The FBM KLCI endured a choppy trading session yesterday before closing 0.02% lower, in line with the weakness in major regional indices. The lower liners, however, ended higher, led by the FBM Ace (+1.4%) index, while the Industrial Products (-0.1%), Trading/Services (- 0.2%) and Properties (-0.02%) sub-indices underperformed in the broader market.

Market breadth remained positive as gainers outnumbered losers on a ratio of 424-to-376 stocks. Traded volumes gained 10.6% to 1.88 bln shares as trading interest were centered towards the lower liners.

Key losers on the FBM KLCI include IHH (- 9.0 sen), AmBank (-7.0 sen), Axiata (-5.0 sen), YTL (-4.0 sen) and KLCC (-4.0 sen). Microlink Solutions (-16.0 sen) topped the losers lists despite receiving a letter of Intent (LoI) from Bank Kerjasama Rakyat Malaysia Bhd to enhance the banking system. Meanwhile, Scientex (-14.0 sen), TAHPS Group (-13.0 sen), Success (-12.0 sen) and AmWay (-11.0 sen) were amongst the other notable decliners on the broader market.

On the other side of the trade, Panasonic (+RM1.20), Dutch Lady (+40.0 sen), MPI (+34.0 sen) and Carlsberg (+32.0 sen) were amongst the biggest gainers of the day. Heineken Malaysia added 58.0 sen after reported a strong set of quarterly earnings. Major advancers on the FBM KLCI were BAT (+70.0 sen), Hong Leong Financial Group (+14.0 sen), Public Bank (+14.0 sen), Westports (+8.0 sen) and Hong Leong Bank (+6.0 sen).

Japanese stockmarkets resumed trading as the Nikkei (+1.4%) registered its sixth straight winning day on expectations of further stimulus measures by the Bank of Japan. The Shanghai Composite, however, extended its losses by 0.2% on slower growth in housing prices, while the Hang Seng Index snapped a streak of six consecutive days of gain to close 0.6% lower. ASEAN stockmarkets, meanwhile, ended mixed.

Wall Street ended mixed as the Dow (+0.1%) registered another record closing, boosted by the strong housing data coupled with strong corporate earnings from Johnson & Johnson (+1.7%) and United Health (+1.3%). On the broader market, however, the S&P (-0.1%) retreated from the all-time high as nine of the ten main sectors fell, while the Nasdaq closed 0.4% lower.

European benchmark indices closed mostly lower as the CAC and DAX fell 0.6% and 0.8% respectively as the economic sentiment for the Eurozone fell to -14.7 in June. Despite opening lower at the start of the trading bell, the FTSE managed to recoup all its intraday losses before closing 0.03% higher, buoyed by stronger-than-expected inflation rate which grew 0.5% Y.o.Y in June.

THE DAY AHEAD

The FBM KLCI continues to struggle in breaking out of the 1,670 level as rotational plays and quick profit taking activities hindered its progress. At the same time, there also remains little follow through buying to help lift the market heavyweights as the general market undertone remains mixed and unsettled yet.

Consequently, we think the key Malaysian market barometer will continue to drift within a tight trading range within the 1,660-1680 levels over the near term amid the still cautious market environment.

However, interest among the lower liner stocks appears to be picking up and we think the speculative interest may continue to draw in retail players and potentially expand the market’s near term market breadth.

COMPANY BRIEF

PRG Holdings Bhd has inked a joint-venture (JV) deal with Baycity Park Sdn Bhd to jointly-develop residential properties in Selangor's Section U5. The 2.6 ha. (6.48 ac.) leasehold land owned by Baycity will see the development of three apartments blocks, which will be priced at between RM250,000 and RM400,000 per unit.

Further, both parties had also signed a shareholders agreement for the JV company, Premier Baycity, which will be 49.0% and 51.0% owned by Baycity and PRG respectively. The project is set to commence by the end of 2016 or early next year and is slated for completion in 36 months. It will start contributing to the group’s earnings in year 2017.

Separately, PRG is exploring possibilities of expanding its construction and real estate development business, which targets affordable housing and infrastructure projects in Myanmar and the Philippines. The group also said that the potential projects will be on a small scale basis. (The Edge Daily)

RAM Rating Services Bhd has downgraded the long-term ratings of UMW Holdings Bhd’s Islamic debt programmes, which included the RM300.0 mln ICP/MTN programme (2010/2017) and a RM2.0 bln IMTN programme (2013/2028), to AA2 from AAA and revised the rating outlook to stable from negative.

The revision was mainly due to weaker operating performance and financial health, which is not expected to recover significantly within two years. (The Star Online)

PPB Group Bhd's associate, Wilmar International Ltd is expected to register a net loss of about US$230.0 mln (RM923.0 mln) in 2Q2016, based on a preliminary review of its unaudited financial results. The weaker performance was attributed to tougher operating conditions, led by the manufacturing sub-segment within oilseeds and grains, as well as the sugar segment. (The Edge Daily)

Ge-Shen Corp Bhd is purchasing a double-storey detached warehouse with an annexed three-storey office and other ancillary buildings from Tiong Nam Logistics Holdings Bhd to expand its manufacturing plant. The property, which costs an estimated RM9.5 mln, is located in Tebrau, Johor Bahru.

George Kent (Malaysia) Bhd is proposing a one-for-four bonus issue of up to 75.1 mln new shares aimed at rewarding shareholders, while increasing the company’s capital size. Other details of the corporate exercise remained undisclosed pending relevant approvals. (The Edge Daily)

Ferrier Hodgson MH Sdn Bhd, the auditor undertaking an extended audit of Maxwell International Holdings Bhd was unable to ascertain, verify and substantiate if the latter had received any consideration for the RMB92.4 mln (RM64.6 mln) worth of advertising expenses (adex) incurred.

The audit firm also said that a significant volume of important documents that was requested has not been provided at this juncture.

To recap, Maxwell had incurred a significant loss of RM45.9 mln in 3Q2015, which was mainly due to selling and distribution expenses amounting to RM44.6 mln.

TMC Life Sciences Bhd has inked into a Memorandum of Understanding (MoU) with Singapore-based Thomson Medical Pte Ltd and University College Dublin on 18th July 2016 to explore the possibility in setting up a health sciences training and education platform in Malaysia and Singapore. The MoU is valid for a year from the date of signing, unless terminated or upon execution of a definitive agreement.

Thomson is a private health care service provider, who owns and operates the largest private women and children's specialist hospital in Singapore as well as specialist clinics and medical centres in Singapore and Indonesia. Both parties are related to Sasteria Pte Ltd, the key shareholder in the two companies. (The Edge Daily)

D&O Green Technologies Bhd is collaborating with a Hong Kong-based thermal management solutions company to design and sell light-emitting diode (LED) modules and thermal substrates, in a bid to expand its products and services.

D&O’s 61.8%-owned subsidiary, Dominant Opto Technologies Sdn Bhd has signed a JV agreement with Rayben Innovation Ltd which will result in the formation of the JV company, DRE Technologies Co Ltd in Zhuhai, China. The company will be responsible for the design, production and sales of automotive LED modules and thermal substrates. (The Edge Daily)

Kerjaya Prospek Group Bhd has received a letter of award from Apple 99 Development Sdn Bhd to undertake construction works for The Apple and Courtyard by Marriott development project in Malacca for RM213.8 mln. The duration of the contract is from 1st August 2016 to 31st October, 2018.

Further, the group has also proposed a single-tier interim dividend of four sen per share for 2016. (The Star Online)

Source: M+ Online Research - 20 Jul 2016