The FBM KLCI (-0.7%) slipped for the third straight session after the U.S. Department of Justice move to seize US$1.0 bln worth of assets linked to 1Malaysia Development Bhd dampened the general market sentiment. The lower liners – FBM Small Cap (-0.8%), FBM Fledgling (-0.8%) and FBM Ace (-2.9%) all took a beating, while the broader market were painted in red.

Market breadth turned negative as losers outpaced gainers on a ratio of 649-to-202 stocks. Traded volumes fell 6.2% to 1.81 bln shares on the back of the dour market sentiment.

More than two-third the key index constituents fell, dragged down by Genting (-35.0 sen), Hong Leong Financial Group (-20.0 sen), PPB Group (-14.0 sen), Petronas Dagangan (-12.0 sen) and IHH (- 12.0 sen). Among the biggest decliners on the broader market include Nestle (-30.0 sen), KESM Industries (-15.0 sen), Huat Lai Resources (-14.0 sen), SWS Capital (- 14.0 sen) and Heineken Malaysia (-10.0 sen).

In contrast, Panasonic (+72.0 sen), Chin Teck Plantations (+34.0 sen), SAM Engineering (+31.0 sen) and Pharmaniaga (+13.0 sen) were the biggest gainers of the day. Hua Yang added 1.0 sen after announcing a one-for-three bonus issue shares. There were only three gainers on the big board – BAT (+26.0 sen), KLK (+4.0 sen) and YTL (+2.0 sen).

Asian benchmark indices closed higher yesterday as the Nikkei added 0.8% on a potential ¥20.0 trl stimulus package, coupled with the weaker Japanese Yen which fell to six weeks low against the U.S. Dollar. The Shanghai Composite (+0.4%) halted a three straight days losing streak, while the rally in properties stocks sent the Hang Seng Index (+0.5%) to close above the 22,000 psychological. ASEAN stockmarkets, meanwhile, ended mixed.

U.S. stockmarkets retreated from their all-time high levels as the Dow (-0.4%) halted its longest winning streak since 2013. On the broader market, the S&P closed 0.4% lower, dragged down by the weak-than-expected corporate earnings from Intel (-4.0%) and American Express (-1.6%).

European benchmark indices also ended mostly lower as the FTSE and CAC fell 0.4% and 0.1% respectively after the European Central Bank held back the introduction of additional stimulus measures. The DAX, however, gained 0.1% after enduring a choppy trading session.

THE DAY AHEAD

We think the 1MDB issue will continue to cloud the local market sentiments for the time being and it would also mean that stocks on Bursa Malaysia could head lower to end the week on another losing note. As is it, the market’s cautiousness could result in more near term selling with more market players retreating to the sidelines until clarity returns.

This could also mean that the FBM KLCI may head towards the 1,650 support level over the near term amid the continuing dour market conditions. If the above level gives way, the 1,630 support will be the next target. Meanwhile, the 1,680 level remains the main near term resistance level.

We also think the weakness will permeate to the lower liners as retail investors are also likely to retreat to the sidelines amid the weaker market sentiments, with renewed profit taking activities on stocks that had run-up over the past few trading sessions.

COMPANY BRIEF

WZ Satu's 3QFY16 net profit rose 29.0% Y.o.Y to RM5.6 mln, from RM4.4 mln in 3QFY15 which was affected by a loss of RM2.3 mln from discontinued operations. Meanwhile, revenue jumped 36.0% Y.o.Y to RM125.5 mln, from RM92.2 mln a year ago, on the back higher contribution from its civil engineering and construction segment.

The cumulative 9MFY16 net profit was almost unchanged at RM15.0 mln, from RM14.9 mln in the previous corresponding year, despite the strong revenue performance which was 43.6% Y.o.Y higher at RM342.3 mln, from RM238.4 mln in 9MFY15.

Although WZ Satu expects the construction sector to remain robust, its manufacturing and oil & gas segments, however, will continue to be challenging. The group’s construction orderbook is expected to keep the company busy for the next two to three years. (The Edge Daily)

Gadang Holdings Bhd's 4QFY16 net profit expanded 20.0% Y.o.Y to RM30.5 mln compared to RM25.4 mln in the previous corresponding period, backed by the improved performance of its construction and property divisions, while, revenue jumped 47.0% Y.o.Y to RM248.9 mln from RM169.8 mln previously.

Meanwhile, the group’s FY16 net profit surged 58.0% Y.o.Y to RM94.2 mln as opposed to RM59.6 mln, helped by higher revenue which was 15.0% Y.o.Y higher from RM587.4 mln in FY15, to RM676.1 mln.

Moving forward, Gadang will continue to focus on executing its ongoing projects to realign its property development strategies to suit market conditions, expand its Indonesian utility operations, and optimise the plantation harvesting activities to improve revenue. (The Edge Daily)

Pantech Group Holdings Bhd's 1QFY17 net profit improved 11.3% Y.o.Y to RM8.1 mln, from RM9.1 mln last year, as it continues to reap lower contribution from its manufacturing division due to sluggish oil and gas industry. Revenue, meanwhile, fell to RM123.9 mln from RM138.6 mln in 1QFY16.

Pantech also proposed a first interim single-tier dividend of 0.5 sen, payable on 19th October, 2016. (The Edge Daily)

Gamuda Land Sdn Bhd, the property development unit of Gamuda Bhd, is planning to invest some RM63.0 mln to build an international school campus at its Jade Hills township in Kajang, Selangor.

The partnership with Eaton International School is based on a build-and-lease model, whereby Gamuda Land will build the school and subsequently lease the assets to the former. The new campus will be able to cater to up to 2,000 students. (The Edge Daily)

Sanichi Technology Bhd's rights issue with free warrants was fully subscribed, comprising of the total valid acceptances of 350.4 mln, or 61.2% and a total valid excess applications of 221.9 mln or 38.8% and the new shares and warrants will be listed on 29th July 2016.

Meanwhile, Sanichi’s Managing Director, Datuk Seri Dr Jacky Pang Chow Huat had acquired a total of 18.8 mln shares in the company between 1st July 2016 and 4th July 2016. (The Edge Daily)

CIMB Group Holdings Bhd‘s 93.7%-owned subsidiary, CIMB Thai Bank PCL’s 2Q2016 net profit plunged 82.0% Y.o.Y to THB39.9 mln (about RM4.8 mln), from THB217.6 mln (about RM26.2 mln) a year ago, dragged down by higher operating expenses, bad debt and impairment losses.

However, the cumulative 1H2016 net profit rose 5.5% Y.o.Y to THB367.2 mln, attributed to stronger operating income and more efficient cost management strategies. (The Star Online)

Property developer and contractor, Gromutual Bhd is planning to sell off its 1.75 ha. land in Kulai, Johor to Vermi Industries Sdn Bhd for RM7.2 mln. The sale proceeds will be used to finance acquisitions of new investment properties, to pare down bank borrowings and/or fund its working capital. Gromutual expects the disposal to be completed in the 4Q2016.

Scomi Engineering Bhd has issued an arbitration notice to Prasarana Malaysia Bhd on 21st July 2016, in a bid to resolve its dispute with latter over its decision to terminate Scomi in the KL Monorail extension project due to an alleged delay in train delivery. (The Star Online)

Public Bank Bhd has decided to make an early redemption of its outstanding US$200.0 mln, 6.84% innovative Tier 1 capital securities at their principal amount together with accrued interest on 22th August 2016. Following the early redemption, the securities, which are listed on the Singapore Stock Exchange, will be delisted on 23th August, 2016. (The Star Online)

Sime Darby Bhd is planning to launch the Phase 3 of its Elmina Valley homes, which has a GDV of RM280.0 mln at the City of Elmina on 23th July 2016 following the launch of Phase 1 and Phase 2 earlier this year.

The group expects its Phase 3 to follow the success of the first two phases, which has a 90.0% take-up rate within the first two days of launching.

Source: M+ Online Research - 22 Jul 2016