Tracking the weakness on Wall Street overnight, coupled with the recent fall in crude oil prices, the FBM KLCI fell 0.4% yesterday. The lower liners also ended mostly lower as the FBM Small Cap and FBM Fledgling fell 0.4% and 0.1% respectively, while the Consumer Products (+0.01%) sector outperformed amid the negative broader market.

Market breadth turned negative as losers outnumbered gainers on a ratio of 448-to- 294 stocks. Traded volumes fell 13.0% to 1.40 bln shares amid the negative market sentiment.

More than two-thirds the key index constituents fell, dragged down by Petronas Dagangan (-54.0 sen), followed by Genting (-21.0 sen), KLK (-20.0 sen), KLCC (-20.0 sen) and Hong Leong Bank (- 12.0 sen). Significant decliners on the broader market were Nestle (-40.0 sen), Lafarge (-13.0 sen), Hartalega (-11.0 sen) and Time DotCom (-10.0 sen). Cycle & Carriage Bintang fell 22.0 sen after reporting a weak set of quarterly earnings.

Consumer Products stocks like Panasonic (+RM1.44), Dutch Lady (+60.0 sen), Ajinomoto (+48.0 sen) and Heineken Malaysia (+28.0 sen) topped the broader market advancers lists. WCT added 3.0 sen after bagging a portion of works for the Pan Borneo Highway project. Meanwhile, BAT (+28.0 sen), Public Bank (+12.0 sen), Westports (+6.0 sen), DIGI (+2.0 sen) and RHB Bank (+1.0 sen) were the only advancers on the FBM KLCI.

Japanese stockmarkets closed lower for the third straight session as the Nikkei fell 1.4% after investors deemed that the anticipated stimulus package from Bank of Japan may not live up to expectations. The Shanghai Composite, however, extended its gains by 1.2%, anchored by financial and industrial stocks, while the Hang Seng Index climbed 0.6%. ASEAN stockmarkets, meanwhile, ended mostly higher.

U.S. stockmarkets ended mixed as the Dow (-0.1%) extended its losses after McDonald’s (-4.5%) reported a slower-than-expected same store sales that offsets new home sales data for June which rose to seven year high. On the broader market, the S&P (+0.03%) closed marginally higher, while the Nasdaq (+0.2%) rose to its highest level year-to-date.

European stockmarkets also closed higher as the FTSE added 0.2%, lifted by gains in mining shares such as Fresnillo (+3.7%), Rio Tinto (+3.1%) and Rangold (+1.6%). The DAX gained 0.5% after Volkswagen AG (+2.4%) reported its plans to offer a new proposal to fix 85,000 vehicles, while the CAC closed 0.2% higher.

THE DAY AHEAD

There remains no change to our immediate market view and we think the market’s cautiousness will prevail over the near term. This will keep more market players on the sidelines and market breadth will also stay on the thin side. We also think that the profit taking activities are likely to persist for longer and dampen the market’s upside prospects.

Consequently, we expect the key index to trend in a tight trading range for the time being with the downside bias still present. The 1,660 will serve as the near term support, followed by the 1,650 level. The 1,670 level remains the main near term resistance.

The cautious market environment will also keep most retail players at bay and the lower liners and broader market shares will continue to see fewer followings over the near term.

COMPANY BRIEF

A joint-venture (JV) between KKB Engineering Bhd and WCT Holdings Bhd has clinched a contract worth RM1.29 bln for the Phase 1 works of the proposed Pan Borneo Highway (Sarawak stretch) project from Lebuhraya Borneo Utara Sdn Bhd. The project includes the development and upgrading of the stretch between Sungai Arip Bridge and Bintulu Airport that will be completed in 51 months.

KKB holds 70.0% equity stake the JV company KKB Engineering Bhd-WCT Bhd JV, while, WCT holds the remaining 30.0%. (The Edge Daily)

AWC Bhd’s engineering-unit, M&C Engineering and Trading Sdn Bhd (M&C) has received a contract worth RM12.7 mln from Persada Mewah Sdn Bhd.

The scope of works include the supply, delivery, installation, testing and commissioning of Air Conditioning and Mechanical Ventilation Services (ACMV), Electrical and Lightning Protection Services (ELPS) and Extra Low Voltage Service (ELV) packages for an Education Hub in Cyberjaya. The contract will run from 26th July 2016 until 17th August, 2017.

AWC’s year-to-date contract wins amount to approximately RM1.0 bln. (The Edge Daily)

YTL Corp Bhd is proposing to privatise its 74.1%-owned subsidiary, YTL e-Solutions Bhd, at 55.0 sen per share through a voluntary share exchange offer. This will enable YTL e-Solutions’ shareholders to exchange their stake in the company for shares in YTL Corp.

The offer to be be undertaken at an offer price of 55.0 sen for every YTL e-Solutions’ share will be satisfied through the issuance of YTL Corp shares at an issue price of RM1.65, which would represent an exchange ratio of approximately 0.333 YTL Corp share-for-every YTL e-Solutions share tendered.

The corporate exercise will allow YTL e-Solutions’ shareholders to reduce their exposure in a single industry in exchange for an investment in the diversified operations of the YTL Corp group, as well as participate in the future growth prospects of YTL Corp group, following the consolidation of both YTL e-Solutions and YTL Corp group. (The Star Daily)

British American Tobacco (Malaysia) Bhd‘s (BAT) 2Q2016 net profit plunged 78.2% Y.o.Y to RM47.7 mln, from RM219.4 mln in the previous corresponding period, mainly due to the steep 40.0% excise duty hike implemented in November 2015, which resulted in lower sales volume as BAT lost its market share to illegal cigarettes. A sum of RM86.0 mln made for the provision for its restructuring expenses relating to the winding down of BAT’s operations in Petaling Jaya, Selangor had also dragged earnings lower.

Revenue for the quarter contracted 11.5% Y.o.Y to RM962.6 mln, compared to RM1.09 bln in 2Q2015.

Cumulative 1H2016 net profit lost more than 50.0% Y.o.Y to RM220.3 mln from RM461.1 mln a year ago, attributed to weaker sales volume, while revenue was down 16.0% Y.o.Y to RM1.98 bln from RM2.36 bln.

BAT warned that based on its 1H2016 performance, its 2016 earnings are expected to be lower than 2015. A second interim dividend of 45.0 sen was also proposed, which is payable on 25th August, 2016. (The Star Online)

Country View Bhd registered a 54.4% Y.o.Y jump in its 2QFY16 net profit to RM4.7 mln from RM3.0 mln in 2QFY15, on the back of higher revenue, which was up 21.2% Y.o.Y to RM33.4 mln due to higher take-up rates at its Taman Nusa Sentral project.

However, its cumulative 1HFY16 net profit decreased significantly by 32.9% Y.o.Y to RM7.8 mln from 1HFY15's RM11.6 mln, mainly attributed to a one-off profit from selling a piece of commercial land that was recognised in 1QFY15. Revenue, meanwhile, stood at RM60.9 mln, vs. RM63.2 mln a year ago. The company had also proposed a first interim dividend of four sen per share, payable on 25th August, 2016. (The Edge Daily)

Globetronics Technology Bhd's 2Q2016 net profit dived 64.0% Y.o.Y to RM6.5 mln, in comparison to RM17.9 mln last year following weaker performance from its Malaysia and Singapore segments, while quarterly revenue retreated by 36.0% Y.o.Y to RM57.4 mln, from RM89.0 mln a year earlier.

In line with its quarterly performance, its cumulative 1H2016 net profit also plunged 71.0% Y.o.Y to RM10.2 mln against RM35.1 mln in 1HFY15, on the back of a 35.0% Y.o.Y decrease in its revenue. (The Edge Daily)

Puncak Niaga Holdings Bhd has announced the appointment of Azlan Shah Rozali, the son of major shareholder and Executive Chairman Tan Sri Rozali Ismail, as acting Managing Director of the company effective from 3th August.

He will be taking over from Datuk Syed Hisham Syed Wazir, who is resigning due to health reasons and also ceased to be the alternate director to Tan Sri Rozali Ismail. (The Star Online)

Melati Ehsan Holdings Bhd's 3QFY16 net profit jumped by more-than-nine fold to RM7.6 mln, compared to RM827,000 a year ago, attributed to a gain from the disposal of a subsidiary company. Quarterly revenue, however, sunk 71.3% Y.o.Y to RM13.3 mln from RM46.3 mln in 3QFY15.

Net profit for the 9MFY16 rose 209.2% Y.o.Y to RM17.0 mln, from RM5.5 mln, due to profit from the aforementioned sale of subsidiary, despite the fall in revenue by 67.5% Y.o.Y to RM50.2 mln from RM154.3 mln. (The Edge Daily)

Yinson Holdings Bhd has completed the sale of its non-oil and gas (O&G) subsidiaries to Liannex Labuan Ltd and has also declared a special dividend of up to RM160.0 mln.

The disposal had brought in proceeds amounting to RM223.2 mln, which was slightly lower than the initial offer price of RM228.0 mln by Liannex Labuan announced in January. (The Edge Daily)

Source: M+ Online Research - 27 Jul 2016