The FBMKLCI fell 0.3% last Friday following the retracement of crude oil prices and the falling Ringgit, as well as the weaker market sentiments brought about by the 1Malaysia Development Bhd concerns. The key index also extended its losses by 0.3% W.o.W to close in the red. Meanwhile, the FBM Small Cap (-0.4%), the FBM Fledging (-0.3%) and the FBM ACE (-0.6%) contracted amidst a negative broader market.

Market breath remained dour as decliners outweigh gainers on a ratio of 445-to-324 stocks. Traded volume fell by 14.3% to 1.90 bln shares due to negative market sentiment.

Key index underperformers include Hong Leong-related counters such as Hong Leong Financial Group (-28.0 sen) and Hong Leong Bank (-12.0 sen), following the bank’s decision to lower its base rate from 3.94% to 3.69%. Other Main Board decliners were Sime Darby (-18.0 sen) and Genting Malaysia (-11.0 sen). Genting (-29.0 sen) came under pressure after the unsuccessful experimental results for its Alzheimer’s drug, LMTX undertaken by associate TauRX Pharmaceuticals Ltd.

On the other hand, Dutch Lady (+98.0 sen), Panasonic Manufacturing Msia (+60.0 sen), Ajinomoto (+34.0 sen), Perusahaan Sadur Timah Msia (+17.0 sen) and Concrete Engineering Products (+12.0 sen) topped the lower liners advancers. Heavyweight gainers were BAT (+RM1.16), Westports Holdings (+11.0 sen), CIMB Bank (+10.0 sen) Kuala Lumpur Kepong (+2.0 sen). Tenaga Nasional (+6.0 sen) also rallied after its 3QFY16 net profit jumped 192.0% Y.o.Y to RM2.30 bln.

Japanese stockmarkets pared off its earlier losses to finish higher by 0.6%, after the unchanged interest rates and stimulus package announced by the Central Bank of Japan (BOJ) failed to excite investors. The Hang Seng Index (-1.3%) traded in the negative zone during the intra-day session, while the Shanghai Composite Index lost 0.5% to close at 2,979.3 points.

U.S. stockmarkets closed mainly in the green, following the Federal Reserve’s decision to hold its rates unchanged as per analysts’ expectations. The Dow, however, slipped slightly by 0.1% after weaker-than-expected U.S. GDP growth numbers, on top of losses in the financials and consumer discretionary stocks. On the broader market, the S&P 500 (+0.2%) continued it two-day rally after more than 80.0% of the companies on the index beat analysts’ forecast to report positive earnings, while the NASDAQ expanded marginally 0.1%.

European benchmark indices were also higher last Friday, led by gains in banks in the ongoing earnings season. The FTSE (+0.1%) inched higher to close at 6,724.4 points as gains on financial-related counters offset the pullback in the communication and utilities sectors. Similarly, the CAC and the DAX advanced by 0.4% and 0.6% respectively.

THE DAY AHEAD

The FBM KLCI’s mostly sideway trend is likely to persist over the near term as there remains few positive catalysts and sustainable leads for market to follow. At the same time, the trading activities are likely to be met by quick profit taking activities that could limit their upsides.

Consequently, we see the key index lingering within the 1,650 and 1,660 levels for the time being, but the downside bias is likely to remain amid the insipid market sentiments.

The lower liners and broader market environment will also mixed-to-lower as retail players are likely to continue to rotational and situational plays.

COMPANY BRIEFS

Malaysia Packaging Industry Bhd’s (Maypak) major shareholder, Toyo Seikan Co Ltd (TSCL) has entered into a conditional sale and purchase agreement (SPA) with Taisei Lamick Co ltd (TLC) for the sale of a 55.0% stake in Maypak for 16.6 sen per share, totalling a RM3.8 mln cash deal.

Upon the completion of the proposed acquisition, TLC would trigger a mandatory take-over to acquire all the remaining shares not already owned by TLC. TLC will serve the notice of the proposed MGO to the board of Maypak when the SPA become unconditional. The proposals are expected to be completed in 2H2016. Additionally, Maypak has requested a suspension of the trading its shares on 29th July 2016. (The Star Online)

New Hoong Fatt Holdings Bhd's 2Q2016 net profit rose 66.9% Y.o.Y to RM8.6 mln on higher demand and the impact of a favourable exchange rate. Revenue for the quarter expanded 16.1% Y.o.Y to RM60.0 mln.

For 1HFY16, cumulative net profit added 48.0% Y.o.Y to RM14.1 mln. Revenue for the period grew 14.8% Y.o.Y to RM114.6 mln. (The Edge Daily)

Caring Pharmacy Group Bhd's 4QFY16 net profit gained 4.2% Y.o.Y to RM2.7 mln due to higher sales. Revenue for the quarter climbed 13.5% Y.o.Y to RM108.3 mln.

For FY16 cumulative net profit contracted 43.4% Y.o.Y to RM7.3 mln. Revenue for the year, however, rose 10.6% Y.o.Y to RM402.6 mln. A final dividend of 1.5 sen per share was proposed. (The Edge Daily)

Nylex (Malaysia) Bhd's 4QFY16 net profit soared 189.7% Y.o.Y to RM6.5 mln on higher contributions from its subsidiaries abroad. Revenue for the quarter, however, fell 10.2% Y.o.Y to RM291.0 mln.

For FY16, cumulative net profit increased 50.9% Y.o.Y to RM11.2 mln. Revenue for the year, however, weakened by 5.5% Y.o.Y to RM1.20 bln. (The Edge Daily)

WZ Satu Bhd's unit has clinched a RM27.0 mln contract from Shell MDS (Malaysia) Sdn Bhd (SMDS) for mechanical works at a SMDS pipeline project. The contract runs for a 13-month period, commencing work on 1st August 2016. (The Edge Daily)

Censof Holdings Bhd has clarified that an owed sum of RM6.7 mln that was the subject of a qualified opinion expressed by its external auditors is recoverable. The contract was first awarded to Censof's subsidiary in 2011 for RM22.5 mln and there was a variation order worth RM2.5 mln thereafter.

Accordingly, the project was implementing under various phases over the years. So far, Censof's subsidiary has to date received payment for work done amounting to RM18 mln. For the remaining portion of the contract, Censof is currently undergoing a User Acceptance Test (UAT) stage which is expected to be completed within the coming six months. (The Edge Daily)

Luxchem Corp Bhd's 2Q2016 net profit rose 32.8% Y.o.Y to RM13.0 mln on higher contribution from its trading and manufacturing segments. Revenue for the quarter climbed 9.2% Y.o.Y to RM175.9 mln.

For 1H2016, cumulative net profit increased 76.3% Y.o.Y to RM20.0 mln. Revenue for the period inched up 0.7% Y.o.Y to RM335.8 mln. (The Edge Daily)

Source: M+ Online Research - 1 Aug 2016