The FBM KLCI (-0.1%) lingered in the negative zone for most of the intra-day session, mainly due to the lack of buying support from institutional funds and profit-taking on selected heavyweights. On the other hand, the lower liners and the broader market shares ended mostly higher.

Despite the negative key index, market breath was favourable as advancers outpaced losers on a ratio of 405-to-360 stocks. Traded volume, however, plunged 20.1% to 2.01 bln shares as investors stayed on the sidelines awaiting for fresh catalysts.

BAT (-RM1.70) led the heavyweight losers on the FBM KLCI, followed by PPB Group (-28.0 sen), Kuala Lumpur Kepong (-12.0 sen), Hong Leong Bank (-6.0 sen) and Astro Malaysia Holdings (- 5.0 sen). On the broader market, the other key decliners include Harrisons Holdings (- 13.0 sen), Can-One (-10.0 sen), United ULi Corporation (-10.0 sen) and UMS Holdings (-8.0 sen). Meanwhile, P.I.E Industrial lost 11.0 sen after reporting a decline in its 2Q2016 net profit by 35.8% Y.o.Y to RM6.1 mln.

On the other side of the trade, the major advancers in the broader market were Panasonic Manufacturing (+RM1.10), Fraser & Neave Holdings (+94.0 sen), UMW Holdings (+54.0 sen), Heineken Malaysia (+22.0 sen) and United Plantations (+16.0 sen). Meanwhile, the index-linked heavyweight gainers included Petronas Gas (+16.0 sen), Sime Darby (+13.0 sen), KLCC Property & REITs (+4.0 sen) and Maybank (+2.0 sen). Power-giant Tenaga Nasional extended its winning streak for the third straight session to close 4.0 sen higher.

On the regional markets, the Hang Seng (- 0.1%) regained most of its intraday losses, underpinned by the rally in real estate shares as the property index has recovered 37.0% from its year-low in January. Meanwhile, both the Nikkei and the Shanghai Composite Index climbed steadily to close 0.7% higher. ASEAN indices finished mostly higher on Tuesday.

Wall Street eked-out small gains as investors digest the weaker-than-expected U.S. productivity data which has fallen 0.5% below analysts’ expectations. The Dow (+0.02%) almost flatlined as communications and consumer staples-related companies offset losses by the materials sector. Meanwhile, the S&P500 (+0.04%) shrugged off losses in the energy and materials sectors to advance marginally higher while the Nasdaq (+0.2%) hit a record high, closing at 5,225.5 points.

Key European benchmark indices finished on a strong footing following the upbeat global sentiments due to the rebound in crude oil prices, stimulus measures from central banks and better-than-expected U.S. corporate earnings results. The FTSE (+0.6%) extended its rally for the fourth straight day as the Pound edged lower, aiding export-related stocks and retailers such as Marks & Spencer (+2.4%) and Tesco (+2.3%). The DAX notched a gain of 2.5%, pushing into the bull-market territory as corporate earnings outstripped analysts’ expectations, while the CAC jumped 1.2% at the close.

THE DAY AHEAD

Although the FBM KLCI retreated yesterday, we think it is merely mild profit taking after the past few days’ ascend and the uptrend should resume over the near term amid the continuing positive market environment. As it is, investors are still cheering the various government stimulus measures and are anticipating that interest rates will remain low for the foreseeable future. At the same time, the FBM KLCI is seemingly finding support at the 1,670 level and it would provide a springboard for the key index to retest the 1,680 level over the near term. However, we maintain our view that the 1,680 level remains a formidable level to clear given the stretched market valuations and the general wariness over the sustainability of the market’s uptrend persisting. Lower liners and broader market shares are also expected to see continued rotational and speculative interest amid the current calmer market conditions.

At the same time, the FBM KLCI is seemingly finding support at the 1,670 level and it would provide a springboard for the key index to retest the 1,680 level over the near term. However, we maintain our view that the 1,680 level remains a formidable level to clear given the stretched market valuations and the general wariness over the sustainability of the market’s uptrend persisting.

COMPANY BRIEFS

Taliworks Corporation Bhd’s 2Q2016 net profit surged 8.0x Y.o.Y to RM76.2 mln, mainly attributed to a one-off gain of RM65.8 mln arising from the disposal of its China waste management division. Revenue for the quarter gained 4.8% Y.o.Y to RM76.8 mln.

For 1H2016, cumulative net profit jumped 209.8% Y.o.Y to RM76.0 mln. Revenue for the period grew 5.5% Y.o.Y to RM152.1 mln. (The Star Online)

Tien Wah Press Holdings Bhd is undertaking a A$4.2 mln (RM12.9 mln) retrenchment exercise at its Sydney-based operation, having transferred its tobacco packaging printing business to the group’s Vietnam-based unit. Anzpac Services (Australia) Pty Ltd, which is 51-0% owned by Tien Wah’s subsidiary Max Ease International Ltd, would continue to reorganise and/or undertake cost-cutting programmes and to expand its non-tobacco clientele under its remaining lithography printing business.

Following the retrenchment exercise, which is expected to be completed this quarter, Anzpac is forecast to achieve A$0.5 mln (RM1.5 mln) saving in salaries and wages in 2016 and an annual savings of salaries and wages of around A$3.1 mln (RM9.6 mln) in subsequent years. (The Star Online)

Petronas Chemicals Group Bhd’s 2Q2016 net profit fell 17.1% Y.o.Y to RM462.0 mln, mainly due to assets write-off amounting to RM241.0 mln on the cancellation of an elastomers project. Revenue for the quarter declined 3.1% Y.o.Y to RM3.20 bln.

For 1H2016, cumulative net profit decreased 9.3% Y.o.Y to RM1.05 bln. Revenue for the period slipped 1.5% Y.o.Y to RM6.35 bln. An interim dividend of 7.0 sen per share was declared. (The Star Online)

Petronas Gas Bhd’s 2Q2016 net profit decreased 50.6% Y.o.Y to RM403.8 mln. Revenue for the quarter, however, climbed 3.3% Y.o.Y to RM1.19 bln.

For 1H2016, cumulative net profit declined 32.9% Y.o.Y to RM850.9 mln. Revenue for the period, however, added 3.0% Y.o.Y to RM2.25 bln. (The Edge Daily)

TAS Offshore Bhd has secured two contracts worth a combined RM31.6 mln for the sale of two harbour tugs. The vessels are sold to one of its existing customers and are expected to be delivered in 4Q2017. (The Edge Daily)

Ajiya Bhd has signed a Memorandum of Understanding (MoU) to partner with Sarawak-based IMAG Development & Construction Sdn Bhd to develop a housing project to be awarded by Prima Corporation Malaysia (PR1MA). Ajiya has received a letter of intent from PRIMA to construct 746 units of prima homes comprising townhouse units with all the necessary amenities, utilities, facilities and infrastructures on a 24.9-ac. leasehold land in Matang, Sarawak. However, no further details were disclosed.

Petra Energy Bhd has entered into a Memorandum of Understanding (MoU) with Pekat Teknologi Sdn Bhd, which will pave the way for Petra to venture into the solar photovoltaic (PV) segment. The parties intend to pursue opportunities in relation to the design, procurement, installation, commissioning and operation of solar PV systems.

Pekat is involved in providing solutions for the design, supply, distribution and installation of lightning protection systems, earthing systems, surge protection systems and PV renewal energy technology, and is also the distributor of Sungrow PV products. There is no contract value stated as this MoU serves as an intention of the parties to cooperate and collaborate on an exclusive basis to bid for potential projects.

The duration of this MoU is two years, effective from 9th August 2016 and will expire on 8th August 2018, with an extension option as may be mutually agreed between the parties. (The Edge Daily)

Sona Petroleum Bhd has commenced liquidation proceedings on 9th August 2016 after filing a petition to the Kuala Lumpur High Court to wind up the Special Purpose Acquisition Company and appoint liquidators. This is in line with the company's Memorandum and Articles of Association which provides that the company shall be dissolved, wound up and liquidated under the Act, if the company does not complete a qualifying acquisition within the permitted time frame. (The Edge Daily)

KKB Engineering Bhd’s 2Q2016 net profit plunged 94.4% Y.o.Y to RM0.4 mln, due to lower activities in its major subsidiaries, Harum Bidang Sdn Bhd and KKB Industries (Sabah) Sdn Bhd. Revenue for the quarter fell 9.8% Y.o.Y to RM27.2 mln.

For 1H2016, cumulative net loss stood at RM1.6 mln vs. a net profit of RM33.3 mln in the previous corresponding quarter. Revenue for the period tumbled 53.8% Y.o.Y to RM49.3 mln. (The Edge Daily)

Source: M+ Online Research - 10 Aug 2016