Despite falling crude oil prices, the weaker Ringgit and a potential slowdown in Malaysia’s 2Q2016 economic growth, the FBM KLCI rose 0.3% to close on a positive note. The lower liners advanced, led by FBM ACE and FBM Small Cap which rose 0.2% each. Meanwhile, the broader market closed mostly in the green.

Market breath remained positive as advancers outnumbered decliners on a ratio of 414-to-381 stocks. Traded volume, however, shrunk 21.8% to 1.85 bln shares amid mild profit-taking activities by investors.

Topping the gainers list on the big board were banking heavyweights like Hong Leong Financial Group (+24.0 sen), CIMB Bank (+11.0 sen) and Public Bank (+10.0 sen), while Kuala Lumpur Kepong and MISC rose 8.0 sen each. Other notable advancers of the day include Aeon Credit (+38.0 sen), MNRB Holdings (+25.0 sen), Bursa Malaysia (+17.0 sen) and Thong Guan Industries (+16.0 sen). RCE Capital, meanwhile, jumped 30.0 sen after announcing strong 1QFY16 earnings.

Among the biggest decliners of the day were Fraser & Neave (-30.0 sen), Panasonic Manufacturing (-20.0 sen), Power Root (-14.0 sen), UMW Holdings (- 13.0 sen) and Mesiniaga (-11.0 sen). There were only four decliners on the key index – Maxis (-9.0 sen), Genting (-5.0 sen), AmBank (- 3.0 sen) and Astro (-1.0 sen).

Regional equities were subdued on Thursday amid negative global sentiments due to worries over falling commodity prices. The Hang Seng, however, rose 0.4% buoyed by gains in financials-related stocks as investors looked forward to the commencement of the exchange trading link between Hong Kong and Shenzhen. The Shanghai Composite Index shed 0.5%, while the Japanese stockmarkets were closed for holiday. ASEAN indices ended mostly in the red at Thursday’s close.

All three of the key benchmark U.S.indices rose to hit record highs for the first time since 1999 amid sharp gains in crude oil prices and strong quarterly earnings. The Dow was up 0.6%, backed by the rally in heavyweights such as Nike (+2.9%) and Merck & Co. (+1.6%), while better-than-expected corporate earnings results propped the S&P 500 (+0.5%) higher as retail giants – Macy’s Inc (+17.9%) and Kohl’s Corporation (+16.2%) advanced. The Nasdaq also rose 0.5%, following improvements in the weekly jobless claims which continued to stay at low levels.

European equities trended higher, on the back of gains in energy companies and robust earnings reports. The FTSE moved 0.7% upwards as nine out of ten sectors rallied, while the DAX (+0.9%) and the CAC (1.2%) close firmly in the green.

THE DAY AHEAD

Although the FBM KLCI managed to buck the weaker regional trend yesterday, we think that the toppish market conditions still prevails and the market remains at the crossroads amid the lack of fresh convincing leads that could limit its near term upsides.

However, the key index may still continue to edge higher over the near term in tandem with the positive overnight performance of key global stock indices with the 1,680 level likely to continue as the main resistance. The above level could continue to serve as the major hurdle to clear as market valuations are already stretched. The 1,650 level, meanwhile, remains the immediate market support level.

Notwithstanding the direction of the index heavyweights, there should be sustained trading interest among the lower liners and broader market shares as rotational and speculative interest remains strong with retail players taking advantage of the calmer market conditions to continue their trading activities.

COMPANY BRIEFS

Kumpulan Perangsang Selangor Bhd (KPS) has signed a deal to acquire a 71.4% equity interest in cement packaging player Century Bond Bhd (CCB) for RM150.0 mln and plans to take it private following the mandatory general offer (MGO) for the remaining shares. The 71.4% stake comprises of 85.7 mln shares which translates to RM1.75 cash per share.

On the rationale for the takeover, KPS believed that the proposed acquisition would fit into its long term business strategy and create value for its stakeholders. CBB’s attraction is due to it being the market leader in the Malaysian cement packaging industry with growth opportunities in adjacent markets. (The Star Online)

Iris Corp Bhd will supply 2.5 mln 32-page Nigerian electronic passports under a US$42.5 mln (RM170.0 mln) supply agreement with Nigeria-based Iris Smart Technologies Ltd (ISTL). The agreement signed on 10th August 2016 is for a term of three years. ISTL is a system integrator and solution provider for the establishment and management of citizen database and identity management. (The Star Online)

Bioalpha Holdings Bhd aims to have 30 pharmacy outlets from the current 14 in the next 12 months. The integrated health supplements company intends to grow its pharmacy chain, Constant Pharmacy, on a franchise basis outside the Klang Valley, where price competition is less stiff. Each outlet is estimated to cost around RM750,000, depending on size and location.

Bioalpha plans to set up six pharmacies in Kelantan and it is in discussions with a prospective master franchisee in Johor. The pharmacy to population ratio in Tanah Merah, Kelantan is very low at 1:13,333 compared to Kuala Lumpur of about 1:3,000. Meanwhile, Bioalpha also plans to roll out an additional 10 new home brand products. (Bernama)

Media Prima Bhd’s 2Q2016 net profit fell 36.5% Y.o.Y to RM27.9 mln on higher depreciation and amortisation charges in the quarter, which resulted in a higher operating cost of 3.6% Y.o.Y. Revenue for the quarter slipped 4.5% Y.o.Y to RM349.6 mln.

For 1H2016, cumulative net profit declined 28.1% Y.o.Y to RM45.2 mln. Revenue for the period dropped 6.0% Y.o.Y to RM653.6 mln. A first interim dividend of 2.0 sen per share, payable on 30th September 2016, was declared. (The Edge Daily)

Perak Corporation Bhd's unit, Animation Theme Park Sdn Bhd (ATP), has injected additional RM22.0 mln cash into its Movie Animation Park Studios (MAPS) to enhance the animation theme park in Perak.

The proposal is to ensure MAPS becomes a favourite tourist destination in Malaysia and the surrounding countries within Southeast Asia. This is also to complement its property development activities and to provide it with a steady stream of income in future. (The Edge Daily)

Scomi Group Bhd’s 1QFY17 net loss stood at RM12.2 mln vs. a net profit of RM9.7 mln in the previous corresponding quarter, mainly due to slump in oil prices which affected its drilling business. Revenue for the quarter declined 37.0% Y.o.Y to RM237.6 mln. (The Edge Daily)

Gas Malaysia Bhd's 2Q2016 net profit rose 15.7% Y.o.Y to RM39.0 mln on higher volume of gas sold. Revenue for the quarter gained 22.5% Y.o.Y to RM973.6 mln.

For 1H2016, cumulative profit increased 13.2% Y.o.Y to RM70.4 mln. Revenue for the period added 23.7% Y.o.Y to RM1.93 bln. It declared a 4.0 sen dividend per share, payable on 21st September 2016.(The Edge Daily)

Wah Seong Corp Bhd will execute a contract with an international consortium by 30th September 2016 for its pipe coating contract for the Nord Stream 2 gas pipeline project in Europe. Wah Seong’s pipe coating business unit, Wasco Coatings Europe B.V., has signed a letter of intent (LOI) with the Nord Stream 2 AG consortium on 11th August 2016 to commence mobilisation of works for Nord Stream 2 project, pending finalisation of a formal contract to be signed by both parties.

The consortium had awarded a tender to Wasco Coatings Europe B.V. for the provision of concrete weight coating and storing of more than 200,000 pipes for the pipeline project. The pipeline is planned to pass through the Baltic Sea, transporting natural gas over 1,200km from the world’s largest gas reserves in Russia, via the most efficient route to consumers in Europe. (The Edge Daily)

Source: M+ Online Research - 12 Aug 2016