In light of the stronger Ringgit against the U.S. Dollar, coupled with the recent sharp recovery in crude oil prices, the FBM KLCI (+0.6%) extended its gains to close marginally below the 1,700 psychological level. The lower liners – the FBM Small Cap (+0.3%), FBM Fledgling (+0.2%) and FBM Ace (+1.4%) all advanced, but the Plantations sector (- 0.03%) underperformed the positive broader market.

Market breadth stayed positive as gainers outnumbered losers on a ratio of 512-to-382 stocks. Traded volumes rose 22.4% to 2.83 bln shares, buoyed by the positive market sentiment.

Leading the gainers on the big board was BAT (+92.0 sen), followed by Axiata (+19.0 sen), Sime Darby (+17.0 sen), PPB Group (+10.0 sen) and CIMB (+9.0 sen). Amongst the biggest gainers on the broader market were Oriental Holdings (+32.0 sen), KESM Industries (+30.0 sen), Ajinomoto (+28.0 sen) and Central Industrial Corporation (+22.0 sen). Ann Joo Resources gained 8.0 sen on a strong set of quarterly earnings.

Consumer products giants like Nestle (- 70.0 sen), Dutch Lady (-68.0 sen) and Fraser & Neave (-10.0 sen) topped the broader market losers lists, while United Uli-Corporation and Pharmaniaga fell 15.0 sen and 11.0 sen respectively. Among the biggest decliners on the key index include Wesports (-10.0 sen), Hong Leong Bank (-8.0 sen), Genting (-6.0 sen), KLCC (-5.0 sen) and Hong Leong Financial Group (-4.0 sen).

Asia benchmark indices retreated as the firmer Japanese Yen against the Greenback caused the Nikkei (-1.6%) to extend its losses. The Shanghai Composite (-0.5%) erased some of previous session gains, dragged down by the weakness in banking and insurance shares, while the Hang Seng Index snapped a streak of four straight sessions of gains after falling 0.1%. ASEAN indices, meanwhile, ended mostly negative.

US stockmarkets fell from the all-time high levels as the Dow (-0.5%) erased all of its previous session gains on hawkish remarks from the Federal Reserve officials on a potential interest rates hike next month. The S&P 500 declined 0.6%, dragged down by the utilities sector, while the Nasdaq closed 0.7% lower.

European benchmark indices also ended in the red - the FTSE (-0.7%), CAC (-0.8%) and DAX (-0.6%) all fell, taking cue from the weakness in Asian stockmarkets earlier on. Mining stocks such as BHP Billiton PLC (+0.7%) and Antofagasta PLC (+8.7%), however, outperformed to limit the losses on the FTSE.

THE DAY AHEAD

As the key index approaches the psychological 1,700 level, we think that the volatility will be greater amid the toppish market conditions. Therefore, we expect the market to potentially pullback over the near term in tandem with the overnight weakness on Wall Street. We expect quick profit taking activities to permeate the Malaysian stockmarket after the recent strong gains that were driven by the bouts of foreign buying amid the higher risk appetite for emerging market stocks.

The FBM KLCI should find support at around the 1,690 and 1,680 levels, while above the 1,700 points level, the resistances is at 1,710. We also think that there could be profit taking activities among the lower liners and broader market shares amid the more cautious market environment.

COMPANY BRIEFS

Box-Pak (Malaysia) Bhd's 2Q2016 net profit dived 81.0% Y.o.Y to RM769,000 vs. RM4.1 mln a year ago, on increased material and operating costs and unfavorable foreign exchange. The weaker performance was also attributable to higher finance costs and initial pre-operating expenses incurred in Myanmar. Revenue, however, gained 26.0% Y.o.Y to RM123.1 mln, from RM97.8 mln last year.

The group’s cumulative 1H2016 net profit plunged 67.0% Y.o.Y to RM2.1 mln, from RM6.6 mln a year earlier – dragged by the above reasons, while revenue expanded 26.0% Y.o.Y to RM243.5 mln, from RM193.9 mln in 1H2015.

Box-Pak is also proposing a rights issue with free detachable warrants to raise up to RM120.0 mln to expand its business in Malaysia and Myanmar, as well as repaying short-term loans and fund its working capital needs.

About RM30.0 mln and RM50.0 mln are earmarked for expansion purposes in Malaysia and Myanmar respectively, while RM39.1 mln would go towards loan repayments and working capital. (The Edge Daily)

Press Metal Bhd saw its 2Q2016 net profit surge nearly six times to RM146.1 mln, compared to RM24.7 mln a year ago, on higher production output and a RM45.0 million insurance claim, while revenue jumped 67.9% Y.o.Y to RM1.59 bln, from RM947.3 mln in the previous corresponding year.

Cumulative 1H2016 net profit jumped 254.6% Y.o.Y to RM240.6 mln, from RM67.9 mln last year – mainly due to higher other operating income and revenue, which was 43.6% Y.o.Y higher at RM2.88 bln vs RM2.0 bln in the previous comparative period. Press Metal has alsodeclared a second interim dividend of three sen a share, payable on 20th September 2016. (Bernama)

PMB Technology Bhd recorded a 49.7% Y.o.Y gain in its 2Q2016 net profit at RM2.4 mln, compared with RM1.6 mln a year ago, buoyed by better cost management and lower finance costs - although revenue fell 15.7% Y.o.Y to RM94.6 mln, from RM112.1 mln.

The group has proposed a second interim single tier dividend of one sen per share, payable on 20th September 2016.

Cumulative 1H2016 net profit was 43.2% Y.o.Y higher at RM4.8 mln, from RM3.4 mln in the corresponding period last year – mainly due to lower operating expenses while revenue lost 23.1% Y.o.Y to RM168.5 mln, from RM219.1 mln in the 1H2015. (The Edge Daily)

Dagang NeXchange Bhd‘s (DNex) 2Q2016 net profit expanded nearly 23-fold to RM89.5 mln, from RM3.9 mln last year, attributable to the RM85.3 mln share of profit from its 30.0% associate company, Ping Petroleum Ltd. Meanwhile, quarterly revenue more than doubled to RM47.4 mln, from RM22.6 mln in 2Q2015.

Its 1H2016 net profit rose by more than 20 times to RM94.9 mln, from RM4.4 mln in the previous corresponding year, while revenue rose 66.7% Y.o.Y to RM74.3 mln, from RM44.6 mln. (Bernama)

TAHPS Group Bhd saw its 1QFY17 net profit decline 13.7% Y.o.Y to RM1.9 mln, from RM2.2 mln a year ago, on higher development costs from its property division, despite revenue rising 39.5% Y.o.Y to RM15.9 mln, from RM11.4 mln in 1QFY16. (The Edge Daily)

MMS Ventures Bhd's 2Q2016 net profit advanced 59.9% Y.o.Y to RM5.7 mln, alongside a 75.5% Y.o.Y jump in revenue to RM20.1 mln. A one sen dividend, payable on 17th October, 2016, was declared.

The group’s cumulative 1H2016 net profit stood at RM5.5 mln, translating into a 5.0% Y.o.Y gain, due to fair value adjustments made on other investments and forex gains. (The Edge Daily)

Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) and Terengganu state government-linked corporation Eastern Pacific Industrial Corp Bhd (EPIC) have established a 70:30 joint-venture (JV) to provide repair services for marine vessels, including dry docking repair, refit, refurbishment, maintenance and technical solutions at the ship repair facility located in Kemaman, Terengganu.

MMHE and EPIC have purchased a 5,000-tonne floating dock from South Korea's Yeisu Ocean Co Ltd, which was completed on 19th July 2016 and delivered to Kemaman on 30th July 2016 for the venture. (The Star Online)

White Horse Bhd's 2Q2016 net profit plunged 75.3% Y.o.Y to RM4.0 mln, in comparison to RM16.1 mln in the same quarter a year earlier, mainly due to higher production and operating costs, together with a weaker Ringgit. On the other hand, revenue improved marginally by 0.5% Y.o.Y to RM185.8 mln, from RM184.9 mln previously.

Cumulative 1H2016 net profit shed 35.9% Y.o.Y to RM21.3 mln vs. RM33.2 mln in the previous corresponding period, mainly due to lower revenue contribution that fell 8.4% Y.o.Y to RM355.5 mln, from RM388.0 mln a year ago. (The Edge Daily)

Marco Holdings Bhd registered a 23.3% drop in its 2Q2016 net profit to RM3.9 mln, compared to RM5.1 mln a year ago, on the back of tightening margins due to stiff competition. Revenue, however, expanded 27.5% Y.o.Y to RM45.5 mln, from RM35.7 mln in 2Q2015.

From a cumulative perspective, Marco's 1H2016 net profit lost 25.4% Y.o.Y to RM7.6 mln, from RM10.2 mln in 1HFY15, despite revenue gaining 15.4% Y.o.Y to RM94.2 mln, from RM81.6 mln a year earlier. (The Edge Daily)

Chemical Company of Malaysia Bhd (CCM) has procured a five-year term loan of RM100.0 mln from Affin Islamic Bank Bhd to refinance its borrowings of non-rated sukuk musyarakah, which is maturing on 25th August 2016. The borrowings will expire on 16th August 2021. (Bernama)

V.S. Industry Bhd has clinched a US$82.0 mln contract for the manufacturing of new model of coffee brewer from one of its existing key customers. The three-year contract is the first full own-brand manufacturing (ODM) model of coffee brewer by V.S. Industry for the customer and the customer has granted exclusive manufacturing rights to the group for the first 18 months. (The Star Online)

Malayan Banking Bhd's (Maybank) investment banking unit, Maybank Kim Eng and Mizuho Securities Co has formed a partnership to grow their equity brokerage businesses in Asia.

The collaboration will enhance the group’s exposure to Mizuho's institutional clients in Japan, while Mizuho's institutional clients will gain access to Maybank Kim Eng's research reports and corporate services. (The Star Online)

Source: M+ Online Research - 17 Aug 2016