The FBM KLCI (-0.3%) snapped a streak of five consecutive sessions of gains yesterday as the key index traded in the negative territory throughout the trading session. The lower liners, however, ended mostly higher with the FBM Fledgling and FBM Ace closing 0.1% and 0.3% higher respectively, while the Properties (+0.2%), Plantations (+0.01%) and Mining (+0.9%) sectors outperformed the negative broader market.

Market breadth turned negative as losers outstripped gainers on a ratio of 517-to- 323 stocks. Traded volumes, however, gained 10.0% to 3.12 bln shares, on rotational play amongst the lower liners.

Key losers on the FBM KLCI were BAT (- RM1.90), Hong Leong Financial Group (- 12.0 sen), Astro (-10.0 sen), Axiata (-9.0 sen) and MISC (-8.0 sen). Meanwhile, United-Uli Corporation slipped 75.0 sen to close lower for the third straight session while other notable decliners on the broader market include Oriental Holdings (-35.0 sen), SLP Resources (-30.0 sen), SCGM (-26.0 sen) and Ajinomoto (-18.0 sen).

On the other side of the trade, United Plantations (+48.0 sen), Air Asia (+15.0 sen), PRG Holdings (+11.0 sen) and Power Root (+10.0 sen) were amongst the biggest gainers on the broader market. Bison added 8.0 sen to close at a fresh new high. Significant advancers on the key index include PPB Group (+6.0 sen), Public Bank (+4.0 sen), KLCC (+3.0 sen), Genting Malaysia (+2.0 sen) and Maxis (+2.0 sen).

The Nikkei added 0.9% after banking stocks such as Mitsubishi UFJ Financial Group (+2.6%) and Mizuho Financial Group (+2.1%) advanced. Market reaction, however, were muted after China approved the new mainland stock link to Hong Kong as the Shanghai Composite (-0.02%) closed marginally lower, while the Hang Seng Index (-0.5%) slipped into the red in the final trading hour. ASEAN indices, meanwhile, ended mostly negative.

US stockmarkets closed marginally higher overnight as the Dow (+0.1%) recouped all its intraday losses as investors digested the latest Federal Reserve policy meeting on the timing of interest rates hike. On the broader market, the S&P 500 added 0.2% with seven of the ten main sectors advanced, while the Nasdaq closed 0.03% higher.

Earlier, European benchmark indices - the FTSE (-0.5%), CAC (-1.0%) and DAX (-1.3%), all extended their losses ahead of the release of the U.S. Federal Reserve minutes. Meanwhile, U.K.’s unemployment rate in June held steady at 4.9% - in line with economists’ estimates.

THE DAY AHEAD

Yesterday’s consolidation spell is relatively mild as there was still some mild support among the index heavyweights with market conditions remained relatively calm. At the same time, there are also few compelling leads for investors to follow and consequently, we think that the FBM KLCI is likely to stay rangebound over the near term as market players await for fresh catalysts.

We see the key index trending within the 1,690 and 1,700 levels over the near term and as valuations are already toppish, the 1,700 points level may still prove to be a difficult hurdle to pass convincingly.

In the meantime, rotational interest on the lower liners and broader market shares are still on high and will continue to draw-in retail players.

COMPANY BRIEFS

Paramount Corp Bhd’s 2Q2016 net profit soared 70.0% Y.o.Y to RM23.9 mln, from RM14.1 mln last year, on better performance from its property division. Revenue jumped 26.1% Y.o.Y to RM145.3 mln, from RM115.3 mln in 2Q2015.

For 1H2016, however, Paramount’s net profit slipped 9.8% Y.o.Y to RM33.6 mln, compared to RM37.2 mln a year ago, alongside revenue, which fell 7.7% Y.o.Y to RM258.6 mln - emanating from lower net interest income and higher share of loss from its associate. The group ha also declared an interim single tier dividend of 2.5 sen per share, to be paid on 28th September, 2016. (The Star Online)

Malaysian Resources Corp Bhd (MRCB) plans to dispose of the Eastern Dispersal Link (EDL) Expressway in Johor, as it is not part of its core business and accounts for 36.0% of its debt. The sale of the EDL will see its gearing fall to 0.5x. (The Edge Daily)

Ranhill Holdings Bhd’s unit, Ranhill Water Services Sdn Bhd has secured a one-year contract worth RM15.9 million for non-revenue water (NRW) services in Kelantan from Air Kelantan Sdn Bhd.

The contract is to provide services for areas of Kota Bharu Utara, Kota Bharu Timur, Kota Bahru Selatan, Bachok, Pasir Mas, Tumpat and Tanah Merah. (The Edge Daily)

Direct-selling company, Amway (M) Holdings Bhd’s 2Q2016 net profit contracted 40.0% Y.o.Y to RM6.2 mln, from RM10.2 mln a last year, on the back of higher import costs resulting from the weaker Ringgit and higher product price, as well as increased operating expenses. Revenue, however, jumped 43.0% Y.o.Y to RM268.9 mln, from RM188.0 mln in 2Q2015.

For 1H2016, Amway's net profit slumped 48.5% Y.o.Y to RM24.2 mln, from RM47.1 mln in the last corresponding year – dragged down by higher operating costs, even as revenue climbed 12.7% Y.o.Y to RM574.8 mln, from RM510.0 mln in 1H2015.

The group is proposing a second interim single tier dividend of 5.0 sen per share, which is payable on 15th September 2016. (The Edge Daily)

Malaysian Bulk Carriers Bhd's (Maybulk) 2Q2016 net loss widened by 90.9% Y.o.Y to RM40.3 mln, pulled down by its 21.3%-owned associate, PACC Offshore Services Holdings Ltd (POSH) in Singapore and continuously weak dry bulk market. Revenue also fell by 4.8% Y.o.Y to RM55.4 mln, from RM58.1 mln.

For 1H2016, its net loss widened to RM64.4 mln, in comparison to RM43.9 mln in the same period last year, due to the aforementioned reasons, as well as higher finance costs. Revenue was relatively unchanged at RM108.9 mln vs. RM109.9 mln a year earlier. (The Star Online)

Pestech International Bhd has secured a RM37.8 mln contract from the National Grid Corp of the Philippines (NGCP) to upgrade secondary devices and construct a separate protection/control building for unmanned operation of the Tiwi Geothermal Power Plants A and C substations in the country. The contract marks the group’s entry into the Philippines' power infrastructure market.

The contract is divided into two parts — a foreign currency portion worth US$7.0 mln (RM28.1 mln) and a local currency portion worth 111.0 mln peso (RM9.6 mln). (The Star Online)

Malakoff Corp Bhd’s 2Q2016 net profit soared 50.2% Y.o.Y to RM129.6 mln, from RM86.3 mln a year ago, attributed to insurance claim on rotor replacement and lower losses from its associates. Meanwhile, revenue improved 17.8% Y.o.Y to RM1.53 bln, from RM1.30 bln in 2Q2015

Malakoff’s cumulative 1H2016 net profit grew 12.4% Y.o.Y to RM213.7 mln, while revenue rose 8.6% Y.o.Y to RM2.87 bln, compared to RM2.64 bln. The improved bottom line was due to a lower net loss of its associates and joint-ventures. The group proposed an interim dividend of 3.5 sen per share, payable on 4th October 2016. (The Star Online)

Malayan Flour Mills Bhd's (MFM) 2Q2016 net profit more than doubled to RM30.7 mln, from RM12.7 mln previously, mainly due to unrealised forex gains, coupled with lower share of loss of equity accounted for its joint venture in 2Q2016. Revenue also expanded 13.5% Y.o.Y to RM608.1 mln, from RM535.6 mln.

The favorable 2Q2016 results lifted MFM's cumulative 1H2016 net profit to RM48.3 mln, more than double the RM18.1 mln net profit in 1H2015, while revenue advanced 16.7% Y.o.Y to RM1.27 bln, from RM1.09 bln a year ago. An interim dividend of 3.0 sen per share, payable on 15th September 2016 was proposed. (The Edge Daily)

Hume Industries Bhd’s 4QFY16 net profit plunge 60.0% Y.o.Y to RM8.1 mln, from RM20.4 mln in the previous corresponding period, impacted by lower selling price and higher production costs recorded for construction materials. Revenue, meanwhile, also fell 14.0% Y.o.Y to RM148.2 mln, from RM171.8 mln.

Full-year net profit edged lower by 6.0% Y.o.Y to RM48.8 mln vs. RM52.0 mln in FY15, despite a 28.0% Y.o.Y increase in revenue to RM603.3 mln, from RM472.8 mln a year ago. (The Edge Daily)

Classic Scenic Bhd announced that its 2Q2016 net profit jumped 45.0% Y.o.Y to RM3.6 mln, in comparison to RM2.5 mln a year earlier, attributable to higher sales and lower operating expenses, while revenue expanded 6.0% Y.o.Y to RM14.4 mln, from RM13.5 mln.

Classic’s cumulative 1H2016 net profit stood at RM7.8 mln – translating into a 49.7% Y.o.Y increase from RM5.2 mln previously. The higher earnings was fuelled by lower operating expenses, a fair value gain from its foreign currency forward contracts and improved revenue, which was up 8.7% Y.o.Y to RM29.8 mln vs. RM27.4 mln in 1H2015. A first interim single tier dividend of 6.0 sen a share was declared and will be payable on 16th November 2016. (The Edge Daily)

Kuala Lumpur Kepong Bhd (KLK) registered a marginal 2.6% Y.o.Y increase in its 3QFY16 net profit to RM253.4 mln, from RM246.9 mln in the previous corresponding year, mainly due to increased contribution from its plantations, manufacturing and oleochemical divisions, albeit offset by declining performance in its property segment. Quarterly revenue was up 10.9% Y.o.Y to RM3.92 bln, from RM3.54 bln in 3QFY15.

Its cumulative 9MFY16 net profit surged 78.0% Y.o.Y to RM1.22 bln, from RM683.6 mln – mainly due to stronger revenue contribution, which was 23.1% Y.o.Y higher at RM11.96 bln, increases in other operating income and better performance from its joint-ventures. (The Star Online)

Source: M+ Online Research - 18 Aug 2016