The FBM KLCI fell 0.4% last Friday after the key index traded largely in the negative territory throughout the entire trading session, dragged down by selling pressure on selective banking and telco heavyweights. Still, the FBM KLCI managed to close 0.2% W.o.W higher, rising for the third straight week. The lower liners closed in the red as selected stocks saw heavy selling that affected sentiments on the broader market, but the Plantations sector (+0.7%) outperformed the negative broader market.

Market breadth stayed negative as losers outstripped gainers on a ratio of 523-to- 319 stocks. Traded volumes, however, fell 29.4% with 2.20 bln shares on profit taking activities.

More than two-thirds the key index constituents fell, dragged down by PPB Group (-16.0 sen), followed by Axiata (- 14.0 sen), BAT (-12.0 sen), Sime Darby (- 7.0 sen) and Maxis (-7.0 sen). Among the biggest decliners on the broader market were Dutch Lady (RM-1.44), United Plantations (-50 sen), United-Uli Corporation (-40.0 sen) and POS Malaysia (-24.0 sen). MPI slipped 19.0 sen despite reporting a strong set of quarterly earnings.

On the other side of the trade, Apex Healthcare (+26.0 sen), Petron Malaysia (+14.0 sen), Padini (+13.0 sen) and DRBHiCom (+12.0 sen) led by broader market gainers list. Aluminium Company of Malaysia jumped 9.5 sen after receiving a takeover offer from Kian Joo Can Factory Bhd’s MD, Mr. Yeoh Jin Hoe for RM0.61 per share. There were only three advancers on the FBM KLCI - KLK (+8.0 sen), IOI Corporation (+4.0 sen) and SapuraKencana Petroleum (+1.0 sen).

Asian benchmark indices closed mostly higher last Friday as the Nikkei (+0.4%) extended its gains, albeit it fell 2.2% W.o.W. The Shanghai Composite added 0.1% to close positive in the final trading hour, while the Hang Seng Index (-0.4%) retreated from its YTD high. ASEAN indices, meanwhile, ended mixed.

U.S. stockmarkets ended lower but managed to trim most of their intraday losses as the Dow fell 0.2%, dragged down by selling pressure on Wal-Mart Stores Inc. (-2.0%). On the broader market, the S&P 500 declined 0.1% as utilities (-1.2%) and telecommunication (-0.9%) sectors took a beating. Although the Nasdaq ended 0.03% lower, it managed to record its eighth consecutive weekly gain.

European benchmark indices - the FTSE (-0.2%), CAC (-0.8%) and DAX (-0.6%), trended lower, pressured by banking and mining stocks. Meanwhile, Germany’s Producer Price Index (PPI) for July fell 2.0% Y.o.Y, but came above economists’ expectations of a 2.1% Y.o.Y fall.

THE DAY AHEAD

We see further near term downside as the Malaysian stockmarket continues to consolidate after their recent near term gains and its inability to clear the 1,700 points level. At the same time, the toppish market environment is also leaving little space for the FBM KLCI to climb further over the near term, in our view. Similarly, sentiments are also turning increasingly guarded after the selldown of some lower liners later last week and the cautiousness is likely to prevail at the start of the week.

Therefore, we think the FBM KLCI could retrace back to the 1,680 level, where there should be some ample support for now. On the upside, the 1,700 points level remains the main resistance level.

Meanwhile, we think there will be increasing volatility among the lower liners and broader market shares as retail investors may be spooked by the selldown in selected stocks like United U-Li, SCGM and Pecca. Therefore, we see further near term profit taking on the lower liners as retail investors retreat to the sidelines.

COMPANY BRIEFS

Affin Holdings Bhd reported a marginal decline of 1.4% Y.o.Y in its 2Q2016 net profit to RM137.4 mln, from RM139.4 mln a year earlier, due to higher taxation. Revenue for the quarter was higher at RM476.7 mln, compared to RM449.2 mln in the previous corresponding period.

Its cumulative 1H2016 net profit jumped 49.3% Y.o.Y to RM253.0 mln, from RM169.5 mln 1H2015 – due to higher net interest income and Islamic banking income. Revenue meanwhile, grew 2.9% Y.o.Y to RM903.6 mln, in comparison to RM877.9 mln in 1H2015. (The Edge Daily)

Lii Hen Industries Bhd’s 2Q2016 net profit expanded 34.4% Y.o.Y to RM17.0 mln, from RM12.6 mln a year earlier - on the back the stronger Greenback, while revenue increase 4.5% Y.o.Y to RM144.5 mln, from RM138.2 mln in 2Q2015.

The cumulative 1H2016 net profit stood at RM38.1 mln, a 62.8% Y.o.Y increase from RM23.4 mln previously as revenue expanded 23.8% Y.o.Y to RM309.9 mln, compared to RM250.4 mln in the previous corresponding period. The group proposed a second dividend of 4.0 sen per share, payable on 23th September 2016. (The Edge Daily)

Elsoft Research Bhd’s 2Q2016 net profit rose more than five-fold to RM10.4 mln, from RM1.9 mln a year earlier – mainly due to higher revenue and foreign exchange gains. Quarterly revenue surged 239.6% Y.o.Y to RM18.4 mln, from RM5.4 mln in 2Q2015, on the back of higher demand from the automotive industry and smart devices industry.

Cumulative 1H2016 net profit spiked 80.8% Y.o.Y to RM11.9 mln, from RM6.6 mln previously – the jump mainly attributed to the improved 2Q2016 earnings, while revenue stood at RM28.6 mln, from RM15.7 mln last year. Elsoft is also proposing an interim dividend of 3.0 sen per share, payable on 29th September 2016. (The Edge Daily)

Tan Chong Motor Holdings Bhd sunk into the red with a 2Q2016 net loss of RM14.6 mln, compared with a net profit of RM14.2 mln a year ago, although revenue rose 8.7% Y.o.Y to RM1.37 bln, from RM1.26 bln in 2Q2015. The net loss was attributed to higher operating costs.

Meanwhile, its cumulative 1H2016 net loss stood at RM51.8 mln, from net profit of RM40.5 mln last year, due to intense competition and the weakening Ringgit, while revenue flatlined at RM2.84 bln, compared to RM2.83 bln a year earlier. An interim dividend of 1.0 sen per share which is payable on 29th September 2016 was declared. (The Edge Daily)

Kian Joo Can Factory Bhd’s 2Q2016 net profit gained 11.9% Y.o.Y to RM39.5 mln, from RM35.3 mln a year ago, buoyed by higher revenue, which rose 12.0% Y.o.Y to RM438.9 mln, compared to RM391.8 mln.

However, its cumulative 1H2016 net profit decreased 19.2% Y.o.Y to RM51.4 mln, from RM63.6 mln in 1H2015, due to forex losses, higher operating and finance expenses, despite revenue rising 17.5% Y.o.Y to RM866.9 mln, from RM737.7 mln in the previous corresponding year. (The Edge Daily)

Amcorp Properties Bhd saw its 1QFY17 net profit slide 92.1% Y.o.Y to RM4.5 mln, from RM56.9 mln a year ago as the previous period included a gain on disposal of the Merchant Square in London. Meanwhile, revenue expanded 27.4% Y.o.Y to RM43.8 mln, from RM34.4 mln.

The group said that revenue contributions from Malaysian property projects stood at RM20.3 mln, while renewable energy and contracting division contributed revenues of about RM23.5 mln in 1QFY17.

Tune Protect Group Bhd registered a 64.0% Y.o.Y hike in its 2Q2016 net profit to RM26.5 mln, from RM16.1 mln a year ago – attributed to higher pretax profit of RM16.3 mln in general insurance and RM400,000 in general reinsurance. Revenue was also up 8.9% Y.o.Y to RM125.5 mln, from RM115.2 mln in 2Q2015.

The group’s cumulative 1H2016 net profit climbed 50.5% Y.o.Y to RM49.1 mln, in comparison to RM32.6 mln last year, on the back of improved net earned premiums and other revenue, on top of lower net claims. Revenue advanced 12.6% Y.o.Y to RM255.1 mln, from RM226.5 mln in the previous corresponding period. (Bernama)

CSC Steel Holdings Bhd's 2Q2016 net profit almost tripled to RM29.3 mln, from RM10.5 mln a year ago, supported by lower cost of production as hot rolled steel prices fell. Revenue for the quarter rose 4.4% Y.o.Y to RM269.7 mln, from RM258.3 mln in 2Q2015.

CSC reported a 141.3% Y.o.Y jump in its cumulative 1H2016 net profit to RM38.3 mln, from RM15.9 mln due to the aforementioned reasons, despite its revenue falling by 11.2% Y.o.Y to RM490.7 mln, from RM552.7 mln previously. (The Edge Daily)

Perisai Petroleum Teknologi Bhd have secured a six-month extension for the charter of a floating production, storage and offloading (FPSO) facility at the North Malay Basin worth US$45.0 mln (RM180.7 mln). Perisai’s 40.0%-owned associate company, Larizz Petroleum Services Sdn Bhd and Hess Exploration and Production Malaysia BV have agreed to extend the contract until 31st May 2017 with an option to extend the charter on a monthly basis for up to 12 months. (The Edge Daily)

WZ Satu Bhd has clinched a RM70.8 mln contract from the joint-venture (JV) company of Q Bena Resources Sdn Bhd and Prisma Simfoni Sdn Bhd to undertake civil roadworks for parts of the proposed West Coast Expressway.

The project works include the construction and completion of the new alignment of roadworks for approximately 20.0 km of Section 10 (Changkat Cermin to Beruas Interchange) – covering earthworks, geotechnical and soil investigation works, bridges and retaining structures works, utilities and services works, as well as health, safety and environmental protection works.

The contract is expected to take about 30 months to complete. (The Star Online)

Vivocom Intl Holdings Bhd has bagged a turnkey contract to build two 18-storey apartment blocks in Chepor Batu 10, Perak for RM100.0 mln, from Green Ventures Development Sdn Bhd. (The Edge Daily)

Pharmaniaga Bhd's 2Q2016 net profit contracted 7.5% Y.o.Y to RM15.0 mln, from RM16.2 mln a year earlier, on the back of higher amortisation of the Pharmacy Information System and increased finance costs, despite higher revenue, which was 3.7% Y.o.Y higher at RM531.8 mln vs. RM512.9 mln.

Cumulative 1H2016 net profit was down 30.5% Y.o.Y from RM48.0 mln previously, to RM33.4 mln due to the above mentioned reasons. Revenue, however, grew 10.8% Y.o.Y to RM1.09 bln, from RM984.7 mln last year. The group has propose a second interim dividend of five sen per share payable on 20th September 2016. (The Star Online)

Zelan Bhd is seeking to claim AED452.8 mln (RM495.6 mln) from Meena Holdings LLC for breach and defaults of contract for the Meena Plaza mixed use development project in Abu Dhabi, the United Arab Emirates. (The Edge Daily)

Three-A Resources Bhd's 2Q2016 net profit surged 30.6% Y.o.Y to RM9.1 mln, from RM7.0 mln a year ago – mainly due to higher revenue and product margins, as well as forex gains. Revenue for the quarter rose 4.5% Y.o.Y to RM96.9 mln, from RM92.8 mln in 2Q2015.

For 1H2016, Three-A’s net profit jumped 50.6% Y.o.Y to RM15.8 mln, compared to RM10.5 mln alongside revenue, which gained 22.2% Y.o.Y to RM204.5 mln, from RM167.3 mln last year. (The Edge Daily)

Source: M+ Online Research - 22 Aug 2016