The FBM KLCI endured a choppy trading session yesterday before closing 0.1% higher, lifted by the firmer Ringgit against the Greenback, coupled with the gains in crude oil prices. The lower liners – FBM Small Cap (+0.4%), FBM Fledgling (+0.01%) and FBM ACE (+0.1%) all advanced, while the Industrial (-0.3%), Consumer Products (-0.4%) and Mining (- 3.2%) underperformed the mostly positive broader market.

Market breadth remained positive as gainers edged losers on a ratio of 402-to- 374 stocks. Traded volumes added 8.2% to 1.69 bln shares on rotational play among the lower liners.

Anchoring the gainers on the FBM KLCI were KLCC (+20.0 sen), Genting (+15.0 sen), KLK (+10.0 sen), Maybank (+5.0 sen) and PPB Group (+4.0 sen). Leading the advancers list on the broader market were Scientex (+25.0 sen), followed by SAM Engineering (+23.0 sen), United Uli- Corporation (+20.0 sen), MPI (+18.0 sen) and Latitude Tree (+14.0 sen).

In contrast, consumer products heavyweights like Dutch Lady (-RM1.34), Panasonic (-70.0 sen), Nestle (-60.0 sen), Heineken Malaysia (-46.0 sen) and Ajinomoto (-18.0 sen) topped the broader market losers list. Meanwhile, Hong Leong Financial Group (-24.0 sen), Petronas Dagangan (-6.0 sen), Genting Malaysia (-6.0 sen), Sime Darby (-4.0 sen) and Public Bank (-4.0 sen) were among the biggest big board decliners.

Japanese stockmarkets extended their losses as the Nikkei fell 0.3%, dragged down by financial stocks after the Bank of Japan will not rule out of further negative interest rates. The Shanghai Composite added 0.1% after exports data in July 2016 rose for the first time in two years, while the Hang Seng Index closed 0.8% higher. ASEAN stockmarkets, meanwhile, ended mixed.

Wall Street closed lower overnight as the Dow fell 0.3% after Apple Inc (-2.6%) newly launched iPhone 7 failed to impress. On the broader market, the S&P500 declined 0.2%, dragged down by the technology sector (-0.9%), which offset the gains in the energy sector (+1.7%) after crude oil price rallied, while the Nasdaq (-0.5%) snapped a four winning-day streak.

European benchmark indices ended mostly lower as the CAC and DAX fell 0.3% and 0.7% respectively after the European Central Bank has held off additional stimulus measures. The FTSE, however, added 0.2%, after Micro Focus (+14.5%) is acquiring the software arm of Hewlett Packard Enterprise for £6.60 bln.

THE DAY AHEAD

We continue to think that the key index is at the crossroads after its recovery from the 1,670 level a week ago as sentiments are turning indifferent amid the toppish market conditions. As it is, there appears to be some hesitation on the key index’s part to clear the 1,690 level convincingly as bouts of profit taking are curbing the upsides.

Therefore, we expect the mild profit taking spell to keep the key index near the 1,690 level ahead of the weekend as there was also weakness on key overseas indices overnight.

The lower liners and broader market shares are also likely to see the mixed trading trend as retail players still on the cautious side.

COMPANY BRIEF

The trading of securities of LBS Bina Group Bhd and its construction subsidiary ML Global Bhd has been suspended for three market days starting 9th September 2016 pending a material announcement.

Earlier in April 2016, LBS Bina had made a mandatory general offer (MGO) to buy out the remaining shares in ML Global it did not own for 56.0 sen each and the remaining warrants for 6.0 sen each.

The MGO was triggered after the company purchased 17.0 mln ML Global shares from former Managing Director Datuk Beh Hang Kong, raising its stake in the company from 32.0% to 50.9%. Only a few minority shareholders took up LBS’ offer by the closing date. (The Star Online)

Berjaya Auto Bhd’s (BAuto) 60.4%-owned subsidiary, Bermaz Auto Philippines Inc (BAP) plans to seek a listing on the Main Board of the Philippine Stock Exchange. BAP is involved in the distribution of Mazda vehicles and spare parts through appointed dealers in the Philippines.

Separately, BAuto’s 1QFY17 net profit fell 21.0% Y.o.Y to RM41.1 mln due to lower sales volume in Malaysia and compressed gross profit margin as the Japanese Yen strengthened against the Ringgit. Revenue for the quarter dropped 4.0% Y.o.Y to RM493.6 mln. A first interim dividend of 3.0 sen per share was declared. (The Star Online)

Pecca Group Bhd’s 60%-owned subsidiary, Pecca Leather Aviation Services Sdn Bhd (PAviation) has secured approval from the Department of Civil Aviation (DCA) to extend its work scope in aviation leather upholstery. The approved services included the wrapping, cutting and sewing of leather or fabric seat covers and cabin interior sidewall and ceiling panel. (The Star Online)

Malaysian Rating Corp Bhd (MARC) has downgraded DRB-Hicom Bhd's senior debt rating due the conglomerate's weakened credit metrics that are more in line with the lower rating band.

MARC has downgraded its rating on DRB-Hicom's Islamic Medium-Term Notes (IMTN) Programme of up to RM1.80 bln to A+IS from AA-IS. Concurrently, the rating for its Perpetual Sukuk Musharakah Programme of up to RM2.00 bln has been lowered to A-IS from AIS. (The Edge Daily)

Sterling Progress Bhd intends to cancel 7.5 sen off the par value of its ordinary shares of 10.0 sen each to 2.5 sen to eliminate existing accumulated losses with the credit arising from the cancellation of its share capital. It plans to then consolidate every four ordinary shares of 2.5 sen each into one new ordinary share of 10.0 sen each.

The issued and paid-up share capital prior to the announcement, as at 7th September 2016, is RM98.9 mln comprising 989.2 mln shares, with 315.0 mln outstanding warrants and 296.8 mln ESOS options. The proposed par value reduction could give rise to a credit of at least RM74.2 mln — assuming none of the warrants and options were converted prior to that — or as much as RM120.1 mln if the outstanding warrants and options were fully converted. (The Edge Daily)

O&C Resources Bhd's 70%-owned subsidiary, Pangkal Teguh Sdn Bhd has been appointed as the project management consultant by Yayasan Pahang for a proposed affordable housing development scheme comprising 25,000 residential units in Pahang.

Pangkal Teguh is expected to earn an average of 4.8% of the gross development value (GDV) of the said project, or approximately RM91.0 mln from the management contract over the seven-year construction period. (The Edge Daily)

Khazanah Nasional Bhd is reportedly planning to divest part of its stake in Tenaga Nasional Bhd (TNB). Khazanah is looking to sell 82.0 mln shares of TNB, or about 1.5% of the total shares outstanding, which could raise up to RM1.20 bln. The fund is looking to sell the stake at RM14.30–RM14.56 per share. (The Edge Daily)

Source: M+ Online Research - 9 Sep 2016