The FBM KLCI (-0.9%) trended lower for the third straight session, taking cue from the dour market sentiments on Wall Street overnight. Selling pressure was evident among selective telco and banking blue chip stocks. Both the lower liners and the broader market continues to trend lower with the exception of Plantations (+0.1%) sector which outperformed the latter segment.

Market breadth remained negative as losers outpaced gainers on a ratio of 2-to- 1 stocks. Traded volumes, however, rose 3.6% to 1.40 bln shares as the selling pressure in selected lower liners intensified.

More than two-thirds of the key index constituents were in the red, led by BAT (- 52.0 sen), followed by Hong Leong Financial Group (-36.0 sen), PPB Group (- 34.0 sen), Hong Leong Bank (-32.0 sen) and Axiata (-18.0 sen). Notable decliners on the broader market include Panasonic Malaysia (-22.0 sen), UMW (-21.0 sen), Dutch Lady (-18.0 sen) and Heineken Malaysia (-18.0 sen). Despite bagging three subcontract works, AWC slipped 1.0 sen.

In contrast, United Plantations (+34.0 sen), Bursa Malaysia (+22.0 sen), Choo Bee (+15.0 sen) and LPI Capital (+14.0 sen) were among the biggest advancers on the broader market. Three-A Resources added 4.0 sen after proposing a one-for-four bonus shares. There were only four gainers on the FBM KLCI –Hap Seng (+8.0 sen), Astro (+7.0 sen), PPB Group (+6.0 sen) and Westports (+2.0 sen).

Asia benchmark indices closed lower as the Nikkei fell 0.7%, dragged down by the weakness in banking stocks. The Shanghai Composite (-0.7%) fell to a onemonth low but was supported marginally above the 3,000 psychological level, while the Hang Seng Index closed 0.1% lower after enduring a choppy trading session. ASEAN stockmarkets, meanwhile, ended mostly lower.

Albeit opening higher at the start of the trading bell, US stockmarkets closed mostly lower overnight as the Dow and the S&P 500 fell another 0.2% and 0.1% respectively after crude oil prices extended its slide. Investors were also concerned that the market’s weakness could prolong. The Nasdaq, however, gained 0.4%.

European benchmark indices also ended mostly lower as the CAC and DAX fell 0.4% and 0.1% respectively after the Eurozone’s industrial production data for July fell 1.1% M.o.M - below economists’ expectations of 0.9% fall. The FTSE (+0.1%), however, outperformed ahead of the Bank of England monetary policy meeting.

THE DAY AHEAD

With global market sentiments remaining dour, coupled with the shortened trading week, we expect stocks on Bursa Malaysia to continue their slide over the near term. As it is, the selling is still prevalent amid the uncertain market direction that is clouded by the combination of continuing economic weakness, high stock valuations and undetermined interest rate direction.

Market participants were also disappointed that many Central Banks are holding back further stimulus measures, thereby hurting sentiments. Under the prevailing environment, we think the FBM KLCI could slip further and to below the 1,660 level. The sustained downside could see the key index finding support at the 1,650 level. Given the weak sentiments, any recovery will be mild and limited to the 1,670 level.

COMPANY BRIEF

Eita Resources Bhd was a project worth RM15.2 mln to supply and install 18 units of lifts. The group had received a letter of award (LoA) as the a sub-contractor from Kerjaya Prospek (M) Sdn Bhd to supply, deliver, install, test and commission the lift service works for a serviced apartments and office suites development project in Kuala Lumpur for Tetuan Nusmetro Property Sdn Bhd. Eita expects the subcontract to be completed by 31st October, 2019. (The Edge Daily)

Astro Malaysia Holdings Bhd registered an 8.6% Y.o.Y fall in its 2QFY17 net profit to RM125.4 mln, from RM137.2 mln last year – mainly due to the weaker Ringgit, and despite higher revenue which grew 4.3% Y.o.Y to RM1.43 bln from RM1.37 bln a year ago.

Cumulative 1HFY17 net profit rose 7.2% Y.o.Y to RM327.6 mln from RM305.5 mln in the last corresponding year as revenue gained 3.9% Y.o.Y from RM2.7 bln in 1HFY16 to RM2.8 bln.

The group also declared a second interim dividend of three sen, which was payable on 13th October 2016. (The Star Online)

Willowglen MSC Bhd has signed a shareholders’ agreement with Secura Group Ltd, a Singapore Exchange Catalist Board listed entity, in a bid to expand its current range of security solutions, systems and services.

Under the agreement, the parties will incorporate a 50:50 joint-venture company (JV) known as Secura Malaysia Sdn Bhd which will provide the cyber security, homeland security, security consultancy, security systems integration and other security products and services in the country. (The Edge Daily)

Practice Note 17 (PN17) company, EKA Noodles Bhd was granted a 90-day restraining order, from the Penang High Court to prevent further proceedings or actions taken against the company and its eight wholly-owned subsidiaries, starting from 9th September 2016.

The restraining order will allow the group ample time to focus its efforts on formalising a scheme of arrangement with its creditors. (The Edge Daily)

Malaysia Packaging Industry Bhd (Maypak) has announced that the trading activities for its shares will be suspended on 15th September 2016, pending a material announcement.

Its most recent development was Taisei Lamick Co Ltd purchasing a 55.0% equity stake in Maypak from Toyo Seikan Co Ltd for RM3.8 mln in July, making it the largest shareholder in the group and triggering a mandatory general offer. (The Edge Daily)

LBS Bina Group Bhd has decided to streamline its construction business under its 51.2%-owned subsidiary ML Global Bhd (MGB), following the disposal of its 75.0%-indirectly owned shareholding in MITC Engineering Sdn Bhd (MITCE) to MGB for RM225.0 mln.

The consideration will be satisfied via the allotment and issuance of 200.8 mln ordinary shares of 50.0 sen each in MGB at a price of 67.0 sen a share to MITC Sdn Bhd, which holds the 75.0% equity interest in MITCE.

Further, some 135.0 mln new Irredeemable Convertible Preference Shares of 50.0 sen each in MGB will also be issued at the price of 67.0 sen per share to MITC.

In conjunction with the disposal, MITC is planning to undertake a proposed placement of up to 45.0 mln shares to third party investors. (The Star Online)

Melewar Industrial Group Bhd (MIG), which was slapped with Unusual Market Activity (UMA) query by Bursa, said that the rally in the stock price of its subsidiary, Mycron Steel Bhd could be the reason for the recent surge in MIG’s share price.

The rise in the group’s share price could also be attributed to its better 4QFY16 results, as well as the revaluation exercise undertaken by the group on its land, buildings, plant, machinery and electrical installation. (The Star Online)

Source: M+ Online Research - 15 Sep 2016