Tracking the positive developments on key regional indices, the FBM KLCI (+0.8%) halted its steak of four consecutive sessions of losses yesterday. Gains were underpinned by buying support amongst selective plantation heavyweights. Both the lower liners and the broader market stocks advanced – the latter led by the Finance (+1.0%) index.

Market breath turned positive as advancers pipped decliners on a ratio of 467-to-319 stocks. Traded volumes added 24.3% to 1.57 bln shares.

More than two-thirds of the key index constituents rose, led by heavyweights like Genting (+17.0 sen), followed by Sime Darby (+15.0 sen), Petronas Gas (+14.0 sen), Axiata (+13.0 sen) and RHB Bank (+13.0 sen). Significant advancers on the broader market include KESM Industries (+42.0 sen), Panasonic (+32.0 sen), Aeon Credit (+28.0 sen) and Alliance Financial Group (+17.0 sen). Syarikat Takaful added 9.0 sen after reporting a strong set of quarterly earnings.

Consumer products stocks like Heineken (-32.0 sen), Carlsberg (-24.0 sen) and Ajinomoto (-20.0 sen) topped the broader market decliners list, while Tasek Corporation and Chin Teck Plantations fell 12.0 sen and 10.0 sen respectively. There were only three losers on the key index – KLCC (-3.0 sen), Petronas Dagangan (-2.0 sen) and KLK (-2.0 sen).

Asia benchmark indices advanced as the Nikkei (+0.4%) erased all its intraday losses on gains in properties and construction sector. The Shanghai Composite (+1.4%) rose ahead of a barrage of economic data due today, while the Hang Seng Index added 1.6%, lifted by property stocks. ASEAN stockmarkets, meanwhile, ended mostly higher.

U.S. stockmarket rebounded overnight as the Dow gained 0.4% after the inflation rate in September (+1.5% Y.o.Y) rose to its highest level in nearly two years coupled with better-than-expected corporate results. On the broader market, the S&P 500 added 0.6%, anchored by gains in the healthcare sector (+1.1%), while the Nasdaq ended 0.9% higher.

Earlier, European benchmark indices – the FTSE (+0.8%), CAC (+1.3%) and DAX (+1.2%) all recovered from their previous session sell-offs, taking cue from the positive sentiment across Asian strockmarkets. Notable gainers include mining companies like Glencore (+3.2%), Anglo American (+1.7%) and BHP Billiton (+1.6%).

THE DAY AHEAD

The tide changed quickly yesterday on speculation that the Federal Reserve may hold back its interest rate hike or implement a gradual pace of hike amid the still challenging economic recovery prospects. Consequently, market players took a positive view on the prolongation of the loose monetary environment to bargain hunt on some beaten down stocks that led to the FBM KLCI’s strong gains yesterday.

We think there could be more near term upsides on Bursa Malaysia on the back of the improved market sentiments and investors could again speculate on the Budget contents to be announced this Friday.

However, we think the upsides will become choppier as we think some quick profit taking activities could emerge after yesterday’s hefty gains. On the upside, the next resistance is at the 1,670 level, followed by the 1,680 level. The key support remains at the 1,650 level.

COMPANY BRIEFS

Top Glove Corp Bhd expects to grow its sales volume by 10.0% per annum, driven by its capacity expansion plans. The group is also planning to ramp-up its nitrile gloves production capacity to 58.8 bln glove pieces, from 46.6 bln glove pieces a year currently via an additional 112 lines by 2020.

Moving forward, four factories are slated to be opened within the next two years, in F6 Phuket, Thailand, F30 and F31 (Phase 1 and 2). (The Star Online)

Damansara Realty Bhd has entered into an agreement with Putrajaya Corporation to develop the Perumahan Penjawat Awam 1Malaysia (PPA1M) project located in Putrajaya.

The 11.9-ac. development will have an estimated gross development cost (GDV) of RM467.3 mln and will encompass 1,350 residential units as well as 45 commercial units at Presinct 5, Putrajaya. The project is slated for completion by end-2019. (The Star Online)

Pasdec Holdings Bhd is planning to undertake a capital reduction which will halve the par value of its share from RM1.00 to RM0.50 per piece. The group has also proposed a rights issue to raise up to RM34.3 mln via a renounceable two call rights issue of 114.4 mln new shares, on the basis of two rights share-for-every five existing shares.

At an indicative issue price of 50 sen, Pasdec said the first call of 30 sen will be payable in cash on application, and the second call of 20 sen is to be capitalised from the group’s reserves.

The rights issue also comes along with free detachable warrants, which will be allocated on the basis of one warrant-for every one rights share subscribed.

After the proposed capital reduction, Pasdec will acquire 12 office units via the issuance of 80.0 mln new shares at an issue price of 50.0 sen per share. The group has entered into a conditional sale and purchase agreement (SPA) with Jasa Imani Sdn Bhd for the acquisition of these office units located within a 23-storey office building called Menara Zenith in Kuantan, Pahang. The corporate exercises are expected to be completed by 1H2017. (The Edge Daily)

Selangor Dredging Bhd is planning to sell 16 pieces of freehold land in Damansara Heights, Kuala Lumpur, which collectively measures 15,751 sq. m., for RM71.0 mln cash. The group has signed an agreement with Bukit Selesa Development Sdn Bhd for the disposal, which is expected to be completed by 3Q2022.

The gains from the disposal will be used to fund the repayment of intercompany borrowings. (The Edge Daily)

HeiTech Padu Bhd has secured a three year purchase order worth RM14.9 mln from Prudential Services Asia Sdn Bhd for disaster recovery services and office rental services. (The Edge Daily)

Pantech Group Holdings Bhd's 2QFY17 net profit plummeted 51.0% Y.o.Y to RM5.1 mln against RM10.4 mln in the last corresponding period. The weakened earnings were due to subdued oil and gas industry and stiff competition. Revenue also fell 14.0% Y.o.Y to RM103.8 mln, from RM121.4 mln in 2QFY16.

The cumulative 1HFY17 net profit plunged 32.0% Y.o.Y to RM13.2 mln, from RM19.6 mln a year ago, alongside revenue which was down 12.0% Y.o.Y to RM227.8 mln from RM260.0 mln in 1HFY16. (The Edge Daily)

Tanjung Offshore Bhd is planning to acquire a RM9.8 mln freehold single storey detached factory in Hulu Langat, Selangor to save on rental following the expiry of a tenancy agreement in the 4Q2016 and to improve its corporate image.

The group has inked a sale and purchase agreement (SPA) with Public Bank Bhd, for the building annexed with a three storey office/showroom.

The group will fund the purchase via internal funds and bank borrowings. (The Edge Daily)

DBE Gurney Resources Bhd has announced that it will undertake a bonus issue of up to 2.34 bln free warrants to reward its existing shareholders. The warrants will be on the basis of one warrant-for-every two DBE Gurney shares owned by the shareholders.

The exercise price of the warrants has been fixed at 5.0 sen each for a period of five years. The corporate exercise is expected to be completed by 1Q2017, although the entitlement is not yet announced yet. (The Edge Daily)

Source: M+ Online Research - 19 Oct 2016