The FBM KLCI (+0.04%) endured a choppy trading session before closing marginally higher yesterday on the back of a firmer Ringgit against the U.S. Dollar, coupled with higher crude oil prices. The lower liners, however, closed mostly lower as the FBM Small Cap and FBM Ace fell 0.1% and 0.9% respectively, while the broader market ended mixed.

Market breath turned negative as advancers outstripped decliners on a ratio of 403-to-372 stocks. Traded volumes slipped 11.5% to 1.39 bln shares, owing to the negative market sentiment.

Leading the gainers on the big board was Genting (+10.0 sen), followed by Westports (+7.0 sen), Petronas Chemicals (+5.0 sen), Sime Darby (+5.0 sen) and Public Bank (+4.0 sen). KESM Industries (+57.0 sen) topped the broader market advancers list again, while other notable gainers were Panasonic (+50.0 sen), Lafarge (+21.0 sen), TAHPS Group (+20.0 sen), Time dotCom (+20.0 sen) and JerAsia Capital (+16.5 sen).

On the other side of the trade, significant decliners on the broader market were Fraser & Neave (-34.0 sen), Khind Holdings (-15.0 sen), Can-One (-14.0 sen) and Hong Leong Industries (-13.0 sen). Pantech slipped 1.5 sen after reporting a weak set of quarterly earnings. On the FBM KLCI, BAT (-48.0 sen), Axiata (-12.0 sen), PPB Group (-6.0 sen), YTL (-2.0 sen) and Tenaga (-2.0 sen) were amongst the biggest decliners.

Japanese stockmakrets advanced as the Nikkei (+0.2%) extended its gains for the fourth straight session. The Shanghai Composite (+0.03%) ended relatively flat after its 3Q2016 GDP rose 6.7% Y.o.Y – coming in line with economists’ estimates, but the Hang Seng Index
closed 0.4% lower. ASEAN stockmarkets, meanwhile, ended mixed.

U.S. stockmarket extended their gains as the Dow added 0.2% after Morgan Stanley (+1.9%) latest quarterly earnings beat estimates. On the broader market, the S&P 500 gained 0.2%, boosted by the rally in energy sector (+1.4%) after crude oil prices rose to its highest level in 15 months.

Despite opening lower at the trading bell, European benchmark indices – the FTSE (+0.3%), CAC (+0.3%) and DAX (+0.1%) all recovered from their intraday losses. The rally in crude oil prices sent oil producers like Repsol SA (+1.5%), Lundin Petroleum (+1.4%) and BP (+0.9%) higher.

THE DAY AHEAD

The key index still finds it difficult to spring past the 1,670 level as the buying interest have not been sufficiently firm to lead it higher. As it is, there is still some measure of hesitation on the part of most investors on the sustainability of the market’s uptrend with the lack of sustainable leads.

Therefore, we think the FBM KLCI is likely to continuing taking small strides as it approaches the 1,670 resistance, which we think will continue to serve as a key resistance. We also think that the key index could remain firm and well supported ahead of the Budget announcement tomorrow. The steady market will be helped by bargain hunting activities on oil and gas related companies as crude oil prices continue to recover.

We also think that the lower liners and broader market environment should remain steady amid the calmer market environment.

COMPANY BRIEFS

Digi.Com Bhd registered a 10.5% Y.o.Y increase in its 3Q2016 net profit to RM438.4 mln, from RM396.6 mln a year earlier – boosted by favourable foreign exchange (forex) and derivative gains, as well as lower cost. Revenue however, lost marginally by 3.0% Y.o.Y to RM1.62 bln from RM1.67 bln in 3Q2015.

The group’s cumulative 9M2016 net profit, however, fell 6.0% Y.o.Y to RM1.26 bln against RM1.34 bln in the previous corresponding year, in-tandem with the 5.0% Y.o.Y drop in revenue at RM4.93 bln, from RM5.19 bln last year. Digi has proposed an interim dividend of 5.6 sen a share, payable on 30th December 2016

Looking ahead, Digi expects the company growth to stem from the postpaid segment, following the 10.4% Y.o.Y growth in postpaid revenue to RM489.0 mln as its postpaid subscriber base improved 12.3% Y.o.Y to almost 2.0 mln subscribers. (The Star Online)

Maxis Bhd‘s 3Q2016 net profit grew 19.8% Y.o.Y to RM503.0 mln, from RM420.0 mln in the previous corresponding year as new mobile packages launched in the previous quarter continued to gain momentum, although quarterly revenue flatlined at RM2.16 bln.

Cumulative 9M2016 net profit jumped 18.7% Y.o.Y to RM1.51 bln, from RM1.27 bln a year ago – mainly due to higher other income and lower network operation cost, while revenue fell less than 1.0% Y.o.Y to RM6.40 bln. The group has proposed a third interim single-tier tax exempt dividend of 5.0 sen apiece, payable on 29th December 2016. (The Star Online)

Federal Furniture Holdings Bhd is planning to diversify into the construction sector by acquiring a 60.0% equity stake in Pembinaan Masteron Sdn Bhd for RM33.0 mln. The purchase will be paid via a cash combination of RM6.0 mln in cash and an issuance of Redeemable Convertible Preference Shares amounting to RM27.0 mln. (The Star Online) UEM Sunrise Bhd (UEMS) has lost a court case against the Inland Revenue Board (IRB), in relation to the payment of additional tax and penalty amounting to RM73.8 mln. The Federal Court ruled in favour of the IRB, although UEMS has won against the IRB in two lower courts previously.

Moving forward, the group will submit an appeal to the Special Commissioners of Income Tax for the aforementioned case. (The Star Online)

WZ Satu Bhd has dropped its proposed collaboration with Konsortium PKMM Bina Sdn Bhd for the development and upgrading of the planned Pan Borneo Highway in Sarawak.

This follows the expiry of the Letter of Collaboration (LOC) signed between the two parties on 19th October, 2015 for the collaboration on the pre-qualification of the Pan Borneo Highway project. (The Edge Daily)

Ajinomoto (M) Bhd will cease to be a shareholder of Malaysia Packaging Industry Bhd (Maypak) after selling its entire 5.0% (2.1 mln shares) shareholding in latter to Japan’s Taisei Lamic Co Ltd for RM1.4 mln. (The Edge Daily)

Priceworth International Bhd (PWI) is acquiring Rumpun Capaian Sdn Bhd for RM260.0 mln, to be paid by a proposed private placement and special issue. Rumpun’s wholly-owned subsidiary, Anika Desiran Sdn Bhd (ADSB) holds a 100-year concession, from 1997, to carry out harvesting, forest management and rehabilitation and industrial tree planting within a 101,161 ha. forest in a reserve area in Trus Madi, Sabah, known as Forest Management Unit 5 (FMU5). (The Edge Daily)

Emico Holdings Bhd has proposed a share capital reduction by cancelling 90.0 sen out of the par value of every existing ordinary share of RM1.00 each to pare down its accumulated losses. The gain of about RM86.3 mln from the corporate exercise will be used to set off its accumulated losses of RM81.3 mln at company level and RM74.5 mln at group level as at 31st March, 2016.

Meanwhile, the remaining funds after setting off the accumulated losses will be credited to the retained earnings of the company. (The Star Online)

Source: M+ Online Research - 20 Oct 2016