Sustained Rebound

Despite opening lower at the start of the trading bell, the FBM KLCI (+0.1%) staged a quick recovery in tandem with the gains in key regional indices, owing to the buying support in selective key index heavyweights. While the broader market closed mixed, the lower liners ended mostly higher as the FBM Small Cap and FBM Fledgling indices added 0.2% each.

• Market breadth, however, remained negative as losers edged gainers on a ratio of 388-to-366 stocks. Traded volumes climbed 12.3% to 1.48 bln shares on bargain hunting activities.

• Anchoring the gainers on the big board was Genting (+19.0 sen), followed by Maybank (+16.0 sen), Petronas Dagangan (+4.0 sen), Genting Malaysia (+3.0 sen) and Hong Leong Bank (+2.0 sen). Significant advancers on the broader market include LPI Capital (+40.0 sen), TAHPS Group (+30.0 sen), Carlsberg (+18.0 sen), Perusahaan Sadur Timah (+13.0 sen) and MyEG (+12.0 sen).

• KESM Industries (-33.0 sen) topped the broader market decliners list, while Far East Holdings and United Plantations fell 30.0 sen each. MSC slipped 2.0 sen after reporting a weak set of quarterly earnings. Among the biggest decliners on the key index were BAT (-94.0 sen), Hong Leong Financial Group (-22.0 sen), PPB Group (-8.0 sen), AmBank (-8.0 sen) and DIGI (-4.0 sen).

• Asian benchmark indices rebounded yesterday as the Nikkei jumped 1.6% on a weaker Japanese Yen. The Hang Seng Index (+0.7%) halted a streak of three consecutive sessions of losses on gains from energy stocks, while the Shanghai Composite added 0.3%, buoyed by optimism over the U.S. political standings. ASEAN stockmarkets, meanwhile, ended mostly higher. ? Wall Street started off the week on a strong footing after the U.S. Federal Bureau of Investigation cleared criminal charges against Presidential candidate, Hilary Clinton. The Dow surged 2.1% with all 30 members of the index constituents advancing, while the S&P 500 (+2.2%) recorded its first gain in the last ten trading session.

• Key European benchmark indices - the FTSE (+1.7%), CAC (+1.9%) and DAX (+1.9%) all registered their biggest gains in six weeks, offsetting the weaker-thanexpected Eurozone’s retail sales data in September which only climbed 1.1% Y.o.Y vs. economists’ expectations of a 1.6% growth. Notable gainers include HSBC Holdings PLC (+4.6%) and Ryanair Holdings PLC (+5.3%) after both companies reported a strong set of quarterly earnings.

The Day Ahead

• After performing true to form yesterday, we expect the recovery trend to continue over the near term in tandem with the stronger performances of key global indices. The overhang on U.S. Presidential candidate Hillary Clinton has also dissipated and optimism over her forerunner position that will give the market further near term boost.

• Therefore, we think the recovery trend will persist over the near term as market players will capitalise on the more positive near term sentiments to bargain hunt on some beaten down market leaders.

• This is expected to lift the key index to retest the 1,660 level. However, we think the gains could be measured and the 1,670 resistance is a distinct target for now. On the downside, the 1,650 level is the intermediate support.

Company Briefs

• PIE Industrial Bhd's 3Q2016 net profit plummeted 67.1% Y.o.Y to RM4.6 mln, from RM14.0 mln in the previous corresponding period, on the back of thinner margins and lower revenue, which was down 14.7% Y.o.Y to RM130.2 mln, from RM150.5 mln a year ago.

• Cumulative 9M2016 net profit also plunged 62.0% Y.o.Y to RM12.8 mln vs. RM33.8 mln in 9M2015, mostly due to the aforementioned reasons, while revenue fell 3.6% Y.o.Y to RM385.8 mln, from RM400.0 mln. (The Edge Daily)

• New Hoong Fatt Holdings Bhd registered a 22.4% Y.o.Y jump in its 3Q2016 net profit to RM6.4 mln against RM5.2 mln in 3Q2015 – mainly due to a fair value gain on its investment properties amounting to RM0.9 mln. Revenue for the quarter was marginally higher by 2.5% Y.o.Y to RM54.5 mln, from RM53.2 mln last year.

• For the cumulative 9M2016 period, net profit rose 38.9% Y.o.Y to RM20.5 mln, from RM14.8 mln in 9M2015, attributed to higher revenue, forex gain and fair value gain on the investment properties. Revenue also grew 10.5% Y.o.Y to RM169.1 mln, from RM153.0 mln previously. An interim dividend of 3.0 sen per share, totaling RM2.3 mln was declared and is payable on 16th December 2016.

• Metronic Global Bhd, which holds an 18.8% direct shareholding in MNC Wireless Bhd has rescinded the special notice served to the latter to call for an Extraordinary General Meeting (EGM) for the removal of five directors.

• Previously, Metronic intended to remove MNC Wireless’ Chairman, Wong Kok Seong, Chief Executive Officer (CEO) and Executive Director (ED) Christopher Tan Chor How, ED Pang Siaw Sian, independent Non-Executive Director Thu Soon Shien and Non-Independent Non-ED Kua Khai Shyuan, and replace them with Nga Koo Koy, Eric Boon Chuan Kit, Ng Wee Peng, Tan Kian Hong and Raja Aida Jasmin Raja Shahrome. (The Edge Daily)

• Scicom (MSC) Bhd's 1QFY17 net profit stood at RM12.0 mln, up from RM9.7 mln a year ago - a 23.6% Y.o.Y jump, led by an increase in billings for outsourcing projects. Meanwhile, revenue gained 16.3% Y.o.Y to RM52.1 mln vs. RM44.8 mln last year.

• Scicom said that it is on track to be the largest business process outsourcing (BPO) provider in Sri Lanka by March 2017. Further, the group is also the call centre provider for SriLankan Airlines.

• In addition to expanding its BPO presence in Sri Lanka, Scicom has also expressed interest in moving into e-government services in Nepal, Cambodia and Laos. (The Edge Daily)

• The Independent Adviser (IA) to the 55.0% Malaysia Packaging Industry Bhd (Maypak) takeover offer by Taisei Lamick Co Ltd has recommended that shareholders accept the revised offer of RM1.00, although it deemed the offer not fair.

• Taisei Lamick has revised the offer price to RM1.00, from 65.0 sen on 31st October 2016 and the offer will be valid until 15th November, 2016.

• Mercury Securities, the IA, said that the revised offer price represents a significant premium ranging from 99.9% to 122.2% to the closing market price or volume weighted average market price of the Maypak shares as at the sale and purchase agreement's last trading date of 28th July 2016.

• Axiata Group Bhd's 100.0%-owned subsidiary, edotco Group Sdn Bhd, has exercised a call option to increase its effective holdings in edotco Myanmar Ltd by to 87.5%, from 75.0% previously.

• The additional 12.5% stake will cost Axiata US$35.0 mln (RM147.4 mln) and will be paid in cash.

• This values edotco Myanmar at US$280.0 mln, 68.7% higher than the US$166.7 mln implied valuation of the company when Axiata paid US$125.0 mln for a 75.0% stake almost one year earlier. (The Star Online)  

Source: Mplus Research - 8 Nov 2016