• The FBM KLCI (+0.9%) rebounded yesterday as the key index recovered most of its previous session’s losses after the bond selloff in emerging markets abated, coupled with the stabilising crude oil prices. Both the lower liners and the broader market also closed higher as the Construction (+1.5%) sector emerged as the key winner in the latter.

• Market breadth turned positive as gainers outpaced losers on a ratio of 531-to-258 stocks. Traded volumes, however, declined 3.0% to 1.34 bln shares as investors remain cautious on the volatile market condition.

• More than two-third the key index constituents advanced, led by BAT (+78.0 sen), followed by PPB Group (+24.0 sen), Sime Darby (+24.0 sen), Public Bank (+18.0 sen) and KLK (+16.0 sen). Among the biggest gainers on the broader market were Sungei Bagan Rubber (+22.0 sen), Dutch Lady (+14.0 sen), Gadang (+14.0 sen) and LPI Capital (+14.0 sen). Southern Steel added 6.0 sen after returning to the black in the latest 1QFY17 earnings report.

• Significant losers include plantation stocks like United Plantations (-58.0 sen), Chin Teck Plantations (-26.0 sen) and IJM Plantations (-9.0 sen), while Aeon Credit (-22.0 sen) and Lafarge (-15.0 sen) topped the broader market decliners list. There were only four decliners on the big board – Hong Leong Bank (-18.0 sen), Petronas Gas (-14.0 sen), KLCC (-4.0 sen) and YTL (-2.0 sen).

• Japanese stockmarkets ended relatively flat as the Nikkei fell 0.03%, halting a streak of three consecutive winning days on profit taking activities. The Shanghai Composite (-0.1%) retreated from its ten months high, but the Hang Seng Index(+0.5%) rebounded from its three-month low, lifted by banking stocks. ASEAN stockmarkets, meanwhile, ended mixed.

• U.S. stockmarkets closed higher overnight as the Dow (+0.3%) advanced for the seventh straight session, boosted by stronger-than-expected retail sales data that added 0.8% M.o.M in October - above economists’ estimates of 0.6% rise. On the broader market, the S&P 500 gained 0.8%, anchored by gains in the energy sector (+2.6) after crude oil prices rallied, while the Nasdaq jumped 1.1%.

• Earlier European benchmark indices - the FTSE (+0.6%), CAC (+0.6%) and DAX (+0.4%), all extended their gains. Energy stocks rallied on renewed efforts by members of the Organization of the Petroleum Exporting Countries to curtail production.

The Day Ahead

• We continue to think that stocks on Bursa Malaysia will continue to find support after their recent rout and this is expected to see the FBM KLCI extending its near term recovery. However, the key index is once again left at the crossroads as it closed at the 1,630 level yesterday, indicating that recovery is still far from certain.

• Nevertheless, we expect the near term recovery to sustain as market conditions is calmer and this could see the FBM KLCI clearing the 1,630 level to move towards the next resistance at the 1,640 level. The up move could be choppy amid the expected bouts of quick profit taking activities as well as continuing wariness among many market players.

• The lower liners and broader market stocks are also expected to recovery further, but the continuing lack of buying interest could temper their gains, in our view. The supports, meanwhile, are at the 1,600-1,620 levels.

Company Briefs

• BHS Industries Bhd posted a 1QFY17 net loss of RM2.3 mln, from a net profit of RM163,000 a year ago, mainly due to preoperating expenses incurred by a new business venture totaling RM700,000. Revenue, however, expanded 5.5% Y.o.Y to RM6.7 mln vs. RM6.3 mln in 1QFY16.

• Despite the losses made in the printing business following its move from a rented factory to a newly acquired factory, BHS is confident that the inclusion of two new machines will realign its business strategy to enhance production efficiency and increase competitiveness. (The Edge Daily)

• Tanjung Offshore Bhd has proposed to purchase a 51.0% equity stake in Wenmax Bhd, a Petroliam Nasional Bhd (Petronas) licensed vendor, for RM8.0 mln to expand its upstream oil and gas (O&G) sector.

• Wenmax supplies industrial equipment, machineries, spare parts and lubricants oil to Petronas' group of companies for its O&G projects. The group expects the acquisition to improve its financial position as it consolidates positive earnings from Wenmax.

• Eco World Development Group Bhd (EcoWorld) is teaming up with the Employees Provident Fund Board (EPF) to jointly develop a piece of 2,198 ac. leasehold land in the northwestern Klang Valley corridor in Kuala Selangor into a mixed project estimated to be worth RM15.0 bln.

• The project consists of a mixed residential and commercial development dubbed Eco Grandeur as well as an integrated business park named Eco Business Park V, which will be developed by its unit Paragon Pinnacle Sdn Bhd, the joint-venture (JV) company. Paragon Pinnacle will be 60.0%-owned by EcoWorld, while the remaining 40.0% will be held by EPF.

• EPF is required to provide shareholders advances of RM367.0 mln to the JVCo to fund the proposed developments.

• This is the second partnership between EcoWorld and EPF to jointly develop a strategic project — the first being Bukit Bintang City Centre — and the third development that is being undertaken via the group's partnership-for-growth model. (The Star Online)

• Land & General Bhd (L&G) has proposed to buy over four companies from Malaysia Land Properties Sdn Bhd for a cumulative RM298.3 mln, in a bid to replenish its land bank.

• The four companies are Primal Milestone Sdn Bhd (RM128.4 mln), Triumph Bliss Sdn Bhd (RM118.2 mln), Forward Esteem Sdn Bhd (RM45.7 mln) and Quantum Bonus Sdn Bhd (RM6.0 mln). (The Edge Daily)

• Tadmax Resources Bhd’s 3Q2016 net loss widened 29.5% Y.o.Y to RM3.6 mln against a new loss of RM2.8 mln in the last corresponding year – mainly due to the initial expenditure incurred by a new property project in Taman Metropolitan, Kepong which is expected to be launched sometime in December 2016, as well as higher finance cost.

• Revenue, on the other hand, increased threefold from RM3.4 mln in 3Q2015 to RM13.6 mln. However, the group had warned that it is expected to record operating losses for the full year.

• Moving forward, the group foresees positive contribution in 2017 - from its new development project in Taman Metropolitan known as Mizumi Residences, following the rescheduled launch of the project to next month.

• TAHPS Group Bhd's 2QFY17 net profit fell 41.3% Y.o.Y to RM3.0 mln, from RM5.1 mln, attributed to weaker performance in its plantation and property development divisions, while revenue declined 25.7% Y.o.Y to RM16.5 mln, from RM22.2 mln a year ago.

• Looking ahead, the group is expecting another challenging year for its property division and its plantation segment, which is currently undergoing a replanting programme. (The Edge Daily)

• Apex Healthcare Bhd's 3Q2016 net profit jumped 57.5% Y.o.Y to RM8.7 mln against RM5.4 mln last year, contributed by higher revenue and profit contribution from its associate, Straits Apex Sdn Bhd. Quarterly revenue gained 11.5% Y.o.Y at RM143.0 mln, in comparison with RM128.3 mln in 3Q2015.

• Cumulative 9M2016 net profit stood at RM28.2 mln, which was 38.0% Y.o.Y higher than RM20.4 mln in the last corresponding period, in-tandem with stronger revenue contribution which advanced to RM437.1 mln, from RM392.6 mln in 9M2015  

Source: Mplus Research - 16 Nov 2016