• Tracking the positive sentiments on key Asian stockmarkets and stronger crude oil prices, the FBM KLCI gained 0.2% to close in the green amid bargain-hunting activities on selected blue-chips. The FBM Small Cap (+0.4%), FBM Fledging (+0.3%) and FBM Ace (+0.2%) also advanced, but the broader market closed mixed.

• Market breadth remained dour as underperformers outweigh gainers on a ratio of 409-to-365 stocks. Traded volumes fell 0.6% to 1.38 bln shares, amid the lack of buying-support from foreign investors.

• On the key index, Hong Leong-related companies like Hong Leong Financial Group and Hong Leong Bank gained 40.0 sen and 10.0 sen respectively, followed by Petronas Gas (+20.0 sen), Genting (+11.0 sen) and Genting Malaysia (+10.0 sen). Meanwhile, broader market chart toppers include Far East Holdings (+28.0 sen), Thong Guan Industries (+17.0 sen), Carlsberg (+16.0 sen) and Panasonic Manufacturing (+14.0 sen). Prestariang rose 13.0 sen after securing a government contract to implement the Sistem Kawalan & Imigresen Nasional (SKIN) programme estimated to be worth RM3.50 bln.

• On the other hand, broader market decliners include Nestle (-42.0 sen), United Plantations (-30.0 sen), BAT (-28.0 sen), Heineken Malaysia (-26.0 sen) and Amway (-34.0 sen). Key index losers were BAT (-28.0 sen), Petronas Dagangan (- 24.0 sen), Tenaga (-12.0 sen), RHB Bank (-10.0 sen) and PPB Group (-8.0 sen).

• Japanese equities extended its gains for the fourth day – buoyed by the weakness in Yen, although Japan’s exports data came in below analysts’ expectations. Hong Kong’s Hang Seng Index (+0.1%) rose as investors look forward to the launching of the Shenzhen-Hong Kong trading link, while the Shanghai Composite Index finished higher by 0.8%, with more than half of its constituents in the green. The majority of the ASEAN stockmarkets finished positively at Monday’s close.

• Wall Street ended strongly overnight and hitting record highs on renewed optimism of an Organisation of the Petroleum Exporting Countries (OPEC) output cut, coupled with the moderation in the U.S. Dollar’s strength. The S&P 500 surged 0.8% - backed by gains in the energy sector, while the Dow and the Nasdaq advanced 0.5% and 0.9% respectively.

• Earlier, European stockmarkets edged higher as mining and energy-related stocks rallied. The FTSE (+0.03%) clawed back earlier losses to close slightly higher, while the CAC and DAX gained 0.6% and 0.2% respectively.

The Day Ahead

• Despite the dwindling selling pressure, we think the general market environment remains tepid due to the continuing lack of buying interest. This is clearly reflected in the continuing weakness in both market breadth and depth and only bargain hunting on selected stocks that kept the market afloat yesterday.

• We think the insipid market conditions will persist over the near term with little change to the present market conditions. We expect market breadth and depth to remain lackluster as many market players have taken to the sidelines amid the heightened possibility of an interest rate hike next month in the U.S. and this will continue to keep the Ringgit dampened.

• Nevertheless, there should be further near term rebound as the FBM KLCI has seemingly found a support at the 1,620 level. The positivity among global markets will also help to tip the key index higher amid some mild bargain hunting activities that could potentially lift the key index back to the 1,630-1,640 levels over the near term.

Company Briefs

• The Corporate Debt Restructuring Committee (CDRC) has agreed to assist Perisai Petroleum Teknologi Bhd to mediate with its lenders and to allow the company until the first week of January 2017 to submit a debt restructuring scheme proposal.

• The Practice Note 17 affected issuer, whose unit in October 2016 defaulted on the payment of the principal and interest of S$125.0 mln in medium-term notes, had on 9th November 2016 accepted the CDRC’s application for assistance. (The Star Online)

• Tool and die maker MQ Technology Bhd’s rights issue with warrants, partly aimed at raising funds for its diversification into the theme park business, was undersubscribed by 34.2%. The subscription level will raise RM27.5 mln, which is above the minimum subscription level of RM18.1 mln.

• Of the proceeds, RM15.9 mln will be used to subscribe to a 51.0% stake in a joint venture company that will develop a theme park on 9.2 ac. of reclaimed land in Klebang, Malacca. The park is tentatively named Malacca Explorer Resort – Dive Park Zone. (The Star Online)

• Pharmaniaga Bhd’s, 3Q2016 net profit slipped 34.6% to RM13.1 mln, dragged down by lower demand from government hospitals. Revenue for the quarter fell 1.8% Y.o.Y to RM515.2 mln. ? For 9M2016, cumulative net profit declined 31.7% Y.o.Y to RM46.4 mln. Revenue for the period, however, rose 6.4% Y.o.Y to RM1.61 bln. A third interim dividend of four sen per share, payable on 15th December 2016, was declared. (The Star Online)

• Kuala Lumpur Kepong Bhd (KLK) plans to acquire a bigger stake in PT Perindustrian Sawit Synergi (PTPSS), a downstream palm oil producer in Indonesia, by upping its stake in the joint venture company from 63.0% to 75.0%. KLK’s wholly-owned subsidiary, KL-Kepong Plantation Holdings Sdn Bhd has inked an amended agreement with Gunaria Sdn Bhd, Mujib Moosa Modak, Modak Moosa Mohamed and Al Hakim Hanafiah to buy the 75.0% stake.

• Gunaria, which is a wholly-owned subsidiary of IJM Plantations Bhd, will cut its stake from 32.0% to 20.0%. Meanwhile, a new shareholder, Al Hakim Hanafiah, is set to buy the remaining 5.0% stake in Perindustrian Sawit Synergi. The transaction is expected to be completed by 4Q2017. (The Edge Daily)

• Fajarbaru Builder Group Bhd's associate company is buying a piece of freehold land measuring 676 sq.m. within the central business district of Melbourne, Australia for A$25.6 mln (RM84.2 mln) cash.

• The land has been granted a planning permit that allows the construction of a 48-level residential tower, including two basement carpark levels, two recreational levels and service levels on the land from 29th October 2017 to 29th October 2020. The purchase consideration will be satisfied by way of cash on or before 20th June 2017. (The Edge Daily)

• WCT Holdings Bhd's 3Q2016 net profit plunged 72.1% Y.o.Y to RM24.0 mln, as the previous corresponding quarter’s earnings included unrealised foreign exchange gains. Revenue for the quarter, however, rose 11.5% Y.o.Y to RM414.4 mln.

• For 9M2016, cumulative net profit dropped 56.8% Y.o.Y to RM64.9 mln. Revenue for the period, however, increased 29.2% Y.o.Y to RM1.48 bln. (The Edge Daily)

• MKH Bhd is teaming up with PR1MA Corp Malaysia to jointly develop a piece of freehold land measuring 33,280 sq.m. (8.2 ac.) in Kajang into a mixed project with a gross development value (GDV) of RM464.0 mln. The project is to be developed over three years and the project's profit and cost sharing between PR1MA and Metro will be on a 30:70 basis.

• The total initial capital and investment outlay to be incurred as initial start-up costs and preliminary works by Metro into the joint development of the project is estimated at RM38.0 mln. MKH plans to finance the initial outlay via a mixture of internally generated funds and/or bank borrowings. To fully finance its part of the project, it may even undertake other forms of fund raising. (The Edge Daily)

• MSM Malaysia Holdings Bhd's 3Q2016 net profit decreased 63.5% Y.o.Y to RM23.3 mln on higher raw material costs and a weaker Ringgit. Revenue for the quarter, however, climbed 15.9% Y.o.Y to RM633.1 mln.

• For 9M2016, cumulative net profit slipped 50.3% Y.o.Y to RM106.3 mln. Revenue for the period, however, rose 11.0% Y.o.Y to RM1.82 bln. A first interim dividend of 10 sen for the quarter, payable on 30th December 2016 was declared. (The Edge Daily)  

Source: Mplus Research - 22 Nov 2016