• The FBM KLCI rose marginally by 0.1% as crude oil prices extended its gains for the third-straight day, ahead of the Organisation of Petroleum-Exporting Countries (OPEC) meeting to decide on production output. The lower liners, however, were mostly down with the exception of the FBM Ace (+0.05%), while the broader market finished mixed.

• Market breadth was negative as losers beat gainers on a ratio of 410-to-344 stocks. Traded volumes, however, gained by 8.2% to 1.50 bln shares amid the positive sentiment from global stockmarkets that encouraged some bargain hunting activities.

• On the Main Board, BAT (+RM1.06), Petronas Gas (+30.0 sen), Genting Malaysia (+21.0 sen), RHB Bank (+12.0 sen) and Tenaga (+10.0 sen) led the key index higher. Meanwhile, broader market gainers were sin stocks like Carlsberg (+24.0 sen) and Heineken Malaysia (+16.0 sen), trailed by Triplc (+20.0 sen) and Sarawak Oil Palms (+15.0 sen). DKSH increased 20.0 sen after posting a 20.0% Y.o.Y jump in its 3Q2016 net profit to RM5.4 mln vs. RM4.5 mln in the previous corresponding year.

• Significant broader market laggards include Malaysian Pacific Industries (- 25.0 sen), Panasonic Manufacturing (- 22.0 sen), Felda Global Ventures (-20.0 sen), Focus Lumber (-14.0 sen) and Prestariang (-14.0 sen). Meanwhile, Hong Leong Financial Group (-26.0 sen), PPB Group (-12.0 sen), Sime Darby (-10.0 sen) Maybank (-9.0 sen) and Axiata (-5.0 sen) led the blue-chip gauge lower.

• Key Asian stockmarkets rallied – tracking the positive sentiment from Wall Street after U.S. equities closed at record highs on Monday. The Nikkei advanced 0.3% after damage from the earthquake on Tuesday appeared mild. The Shanghai Composite Index (+0.9%) ended at a new high since January amid a stronger Yuan after China halted 12-straight sessions of devaluation, while the Hang Seng Index jumped 1.4% to 22,678.1 points. ASEAN stockmarkets, meanwhile, finished on a positive note.

• U.S. equities rose to another record high, together with commodity prices, amid a recovery in the corporate earnings and optimism of growth in the U.S. economy. The Dow jumped 0.4% as investors looked past the potential interest rate hike in December to President-elect Donald Trump’s pro-growth economic policies. On the broader market, the S&P 500 and the Nasdaq also rallied to 0.2% and 0.3% respectively.

• Key European indices hit their record highs – buoyed by gains in mining stocks, which offset the drag from drugmakers. The FTSE was 0.6% higher, albeit reversing earlier gains as mining giants like Anglo American (+7.6%) and Glencore (+5.3%) advanced. The CAC rose 0.4%, while the DAX added 0.3% to close just above the 10,713 psychological level on expectations of more fiscal stimulus from the European central bank.

The Day Ahead

• We see the mild recovery trend sustaining over the near term despite the continuing insipid market environment as institutional investors are likely to maintain their selective bargain hunting activities. The positive performances among regional and other key global indices will also help to encourage the mild recovery trend.

• Nevertheless, we maintain our view that the recovery will be mild as most market players are still wary over the market’s direction and the Ringgit’s performance amid the heightened prospects of an interest rate hike early next month. At the same time, the ongoing results reporting season is seeing a mixed earnings trend thus far and providing few catalysts for investors to follow, particularly for retail investors.

• Under the prevailing market environment, we also see most market players remaining on the wayside and both market breadth and depth are likely to stay lackluster. We expect the key index to take another stab at the 1,630 and if it is cleared, the next resistance is at the 1,640 level. Meanwhile, the key support remains at the 1,620 level.

Company Briefs

• Felda Global Ventures Holdings Bhd’s (FGVH) 3Q2016 net loss widened to RM94.9 mln from a net loss of RM33.9 mln recorded in the previous corresponding quarter due lower crude palm oil (CPO) production, higher raw sugar costs as well as lower earnings from downstream segment which offset the lower administrative expenses and other operating costs. Revenue for the quarter fell 7.1% Y.o.Y to RM4.19 bln.

• For 9M2016, cumulative net loss stood at RM98.2 mln, vs. a net profit of RM15.7 mln recorded in the previous corresponding period. Revenue for the period, however, increased 5.9% Y.o.Y to RM12.1 bln. (The Star Online)

• AirAsia X Bhd’s (AAX) 3Q2016 net profit stood at RM11.0 mln vs. a net loss of RM288.2 mln registered in the previous corresponding quarter, owing to the higher topline growth coupled with cost efficiency. Revenue for the quarter climbed 23.9% Y.o.Y to RM982.4 mln. ? For 9M2016, cumulative net profit stood at RM191.5 mln vs. a net loss of RM547.1 mln in the corresponding period. Revenue for the period added 27.7% Y.o.Y to RM2.84 bln. (The Star Online)

• Yen Global Bhd has proposed a rights issue with warrants to raise up to RM55.0 mln - most of which will be used to diversify into information and communication technology (ICT) business. The loss-making apparel maker also proposed to reduce the par value of its shares from 50 sen each to 10 sen each. This would give rise to credit of RM55.0 mln which will wipe out its accumulated losses of about RM43.2 mln. The proposed diversification followed the emergence of connectivity solutions provider, Green Packet Bhd as a substantial shareholder in Yen Global recently.

• Yen Global plans to issue up to 275.0 mln rights shares on a 2 rights shares-for-1 share basis, together with three free warrants for every four rights shares subscribed, after undertaking the par value reduction. At an indicative issue price of 20 sen per rights share, the proposed rights issue would raise between RM48.6 mln and RM55.0 mln. (The Star Online)

• Huat Lai Resources Bhd’s 3Q2016 net profit surged 244.0% Y.o.Y to RM45.2 mln due to higher revenue and stricter cost controls. Revenue for the quarter gained 6.4% Y.o.Y to RM440.9 mln.

• For 9M2016, cumulative net profit grew 22.2% Y.o.Y to RM75.9 mln. Revenue for the period rose 8.2% Y.o.Y to RM1.20 bln. (The Edge Daily)

• Salcon Bhd slipped into the red with a net loss of RM0.8 mln in 3Q2016 vs. a net profit of RM3.5 mln in the previous corresponding quarter, dragged down by its other income which shrank 92.0% Y.o.Y to RM1.7 mln, coupled with lower interest income. Revenue for the quarter, however, rose 1.8% Y.o.Y to RM23.0 mln.

• For 9M2016, cumulative net profit declined 12.8% Y.o.Y to RM10.5 mln. Revenue for the quarter fell 8.1% Y.o.Y to RM60.5 mln. (The Edge Daily)

• IOI Properties Group Bhd's 1QFY17 net profit grew 64.2% Y.o.Y to RM189.6 mln, mainly attributed to better revenue and operating profits from its property development and property investment segments, as well as higher revenue recorded by its leisure and hospitality segment. Revenue for the quarter rose 51.1% Y.o.Y to RM899.5 mln. (The Edge Daily)

• Johore Tin Bhd's 3Q2016 net profit soared 228.0% Y.o.Y to RM10.8 mln, due to higher sales, lower material costs and foreign exchange gain on financial settlement. Revenue for the quarter rose 18.3% Y.o.Y to RM115.9 mln.

• For 9M2916, cumulative net profit rose 76.7% Y.o.Y to RM24.7 mln. Revenue for the period grew 6.8% Y.o.Y to RM322.8 mln. (The Edge Daily)

• Brahmal Vasudevan, the founder and Chief Executive Officer of private equity firm, Creador Sdn Bhd, has emerged as a substantial shareholder of ICT training and certification provider Prestariang Bhd. Brahmal acquired 24.5 mln shares or a 5.1% direct stake in Prestariang on 22nd November 2016. (The Edge Daily)

• Dialog Group Bhd's 1QFY17 net profit climbed 35.4% Y.o.Y to RM81.3 mln on higher contribution from its joint ventures, particularly the Pengerang Independent Terminals where the storage units are fully leased out. Revenue for the quarter gained 21.8% Y.o.Y to RM653.6 mln. (The Edge Daily)  

Source: Mplus Research - 23 Nov 2016