• The FBM KLCI (-0.5%) extended its losses for the second-straight day amid portfolio reshuffling by fund managers. The lower liners were splashed in red, led by the FBM Ace (-1.2%), while the broader market ended down with the exception of the Consumer Products (+0.1%), Technology (+0.2%) and Plantations (0.3%) sectors.

• Market breadth was lukewarm as losers surpassed the advancers on a ratio of 526-to-276. On the other hand, traded volumes spiked 36.5% to 1.88 bln shares, amid the continuing negative investor sentiments due volatile energy prices and weakening Ringgit.

• Petronas-affiliated counters like Petronas Dagangan and Petronas Gas fell 52.0 and 38.0 sen respectively, followed by Sime (- 19.0 sen), Axiata (-13.0 sen) and KLCC (- 13.0 sen) as they weighed on the key index. Meanwhile, broader market losers were Panasonic Manufacturing (-RM1.8), alongside Nestle (-54.0 sen), Pharmaniaga (-28.0 sen), Sam Engineering & Equipment (-28.0 sen and Malaysia Smelting Corporation (-23.0 sen).

• On the other side of the trade, consumer products bellwethers like Ajinomoto and Dutch Lady rose 52.0 sen each, alongside other broader market constituents like The Store (+40.0 sen), UMW Holdings (+27.0 sen) and RHB Bank (+25.0 sen). Key advancers on Bursa Malaysia included RHB Bank (+25.0 sen), IHH Healhcare (+19.0 sen), BAT (+16.0 sen), MISC (+14.0 sen) and Hap Seng Consolidated (+8.0 sen).

• Key regional stockmarkets were on an upward bias ahead of the Organisation of Petroleum-Exporting Countries (OPEC) meeting. The Nikkei (+0.01%) closed flattish amid higher-than-expected Japanese factory data, although the Shanghai Composite Index retraced 1.0% on concerns over liquidity and tighter regulations by China to prop the sliding Yuan. The Hang Seng Index, however, rallied 0.2% to 22,789.8 points, buoyed by gains in the property and telecommunication services sector. ASEAN equities finished broadly positive on Wednesday.

• U.S. equities traded mostly lower overnight, after gains in energy stocks failed to push the market higher. The Dow (+0.01%) flatlined with six-of-nine sectors closing down. The S&P 500 lost 0.3%, yesterday, but the index closed up 3.4% M.o.M in November, while the Nasdaq gave up 1.1% to close in the red ahead of the U.S. employment data.

• European shares finished higher as investors cheered the Organisation of Petroleum-Exporting Countries’ (OPEC) decision to cut production ahead of Italy’s referendum. The FTSE was up 0.2% after trimming earlier gains, due to the declines in utilities and materials-related counters. Meanwhile, the CAC (+0.6%) ended on strong footing, backed by the rally in energy, basic materials and financials sectors and the DAX rose 0.2% to 10,640.3 points.

The Day Ahead

• The late-day selldown yesterday has left the key index below the 1,620 support yesterday as sentiments on Malaysian stocks remained weak. The meek market outlook has not changed with the insipid market environment still prevalent in view of the strong likelihood of a rate increase in the U.S. and the weak Ringgit.

• This means that market breadth will remain on the negative side as investors continue to adopt a risk-off approach to equities, affecting the lower liners and broader market shares the most. Nevertheless, we think that local institutions could embark on a mild support exercise on index linked stocks to help lift the FBM KLCI back above the 1,620 level. At the same time, the key index is already oversold and a rebound is due.

• We expect oil and gas stocks to potentially lead the key index higher amid OPEC’s agreement to trim production. Ahead of the 1,620 resistance, the other resistance is at 1,630 while the critical support remains at the 1,600 level.

Company Briefs

• Bursa Malaysia Securities Bhd has publicly reprimanded My EG Services Bhd (MyEG) and it’s Managing Director, Wong Thean Soon, for the late disclosure to Bursa on its appointment to implement the fully online renewal of foreign workers’ permit from 2015 onwards. MyEG had, at the CIMB Conference on 6th January 2015, disclosed the Government’s decision for it to implement the fully online renewal of foreign workers’ permit from 2015 onwards.

• However, the announcement on the arrangement was made to Bursa Malaysia Securities only on 9th January 2015 without any disclosure of details of its impact or implication on MyEG’s financials which was earlier disclosed in its presentation to the fund managers at the conference. (The Star Online)

• Media Chinese International Ltd’s (MCIL) 2QFY17 net profit fell 32.4% Y.o.Y to RM21.3 mln, affected by the decelerating local economy and weak consumer sentiments. Revenue for the quarter declined 12.2% Y.o.Y to RM353.4 mln ? For 1HFY17, cumulative net profit declined 38.2% Y.o.Y to RM42.1 mln, Revenue for the period decreased 14.7% Y.o.Y to RM695.8 mln. (The Star Online)

• Affin Holdings Bhd’s 3Q2016 net profit gained 36.4% Y.o.Y to RM139.7 mln, owing to lower allowance for loan impairment, higher Islamic banking income as well as higher other operating income. Revenue for the quarter increased 9.7% Y.o.Y to RM504.4 mln.

• For 9M2016, cumulative net profit added 44.4% Y.o.Y to RM392.6 mln. Revenue for the period rose 5.3% Y.o.Y to RM1.41 bln. An interim dividend of three sen a share was declared. (The Star Online)

• TSH Resources Bhd plans to privatise its 67.5%-owned subsidiary, Ekowood International Bhd at 40 sen a share to restructure the loss-making unit. TSH planned to privatise the wood flooring manufacturer via a share exchange scheme where Ekowood shareholders will exchange their shares for new TSH shares at RM1.92 each. (The Edge Daily)

• BIMB Holdings Bhd’s 3Q2016 net profit rose 17.4% Y.o.Y to RM140.6 mln, on improved contributions from its Islamic banking arm and Takaful business. Revenue for the quarter gained 9.8% Y.o.Y to RM881.4 mln.

• For 9M2016, cumulative net profit improved 8.9% Y.o.Y to RM419.6 mln. Revenue for the period climbed 9.9% Y.o.Y to RM2.67 bln. (The Edge Daily)

• KPJ Healthcare Bhd's 3Q2016 net profit dropped 14.8% Y.o.Y to RM32.5 mln due to higher depreciation and finance costs from newly opened hospitals. Revenue for the quarter, however, increased 6.3% Y.o.Y to RM767.0 mln.

• For 9M2016, cumulative net profit fell 10.2% Y.o.Y to RM97.0 mln. Revenue for the period, however, added 6.1% Y.o.Y to RM2.28 bln. An interim dividend of 1.5 sen, payable on 11th January 2017, was declared. (The Edge Daily)

• APM Automotive Holdings Bhd's 3Q2016 net profit increased 80.9% Y.o.Y to RM17.5 mln on higher sales volume and improved gross profit margin. Revenue for the quarter grew 22.5% Y.o.Y to RM313.3 mln.

• For 9M2016, cumulative net profit declined 27.5% Y.o.Y to RM33.2 mln. Revenue for the period, however, improved 1.8% Y.o.Y to RM895.9 mln. (The Edge Daily)

• Silk Holdings Bhd has bagged a RM27.8 mln contract to provide an anchor handling tug supply vessel to support a high-pressure high-temperature (HPHT) jack-up drilling rig for Hess Exploration and Production Malaysia BV. The contract, which will commence immediately, is for a duration of 18 months with an option for Hess to extend for another 12 months. (The Edge Daily)

• MWE Holdings Bhd is jointly developing a mixed development estimated to have a gross development value of RM1.50 bln on nine plots of leasehold land owned by its indirect subsidiary, Melati Mewah Sdn Bhd in Bukit Raja, Selangor, with a private developer. The proposed project, which will have a mix of residential and commercial properties, will be solely funded by internal funds and/or borrowings. (The Edge Daily)

• KUB Malaysia Bhd and Malaysia Steel Works (KL) Bhd (Masteel) have mutually agreed to terminate their joint-venture agreement for the proposed RM1.23 bln inter-city rail transit system project in Iskandar Malaysia, Johor, without stating the reason for the termination.
   
• KUB and Masteel had inked the agreement in January 2011 to establish Metropolitan Commuter Network Sdn Bhd with KUB having a 40.0% stake and Masteel 60.0% to build and operate the 100km inter-city rail transit system in Iskandar Malaysia. (The Edge Daily)

• Cahya Mata Sarawak Bhd's 3Q2016 net profit dropped 10.4% Y.o.Y to RM58.7 ml, due to its share of substantial losses in its associates and lower earnings from its cement and construction and road maintenance divisions. Revenue for the quarter declined 13.5% Y.o.Y to RM356.1 mln.

• For 9M2016, cumulative net profit fell 58.6% Y.o.Y to RM67.7 mln. Revenue for the period slipped 14.1% Y.o.Y to RM1.10 bln. (The Edge Daily)

• Malaysian Resources Corp Bhd’s (MRCB) 3Q2016 net profit surged 421.1% Y.o.Y to RM29.4 mln, attributed to the higher contribution from the group’s core operating activities, namely property development and investment. Revenue for the quarter gained 47.4% Y.o.Y to RM551.2 mln.

• For 9M2016, cumulative net profit fell 73.9% Y.o.Y to RM79.3 mln. Revenue for the period, however, increased 5.0% Y.o.Y to RM1.38 bln. (The Edge Daily)

• UEM Sunrise Bhd’s 3Q2016 net profit decline 23.9% Y.o.Y to RM36.3 mln on higher operational cost from its Australian projects. Revenue for the quarter, however, rose 19.3% Y.o.Y to RM421.3 mln.

• For 9M2016, cumulative net profit fell 49.1% Y.o.Y to RM94.0 mln. Revenue for the period climbed 7.0% Y.o.Y to RM1.22 bln. (The Edge Daily)  

Source: Mplus Research - 1 Dec 2016