• The FBM KLCI ended 0.5% higher after snapping a two-day decline, in-line with the positive sentiment among key regional stockmarkets and buyingsupport on selective heavyweights. The lower liners rebounded – led by gains in the FBM Ace (+1.9%), while most sectors on Bursa Malaysia rallied, with the exception of the Industrial Products (- 0.1%) sector.

• Market breadth turned positive as gainers beat the losers on a ratio of 493-to-307. Traded volumes, however, fell 18.8% to 1.53 bln shares as investors adopt a waitand-see attitude if the Organisation of Petroleum- Exporting Countries (OPEC) production cut materialises.

• Significant key-index gainers were PPB Group (+36.0 sen), BAT (+30.0 sen), Sime Darby (+14.0 sen), KLCC (+13.0 sen) and CIMB (+10.0 sen). Broader market charttoppers were Chin Teck Plantations (+20.0 sen), Cahya Mata Sarawak (+20.0 sen), AEON Credit Service (+18.0 sen), Apollo Food Holdings (+18.0 sen) and Malaysia Pacific Industries (+15.0 sen).

• Consumer-products giant like Nestle (- 22.0 sen) and Fraser & Neave (-18.0 sen) declined on expectations of thinning margins, in view of the increasing cost of raw materials. Meanwhile, other broader market decliners include Sam Engineering & Equipment (-67.0 sen), Panasonic Manufacturing (-62.0 sen) and Far East Holdings (-22.0 sen). The five decliners on Bursa Malaysia were IHH Healthcare (-18.0 sen), Petronas Gas (- 16.0 sen) and Maxis (-7.0 sen), trailed by banking heavyweights such Hong Leong Financial Group and RHB Bank which fell 8.0 sen each.

• Asian equities rallied at Thursday’s closing bell, mainly led by a slew of upbeat economic data and gains in energy shares after major oil producers agreed to a production cut to counter the persisting oversupply in crude oil. The Nikkei jumped 1.1% to 18,513.1 points, buoyed by gains in Inpex (+10.0%) and JX Holdings (+7.5%), as well as better-thanexpected manufacturing data from Japan, while the Hang Seng finished up 0.4%. The Shanghai Composite Index rose 0.7% with all 11 sectors firmly in the green, after China’s manufacturing data beat analyst forecast. Meanwhile, the majority of ASEAN stockmarkets ended on an optimistic tone.

• Wall Street finished mixed, amid betterthan-expected manufacturing data and rising crude oil prices. The Dow rose 0.4% to 19,191.9 points, on the back of gains in Goldman Sachs (+3.4%) and JP Morgan Chase & Co (+2.0%). The Nasdaq and the S&P 500, meanwhile, narrowed 1.4% and 0.4% respectively, weighed down by weaker semiconductor shares after it was reported that Apple (-0.9%) is cutting orders for its iPhone 7 parts.

• Key European benchmark indices slipped into the red, alongside a selldown in global bonds on Thursday’s close. The FTSE shed 0.5% due to worries that the strengthening Pound could trim earnings of multinational companies. The CAC fell 0.4%, dragged by losses in technology, utilities and healthcare-related counters, while the DAX (-1.0%) closed just above the 10,500.0 psychological level.

The Day Ahead

• The sharp recovery yesterday on bargain hunting activities lifted the key index back above the 1,620 level. The positive momentum from key regional indices would also provide some alleviation on Bursa Malaysia stocks that has been oversold over the near term.

• For now, however, we think the recovery could be modest as many market participants are still wary over external factors including the weakness in the local currency against the Greenback, slowdown in economy growth and uncertainty over the upcoming US interest rate hike.

• With crude oil prices extended their gains above the US$50 per barrel overnight, we reckon that oil & gas stocks could see further technical rebound. Recovery on the big board, however, could be capped at the immediate resistance is at 1,630 level, owing to the sluggish China factory data coupled with the lack of local catalyst, while support at the 1,600 psychological level remains unchanged.

Company Briefs

• Boustead Holdings Bhd’s 3Q2016 net profit soared 633.3% Y.o.Y to RM44.0 mln, mainly due to gains on disposals from the group’s stake in Jendela Hikmat Sdn Bhd as well as the sale of non-core plantation land. Revenue for the quarter, however, fell 4.7% Y.o.Y to RM2.02 bln.

• For 9M2016, cumulative net profit surged 27.6x Y.o.Y to RM248.3 mln. Revenue for the period, however, declined 4.3% Y.o.Y to RM5.95 bln. A third interim dividend of five sen per share was declared. (The Star Online)

• EKA Noodles Bhd, which fell into Practice Note 17 (PN17) status three months ago, 3Q2016 net loss widened to RM5.9 mln, from RM1.7 mln recorded in the previous corresponding quarter, due to slower sales.

• Revenue for the quarter dropped 50.3% Y.o.Y to RM6.3 mln. For 9M2016, cumulative net loss totaled RM14.5 on the back of a revenue of RM21.9 mln. There were no comparison figures for the financial year end. (The Edge Daily)

• Bison Consolidated Bhd is buying a factory in Johor Bahru for RM4.2 mln that will operate as a sub-distribution centre for its stores in Johor. The factory's acquisition from Idea Harmoni Sdn Bhd is aimed at improving its nationwide logistics to support its growing network and product base. (The Edge Daily)

• KPJ Healthcare Bhd has proposed to dispose of its 30.0% stake or 720,000 shares in Hospital Penawar Sdn Bhd, held by its wholly-owned subsidiary Kumpulan Perubatan (Johor) Sdn Bhd, for RM2.2 mln. 462,750 shares will be sold to Dr Mohd Adnan for RM1.4 mln, while the balance 257,250 shares will be sold to Azizan Sulaiman for RM0.8 mln.

• KPJ has noted that it has considered various options with the board of Hospital Penawar and proposed a few solutions, including the focus on wholly-owned companies for better management and decision making and the consolidation of KPJ group of hospitals to operate under a single entity. (The Edge Daily)

• Perdana Petroleum Bhd’s wholly-owned subsidiary Petra Offshore Ltd (POL) has issued a notification to Nam Cheong International Ltd (NCIL) for the cancellation of the memorandum of agreement (MoA) to acquire an accommodation work barge. In reference to its announcement dated 25th June 2014 on the proposed acquisition of two work barges — SK316 and SK317 — Perdana Petroleum is cancelling the acquisition of SK317 as NCIL has not fulfilled the condition of delivery in accordance to the terms and conditions of the MoA.

• The cancellation does not have any reasonably foreseeable material and adverse financial and operational impact on POL, but the refund will improve cashflow. (The Edge Daily)  

Source: Mplus Research - 2 Dec 2016