• Despite opening higher at the start of the trading bell, the FBM KLCI reversed all its intraday gains before closing 0.2% lower, on profit taking activities among selective plantation heavyweights. The lower liners also trended mostly lower as the FBM Small Cap and FBM ACE fell 0.4% and 0.3% respectively, while the Technology and Properties sectors rose 0.1% each, outperforming the negative broader market.

• Market breadth turned negative as losers outnumbered gainers on a ratio of 440- to-297. Traded volumes declined 11.3% to 1.14 bln shares on the lack of catalysts.

• Half of the key index constituents fell, led by PPB Group (-34.0 sen), KLK (-18.0 sen), Genting (-15.0 sen), Public Bank (- 12.0 sen) and Genting Malaysia (-10.0 sen). Notable decliners on the broader market include consumer products and plantations stocks like Dutch Lady (-50.0 sen), Panasonic (-34.0 sen), United Plantations (-30.0 sen) and Chin Teck Plantations (-18.0 sen). SAM (-15.0 sen) trended lower for the sixth straight session.

• On the other side of the trade, LPI Capital (+24.0 sen), Nestle (+24.0 sen), IJM Plantations (+17.0 sen), Y&G (+15.0 sen) and Heineken (+14.0 sen) were amongst the biggest advancers on the broader market. Significant gainers on the key index include BAT (+84.0 sen), Hap Seng (+13.0 sen), Hong Leong Bank (+10.0 sen), Maxis (+4.0 sen), and Axiata (+3.0 sen).

• Key regional indices ended in the red overnight as the Nikkei declined 0.8% on the weakness in financial stocks. The Hang Seng Index slipped 0.3%, while the Shanghai Composite Index ended 1.2% lower, dragged down by real estate (- 3.7%) and infrastructure (-4.0%) sector. ASEAN stockmarkets, meanwhile, ended mostly lower.

• Wall Street advanced overnight due to stronger-than-expected nonmanufacturing data that expanded for the ninth consecutive month in November, implying the economy is on firm footing and interest rates are on course to see an increase next week. The Dow (+0.2) rose to a fresh record high while the S&P 500 and Nasdaq gained 0.6% and 0.2% respectively.

• Earlier, European benchmark indices also rebounded – the FTSE (+0.2%), CAC (+1.0%) and DAX (+1.6%) all ended in the positive note, shrugging off the Italian referendum outcome. Banking stocks rebounded whilst mining stocks like Rio Tinto (+1.6%) and Glencore (+4.4%) climb on higher copper prices.

The Day Ahead

• We expect the rangebound trend within the 1,620 and 1,630 levels to continue over the near term as market participants remain wary over the potential U.S. interest rate hike next week that could also signal more rate hikes in 2017. Although the Ringgit appears to have found some near term stability, bouts of selling are still occurring, particularly from foreign funds and this could continue to pressure the key index, in our view.

• At the same time, we think any rebound will be insignificant as there is few positive domestic catalyst and buying interest remains thin, as a consequence. The recently concluded corporate results reporting season provided few positive surprises and the results, in general, remained on the weak side.

• We expect the insipid market trend to also extend to the lower liners and broader market shares with many retail players preferring to stay on the sidelines until there are clearer signs of a firmer market.

Company Briefs

• Bina Darulaman Bhd’s (BDB) 3Q2016 net profit surged 58.1% Y.o.Y to RM5.8 mln, against RM3.67 mln a year ago, in-tandem with the 98.8% jump in revenue to RM87.2 mln, from RM43.9 mln in 3Q2015 – led by stellar performance of the group's property and road & quarrying divisions.

• Cumulative 9M2016 net profit was 9.5% Y.o.Y higher at RM10.7 mln, compared to RM9.8 mln, while revenue rose 47.4% Y.o.Y to RM202.7 mln vs. RM137.5 mln previously.

• The group expects to launch RM900.0 mln worth of property launches in 2017, with focus on the affordable housing segment, which includes a pocket development in Kuala Kangsar, Perak, BDB's first development outside Kedah. (The Edge Daily)

• George Kent (M) Bhd’s 3QFY17 net profit grew almost two-fold to RM23.7 mln, from RM12.1 mln in the previous corresponding period, while quarterly revenue rose 26.0% Y.o.Y to RM122.1 mln from RM96.9 mln in 3QFY16. The improved bottomline was attributed to higher contribution from its engineering segment, which was 196.0 % Y.o.Y higher at RM25.5 mln. George Kent has also proposed a second interim dividend of two sen a share, payable on 31st January, 2017.

• For the cumulative 9MFY17, net profit expanded 94.9% Y.o.Y to RM59.3 mln, in comparison to RM30.4 mln a year earlier Revenue also gained 51.4% Y.o.Y to RM409.8 mln, from RM270.6 mln last year. (The Star Online)

• MTouche Technology Bhd is planning a series of corporate exercise, including par value reduction, share consolidation, rights issues with warrants and employees’ share option scheme (ESOS), in a bid to provide greater flexibility for the company to raise funds.

• The par value reduction will include the cancellation of 5.0 sen from the par value of every existing Mtouche share of 10.0 sen each, while the proposed share consolidation will also involve the consolidation of every two shares into one new share.

• Meanwhile, the proposed rights issue will see the issuance of up to 557.5 mln rights shares together with up to 278.8 mln free warrants to be implemented on a renounceable basis of six rights shares together with three free warrants-forevery two existing shares held. The right issues with warrants will only be undertaken after the completion of the par value reduction proposal and share consolidation proposal.

• Under the base scenario, MTouche expects to raise RM38.2 mln, while the maximum scenario would see RM55.8 mln raised. The group is planning to spend RM120.0 mln on regional business expansion as well as another RM7.5 mln in acquiring new office premises. (The Star Online)

• Practice Note 17 (PN17) company, YFG Bhd has inked a one-year collaboration agreement (CA) with Hasilwan (M) Sdn Bhd to tender for new contracts, explore new markets and enhance the mechanical and electrical engineering upper value chain. The latter is currently undertaking works and projects relating to engineering solutions and mechanical and electrical engineering service.

• The collaboration is expected to improve their respective brand names, capabilities, expertise and market presence by co-operating in areas that are mutually beneficial and which may add value through sharing of resources, knowledge and expertise.

• YFG has until 20th April, 2017 to submit its regularisation plan to Bursa. (The Edge Daily)

• Loss-making Asiamet Education Group Bhd is planning to acquire CUCMS Education Sdn Bhd (CESB) — the operator of the Cyberjaya University College of Medical Sciences in Cyberjaya, Selangor — from SMRT Holdings Bhd for RM166.0 mln. The acquisition will be funded via the issuance of 830.0 mln Asiamet shares at an issue price of 20.0 sen each.

• The group is also proposing an internal reorganisation exercise after the completion of the proposed acquisition, where it will dispose of its entire equity interest in CESB, Valencia Education Group Sdn Bhd, Asiamet (KK) Sdn Bhd, Asiamet (Kuching) Sdn Bhd and Asiamet (KB) Sdn Bhd to a NewCo, with SMRT at the helm.

• The proposed share exchange included the exchange of the entire enlarged issued share capital of Asiamet for NewCo Shares and Asiamet will become a wholly-owned subsidiary of the NewCo, whereby Newco will assume Asiamet’s listing status on the Main Market of Bursa Malaysia. (The Edge Daily)

• Japan’s Taisei Lamick Co Ltd has gained control of 90.8% shareholding of Malaysia Packaging Industry Bhd (Maypak) at the close of its unconditional mandatory takeover of Maypak shares yesterday. Maypak’s trading will be suspended from 14th December, 2016 as the former does not intend to maintain Maypak’s listing status. (The Star Online)  

Source: Mplus Research - 6 Dec 2016