• The FBM KLCI (+0.3%) rebounded yesterday as the key index hovered in the positive territory for most of the trading session, lifted by buying support in selective index heavyweights. However, the lower liners – the FBM Small Cap FBM Fledgling and FBM ACE all fell 0.3% each, while the Construction (-0.2%) and Technology (-1.1%) sectors underperformed the positive broader market.

• Market breadth stayed negative as losers outstripped gainers on a ratio of 4-to-3 stocks. Traded volumes declined 4.4% with only 1.09 bln shares exchanging hands.

• Half of the key index components rose, led by Petronas Gas (+48.0 sen), followed by PPB Group (+34.0 sen), KLK (+10.0 sen), MISC (+10.0 sen) and Public Bank (+10.0 sen). Notable advancers on the broader market were consumer products stocks like Frasers & Neave (+82.0 sen), Heineken (+48.0 sen), Dutch Lady (+24.0 sen) and Carlsberg (+14.0 sen). George Kent added 4.0 sen after reporting a strong set of quarterly earnings.

• Meanwhile, among the biggest decliners on the broader market were Shell (-34.0 sen), DKSH (-21.0 sen), Globetronics (- 17.0 sen), Top Glove (-16.0 sen) and Nestle (-14.0 sen). Key decliners on the big board include BAT (-40.0 sen), Hong Leong Financial Group (-4.0 sen), Telekom Malaysia (-2.0 sen), Tenaga (-2.0 sen) and IHH (-1.0 sen).

• Asia benchmark indices closed mostly higher as the Nikkei gained 0.5% after the Nikkei Volatility Index fell 4.8% to a onemonth low at 18.36. The Hang Seng Index added 0.8%, taking cue from gains on Wall Street, but the Shanghai Composite Index extended its losses by 0.2% after enduring a choppy trading session ASEAN stockmarkets, meanwhile, ended mostly higher.

• U.S. stockmarkets extended their gains as the Dow rose 0.2% after recovering all its intraday losses. On the broader market, the S&P 500 added 0.3%, lifted by gains in financial and telecommunication shares, while the Nasdaq closed 0.5% higher.

• Earlier, European benchmark indices also extended their gains – the FTSE (+0.5%), CAC (+1.3%) and DAX (+0.6%) all rose on speculation that the European Central Bank will extend its monetary easing policy. Notable gainers were Italian banking stocks like Mediobanca SpA (+9.9%), Intesa Sanpaolo SpA (+8.2%) and Unione di Banche Italiane (+9.70%) on bargain hunting activities.

The Day Ahead

• Once again, the FBM KLCI tethers near the 1,630 resistance level after yesterday’s selective bargain hunting activities. Nevertheless, we think the above level will continue to be a formidable level to breach as the general market undertone is still largely cautious ahead of the upcoming FOMC meeting that is likely to see U.S. interest rates raised. At the same time, the foreign selling is still prevalent due to the weak Ringgit and this could limit the key index’s upsides, in our view.

• Hence, we see the FBM KLCI remaining on a sideway trend within the 1,620 and 1,630 levels over the near term amid the continuing lack of fresh positive catalysts that will keep more market participants, particularly retail investors, on the sidelines until a clearer market direction emerges.

• There is also no change to our near-term view that the lower liners and broader market shares will continue to see reduced following as leads are still too far and in-between.

Company Briefs

• Berjaya Food Bhd’s (BFood) 2QFY17 net profit dropped 18.8% Y.o.Y to RM5.0 mln, dragged down by losses in its Kenny Rogers Roasters business in Malaysia, although revenue grew 10.1% Y.o.Y to RM149.1 mln vs. RM135.4 mln a year ago. A second interim single-tier dividend of one sen apiece was declared and will be paid on 26th January 2017.

• Cumulative 1HFY17 net profit contracted 18.5% Y.o.Y to RM10.0 mln, from RM12.3 mln in the last corresponding period. Revenue, however, increased 8.5% Y.o.Y to RM290.5 mln, from RM267.8 mln.

• Moving forward, BFood foresees a challenging business environment for the remainder of FY17 on the back of the weaker Ringgit and depressed economic outlook. (The Star Online)

• Sarawak Oil Palms Bhd’s (SOPB) renounceable rights issue was oversubscribed by 17.6%. The group received a total of 148.9 mln acceptances and excess applications, of which 22.3 mln were oversubscribed.

• The group has fixed the issue price for the two-for-seven renounceable rights issue at RM2.80 per share, which could raise up to RM357.7 mln. The proceeds will be used to partly finance the acquisition of Shin Yang Oil Palm (Sarawak) Sdn Bhd, worth RM873.0 mln. The rights shares are expected to be listed and quoted on the Main Market of Bursa Securities on 15th December 2016. (The Edge Daily)

• MKH Bhd is planning a one-for-10 rights issue to raise about RM80.0 mln to fund the group’s property development activities. The rights issue will also be accompanied with a two-for-one bonus issue.

• The renounceable rights issue includes 45.4 mln new shares of RM1.00 par at an issue price to be fixed later. Meanwhile, the bonus issue will comprise of 90.8 mln new shares. The corporate exercise is slated for completion by the 2Q2017. (The Edge Daily)

• Omesti Bhd has secured a RM17.0 mln project to develop a financial reporting platform from Suruhanjaya Syarikat Malaysia (SSM). The project includes a comprehensive re-engineering of the SSM online infrastructure to facilitate the filing of annual returns and audited accounts by companies electronically.

• The new platform will also allow business information to be exchangeable among regulators, including tax and financial authorities, central banks and governments and is expected to be completed by December 2017. (The Edge Daily)

• Asia Media Group Bhd was slapped with an Unusual Market Activity (UMA) query by Bursa Malaysia after its share price plunged 35.3% to 16.5 sen, from 26.0 sen previously. (The Star Online)

• Stone Master Corp Bhd slipped into the Practice Note 17 (PN17) classification, after its shareholders’ equity dropped below 50.0% of its issued and paid-up capital. The fall was mainly due to the company’s accumulated losses which grew to RM23.7 mln, causing its total liabilities to jump to RM14.9 mln. The group has 12 months to submit a regularisation plan to the authorities, or it risks being suspended from trading and delisted from the stock exchange. (The Edge Daily)

• Following the acquisition of a 90.8% equity stake in Century Bond Bhd, Selangor government-linked firm Kumpulan Perangsang Selangor Bhd (KPS) plans to delist the former from Bursa Malaysia. Hence, Century's trading activities will be suspended upon the expiry of five market days from the close of the offer period on 13th December 2016.

• In the meantime, KPS's cash offer of RM1.75 for every Century Bond share will remain open for acceptances until 5pm on 13th December 2016. (The Edge Daily)  

Source: Mplus Research - 7 Dec 2016