• The FBM KLCI rose 0.5% to close higher for the third consecutive day after recovering from earlier losses, on the back of the continuous buying-support in blue chips counters. Most of the lower liners rose, with the exception of the FBM Ace (-0.2%). Meanwhile, seven out-of-ten sectors on the Bursa Malaysia advanced.

• Market breadth was indifferent as losers skirted winners on a ratio of 371-to-370. Traded volumes rallied 25.3% to 1.7 bln shares amid subsiding selling pressure from foreign funds ahead of the year-end.

• Key index constituents which boosted the Main Board were Kuala Lumpur Kepong (+52.0 sen), Hong Leong Bank (+30.0 sen), Tenaga (+30.0 sen), KLCC (+20.0 sen) and Petronas Chemicals (+12.0 sen). Broader market advancers include F&B giants like Dutch Lady (+40.0 sen) and Fraser & Neave (+34.0 sen), trailed by other winners such as Allianz Malaysia (+18.0 sen) and Genting Plantations (+12.0 sen). Meanwhile, Foundpac rose 12.0 sen following its listing debut on Thursday.

• Significant laggards were Nestle (-70.0 sen), Panasonic Manufacturing (-58.0 sen), Chin Teck Plantations (-18.0 sen), Warisan (-15.0 sen) and Perusahaan Sadur Timah Malaysia (-12.0 sen). Key heavyweights that declined yesterday were BAT (-40.0 sen), Hap Seng (-33.0 sen), Hong Leong Financial Group (-14.0 sen), Maxis (-8.0 sen) and AMMB Holdings (-7.0 sen).

• Key regional indices were mostly subdued on Thursday amid a weaker Dollar and disappointing U.S. home sales data. The Nikkei dropped 1.3%, dragged down by Toshiba (-17.0%) following a credit downgrade by major rating agencies due to uncertainties surrounding the write-down in its nuclear business. The Shanghai Composite Index lost 0.2% - weighed down by the property sector, although the Hang Seng Index rose 0.2%, ahead of its November trade data. ASEAN stockmarkets, however, finished broadly in the green.

• U.S. stockmarkets retreated on Thursday’s closing bell as gains in defensive stocks failed to outweigh the losses in the financial sector. The Dow slide further away from the 20,000 points milestone after falling marginally by 0.1%, while the S&P 500 (-0.03%) flatlined. The Nasdaq (-0.1%) also closed lower, led by losses in Cempra (-57.4%) after the drug maker’s antibiotic was rejected by the U.S. health regulators.

• Earlier, European equities closed in the red as concerns over the health of the banking industry continued to weigh on the market, amid holiday-thinned trading. Both the CAC and the DAX slipped 0.2%, as losses in Deutsche Bank (-1.6%) and Commerzbank (-1.3%) dragged Germany’s key index lower. The FTSE, however, finished up by 0.2% as metal-related counters continued its rally.

The Day Ahead

• After yesterday’s continuing window dressing activities, we think that profit taking activities will emerge over the near term for the gains to be digested. As it is, we do not think that the current uptrend is sustainable as there remain few positive catalysts to lift the market significantly higher and the current spell is largely the traditional year-end window dressing exercise.

• Therefore, we expect the window dressing activities to ease and any upside could be limited to the 1,640 level. The supports, meanwhile, are located at the 1,620-1,630 levels.

• We also think that retail players will undertake quick profit taking activities on the lower liners and broader market over the near term.

Company Briefs

• Track and trace solutions provider SMTrack Bhd’s external auditor, KC Chia & Noor, has expressed a qualified opinion on the company’s annual audited financial statements for the financial year ended 31st July 2016.

• The auditor highlighted three issues that remained unresolved during the financial year in question, namely, the carrying value of certain assets, accounts’ opening balances and a gain on disposal of a subsidiary company.

• One of the basis for the qualified opinion was that the previous auditor was unable to obtain a satisfactory and appropriate audit evidence concerning the recoverable amount of IT equipment, and IT equipment under installation, which amounted to RM2.9 mln and RM3.3 mln, respectively as at 31st March 2015.

• It was also unable to access the audit working papers of the predecessor auditors and unable to verify SMTrack account’s opening balances and unable to perform any verification on a gain on the disposal of SMTrack’s subsidiary, LEYS International Ltd.

• SMTrack has been suspended from trading since 8th December 2016 because of the delay submitting its annual report. The group has submitted its outstanding annual report and will resume its trading on 30th December 2016. (The Star Online)

• Berjaya Corp Bhd’s (BCorp) 2QFY17 net profit rose 44.4% Y.o.Y to RM176.5 mln, driven by improved contributions from its property investment and development business segment. Revenue for the quarter added 8.8% Y.o.Y to RM2.46 bln.

• For 1HFY17, cumulative net profit declined 36.2% Y.o.Y to RM113.8 mln. Revenue for the period, however, gained 6.6% Y.o.Y to RM4.68 bln. (The Edge Daily)

• Crescendo Corp Bhd's 3QFY17 net profit ballooned 373.2% Y.o.Y to RM8.0 mln, mainly due to higher sales of properties. Revenue for the quarter climbed 98.3% Y.o.Y to RM72.5 mln.

• For 9MFY17, cumulative net profit surged 305.3% Y.o.Y to RM58.9 mln. Revenue for the period rose 27.6% Y.o.Y to RM170.0 mln. (The Edge Daily)

• Apollo Food Holdings Bhd’s 2QFY17 net profit fell 55.5% Y.o.Y to RM4.3 mln, on weaker sales in both its local and overseas markets coupled with higher raw material costs. Revenue for the quarter declined 10.5% Y.o.Y to RM48.1 mln.

• For 1HFY17, cumulative net profit decreased 52.0% Y.o.Y to RM10.0 mln. Revenue for the quarter dipped 5.4% Y.o.Y to RM98.1 mln. (The Edge Daily)

• Quality Concrete Holdings Bhd’s 3QFY17 net loss widened 88.3% Y.o.Y to RM3.9 mln, mainly due to a contract sum deduction for its completed water infrastructure project. Revenue for the quarter, however, gained 13.3% Y.o.Y to RM43.8 mln.

• For 9MFY17, cumulative net loss shrank 29.8% Y.o.Y to RM6.8 mln. Revenue for the period, however, fell 12.5% Y.o.Y to RM98.9 mln. (The Edge Daily)  

Source: Mplus Research - 30 Dec 2016