• Despite lingering in the negative territory for most of the trading session, buying support amongst selective index heavyweights in the eleventh hour sent the FBM KLCI 0.2% higher. The key index recorded its fourth straight session of gains and consequently rose 1.5% W.o.W, but fell 3.0% Y.o.Y in 2016 – marking its third consecutive annual decline. Most of the lower liners rose, with the exception of the FBM Small Cap (-0.4%), while the Construction sector (-0.2%) underperformed the positive broader market.

• Market breadth turned positive as gainers edged losers on a ratio of 404-to-362. Traded volumes, however, fell 17.8% to 1.45 bln shares as investors retreated ahead of the extended year-end break.

• Notable advancers on the big board were BAT (+RM1.60), Hap Seng (+33.0 sen), KLCC (+30.0 sen), Petronas Dagangan (+33.0 sen) and Maybank (+22.0 sen). Consumer products giants like Nestle (+40.0 sen), MSM (+34.0 sen), Frasers & Neave (+28.0 sen) and Dutch Lady (+16.0 sen) topped the broader market gainers list, while Kim Loong added 10.0 sen after reporting a strong set of quarterly earnings.

• On the flipside, topping the broader market decliners list were Success Transformer (-19.0 sen), Apollo (-16.0 sen), Y&G (-15.0 sen), Ajinomoto (-12.0 sen) and Heineken Malaysia (-12.0 sen). Meanwhile, KLK (-20.0 sen), PPB Group (- 14.0 sen), DiGi (-13.0 sen), Telekom (- 11.0 sen) and MISC (-6.0 sen) were amongst the biggest decliners on the key index.

• Japanese equities trended lower as the Nikkei (-0.2%) fell to a three-week low but added 0.4% Y.o.Y in 2016. The Shanghai Composite Index (+0.2%) recouped most of its previous session losses, but fell 12.3% Y.o.Y in 2016, while the Hang Seng Index jumped 1.0% to close above the 22,000 psychological level and subsequently added 0.4% Y.o.Y in 2016. ASEAN stockmarkets, meanwhile, ended mostly higher.

• U.S. stockmarkets extended its losses in the final trading day of the year. The Dow declined 0.3% on profit taking activities but managed to record a 13.4% Y.o.Y gain in 2016. On the broader market, the S&P 500 slipped 0.5%, while the Nasdaq ended 0.9% lower with both indices rising 9.5% Y.o.Y and 7.5% Y.o.Y in 2016.

• European benchmark indices, however, ended on a positive note – the FTSE (+0.3%), CAC (+0.5%) and DAX (+0.3%) all finished higher. All three indices booked in 14.4% Y.o.Y, 4.9% Y.o.Y and 6.9% Y.o.Y gains in 2016, largely fuelled by the rally on Wall Street in 4Q2016.

The Day Ahead

• Last week’s profit taking has short and the FBM KLCI’s end-of-year performance has generally exceeded expectations as it managed to narrow its Y.o.Y losses. However, we think the start of the year may see the selling activities resuming as short-term players continues to lock-in profits after last week’s runup.

• As it is, investors will be searching for new catalysts to start the year, but we think there remain few and this will leave investors to retreat to the sidelines for the time being and to close out their shortterm positions. The pullback could send the key index back to the 1,630 support level, while the 1,650 level continues to be the major resistance.

• We also think the profit taking activities will extend to the lower liners and broader market shares as retail players will also trim some of their short-term positions.

Company Briefs

• Pesona Metro Holdings Bhd has terminated its plan to acquire a 90.0% equity shareholding in Selasih Asli Sdn Bhd for RM60.0 mln after the conditions of the acquisition was not fulfilled. Selasih Asli is owned by Semarak Korporat Sdn Bhd, a wholly-owned unit of SPK-Sentosa Corp Bhd.

• Under the Share Sale Agreement (SSA) signed in April 2015, Selasih Asli was required to secure a 30-year concession to design, develop and maintain student hostels for a tertiary-level institution in Peninsula Malaysia. However the aforementioned deal was not secured.(The Edge Daily)

• HeiTech Padu Bhd has been awarded a three-year contract to supply core banking infrastructure and technology to Bank Simpanan Nasional (BSN) for a total of RM53.6 mln on 28th December 2016.

• The project will include the delivery of hardware, software, services and maintenance for the project. The consideration for the contract is RM43.8 mln, while the remaining RM9.8 mln is for the maintenance of the project over a two-year period. (The Edge Daily)

• CIMB Group Holdings Bhd (CIMB) is planning to sell its 18.2% equity stake in the Bank of Yingkou Co Ltd (BYK) for RM972.0 mln. The group has inked a Share Transfer Agreement (SPA) with Shanghai Guozhijie Investment Development Co Ltd, which will see 391.4 mln shares in BYK sold at one time its price to book value (P/BV). The exercise is expected to be completed in 2017. ? The disposal will enable CIMB to focus on its core business in its core markets, based on its Target 18 (T18) - the group’s strategic review exercise that was initiated in 2014.(The Edge Daily)

• Cypark Resources Bhd's 4QFY16 net profit jumped 45.0% Y.o.Y to RM11.9 mln, from RM8.2 mln last year - due to higher income generated from its landfill operation as well as its Ladang Tanah Merah project. Quarterly revenue also grew 21.3% Y.o.Y to RM67.6 mln against RM55.7 mln a year earlier.

• In FY16, the group's earnings rose 16.5% Y.o.Y to RM50.7 mln, from RM43.5 mln, while revenue rose to RM282.9 mln vs. RM251.9 mln in FY15.

• The group said that the increasing demand for a cleaner and greener solution for waste management and disposal facilities has generated opportunities for Cypark to implement its innovative wasteto-energy technology (SMART-WTE).

• The SMART-WTE plant in Ladang Tanah Merah, Negeri Sembilan, Malaysia, which is slated to be completed in 2017, will be the Malaysia’s first and largest state-ofthe-art green waste-to-energy plant. The plant will exclusively cater for most of the waste generated in the state of Negeri Sembilan for the next 25 years and is expected to generate revenue of more than RM80.0 mln per annum.

• R&A Telecommunication Group Bhd is suing JMT Kelantan Baru Sdn Bhd and JMT RE Maintenance Sdn Bhd for failing to repay the RM1.0 mln in advance payment made for a 2x10 MWp mini hydro power project that the group has undertaken in Kelantan.

• R&A is also claiming a 5.0% per annum interest, costs and any other relief deemed suitable and beneficial, as the court may deem fit. (The Star Online)

• Loss-making SMTrack Bhd said that it is not expecting to turnaround anytime soon, as it is in the midst of organisational restructuring, following several boardroom changes last year. The group also appointed its new auditor, Messrs KC Chia & Noor in October, after its former auditor Messrs Baker Tilly Monteiro Heng resigned in August.

• The group posted a net loss of RM0.3 mln in 1QFY17, compared to a net profit of RM514, 000 a year earlier, although revenue tripled to RM0.6 mln from RM0.2 mln.

• Nevertheless, SMTrack plans to return to the black by end-2017, banking on its information technology business, where the Radio-frequency Identification (RFID) technology is its main forte — as well as the construction segment. (The Edge Daily)  

Source: Mplus Research - 3 Jan 2017