• The FBM KLCI closed marginally lower yesterday as last minute support on selected index heavyweights helped to cushion the day’s losses. Still, the market started on a positive note, jumping to a high of 1,787 points, but lost grounds as the day progressed with little follow through buying and resulting in most subindices closing in the red. The trading services (-0.4%) index was the main underperformer, while the industrial sector (+1.0%) as the main outperformer.

• Market breadth stayed negative with losers outpacing gainers 497-to-412 stocks, while volumes were slightly lower at 3.51 bln shares vs. 3.74 bln shares a day earlier.

• On the key index, the main losers were IHH (-25.0 sen), Digi (-10.0 sen) and Hong Leong Financial Group (-30.0 sen). On the broader market, the key losers were Dutch Lady (-60.0 sen), Lafarge (-43.0 sen), and Batu Kawan (18.0 sen). IWCity closed 15.0 sen lower, despite lingering in the positive zone for most of the day as profit taking activities escalated later in the day.

• Time dotcom (+46.0 sen) emerged as one the day’s biggest mover, followed by MPI (+30.0 sen), Malton (+24.0 sen) and F&N (+22.0 sen). On the big board, Petronas Gas (+RM1.12) was the main mover after it reported stronger quarterly earnings, while the other leaders on the FBM KLCI include Public Bank (+18.0 sen), Petronas Dagangan (+34.0 sen) and MISC (+7.0 sen).

• Regional stockmarkets were mixed with the Hang Seng (-0.1%) retreating after hitting a two-year high a day earlier, but China stocks continues to climb with the Shanghai Composite closing 0.7% higher. The Nikkei (+0.3%) rose for the first time in three sessions as optimism on corporate earnings growth returned. ASEAN indices, meanwhile, were broadly lower.

• U.S. equity markets were virtually unchanged as the Dow (0.0%) and S&P 500 (-0.1%) went nowhere amid the mixed economic data that were released that saw manufacturing output rising, but homebuilding figures disappoint. The Nasdaq, however, continues to gain pace, rising 0.3% as technology stocks were chased up.

• European stock indices were mixed at yesterday’s close with the FTSE rising another 0.9% on optimism over the outcome of the British election as well as higher commodity prices. The CAC was down 0.2% and DAX was unchanged as these markets consolidated ahead on fewer fresh leads after their recent upsides.

The Day Ahead

• The key index is still unable to break out of its tight trading range, lingering within the 1,775 and 1,780 levels as it awaits for more convincing leads to push it pass the 1,780 level.

• Still, we continue to think that the above level will serve as a major near term hurdle as valuations and already stretched and there are fewer compelling buys to help lfit the market higher.

• Therefore, we see the market remaining in a tight rangebound trend within the above levels for now as the market undertone is still holding firm and there is little selling pressure. Meanwhile, the rotational buying interest is likely to help keep traded volumes at respectable levels over the near term as there is still substantive retail interest on the lower liners and broader market shares.

Company Briefs

• OSK Ventures International Bhd (OSKVI) made a turnaround in its earnings with a 1Q2017 net profit of RM14.8 mln, from a net loss of RM4.8 mln a year earlier, due to a net fair value gain on financial instruments of RM15.2 mln, while revenue surged 363.5% Y.o.Y to RM24.3 mln from RM5.2 mln in 1Q2016. (The Edge Daily)

• Iskandar Waterfront City Bhd-linked IWH CREC Sdn Bhd has been given the green light to bid for the Bandar Malaysia real estate project again as long as the offer is right for the Malaysian government, according to Minister in the Prime Minister's Department Datuk Seri Abdul Rahman Dahlan. (The Edge Daily)

• IOI Corp Bhd reported a 58.0% Y.o.Y plunge in its 3QFY17 net profit to RM305.3 mln, from RM729.4 mln a year ago, weighed down by lower net foreign currency translation gain on foreign currency denominated borrowings. Quarterly revenue, however, expanded 21.0% Y.o.Y to RM3.47 bln from RM2.87 bln.

• Cumulative 9MFY17 net profit also declined 38.0% Y.o.Y to RM425.7 mln, from RM688.7 mln in the previous corresponding year due to the aforementioned reasons, although revenue rose 17.0% Y.o.Y to RM10.43 bln, from RM8.92 bln. (The Edge Daily)

• Petronas Chemicals Group Bhd is planning to expand its specialty chemicals production to meet demand in new regional markets and profit from higher margins. The company aims to increase the sales volume of specialty chemicals to 15.0% of total sales volume in the next 20 years, from 0.2% currently. (The Edge Daily)

• Dialog Group Bhd's 3QFY17 net profit increased 20.0% Y.o.Y to RM94.4 mln, from RM78.9 mln in the same quarter last year, on higher contributions from the group’s joint ventures, particularly from the Pengerang Independent Terminals. Earnings were also boosted by a 91.0% Y.o.Y jump on its share of JV results at RM28.6 mln, from RM15 mln a year ago.

• Revenue for the quarter, meanwhile, jumped 42.0% Y.o.Y to RM913.6 mln, from RM641.4 mln previously. The group has declared a dividend of 1.2 sen per share, payable on 29th June, 2017. (The Star Online)

• Inari Amertron Bhd reported a 139.1% Y.o.Y surge in 3QFY17 net profit to RM51.2 mln, from RM21.4 mln a year earlier, mainly due to higher demand for its products and changes in product mix. Revenue also grew 26.1% Y.o.Y to RM274.0 mln, from RM217.3 mln in 3QFY16.

• Cumulative 9MFY17 net profit expanded 49.8% Y.o.Y to RM162.2 mln, from RM108.3 mln a year earlier, while revenue improved 5.7% Y.o.Y to RM830.7 mln vs. RM785.9 mln previously. A third interim single tier dividend of 2.2 sen per share was declared for FY17, which is payable on 6th July, 2017. (The Edge Daily)

• Pharmaniaga Bhd's 1Q2017 net profit rose marginally by 3.0% Y.o.Y to RM18.9 mln, from RM18.4 mln a year ago, attributed to stronger contribution from the private sector business and lower finance costs.

• Revenue also gained 11.0% Y.o.Y to RM618.3 mln, from RM559.2 mln last year. Subsequently, the group has proposed a four sen per share interim dividend, payable on 7th June 2017. (The Edge Daily)

• BIMB Holdings Bhd's 1Q2017 net profit was 11.7% Y.o.Y higher at RM151.1 mln against RM135.3 mln a year ago, as contributions from both its Islamic banking and insurance segments improved. Revenue for the quarter also gained 3.2% Y.o.Y to RM919.6 mln, from RM890.8 mln. (The Star Online)

• Sime Darby Bhd is selling its Australia and New Zealand automobile distribution businesses to Inchcape Australia for the Australian business and to the Rick Armstrong Motor Group for the New Zealand business.

• The distribution businesses are principally involved in the import and distribution of Peugeot, Citroen and DS brands in the Australian and New Zealand markets. (The Star Online)

• Matrix Concepts Holdings Bhd has posted a 28.9% Y.o.Y jump in full year net profit to RM187.8 mln, from RM145.7 mln in FY16, contributed by new sales of its residential properties in Negeri Sembilan and Johor, while revenue soared 31.2% Y.o.Y to RM780.4 mln, from RM594.6 mln a year ago.

• For 4QFY17, Matrix Concepts recorded a net profit of RM39.0 mln and revenue of RM161.4 mln. The group also changed its financial year end from 31st December to 31st March. It declared a fourth interim single-tier dividend of 3.75 sen per share in respect of FY17, payable on 20th June 2017. (The Edge Daily)  

Source: Mplus Research - 17 May 2017