• Once again, a last minute haul on selected index heavyweights allowed the key index to close with marginal gains in an otherwise dour market environment where selling and profit taking activities remain prevalent. For most of the day, the key index was in the negative territory as leads were far-and-in between. As with the previous day, most sub-indices were in the red with the FBM ACE dipping 1.4%, while the Finance index was the main outperformer with a 0.8% gain.

• Market breadth stayed on the negative side as losers were ahead of gainers 501- to-437 stocks. Meanwhile, volumes perked up slightly with 2.74 bln shares traded, nearly 5.0% higher than the previous day.

• Banks were among the main index movers – CIMB was up 14.0 sen, followed by Maybank (+8.0 sen), Westports (+18.0 sen) and Petronas Dagangan (+64.0 sen). In the broader market, Ajinomoto (+50.0 sen) continues to make headway after proposing a special dividend, while Nestle (+50 sen), Hong Leong Industries (+45.0 sen) and Malaysia Airports (+26.0 sen) were among the other big movers of the day.

• Maxis (-25 sen) endured a selldown to emerge as the biggest loser on the FBM KLCI, followed by Genting Malaysia (-8.0 sen), IHH (-8.0 sen) and Petronas Gas (- 30 sen). Elsewhere, Panasonic Malaysia continues to lose ground, dipping RM1.22, followed by Genting Plantations (-52 sen), Yee Lee (- 22.0 sen) and Karex (-25.0 sen) – the latter falling after announcing weaker results.

• Asian stock markets closed mixed yesterday with the Nikkei slipping 0.1% on a stronger Yen, but China stock dipped despite the country reporting stronger economic data. Hong Kong stocks, meanwhile, rose to its highest level with technology and financial stocks leading the gains. ASEAN stock indices closed mixed.

• U.S stocks continues to ease overnight as banking stocks were sold down following the weakness in JP Morgan’s revenue. The losses were more pronounced for most of the day, until last minute bargain hunting helped to cushion the losses and leaving the Dow just 0.1% down for the day, while the S&P 500 was 0.05% lower. The Nasdaq also retreated slightly.

• There continues to be little impetus for European stocks and this resulted in a mixed market environment that saw the FTSE and CAC falling 0.1% and 0.4% respectively, while the DAX improved 0.1%.

The Day Ahead

• There is still a shortage of leads to determine the market’s near term direction, both from local and foreign sources. Thus, this is leaving the key index to drift with the periods of profit taking punctuated by the bouts of bargain hunting activities over the past few sessions. With the current insipid market conditions continuing, we think the key index is likely to remain on a rangebound trend over the near term. Gains will be capped by the high valuations, while the downside risk will again be cushioned selected support on the index heavyweights.

• Hence, we expect the key index to continue trending within the 1,760 and 1,770 levels over the near term.

• The broader market and lower liners, however, may continue to witness selling amid the lack of fresh buying interest after many stocks have climbed significantly over the past few months, thus providing few compelling buys. Also the lack of new leads is resulting in many retail players locking in their profits.

Company Briefs

• Felda Global Ventures Holdings Bhd’s (FGV) 1Q2017 net profit stood at RM2.5 mln vs. a net loss of RM81.1 mln, lifted by lower costs and higher revenue from the plantation, logistics and sugar segments. Revenue for the quarter grew 15.1% Y.o.Y to RM4.32 bln. (The Star Online)

• Malaysian Resources Corp Bhd (MRCB) is partnering the Employees Provident Fund (EPF) to jointly develop three parcels of leasehold land in Bukit Jalil, which have a potential gross development value (GDV) of RM21.00 bln over a 20-year period.

• MRCB’s 85%-owned subsidiary, Rukun Juang Sdn Bhd will hold a 20.0% stake in the JV company, while Tanjung Wibawa will own the remaining 80.0% shares. Under the agreement, Rukun Juang will sell the land to Bukit Jalil Sentral Property for up to RM1.43 bln or RM405 per sq ft. (The Edge Daily)

• AMMB Holdings Bhd’s (AmBank Group) 4QFY17 net profit rose 19.9% Y.o.Y to RM335.8 mln, mainly contributed by other operating income, net income from Islamic banking business, writeback of impairment on doubtful sundry receivables and net interest income. Revenue for the quarter increased 2.4% Y.o.Y to RM2.15 bln.

• For FY17, cumulative net profit grew marginally by 1.7% Y.o.Y to RM1.32 bln. Revenue for the year, however, fell 1.5% Y.o.Y to RM8.29 bln. A final dividend of 12.6 sen per share was proposed. ? Separately, Ambank Group and RHB Bank Bhd have requested a suspension in the trading of their shares today. Both groups were suspended pending a material announcement, which is rumoured to be a potential merger between the two banks. (The Edge Daily)

• Mah Sing Group Bhd’s 1Q2017 net profit declined 4.9% Y.o.Y to RM90.4 mln as selling, marketing and administrative expenses rose. Revenue for the quarter, however, rose 2.0% Y.o.Y to RM723.5 mln. (The Edge Daily)

• Sime Darby Bhd’s 3QFY17 net profit increased 5.0% Y.o.Y to RM699.0 mln, anchored by higher income from its oil palm plantation, heavy equipment and car dealerships divisions. Revenue for the quarter climbed 21.7% Y.o.Y to RM12.45 bln.

• For 9MFY17, cumulative net profit improved 40.4% Y.o.Y to RM1.79 bln. Revenue for the period added 8.2% Y.o.Y to RM34.88 bln. (The Edge Daily)

• MSM Malaysia Holdings Bhd’s 1Q2017 net loss stood at RM34.6 mln vs. a net profit of RM59.3 mln, owing to the higher raw material costs and the weakened Ringgit. Revenue, however, rose 17.3% Y.o.Y to RM649.0 mln. (The Edge Daily)

• Bumi Armada Bhd's 1Q2017 net profit jumped 105.3% Y.o.Y to RM48.1 mln, driven mainly by higher contribution from the Floating Production and Operation (FPO) segment. Revenue for the quarter, however, declined 6.2% Y.o.Y to RM404.2 mln. (The Edge Daily)

• Alliance Financial Group Bhd's (AFG) 4QFY17 net profit slipped 9.6% Y.o.Y to RM117.4 mln, on higher allowances for losses on loans, advances, financing and other receivables. Revenue for the quarter, however, gained 4.1% Y.o.Y to RM367.3 mln.

• For FY17, cumulative net profit fell 1.9% Y.o.Y to RM512.1 mln. Revenue for the year, however, improved 3.2% Y.o.Y to RM1.47 bln. A second interim dividend of 7.5 sen per share, payable on 22nd June 2017 was declared. (The Edge Daily)

• KNM Group Bhd’s 1Q2017 net profit sank 81.8% Y.o.Y to RM2.0 mln, dragged down by lower percentage of completed projects recognised and slower replenishment of new orders due to market uncertainties. Revenue in the quarter fell 17.7% Y.o.Y to RM326.8 mln. (The Edge Daily)

• Muhibbah Engineering (M) Bhd's 1Q2017 net profit rose 23.4% Y.o.Y to RM29.3 mln, due to higher contribution from its concessions division, coupled with lower tax payments. Revenue for the quarter, however, slipped 49.9% Y.o.Y to RM241.5 mln. (The Edge Daily)

• Destini Bhd’s 1Q2017 net profit increased 40.3% Y.o.Y to RM10.1 mln, on higher demand for the group’s aviation maintenance, repair and overhaul (MRO) services, as well as its marine manufacturing services. Revenue for the quarter soared 173.7% Y.o.Y to RM223.7 mln. (The Edge Daily)  

Source: Mplus Research - 1 Jun 2017