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Author: PublicInvest   |   Latest post: Mon, 2 Aug 2021, 10:16 AM

 

PublicInvest Research Headlines - 2 Aug 2021

Author: PublicInvest   |  Publish date: Mon, 2 Aug 2021, 10:16 AM


Economy

US: Consumer sentiment drops slightly less than initially estimated in July. Revised data released by the University of Michigan showed consumer sentiment in US decreased by slightly less than initially estimated in the month of July. The report said the consumer sentiment index for July was upwardly revised to 81.2 from a preliminary reading of 80.8 but remains below the June reading of 85.5. Economists had expected the index to be unrevised. "The largest monthly declines remained concentrated in the outlook for the national economy and complaints about high prices for homes, vehicles, and household durables," said Surveys of Consumers chief economist Richard Curtin. (RTT)

US: Consumer sentiment drops slightly less than initially estimated in July. Revised data released by the University of Michigan showed consumer sentiment in US decreased by slightly less than initially estimated in the month of July. The report said the consumer sentiment index for July was upwardly revised to 81.2 from a preliminary reading of 80.8 but remains below the June reading of 85.5. Economists had expected the index to be unrevised. "The largest monthly declines remained concentrated in the outlook for the national economy and complaints about high prices for homes, vehicles, and household durables," said Surveys of Consumers chief economist Richard Curtin. (RTT)

US: Personal income unexpectedly inches higher in June. Personal income in the US expectedly saw a slight increase in the month of June, according to a report released by the Commerce Department. The report showed personal income inched up by 0.1% in June after tumbling by a revised 2.2% in May. The uptick surprised economists, who had expected personal income to dip by 0.3% compared to the 2.0% slump originally reported for the previous month. The modest increase in personal income primarily reflected higher private wages and salaries, which were partly offset by decreases in economic impact payments and unemployment insurance. (RTT)

EU: Eurozone economy bounces back from pandemic driven downturn. The euro area economy recovered in the 2Q, after two straight quarters of contraction, driven by the lifting of lockdowns and the implementation of vaccination programmes, the preliminary flash estimate from Eurostat showed. Inflation exceeded the ECB’s target in July on higher energy prices, another report from the statistical office showed. The unemployment rate in the currency bloc dropped to the lowest since May 2020 as firms hired more staff amid economic recovery. (RTT)

China: Will maintain prudent, flexible monetary policy in 2H — central bank. China will maintain a prudent, flexible and targeted monetary policy in the second half of the year, its central bank said, as it seeks to support growth while keeping the digital economy in check. China's economy has staged a strong rebound from the impact of the Covid-19 pandemic, but recent data has suggested that gains are fading. The People's Bank of China (PBOC), in a statement on its website after a meeting on its priorities for the second half of the year, called for "rectifying" e-commerce and other tech companies and said it would "maintain a high level of pressure" on firms speculating in digital currencies. (Reuters)

China: Factory activity in July grows at slowest pace since Feb 2020. China's factory activity expanded in July at the slowest pace in 17 months as higher raw material costs, equipment maintenance and extreme weather weighed on business activity, adding to concerns about a slowdown in the world's second-biggest economy. The official manufacturing Purchasing Manager's Index (PMI) eased to 50.4 in July from 50.9 in June, data from the National Bureau of Statistics (NBS) showed, but remained above the 50-point mark that separates growth from contraction. (Reuters)

South Korea: July exports jump to record though growth pace slows. South Korean exports jumped to a record high in July as overseas demand for chips and biohealth products extended export growth to a ninth consecutive month, supporting an economic recovery facing headwind from the country's worst Covid-19 outbreak yet. Exports rose 29.6% in July from the same month a year earlier to USD55.43bn, the largest amount since South Korea began compiling relevant data in 1956, the trade ministry said. (Reuters)

Japan: Industrial production climbs 6.2% in June. Industrial output in Japan advanced a seasonally adjusted 6.2% on month in June, the Ministry of Economy, Trade and Industry said. That beat expectations for an increase of 5.0% following the downwardly revised 6.5% contraction in May (originally -5.9%). On a yearly basis, industrial production spiked 22.6% - roughly in line with expectations following the 21.1% gain in the previous month. Upon the release of the data, the METI maintained its assessment of industrial production, saying that it is picking up. (RTT)

Markets

Malakoff (Outperform, TP: RM1.02): To assess developing rooftop solar projects at police buildings. Malakoff Corp has signed a MoU with Koperasi Polis Diraja Malaysia (KPDRM) to assess the feasibility of jointly developing rooftop solar projects at selected police buildings. The collaboration came under the Net Energy Metering 3.0 scheme or for self-consumption. (BTimes)

Serba Dinamik (Neutral, TP: RM0.44): Bintulu energy hub remains agile, resolute amid Covid-19 uncertainties. Bintulu Integrated Energy Hub (BIEH) in Sarawak remains agile and resolute in responding to an uncertain and challenging economic environment, in its pursuit of long-term growth strategies towards a sustainable future. (BTimes)

Kerjaya Prospek: Bags RM139m job from E&O. Kerjaya Prospek Group has bagged a RM139m contract from Damansara Peak SB. Damansara Peak is an indirect subsidiary company of Eastern & Oriental (E&O). This was the fourth contract secured for the year, bringing the year-to-date contract wins to RM523.5m. Kerjaya Prospek's total outstanding order book now stands at about RM3.4bn. (BTimes)

AYS Ventures: Sells land, properties in Selangor for RM10.8m. AYS Ventures is disposing of a freehold land and properties in Selangor for RM10.8m. The land sale is expected to result in a loss of approx. RM1.2m. It had entered into a sale and purchase agreement to dispose of a freehold land in Kapar, Klang, Selangor, measuring approx. 2.1767 acres. (The Edge)

G Capital: Partners KOP Mantap to develop solar power. G Capital has partnered with KOP Mantap to develop renewable energy (RE) focusing on solar power. Both parties inked a MoU to establish a framework for collaboration regarding business opportunities and potential business ventures. These included developing plots of land with high sun exposure to construct, develop, and operate solar photovoltaic plants. (BTimes)

Leon Fuat: Buys land in Port Klang to expand steel manufacturing business. Leon Fuat is acquiring a leasehold industrial land in Port Klang for RM20.43m to expand its welded steel pipe manufacturing activities. The 27,108 sqm land is located less than 500 metres from the group’s existing welded steel pipe manufacturing plant in Kawasan Perusahaan Bandar Suleiman. (The Edge)

Westports: 2Q net profit jumps 32% on higher container revenue, declares 8.5 sen dividend. Westports Holdings net profit rose by 32.48% to RM177.97m in the 2QFY21 from RM134.34m recorded in the previous year’s corresponding quarter, largely due to higher container revenue. Consequently, EPS jumped to 5.22sen from 3.94sen. (The Edge)

MHB: Narrows operating loss in 2Q21. Malaysia Marine & Heavy Engineering (MHB) narrowed its net loss for the 2QFY21 to RM34.38m from RM397.02m last year, on lower impairments and operating losses in the quarter. Quarterly losses per share shrank to 2.1sen, from 24.8sen last year. The bigger operating losses last year was due to the yard shutdown during the Movement Control Order 1.0. (The Edge)

MARKET UPDATE

The FBM KLCI might open flat today as Wall Street stocks followed European and Asian bourses lower on Friday after markets were buffeted last week by jitters over slowing global growth and Beijing’s regulatory crackdown on tech businesses. The S&P 500 closed down 0.5%, although the blue-chip index still notched its sixth consecutive month of gains, boosted by strong corporate earnings and record-low interest rates. The tech-focused Nasdaq Composite slid 0.7%, after the quarterly results of online bellwether Amazon missed analysts’ forecasts. The tech conglomerate’s stock finished the day 7.6% lower, its biggest oneday drop since May 2020. The sell-off on Wall Street comes after the continent-wide Stoxx Europe 600 index ended the session 0.5% lower, having hit a high a day earlier, lifted by a bumper crop of upbeat earnings results. Data released on Thursday showed the US economy grew at a weaker than expected annualised rate of 6.5% in the three months to June, as labour shortages and supply chain disruptions caused by coronavirus persisted. Meanwhile, China’s regulatory assault on large tech businesses has sparked fears of a broader crackdown on privately owned companies.

Back home, the FBM KLCI slipped to below the key support level of 1,500, in line with weaker regional markets which were dragged down by Covid-19 worries. The benchmark index ended 18.33 points or 1.21% lower at its intra-day low of 1,494.6. The regional shares also slid, extending their biggest monthly drop on lingering investor concern over regulatory crackdowns in China on the education, property and tech sectors and a resurgence in Covid-19 cases in the country. The Shanghai Composite Index ended 0.42% lower at 3,397.36, and Hong Kong’s Hang Seng Index fell 1.35% to 25,961.03. Japan’s Nikkei 225 fell 1.8% to 27,283.59, its biggest decline since June 21 and the lowest close since Jan 6. South Korea’s Kospi, meanwhile, tumbled 1.24% to 3,202.32, its sharpest daily fall in more than two months.

Source: PublicInvest Research - 2 Aug 2021

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CIMB Group Holdings Berhad - CIMB Niaga: Cautious Optimism

Author: PublicInvest   |  Publish date: Mon, 2 Aug 2021, 10:15 AM


CIMB Niaga reported an improved 2QFY21 net profit of Rp1.12tln (+70.8% YoY, + 18.2% QoQ) due primarily to lower levels of loan loss provisions (-29.6% YoY, - 28.4% QoQ). Notable improvements continued to be seen in its funding profile, thereby sustaining its margins, while operating costs were also kept in check. Loans growth is still soft amid uncertain economic conditions, though key indicators continue to show positive trends. In the near-term, liquidity, asset quality and cost management will remain key focus areas. We remain optimistic over the Group’s longer-term prospects, underpinned by its F23+ initiatives, and are encouraged by this turnaround in the Indonesian operations. We retain our Neutral call however given limited upside to our target price of RM4.50.

  • Operating income fell 2.4% QoQ due to a weakening in non-interest income contributions (-8.5% QoQ), though mitigated again by a notably lower interest expense (-8.0%). Loan yields were 4bps lower QoQ to 8.4% while cost of funds only slipped 2bps QoQ to 2.1%. There was a significant +141.8% QoQ jump in recoveries (from a sale of loans), though a much larger decline in derivative and fee income weighed on non-interest income.
  • Net interest margin (NIM) slipped marginally to 5.08% in 2QFY21 (1QFY21: 5.12%) due to a drop in loan yields. On a YoY basis however, a significant improvement in funding costs (-124bps) which outstripped that of lower loan yields (-109bps) is keeping margins steady at above 5%. The bank’s CASA ratio of 62.4% is above industry average of 59.4%.
  • Loans outstanding contracted further by 6.8% on a YoY basis, though relatively flat on a sequential basis. Caution continued to be exercised over the corporate (-14.0% YoY) and commercial (-14.3%) portfolios which continued to be restructured in line with its F23+ recalibration. With near to medium term focus still on asset quality management, the consumer banking franchise will remain the growth driver, particularly in the mortgage and auto segments.
  • Asset quality continues to improve, with loan loss provisions dropping a further 29.6% YoY and 28.4% QoQ though also due in part to absorption by macro overlays from previous quarters. Gross non-performing dropped 0.6% QoQ to 3.2%, though special mention loans were 0.5% higher to 6.6%. Management is cautious given the resurgence in new COVID-19 cases, with the resultant movement restrictions and business closures posing new challenges. Active loans at risk (including COVID-19 related credit) currently makes up about ~18% of its total loans book, with a 39% coverage ratio. 1HQFY21 credit cost is 2.7%, within expectations.

Source: PublicInvest Research - 2 Aug 2021

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Axiata Group - Negotiating Potential Acquisition of Link Net

Author: PublicInvest   |  Publish date: Mon, 2 Aug 2021, 10:15 AM


Axiata Group (Axiata) and its 66.48%-owned subsidiary XL Axiata, have entered into a non-binding term sheet with Asia Link Dewa and PT First Media to facilitate discussion for a potential acquisition of a 66% stake in PT Link Net (Link Net), a telco service and cable television provider in Indonesia. Link Net has a market capitalisation of IDR13.2 tril (~RM3.8bn) and an annual net profit of Rp941.7bn (~RM275m) for FY20. The historical 5-year earnings CAGR of Link Net appears to be decent at 9%. As this proposal is only at its preliminary stage, we make no changes to our earnings forecasts and maintain our Neutral call on Axiata.

  • Background. Link Net is engaged in the provision of telco services through a broadband communication network including distribution of television programs and high-speed internet in 23 cities across Indonesia. The key growth driver for Link Net hinges on Indonesia’s large and young population base, growing affluence and expanding internet user base. The group is currently owned by a private equity firm and a subsidiary of the Lippo Group conglomerate.
  • Financials. Historically, Link Net has chalked a 5-year earnings CAGR of 9% between 2015 and 2020 with a 15% annual growth in ARPU. It is one of the leading high-speed broadband (HSBB) providers in Indonesia with 2.7m home passes. Competition in the fixed broadband market is intense but only Link Net and another player (PT Telkom) currently operate with scale. In 1QFY21, it posted an EBITDA and net profit margin of 58.4% and 23.3% respectively.
  • Still in the early stage. The growth prospect of Link Net seems promising given the country’s large population base with 58% under the age of 30 years while online penetration remains low. Nevertheless, the proposal is still in the early stage of discussion. It remains uncertain whether this would lead to a definitive agreement. In the absence of key information such as purchase consideration, valuation, mode of payment etc we are unable to assess its impact on Axiata at this juncture.

Source: PublicInvest Research - 2 Aug 2021

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MI Technovation Berhad - Expecting Strong Catch-up in 2H

Author: PublicInvest   |  Publish date: Mon, 2 Aug 2021, 10:14 AM


Stripping out the one-off expense of RM7.7m incurred in 1QFY21, and foreign exchange (FX) changes, Mi Technovation saw its 1HFY21 earnings grow 43.3% YoY to RM33.4m on the back of stronger semiconductor equipment earnings and also new earnings contribution from Taiwan-based Accurus Scientific. Nevertheless, the results accounted for only 41% and 45% of our and consensus expectations, respectively. No dividend was declared for the quarter. Despite the weaker-than-expected results, we make no changes to our earnings forecasts as we expect to see a catch-up in the subsequent quarters. Pending more guidance from the upcoming briefing, we maintain our Outperform call with an unchanged TP of RM5.78 based on 45x FY22 EPS.

  • 2QFY21 revenue surged 89.5% YoY to RM117.3m. The encouraging topline growth was mainly driven by the semiconductor equipment business and maiden contribution from the semiconductor material business following completion of the acquisition of Taiwan-based Accurus Scientific on 19 April. Following the realignment across the group, the semiconductor equipment business now includes the i) manufacturing and sales of the semiconductor manufacturing equipment, ii) smart factory automation solutions for Industrial 4.0, iii) provision of maintenance services and technical support and iv) sale of related spare parts and components. Led by the robust Mi Series equipment sales to China, semiconductor equipment sales jumped 46.6% YoY to RM90.7m, making up 77.3% of the Group’s topline. The remainder was contributed by the semiconductor material business, which made up of RM26.5m, supported by solder ball sales.
  • Record quarterly earnings. The Group posted its best-ever quarterly earnings of RM26.3m, up 35.6% YoY, on the back of stronger earnings contribution from semiconductor equipment business (YoY: +29.5%) while semiconductor material business delivered a maiden pre-tax profit of RM2.7m. Meanwhile, pre-tax margin declined from 29.6% in 2QFY20 to 22.5%, attributable to the aggressive expansion carried out by the semiconductor equipment business in Taiwan, Korea and China as well as operating expenses incurred by the semiconductor material business for the new plant in Ningbo, China.
  • Looking at another new venture. We understand that the recently proposed private placement raising RM270m via an issuance of 10% of its share base of 820.2m is to prepare the group for multiple acquisition targets in different regions as it plans to expand its semiconductor material business portfolio. One of the potential M&A targets is related to semiconductor materials used for automotive semiconductor applications, which are believed to be able to complement the new solder ball business. The move will also diversify its exposure beyond mobile devices.

Source: PublicInvest Research - 2 Aug 2021

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Maxis Berhad - In Line With Expectations

Author: PublicInvest   |  Publish date: Mon, 2 Aug 2021, 10:13 AM


Maxis posted a 5.3% YoY growth in 2QFY21 net profit to RM360m. The results were within both our and consensus estimates, accounting for 48% of full-year forecast. The growth in earnings was largely due to stronger revenue contribution from device sales, postpaid and home fibre business, despite a slight uptick in total cost. Our earnings forecast and DCF-based TP of RM4.64 remain unchanged. We maintain our Neutral call on Maxis. A second interim dividend of 4.0sen per share was declared, bringing it to a total dividend of 8.0sen per share for 1HFY21.

  • 2QFY21 revenue increased by 5.3% YoY, driven by higher postpaid revenue, home fibre revenue and device sales. Postpaid subscriber base improved by 8.7% YoY, partly at the expense of a 6% decline in postpaid subscriber base as prepaid customers continued to switch to the value accretive Hotlink Postpaid. The higher postpaid base was also attributable to the introduction of Jaringan Prihatin Programme. Blended ARPU remained stable at RM47. Fibre connections have risen by 18.5% due to strong adoption rate for Maxis Unlimited Postpaid & Fibre converged packages. Meanwhile, we attribute the increase in device sales to new product launches.
  • 2QFY21 net profit also grew 5.3% YoY. Despite a 5% increase in total expenses, mainly due to higher direct cost and depreciation charges, the group was able to chalk a growth in net profit on higher revenue. EBITDA margin improved marginally from 43.6% in 2QFY20 to 44%. Although capex was lower at RM180m in 2QFY21, we expect this to pick up in 2HFY21.
  • Back in the lead. Having lost the top spot in mobile cellular subscription in 2018, Maxis has regained its leadership position with a market share of 28.2% in 2020 (based on MCMC’s latest publication). We also note that the gap with the second-largest telco has also widened, which we attribute to the shrinking pool of migrant workers in Malaysia that has affected its closest competitor. In terms of ARPU and margin, Maxis’ overall performance was in line with industry average. We expect the current trend of declining ARPU would continue given a saturated market and on-going competition. Although Malaysia’s capital intensity of 14.2% was below global average, Maxis has a higher intensity and we expect this to be maintained at 15% going forward, given its continuous investment in growing its entreprise and home fibre business as well as network upgrade.

Source: PublicInvest Research - 2 Aug 2021

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Technical Buy - TEOSENG (7252)

Author: PublicInvest   |  Publish date: Mon, 2 Aug 2021, 10:13 AM


Description

As one of the largest egg producers in Malaysia, TEOSENG’s activities predominantly revolve around layer farming, which refers to the business of rearing chickens for egg production. Via its subsidiaries, TEOSENG is also involved in the manufacturing and marketing of paper egg trays and animal feeds, along with the distribution of animal health products.

Fundamentals

The group should continue to monitor, reassess the financial position, take appropriate and timely action to minimise the possible impacts caused by COVID19 pandemic.

Source: PublicInvest Research - 2 Aug 2021

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Technical Buy - MELEWAR (3778)

Author: PublicInvest   |  Publish date: Mon, 2 Aug 2021, 10:13 AM


Description

MELEWAR’s principal activity is in the mid and down-stream sectors of the steel industry, focusing mainly on the manufacturing of cold rolled coil (CRC) steel sheets and steel tubes and pipes through its 74.13% interest in its public listed subsidiary, MYCRON.

Fundamentals

The greatest threat to MELEWAR remains with the setback on the nation’s economy due to the prolonged pandemic fallout. Nevertheless, its steel segments’ recent investments in production-lines upgrades, galvanizing-line upgrade, acid regeneration plant, and solar energy are all coming on-stream which should further boost bottom-line, particularly into the next financial year.

Source: PublicInvest Research - 2 Aug 2021

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Technical Buy - AJIYA (7609)

Author: PublicInvest   |  Publish date: Mon, 2 Aug 2021, 10:13 AM


Description

AJIYA is principally involved in the manufacturing and supply of building materials for the construction industry.

Fundamentals

As Malaysia is set for recovery from the COVID-19 pandemic and gradual normalisation, the group should intensely monitor and strive to increase the market share for its products. Nonetheless, the shortage and delay in raw materials supplies should post a challenge to the group for the coming quarters.

Source: PublicInvest Research - 2 Aug 2021

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PublicInvest Research Headlines - 30 Jul 2021

Author: PublicInvest   |  Publish date: Fri, 30 Jul 2021, 10:09 AM


Economy

US: Fiscal stimulus, vaccinations lift economy above prepandemic level. The US economy grew solidly in the 2Q, pulling the level of GDP above its pre-pandemic peak, as massive government aid and vaccinations against COVID-19 fueled spending on goods and services. The pace of GDP growth reported by the Commerce Department, however, slower than economists had expected. That was because businesses ran down inventories further to meet the robust demand. Supply constraints are making it harder for business to replenish stocks. GDP increased at a 6.5% annualized rate last quarter, the government said in its advance estimate of 2Q GDP. The economy grew at a 6.3% rate in the 1Q, revised down from the previously reported 6.4% pace. (Reuters)

US: Pending home sales decline in June as prices climb. Contracts to purchase previously owned US homes declined in June in step with a spike in home prices after rebounding strongly in the prior month. The Pending Home Sales Index, based on contracts signed last month, fell 1.9% to 112.8. Economists polled had forecast pending home sales would increase 0.3%. Pending home sales for May were revised to show an increase of 8.3% instead of the 8.0% gain previously reported. Pending home contracts are seen as a forward-looking indicator of the health of the housing market because they become sales one to two months later. House prices have soared in the past year, with the median price for both new and existing homes now topping USD360,000. (Reuters)

US: Weekly jobless claims pull back less than expected. After reporting an unexpected increase in first-time claims for US unemployment benefits in the previous week, the Labor Department released a report showing a modest pullback in initial jobless claims in the week ended July 24th. The report said initial jobless claims dipped to 400,000, a decrease of 24,000 from the previous week's revised level of 424,000. Economists had expected jobless claims to drop to 380,000 from the 419,000 originally reported for the previous week. Meanwhile, the Labor Department said the less volatile four-week moving average crept up to 394,500, an increase of 8,000 from the previous week's revised average of 386,500. (RTT)

EU: Economic confidence hits record high. Eurozone economic confidence hit a record high in July driven by rising sentiment in the industrial and service sectors, survey results from the European Commission showed. The economic confidence index rose to 119.0 from 117.9 in June. This was the highest since records began in 1985 and also well above economists' forecast of 118.5. However, compared to the previous months, the latest improvement was much weaker, suggesting that the indicator is approaching its peak. The improvement in the overall economic confidence was largely driven by industrial and services confidence. (RTT)

EU: German inflation hits 13-yr high, union demands "strong wage increases". Germany’s annual consumer price inflation accelerated by more than expected to hit a 13-year high in July, leading services sector trade union Verdi to immediately demand “strong wage increases”. Consumer prices rose by 3.1% in July compared with 2.1% in June. A poll had pointed to a reading of 2.9%. July’s reading was the highest since Aug 2008, when the harmonised inflation rate hit 3.3%, an official at the Statistics Office said. The rise pushed the inflation rate further above the European Central Bank’s 2% target and fuelled a debate about whether the increase in the cost of living will persist. (Reuters)

EU: German unemployment falls in sign of continuing recovery. German unemployment fell in July as companies hired more staff in light of a recovery in Europe’s largest economy, official figures showed. The Labour Office said the number of people out of work fell by 91,000 in seasonally adjusted terms to 2.598m. A poll had forecast a fall of 28,000. The seasonally adjusted jobless rate fell to 5.7%. Unemployment and underemployment have continued to fall sharply since the start of the summer break. Companies are increasingly looking to hire new staff. The release of the jobless figures followed the publication of a survey showing German business morale fell unexpectedly in July on continuing supply chain worries and amid rising coronavirus infections. (Reuters)

UK: Mortgage lending booms but consumers stay wary about debt. British mortgage lending showed a record surge in June as home-buyers rushed to qualify for a tax break before it was scaled back, but other data added to signs that a rise in COVID-19 cases in recent weeks slowed the broader economic recovery from lockdown. Mortgage borrowing leapt by a net GBP17.9bn (USD25.0bn) from May, the biggest monthly increase in Bank of England records which date back to 1993. (Reuters)

South Korea: Industrial output rises 2.2% in June. Industrial production in South Korea was up a seasonally adjusted 2.2% on month in June, Statistics Korea said. That beat expectations for an increase of 1% following the downwardly revised 1% contraction in May (originally -0.7%). On a yearly basis, industrial production jumped 11.9% again exceeding expectations for 9.3% following the downwardly revised 14.9% gain in the previous month (originally 15.6%). For the 2Q of 2021, industrial production fell 1% on quarter and gained 13% on year. (RTT)

Australia: Export prices spike 13.2% on quarter in 2Q. Export prices in Australia were up 13.2% on quarter in the 2Q of 2021, the Australian Bureau of Statistics said, accelerating from 11.2% in the previous three months. On a yearly basis, export prices surged 26.0%. (RTT)

Markets

CTOS Digital: Acquires 4.63% in RAM for RM10m. CTOS Digital made its first post-listing acquisition by buying a 4.63% stake in credit rating agency RAM Holdings from CIMB Bank for RM10.05m, to extend product offering to its existing customers. CTOS had entered into a share purchase agreement with CIMB Bank. The acquisition of a strategic minority stake in RAM will allow both companies to leverage each company’s expertise in credit assessment, data and analytics to further extend their product offering and value proposition to their existing customer base. (The Edge)

MAG: Proposes one warrant for four shares to raise RM84.9m. MAG Holdings has proposed a bonus issue on the basis of one warrant for every four shares held which will enable it to raise RM84.90m when the warrants are converted. This would involve the issuance of up to 471.67 million warrants. The proceeds would be used for working capital. (StarBiz)

Nextgreen Global: Plans private placement to raise up RM21.09m for tissue paper mill JV. Nextgreen Global has proposed to undertake a private placement of 5.32% of its total issued shares to raise up to RM21.09m for its tissue paper mill JV. Nextgreen announced that it had entered into a JV agreement with Dengkil Paper Mill to set up a tissue paper mill in Pahang. The estimated cost for the venture was RM25.5m. (The Edge)

T7 Global: Bayan gas MOPU hits construction milestone in China. T7 Global’s Bayan mobile offshore gas production unit (MOPU) has reached its second construction milestone, with the keel laying at a shipyard in Qingdao, China. It is set to be installed offshore Sarawak for Petronas Carigali SB's Bayan Gas Redevelopment Project Phase 2 to boost gas production in the Bayan field upon completion in 2022. (The Edge)

LYC Healthcare: Suspends its confinement centre in Bukit Jalil after 7 Covid-19 cases found. LYC Healthcare has temporarily suspended its confinement centre in Bukit Jalil, Kuala Lumpur for 14 days from July 29, following the discovery of seven Covid-19 infections there. The temporary stoppage is not expected to have a significant impact on its revenue and earnings for FY22, and that its other confinement centres at other locations are unaffected and operating as normal. (The Edge)

Frontken: 2Q earnings climb to RM24.74m on strong semiconductor demand. Frontken’s s net profit rose 21.69% YoY to RM24.74m in 2QFY21, due to an increase in contributions from its Taiwan, Malaysia and Singapore subsidiaries. Revenue was up 23.97% YoY to RM108.63m from RM87.62mil as volume in the semiconductor space picked up on higher demand and strong orders from a customer of its Taiwan subsidiary. (StarBiz)

Genetec: Returns to black in 1Q on higher sales volume and improved operational efficiency. Genetec has returned to the black with a net profit of RM8.18m in 1QFY21, from a net loss of RM2.09m a year ago, underpinned by higher sales volume and improved operational efficiency.The group has achieved a strong order book primarily from the Electric Vehicle (EV) sector, which has significantly contributed positively to its current quarter performance. (The Edge)

MARKET UPDATE

The FBM KLCI might open flat today due to political headwinds and persistent rise in the number of Covid-19 infections expected to continue to bog down the stock market. Overnight, stocks on Wall Street rose on Thursday despite weaker than expected US growth data that cemented expectations that the Federal Reserve would maintain its pandemic-era stimulus that has supported financial markets for a year and a half. The moves followed data showing US gross domestic product grew at an annualised rate of 6.5% in the second quarter, missing the 8.5% rise expected by economists polled by Reuters. The S&P 500, the blue-chip US share index, closed 0.4% higher after hitting a high on Monday. The tech-heavy Nasdaq Composite index climbed 0.1%, rebounding slightly after notching its worst day in two and a half months earlier in the week. The region-wide Stoxx Europe 600 benchmark closed up 0.5% to a new record, while London’s FTSE 100 gained 0.9% and Frankfurt’s Xetra Dax ended the session 0.5% higher.

Back home, the FBM KLCI erased earlier gains and sank into the red on concerns about the latest political developments in the country. The benchmark index closed 2.46 points or 0.16% lower at 1,512.93 after moving between 1,511.51 and 1,520.04 throughout the day. Most regional bourses closed higher after the US Federal Reserve (Fed) signalled that it was in no rush to taper monetary policy support. Japan’s Nikkei 225 finished 0.73% higher at 27,782.42, while South Korea’s KOSPI rose 0.18% to 3,242.65. In China, shares rebounded after Beijing calmed investor nerves over mounting regulatory risks. The Shanghai Composite index closed 1.49% higher at 3,411.72, while Hong Kong’s Hang Seng Index added 3.3% to 26,315.32.

Source: PublicInvest Research - 30 Jul 2021

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Technical Buy - BTM (7188)

Author: PublicInvest   |  Publish date: Fri, 30 Jul 2021, 10:09 AM


  • Target Price: RM0.240, RM0.255
  • Last closing price: RM0.225
  • Potential return: 6.6%, 13.3%
  • Support: RM0.215
  • Stop Loss: RM0.205

Possible for sideways breakout. BTM is staging a potential breakout from its sideways channel. Corresponding RSI and MACD indicators remain healthy while trending sideways, with anticipation of continuous improvement in both momentum and trend in the near term. Should immediate resistance level of RM0.240 be broken with renewed buying interest, it may continue to lift price higher to subsequent resistance level of RM0.255.

However, failure to hold on to support level of RM0.215 may indicate weakness in the share price and hence, a cut-loss signal.

Source: PublicInvest Research - 30 Jul 2021

Labels: BTM
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