PublicInvest Research

Author: PublicInvest   |   Latest post: Mon, 18 Oct 2021, 9:36 AM


PublicInvest Research Headlines - 18 Oct 2021

Author: PublicInvest   |  Publish date: Mon, 18 Oct 2021, 9:36 AM


US: Retail sales unexpectedly rise in Sept as consumers keep spending. Consumers spent at a much faster pace than expected in Sept, defying expectations for a pullback amid pervasive supply chain problems, the Census Bureau reported. Retail sales for the month increased by 0.7%, against the Dow Jones estimate for a decline of 0.2%. Excluding auto-related sales, the number rose 0.8%, better than the 0.5% forecast. Compared with a year ago, sales were up 13.9% on the headline number and 15.6% excluding autos. The increase came during a month when the government ended the enhanced benefits it had been providing during the Covid-19 pandemic and against forecasts that growth would slow in the third quarter due to the delta variant spread and a perceived pullback in consumer activity. (CNBC)

US: Consumer sentiment unexpectedly edges lower in Oct. Preliminary data released by the University of Michigan unexpectedly showed a modest deterioration in US consumer sentiment in the month of Oct. The report showed the consumer sentiment index slipped to 71.4 in Oct from 72.8 in Sept. The dip surprised economists, who had expected the index to inch up to 73.1. "Consumer sentiment has remained for the past three months at the lows first recorded in response to last year's shutdown of the economy," said Surveys of Consumers chief economist Richard Curtin. He added, "The Delta variant, supply chain shortages, and reduced labor force participation rates will continue to dim the pace of consumer spending into 2022." (RTT)

US: Business inventories increase in line with estimates in Aug. A report released by the Commerce Department showed US business inventories increased in line with economist estimates in the month of Aug. The Commerce Department said business inventories climbed by 0.6% in Aug, matching the increase seen in the previous month as well as economist expectations. Wholesale inventories led the way higher, jumping by 1.2%, while manufacturing inventories rose by 0.6% and retail inventories inched up by 0.1%. Meanwhile, the report showed business sales edged down by 0.1% in Aug after rising by 0.5% in July. (RTT)

EU: Eurozone Aug trade surplus falls. Eurozone visible trade surplus for Aug decreased from a year ago, defying expectations for an improvement, preliminary data from Eurostat showed. The goods trade surplus in Aug was EUR4.8bn versus EUR14bn in the same period last year. Economists had forecast a surplus of EUR16.1bn. Exports rose 18.2% YoY and imports grew 26.6%. In the Jan to Aug period, the trade surplus was EUR126.9bn versus EUR126.8bn in the same period last year. Exports grew 15.2% and imports rose 16.8%. On a seasonally adjusted basis, euro area trade balance was EUR11.1bn compared to EUR13.5bn in July. Exports rose 0.3% and imports increased 1.6% from the previous month. (RTT)

China: Chinese central bank official sees liquidity balanced, no big swings in 4Q . Liquidity in China's banking system will be basically balanced in the 4Q, with no big fluctuations, a central bank official said. The PBOC will stick to normal monetary policy, which will be flexible, targeted, and appropriate, Sun Guofeng, head of the central bank's monetary policy department, told a briefing. The PBOC will use various tools to keep liquidity reasonably ample and enhance stability of total credit growth, he said. "In the fourth quarter, supply and demand of liquidity in the banking system will continue to be basically balanced and there won't be any big fluctuations," Sun said. (Reuters)

Japan: Tertiary activity falls for second month . Japan's tertiary activity declined for the second straight month in August, data from the Ministry of Economy, Trade and Industry showed. The tertiary activity index fell 1.7% month-on-month in Aug, following a 0.6% decrease in July. Among the individual components, living and amusement-related services, transport and postal activities, retail trade, wholesale trade, medical, health care and welfare, electricity, gas, heat supply and water, and goods rental and leasing increased in Aug. Meanwhile, business-related services, real estate, finance and insurance, and information and communications increased. (RTT)

Indonesia: Trade surplus rises in Sept . Indonesia's trade surplus increased in Sept, figures from Statistics Indonesia showed. The trade surplus increased to USD4.37bn in Sept from USD2.386bn a year ago. Economists had expected a surplus of USD3.84bn. In Aug, the trade surplus was USD4.748bn. Exports grew 47.64% YoY in Sept. Economists had expected a rise of 51.57%. Imports rose 40.31% annually in Sept. Economists had forecast a increase of 50.0%. On a monthly basis, exports decreased 3.84% and imports declined 2.67% in Sept. (RTT)


TNB (Outperform, TP:RM12.42): Fibre unit Allo Technology appoints Juniper to undertake network infra upgrade. Tenaga Nasional’s 100%-owned ICT unit Allo Technology SdB has appointed New York-listed Juniper Networks to upgrade its network infrastructure as it moves to expand its fiberisation coverage nationwide to a targeted 180,000 premises by end-2021. (The Edge)

KPJ Healthcare (Neutral, TP:RM0.94): Revises down rental rate of Jeta Gardens elder care homes in Australia. KPJ Healthcare And Al Aqar Australia Pty Ltd are varying an existing lease agreement to revise the rental rate of the former's Jeta Gardens elderly care properties in Brisbane, Australia. (The Edge)

Bertam Alliance: Unit secures RM25m contract for constructing MACC office complex in Sabah. Bertam Alliance has secured a contract worth RM24.98m for the proposed construction of an office complex for the Malaysian Anti-Corruption Commission (MACC) in Sabah. (The Edge)

Kerjaya Prospek: Secures RM258m construction job. Kerjaya Prospek has accepted a RM258m contract from Teguh Harian Build-Tech SB for the construction of main building works for a proposed residential development project in Johor Baru, Johor. (SunBiz)

Sentral REIT: Plans to raise up to RM3bn via debt programmes for investments, working capital, and to refinance borrowings. Sentral REIT (formerly MRCB-Quill REIT) has lodged debt programmes with the SC, through which it plans to raise up to RM3bn in combined aggregate value to finance its investment activities and general working capital, as well as to refinance its borrowings. (The Edge)

NPC Resources: To sell agricultural lands in Sabah for RM53m. NPC Resources is disposing of four parcels of agricultural land in Kinabatangan, Sabah to Syarikat Kretam Plantations SB (SKPSB) for a total of RM52.72m. (The Edge)

XOX: To acquire 19% stake in Jadi Imaging for RM46m. XOX has entered into an agreement to acquire a 19.01% stake in Jadi Imaging Holdings for a purchase consideration of RM46m. Jadi is principally engaged in the business of development, formulation, and manufacturing of toners for laser printers, photocopiers, facsimile machines, and multifunction office equipment. (The Edge)

Jade Marvel: Plans JV in management of wellness-related biz via one-stop IT control system. Jade Marvel Group is planning to collaborate with a newly incorporated local private company to jointly undertake the management of wellness industry-related businesses via a one-stop information technology control system. (The Edge)

Duopharma: Distributes Sinopharm Covid-19 vaccine. Duopharma Biotech’s unit is distributing the Sinopharm Covid- 19 vaccine following the arrival of a shipment as the company contributes to the vaccination efforts in Malaysia. (StarBiz)

Market Update

The FBM KLCI might open higher today after Wall Street stocks had their best week in nearly three months last week as strong corporate earnings tempered nerves about inflation. The blue-chip S&P 500 rose 0.8% on Friday for a gain of 2% over the past five days, its best weekly performance since late-July. Industrial and financial groups helped drive the gains. The technology-heavy Nasdaq Composite ended the session 0.5% higher. The gains continued from Thursday’s trading session, which marked Wall Street’s best daily performance for eight months as upbeat earnings tempered fears of inflation. Stock and bond markets have for weeks been dogged by worries about surging energy prices, jammed-up supply chains and companies failing to pass on higher costs to consumers. Better than expected quarterly earnings reports from Wall Street banks and iPhone chipmaker Taiwan Semiconductor Manufacturing Company, however, have lifted the mood. In Europe, the regional Stoxx Europe 600 index closed up 0.7%, delivering a weekly rise of more than 2%. London’s FTSE 100 added 0.4%. Back home, the FBM KLCI added 5.76 points to 1,598.28 from 1,592.52 at Thursday’s close. In the region, Japan’s Nikkei 225 gained 1.8%, Hong Kong’s Hang Seng rose 1.5% and China’s Shanghai Composite Index edged up 0.4%.

Source: PublicInvest Research - 18 Oct 2021

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PublicInvest Research Headlines - 15 Oct 2021

Author: PublicInvest   |  Publish date: Fri, 15 Oct 2021, 9:35 AM


US: Weekly jobless claims fall below 300,000 in boost to labor market recovery. The number of Americans filing new claims for unemployment benefits dropped below 300,000 last week for the first time in 19 months, further evidence that a shortage of workers was behind slower job growth rather than weakening demand for labor. With the second straight weekly decline reported by the Labor Department, initial claims are now in the zone that is generally associated with healthy labor market conditions. (Reuters)

US: Fed, nearing bond-buying 'taper,' remains divided on inflation. Despite a broadly shared view that the US labor market has healed enough to allow the Fed to start reducing its monthly bond purchases as soon as next month, policymakers are sharply divided over inflation and what they should do about it. Views expressed just in the last 24 hours ranged from worried to sanguine. Some policymakers are convinced that once pandemic-disrupted supply chains get back up and running, price rises will calm back down on their own. (Reuters)

US: Fed's Barkin says more data needed before rate hikes are appropriate. Richmond Fed President Tom Barkin said the US central bank has cleared a path for what he hopes to be a “seamless” start to a reduction in its support for the economy, but that it will take more time to determine when interest rate hikes will be appropriate. Fed policymakers feel that labor markets have healed enough to start reducing their crisis-era support for the US economy soon. (Reuters)

EU: German economic institutes cut 2021 GDP forecast. Germany’s top economic institutes cut their joint forecast for 2021 growth in Europe’s largest economy to 2.4% as supply bottlenecks hamper manufacturing, but they raised their prediction for next year. The five institutes - the RWI in Essen, the DIW in Berlin, the Ifo in Munich, the IfW in Kiel and Halle’s IWH - raised their 2022 forecast to 4.8% from 3.9%. (Reuters)

UK: BoE hike expectations push sterling to two-week high. Sterling hit a two-week high, adding to the previous session’s gains, as traders focused on hopes that a post-Brexit trade war with the EU will be avoided and on expectations the BOE will raise rates this year. The pound was also helped by the dollar’s weakness as upbeat sentiment lifted stock markets and risk-oriented currencies such as sterling. (Reuters)

China: Economic growth slowed in Q3; government confident of achieving full-year goals – premier. China’s economic growth slowed in the Q3 due to a combination of reasons, but the government is confident of achieving full year development goals, Premier Li Keqiang said. China’s economic recovery is still uneven but we have ample tools to deal with the challenges, said Li at the opening ceremony of the Canton Fair in Guangzhou. (Reuters)

China: Cold keeps China coal prices high, power crunch stokes factory inflation. China coal prices held near record highs as cold weather swept into the country’s north and power plants stocked up on the fuel to ease an energy crunch that is fuelling unprecedented factory gate inflation. A widening power crisis in China has halted production at numerous factories including many supplying big global brands such as Apple Inc. (Reuters)

Japan: Industrial production falls less than estimated. Japan's industrial production declined less than initially estimated in Aug, data from the Ministry of Economy, Trade and Industry said. Industrial production fell a seasonally adjusted 3.6% monthly in Aug. In the initial estimate, output declined 4.3%. Shipments decreased 4.4% on month in Aug and inventories fell 0.1%. (RTT)

India: Sept WPI inflation eases to 10.66% YoY. India’s annual wholesale price-based inflation in Sept eased to 10.66% from the previous month’s 11.39%, remaining in double digits for the sixth month in a row, government data showed. Fuel and power prices rose 24.81% in Sept YoY compared with 26.09% in Aug, while manufactured product prices rose 11.41% compared with 11.39% in the previous month. (Reuters)

Singapore: Central bank tightens monetary policy. Singapore central bank unexpectedly tightened its monetary policy as the economy is expected to sustain strong growth underpinned by foreign demand and domestic spending. The Monetary Authority of Singapore decided to raise slightly the slope of the policy band, from zero percent previously. The width of the policy band and the level at which it is centered will be unchanged. (RTT)


TM (Outperform, TP: RM6.90): MMEA inks AMHS communication line lease agreement with Telekom Malaysia. The Malaysian Maritime Enforcement Agency (MMEA) has signed the Aeronautical Message Handling Services (AMHS) communication line lease agreement with Telekom Malaysia for Cospas-Sarsat, a satellite-aided search and rescue initiative. The Cospas-Sarsat system AMHS communication line rental contract worth RM515,160 is for a period of three years from Aug 1 to July 31, 2024. (The Edge)

AirAsia (Neutral, TP: RM0.86): Airline holding company renamed to create clear airline vs digital distinction. AirAsia Group has renamed the holding company of its airline operations to AirAsia Aviation Ltd as the low cost carrier undertakes a rapid transformation from an airline into a digital travel and lifestyle services. AirAsia Group, said Bo Lingam would take over as group chief executive officer of AirAsia Aviation, overseeing its four airlines (AirAsia Malaysia, AirAsia Philippines, AirAsia Thailand and AirAsia Indonesia). (BTimes)

Kerjaya Prospek: Accepts RM258m building contract in Johor . Kerjaya Prospek Group’s unit has accepted a letter of award for a RM258m residential project in Plentong, Johor from Teguh Harian Build-Tech SB. Kerjaya Prospek (M) SB secured the contract for the main building works for the project which covers the construction of main building works for three blocks of apartment. The project includes common area and mechanical & electrical facilities, and a 12-storey podium carpark consisting of carpark and M&E facilities. (StarBiz)

Sedania: Unit inks deal to bid for digital Islamic bank licence . Sedania Innovator unit Sedania As Salam Capital SB has inked a MoU with FCA Capital SB in its bid for a digital Islamic bank licence from Bank Negara Malaysia. Sedania said FCA acted as the financial advisor for a consortium that submitted a bid for approval of a digital Islamic bank licence from the central bank. It said the decision for the digital Islamic bank licence is expected to be announced by the first quarter of 2022. (The Edge)

Advancecon: Bags another ECRL subcontract job for RM17m. Advancecon Holdings said it has been appointed a subcontractor for the proposed construction and completion of ground treatment work of Section 4 of the East Coast Rail Link (ECRL) project for RM16.97m. It has accepted the letter of acceptance from China Communications Construction (ECRL) SB for the appointment. (The Edge)

Binasat: Plans private placement to raise up to RM23m . Binasat Communications has proposed a private placement to raise as much as RM23.3m to fund its working capital, mainly for the group's fibre optic telecommunications network supporting services. (The Edge)

MISC: Unit AET completes first ever LNG bunkering in US . MISC’s unit, AET has completed its first-ever liquefied natural gas (LNG) bunkering in the US, working in coordination with Shell to refuel the LNG dual-fuel Aframax tanker Pacific Ruby outside Port Canaveral in Florida. The transfer of 600 tonnes of marine LNG onto the 113,305 DWT petroleum tanker from the Q-LNG 4000 bunker barge was safely completed within three hours. (The Edge)

Market Update

The FBM KLCI might nudge higher today after the US stock market had its best day since March on Thursday, as investors’ worries about inflation and potential interest rate increases were tempered by upbeat corporate earnings reports. The S&P 500 closed 1.7% higher, its biggest one-day rise in seven months, though the blue-chip index remains about 2.4% below its all-time high hit in early September. The technology-focused Nasdaq Composite also added 1.7%, its best day since May. Europe’s Stoxx 600 equity benchmark closed up 1.2%. The moves came after Taiwan Semiconductor Manufacturing Company, whose chips are used in everything from iPhones to cars, posted a better than expected 14% rise in profits for the third quarter from the same period last year. Citigroup and Bank of America also posted quarterly earnings that beat analysts’ estimates as both US companies released funds from bad loan reserves in a sign of growing confidence in borrowers’ abilities to repay. The luxury goods group LVMH said earlier in the week that Chinese demand had held up through a manufacturing slowdown and government crackdown on property speculation.

Back home, Bursa Malaysia closed lower on Thursday, with its key index declining 0.49% due to profit-taking activities after seven days of gains. The market was dragged down mainly by banking, plantation, and oil and gas heavyweights and at the closing bell, the FBM KLCI shrank 7.86 points to 1,592.52 from 1,600.38 at Wednesday’s closing. In the region, China’s CSI 300 share index closed 0.5% lower. Japan’s Nikkei 225 rose 1.5% as exporters were boosted by the weak yen, which is close to its lowest level against the dollar since November 2018.

Source: PublicInvest Research - 15 Oct 2021

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Banking - Clarity on URUS

Author: PublicInvest   |  Publish date: Fri, 15 Oct 2021, 9:21 AM

The Ministry of Finance has provided more clarity on the Financial Management and Resilience Programme (dubbed URUS – Program Pengurusan and Pertahanan Kewangan), a day after it was announced by YAB Prime Minister Dato’ Seri Ismail Sabri Yaakob. URUS is a comprehensive financial assistance plan and crafted collaboratively by the banking industry and Agensi Kanseling dan Pengurusan Kredit (AKPK).

The scheme is open to individual customers, on application, who are under an existing repayment assistance programme (e.g. Targeted Repayment Assistance, PEMERKASA Plus, PEMULIH, bank’s own rescheduling and restructuring, etc) as at Sept 30, 2021 and meet the following criteria:

  • from the B50 income segment (customers with gross household income of RM5,880 or lower). Evidence of household income will be required for customers who are not registered recipients of Bantuan Sara Hidup (BSH) or Bantuan Prihatin Rakyat (BPR).
  • experienced either loss of employment, or reduction of income of at least 50%.
  • loan/financing is still performing (not in arrears exceeding 90 days) as at the date of their application.

Individual customers who fulfil the criteria can apply for URUS through one of their banks starting from Nov 15, 2021 until Jan 31, 2022. The plan will encompass:

  • an interest/profit waiver for a period of three (3) months, commencing the month following the customer’s onboarding into the scheme, or
  • a three (3)-month interest/profit waiver together with reduced instalments for a period of up to 24 months in total. During this period, customers with unsecured personal loans/financing and credit cards may also benefit from reduced interest/profit rates to help alleviate their financial burden.

Thoughts. In Bank Negara Malaysia’s Financial Stability Review for 1H 2021, it was noted that while most household borrowers remain resilient with prudent debt service ratios and sufficient financial buffers, some borrowers were facing greater financial stress. Based on simulations, 11%-15% of household borrowers may need to drawdown on their cash buffers to service debt. Of these borrowers, 1.9% are at risk of depleting their cash buffers. The share of household borrowers under repayment assistance rose sharply to 25.4% of total household loan accounts in July, in line with the further expansion of repayment assistance by banks. Targeted at the truly needy, this move is therefore necessary though not particularly a welcome one.

Expected to cost the banking system some RM1bn to fund the cost of the reduction in interest/profit costs, the quantum is certainly a more manageable one and less of a surprise as when the idea was first mooted in mid-September. With clarity admittedly lacking then, it was also merely an instruction by the Ministry of Finance for banks to work on the exemption from interest payments for loan moratorium recipients under the B50 category for the October to December period of 2021. Bank Negara Malaysia (BNM) had cautioned that:

  • banks’ credit ratings might be downgraded to reflect weaker future earnings and that this would make it more expensive for banks to raise capital. Banks' higher cost of funds would then be passed on to borrowers
  • it was "imperative that short-term relief measures do not incur significant long term damage to the economy”, as it highlighted the importance in considering the effects of an interest rate waiver on future lending decisions by individual banks

While we are not likely to see banks refraining from funding any particular segment of borrowers due to the notion of higher risk profiles so as long as they remain creditworthy, we have however seen cautionary statements from one particular ratings agency. S&P Global Ratings, in late-September, noted that the downside systemic risks for Malaysian banks are on the rise. Affirming long-term and short-term issuer credit ratings, they however said the outlook on all the five Malaysian banks they rated is negative. Reasons cited were that the economic risk trend for Malaysia had turned negative and that Malaysian banks were also facing rising risk in the competitive environment due to negative government intervention.

In a statement released overnight, BNM says it welcomes the move and further encouraged those who are not eligible for URUS to also approach their banks to discuss other repayment solutions that suit their financial circumstances. Separately, BNM also said there will be further enhancements to its Fund for SMEs in Budget 2022, targeted at assisting businesses in their cash flow management and repositioning themselves with the reopening of the economy.

Short-term volatilities notwithstanding, current assistance programs are notably one-off in nature. Any modification losses incurred will eventually be unwound over the years. Liquidity in the system is still ample, with the banks well capitalized. Expected rate normalization in 2022 and anticipated economic recoveries will bring about asset quality improvements and loans growth, all of these medium- to longer-term boons to the sector. We do not see conditions getting significantly worse than 2020 levels. While we maintain our Neutral view on the sector, it continues to be with a positive bias given its lagging valuations relative to the broader market. For sector exposure, we like Alliance Bank and Maybank.

Source: PublicInvest Research - 15 Oct 2021

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Technical Buy - GPHAROS (5649)

Author: PublicInvest   |  Publish date: Fri, 15 Oct 2021, 9:12 AM

  • Target Price: RM0.405, RM0.425
  • Last closing price: RM0.375
  • Potential return: 8.0%, 13.3%
  • Support: RM0.365
  • Stop Loss: RM0.340

Possible for sideways breakout. GPHAROS is staging a potential breakout from its sideways channel, with anticipation of continuous improvement in both momentum and trend in the near term. Should immediate resistance level of RM0.405 be broken with renewed buying interest, it may continue to lift price higher to subsequent resistance level of RM0.425.

However, failure to hold on to support level of RM0.365 may indicate weakness in the share price and hence, a cut-loss signal.

Source: PublicInvest Research - 15 Oct 2021

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Technical Buy - CAMRES (7128)

Author: PublicInvest   |  Publish date: Fri, 15 Oct 2021, 9:11 AM

  • Target Price: RM0.375, RM0.400
  • Last closing price: RM0.355
  • Potential return: 5.6%, 12.6%
  • Support: RM0.340
  • Stop Loss: RM0.325

Possible for sideways breakout. CAMRES is staging a potential breakout from its sideways channel, with anticipation of continuous improvement in both momentum and trend in the near term. Should immediate resistance level of RM0.375 be broken with renewed buying interest, it may continue to lift price higher to subsequent resistance level of RM0.400.

However, failure to hold on to support level of RM0.340 may indicate weakness in the share price and hence, a cut-loss signal.

Source: PublicInvest Research - 15 Oct 2021

Labels: CAMRES
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PublicInvest Research Headlines - 14 Oct 2021

Author: PublicInvest   |  Publish date: Thu, 14 Oct 2021, 10:19 AM


US: Fed says it could begin ‘gradual tapering process’ by mid Nov. Fed officials could begin reducing the extraordinary help they’ve been providing to the economy by as soon as mid-Nov, according to minutes from the central bank’s Sept meeting released. The meeting summary indicated members feel the Fed has come close to reaching its economic goals and soon could begin normalizing policy by reducing the pace of its monthly asset purchases. In a process known as tapering, the Fed would reduce the USD120bn a month in bond buys slowly. (CNBC)

US: Consumer prices increase solidly in Sept. US consumer prices increased solidly in Sept and are poised to rise further in the months ahead amid a surge in the costs of energy products, which would cast doubts on the Federal Reserve’s view that high inflation is transitory. The consumer price index rose 0.4% last month after climbing 0.3% in Aug, the Labor Department said. In the 12 months through Sept, the CPI increased 5.4% after advancing 5.3% YoY in  Aug. Excluding the volatile food and energy components, the CPI climbed 0.2% after edging up 0.1% in Aug, the smallest gain in six months. The so-called core CPI rose 4.0% on a YoY basis after increasing 4.0% in Aug. (Reuters)

EU: German economic institutes cut 2021 growth forecast to 2.4% - sources. Germany’s economic institutes will cut their joint forecast for 2021 growth of Europe’s largest economy to 2.4% from the 3.7% they previously projected as supply bottlenecks slow recovery, two people familiar with the decision told Reuters. The institutes, which are expected to release their joint growth forecast, will also raise their forecast for growth next year to 4.8% from 3.9%, and will project 1.9% economic growth for 2023. The German government, which so far has been forecasting growth of 3.5% for this year and 3.6% for next, is expected to update its own estimates this month as well. (Reuters)

EU: Rising German inflation calls for 'noticeable wage gains', union chief says. Rising inflation in Germany calls for “clearly noticeable real wage increases”, the chairman of services sector trade union Verdi said in comments released. German inflation accelerated in Sept to 4.1%, its highest since Dec 1993, driven up by energy and food costs. Economists are looking for signs that higher inflation expectations will lead to higher wage increases which could kick off a wage-price spiral, driving inflation higher still and eroding households’ purchasing power further. (Reuters)

UK: Economy expands in Aug. Underpinned by services and production output, the UK economy expanded in Aug after contracting for the first time in six months in July, the Office for National Statistics (ONS) reported. GDP grew 0.4% on month, but slightly slower than the economists' forecast of +0.5%. The ONS said GDP growth for July has been revised from 0.1% growth to a 0.1% fall, mainly because of downwardly revised data for the manufacture of motor vehicles, oil and gas, and improvements to how health output is measured. GDP remained 0.8% below its pre-pandemic level in Aug. (RTT)

China: Sept export growth unexpectedly picks up, imports slow. China’s export growth was faster than expected in Sept, as solid global demand offset some of the pressure on factories from power shortages and a resurgence of domestic COVID-19 cases. China’s exports in Sept rose 28.1% from a year earlier, up from a 25.6% gain in Aug. Analysts polled by Reuters had forecast growth would ease to 21%. (Retuers)

China: Sept new bank loans rise to CNY1.66trn, below forecast. Chinese banks extended CNY1.66trn (USD257.66bn) in new yuan loans in Sept, up from Aug but falling short of analyst expectations. Analysts polled by Reuters had predicted new yuan loans would rise to CNY1.85trn in Sept from CNY1.22trn the previous month and against CNY1.9trn a year earlier. Broad M2 money supply grew 8.3% from a year earlier, central bank data showed, above estimates of 8.1% forecast in the Reuters poll. M2 grew 8.2% in Aug from a year earlier. (Reuters)

India: Fuel demand rose 5.2% YoY in Sept. India’s fuel demand rose 5.2% in Sept compared with the same month last year to 15.92mt, data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed. Sales of gasoline, or petrol, were 6% higher from a year earlier at 2.60mt, while diesel sales rose 0.5% YoY to 5.51mt, the data showed. (Reuters)


WCT (Neutral, TP: RM0.58): Secures development rights over Sabah land. WCT Holdings has secured the sole development rights over 411 acres of land at Lok Kawi in Sabah. (The Edge)

Comments: The agreement provides the Group options to acquire the development rights over the 11 parcels of land. The period opened for the Group as a developer to exercise the Options is 15 years. Nonetheless, the Group is to undertake at least two Parcels of land within six months for Parcel 1 and within 54 months for Parcel 2, to exercise the Options. We are positive over this development as it would enable WCT to enhance its landbank with a strategic development land in Sabah, without incurring a substantial upfront land cost given the Options are to be exercised over the Option Period. The Group will only need to pay 10% upon execution of the agreement while the balance 90% to be paid by way of settlement in cash or payment in kind within 7 years. Financial benefit will not be so immediate as the Project is envisaged to be a long-term investment and development. Given the lack of details (size of the required two parcels and its estimated GDV), it is difficult to gauge the potential earnings contribution at this juncture.

Maxis (Neutral, TP: RM4.64): Proposes MyKRIS Asia acquisition for up to RM157.5m, its largest to date. Maxis has proposed to acquire managed network and security services company MyKRIS Asia SB for up to RM157.5m, which would be the telecommunications company's largest acquisition to date. The acquisition includes adding a pool of experts comprising 70 qualified engineers and support team, which is expected to enhance Maxis' capabilities. (The Edge)

Malakoff (Outperform, TP: RM1.02), Gas Malaysia collaborate on O&M services for cogeneration plants . Malakoff Corp and Gas Malaysia have teamed up to share their expertise and resouces in the undertaking of operations and maintenance services for cogeneration plants in Malaysia. In a joint statement, the two utility companies, which are members of the MMC Group, said they will form a joint venture company called Malakoff-Gas Malaysia Cogen O&M SB. (StarBiz)

SCIB: Bags RM13.28m school project near Sibu . Sarawak Consolidated Industries has secured a RM13.28m job from Sarawak Public Works Department to redeveloped two schools near Sibu, Sarawak. The project is expected to contribute positively to financial performance over the coming quarters. (StarBiz)

UMW: Auto sales surge 133% to 22,193 units in Sept 2021 . UMW Holdings posted a 133.3% jump in automotive sales to 22,193 units in Sept 2021 compared with 9,512 units sold in Aug 2021 as the operations gradually normalised following easing of the FMCO restrictions from Aug 16. Both UMW Toyota Motor (UMWT) and UMW’s associate company, Perodua continue to ramp-up production to hasten delivery of the outstanding orders. (StarBiz)

KTB: Proposes placement of 16.63% issued shares to DOH Properties . Konsortium Transnasional (KTB) has proposed placement of 67m new ordinary shares, representing 16.63% of its existing issued shares, to Doh Properties SB at an issue price of 10 sen per unit. (The Edge)

Market Update

The FBM KLCI might open higher today after Wall Street stock and bond prices climbed on Wednesday despite data confirming a surge in inflation and the Federal Reserve publishing further details on its plans to begin easing asset purchases. Headline US consumer prices rose 5.4% year on year in September, marking the fifth consecutive month of annual increases of 5% or more. The figure was slightly ahead of most economists’ forecasts, but had little immediate effect on US stocks after investors had spent much of the past few weeks positioning themselves for a likely increase. Persistent inflation has increased confidence that the US central bank will begin tapering its pandemic-era stimulus measures as early as next month. Minutes from the latest meeting of the Federal Open Market Committee provided further support on Wednesday, showing that there was a growing consensus among top officials to begin tapering “soon”. The prospect has hit stock markets in recent weeks, but the blue-chip S&P 500 rose 0.3% on Wednesday. The index has dropped about 4% from the record high it hit in early September. The tech-heavy Nasdaq Composite index rose 0.7%. In Europe, the region-wide Stoxx 600 also closed up 0.7%.

Back home, Bursa Malaysia on Wednesday broke through the 1,600 psychological level, accumulating gains of 5% during its seven-day rally. At 5pm, the FBM KLCI increased 1% or 16.47 points to 1,600.38 from 1,583.91 at Tuesday’s close. In the region, major benchmarks were mixed. The Shanghai Composite Index added 0.4% while Japan’s Nikkei 225 slid 0.3%. Markets in Hong Kong were closed due to a typhoon..

Source: PublicInvest Research - 14 Oct 2021

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Greatech Technology Berhad - Groundbreaking in Batu Kawan III Plant

Author: PublicInvest   |  Publish date: Thu, 14 Oct 2021, 9:58 AM

We attended from the Greatech Technology’s (Greatech) virtual groundbreaking ceremony yesterday for the commencement of construction for the new RM51m Batu Kawan III building. As guided in the previous report, the group has been expanding its manufacturing floorspace with an aim of doubling it to c.1.1m sq ft by mid-FY22 to cater for the increasing customer demand from solar, EV battery and medical fields. Meanwhile, it also unveiled its new corporate slogan called “Accelerate the Future”. Given the robust earnings outlook, we maintain our Outperform call on Greatech, with an unchanged TP of RM7.70, as we peg our FY22F EPS of 17.0sen to a PE multiple of 45x.

  • Massive capacity boost in the next one year. The 265k sq ft Batu Kawan III production and office building will be sitting on a 2.83 ha of land in Batu Kawan. The third manufacturing plant can accommodate up to 500 employees. It is strategically located near Greatech’s two new manufacturing facilities in Batu Kawan as well as the group’s corporate headquarters in Bayan Lepas, Penang. The construction of the factory is expected to be completed by Apr 2022 and ready for occupancy in May 2022. Including the upcoming commencement construction of Batu Kawan IV manufacturing plant and the expansion of its existing HQ in Bayan Lepas, the group’s combined floorspace will jump from 391.4k sq ft to 1.2m sq ft by mid-2022 (refer to Table 1). All-in, the total capex for the massive capacity boost will cost about RM200m. Besides having presence in the US and Malaysia, the Group also plans to set up sales offices in Germany, India, Switzerland and Ireland.
  • Securing new orderbook of RM163m as at end Aug-21. This brings the group’s total current outstanding orderbook to a solid RM369m, providing an earnings visibility until 2HFY22. Note that the bulk of new orders are from the solar industry, which accounts for about 80% of existing orderbook while the remaining 20% from the EV battery segment. Moving forward, we are expecting the group to receive additional c.RM300-400 m new orders in 4QFY21, primarily from its key solar customer, to finish the year strong with a targeted RM550m outstanding orderbook.
  • FY22 orderbook forecasts. We gather from management that the group is targeting at least RM500m new orderbook replenishments in FY22 (refer to Figure 1), with more than half is contributed by the solar segment (c.RM300m) while EV and medical segment to potentially contribute c.RM100m each. Note that Greatech has already identified 25 prospective clients in the medical segment thus far, with most residing in the US. We also highlight that Greatech is aiming to secure another 3-4 new customers in the EV battery space from the 8 shortlisted EV firms in the US, on top of the 4 EV clients it is serving currently.

Source: PublicInvest Research - 14 Oct 2021

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Technical Buy - IFCAMSC (0023)

Author: PublicInvest   |  Publish date: Thu, 14 Oct 2021, 9:55 AM

  • Target Price: RM0.355, RM0.370
  • Last closing price: RM0.335
  • Potential return: 5.7%, 13.4%
  • Support: RM0.325
  • Stop Loss: RM0.310

Possible for sideways breakout. IFCAMSC is staging a potential breakout from its sideways channel, with anticipation of continuous improvement in both momentum and trend in the near term. Should immediate resistance level of RM0.355 be broken with renewed buying interest, it may continue to lift price higher to subsequent resistance level of RM0.370.

However, failure to hold on to support level of RM0.325 may indicate weakness in the share price and hence, a cut-loss signal.

Source: PublicInvest Research - 14 Oct 2021

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Technical Buy - ARTRONIQ (0038)

Author: PublicInvest   |  Publish date: Thu, 14 Oct 2021, 9:54 AM

  • Target Price: RM0.360, RM0.385
  • Last closing price: RM0.325
  • Potential return: 10.7%, 18.4%
  • Support: RM0.305
  • Stop Loss: RM0.290

Possible for sideways breakout. ARTRONIQ is staging a potential breakout from its sideways channel, with anticipation of continuous improvement in both momentum and trend in the near term. Should immediate resistance level of RM0.360 be broken with renewed buying interest, it may continue to lift price higher to subsequent resistance level of RM0.385.

However, failure to hold on to support level of RM0.305 may indicate weakness in the share price and hence, a cut-loss signal.

Source: PublicInvest Research - 14 Oct 2021

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PublicInvest Research Headlines - 13 Oct 2021

Author: PublicInvest   |  Publish date: Wed, 13 Oct 2021, 9:27 AM


Global: IMF cuts its global growth forecast, citing supply disruptions and the pandemic. The International Monetary Fund is now less optimistic about the global economy for 2021, but still sees reasonable growth over the medium term. In its World Economic Outlook, published, the Fund said it expects global gross domestic product to grow by 5.9% this year — 0.1 percentage point lower than its July estimate. For next year, the IMF has kept its global growth projection at 4.9%. (CNBC)

US: A record 4.3m workers quit their jobs in Aug, led by food and retail industries. Workers left their jobs at a record pace in Aug, with bar and restaurant employees as well as retail staff quitting in droves, the Labor Department reported. Quits hit a new series high going back to Dec 2000, as 4.3m workers left their jobs. The quits rate rose to 2.9%, an increase of 242,000 from the previous month, which saw a rate of 2.7%, according to the department’s Job Openings and Labor Turnover Survey. (CNBC)

EU: German ZEW economic sentiment at 19-month low. German economic confidence deteriorated for the fifth consecutive month to hit the lowest since March 2020 amid supply bottleneck and higher input prices, survey results from the ZEW - Leibniz Centre for European Economic Research showed. The ZEW Indicator of Economic Sentiment dropped to 22.3 in Oct from 26.5 in Sept. The reading was below the economists' forecast of 24.0 and was the lowest since March 2020, when the score was -49.5. The indicator for the current economic situation declined 10.3 points to 21.6 in Oct. This was the first time that the indicator has recorded a decline after its continuous increase between Feb and Sept 2021. (RTT)

UK: Employment at record high. The UK payroll employment as well as job vacancies reached record levels at the end of the 3Q as the economy recovers from the pandemic-driven downturn. The number of payroll employees showed a monthly increase of 207,000 to reach a record 29.2m in Sept, the Office for National Statistics reported. In three months to Sept, job vacancies hit a record high of 1,102,000, with the majority of industries growing on the quarter. The rate of quarterly growth was highest in transport and storage. (RTT)

UK: BRC retail sales grow at slower pace in Sept. UK retail sales growth eased sharply in Sept as fuel shortages and wetter weather weighed on consumer confidence, data published by the British Retail Consortium and KPMG showed. Retail sales grew only 0.6% on a yearly basis in Sept after rising 3% in Aug. At the same time, like-for like sales fell 0.6% annually. An uncertain backdrop and slower growth means the 4Q is looks challenging as the economic recovery is dependent on strong retail sales during the festive season. (RTT)

China: Liberalises coal-fired power pricing to tackle energy crisis. China will allow coal-fired power plants to charge some customers market-driven prices for electricity, as a worsening energy crisis persuaded authorities to rush through their boldest reform of the power sector in decades. Responding to shortfalls in power generation brought on by shortages and record high prices for coal, the government has taken a range of steps to boost coal production and manage electricity demand at industrial plants. (Reuters)

Japan: Factory mood hits lowest since April on virus drag - Reuters Tankan. Japanese manufacturers were least optimistic in six months in Oct as they suffered from the impact of the coronavirus pandemic and automakers' output cuts, the Reuters Tankan poll showed. The Reuters Tankan index readings are derived by subtracting the percentage of respondents who say conditions are poor from those who say they are good. A negative reading means that pessimists outnumber optimists. (Reuters)

India: Inflation slows more than expected. India's consumer price inflation slowed more than expected in Sept, while industrial production grew in line with expectations in Aug, official data showed. The consumer price index rose 4.35% YoY following a 5.30% in Aug. Economists had forecast a 4.50% increase. The food price inflation eased to 0.68% from 3.11% in the previous month. (RTT)

Korea: Bank of Korea retains key rate; signals rate hike in Nov. Bank of Korea maintained its key interest rate but signaled a rate hike as early as in Nov to rein in high inflation and household debt. The Monetary Policy Board of the Bank of Korea decided to leave its base rate unchanged at 0.75%. The bank had raised its rate by a quarter point in Aug. Governor Lee Ju-yeol said the bank can consider hiking key rate at the next meeting should the economic recovery proceed as expected. (RTT)


Genting Malaysia (Neutral, TP: RM3.25): To inject another USD150m into Empire Resorts. Genting Malaysia (GenM) is injecting another USD150m (RM625m) into its US-based unit Empire Resorts Inc mainly for the repayment of short-term debts. It entered into an agreement to subscribe for up to USD150m of additional Series L Preferred Stock of Empire. (The Edge)

Ni Hsin: Partners MNA Energy to develop battery technology for EV motorcycles. Ni Hsin Group has partnered with MNA Energy SB (MNAE) to develop battery technology for electric motorcycles (EV two wheelers). It has entered into a head of agreement with MNAE for such collaboration that also includes participation in the latter’s business and growth. (The Edge)

MyEG: Inks blockchain backbone, supernodes deal with China's CAICT. MY E.G. Services signed a MoU with the Institute of Industrial Internet & IoT, China Academy of Information and Communications Technology (CAICT) of China on blockchain technology. The MoU is for the international extension of China's national blockchain network, Xinghuo Blockchain Infrastructure and Facility. (BTimes)

Lion Industries: Sells Antara Steel for RM664m. Lion Industries Corp is selling its 100% stake in Antara Steel Mills SB to Esteel Enterprise Pte Ltd for USD158.82m or about RM663.85m under an all-cash deal. It had entered into a conditional sale and purchase agreement for the proposed disposal of its entire 218m shares and 30m redeemable preference shares in Antara. (BTimes)

Bintulu Port: Bags RM25m maintenance dredging work contract. Bintulu Port Holdings has bagged a 5-year contract from See Song & Sons SB for maintenance dredging works at Samalaju Industrial Port in Bintulu, Sarawak, worth RM25.29m. Bintulu Port said its subsidiary Samalaju Industrial Port SB has issued the letter of acceptance for the contract. (The Edge)

Tan Chong: Terminates MoU to exclusively distribute microbus in Vietnam. Tan Chong Motor Holdings and Chinese firm Xiamen King Long United Automotive Industry Co Ltd have mutually agreed to terminate a MoU signed within relation to the exclusive rights to distribute the latter's Kinggo microbus model in Vietnam in both completely built-up and completely knocked-down forms. (The Edge)

Ramssol: In regional pact with AI firm Laiye. Ramssol Group has partnered with artificial intelligence robotic process automation (AI-RPA) firm, Laiye for intelligent automation technology across Southeast Asia. Through the partnership, Ramssol was tapping into the automation training business by providing RPA skills training to equip employees or jobseekers with a broad range of AI- RPA knowledge, concept and functionality. (BTimes)

Jade Marvel: Plans private placement to raise funds for frozen food processing and money lending businesses. Jade Marvel Group has proposed a private placement of up to 20% of its issued shares to raise as much as RM22.42m mainly for its frozen food processing and money lending businesses. The placement may involve the issuance of up to 43.11m new Jade Marvel shares. (The Edge)

Market Update

The FBM KLCI might open lower today after Wall Street’s blue-chip S&P 500 index closed down 0.2%, following a choppy session on Monday where an initial boost for energy stocks faded as questions about economic growth came to the fore. The technology-focused Nasdaq Composite was down 0.1%. Communications stocks led losses among the S&P 500’s 11 sectors, declining more than 1%. Google parent Alphabet Inc. slid USD49.30, or 1.8%, to USD2,728.98 and Facebook Inc. fell USD1.68, or 0.5%, to USD323.77. Steeply rising bond yields and regulation issues have dragged down tech shares in recent sessions. Europe’s Stoxx 600 benchmark was volatile on Tuesday, dropping 1.2% in early dealings to fall about 5% below its all-time high reached in mid-August, before closing the session 0.1% lower. London’s FTSE 100 index closed down 0.2%.

Back home, Bursa Malaysia’s barometer index ended the day above the 1,580 level, thanks to gains in bank as well as telecommunication counters. At the closing bell, the FBM KLCI ended at its intra-day high of 1,583.91, by adding 13.09 points compared with 1,570.82 at Monday’s close. In the region, China’s CSI 300 fell 1.1%, with the stocks of utilities dropping the most amid an electricity shortage driven by a lack of adequate coal supplies. Tokyo’s Nikkei 225 lost 0.9% as utilities’ shares fell along with highly valued technology stocks that are vulnerable to the prospect of US interest rates rising.

Source: PublicInvest Research - 13 Oct 2021

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