PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 18 Dec 2018, 09:51 AM


PublicInvest Research Headlines - 4 Dec 2017

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EU: Greece, creditors strike deal on the conditions for fresh cash. Greece and its international creditors agreed on a set of economic overhauls the country must undertake in exchange for fresh loans, paving the way for a payment that will help it build a cash buffer as it seeks to prepare for its bailout exit. The so-called staff level agreement came after a week of talks in Athens saw the two sides reach common ground on politically sensitive issues such as reforms in the energy sector, public administration, the financial system, social-cohesion programs and fiscal performance among others. (Bloomberg)

EU: Italy Banks Mergers to Continue in 2018: Patuelli to Stampa. The consolidation of Italy’s banking industry will continue next year, with the number of banks falling to about 110 from about 700 in 2016, the president of banking association ABI Antonio Patuelli is quoted as saying in an interview with La Stampa. Abi not directly involved in the activity of industry watchdogs. Bankruptcy law reform is the best tool to support banks in reducing NPLs burden. (Bloomberg)

UK: Business lobby says get used to subdued economic growth. The UK economy’s “lukewarm” growth will continue for some time and may even weaken in coming years, according to the Confederation of British Industry. In its latest outlook, the CBI sees expansion of 1.5% next year and 1.3% in 2019, which would be the worst annual performance since 2009, when the economy shrank. It also said the downside risks to its projections are high, as they assume Brexit goes smoothly, with the UK reaching agreement on a transition deal with the European Union early next year. That would come into effect when it leaves the bloc in Mar 2019. (Bloomberg)

China: Emerging markets to spotlight china trade data, Brazil this week. China trade data and Brazil’s pension bill may dominate emerging markets headlines this week. But don’t forget South Africa’s leadership vote. And of course there’s always the latest drama in Venezuela - not to mention interest-rate decisions in Brazil and Poland. The Chinese trade numbers for Nov, to be released Friday, will help explain the state of the economy as the end of the year approaches. South Africa’s election race is heating up ahead of the ANC’s leadership vote this month. In Brazil, debate over the much-anticipated pension bill now looks to spill over into 2018, while the central bank may drop benchmark rates to a record low. Poland is probably on hold despite a surprise spike in inflation. (Bloomberg)

Japan: Famous for its debt, set to cut bond sales for fifth year. Japan’s Ministry of Finance will probably trim bond sales for a fifth year running, helping to shrink the world’s biggest debt burden. The reduction will also make central bank purchases of the securities to control the yield curve more effective, analysts said. The ministry is likely to cut issuance across maturities, with more focus on super-long notes where demand has been weak because of the Bank of Japan’s yield-curve control policy, according to a survey of 11 government bond primary dealers. Estimates of the reduction range from JPY2.8trn (USD24.8bn) to JPY6.0tr. (Bloomberg)

India: New battle looms in powerful Indian states as Modi tightens grip. Narendra Modi’s steady conquest of India’s state governments and his drive to unify taxes across the country are fueling a new competition between provincial chief ministers for investment in factories, businesses and jobs that is redrawing the country’s industrial map. The ruling Bharatiya Janata Party has extended control to a record 18 states, representing roughly 60% of India’s GDP. That’s allowing Modi to erode decades of fighting between the central government and provincial leaders, who are responsible for everything from providing industrial land to law and order. (Bloomberg)

India: Bond bulls brace for more losses in 2018. The narrative on India’s monetary policy path is fast changing toward higher interest rates, signaling more losses in 2018 for bond investors who are still nursing their wounds from this year. One-year interest-rate swaps climbed to 6.3% this week, the highest since June. Traders are warming up to the idea the Reserve Bank of India may be done cutting rates and its next move will be upwards. South Korea took the lead on Nov 30 to be the first major Asian central bank to raise interest rates since the Federal Reserve began its tightening cycle in late 2015. (Bloomberg)


TNB (Outperform, TP: RM17.02): Wins solar plant bid. Tenaga Nasional (TNB) has received a letter of acceptance of offer from the Energy Commission (EC) to develop a 30MW alternate current large scale solar photovoltaic plant at Bukit Selambau, Kedah. (Bernama)

RHB Bank: Eyes 10% growth in northern customer base. RHB Bank expects its customer base in the northern market to increase by 10% in 2018 following the opening of a new branch in Tanjung Tokong on Penang island. Group retail banking acting head and executive vice-president Nazri Othman said the northern region market is the second largest market in the country after the Klang Valley. Nazri said mortgage loans are expected to grow by 16% in 2017. “The growth of mortgage loans in the financing industry in the country is about 7% this year. “In 2018, mortgage loans are projected to grow by about 13%,” he added. (StarBiz)

Sarawak Cable: Powers up cable sales. Sarawak Cable (SCB) is zooming in on Sarawak and Budget 2018’s huge allocations for digital infrastructure projects to push for increased sales of its telecommunication cables and optical ground wires. Group MD and CEO Aaron Toh Chee Ching said the Sarawak government had approved RM1bn in its budget to fund digital infrastructure projects and programmes while the Federal Government had set aside RM500m to finance telecommunication projects and broadband facilities in Sarawak next year. (StarBiz)

Priceworth: May pay RM30m less for Sabah forest reserve area. Priceworth International may pay RM30m, or 11.5%, less than the RM260m purchase consideration for Forest Management Unit No 5 (FMU5), under a variation to the sale and purchase agreement (SPA). The timber group said the discount is part of a cash option granted by the vendor of FMU5 — Transkripsi Pintar SB — in consideration of Priceworth agreeing to modify the payment schedule for the balance deposit of RM10m and making an advance payment. (The Edge)

BIMB: 3Q profit up 30.5%, declares 14 sen dividend. BIMB Holdings' net profit in the 3QFY17 rose 30.5% to RM183.4m from RM140.6m, mainly due to net write-back of allowances for impairment against a net allowance charged for impairment in the corresponding quarter in FY16. BIMB said profit before zakat and tax (PBZT) climbed 19.3% YoY to RM270.8m from 3QFY16's RM226.9m. Quarterly revenue came in at RM912.7m, climbing 4.4% YoY from RM874.5m. (The Edge)

IWCity: Sees second straight profitable quarter with Johor land sale. Iskandar Waterfront City (IWCity) announced a second consecutive profitable quarter with a net profit of RM89.6m booked in 3QFY17, due to gain from a sale of land in Johor. In the corresponding quarter a year ago, the group recorded a net loss of RM3.6m. (The Edge)

Tropicana: 3Q net profit up 2%, declares 2 sen dividend. Tropicana Corp's net profit rose 2% to RM35.5m in 3QFY17 from RM34.8m a year ago, mainly due to cost savings and higher progress billings from advanced progress of many of the group's ongoing projects in the Klang Valley and northern region. This was partly offset by a RM34.7m loss arising from the sale of a piece of development land. (The Edge)

Market Update

US markets ended lower last Friday with politics coming to the fore again as a former close aide of President Donald Trump admitted to lying to federal agents about his reported dealings with Russians before last year’s presidential elections. The S&P 500 fell as much as 1.5% on news that Special Counsel Robert Mueller’s investigation had pierced the White House inner circle, though clawing back more than half the plunge after the Senate said it had the votes to slash corporate taxes, finishing the day only 0.2% lower. The Dow Jones Industrial Average and Nasdaq Composite were 0.2% and 0.4% lower respectively, meanwhile. European equities slumped, weighed by a selloff in technology-based shares and with investors also appearing reluctant to put their money to work elsewhere. Euro-area finance ministers are due to discuss the future of the euro area later today, vote for a new president, and also debate Greece’s bailout review in Brussels. The European Commission College of Commissioners will discuss Brexit on Wednesday and will likely make its recommendation on whether sufficient progress has been made to move negotiations onto the future relationship. On the day however (last Friday), Spain’s IBEX 35, France’s CAC 40 and Germany’s DAX tumbled 1.2%, 1.0% and 1.3% respectively while UK’s FTSE 100 fell 0.4%. Asian markets were mostly higher earlier in the day as investors kept a keen eye on US tax legislation developments. Japan’s Nikkei 225 and Singapore’s Straits Times Index were up 0.4% and 0.5% while the Shanghai Composite Index squeezed out a 0.43- point gain. The Hang Seng Index was 0.4% lower however. The Malaysian and Indonesian markets were closed for a holiday.

Nestle and Press Metal, both of which had seen their share prices hitting record highs recently, will be added to the FBM KLCI list of 30 component stocks, with British American Tobacco and IJM Corporation losing their spots. DRB-Hicom returned to profitability after two quarters of losses, though this was largely aided by one off items (government grants, etc). Please refer to the accompanying report today for more details.

Source: PublicInvest Research - 4 Dec 2017

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