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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 19 Apr 2019, 10:04 AM

 

PublicInvest Research Headlines - 28 Aug 2018

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Economy

US: Says China's steel wheels subsidized, will impose duties on imports. The US Commerce Department said it had made a preliminary determination that imports of certain steel wheels from China were subsidized at rates ranging from 58.75% to 172.51%, and it would impose duties on the product. “As a result of today’s decision, Commerce will instruct US Customs and Border Protection to collect cash deposits from importers of certain steel wheels from China based on these preliminary rates,” the department said. It estimated the value of US imports of steel wheels from China in 2017 at USD388m. (Reuters)

EU: Trade truce with Trump lifts German business morale. German business morale improved for the first time this year in August as a trade truce between the EU and US made company executives less concerned about a transatlantic trade war. The Ifo economic institute said its closely-watched business climate index jumped to 103.8, beating July’s reading of 101.7 and a Reuters consensus forecast of 101.9. (Reuters)

China, Japan: Slowly learning to cooperate in Trump age. Japanese Finance Minister Taro Aso will travel to Beijing later this week for a meeting with Chinese counterpart Liu Kun that is likely to demonstrate the improving relationship between the world’s second- and third-largest economies. Aso, 77, who also serves as Japan’s deputy prime minister, is expected to discuss with Liu the resurrection and expansion of a currency-swap arrangement at the talks. While any such agreement is of limited practical importance in itself, the revamped deal would nonetheless be significant as it would reflect the latest warming of relations between Asia’s two economic powerhouses. (Bloomberg)

China: Early indicators show China’s economy weakening again in Aug. The earliest indicators for China’s economy show that the pace of expansion slowed for a fourth month in Aug, highlighting the pressure for the government to push through pro-growth policies. The data suggest the economy weakened further as demand from trading partners lost steam, with the decline in stock prices reflecting worsening sentiment. (Bloomberg)

China: Cabinet to curb risks in online finance, share-backed loans. China will continue to resolve financial risks in online lending and the use of shares as collateral for financing activities to protect market stability, the state council said. The government will speed up the development of a long-term regulatory mechanism for internet finance, the cabinet said in a post following a meeting of the state cabinet’s Financial Stability and Development Commission (FSDC) chaired by vice premier Liu He, adding that risks in online lending were under control. (Reuters)

Markets

Wah Seong (Trading Buy, TP: RM1.64): Partners Japanese firm to produce palm oil process equipment. Wah Seong has teamed up with Japan's Saito Separator Ltd to manufacture accessories and equipment under the Saito brand for disc bowl centrifuge and decanters for the palm oil industry. Its indirect wholly-owned subsidiary PMT Industries SB (PMTI) has entered into an agreement with Saito to form a JV company known as PMT Saito SB to undertake the businesses. (Bursa Announcement) Comments: We are neutral with this development as the partnership with a foreign technology provider is part of the group's strategy to become a one-stop process equipment provider for the palm oil sector. While this is positive to the Group’s future earnings, we reckon the financial impact will not be meaningful as the major contributor to the Group’s operational profit is still its pipeline coating services. We keep our earnings forecast and TP of RM1.64 unchanged. Our Trading Buy call is also retained.

Serba Dinamik (Outperform, TP: RM4.19): Remains positive on outlook with digital adoption. Serba Dinamik Holdings is confident of the group’s prospects on the back of increased digitalisation in its operations and management (O&M) segment which will bring about effective cost savings. O&M contributes about 86% to Serba Dinamik’s revenue as at end of financial year. The group will be spending about RM2m in this next quarter on a proof of concept exercise to pilot digital services on a plant turnaround and routine maintenance management of the group’s PT Serba Dinamik Indonesia plant. (The Edge)

Gamuda (Neutral, RM3.80): Accepts Air Selangor's offer for SPLASH. Gamuda has accepted the offer from Pengurusan Air Selangor SB (Air Selangor) to acquire its 40%-owned associate company Syarikat Pengeluar Air Selangor Holdings (SPLASH). Gamuda will make the necessary announcement to Bursa Securities upon the finalisation and execution of the termination and settlement agreement and the new operations and maintenance agreement of Sungai Selangor Water Treatment Plant Phase 3 (SSP3) which, inter alia, are subject to and are conditional upon the completion of the share purchase agreement to be entered. (The Edge)

Barakah Offshore: Winds up Saudi Arabia subsidiary. Barakah Offshore Petroleum is winding-up its subsidiary in Saudi Arabia, which was set up to secure oil and gas projects in the Middle East. The closure of PBJV Gulf Co Ltd is part of the group’s plans to reduce its operating costs. PBJV Gulf is an indirect 85%-owned subsidiary that was incorporated on March 19, 2012 and had set up an office in Al-Khobar, Saudi Arabia. PBJV Gulf audited net liabilities as at Dec 31, 2017 was Saudi Riyal 626,985 (RM686,000). The closure and voluntary liquidation of PBJV Gulf is not expected to have any material effect on the group's net assets per share and earnings per share for the FYE Dec 31, 2018. (The Edge)

Yinson: Incorporates new unit in Mexico. Yinson Holdings has incorporated a subsidiary in Mexico. Yinson Malva Operations S.A. DE C.V. was incorporated with an initial issued paid-up share capital of 10,000 Mexican pesos (RM2,190), of which 90% is held by Yinson Production AS and the remaining 10% by Floating Operations and Production Pte Ltd. The principal activity of the subsidiary is provision of operations and maintenance of floating marine assets to the offshore oil and gas industry. The incorporation of the new unit is not expected to have any material effect on the group’s earnings or net assets for the FYE Jan 31, 2019. (The Edge)

Mudajaya: Third unit of India power plant achieves commercial operations. The third unit of Mudajaya Group coal-fired thermal power plant in India’s Chhattisgarh state has achieved its commercial operation date. Its 26%-owned associate in India, RKM Powergen Pvt Ltd, has notified the group that Unit 3 has achieved COD. RKM is still pursuing an approval letter from the Fuel Management Division of Central Electricity Authority India and will need to conclude the power purchase agreement, before power sales can commence. (The Edge)

Vertice: Bags RM27m Desaru subcontract work. Vertice has bagged a RM27.35m sub-contract work from Kumpulan Liziz SB, who is the main contractor for the proposed Desaru Coast Marina, customs, immigration and quarantine (CIQ) complex and ferry terminal building in Desaru, Johor. Its wholly-owned subsidiary Vertice Construction SB has accepted the sub-contract offer from Kumpulan Liziz. The job encompasses dredging works for marina basing and entrance, construction of breakwater at the entrance of the ferry terminal and design, fabricate, supply and installation of steel pontoon system and dolphin piles. (The Edge)

Land & General: 1Q profit drops 92% to RM1.8m. Land & General 1Q net profit dropped 92% to RM1.79m from RM23.67m a year earlier, mainly because previously there was a one-off gain from the disposal of MRT land for RM33.61m. EPS for the quarter fell to 0.06sen from 1.15sen previously. Quarterly revenue remained flat at RM22.08m compared with RM22.01m a year ago. Its property segment recorded revenue of RM15.45m following further progress billings and construction progress from its Astoria project in Ampang Hilir. The project has to-date achieved a take-up rate of 70% based on its Phase 1 launch of 506 units. (The Edge)

Utusan Melayu: Net loss narrows in 2Q. Utusan Melayu (Malaysia) narrowed its net loss to RM2.65m in the 2QFY18 from RM10.68m a year ago, on contribution from tablet project. Loss per share came in lower at 2.39sen, compared with 9.64sen for 2QFY17. Quarterly revenue rose 19% to RM63.87m, from RM53.83m a year ago. The PN17 company attributed the higher revenue to recognition of income from Tutor Guru and Epaper in relation to a tablet project. The group also recorded higher other income from a printing job. On prospects, it remains cautious on the group's performance in 2018, given the continuing downward trend of print newspaper industry and increasing demand for online news. (The Edge)

Padini: 4Q net profit up 45%, declares 2.5sen dividend. Padini Holdings net profit grew 45.1% to RM57.29m in the 4QFY18 from RM39.48m a year ago, on higher revenue. Padini attributed the higher earnings to improvement in gross profit margin, as well as counter balance by the increase in selling and distribution expenses. This resulted in higher earnings per share of 8.71sen for 4QFY18 compared with 6sen for 4QFY17. On prospects, the group is confident of turning in another profitable period despite the challenging economic environment and rising cost. (The Edge)

Tiong Nam: 1Q net profit jumps on growth in logistics and warehousing services. Tiong Nam Logistics 1Q net profit rose 7.1 times to RM4.86m or 1.07sen per share, from RM683,000 or 0.16sen per share a year ago, on growth in its logistics and warehousing services segment and narrower losses in the investments segment. Revenue for the quarter grew 10.1% to RM155.1m from RM140.9m previously, due to revenue growth seen in the logistics and warehousing services segment as well as property development segment. The latest 1Q is the group’s third consecutive quarter of improvement in profits at the logistics and warehousing services. (The Edge)

Market Update

The FBM KLCI might open with a positive bias today after Wall Street’s sustained record-breaking run set an upbeat tone to trade across stock markets overnight, while the Mexican peso rallied as President Enrique Peña Nieto and Donald Trump hailed a trade deal between Mexico and the US. The S&P 500 closed 0.8% higher to 2,897 in New York, expanding on the record close it reached on Friday following a dovish speech to central bankers by Federal Reserve chairman Jay Powell. Meanwhile, the Dow Jones Industrial Average jumped 259 points, or 1%, to 26,049 after the blue-chip index successfully reclaimed the psychologically important 26,000 mark for the first time since February and the Nasdaq Composite Index rose 72 points, or 0.9%, to 8,017. In Europe, the region-wide Stoxx 600 closed up 0.5%, with gains of 1.2% for Frankfurt’s Xetra Dax. The CAC 40 in Paris finished 0.9% higher, while London’s FTSE 100 is closed for the late summer public holiday.

Back home, the FBM KLCI ended the day up 3.01 points or 0.17% to its 13-week high of 1,811.60 points. Decliners led gainers by 572 to 376 with 376 counters traded unchanged. About 2.75bn shares worth RM2.02 billion were traded in the open market. Across the region, Japan's Nikkei 225 was up by 0.88%, China’s Shanghai Stock Exchange Composite rose 1.89% and Hong Kong's Hang Seng surged by 2.17%. Seoul’s Kospi Composite index underperformed, up just 0.3%.

Source: PublicInvest Research - 28 Aug 2018

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