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PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 20 Jun 2019, 10:04 AM

 

PublicInvest Research Headlines - 12 Sept 2018

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Economy

US: Record job openings, quits rate boost wage growth outlook. US job openings surged to a record high in July and more Americans voluntarily quit their jobs, pointing to sustained labor market strength and confidence that could soon spur faster wage growth. The Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS, released on Tuesday also suggested a further tightening in labor market conditions, with employers appearing to increasingly have trouble finding suitable workers. While the tightening labor market could boost wage gains, some economists warned that worker shortages could over time negatively impact economic growth. (Reuters)

US: Small-business optimism at record high on hiring, spending. A measure of optimism among US small-business owners rose to a record and exceeded projections as companies planned the most capital spending since 2007 and hiring intentions hit an all-time high, a National Federation of Independent Business survey showed Tuesday. Sentiment index rose 0.9 point to 108.8, the highest since tracking began in 1974 and exceeding the prior peak in Sept 1983. Capital spending plans were the highest since 2007 while inventory investment intentions were the strongest since 2005. Small businesses are increasingly optimistic as the economic expansion enters its 10th year and the Trump administration prioritizes industry deregulation and tax cuts. Companies have been boosting inventories to match robust consumer demand for goods and services. (Bloomberg)

US: Markets see highest chance yet of two more Fed hikes in 2018. Federal Reserve officials expect to lift the central bank’s benchmark interest rate a total of four times in 2018, based on their economic projections. Markets are increasingly becoming believers. Policy makers have already lifted borrowing costs twice this year, and their projections indicate another two quarter-point moves by the end of 2018. The implied yield on Jan fed funds futures, an indication of where the market sees the benchmark at year end, on Tuesday climbed to an unprecedented 2.3%, indicating around 44 basis points of additional tightening by the end of Dec. The first 25 basis points of this is priced as a near certainty for the Federal Open Market Committee’s meeting later this month, based on the Oct fed funds contract. (Bloomberg)

EU: German economic confidence at 4-month high. German economic sentiment improved more-than-expected to a four-month high in Sept, despite trade war fears, survey data from the Centre for European Economic Research, or ZEW, showed Tuesday. The economic sentiment indicator climbed to -10.6 from -13.7 in Aug, the Mannheim-based think tank said. Economists had expected a moderate improvement to -13.5. The score was the highest since May. The current conditions index rose to 76 from 72.6 in Aug. Economists had expected a lower reading of 72. The financial market experts' sentiment concerning the economic development of the Eurozone also improved in Aug. The corresponding indicator climbed 3.9 points to minus 7.2 points. (RTT)

UK: Mark Carney to remain BOE Governor until Jan 2020. Mark Carney is set to continue as the governor of the BOE until the end of Jan 2020 to support a smooth Brexit and transition, UK Chancellor Philip Hammond confirmed Tuesday. Hammond made the announcement while speaking at the Parliament. The seven-month extension was agreed in an exchange of letters between the Governor and the Chancellor, the Treasury said. The UK is set to exit the European Union in March 2019. (RTT)

China: Seeks WTO backing for USD7bn sanctions on US over dumping duties. China told the World Trade Organization (WTO) on Tuesday it wanted to impose USD7bn a year in sanctions on the US in retaliation for Washington’s non-compliance with a ruling in a dispute over US dumping duties. The request for authorization from the WTO to introduce the sanctions is likely to lead to years of legal wrangling over the case for the penalty and the amount. China’s request for authorization, said the latest available data showed it had suffered USD7.0bn in damages annually, and therefore it requested permission to raise trade barriers on US goods to the same amount, as allowed under WTO rules. (Reuters)

Markets

Bumi Armada (Trading Buy, TP: RM0.67): Achieves Final Acceptance on the Armada Kraken FPSO. In a press statement last Friday, the Group reported that it has achieved the Final Acceptance certificate of Armada Kraken Floating Production Storage and Offloading (FPSO) vessel with the requirements set out in the contract dated 20 Dec 2013 and supplemented by Amendment Agreement Number One (AA1, 19 Aug 2016) and Amendment Agreement Number Two (AA2, 27 August 2018). (Bursa Announcement). Comments: We are positive on this long-awaited development as this will ensure maximum production and up-time, with earnings contribution from this complex heavy oil project expected to be significant next year. We keep our forecasts, having already imputed this from next year onwards. Maintain our Trading Buy call with an unchanged DCF-derived TP of RM0.67.

KFima (Neutral, TP: RM1.79): Unit's impairment writeback totals RM24m. Fima Corp said the quantum of the writeback of the impairment relating to its Indonesian subsidiary PT Nunukan Jaya Lestari's (NJL) property, plant and equipment amounts to RM23.6m. Fima said the sum would be reflected in its financial results for the 2Q ending June 30, 2019. On Aug 21, Indonesia's Supreme Court ruled in favour of NJL whose cultivation rights (HGU) certificate was revoked after a ministerial order on July 25, 2016. (The Edge)

Country View: Gets RM232m loan to part-finance land purchase in Iskandar Puteri. Country View has accepted banking facilities totalling RM232m to part-finance the purchase of a piece of 164-acre vacant land in Iskandar Puteri, Johor. The property developer said the facility was offered to its wholly-owned subsidiary, Country View Resources SB, by RHB Islamic Bank and MBSB Bank. Of the amount, RM217m would be used to part-finance the RM310m purchase price of the land, the group said. (The Edge)

CCM: Sells land in Seremban for RM21.5m. Chemical Company of Malaysia (CCM) is selling a vacant industrial land in Seremban for RM21.5m, the bulk of which will be used to pare down its borrowings. CCM said it has signed an agreement to sell the leasehold land, measuring 73,705 sq m, to Rock Link SB and the deal is expected to be completed by the 1Q2019. The land’s original cost of investment was RM9.04m in Dec 1994, the group said. (The Edge)

TDM: Undertakes RM434m debt rationalisation exercise. TDM will undertake a debt rationalisation exercise that involves the full settlement of the outstanding rupiah notes held by its Indonesian subsidiary, PT Rafi Kamajaya Abadi. TDM said under the debt rationalisation exercise, the group will utilise a USD105m (RM434.3m) credit facility to fully settle the group's outstanding rupiah notes used for TDM's plantation operations in Kalimantan, Indonesia. Subsequently, TDM will redeem its investment in fixed income securities, of which the proceeds will be used to fully settle the principal portion of the USD105m Foreign Currency Revolving Credit-i Commodity Murabahah. (The Edge)

Analabs: Buys RM12.6m worth of Maybank shares for dividend, capital gains. Analabs Resources said it has acquired shares of Malayan Banking (Maybank) amounting to RM12.56m, with the intention of deriving dividend income and for potential capital gains. The purchase accounted for 5.03% of Analabs' audited consolidated net assets as at April 30, 2018. Analabs said the shares were acquired in the open market between June 2 and Sept 7. (The Edge)

Sunsuria: Teams up with UK group to set up international school. Sunsuria has teamed up with UK-based Concord College International Ltd to operate an international school in Malaysia. Concord is a wholly-owned subsidiary and educational charity which runs an independent international school in England. Sunsuria said the collaboration is expected to benefit the local community within Sunsuria City in the south of Putrajaya as it provides access to quality international education. (The Edge)

TFP Solutions: Disposes stake in Bangladesh JV. TFP Solutions is pulling out of its Bangladesh solution business joint venture, due to “irreconcilable differences and incompatibility” with its partner. The group said its wholly-owned subsidiary, TFP Soft SB (formerly known as One Uni Education SB), is selling the 55% stake in TFP Bangladesh to Mohamed Junaeid Aziz for RM7,978. (The Edge)

Alam Maritim: Forms JV for offshore underwater segment. Alam Maritim Resources’ wholly owned subsidiary Alam Hidro (M) SB (AHSB) has entered into a shareholders’ agreement with AME Subsea SB for the purpose of venturing and providing offshore underwater and subsea services. The services include a complete work programme of underwater, structural and topside inspection, repair and maintenance, particularly in the international markets. AHSB and AME had incorporated a joint venture company known as Subsea Worldwide Solutions SB, which is expected to contribute positively to Alam Maritim’s earnings and net tangible assets for the year ending 31 Dec 2018 and beyond. (SunBiz)

Scientex: Unveils RM1.3bn township development in Senai. Property developer Scientex has unveiled its latest township development in Senai, Johor, the 121-acre Taman Scientex Utama with estimated GDV of RM1.3bn. Taman Scientex Utama, consisting of residential and commercial components, is designed for an integrated and vibrant community living experience. It echoes the resounding success of the 250-acre Taman Scientex Senai, the Group’s first township development in Senai launched in 2013. Additionally, more than 85% of the 1,400 residential and commercial units in Taman Scientex Utama would be priced in the affordable range. This is in line with Scientex’s aim to build 50,000 affordably priced quality homes throughout the nation by 2028. (StarBiz)

Oil and Gas (Overweight): Petronas signs oil-exploration, output pact with South Sudan. South Sudan’s government signed agreements for the exploration, production and sale of oil from three blocks with companies including Petroliam Nasional (Petronas) and China National Petroleum Corp. The accords, covering blocks 1, 2 and 4 in an area once known as Unity state, were signed at the Petroleum Ministry in the capital, Juba, on Monday. The other signatories were Oil & Natural Gas Corp of India and and the state owned National Oil & Gas Corp of South Sudan. (The Edge)

Market Update

The FBM KLCI might open higher today as US stocks shrugged off a wobbly start to close higher Tuesday, with the Dow climbing by triple digits, as energy and telecommunications rallied. However, trade worries were simmering below the surface as investors continued to watch the situation between the U.S. and China. At the closing bell, the Dow Jones Industrial Average climbed 113.99 points, or 0.4%, to end at 25,971.06 after two consecutive losing sessions. The S&P 500 added 10.76 points, or 0.4%, to finish at 2,887.89 and the tech-laden Nasdaq Composite Index advanced 48.31 points, or 0.6%, to 7,972.47.

Across the Atlantic, the Stoxx Europe 600 fell 0.1% to end at 375.31, after a gain of 0.4% on Monday. The index fell 2.2% last week, and is down 3.6% year-to date. Germany’s DAX 30 pared early losses to end 0.1% lower at 11,970.27, while France’s CAC 40 rose 0.3% to 5,283.79. The UK’s FTSE 100 fell 0.1% to 7,273.54. Back home last Friday, the FBM KLCI index gained 0.60 of a point or 0.03% to 1,799.17 points. Trading volume decreased to 1.73bn worth RM1.64bn. Market breadth was negative with 334 gainers as compared to 475 losers. The regional markets finished mixed yesterday with the Nikkei 225 gained 1.30%, while the Hang Seng led the Shanghai Composite lower. They fell 0.72% and 0.18% respectively.

Source: PublicInvest Research - 12 Sept 2018

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