PublicInvest Research

Author: PublicInvest   |   Latest post: Wed, 21 Aug 2019, 10:13 AM


PublicInvest Research Headlines - 1 Oct 2018

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US: Consumer sentiment improves slightly less than initially estimated. A report released by the University of Michigan on Friday showed consumer sentiment in the US improved by slightly less than initially estimated in the month of Sept. The report said the consumer sentiment index for Sept was downwardly revised to 100.1 from the preliminary reading of 100.8. Economists had expected the index to be unrevised. (RTT)

US: NAFTA talks run up against deadline; US tariffs remain tough issue. With little time left ahead of a deadline to agree to a renewed NAFTA, Canadian and US trade officials on Sunday tried to settle differences on tough issues such as protection against American tariffs. The administration of US President Donald Trump said Canada must sign onto the text of the updated North American Free Trade Agreement by midnight EDT on Sunday (0400 GMT Monday) or face exclusion from the trilateral pact, which includes Mexico. (Reuters)

US: Personal income rises 0.3% in august, slightly less than expected. Personal income in the US rose by slightly less than expected in the month of August, according to a report released by the Commerce Department on Friday, while personal spending increased in line with economist estimates. The report said personal income climbed by 0.3% in August, matching the increase seen in July. Economists had expected income to rise by 0.4%. (RTT)

EU: Eurozone inflation exceeds target in Sept. Eurozone inflation increased in Sept, exceeding the central bank's ceiling, on food and energy prices, while core price growth eased unexpectedly, official data showed Friday. Inflation rose marginally to 2.1%, in line with expectations, from 2% in August, Eurostat reported. A similar 2.1% was logged in July. Final data is due on Oct 17. (RTT)

EU: Germany's unemployment declines sharply in Sept. German unemployment decreased notably in Sept, figures from the Federal Labor Agency revealed Friday. The number of unemployed declined 23,000 from the previous month to 2.3m in Sept. Economists had forecast a moderate fall of 9,000. Unemployment had declined by 10,000 in August. The jobless rate dropped to 5.1% in Sept, while it was expected to remain unchanged at 5.2%. This was the lowest rate since German reunification in 1990. (RTT)

UK: GDP expands as estimated; current account gap widens. The UK economy expanded as initially estimated in the 2Q and the current account gap widened on visible trade deficit and primary income shortfall, data from the Office for National Statistics revealed Friday. GDP grew 0.4% in the 2Q, unrevised from the previous estimate. The growth rate for the 1Q was revised down to 0.1% from 0.2%. (RTT)

UK: Brexit has cost Britain GBP500m a week, study says. Britain’s decision to leave the European Union has cost the government GBP500m a week, wiping out for the moment any future savings from stopping payments to the bloc, according to a study published on Sunday. The Centre for European Reform, a research group that focuses on the European Union, said the British economy is about 2.5% smaller than it would have been if the public have voted to remain in the bloc in June 2016. Its findings were based on the impact on the economy until the end of June 2018. (Reuters)

UK: GfK consumer sentiment weakens in Sept. UK consumer confidence weakened in Sept amid heightened uncertainty surrounding Brexit, survey data from GfK showed Friday. The consumer sentiment index dropped to -9 in Sept from -7 in August. The expected score was - 8. The index measuring changes in past personal finances decreased three points to +1. Likewise, the forecast for personal finances over the coming 12 months dropped to +5 from +8 a month ago. (RTT)

China: To cut import tariffs on wide range of products. China will cut import tariffs on textile products and metals, including steel products, to 8.4% from 11.5%, effective Nov 1, the finance ministry said on Sunday. Import tariffs on wood and paper products, minerals and gemstones will be cut to 5.4% from 6.6%, the ministry also said. Average import tariffs on over fifteen hundred products will be lowered to 7.8% from 10.5%, the ministry said. (Reuters)

China: Widens income tax exemption for foreign investors. China has widened income tax exemption on re-invested profits for foreign firms, the finance ministry said on Sunday, to try to boost foreign investment amid trade tensions. The scope of the tax exemption has been expanded to all sectors where foreign investment is not prohibited, the finance ministry said. The move will help “further encourage foreign investment in China”, the finance ministry said. (Reuters)

Japan: Industrial output gains 0.7% in August. Industrial production in Japan climbed a seasonally adjusted 0.7% on month in August, the Ministry of Internal Affairs and Communications said in Friday's preliminary reading. That was shy of forecasts for an increase of 1.4% following the 0.1% decline in July. On a yearly basis, industrial production added 0.6% - again missing forecasts for an increase of 1.5% and down sharply from 2.2% in the previous month. (RTT)

Japan: Housing starts recover in August. Japan's housing starts increased for the first time in three months in August, data from the Ministry of Land, Infrastructure, Transport and Tourism revealed Friday. Housing starts advanced 1.6% in August from last year, reversing a 0.7% drop in July. Orders were forecast to climb 0.4%. Annualized housing starts decreased to 957,000 from 958,000 in July. The expected level was 947,000. (RTT)


MyEG: Buys commercial space at Empire City for RM35.4m. My EG Services (MyEG) is acquiring a commercial space within the podium level below MyEG Tower at Empire City for RM35.35m cash from Cosmopolitan Avenue SB. MyEG said it has also entered into a put option agreement with Cosmopolitan to obtain an option at MyEG's sole discretion to sell the property back to Cosmopolitan at a sum equal to 66.67% of the purchase consideration within six months from the date of delivery of vacant possession of the property to MyEG. (The Edge)

Pasukhas: Buys Kuantan land for RM4.7m. Pasukhas Group is acquiring a piece of land measuring about 1.0194 hectares in Kuantan, Pahang for RM4.7m. The group said that its wholly owned subsidiary Pasukhas SB had on Sept 28 entered into a sale and purchase agreement with MTM Millennium Holdings SB for the acquisition. Pasukhas said the acquisition will enable the group to expand its existing business activities as well as to take up more business opportunities. The purchase sum will be funded through internal generated funds and/or bank borrowings. (SunBiz)

Notion VTec: Accepts insurance settlement of RM159.37m. Notion VTec has accepted from its insurer a full and final claim settlement of RM159.37m for material fire losses in the incident that occurred at its main manufacturing plant in Klang. The balance net settlement of RM79.37m will be paid at a subsequent date. “The settlement could be deployed for recovery of the production facilities affected by the fire incident and NVB will still retain its rights to any recovery from insurance proceeds for business interruption arising from the fire incident,” said Notion VTec. (StarBiz)

KPS: Sale of Splash stake results in RM331.6m divestment loss but it pockets RM765m in cash. The divestment of a 30% stake in Syarikat Pengeluar Air Sungai Selangor SB (Spash) is set to cost a one-time disposal loss of about RM331.6m for Kumpulan Perangsang Selangor (KPS). The proposed divestment is expected to be completed by the end of the year. The group’s 30% associate company, Syarikat Pengeluar Air Selangor Holdings (SPLASH Holdings) entered into a conditional share purchase agreement (SPA) with Pengurusan Air Selangor SB for the proposed disposal of its entire equity interest and redeemable unsecured loan stocks (RULS) in SPLASH to Air Selangor for RM2.55bn cash. (The Edge)

UMW: Enters JV with Komatsu for heavy equipment business. UMW Corporation SB (UMWC), a wholly-owned subsidiary of UMW Holdings (UMW), entered into a joint venture agreement with Komatsu Ltd (Komatsu) for its heavy equipment business. UMW announced that UMWC and Komatsu now hold a 74% and 26% of the issued and paid-up share capital of a joint venture company known as UMW Komatsu Heavy Equipment SB. UMW president and CEO, Badrul Feisal Abdul Rahim, said: "This joint venture with Komatsu will enable UMW to move forward in the heavy equipment business to further strengthen the long-term business. (The Edge)

Reach Energy: Gets nod for North Kariman field trial production. Reach Energy's producing asset in Kazakhstan, Emir-Oil LLP, has obtained authority approval to commence the trial production period of the North Kariman field in Kazakhstan for 15 months. Reach Energy said the 15-month trial production period will commence on Oct 1, 2018 to Dec 31, 2019. The approval granted for the trial production period allows Emir-Oil to put the North Kariman wells on production, and this is expected to increase current oil production levels substantially. (The Edge)

Kumpulan Powernet: Signs MoU to commercialise 'superfast' charging/discharging battery products. Kumpulan Powernet is teaming up with Japan’s Applied Science Co Ltd (AJ) to commercialise the technology of superfast charging and discharging of battery related products into the mass market. The textile and apparel maker said the the company recognised enormous benefits will arise from the commercialisation of AJ's technology and will give the company an advantageous platform and better prospects in the future. (The Edge)

Ikhmas Jaya: Defers construction of new manufacturing facility. Piling specialist Ikhmas Jaya Group has once again postponed the construction of its new prefabricated building system manufacturing facility in Teluk Panglima Garang, Selangor. This is the second postponement this year after the earlier deferment on March 30. The company said the construction would be delayed until "there are sufficient successful tenders for projects which could utilise the MM2 prefabricated building components (or insulated reinforce concr panel) resulting in the need for the relocation and expansion of the new manufacturing facility". (The Edge)

Scomi: Private share placement falls through. Scomi Group’s share placement plan fell through because the placee did not meet the listing requirement. “On behalf of the BODs of SGB, KAF Investment Bank wishes to announce that the first tranche placement was not implemented as the placee did not meet the requirement pursuant to Paragraph 6.13 of the Main Market Listing Requirements of Bursa Malaysia Securities Bhd,” it said. The group said a new placement price will be determined and announced later. (The Edge)

Berjaya Corp: Posts 1Q profit of RM35m. Berjaya Corp (BCorp) posted a net profit of RM35.06m in its 1QFY19 against a net loss of RM43.4m in the corresponding quarter a year ago, owing to a disposal gain. The group registered earnings per share of 0.66 sen in 1QFY19 versus loss per share of 0.73 sen a year ago. Revenue fell 2.57% year-on-year to RM2.14bn from RM2.2bn. BCorp said it made a disposal gain amounting to RM76.6m on a subsidiary company but that most of its business segments, including gaming, consumer products and services, and F&B, also showed improved operating results. (The Edge)

Comfort Gloves: 2Q net profit down 54.8% hit by one-off whopping logistic expenses. Comfort Gloves recorded a 54.8% decline in net profit to RM4.1m in 2QFY19 compared with RM9.07m a year ago. Its earnings was eroded by the one-off logistics expenses of RM4.4m — an amount that is bigger than its net profit. However, the glove maker did not reveal the reason for the logistic costs. On its operation, the manufacturer’s gross profit grew 8% to RM14.14m during the quarter under review on the back of improvements in production efficiency and quality. (The Edge)

LB Aluminium: 1Q net profit down 26% on reduced margins. LB Aluminium's net profit fell 25.8% to RM2.67m in 1QFY19 from RM3.6m a year ago, due mainly to reduced margins resulting from depressed export returns owing to the strengthening of the ringgit and higher raw material input costs. This resulted in lower EPS of 1.07 sen for 1QFY19 compared with 1.45 sen for 1QFY18. This was despite a 9.2% increase in quarterly revenue to RM135.65m versus RM124.43m in 1QFY18, due mainly to higher business volume and average selling prices. (The Edge)

Market Update

The FBM KLCI might open flat after a mixed picture on Wall Street last Friday as Italian bond yields reached a five-year high on Friday after the government unveiled plans for a sharp increase in public spending and proposed a 2.4 percent budget deficit, risking a collision with the EU. The Italian bond sell-off hit the bonds of Portugal and Greece as well, and across European equity markets, Italy’s FTSE MIB index stood out with a 3.7% drop. European stocks fell during the day, with the Euro Stoxx 50 declining 2% led by falls in financials and utilities. Frankfurt’s Xetra Dax fell 1.5% and France’s CAC 40 declined 0.9%. The FTSE 100 ended on Friday down 0.5%. Wall Street was a more mixed bag. The S&P 500 index enjoyed positive early trading, but ended the last trading day of the month flat, while the Dow and Nasdaq inched 0.1% higher. Data released on Friday by the commerce department revealed that the Federal Reserve’s preferred measure of inflation data — the core consumption expenditures price index, or PCE — held steady at a six-year high in August. The PCE index rose 2 percent last month from a year earlier, bolstering the case for the US central bank’s policymakers to stick to their planned pace of interest rate rises this year and next.

Back home, the FBM KLCI index lost 5.49 points or 0.31% to 1,793.15 points on Friday. Trading volume increased to 2.11bn worth RM2.58bn. Market breadth was positive with 434 gainers as compared to 395 losers. The regional markets finished broadly higher on Friday with shares in Japan leading the region. The Nikkei 225 was up 1.36% while China's Shanghai Composite added 1.06% and Hong Kong's Hang Seng rose 0.10%.

Source: PublicInvest Research - 1 Oct 2018

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