PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 22 Aug 2019, 9:10 AM


PublicInvest Research Headlines - 1 Nov 2018

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US: Companies add more workers than forecast, ADP data show. Companies in Oct added the highest number of workers in eight months to US payrolls, topping estimates and signaling the job market remains solid, according to data released Wednesday from the ADP Research Institute. Private payrolls increased by 227,000 (est. 187,000) after revised 218,000 advance in Sept. (prior 230,000)Payrolls in goods producing industries, which include builders and manufacturers, rose 38,000 after a 48,000 rise Service providers added 189,000 from payrolls after a 170,000 gain (Bloomberg)

US: Fed proposes eased rules for all but the biggest US banks. Regulators have proposed a softer oversight regime that dials back rules for US banks considered unlikely to pose a threat to the financial system -- a step meant to limit the toughest demands only to the largest lenders. Responding to legislation that called on federal agencies to ease compliance burdens for non-Wall Street banks, Federal Reserve governors voted Wednesday on a plan that would separate megabanks from smaller, regional lenders. Under the proposals, banks such as US Bancorp, Capital One Financial Corp. and PNC Financial Services Group Inc. would escape the most stringent capital rules reserved for systemically important institutions. (Bloomberg)

US: Debt sales top crisis-era levels as fiscal bump spurs growth. The US Treasury Department announced debt sales will surpass levels last seen when the country was digging out of its worst economic crisis since the Great Depression. This time around, fiscal stimulus is adding fuel to an already growing economy. A ballooning budget shortfall -- fueled by tax cuts, spending hikes and an aging population -- is driving the US Treasury to raise its long-term debt issuance at its quarterly refunding auctions to USD83bn from USD78bn three months ago, the department said. (Bloomberg)

EU: Euro-area inflation accelerates despite economic slowdown. Euro-area inflation accelerated in Oct and underlying price pressures increased, complicating policy makers’ choices after the economy grew at its weakest pace since 2014. Consumer prices jumped 2.2% from a year earlier while a measure that strips out volatile components rose to 1.1%. Inflation has been stronger than the ECB’s goal of just below 2% for the past five months, although energy has contributed a significant part to the pickup. President Mario Draghi has expressed confidence that a robust labor market and growing wages will also lift core prices, justifying a gradual withdrawal of monetary stimulus. (Bloomberg)

EU: ECB officials cling to economic narrative amid weak data. ECB officials said a recent slew of disappointing economic indicators doesn’t fundamentally change their view on prospects for growth and inflation. Stagnation in Germany and Italy in the 3Q and slower-than-expected expansion in the euro area aren’t reasons to start speculating about actions the central bank might take if the slowdown deepens, Governing Council member Ardo Hansson said. His Austrian colleague Ewald Nowotny shared that view, stating he expects the ECB to go ahead with its plan to end net asset purchases this year. Both men are considered relatively hawkish members of the Governing Council. (Bloomberg)

China: Satellites show manufacturing output contracted in Oct. Chinese manufacturing output contracted in Oct, according to an index based on satellite imagery. The China Satellite Manufacturing Index, which the US-based firm SpaceKnow Inc. compiles using satellite imagery to track activity levels across thousands of industrial sites, slipped below 50 in Oct for the first time since June 2017. The official manufacturing PMI fell to 50.2 in Oct, its lowest level in more than two years, according to data published this week by the National Bureau of Statistics. (Bloomberg)

China: Says more aid coming as downdraft from trade war rises. China’s leadership signaled that further stimulus measures are being planned, as disappointing economic data showed that the current piecemeal approach isn’t working. The nation’s economic situation is changing, downward pressure is increasing, and the government needs to take timely steps to counter this, according to a statement from a Politburo meeting Wednesday chaired by President Xi Jinping. (Bloomberg)


Eita: Bags RM48.94m underground cable project from TNB . A 60%-owned unit of Eita Resources has bagged an RM48.94m contract from Tenaga Nasional to undertake a double circuit 132 kilovolt (kV) underground cable project in Melaka. The unit, TransSystem Continental SB (TSC), received a letter of acceptance today from Tenaga Nasional for the project, which runs from Pencawang Masuk Utama (PMU) Ujong Pasir to PMU Pulau Melaka. The contract shall be effective from today and the time for completion shall be 605 days from the commencement date. (The Edge)

Tatt Giap: Bags RM67m worth of sub-contracting works. Tatt Giap Group has bagged four contracts worth a combined RM67m from Dynaciate Engineering SB to undertake various sub-contracting works. Its wholly-owned subsidiary Superinox Pipe Industry SB had received the four letters of awards from Dynaciate for the project works which range from civil and main mechanical, to piping fabrication and installation works. The project works are expected to contribute positively towards Tatt Giap’s future earnings and net assets and will have no effect on the group’s share capital. (The Edge)

PetDag: Calls off price hike on home deliveries following public outcry. Petronas Dagangan has cancelled the price hike implemented on its Gas Petronas Home Delivery (GPHD) service, after acknowledging the public's concerns. The company's U-turn came after it released a clarification earlier today that the home delivery charges had been revised in line with the market rate, from RM3.20 for 12kg and 14kg cylinders previously, to RM8.20 for 12kg cylinders and RM8.40 for 14kg cylinders. The price revision was to be applicable for GPHD service on orders made through the Mesralink call centre. (The Edge)

Vertice: Bags RM25m modification job for Genting's Arena of Stars. Vertice announced that its unit has secured a sub-contract job worth RM25m, involving modification works at the musical amphitheatre Arena of Stars in Genting Highlands, Pahang. The subcontract, comprising roof covering and acoustic works at the theatre, will be undertaken from Nov 1, 2018 to April 21, 2019. The subcontract is expected to contribute positively towards the group’s earnings and net tangible assets during the six-month period of the subcontract. (The Edge)

Taliworks: Bags RM42m reservoir project. Taliworks Corp has bagged a RM42.36m contract from Setia Haruman SB to build a reservoir called 76ML R.C. Reservoir R4 and undertake related ancillary works at Cyberjaya, Selangor. Its wholly-owned subsidiary Taliworks Construction SB has accepted the letter of award from Setia Haruman for the proposed project. Works will commence on Nov 15 this year, with completion on Nov 14, 2021. The contract is expected to contribute positively to Taliworks Group’s earnings and net assets for the duration of the contract. (The Edge)

TMC Life: Awards RM48.7m piling job to Putra Perdana. TMC Life Sciences has awarded a RM48.7m contract to Putra Perdana Construction SB to undertake piling works for the construction of the 33-storey Thomson Iskandar Medical Hub in Johor Baru. Its whollyowned subsidiary BB Waterfront SB has awarded the contract, which is for a period of 40 weeks, with completion by Sept 2, 2019, to Putra Perdana. The contract will be funded through internal funds. (The Edge)

UMW: It's no longer pursuing takeover of MBM Resources. UMW Holdings will no longer be pursuing the proposed acquisition of a 50.07% stake in MBM Resources (MBMR) and the resultant proposed mandatory takeover offer (MGO). The conglomerate is also giving up its takeover bid for a 10% stake in Perusahaan Otomobil Kedua SB (Perodua) and a proposed renounceable rights issue to raise gross proceeds of up to RM1.1bn. “Given the current business environment, we have recalibrated our corporate strategy in line with our ongoing transformation efforts and will focus on improving our financial performance," said UMW president and CEO. (The Edge)

Perstima: Plans manufacturing plant in the Philippines. Perusahaan Sadur Timah Malaysia (Perstima) plans to set up a new plant for the manufacturing of tinplate and tin-free steel in the Philippines. This is subject to the approval of the local authorities in the Philippines. Perstima has conducted a feasibility study on the market in the Philippines and found that there is currently no existing tinplate and tin-free steel manufacturer there. The annual domestic demand is approximately 220,000 tonnes comprising 170,000 tonnes and 50,000 tonnes of tinplate and tin-free steel respectively. (The Edge)

Kenanga IB: Scraps plan to buy Interpac. Kenanga Investment Bank (Kenanga IB) has scrapped plans to acquire Inter-Pacific Securities SB (Interpac). “We wish to announce that both parties have mutually agreed to terminate the proposed acquisition,” Kenanga IB said. It did not provide a reason. Kenanga IB had announced its intention to acquire Interpac, which is part of Berjaya Corp, in May this year after receiving approval from Bank Negara Malaysia to engage in discussions, which were to be completed within six months from May 16, according to a central bank stipulation. (The Edge)

KPS: Unit takes out RM78m loan for working capital, capex. Kumpulan Perangsang Selangor's (KPS) subsidiary CPI (Penang) SB has accepted the Islamic banking facilities of up to RM77.5m from AmBank Islamic, which will be used for working capital and capital expenditure. KPS said the Islamic facilities will not have any effect on the group's issued share capital and substantial shareholders’ shareholdings. However, it is expected to increase KPS' gearing to 0.55 times from 0.23 times as at Dec 31, 2017. (The Edge)

Lotte Chemical Titan: 3Q net profit dips y-o-y on margin squeeze. Lotte Chemical Titan Holding net profit dipped 6% to RM216.89min its 3QFY18, from RM230.31ma year ago, despite higher revenue mainly because the group faced margin squeeze arising from significant increase in feedstock price. Revenue grew 20% to RM2.42bnfrom RM2.02bn, contributed by higher sales volume of both its olefins and derivatives, as well as polyolefin products, driven by production improvements and higher average product selling prices. (The Edge)

Heineken Malaysia: 3Q profit up 20% as consumers stocked up ahead of SST. Higher volume sales ahead of the reintroduction of the Sales and Services Tax (SST) boosted Heineken Malaysia net profit by a fifth to RM78.9min the 3QFY18, compared with RM65.9ma year earlier. EPS rose to 26.11sen from 21.8sen. Revenue was 3.3% higher at RM512mfrom RM495.5mpreviously, mainly owing to an increase in sales volume ahead of the implementation of the SST in Sept. For the cumulative 9M, Heineken Malaysia’s net profit grew 3.5% to RM182.5mfrom RM176.4ma year ago, on the back of a 6.5% improvement in revenue to RM1.4bn. (The Edge)

Market Update

Markets across the globe checked out of October mostly on a positive note, though still seeing their worst monthly losses in a while. Over in the US, the Dow Jones Industrial Average and S&P 500 ended up 1.0% and 1.1% respectively, driven by strong earnings from the likes of General Motors and Facebook. Both were down 5.1% and 6.9% for the month however. Technology – based shares outperformed on the day, with the Nasdaq Composite jumping 2.0% higher. Separately, private payrolls rose by 227,000 in October, ahead of expectations. Official non-farm payroll numbers are due out tomorrow. European bourses also rallied as investors continued to track corporate earnings releases while also taking advantage of the recent selloffs to bargain-hunt. Eurozone inflation rose 2.2% in October, up from 2.1% in the previous month, giving more reason to the European Central Bank (ECB) to dial back stimulus even as growth in the bloc runs out of steam. France’s CAC 40 was the major outperformer with a 2.3% gain. Germany’s DAX and UK’s FTSE gained 1.4% and 1.3% while Spain’s IBEX 35 rose 1.0%. Asian markets were mostly higher with mainland China markets leading the way again even as manufacturing numbers were missed. Official purchasing managers’ index reading came in at 50.2, down from 50.8 in September and some way off the expectation of 50.6. Investors are focusing instead on expectations of more stimulus measures ahead. Japanese equities were also major performers on the day as the Bank of Japan kept monetary policy steady while also pledging to guide 10-year government bond yields around 0%. The Nikkei 225 was up 2.2% overnight. Elsewhere, the Hang Seng and Straits Times indices gained 1.6% and 1.8% respectively as the FBM KLCI rose 1.4%.

Tatt Giap Group has clinched four contracts worth a combined RM67m to undertake various sub-contracting works which range from civil and main mechanical, to piping fabrication and installation works. Kenanga Investment Bank has called off plans to acquire Inter-Pacific Securities with both firms mutually agreeing to terminate the proposed acquisition. Eita Resources has bagged its fourth contract from Tenaga Nasional to carry out a double circuit 132 kilovolt (kV) underground cable project in Melaka worth RM48.9m.

Source: PublicInvest Research - 1 Nov 2018

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