PublicInvest Research

Author: PublicInvest   |   Latest post: Wed, 13 Nov 2019, 10:04 AM


PublicInvest Research Headlines - 15 Feb 2019

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US: Weakest retail sales since 2009 cast pall over economy. US retail sales recorded their biggest drop in more than nine years in Dec as receipts fell across the board, suggesting a sharp slowdown in economic activity at the end of 2018. The shockingly weak report from the Commerce Department on Thursday led to growth estimates for the 4Q being cut to below a 2.0% annualized rate. Dec’s collapse in retail sales and other data showing an unexpected increase in the number of Americans filing claims for unemployment benefits last week and a second straight monthly decline in producer prices in Jan support the Federal Reserve’s pledge to be “patient” before raising interest rates further this year. Retail sales tumbled 1.2%, the largest decline since Sept 2009 when the economy was emerging from recession. Sales edged up 0.1% in Nov. (Reuters)

US: 2018 holiday sales numbers 'surprise' NRF, fall short of expectations. US holiday spending in 2018 grew a lower-than expected 2.9% to USD707.5bn, the National Retail Federation said, citing turmoil over trade policy and the recent government shutdown as having hurt the industry. All signs during the holidays seemed to show that consumers remained confident about the economy. However, it appears that worries over the trade war and turmoil in the stock markets impacted consumer behavior more than we expected. Overall Dec sales including auto dealers, gas stations and restaurants were down 1.2% seasonally adjusted from Nov but up 2.3% unadjusted YoY. (Reuters)

US: Weekly jobless claims unexpectedly rise to 239,000. A report released by the Labor Department showed first-time claims for US unemployment benefits unexpectedly increased in the week ended February 9th. The report said initial jobless claims rose to 239,000, an increase of 4,000 from the previous week's revised level of 235,000. Economists had expected jobless claims to drop to 225,000 from the 234,000 originally reported for the previous week. The less volatile four week moving average climbed to 231,750, an increase of 6,750 from the previous week's revised average of 225,000. (RTT)

US: Business inventories unexpectedly edge down 0.1% in Nov. Government shutdown-delayed data released by the Commerce Department showed an unexpected dip in business inventories in the US in the month of Nov. The report said business inventories edged down by 0.1% in Nov after climbing by 0.6% in Oct. Inventories had been expected to rise by 0.3%. The unexpected decrease was partly due to a pullback in retail inventories, which fell by 0.4% in Nov after increasing by 0.8% in Oct. Manufacturing inventories also slipped by 0.1% during the month, while wholesale inventories rose by 0.3%. Business sales dropped 0.3% in Nov after inching up by 0.1% in Oct. (RTT)

EU: Eurozone economic growth slows year on year in 4Q, employment up. The eurozone economy slowed as expected YoY in the last three months of 2018 as growth in Germany came to a halt and Italy slipped into recession, official data showed confirming earlier estimates. The European Union’s statistics office Eurostat said GDP in the 19 countries sharing the euro currency rose 0.2% QoQ for a 1.2% YoY increase, slowing from 1.6% YoY in the third quarter. The figures, which are still subject to possible revision, were in line with market expectations and with Eurostat’s earlier preliminary estimate. Employment in the eurozone rose 0.3% QoQ in the last three months of 2018 and was 1.2% higher than in the same period a year earlier. (Reuters)

EU: French jobless rate falls to near 10-year low . France’s unemployment rate fell unexpectedly at the end of last year to its lowest level since the start of 2009, official data showed, offering President Emmanuel Macron some relief on the economics front. The INSEE statistics office said the jobless rate fell to 8.8% from 9.1% in the previous quarter, marking the lowest level since the first quarter of 2009 during the depths of the global financial crisis. Economists polled by Reuters had forecast on average that unemployment would have remained stable at 9.1%. The fall in joblessness offers Macron a boost as he struggles to restore his authority after the waves of “yellow vests” protests that started in Nov against high diesel prices and have since morphed into a broader movement against his government and its drive to undertake reforms. (Reuters)

EU: German economy stalled in Q4, just escaping recession. The German economy stalled in the final quarter of last year, escaping recession by the narrowest of margins after contracting in the July-Sept period for the first time since 2015. GDP in Europe’s biggest economy grew by 0.0% QoQ, the Federal Statistics Office said. That compared with a Reuters forecast for growth of 0.1%. German companies are grappling with a cooling global economy and trade disputes triggered by US President Donald Trump’s ‘America First’ policies. The risk that Britain leaves the European Union without a deal in March is another uncertainty. Compared with the same quarter of the previous year, the economy grew by 0.6% from Oct to Dec. (Reuters)

China: Jan trade data beats forecasts, but likely due to seasonal factors. China’s exports unexpectedly returned to growth in Jan after a shock decline the previous month, while imports fell much less than expected, but analysts said it was likely due to seasonal factors and predicted renewed trade weakness ahead. Global investors and China’s major trading partners are closely watching to see how quickly its economy is cooling, or if a spate of support measures announced last year is beginning to take hold, lifting some of the gloom hanging over the world economy. Jan exports rose 9.1% from a year earlier, customs data showed on Thursday. (Reuters)


Maybank (Neutral, TP: RM9.90): Indonesia's 2018 Patami hits record high. Maybank’s Indonesian unit, PT Bank Maybank Indonesia Tbk, achieved a record high profit after tax and minority interests (PATAMI) of IDR2.2trn (RM636.3m) for the FYE Dec 31, 2018, up 21.6% YoY, on the back of higher net interest income (NII) and continued improvement in asset quality. "Better asset quality, a solid growth in Sharia business, combined with improvement in subsidiaries as well as sustained strategic cost management also contributed to the Bank’s improved performance," it said. (The Edge)

Yinson: Bags RM2.36bn contract from JX Nippon. Yinson Holdings said its wholly-owned subsidiary has been awarded a contract worth USD578m or RM2.35bn from JX Nippon Oil & Gas Exploration (Malaysia) Ltd. "The tenure of the O&M Contract is effective from 12 Feb 2019 and shall remain in full force until termination of the contract for the provision of EPCIC (engineering, procurement, construction, installation & commissioning) and leasing for the Layang FPSO facilities. The charter contract is for a firm period of eight years and comes with options for 10 extension periods of one year each," Yinson said. (The Edge)

Can-One, Kian Joo: Can-One launches takeover of Kian Joo at RM3.10 a share. Can-One International, which owns 31% of Kian Joo Can Factory, has launched a conditional mandatory take-over for the latter at RM3.10 a share. Can-One's current stake comprises of 295.8m shares and this will see it making an offer for the remaining stake. Kian Joo said on Thursday a copy of the take-over notice would be posted to the minority shareholders within seven days. (Bernama)

Xin Hwa: Appoints KPMG unit to conduct independent review. Xin Hwa Holdings (Xin Hwa) has appointed KPMG Management and Risk Consulting SB to conduct an independent review on alleged irregularities on some transactions and payments. It said this was to ascertain whether there were any irregularities in the company. It added that the full review was expected to be completed within 10 weeks from the date of the commencement of the work, slated to start on Feb 18. (Bernama)

Gas Malaysia: 4QFY18 falls near 17% after GCPT adjustment. Gas Malaysia’s net profit in the 4QFY18 fell 16.7% YoY to RM51.1m from RM61.3m the year before, on lower gas contribution margin due to the Gas Cost Pass Through (GCPT) adjustment set for the JulyDec 2018 period. It declared a 4.5 sen dividend per share, amounting to RM57.8m, payable on March 28. This brings its dividend declared for the FY18 to 9 sen, up from 8 sen the year before. (The Edge)

Construction (Neutral): LRT3 project to resume in 2H. Works on the light rail transit 3 (LRT3) project are expected to resume in the 2H of this year, according to Malaysian Resources Corp (MRCB). “The LRT 3 project is already 10% completed and we are at the redesigning stage,” MRCB COO Kwan Joon Hoe said. The LRT 3 project has been stalled for almost a year pending a review in light of the revelation by the Finance Ministry (MoF) that the total cost of the line had ballooned to RM31.65bn. The government then approved the continuation of the 36km-long track at a reduced final cost of RM16.63bn, less 47% of the original cost. This resulted in a series of negotiations between the MoF, Prasarana Malaysia and the project's main contractors MRCB and George Kent (Malaysia). (StarBiz)

Market Update

The FBM KLCI might open lower today after Wall Street lost ground on Thursday after poorer than expected US retail sales data sent shivers through the stock market. The bleak American data followed numbers that showed Germany only narrowly avoiding a return to recession in the fourth quarter. Both reports underlined the fragile state of the global economy as investors continued to wait for signs of progress on the trade dispute between the US and China, with high-level talks between the countries under way. The S&P 500 index was down 0.3%, after having been down as much as 0.8% after the biggest monthly drop in US retail sales since the depths of the financial crisis. The Dow Jones Industrial Average fell 103.88 points, or 0.4%, to 25,439.39, while the Nasdaq Composite Index edged up 6.58 points to 7,426.95. Europe’s Stoxx 600 slipped 0.3% overall, coming off some of its highest readings since November, with the earnings inspired rally looking overdone as sentiment soured. Frankfurt’s Xetra Dax 30 ended the day down 0.7%, while London’s FTSE 100 bucked the trend, helped by a weaker pound. The main UK stock index ticked up 0.1%.

Back home, the FBM KLCI index gained 3.76 points or 0.22% to 1,689.06 points on Thursday. Trading volume increased to 3.89bn worth RM2.29bn. Market breadth was positive with 463 gainers as compared to 359 losers. It was a brighter day for mainland China’s stocks. China’s CSI 300 rose 0.2%, having climbed 2% on Wednesday on hopes for firm signs of an improvement in trade relations with the US. Hong Kong’s Hang Seng slipped 0.2%, with technology and consumer cyclical stocks falling. Japan’s Topix held steady after data showed Japan’s economy returning to growth in the final quarter of 2018.

Source: PublicInvest Research - 15 Feb 2019

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