PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 25 Apr 2019, 10:18 AM


PublicInvest Research Headlines - 14 Mar 2019

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US: Core capital goods orders rebound, inflation muted. New orders for key US made capital goods rose by the most in six months in Jan and shipments increased, but the trend in both measures of business spending on equipment remained soft, leaving forecasts for weak first-quarter economic growth intact. The slowing economy is helping keep inflation tame, with other data showing producer prices barely rising in Feb, resulting in the smallest annual increase in more than 1-1/2 years. This environment supports the Federal Reserve’s wait-and-see approach to further interest rate hikes this year. The rebound in underlying capital goods orders is still consistent with a slowdown in business equipment investment growth, and producer price figures show few signs of a pick-up in inflation in the pipeline. (Reuters)

US: Construction spending posts biggest increase in nine months. US construction spending surged in Jan with investment in public projects rising to a more than eight-year high which could boost economic growth estimates for the 1Q. The Commerce Department said that construction spending jumped 1.3%, the largest increase since last April, after a revised 0.8% drop in Dec. Economists polled by Reuters had forecast construction spending rising 0.4% in Jan after a previously reported 0.6% drop in Dec. Construction spending increased 0.3% YoY basis in Jan. The release of the Jan report was delayed by a five-week partial shutdown of the government that ended on Jan. 25. (Reuters)

EU: Eurozone industrial output stronger than expected in Jan. Eurozone industrial production was stronger than expected in Jan, data showed, mainly thanks to a strong contribution from energy and despite a drop in German output. The European Union’s statistics office Eurostat said production in the 19 countries sharing the euro rose 1.4% MoM in Jan for a 1.1% YoY fall. Economists polled by Reuters had expected a 1.0% monthly increase and a 2.1% annual decline. The Jan result was mainly influenced by a 2.4% monthly and 4.0% YoY jump in energy output, which helped offset or mitigate the weaker results for intermediate and capital goods production. (Reuters)

China: Smartphone shipments to China hit six-year low in February. Smartphone shipments to China in February fell to their lowest in six years, market data indicated, as consumers continued to put off handset purchases amid a slowing economy. Shipments to the world’s biggest smartphone market totalled 14.5m units, down 19.9% from a year ago, according to data from the China Academy of Information and Communications Technology, a government-affiliated research institute. That is the lowest since February 2013, when shipments to the China totalled 20.7m. (Reuters)

Japan: Producer prices add 0.2% in Feb. Producer prices in Japan were up 0.2% on month in February, the Bank of Japan said on Wednesday. That exceeded expectations for an increase of 0.1% following the 0.6% decline in January. On a yearly basis, producer prices climbed 0.8% - again exceeding expectations for a gain of 0.7% and up from 0.6% in the previous month. Export prices were up 0.6% on month and down 1.7% on year in February, the bank said, while import prices gained 1.1% on month and fell 0.7% on year. (RTT)


CMSB: To construct bridge in Bintulu for RM466m. Cahya Mata Sarawak (CMS) has been awarded the contract to construct a bridge crossing with a connecting road in Bintulu, Sarawak for RM466.68m. The contract was awarded by the Sarawak government to PPES Works CCCC JV. CMS owns 51% stake in PPES Works, the remaining 49% is held by the Sarawak Economic Development Corp. The scope of work includes the proposed construction and completion of the proposed Bintulu-Jepak bridge crossing Kuala Kemena, which upon its completion will not only improve connectivity, but will be an addition to the stunning engineering marvels to grace the Sarawak skyline. (The Edge)

Destini: Bags Sarawak Shell contract under PAC drilling programme. Unit of Destini has been awarded a contract for the provision of tubular handling, conductor installation and slot recovery equipment and services by Sarawak Shell under the Pan Malaysia Petroleum Arrangement Contractors’ (PAC) Operators Drilling Programme. The total value of the contract awarded to Destini depends on work orders to be issued. Under the contract, DOS is to be the primary contractor for tubular handling, conductor installation and slot recovery for shallow water. In addition, DOS was appointed to be the secondary contractor for tubular handling equipment and services for deep water. (The Edge)

PRG: HK-listed unit Furniweb to diversify into PVC foam board manufacturing via acquisition. PRG Holdings' 63%-owned subsidiary Furniweb Holdings Ltd, which is listed on the Hong Kong Stock Exchange, has proposed to acquire Meinaide Holdings Group Ltd for HKD140m to be fully satisfied via the issuance of shares. Furniweb believes that the acquisition provides an excellent opportunity for it to expand its business portfolio to include production and sale of polyvinyl chloride (PVC) foam boards, polystyrene foam boards, PVC construction template and other plastic products which is of high growth potential. (The Edge)

Lambo Group: Proposes one-for-two bonus warrants. Lambo Group has proposed to undertake a bonus issue of up to 1.27bn warrants (Warrants B) on the basis of one Warrant B for every two existing shares held at an entitlement date to be determined later. Assuming full exercise at an illustrative exercise price of 16sen per warrant, the Group will raise gross proceeds of RM203.25m. Such proceeds will be used to supplement the group’s existing working capital, which commensurate with the business operations of the group. The working capital will be utilised to finance the group’s dayto-day operations. (The Edge)

Construction (Neutral): Pan Borneo Highway Sabah is now 12.4% complete. The Pan Borneo Highway project in Sabah has reached 12.4% completion as at Feb this year, said Deputy Works Minister Mohd Anuar Mohd Tahir, adding that RM609m has been spent. Mohd Anuar said Phase 1 of the Sabah portion is divided into 35 work packages, involving a total length of 706km. To-date, 12 work packages have been awarded to contractors to begin construction works. However, one of the contractors which was in charge of the Tawau to Semporna stretch was terminated due to poor performance. The federal and Sabah state governments are now studying the execution mechanism of the highway project, and will discuss its future direction with the Cabinet by the end of this month. (The Edge)

Market Update

The FBM KLCI might open higher today after US stocks secured their longest winning streak in nearly a month on Wednesday, with healthcare and energy stocks carrying the S&P 500 to its highest mark of 2019. The S&P 500 was up 0.7%, its third consecutive day of gains and the benchmark’s longest winning streak since mid February. The Nasdaq Composite was up 0.7% and the Dow Jones Industrial Average added 0.6%. Shares in Boeing, which have dragged on the Dow in previous two sessions, recovered to finish 0.5% higher despite dropping as much as 3.2% following the US’s decision to ground 737 Max flights. Positive investor sentiment towards equities — partly fuelled on Wednesday by signs of muted inflation — again saw government bonds shunned, pushing yields higher. European stocks were also higher, with the Stoxx 600 up 0.6%. Britain’s FTSE 100 was 0.1% higher amid the threat of a disorderly Brexit.

Back home, the FBM KLCI index gained 6.96 points or 0.42% to 1,678.24 points on Wednesday. Trading volume increased to 4.00bn worth RM2.39bn. Market breadth was negative with 421 gainers as compared to 459 losers. The regional markets finished broadly lower with shares in China leading the region. The Shanghai Composite was down 1.09% while Japan's Nikkei 225 was off 0.99% and Hong Kong's Hang Seng was lower by 0.39%.

Source: PublicInvest Research - 14 Mar 2019

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