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PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 18 Jul 2019, 9:35 AM

 

PublicInvest Research Headlines - 27 Mar 2019

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Economy

US: Housing starts fall most since June, missing estimates. US new-home groundbreakings fell in Feb by the most in eight months on a drop in single-family homes, suggesting buyers and builders remain wary despite higher wages and a drop in mortgage rates. Residential starts slumped 8.7% to a 1.16m annualized rate, below estimates, after an upwardly revised gain the prior month, according to government figures. Permits, a proxy for future construction, dropped 1.6% to a 1.3m rate. The steeper-than-expected drop and other signs of weakness signals developers continue to struggle to build affordable properties amid rising costs for materials and labor. (Bloomberg)

US: Consumer confidence slumped in March, missing forecasts. US consumer confidence declined for the fourth time in five months on dimmer assessments of present conditions, suggesting that weak 1Q growth and slower job gains in Feb are weighing on attitudes and potentially spending. The Conference Board’s index fell to 124.1 from 131.4. That missed all economist estimates in a Bloomberg survey calling for a rise to 132.5. The gauge of views on the present situation fell to the lowest level in almost a year, while the expectations index also weakened. (Bloomberg)

US: China, Europe slowdown's scale to determine impact on Fed policy, Evans. US Federal Reserve policymakers will look at the scale of the slowdown in the Chinese and European economies to determine any possible impact on Fed policy, Charlie Evans, president of the Chicago Fed, said. “It depends a lot on how large the slowdown would be in China, and how big the headwinds would be from European deceleration as well,” he said. He noted recent instances where uncertainties in the two economies influenced Fed policy. (Reuters)

EU: European leaders press for fairer trade relationship with China. Europe’s top leaders told President Xi Jinping they wanted a fairer trading relationship with China, signaling an openness to engage with Beijing’s “Belt and Road” infrastructure project if it meant more access to the Chinese market. The Europe Union, the world’s largest trading zone, has become increasingly frustrated by what it sees as the slow pace of economic opening in China, even after years of granting China almost unfettered access to EU markets for trade and investment. (Reuters)

UK: Banks approve fewer mortgages in Feb as Brexit nears, UK Finance. British banks approved fewer mortgages in Feb than during Jan, industry data showed. Seasonally-adjusted data from the UK Finance industry body showed banks approved 39,083 mortgages last month, down from 39,910 in Jan. The value of net mortgage lending increased by GBP711m (USD936m), the smallest rise since April 2016 and around half the size of increases in much of last year. (Reuters)

China: Business activity recovering thanks to 'credit-soaked' quarter: Beige Book . China’s economy showed “unmistakable” signs of recovery in the 1Q, with company profits, investment and hiring improving, but policymakers may be relying too much on extraordinary levels of credit, a private survey showed. The quarterly survey of thousands of Chinese firms by China Beige Book International (CBB) painted a surprising picture of a turnaround in business conditions after a poor 4Q that saw the weakest economic growth since the financial crisis. CBB’s findings were in contrast to mostly downbeat official data for Jan and Feb and other business surveys which suggest recent stimulus measures are only slowly kicking in. (Reuters)

Markets

AirAsia (Outperform, TP: RM3.50): Wants Nepal's airport to waive late fees worth Rs130m. AirAsia Group has asked Tribhuvan International Airport (TIA) in Kathmandu, Nepal to waive around Rs130m in outstanding fees, according to a report by The Himalayan Times. The airline had suspended its flights to Nepal since Oct 13 last year. The report quoted TIA as saying that AirAsia is still to pay around Rs194m dues, of which around Rs130m are related to late fees. AirAsia had written a letter to TIA seeking a waiver of at least its late fees. However, TIA refused to do so. (The Edge)

Advancecon: To explore solar energy opportunity. Advancecon Holdings has signed a Memorandum of Understanding (MoU) with Kumpulan Semesta SB (KSSB) to explore opportunities in the solar energy industry in Malaysia, particularly the Large Scale Solar Project 3 initiated by the Energy Commission. This MoU is to express the desire to combine resources and expertise to pursue opportunities in relation to the ownership of solar photovoltaic system in respect of the solar project. (The Edge)

Sapura Industrial: Sapura Aerospace Technologies to build RM100m hi-tech facility. Sapura Aerospace Technologies, a joint venture between Sapura Industrial and two Japanese aerospace companies, will be investing RM100m over the next five years to build a high-technology facility on a 2.02-hectare site in the Greater Klang Valley. The two Japanese companies are Wada Aircraft Technology Co Ltd and Aero Inc. Sapura Aerospace Technologies plans to construct a purpose-built high-specification facility with more than 200 staff to be trained under specially-designed programmes and accreditations. (The Edge)

MAHB: Launches RM5m fund to boost Langkawi tourism. Malaysia Airports Holdings launched an RM5m Langkawi International Tourism Promotional Fund to facilitate the marketing and promotion of Langkawi as an attractive destination. The programme will run for two years starting from June 2019 with the support of the Langkawi Development Authority and the fund will be made available to eligible industry players such as airlines, tour operators, travel agents and destination marketing companies. The airport operator had been intensifying its efforts by improving network connectivity and promoting inbound tourism. (The Edge)

Comfort Gloves: 4Q earnings double to RM9.39m. Comfort Gloves net profit for the 4QFY19 almost doubled to RM9.39m, from RM4.78m a year ago, when the group distributed RM3.4m in shares through the employees’ share scheme. EPS rose to 1.67sen, from 0.86sen previously. Its quarterly revenue grew 23% to RM130.55m, from RM106.36m a year earlier. The group has recommended a final dividend of 1.5sen per share. For the entire FY19, net profit fell 22% to RM27.9m, from RM35.9m in FY18, due to a one-off logistic cost of RM5.4m, higher taxation and deferred taxation expenses of RM7.5m. (The Edge)

Kim Loong: Annual, quarterly profit slump on lower palm oil prices. Kim Loong Resources net profit fell 83% to RM3.15m or 0.34sen per share in the 4QFY19, from RM18.28m or 1.96sen per share in the same quarter a year ago, no thanks lower average crude palm oil (CPO) prices. The average palm oil prices fell 34% compared to the year-ago quarter, despite a marginal increase in fresh fruit bunches production. The substantial drop in CPO selling prices also affected the performance of its palm oil milling operations during the quarter, despite higher sales quantity recorded. (The Edge)

Market Update

The FBM KLCI might open higher today after US stocks closed higher Tuesday as the energy and financial sectors buoyed the market, but main indexes came off their intraday highs on tepid housing and consumer-confidence data as well as lingering uncertainties over global growth and Brexit. The Dow Jones Industrial Average rose 140.90 points, or 0.6%, to 25,657.73 after being up more than 200 points during the session. The S&P 500 index advanced 20.10 points, or 0.7%, to 2,818.46, with energy and financial shares leading the gainers. The Nasdaq Composite climbed 53.98 points, or 0.7%, to 7,691.52. Across the Atlantic, the Stoxx 600 climbed 0.8%, coming after Monday’s mild decline of nearly 0.5%. The U.K.’s FTSE 100 index rose 0.3% to 7,200.4, nearly reversing Monday’s loss of 0.4% (closing at 7,177.6) as investors digested the latest humbling Brexit moment for the government. France’s CAC 40 rose nearly 0.9% after an encouraging GDP figure, swinging back to positive territory after Monday’s close of 5,260.6, registering a decline of nearly 0.2%. By contrast, Germany’s disappointing consumer confidence survey data left the DAX lower by 0.3%.

Back home, the FBM KLCI index gained 0.79 of a point or 0.05% to 1,649.94 points on Tuesday. Trading volume decreased to 2.47bn worth RM1.77bn. Market breadth was negative with 367 gainers as compared to 373 losers. The regional markets finished mixed with the Nikkei 225 gained 2.15% and the Hang Seng rose 0.15%. The Shanghai Composite lost 1.51%.

Source: PublicInvest Research - 27 Mar 2019

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