PublicInvest Research

Author: PublicInvest   |   Latest post: Wed, 21 Oct 2020, 10:11 AM


PublicInvest Research Headlines - 23 Apr 2019

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Global: Asian trade is still slowing even with the China-US truce. Two of the earliest indicators for Asian trade continued pointing down in April, undercutting hopes for a rebound even as the US and China look to be headed toward an settlement of the dispute which has weighed on sentiment. Korean exports dropped 8.7% YoY in the first 20 days of April. Taiwan’s March export orders declined more than forecast and are expected to continue falling this month, according to a separate release. Global finance chiefs ended talks in Washington this month mixing concern toward the current state of the world economy with confidence that it will soon rebound. (Bloomberg)

US: Trump to escalate Iran feud by ending waivers. The Trump administration said it won’t renew waivers that let countries buy Iranian oil without facing US sanctions, a move that roiled energy markets and risks upsetting major importers such as China and India. “This decision is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue,” White House Press Secretary Sarah Sanders said. “The US, Saudi Arabia and the United Arab Emirates, three of the world’s great energy producers, along with our friends and allies, are committed to ensuring that global oil markets remain adequately supplied,” according to the statement. Brent for June settlement climbed as much as 3.5%, reaching its highest level since early November. (Bloomberg)

US, China: Trump-China trade deal seen boosting grain container shipments. A deal ending the trade spat between the US and China would boost container shipments of grain, wheat and soybeans, according to the head of Japan’s largest container-shipping company. While agricultural goods are typically transported in large volumes by bulk ships, there’s a rising trend toward using containers as they can move smaller quantities more efficiently and without the need for storage facilities, said Jeremy Nixon, CEO of Ocean Network Express Pte. (The Edge)

China: Manufacturers deploy every weapon they can. Manufacturers in China facing trade barriers are deploying an array of moves to try to keep foreign customers - giving discounts, tapping tax breaks, trimming workforces and, occasionally, shifting production overseas to skirt tariffs. Tit-for-tat tariffs from the China-US trade war have been costly for many. Adding to the strain on Chinese manufacturers have been EU’s duties on Chinese products ranging from electric bikes to solar panels. March brought some encouraging news for manufacturers. Industrial output rose at its fastest rate since mid-2014 and exports rebounded more than expected, while 1Q growth was better than expected. Still, some manufacturers who depend on US sales are struggling. (Star Biz)

Indonesia: Jokowi hints at budget stimulus to push stalled Indonesia growth. Indonesian President Joko Widodo signaled a renewed push to fire up Southeast Asia’s biggest economy, calling for steps in next year’s budget to stimulate stalled growth. The state budget must provide stimulus for "quality, equitable economic growth" with a focus on boosting investment and exports, Widodo told a limited cabinet meeting. While the economy has been growing at about 5%, the government is targeting growth of 5.3% to 5.5% next year. Indonesia’s budget deficit is on track to be contained below 2% for a second year. (Bloomberg)


Axiata: (Underperform, TP: RM3.65) Unit appeals Nepal’s RM1.45bn capital gains tax demand. Axiata Group’s 80%-owned unit Ncell Private Ltd is challenging the decision of the Nepali tax authorities to charge the company RM1.45bn as CGT. (The Edge) Comment: This was pursuant to the recent ruling by Nepali Supreme Court demanding 39.06bn Nepalese rupees (RM1.45bn) of capital gain tax from Axiata’s 80%-owned subsidiary, Ncell Private Ltd (Ncell). While we agree that the decision in transferring TeliaSonera’s (Ncell’s previous shareholder) tax assessment unto Ncell is unfair, we believe it would be a challenge for Axiata to appeal against it when it had willingly made advances on behalf of TeliaSoneraJust earlier in order to resolve the tax dispute and to pave the way for a successful acquisition of Ncell. Perhaps, there is possibility of a lower tax amount. Nevertheless, this substantiates our concern of high regulatory and investment risks for Axiata’s operations in the emerging markets and we reiterate our Underperform rating with an unchanged TP of RM3.65.

Bina Puri: Wins arbitration case in Pakistan over termination of highway concession deal. Bina Puri Holdings has won an arbitration case against the Pakistan National Highway Authority (NHA) in a dispute relating to the termination of an RM864m highway concession agreement. Bina Puri had commenced the arbitral proceedings against NHA in April 2013. (The Edge)

Seacera: To partner OCR for RM10bn Semenyih development. Seacera Group has entered into a joint venture agreement with Amazing Symphony SB, a subsidiary of OCR Group, for a mixed development in Semenyih which has a potential gross development value (GDV) of RM10bn. The plan will entail the development of landed residential homes, landed commercial shop units, high-rise strata developments, hospitals, schools, hotels and malls, among other components. (The Edge)

Gadang: Has yet to submit any official bid for ECRL jobs . Gadang Holdings clarified that it has not submitted any official tender for the East Coast Rail Link (ECRL) project at this juncture. The group reiterated that it had entered into a pre-bid consortium agreement with DWL Resources to jointly bid for infrastructure projects. (The Edge)

IWCity, Ekovest: Not involved in Bandar Malaysia reinstatement. Iskandar Waterfront City (IWCity) and Ekovest , who both saw their shares surge on optimism that they would benefit from the revival of Bandar Malaysia, have denied that they are involved in the reinstatement of the project. (The Edge)

Chemical Company of Malaysia: Wins RM352mil Petronas Refinery contract . CCM has won a RM351.9m contract to supply caustic soda to Petronas Refinery and Petrochemicals Corp SB (PRPC). CCM Chemicals had accepted a letter of award from Petroliam Nasional for the deal. (The Star)

Velesto: Bags four contracts worth USD104.68m from Petronas Carigali. Velesto Energy has bagged four contracts from Petronas Carigali SB with an estimated combined value of about RM433.07m. The group four Letters of Award for the provision of jack-up drilling rig services for its jack-up rigs. (The Edge)

Market Update

The FBM KLCI might open higher today after the biggest one-day rise for the energy sector since January pushed Wall Street higher on an otherwise muted Monday as oil prices climbed after Washington said it will stop giving sanctions waivers to countries that import Iranian crude or condensate. The US said nations including India and China would face penalties if they continue to import Iranian oil, in the latest effort by Donald Trump’s administration to ratchet up pressure on Iran. Japan, South Korea and Turkey could face sanctions if they did not comply after the waivers are withdrawn next month. The move sparked a rally in oil prices. Global benchmark Brent crude was up 3% to USD74.10 a barrel and hit its highest since November. West Texas Intermediate, the US price, rose 2.6% to USD65.70, also near a six-month high. The S&P 500 spent much of the morning flicking in and out of negative territory but closed 0.1% higher. The Dow Jones Industrial Average finished down 48 points, or 0.2%, at 26,511, with Boeing's stock serving as the biggest drag on the blue-chip gauge, following a report over the weekend from the New York Times that charged the aeronautics and defense company with shoddy production of its Dreamliner jets. Meanwhile, the Nasdaq Composite Index advanced 0.2% at 8,015, putting the index about 1.2% short of its Aug 29 all-time closing high.

Back home, the FBM KLCI index lost ended almost at 1,622.06 points on Monday. Trading volume increased to 4.77bn worth RM3.11bn. Market breadth was positive with 621 gainers as compared to 323 losers. Other equities markets mostly posted small moves with much of Asia-Pacific and Europe offline for Easter. However, Chinese stocks fell from near their highest in 2019, with the CSI 300 of major stocks in Shanghai and Shenzhen down 2.3%.

Source: PublicInvest Research - 23 Apr 2019

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