PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 9 Apr 2020, 10:05 AM


PublicInvest Research Headlines - 26 Apr 2019

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Global: World trade volumes are plunging at the fastest pace in a decade. The global trade funk is dragging on, with new data on showing volumes are falling at the fastest pace since the depths of the financial crisis. Calculations based on the Dutch statistics office’s trade monitor show a 1.9% drop in the three months through Feb compared with the previous three months. That marks the steepest drop since the period through May 2009. Comparing the most recent three months with a year earlier is similarly disappointing. That measure saw a second consecutive decline, also the biggest since 2009. (Bloomberg)

US: Jobless claims rise most since 2017, topping estimates. Filings for US unemployment benefits rose the most since late 2017, while still remaining in the range of what’s considered a tight labor market. Jobless claims rose 37,000 to 230,000 in the week ended Apr 20, according to Labor Department. The four-week average increased to 206,000. The increase in claims snapped a five-week streak of declines, the longest since 2016, indicating that while the labor market may have cooled somewhat it remains robust. Employers in several regions and industries confront higher turnover and find it difficult to hire workers, according to the latest Federal Reserve Beige Book. (Bloomberg)

US: Durable goods orders jump amid rebound in aircraft demand. Reflecting a significant rebound in orders for transportation equipment, the Commerce Department released a report showing new orders for U.S. manufactured durable goods jumped by much more than expected in the month of Mar. The Commerce Department said durable goods orders surged up by 2.7% in Mar after tumbling by a revised 1.1% in Feb. The bigger than expected rebound in durable goods orders came as orders for transportation equipment shot up by 7.0% in Mar after plunging by 2.9% in Feb. Orders for non-defense aircraft and parts led the way higher, soaring by 31.2% in Mar following a 25.4% nosedive in Feb. The report showed orders for motor vehicles and parts also jumped by 2.1% in March after coming in unchanged in the previous month. Excluding the spike in orders for transportation equipment, durable goods orders rose by 0.4% in Mar after edging down by a revised 0.2% in Feb. (RTT)

EU: ECB sees limited impact on Euro area from US car tariffs alone. The immediate impact of US car tariffs on the EU would be small even though escalating trade tensions could have grave consequences for the global economy, according to the ECB. A simulation by ECB researchers shows the region’s car industry would incur losses of 4% in the event of new import duties. The advantages the levies create for US automakers would largely be offset by retaliatory measures affecting other parts of the economy. The prospect of car tariffs has dangled over the EU since last year, when President Donald Trump claimed imports of foreign-manufactured vehicles would threaten national security. The conflict entered another round this month after the US threatened to seek USD11bn in damages through duties on European goods to counter state aid to Airbus SE. (Bloomberg)

Japan: BOJ to hold rates steady until spring 2020. The BOJ kept its monetary policy unchanged and announced that the interest rates will remain very low for an extended period, at least through spring 2020, reflecting uncertainties concerning economy and prices, and the effects of the scheduled consumption tax hike. The Policy Board of the BoJ voted 7-2 to maintain interest rate at -0.1% on current accounts that financial institutions maintain at the bank. The bank said it will purchase government bonds so that the yield of 10-year JGBs will remain at around zero percent. The purchase of government bonds will be conducted in a flexible manner so that the outstanding amount will increase at an annual pace of about JPY 80trn. The BoJ said it will continue with "Quantitative and Qualitative Monetary Easing with Yield Curve Control" policy to attain the inflation goal of 2% and maintain that target in a stable manner. (RTT)

Indonesia: Keeps key rate unchanged as focus shifts to growth. Indonesia’s central bank left its benchmark interest rate unchanged for a fifth month amid a renewed focus on boosting growth in Southeast Asia’s biggest economy. The seven-day reverse repurchase rate was left at 6%. Governor Perry Warjiyo and his board raised the rate by a total of 175 bps last year, but have left the rate unchanged since Nov as they approach the possibility of rate cuts with caution. “To boost the growth of domestic demand, Bank Indonesia will expand its policies to be more accommodative,” Warjiyo said. The decision to stand pat was in line with efforts to strengthen the external stability of Indonesia’s economy. (Bloomberg)


Nestle: Sets aside RM220m capex to upgrade, expand. Nestle (Malaysia) has set aside RM220m for capital expenditure (capex) this year, the highest in five years, to boost production. The RM100m is allocated to upgrade the Milo capacity at its Chembong factory in Negeri Sembilan. Meanwhile, the remaining RM120m is for other factories' capacity upgrading. (The Star)

Petronas Dagangan: Increases FY19 capex to RM500m. Petronas Dagangan has increased its capital expenditure allocation to about RM500m for financial year ending Dec 31, 2019 (FY19) from RM300m in FY18, to refurbish existing petrol stations and Mesra convenience stores, as well as the planned establishment of about 10 new petrol stations within the group's network. (The Edge)

Alam Maritim: Gets RM2.32m service order job. Alam Maritim Resources has bagged an RM2.32m service order contract from FPSO Ventures SB for the provision of manpower, equipment, remotely operated vehicles (ROV) and diving support vessel (DSV) for underwater inspection in lieu of dry-docking (UWILD) operations, for FSO Angsi. (The Edge)

Tropicana: Inks joint development agreements worth RM4.78bn as it drops Pantai Cenang MoU. Tropicana Corp has inked four joint development agreements (JDA) to develop four pieces of land in Langkawi and Pekan Nenas, Johor, with a total estimated gross development value (GDV) of RM4.78bn. The first JDA was inked with Pantai Kok Resort Development SB to develop 44.61 acres at Padang Mat Sirat, Langkawi over 15 years, with estimated GDV of RM3.02bn. The second JDA was with Sinaran Ramah SB to develop a 2.48-acre land in Mukim Kedawang, Langkawi over seven years, with estimated GDV of RM308.3m. (The Edge)

NetX: Inks deal for online ticketing technology. NetX Holdings is collaborating with Buy Tickets SB to provide technology for the latter's online ticketing website or platform known as buytickets.com.my. (The Edge)

Willowglen: Bags RM62.9m contract from Singapore's Public Utilities Board. Willowglen MSC has secured a RM62.9m contract from the Public Utilities Board of Singapore. Part A of the contract — valued at approximately RM59.7m — is for construction works under the replacement of supervisory control and data acquisition (SCADA), control and auxiliary systems at Johor River Waterworks. Part B of the contract is valued at approximately RM3.2m and involves maintenance services for the same project. Works on Part A will start on May 2, 2019, to be completed by May 1, 2022; Part B's tenure is for two years and will begin after Part A completes. (The Edge)

TH Heavy: Auditor issues second disclaimer of opinion, expresses doubt on TH Heavy’s ability to continue as going concern. TH Heavy Engineering’s external auditor Deloitte has again issued a disclaimer of opinion on the group’s financial statements for the financial year ended Dec 31, 2018 (FY18). Deloitte noted that TH Heavy’s assumption that it will be able to continue as a going concern is very much dependent on approval being obtained for its proposed regularisation plan, the timely and successful implementation of the plan, as well as the ability of the group to achieve sustainable and viable operations. (The Edge)

Market Update

US markets were mixed, with a key Dow Jones Industrial Average (Dow) component member 3M tumbling its worst (-12.9%) in over 30 years on a weaker-than-expected earnings report, a slashing of its full-year outlook and plans to cut 2,000 jobs worldwide. The Dow slipped 0.5% as a result. The S&P500 and Nasdaq Composite fared better on the day, with shares of Facebook and Microsoft jumping on better numbers. The former was largely unchanged as the Nasdaq inched 0.2% higher. Amazon and Starbucks were among the few companies that reported after the bell and did not disappoint, both reporting numbers that beat expectations by some way. European stocks were weaker however, as investors pored over another batch of corporate earnings while also contemplating on the breakdown in merger talks between Deutsche Bank and Commerzbank. Separately, the proposed merger between Sainsbury and Asda was blocked by the UK’s competition watchdog while on the economic front, Spain’s unemployment rate rose to 14.7% over the first quarter of 2019 versus the 14.5% in the final quarter of 2018. Spain’s benchmark IBEX 35 gained 0.5% however. Elsewhere, UK’s FTSE 100 , France’s CAC 40 and Germany’s DAX slipped 0.5%, 0.3% and 0.3% respectively. Asian markets were mixed though China’s Shanghai Composite Index tumbled 2.4% amid worries that Beijing could pull back on stimulus measures following recent better-than expected economic data. The Hang Seng Index slipped 0.9%. Japan’s Nikkei 225 rose 0.5% as the Bank of Japan kept monetary policy steady while also saying it intends to keep interest rates “extremely low” until at least till 2020.

Malaysia and China have signed two Memorandums of Understanding – one to enhance palm oil trade and cooperation, and the other to increase cooperation between the two countries in the development of industrial parks, infrastructure, logistics hub and transit-oriented developments under the East Coast Rail Link (ECRL) project. Nestlé Malaysia has budgeted RM220m for its 2019 capital expenditure, the highest in five years. Petronas Dagangan is increasing its capital expenditure allocation to about RM500m for 2019 from RM300m in 2018 meanwhile, to refurbish existing petrol stations and Mesra convenience stores, as well as the planned establishment of about 10 new petrol stations within the group's network.

Source: PublicInvest Research - 26 Apr 2019

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