PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 23 Oct 2020, 9:35 AM


PublicInvest Research Headlines - 17 Dec 2019

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US: Homebuilder confidence jumps to twenty-year high in Dec. A report released by the National Association of Home Builders unexpectedly showed a substantial improvement in US homebuilder confidence in the month of Dec. The NAHB/Wells Fargo Housing Market Index spiked to 76 in Dec from an upwardly revised 71 in Nov. With the unexpected jump, the housing market index reached its highest level since hitting 77 in June of 1999. The unexpected increase by the headline index came as the index gauging current sales conditions soared to 84 in Dec from 77 in Nov. (RTT)

US: New York manufacturing activity little changed in Dec. New York manufacturing activity has grown at a slightly faster rate in the month of Dec, according to a report released by the Federal Reserve Bank of New York. The general business conditions index inched up to 3.5 in Dec from 2.9 in Nov, with a positive reading indicating growth in regional manufacturing activity. The modest increase by the headline  index came as the shipments index climbed to 11.9 in Dec from 8.8 in Nov. On the other hand, the new orders index slid to 2.6 in Dec from 5.5 in Nov, indicating new orders were little changed. (RTT)

EU: PMI signals moderate growth in Dec. The Eurozone private sector logged a moderate growth in Dec, rounding off a 4Q in which output rose at the weakest pace since the economy started recovery in the 2H2013, flash survey data from IHS Markit showed. The composite output index held steady at 50.6 in Dec, signaling a very modest growth across manufacturing and service sectors. The score was slightly above the forecast of 50.5. The manufacturing recession deepened at the end of the year, while the service sector showed signs of resilience. The services PMI advanced more-than-expected to 52.4 from 51.9 in the previous month. (RTT)

EU: German economy stagnating despite signs of industrial rebound - ministry. The German economy is more or less stagnating, the economy ministry said, adding there are initial signs that an industrial recession could be coming to an end as orders stabilize. The indicators at the start of the 4Q pointed to subdued private consumption even though disposable incomes continued to rise. Consumption has helped keep Europe’s biggest economy humming by compensating for weak exports. Trade tensions this year pushed the German manufacturing sector into a recession but the overall economy narrowly escaped the same fate. (Reuters)

UK: Business malaise deepened before election - PMI. British businesses endured their worst downturn since mid-2016 in the run-up to Prime Minister Boris Johnson’s landslide election victory last week, according to a survey published. The ‘flash’ early reading of the IHS Markit/CIPS UK Purchasing Managers’ Indexes (PMI) for Britain showed that the decline in both the services and manufacturing sectors accelerated unexpectedly in Dec. The readings suggested the world’s fifth-biggest economy is on course to contract in the 4Q. However, the PMIs have previously overstated weakness in the economy. (Reuters)

Japan: Tertiary activity falls in Oct. Japan's tertiary industry activity declined at a faster-than-expected rate in October, data from the Ministry of Economy, Trade and Industry showed on Monday. Tertiary industry activity decreased 4.6% month-on-month in October. Economists had forecast a 3.6% fall. Data showed that the broad ranging personal services fell 4.5% in October, and broad-ranging business services dropped 4.0%. Among components, retail sales declined the most, by 16.0% in October. On a yearly basis, tertiary activity decreased 2.3% in October. (RTT)

India: Wholesale prices rise in Nov. India's wholesale prices rose at a slower-than-expected rate in Nov, data from the Ministry of Commerce & Industry showed. The wholesale price index rose 0.58% year-on-year in Nov, after a 0.16% increase in Oct. Economists had expected a 0.84% rise. In Sept, wholesale price inflation was 0.33%. Build up inflation in the financial year was 2.00% compared to 4.56% in the corresponding period of the previous year. Food prices were 11.08% in Nov and prices for non-food articles rose 1.93%. Wholesale price inflation based on the WPI Food Index, which combines the prices of food articles and manufactured food products, rose to 9.02% in Nov from 7.65% in Oct. Meanwhile, fuel and power prices declined 7.32% and prices of manufactured products fell 0.84%. On a monthly basis, wholesale prices rose 0.10% in Nov. (RTT)


Media Prima (Neutral, TP: RM0.28): Notifies employees affected by rationalisation exercise. Media Prima gave official notifications to all employees affected by its manpower rationalisation exercise, which is part of the next phase of its business transformation exercise announced on Nov 1. (Bernama)

Comment: Although this manpower rationalization could potentially affect Media Prima’s headline earnings in the near term, we believe that this is a necessary step for the group act to as a buffer against the challenging operating environment and dwindling newspaper circulation. In 2017, MPR incurred a one-off cost of RM52.3m for Early Retirement Scheme where 217 employees were affected. As we are unable determine the cost associated with this manpower rationalisation, we leave our earnings estimates unchanged at this juncture while maintaining our Neutral call and TP of RM0.28.

EcoWorld: Buys Iskandar Puteri land for RM304.92m for mixed development. River Retreat SB (RRSB) is selling a piece of land in Iskandar Puteri, Johor, to Eco World Development Group Bhd for RM304.92m. EcoWorld said it has to pay a RM20m nomination fee to Permodalan Darul Ta'zim SB (PDT), the investment arm of the Johor state government, for the latter's agreement to nominate Melia Spring to purchase the land, an acquisition EcoWorld said will be financed via internal funds. (The Edge)

Eduspec: Inks deal to implement STEM programs for education ministry . Eduspec Holdings has entered into a collaboration agreement with Matlamat Wawasan SB (MWSB) for the implementation of science, technology, engineering and mathematics (STEM) programs with Computer Science for primary schools and with Robotics for secondary schools under the Ministry of Education (MoE). (The Edge)

Crest Builder: Bags RM316m contract to build 99 Residence . Crest Builder Holdings has bagged a RM316m contract from Inter Sky Development SB, to build the 99 Residence development in Taman Wahyu. The contract period set out in the letter of award is 35 months from July 1, 2020 to May 31, 2023. Crest Builder said the project comprises four blocks of 55-storey service apartments totalling 1,421 units, as well as podium car parks and facility floors. (The Edge)

Titijaya: Partners Tokyu Land to develop RM1.5bn Riveria City . Titijaya Land has teamed up with Japan's Tokyu Land Corp to jointly build and promote the RM1.5bn Riveria City development in Brickfields here to the Malaysian and foreign markets. Titijaya signed a shareholders’ agreement with Tokyu Land's overseas subsidiary Tokyu Land Asia Pte Ltd (TLA), and Riveria City SB (RCSB). (The Edge)

T7 Global: Clinches jobs from Mubadala Petroleum, Shell. T7 Global has clinched contracts for manpower jobs from Mubadala Petroleum's entity, MDC Oil & Gas (SK320) Ltd, and an engineered product job from Sarawak Shell Bhd/Sabah Shell Petroleum Co Ltd. T7 Global received two letters of awards from MDC. The first award is for the provision of third-party manpower services in support of MDC's technical, production operations and its 'Health, Safety, Security and Environment' requirements. The second award is for the provision of third-party manpower services, in support of MDC's drilling and exploration requirements. (The Edge)

Market Update

The FBM KLCI might open higher today after US stocks ended Monday’s session at new records amid an upbeat tone tied to a preliminary U.S.-China trade deal struck last week, even while questions remain over the details of the long-awaited “phase-one” accord. The Dow Jones Industrial Average advanced 100.51 points, or 0.4%, to 28,235.89. Despite the travails of Dow constituent Boeing on Monday, the blue-chip index set its first all time closing high since Nov. 28. The S&P 500 rose 22.65 points, or 0.7%, to 3,191.45. The Nasdaq Composite Index jumped 79.35 points, or 0.9%, to 8,814.23, also marking new record closes. All three main benchmarks set new intraday records on Monday. In economic reports, the Empire State manufacturing index came in at 3.5, slightly higher than November’s 2.9 reading. Meanwhile, the Markit purchasing managers survey for the manufacturing sector was down a touch to 52.5 in December, from 52.6, but the services sector gauge came in at 52.2, from 51.6. In Europe, the Stoxx 600 Europe index climbed 1.4% to end at 417.75, setting a new closing record for the first time in more than four years.

Back home, the FBM KLCI closed lower, ending a three-day streak of gains, on renewed worries about the phase one trade deal between the US and China. At 5pm, the FBM KLCI closed 1.81 points or 0.12% lower at 1,569.35. Across Asia, Japan's Nikkei 225 dropped 0.29%, South Korea's Kospi fell 0.1% while Hong Kong's Hang Seng was down 0.65%. China’s CSI 300 benchmark, which comprises equities listed in Shanghai and Shenzhen, closed higher by around 0.5%.

Source: PublicInvest Research - 17 Dec 2019

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