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PublicInvest Research

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

 

PublicInvest Research Headlines - 27 Feb 2020

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Economy

US: New home sales spike to more than twelve-year high in January. Partly reflecting sharp increases in the Midwest and West, the Commerce Department released a report showing new home sales in the US jumped to their highest level in over twelve years in January. The report said new home sales spiked by 7.9% to an annual rate of 764,000 in January after jumping by 2.3% to an upwardly revised rate of 708,000 in December. Economists had expected new home sales to surge up by 2.3% to an annual rate of 710,000 from the 694,000 originally reported for the previous month. (RTT)

US: Retail sales expected to top USD3.9trn in 2020 despite ‘wild cards’ – NRF. US retail sales are expected to rise between 3.5% and 4.1% to more than USD3.9trn in 2020 despite fears surrounding the coronavirus outbreak and an ongoing trade war, the National Retail Federation (NRF) said. The retail industry group cited steady wage growth, lower interest rates and strong consumer confidence to support its forecast. It also assumes that the coronavirus outbreak will not become a global pandemic. However, the NRF said it expects sales to take a hit if China factory shutdowns continue. (Reuters)

US: Yellen says coronavirus could throw the economy into recession. Former Federal Reserve Chair Janet Yellen said depending on how widely the coronavirus spreads, the economic impact could have a significant impact on EU and veer the US toward a recession. “We could see a significant impact on Europe, which has been weak to start with, and it’s just conceivable that it could throw the US into a recession,” Yellen said. “We had a pretty solid outlook before this happened -- and there is some risk, but basically I think the US outlook looks pretty good.” (Bloomberg)

Hong Kong: Sees record budget deficit, unveil stimulus. Hong Kong unveiled a record high budget deficit for the next fiscal year as the government plans to implement counter-cyclical measures of a massive scale of over HKD120bn to kickstart the economy that sunk into recession after political unrest, and whose outlook is further damped by the coronavirus outbreak. In his 2020-21 budget speech, Finance Secretary Paul Chan said the fiscal deficit for next year will rise to HKD139.1bn, accounting for 4.8 % of GDP. The government runs a fiscal deficit of HKD37.8bn for 2019-20, the first time deficit for Hong Kong over the past 15 years. (RTT)

Singapore: Industrial production grows in January. Singapore industrial production rose unexpectedly in January, data from the Economic Development Board showed. Industrial production increased 3.4% YoY in January, reversing a 3.7% drop in December. Economists had forecast a 5.3% fall. Excluding biomedical manufacturing, industrial output fell 3.8% in January, following a 4.4% decline in the previous month. Among clusters, biomedical manufacturing grew 41.1% annually in January and precision engineering rose by 18.1%. Meanwhile, general manufacturing contracted 10.6%. (RTT)

Indonesia: Ready with bill on new capital as Jokowi seeks funds. Indonesia is ready to seek parliamentary approval for a bill to accelerate the construction of a new capital that’s drawn interest from investors across the world, according to President Joko Widodo. The National Development Planning Agency may submit the bill to the parliament this week. The bill, once passed by lawmakers, will serve as the legal basis for the new capital, he said. (Bloomberg)

Markets

Avillion: China-based group offers RM382m to buy Avillion Port Dickson. Avillion has received an unsolicited RM382m offer from Guangxi East Hangyang Investment Group to purchase its hotel and land in Port Dickson, Negeri Sembilan. The indicative price mentioned in Guangxi East Hangyang's letter of offer dated 21 Feb is subject to due diligence and final agreements. The offer is valid for 30 days from the date of the letter. (StarBiz)

UOA Development: Posts lower 4Q earnings, proposes 14 sen dividend. UOA Development’s net profit fell 17.5% to RM112.61m in its 4QFY19, from RM136.45m in the corresponding quarter a year ago, as revenue more than halved to RM227.02m from RM486.35m. The group attributed its profit and revenue to the progressive recognition of its ongoing projects and sale of completed offices and residential units, but there was a decline because previously, there was contribution from the sale of an office tower in UOA Business Park. (The Edge)

Padini: Posts stronger 2Q profit but warns of Covid-19 impact. Padini Holdings’s net profit grew 4.86% to RM55.8m in 2QFY20, from RM53.2m in the corresponding quarter a year earlier, thanks to increased sales after the opening of four new stores. It declared a third interim dividend of 2.5 sen a share, payable on March 30. On prospect, The retail business in general is impacted by the outbreak of Covid-19 to varying degrees, both in terms of sales as well as supply chain. (The Edge)

Deleum: 4Q rises 14.56% on better sales in power and machinery segment. Deleum’s 4Q net profit rose 14.56% to RM8.57m from RM7.48m a year earlier, due to higher sales and favourable foreign exchange movements. Higher sales was seen in its power and machinery segment that registered better operating margins. Favourable forex movements resulted in a net gain of RM1.1m recorded on the re-translation of forex difference on the RM to the USD, from a forex loss of RM41,000 previously. (The Edge)

Favelle Favco: Profit improves 28% in FY19. Favelle Favco's net profit grew by 28.4% to RM81.34m for the FY19 in tandem with higher sales. Despite the challenging outlook in the current market, the company noted it had an outstanding order book of about RM582m as at 20 Feb from the global oil and gas, shipyard, construction, wind turbine and intelligent automation sectors. Moving forward, the group will also increase the tower crane rental fleet in order to improve the rental income globally. (The Edge)

Advance Synergy: Returns to the black in FY19. Advance Synergy (ASB) returned to the black with a net profit of RM74.94m for the FY19 against a net loss of RM4.9m in FY18. Revenue, however, declined to RM275.52m from RM283.58m previously. It said revenue from information and communications technology (ICT) and other divisions decreased by RM21.9m and RM0.8m, respectively, for FY19 compared to FY18. This was partly offset by the increase in revenue of travel and tours, hotels and resorts, and property development divisions of RM12.8m, RM1.5m and RM700,000 respectively. (The Edge)

Market Update

The FBM KLCI might open lower today as U.S. stocks finished mostly lower Wednesday, with the Dow and S&P 500 index falling for a fifth straight day, as investors digested reports on the spread of China’s coronavirus to Europe and the Americas. Dozens of American and European companies have now warned of the epidemic’s impact on their supply lines and earnings, including Microsoft which lowered its earnings guidance after the market closed Wednesday. The Dow Jones Industrial Average fell 123.77 points, or 0.5%, to settle at 26,957.50, marking the worst five-day point drop for the blue-chip index on record. The S&P 500 shed 11.82 points, or 0.4%, to finish at 3,116.39, while the Nasdaq Composite added 15.16 points, or 0.2%, to close at 8,980.77, snapping a four-day losing streak and handing it an 0.1% gain for 2020. European stocks came off their lows, with the Stoxx Europe 600 index trading flat.

Back home, the FBM KLCI closed 5.69 points or 0.38% lower at 1,495.19, mainly on Petronas Chemicals Group Bhd's share price slump as investors evaluated Malaysia's corporate financial results during the current reporting season. The regional markets added to their drop, with Japan’s Nikkei closing lower by 0.8%. China’s CSI index, which tracks mainland-listed stocks, fell 1.2%.

Source: PublicInvest Research - 27 Feb 2020

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