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Author: PublicInvest   |   Latest post: Fri, 4 Dec 2020, 10:06 AM

 

PublicInvest Research Headlines - 27 May 2020

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Economy

US: Consumer confidence stabilizes, new home sales surprise. US consumer confidence nudged up in May, suggesting the worst of the novel coronavirus-driven economic slump was likely in the past as the country starts to reopen, but it could take a while for the economy to dig out of its hole amid record unemployment. The Conference Board said its consumer confidence index edged up to a reading of 86.6 this month from a downwardly revised 85.7 in April. (Reuters)

US: Business borrowing for equipment falls about 7% in April - ELFA. US companies’ borrowings for capital investments fell about 7% in April from a year earlier, the Equipment Leasing and Finance Association (ELFA) said. The companies signed up for USD8.2bn in new loans, leases and lines of credit last month, down from USD8.8bn a year earlier. Borrowings fell 8% from the previous month. “Business performance shows deterioration from the effects of the coronavirus pandemic, with volume levels and portfolio quality metrics both falling in tandem” ELFA CEO Ralph Petta said. (Reuters)

EU: German GfK consumer confidence set to recover in June. German consumer confidence is set to recover marginally in June from a record low after the gradual reopening of many businesses, survey results from the market research group GfK showed Tuesday. The forward-looking consumer sentiment index rose to - 18.9 in June from -23.1 in May. The score was expected to improve to -18.3. Nonetheless, the -18.9 points was the second-lowest value that has ever been recorded. The control measures taken to contain the spread of coronavirus took the sentiment indicator to a record low in May. (RTT)

UK: British retailers expect decline in sales to ease – CBI. UK retailers expect sales volume to fall at a slightly slower pace but at a historically fast pace next month, the latest monthly Distributive Trades Survey from the Confederation of British Industry showed Tuesday. The retail sales balance rose to -50% in May from -55% in April. The slight easing of the decline was largely driven by a return to growth in the grocery sector. (RTT)

China: PBOC to adopt policy tools to ensure sufficient liquidity, says governor. The PBOC will adopt various monetary policy tools to ensure reasonable and sufficient liquidity and increase the annual growth of the broad-based money supply and social financing significantly higher than the last year, Governor Yi Gang said. Yi said the PBOC will continue the targeted and moderate approach to stimulus. Despite the impact of the coronavirus pandemic, economic fundamentals are unchanged, he said. The pandemic has added downward pressure on the quality of bank assets. He sees the risk of increasing NPL. (RTT)

Japan: All industry activity falls for second month. Japan's all industry activity declined for the second straight month in March, figures from the Ministry of Economy, Trade and Industry showed on Tuesday. The all industry activity index fell 3.8% MoM in March, following a 0.7% decline in Feb. Among components, industrial production fell 3.7% monthly in March, following a 0.3% decrease in Feb. The tertiary industry activity declined 4.2% in March, following a 0.8% fall. (RTT)

Markets

Sime Darby (Neutral, TP: RM2.01): Ready to grab M&A opportunities. Sime Darby is ready to take advantage of M&A opportunities that may arise as valuations are under pressure due to the uncertainty fuelled by the Covid-19 pandemic stressed its group CEO. He noted there might be opportunities for the group in China, as it has a sizeable motor operation in the market there which has provided the group with good profits and returns. (SunBiz)

Uzma (Trading Buy, TP: RM0.76): JV terminates marginal oil field contract after hitting 'economic cut-off' . Uzma’s joint venture has terminated its Tanjong Baram small field risk service contract at the Tanjong Baram marginal oil field with Petronas, as it has reached the contract’s “economic cut-off”. The 30-70 JV with EQ Petroleum Developments Malaysia SB (EnQuest) terminated the contract, with Petronas reimbursing the balance of the reimbursable capital and operational expenditures to Uzma and EnQuest over nine months. (The Edge)

KKB: To focus on the Sarawak Water Supply Grid programme. KKB Engineering will tender for more jobs from the 3Q of 2020 onwards, with a renewed focus on the Sarawak Water Supply Grid programme. As of April, KKB was tendering for some RM227m worth of jobs, including water works, where the outcome is expected to be known in the 3Q onwards or the 1QFY21. The Sarawak government has been steadily rolling out water projects under its multi-billion-ringgit Sarawak Water Supply Grid Programme, despite the Covid-19 pandemic. (SunBiz)

FGV: To develop Agro Food-Valley in Chuping, Perlis. FGV and its public listed subsidiary MSM Malaysia are expediting plans to develop a new agriculture growth area called the FGV Agro Food-Valley in Chuping, Perlis. The decision was made following the rescission of the sales and purchase agreement between MSM’s wholly-owned subsidiary MSM Perlis SB and F&N Agrivalley SB on Apr-9. FGV’s Group CEO stated that the project is expected to redefine the agricultural industry landscape in Perlis as it will adapt IR 4.0 approaches incorporating modern technologies and mechanisms, sustainable development and value-added activities. The entire development of the project involving investment of RM100m within two years will continue to fortify the national agro-food sector whilst assuring food security for the country. (SunBiz)

HeiTech: Wins IT job from Road Transport Department. Heitech Padu has signed a letter of award for the maintenance and technical support services of the hardware and software of mainframe systems for the Road Transport Department. The contract value is RM126.02m for 29 months commencing May 1 this year. (StarBiz)

Sunsuria: Turns in 2Q net profit of RM9m. Sunsuria reported a net profit of RM9.02m 2QFY20. This was sharply lower than the RM91.6m for 2QFY19, when there was an adjustment in the reporting of earnings in accordance with the Malaysian Financial Reporting Standards (MFRS). For that reporting quarter, revenue and profit before taxation of RM149.36m and RM95.47m respectively from Jasper Square, which were previously recognised on a progressive basis, was restated to be recognised in the quarter when the project was completed due to the adoption of MFRS 15. (The Edge)

Market Update

The FBM KLCI open higher today as U.S. stocks finished higher Tuesday, but off key levels following a long holiday weekend, as investors were emboldened by fresh coronavirus vaccine news and signs that global economies are crawling back from the pandemic shutdown. The Dow Jones Industrial Average climbed 529.95 points, or 2.2%, to end at 24,995.11, after trading above 25,000 earlier in the session. The S&P 500 index rose 36.32 points, or 1.2%, to close at 2,991.77, shy of its 200-day moving average of 2,999.8. Meanwhile, the Nasdaq Composite gained 15.63 points, or 0.2%, finishing at 9,340.22. In U.S. economic data Monday, the Chicago Fed’s national activity index registered at a negative 16.74 in April, down from a revised negative 4.97 in March. The S&P CoreLogic Case-Shiller index showed home prices on a national level rose 4.4% annually in March, up from 4.2% in February.

European stocks also finished higher. The Stoxx Europe 600 advanced 1.1%, ending at 348.92, its highest closing level since March 6, while the FTSE 100 gained 1.2%. Asian stocks closed higher overnight across the board, led by a 2.6% rally for the Nikkei 225 index. Hong Kong’s Hang Seng Index rose 1.9%, while the China CSI 300 added 0.9%

Source: PublicInvest Research - 27 May 2020

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