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PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 26 Nov 2020, 11:22 AM

 

PublicInvest Research Headlines - 28 Aug 2020

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Economy

US: GDP plunges 31.7% in 2Q, slightly less than initially estimated . Economic activity in the US contracted slightly less than initially estimated in 2Q, according to a report released by the Commerce Department, although the report still showed a sharp drop in GDP. The report said real gross domestic product plummeted by 31.7% in the 2Q compared to the previously reported 32.9% nosedive. Economists had expected the plunge in GDP to be revised to 32.5%. (RTT)

US: Labour market recovery slowing; economists urge more fiscal stimulus . The number of Americans filing new claims for unemployment benefits hovered around one million last week, suggesting the labour market recovery was stalling as the Covid-19 pandemic drags on and financial aid from the government dries up. The government also confirmed that the economy suffered its sharpest contraction in at least 73 years in the second quarter, because of the disruptions from the coronavirus, with corporate profits sinking deeper. (Reuters)

US: Fed adopts average inflation target, elevates focus on jobs. The Fed rolled out an aggressive new strategy to restore the US to full employment and lift inflation back to healthier levels, in a world where weak inflation, low interest rate, and slow growth appear here to stay. Under the new approach, laid out in a fresh statement on the Fed's longer-run goals and monetary policy strategy approved by all 17 of its policymakers, the US central bank will seek to achieve inflation averaging 2% over time, offsetting below-2% periods with higher inflation "for some time." (Reuters)

EU: Car sales fall modestly in July on demand surge for EVs . European new car registrations declined modestly in July amid a jump in demand for electric vehicles and rebound in some markets, signaling a recovery from the coronavirus-triggered slump, figures from the automotive market data provider JATO Dynamics. New car registrations decreased just 4% YoY, JATO reported based on data from 27 markets. The sales total of 1,278,521 new passenger cars was the highest monthly volume thus far this year and also the highest since September last year. (RTT)

China: Economic rebound picks up speed on car and home sales . China’s economy picked up speed in Aug as a strong industrial sector and stock market, better business confidence and home and car sales combined to boost the first economy globally to emerge from the Covid-19 slump. That’s the assessment from the earliest available indicators, which showed China’s economy continuing to improve. New home sales in China’s four biggest cities accelerated in the first three weeks of Aug, continuing July’s pickup. (Bloomberg)

Markets

Gamuda (Neutral, TP: RM3.55): Shortlisted for AUD20bn rail project in Sydney. A JV between Gamuda Australia and Laing O'Rourke has been shortlisted for the first stages of the AUD20bn Sydney Metro West project. The Gamuda Australia Laing O'Rourke JV is one of three successful consortia shortlisted for the project's first two major tunnelling packages. Early works are expected to begin on the Sydney Metro West project later this year (subject to planning approval), with the aim of having tunnel boring machines in the ground by the 4Q of 2022. (Business Times) Comment: The project could be Gamuda’s largest project in Australia and the region has been identified as part of the Group’s strategy to expand and diversify its construction business regionally, having extensive experience in the fields of engineering, transportation infrastructure and property development. The project with estimated RM60bn contract value could substantially bump up its outstanding orderbook which as at 3QFY20 stood at RM7.5bn. Earnings estimates are kept unchanged for now pending the bidding results.

Kumpulan Powernet: Bags RM192.7m contract for Nepal hydropower project. Kumpulan Powernet has secured a contract worth USD46.2m (RM192.7m) for a hydropower project at Mahakulung VDC, Nepal. The group said its wholly-owned subsidiary KPower International Ltd received a letter of award yesterday from Apex Makalu Hydro Power Pvt Ltd for the 22MW Mid Hongu Khola-A hydropower project in Nepal. The target completion date for the project is within 36 months from the commencement date, or not later than Aug 31, 2023. (The Edge)

Rubberex: Achieves record earnings of RM23m for 2Q, announces 2-for-1 bonus issue. Rubberex Corp (M), posted an all-time-high quarterly net profit of RM23m or earnings per share of 8.96 sen for its 2QFY20 which spanned the height of the Covid-19 pandemic. To add on to the good news, it announced a 2-for-1 bonus issue entailing the issuance of 554.85m new shares, which will swell its issued share capital to 832.28m, although the entitlement date has not been set yet. "The group's next capacity expansion, which is expected to commence later this year, should also contribute to the group's earnings in the 4Q of 2020 onwards," it said. (The Edge)

PPB: 2Q net profit doubles to RM333m, pays eight sen dividend. PPB Group’s net profit more than doubled in the 2QFY20 to RM332.7m, from RM160m a year earlier, boosted by performance of its 18% associate Wilmar International Ltd and its agribusiness segment. Wilmar’s contribution more than offset the group’s weaker core profit, resulting in earnings per share rising to 23.39 sen. PPB declared an interim dividend of eight sen per share, to be paid on Sept 29. On prospects, PPB sees its cinema and property businesses remaining as its biggest drag, while its other main business segments are expected to perform satisfactorily. (The Edge)

UMW: In red with RM78.4m net loss, revenue at RM1.5bn. UMW Holdings (UMW) slipped into the red with a net loss of RM78.4m in the 2QFY20, from a net profit of RM57.2m a year ago. It said this was due to the prolonged Covid-19 pandemic and share losses of RM44.1m from its associate companies. (Business Times)

Market Update

The FBM KLCI might open flat today as US stocks ended a choppy session mostly higher Thursday, with the S&P 500 index notching another record finish, after Federal Reserve Chairman Jerome Powell said policy makers would no longer pre-emptively hike interest rates to stave off inflation. The Dow Jones Industrial Average rose 160.35 points, or 0.6%, to close at 28,492.27, after trading as high as 28,633.85. The S&P 500 ended with a gain of 5.82 points, or 0.2%, at 3,484.55. The Nasdaq Composite, which closed at a record on Wednesday, fell 39.72 points, or 0.3%, to close at 11,625.34, after hitting an all-time intraday high of 11,730.01. The Stoxx Europe 600 closed 0.6% lower, while UK’s FTSE 100 benchmark lost 0.8%.

Back home, the FBMKLCI closed higher, snapping three consecutive days of declines, mainly lifted by Telekom Malaysia Bhd (TM) and Sime Darby Plantation Bhd, which announced strong quarterly results. At 5pm, the benchmark index was up 5.2 points or 0.34% at 1,554.78. Japan’s Nikkei 225 fell 0.4%, while the Shanghai Composite advanced 0.6% and the Hong Kong’s Hang Seng Index declined 0.8%.

Source: PublicInvest Research - 28 Aug 2020

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