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PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 24 Nov 2020, 10:34 AM

 

PublicInvest Research Headlines - 28 Oct 2020

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Economy

  • US: Consumer confidence index unexpectedly edges lower in Oct. After reporting a substantial improvement in US consumer confidence in the previous month, the Conference Board released a report unexpectedly showing a slight drop in confidence in the month of Oct. The Conference Board said its consumer confidence index edged down to 100.9 in Oct after jumping to a revised 101.3 in Sept. The pullback surprised economists, who had expected the index to inch up to 102.0 from the 101.8 originally reported for the previous month. (RTT)
  • US: Core capital good orders hit six-year high, consumer confidence ebbs. New orders for key US-made capital goods increased to 6-year high in Sept, wrapping up a quarter of potentially record growth in business spending and the economy, thanks to fiscal stimulus aimed at softening the blow from the COVID-19 pandemic. But the report from the Commerce Department also showed shipments of these goods rising modestly last month, supporting expectations of slower economic activity heading into the 4Q. (Reuters)
  • EU: Banks expect to tighten credit standards in Q4. The euro area banks expect to tighten their credit standards for firms and to households for house purchases in the 4Q, according to bank lending survey from the European Central Bank. Reflecting concerns around the economic recovery as some sectors remain vulnerable, banks said they are likely to continue tightening credit standards for firms. The net tightening of credit standards on loans to households for house purchases is also expected to continue in the 4Q. (RTT)
  • EU: M3 growth accelerates in Sept. Eurozone money supply grew at a faster pace in Sept and loans to the private sector logged a steady growth, data published by the European Central Bank showed. The broad monetary aggregate M3 expanded by morethan-expected 10.4% on a yearly basis, faster than the 9.5% rise in Aug. Economists had forecast an annual increase of 9.6%. Likewise, the growth in the narrow measure M1 accelerated to 13.8% from 13.2%. As regards the dynamics of credit, the annual growth rate of credit to the private sector slowed to 4.9% in Sept from 5% in Aug. (RTT)
  • UK: Bank of England set to return to the stimulus pump. Britain’s darkening economic outlook looks set to push the Bank of England into ramping up its huge bond-buying stimulus programme next week for the third time since the onset of the coronavirus pandemic. The central bank is expected to increase the size of its asset purchase programme by a further GBP100bn on Nov. 5. That would take it to GBP845bn (USD1.10trn), almost double the level before the pandemic, making the BoE’s response to the coronavirus crisis one of the most aggressive among the world’s central banks. (Reuters)
  • UK: Retailers expect sales to fall again in Nov - CBI. British retailers expect sales to fall in Nov after reporting a sharp fall in Oct, the latest monthly Distributive Trades Survey from the Confederation of British Industry showed. The retail sales balance fell to -23% in Oct from +11% in Sept. The expected balance was +1%. A net 26% of retailers expect sales to fall again in Nov. The survey showed that conditions across the retail sectors were mixed in Oct. Grocery volumes were flat, following five months of strong growth. (RTT)
  • China: Industrial profit growth slows as factory-gate deflation weighs. Profits at China’s industrial firms rose for a fifth straight month in Sept, but at a slower pace as factory-gate deflation and rising raw materials costs undercut a recovery in the manufacturing sector. China’s economic rebound has been gaining momentum following the sharp COVID-19-driven downturn thanks to strong exports, pent-up demand and government stimulus, but slowerthan-expected third quarter gross domestic product growth highlighted pockets of weakness for one of the few drivers of global demand. (Reuters)

Markets

  • Dayang (Neutral, TP: RM1.25): Dayang Topaz incident. Dayang Enterprise Holdings is cooperating with the relevant authorities and its client in relation to the incident involving its oil and gas maintenance vessel Dayang Topaz. According to Dayang, its vessel has not sunk and is still seaworthy. (Bursa)

    Comments: It was reported that Dayang Topaz rammed into the Baram B oil platform after its anchor cable broke in bad weather. While the damage caused had yet to be determined, we foresee there will be no significant impact to Dayang’s earnings. We understand that Dayang Topaz is working under Petronas’ MCM Package A (Offshore) for the Sarawak Oil contract of which the rates are already included in the lump sum contract. Dayang may likely need to find other vessel as a replacement once the project resumes, which should not be an issue given the availability of its other vessels, including Perdana Petroleum's. Current utilisation is between 55% and 65% with charter rates of around RM55,000 to RM70,000 per day. Maintain Neutral call at TP of RM1.25.
     
  • Al-’Aqar: Proposes private placement to raise up to RM50m. Al-’Aqar Healthcare Real Estate Investment Trust (REIT) has proposed to undertake a private placement to raise up to RM50m. The placement size represents not more than 20% of its existing issued share capital and the number of units to be placed would be dependent on the issue price to be fixed later. The proceeds would be used for repayment of Islamic financing (RM30m), future acquisitions (RM15.3m), capex (RM4m) and defrayment of estimated expenses (RM700k). (Bernama)
  • Boustead: SC grants four-month extension for LTAT to decide on privatisation. The Securities Commission Malaysia (SC) granted a further extension of four months to LTAT to announce its firm intention in relation to the proposed privatisation of Boustead Holdings. This is the second extension granted by the regulator. LTAT said the extension of time of up to Feb 2, 2021 was granted by the SC via a letter. (The Edge)
  • Supermax: 1Q net profit soars 32-fold to RM789.5m. Supermax Corp has reported a whopping 32-fold increase in net profit to RM789.5m for its 1Q ended Sept 30, from RM24.7m reported in the same period of the previous year attributed to the exponential increase in glove demand from the Covid-19 pandemic, as well as an increase in capacity and average selling price. It revealed that its proposed dual listing on the Singapore Stock Exchange is still in its initial stages and the structure of the proposal has not been finalised. (SunBiz)
  • Bursa Malaysia: Net profit up 2.5x in 3Q to RM121.9m. Bursa Malaysia reported a more than 2.5-fold increase in net profit to RM121.9m for the 3Q compared with RM47.1m reported in the same period of the previous year, on the back the back of the improved performance from the securities and derivatives markets. (SunBiz)
  • RGT: Strong demand for sanitiser dispensers drives 1Q net profit to record high. RGT's net profit for the 1QFY21 soared 124.2% YoY to RM4.2m, a record high quarterly earnings, on the back of a surge in demand for hygiene care products such as soaps and sanitiser dispensers. With the recent completion in land acquisition in Penang, it can now commence with the expansion and will eventually have double the current production floor and warehousing space. (The Edge)

MARKET UPDATE

  • The FBM KLCI might open weaker today after US S&P 500 fell for a second-straight day on Tuesday and shares in Europe closed sharply lower, as concerns grew that the worsening pandemic would stymie business activity. Wall Street’s benchmark index dropped 0.3% after rising earlier in the trading session, following a 1.9% drop on Monday as coronavirus case numbers in the US surged higher. The tech-heavy Nasdaq Composite, however, was up 0.6%. In Europe, the stock sell-off gathered pace in afternoon trading with bourses closing sharply lower. The region-wide Stoxx 600 index, which lost 1.8% on Monday, fell by a further 1% to its lowest point since the end of May. London’s FTSE 100 closed down 1.1%, Frankfurt’s Dax lost 0.9% and the CAC 40 in Paris slid 1.8%. The falls came as investors digested the implications of further lockdown measures announced by countries including Spain and Italy to stem a surge in infections.

    Back home, the FBM KLCI ended the trading day above the 1,500 level, boosted by healthcare stocks after Hartalega Holdings Bhd posted another record set of quarterly results. At 5pm, the benchmark index closed 5.74 points or 0.38% higher at 1,500.35, supported by 616 gainers against 379 losers. In the region, Japan’s Nikkei 225 dipped 0.04% while South Korea’s Kospi dropped 0.56%. China shares also declined with the Hang Seng falling 0.53%. Meanwhile, the Shanghai Composite Index rose 0.1%.

Source: PublicInvest Research - 28 Oct 2020

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