PublicInvest Research

Author: PublicInvest   |   Latest post: Wed, 21 Apr 2021, 10:46 AM


PublicInvest Research Headlines - 2 Mar 2021

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US: Factory activity scales three-year high, price pressures building. US manufacturing activity increased to a three-year high in Feb amid a surge in new orders, but factories continued to face higher costs for raw materials and other inputs amid labor shortages at suppliers as the pandemic drags on. The ISM said its index of national factory activity rebounded to a reading of 60.8 last month from 58.7 in Jan. That was the highest level since Feb 2018. A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the US economy. (Reuters)

US: Construction spending jumps much more than expected in Jan. A report by the Commerce Department showed US construction spending increased by much more than anticipated in the month of Jan. The construction spending spiked by 1.7% to an annual rate of USD1.522trn in Jan after jumping by 1.1% to a revised rate of USD1.497trn in Dec. The bigger than expected increase in construction spending came as spending private construction surged up by 1.7% to an annual rate of USD1.160trn. (RTT)

EU: Manufacturing growth fastest in 3 years. Euro area manufacturing sector expanded at a faster than estimated pace in Feb, which was the strongest in three years as output and new orders grew sharply and export demand picked up. The final PMI for the manufacturing sector rose to 57.9 from 54.8 in Jan. The flash reading was 57.7. The survey that was conducted during Feb 11-19 also found that acute lengthening of delivery times led to the fastest cost inflation in nearly a decade. Output prices rose at the strongest rate since April 2018. (RTT)

EU: Factory costs rising at fastest pace in a decade. Euro-area manufacturers are reporting the steepest increases in their input costs in almost a decade as the coronavirus disrupts supplies and are passing at least some of that burden onto customers. Rising demand for goods is running into virus restrictions that are causing delivery delays and pushing up prices for raw materials and components, according to an IHS Markit survey. Manufacturers said delivery times worsened last month at the second-fastest pace since records started 24 years ago. (Bloomberg)

UK: Mortgage approvals exceed expectations. UK home loan approvals decreased less than expected in Jan to the lowest in three months, data from the Bank of England showed. The number of approvals for house purchase, which is an indicator of future lending, fell to 98,994 from 102,809 in Dec. Mortgage approvals eased for a second straight month. The latest figure was well above the monthly average of 67,900 in the six months to Feb 2020. Secured lending to individuals decreased to a three-month low of GBP5.16bn from GBP5.34bn in the previous month. (RTT)

UK: Factory output grows at slowest since May, consumer lending slides. British manufacturers reported their slowest output growth since May last month, hit by Brexit and Covid-19-related delays, and consumers cut back heavily on borrowing in Jan as they returned to lockdown. The BoE expects the economy to shrink 4% in the first three months of 2021 - a sharper decline than during any quarter of the 2008-09 financial crisis though much less than the 20% drop last spring. The weak consumer borrowing suggests a slump in spending on non-essentials. (Reuters)

China: Factory activity growth slips to nine-month low, Caixin PMI. China’s factory activity expanded at the slowest pace in nine months in Feb as weak overseas demand and coronavirus flare-ups weighed on output, adding pressure on the country’s labour market. The slowdown in the manufacturing sector underscores the fragility of the ongoing economic recovery in China, although domestic Covid-19 cases have since been stamped out and analysts expect a strong rebound in full-year growth. The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) fell to 50.9 last month, the lowest level since last May. (Reuters)

Japan: Factory activity grows at fastest pace in two years as output, orders rise - PMI. Japan’s factory activity expanded at the fastest pace in over two years in Feb, as strong orders led to the first output rise since the start of the coronavirus pandemic. The final au Jibun Bank Japan Manufacturing PMI jumped to a seasonally adjusted 51.4 in Feb from the prior month’s 49.8 reading. The rise in the headline figure, which compared to a preliminary 50.6 reading, marked the fastest expansion since Dec 2018. (Reuters)

India: Manufacturing growth slows in Feb. India's manufacturing sector grew at a softer pace in Feb, survey results from IHS Markit showed. The headline IHS Markit manufacturing PMI fell to 57.5 in Feb from 57.7 in Jan. New export orders grew at a softer rate in Feb. Total new orders rose further and input inventories grew at the strongest pace in the survey history. The overall rate of cost inflation was the highest in thirty-two months. (RTT)


Axiata (Neutral, TP: RM3.70): Celcom commits RM1b capex for FY21. Celcom Axiata is committing RM1bn in capital expenditure (capex) for its financial year ending Dec 31, 2021 (FY21), which will go towards expanding its network capacity, reducing network traffic congestion and improving 4G coverage nationwide. Celcom chief executive officer Idham Nawawi said the network operator saw a spike in traffic last year, as users consumed more data amid the Covid-19 pandemic. “If you compare the usage in 4QFY20 (fourth quarter ended Dec 31, 2020) versus 4QFY19, there was more than 50% growth in traffic. And now, the traffic in February 2021 is almost 80% more than the total volume of traffic in February 2020. (The Edge)

UEM Edgenta: To save RM100m in shift towards healthcare tech solutions . UEM Edgenta has developed a vision, 'Edgenta of the Future 2025’ (EOTF2025), to transform itself into a technology enabled solutions company with the main focus on healthcare industry. MD and CEO Syahrunizam Samsudin said EOTF2025 is predicated on operating efficiency and cost efficiency, and is expected to save over RM100mn for the company in the next five years. "To make UEM Edgenta leaner and more agile and support the future business environment, we will create predicative and preventive measures through technology automation mechanisation, optimising procurement, and streamlining business structure. (Bernama)

HeiTech Padu: Bags RM33.92m contract from Immigration Dept . HeiTech Padu has signed letter of award (LoA) for a comprehensive maintenance and service contract for the Immigration Department's Malaysian Immigration System (MyIMMs) application worth RM33.92m. In a filing with Bursa Malaysia, the company said the contract is for a period of 36 months commencing from Feb 18, 2021 to Feb 17, 2024. HeiTech Padu is an integrated information and communications technology services provider. (Bernama)

Advancecon: 30%-owned associate bags RM153.5m earthworks project in Bintulu, Sarawak . Advancecon Holdings said it 30%-owned Advancecon Sarawak SB had bagged its single-largest contract worth RM153.5m to undertake earthworks in the Samalaju Industrial Park, Bintulu, Sarawak. The contract was awarded by Wenan Steel (Malaysia) SB to Advancecon Sawarak. Wenan is building an iron and steel production complex there. Advancecon said the contract is in addition to the group’s ongoing works in Sarawak, namely two packages for Pan Borneo Highway Sarawak and two roadwork contracts from the Upper Rajang Development Agency (URDA). (The Edge)

Inix: Calls off Sendayan glove venture, durian venture . Inix Technologies Holdings said that it has ceased its intention to acquire a factory in Sendayan, Negeri Sembilan under a JV, as part of a plan to set up a rubber gloves factory on-site. The cessation follows the lapsing of a letter of intent signed between Inix and its joint venture partner Lyglan Properties SB for the venture, with an estimated cost of RM35m. Inix had intended to invest RM22.75m or 65% of the company’s equity, paired with RM12.25m from Lyglan for the remaining 35%. In a separate filing, Inix said it has decided not to pursue its plan to venture into the durian business that was first announced in September last year. (The Edge)

Market Update

The FBM KLCI might open higher today as global stocks bounced back and government debt rallied on Monday after last week’s turbulent trading, triggered by worries over the possibility of a breakneck economic expansion and the possibility of central banks tightening monetary policies. Wall Street’s blue-chip S&P 500 index rose 2.4%, its biggest one day gain in almost nine months and enough to erase almost the entirety of last week’s declines. The technology-focused Nasdaq Composite climbed 3%. Small-cap stocks advanced even further, with the Russell 2000 up 3.4% — on track for its best daily performance since early January. In Europe, the region-wide Stoxx 600 closed up 1.8%, while both London’s FTSE 100 and Frankfurt’s Xetra Dax indices ended the session 1.6% higher. The gains for global equities came as core government debt on both sides of the Atlantic rallied.

Back home, the FBM KLCI finished the first day of March lower, with declines in rubber glove counters pushing the benchmark index downwards. At market close, the index was down 0.67% or 10.61 points at 1,567.14. Regionally, Asian bourses were largely in positive territory. Hong Kong's Hang Seng was 1.63% or 472.36 points higher at 29,452.37. Its counterpart in Shanghai was 1.21% or 42.32 points higher at 3,551. Meanwhile, Japan's Nikkei 225 rose 2.41% or 679.49 points to 29,663.50.

Source: PublicInvest Research - 2 Mar 2021

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