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PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 22 Jun 2021, 9:57 AM

 

PublicInvest Research Headlines - 5 Apr 2021

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Economy

US: Employment spikes in March, unemployment rate drops to one-year low. E mployment in the US spiked by much more than expected in the month of March. The Labor Department said non-farm payroll employment surged up by 916,000 jobs in March after climbing by an upwardly revised 468,000 jobs in Feb. The bigger than expected increase in employment reflected widespread job growth, with employment in the leisure and hospitality sector once again leading the way. (RTT)

EU: France cuts growth forecast as nationwide lockdown starts. France’s economy will rebound less than previously expected this year due to the latest four-week nationwide lockdown aimed at halting a surge in coronavirus cases. French Finance Minister Bruno Le Maire cut the country’s 2021 GDP growth forecast to 5% from 6%, following an 8.1% contraction last year. (Bloomberg)

China: New tax cuts add to local governments’ funding woes. China will deliver CNY550bn (USD84bn) in tax cuts to help support the economy’s recovery, a move that could also damage local governments’ finances further. The government will lower taxes for small and micro-sized businesses and offer tax breaks for companies in advanced manufacturing. That’s on top of record tax and fee cuts last year. Regional public finances are already constrained and debts have surged. (Bloomberg)

India: March gold imports surge 471% to a record 160 tonnage – government source. India’s gold imports in March surged 471% from a year earlier to a record 160 tonnes, a government source said, as a reduction in import taxes and a correction in prices from record highs drew retail buyers and jewellers. Higher imports by the world’s second-biggest bullion consumer could support benchmark gold prices, which have corrected nearly 17%. (Reuters)

Japan: Cash balance surges by a fifth to record in March. The amount of money circulating in Japan soared by a fifth to hit a record in March as central bank pumped out cash to cushion blows to the economy from the Covid-19 pandemic. The average balance of monetary base, or the amount of cash in circulation and deposits at the BOJ, rose 20.8% in March from a year earlier to JPY613.4trn (USD5.5trn). (Reuters)

South Korea: Inflation returns to pre-pandemic level on oil, food. South Korea’s inflation returned to its pre-pandemic level in March as oil prices remained stronger and consumer demand started to recover after a year-long slump. Consumer prices rose 1.5% from a year earlier, accelerating from Feb’s 1.1% increase to reach the pace of gains in Jan 2020 and match the highest inflation level since Nov 2018, data from the statistics office showed. (Bloomberg)

Markets

IHH (Outperform, TP: RM5.95): Turkish unit expands Europe footprint with 70% stake buy in Serbian healthcare operator. IHH Healthcare’s Turkey-based Acibadem Healthcare Group is acquiring a 70% stake in Bel Medic Group, a leading private healthcare operator in Serbia. (The Edge)

Comment: IHH’s Turkey unit, Acibadem has signed definitive agreements with Serbia’s leading private healthcare operator, Bel Medic, to acquire a 70% stake in the latter. This move to acquire Bel Medic is in line with IHH’s refreshed strategy to cluster its operations to achieve synergy. The price of the deal has not been disclosed, but will be funded by Acibadem’s operations. Overall, we are positive on this move as Bel Medic is immediately earnings accretive and helps to diversify Acibadem’s earnings base considering that its income is denominated in Euros. The deal is expected to complete within three months. Maintain Outperform.

WCT Holdings (Neutral, TP: RM0.53): Ordered to pay RM74m to MAHB in klia2 Integrated Complex dispute. An arbitrator has ordered WCT’s 70% subsidiary to pay RM73.8m to Malaysia Airports Holdings (MAHB), after hearing their dispute relating to the klia2 Integrated Complex cooling system project. (The Edge) Comments: It is understood that the Group is currently seeking further legal advice on the final award. With this award, the Group will share an additional loss in its joint venture of approx. RM28m for FY20. As such, the impact to the Group’s unaudited financial results will be a loss of RM218.8m. Our FY21-23 earnings forecast are unaffected. For the payment, we see no issues as its cash pile currently stands at RM526.7m though the decision is negative for the Group given its already-high financial commitments. We retain our Neutral call.

WCE: To build last section of West Coast Expressway. WCE has bagged a contract worth RM301m from IJMC-KEB JV – the engineering, procurement and construction contractor of the West Coast Expressway project – to build the last section of the highway. WCE said the construction involves 10km in length from the beginning of the Assam Jawa Interchange towards the Tanjung Karang Interchange. (The Star)

Nexgram: Plans RM1.6bn medical complex in Melaka. Nexgram plans to develop a medical complex with a GDV of RM1.6bn in Melaka. It signed a MoU with the Melaka State Development Corp to acquire 10.02 hectares in Bukit Baru, which has been earmarked for the development of the Melaka Lifecare Specialist. The mixed development project would comprise a hospital building, service SoHo units, a wellness centre, a bioscience research centre, and a three-star hotel and condotel, the company said. (TheStar)

IPO: Harps to raise capacity to 19.5bn gloves . Glove maker Harps Holdings is issuing 2.6bn shares consisting of institutional offering and retail offering for its proposed IPO on the Main Market of Bursa Malaysia. This represents 26% of its enlarged issued capital, according to its prospectus. The institutional offering involves the offering of up to 2.3bn IPO shares, representing up to 23% of its issued share capital. The retail offering involves 300m IPO shares, representing 3% of its issued share capital. The issue price has yet to be fixed. (TheStar)

Market Update

The FBM KLCI might open flat today with most major markets closed for Good Friday last week. In the region, shares in Japan jumped on Friday after the S&P 500 surged to a record close overnight on Wall Street. The Nikkei 225 surged 1.58% to close at 29,854 as shares of Japanese conglomerate Softbank Group popped 4.22%. The Topix rose 0.71% to finish the trading day at 1,971.62. In South Korea, the Kospi closed 0.82% higher at 3,112.80. Mainland Chinese stocks also ended higher on the day. The Shanghai composite was up 0.52% to 3,484.39 while the Shenzhen component gained 1.02% to 14,122.61. Most other major Asia-Pacific markets like Australia, Hong Kong, India and Singapore were closed for Good Friday. Elsewhere, markets in the US and UK were also closed for Good Friday. Back home, the FBM KLCI closed 2.17 points or 0.17% higher on bargain hunting. At the closing bell, the FBM KLCI ended the session at 1,585.35, compared to Thursday’s closing of 1,582.64. On the broader market, gainers triumphed over losers by 624 to 408, while 438 counters were unchanged. Trading volume stood at 6.62bn shares, valued at RM2.92bn

Source: PublicInvest Research - 5 Apr 2021

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