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Author: PublicInvest   |   Latest post: Tue, 27 Jul 2021, 9:33 AM

 

PublicInvest Research Headlines - 15 Apr 2021

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Economy

US: Import prices show biggest three-month jump in nearly a decade. Import prices in the US showed another notable increase in the month of March, according to a report released by the Labor Department . The report said import prices surged up by 1.2% in March after jumping by 1.3 in February. Economists had expected import prices to climb by 1.0% . The Labor Department noted import prices spiked by 4.1% from December to March, reflecting the largest three-month increase since May of 2011. Prices for fuel imports continued to lead the way higher, soaring by 6.3% in March after skyrocketing by 11.7% in February. Excluding pries for fuel imports, import prices climbed by 0.8% in March after rising by 0.5%in the previous month. (RTT)

US: Pace of economic recovery accelerates, Fed says. The US economic recovery accelerated to a moderate pace from late February to early April as consumers, buoyed by increased Covid-19 vaccinations and strong fiscal support, opened their wallets to spend more on travel and other items, the Federal Reserve said. The labor market, which was decimated by the coronavirus pandemic, also improved as more people returned to work, with the pace of hiring picking up the most in the manufacturing, construction, and leisure and hospitality sectors. (Reuters)

EU: Industrial production falls less than expected. Eurozone industrial production declined less than expected in February, data from Eurostat revealed. Industrial production decreased 1.0% MoM in February, reversing a 0.8% growth in January. Economists had expected a 1.1% fall. Data showed that energy output decreased 1.2% monthly in February and capital goods output fell 1.9% . Production of intermediate goods declined 0.7%. Durable and non durable consumer goods output fell 1.1% and 0.1%, respectively. (RTT)

EU: Germany’s economic institute cut GDP 2021 growth forecast to 3.7% - sources. Germany’s economic institutes will cut their joint 2021 growth forecast to 3.7% from 4.7% previously due to a longer than expected Covid-19 lockdown, two people familiar with the decision told . The institutes will lift their GDP growth estimate for 2022 to 3.9% from 2.7% previously as private consumption is expected to boost overall output, the sources added. (Reuters)

UK: Labor productivity declines in 4Q. UK labor productivity declined in 4Q after rebounding a quarter ago, the Office for National Statistics showed. Labor productivity, as measured by output per hour, decreased 0.7% annually, in contrast to a 4% rise in the 3Q . At the same time, output per worker fell by 5.9% compared with the same quarter a year ago, reflecting workers remaining employed through the Coronavirus Job Retention Scheme. In 2020, output per hour worked grew 0.4% compared with 2019, although there was substantial volatility during the year. (RTT)

South Korea: Jobless rate falls in March. South Korea's unemployment rate declined in March, data from Statistics Korea showed. The jobless rate fell to a seasonally adjusted 3.9% in March from 4.0% in February. In the same month last year, the unemployment rate was 4.2%. On an unadjusted basis, the unemployment rate decreased to 4.3% in March from 4.9% in the previous month. The number of unemployed decreased to 1.215m in March from 1.353m in the preceding month. Compared to a year ago, the figure rose by 36k persons. (RTT)

Singapore: GDP grows 0.2% in 1Q21, MTI advance estimates. The Singapore economy grew by 0.2% on a YoY basis in 1Q21, a turnaround from the 2.4% contraction in the previous quarter. On a QoQ seasonally-adjusted basis, the economy expanded by 2.0%, extending the 3.8% expansion in the preceding quarter, according to advance estimates by the republic’s Ministry of Trade and Industry (MTI). The advance GDP estimates for 1Q21 were computed largely from data in the first two months of the quarter. (StarBiz)

Singapore: Central bank maintains monetary policy. Singapore central bank retained its monetary policy stance as the policymakers viewed it appropriate amid weak outlook for core inflation and continuing economic recovery. The Monetary Authority of Singapore decided to maintain a 0% per annum rate of appreciation of the Nominal Effective Exchange Rate. (RTT)

Markets

Homeritz (Outperform, TP: RM0.77): Temporary stoppage for its manufacturing facilities. Homeritz is implementing a temporary stoppage for 7 days for one of its manufacturing facilities, Factory D with guidance from the KKM, from 13th -19th April 2021 as the Company had discovered several positive cases of Covid-19 infection among its factory workers located at Factory D. (Bursa Malaysia)

Comments: We understand that Factory D is mainly involved in the manufacturing of dining chair frames. While the 1-week closure is expected to result in a delay in shipments, we believe that it will not have a huge impact on earnings as the management is currently in discussions with its customers to reschedule its delivery dates. However, should the situation escalates whereby operations were to close for 2-4 weeks, we estimate that Homeritz’s earnings would fall by c.4-8%. Our Outperform call and TP of RM0.77 is maintained.

Barakah Offshore: To raise RM14.3m via private placement for working capital. Barakah Offshore Petroleum has proposed to undertake a private placement of up to 167.16m new shares, equivalent to 20% of its existing issued shares, to raise RM14.29m. The shares will be placed to independent third-party investors to be identified soon at an issue price to be determined later. The issue price of the placement shares would represent a discount of 10% to the 5-day VWAP. (The Edge)

Sarawak Consolidated: Buys loss-making Selangor construction firm to expand biz in Peninsular Malaysia. Sarawak Consolidated Industries (SCIB) is acquiring a lossmaking construction firm in Seri Kembangan, Selangor for RM4.98m, to explore business expansion plans in Peninsular Malaysia. The group inked a conditional share sale agreement with three individuals, Noorazylawati Abdul Bakar, Mohd Khairil Mohd Hatta and Ibrahim Mohd Noor to acquire Kencana Precast Concrete SB (KPCSB). (The Edge)

Widad: To expand facilities management business into defence industry via RM35m acquisition. Widad Group has proposed the acquisition of a firm for RM35m cash, which will expand the group's integrated facilities management service offerings into the defense industry. Widad has signed a head of agreement to acquire Palm Shore Holdings SB (PSHSB) from Nawawi Tamby and Mohd Ghauth Mohd Yusoff, who hold 70% and 30% stakes in the firm. (The Edge)

Teladan Setia: Expands landbank in Melaka. Teladan Setia Group is buying 520 acres of land in Jasin, Melaka for RM95.1m, increasing its total landbank 738.9 acres. It is planning to developed landed residential properties priced between RM200,000 to RM400,000 each in Jasin. Based on recent market studies, it believes that landed homes remain the property of choice among the local Melaka population for the foreseeable future. (StarBiz)

Pansar: Completes its acquisition of Perbena Emas. Pansar has completed the acquisition of Perbena Emas SB (PESB), marking the group’s diversification into the construction industry. The acquisition has increased the group’s total secured orderbook value to RM2.2bn. To-date, PESB’s orderbook totalled to RM2bn, comprising of infrastructure projects such as UNIMAS Teaching Hospital in Sarawak totaling RM485.99m. (StarBiz)

Market Update

The FBM KLCI might open flat today as major global stock indices scaled new peaks on Wednesday before shedding gains that anticipated a strong recovery from the coronavirus pandemic, while the dollar dipped to three-week lows as Treasury yields held below recent highs. High-flying growth stocks declined on Wall Street, sending the benchmark S&P 500 and Nasdaq lower, while underpriced value stocks rose, lifting the Dow to a new record. US import prices increased more than expected in March, fueled by higher costs for petroleum products and tight supply chains in the latest data to show inflation heating up as economies reopen. MSCI’s gauge of stocks across the globe shed 0.02% after hitting a new peak, as did the benchmark S&P 500 before it retreated, closing down 0.41%. The tech-heavy Nasdaq Composite dropped 0.99% and the Dow Jones Industrial Average added 0.16%. In Europe, upbeat earnings from German software firm SAP and French luxury goods maker LVMH helped the pan-regional STOXX 600 index close up slightly to just below a record high set last week. Germany’s DAX index ended down 0.2%.

Back home, the FBM KLCI reversed earlier losses to close marginally higher on late buying support in selected index-linked counters. The benchmark index however ended below the 1,600 mark at 1,598.28, for a 0.57-point or 0.04% gain. Elsewhere in region, Japan's Nikkei 225 slid 0.44%, while Seoul's Kospi rose 0.42%, Hong Kong’s Hang Seng gained 1.42% and Shanghai's Composite Index closed up 0.6%.

Source: PublicInvest Research - 15 Apr 2021

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