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PublicInvest Research

Author: PublicInvest   |   Latest post: Mon, 18 Oct 2021, 9:36 AM

 

PublicInvest Research Headlines - 10 May 2021

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Economy

US: Jobs report is latest sign of growing pains for US economy . The US job market is suffering from growing pains as the economy rapidly reopens. While economists are optimistic about future growth, employers are facing hiring challenges as well as supply chain disruptions and higher costs. jJbs report from the Labor Department showed the US added 266,000 jobs in April, far short of the 1m gain economists had forecast. The data suggest that the recovery from the pandemic will continue to be volatile in the coming months. Despite surging job openings, companies say they’re having trouble recruiting workers because of ongoing fears of catching the virus, child care responsibilities, generous unemployment benefits and other factors. The global semiconductor shortage, record-high materials costs and shipping logjams are also a drag on the labor market. “Ultimately the biggest obstruction to the recovery right now is the pandemic,” said Daniel Zhao, senior economist at Glassdoor Inc. (Bloomberg)

US: Wholesale inventories jump slightly less than expected in March . The Commerce Department released a report showing wholesale inventories in the US jumped by slightly less than anticipated in the month of March. The report said wholesale inventories surged up by 1.3% in March after climbing by an upwardly revised 1.0% in Feb. Economists had expected wholesale inventories to spike by 1.4% compared to the 0.6% increase originally reported for the previous month. The jump in wholesale inventories came as inventories of durable goods shot up by 1.3% and inventories of non durable goods surged up by 1.4%. Meanwhile, the report showed wholesales sales soared by 4.6% in March after coming in unchanged in Feb. (RTT)

EU: Germany's industrial output recovers; exports growth accelerates . Germany's industrial production recovered and exports growth accelerated unexpectedly in March, separate data from Destatis revealed. Industrial production grew 2.5% MoM in March, reversing a 1.9% fall in Feb. Output was forecast to climb 2.3%. This was the first monthly growth in three months. The small increase in industrial production in March shows that factories are still not back to normal, despite the strength of demand, Andrew Kenningham, an economist at Capital Economics, said. This seems to be primarily due to supply problems, notably the global shortage of semi-conductor chips, which look set to drag on during the second quarter, the economist added. Supply chain disruptions like the blockage of the Suez Canal or semi-conductor delivery problems will distort industrial activity, Carsten Brzeski, an ING economist said. However, these disruptions will only delay - not derail - the catch-up of German industry. (RTT)

EU: Italy retail sales decline in March . Italy's retail sales declined in March after rising in the previous month, data from the statistical office ISTAT showed. The retail sales value decreased a seasonally adjusted 0.1% MoM in March, after a 5.9% growth in Feb. In Jan, retail sales fell 2.7%. Sales of non-foods declined 1.6% monthly in March, while food sales grew 1.9%. On an annual basis, retail sales surged 22.9% in March, after a 5.7% decrease in the previous month. Online sales grew 39.9% yearly in March. The retail sales volume increased 0.1% monthly in March and accelerated 23.5% from a year ago. In the first quarter, retail sales value rose 0.2% quartely, while volume declined 0.3%. (RTT)

China: Exports rise more than expected . China's exports grew more than expected in April as global demand remained strong, data from the General Administration of Customs revealed. Exports advanced 32.3% on a yearly basis in April. Economists had forecast the growth rate to ease to 24.1% from 30.6% posted in March. Likewise, imports surged 43.1% from the previous year versus the expected growth of 42.5%. Imports had advanced 38.1% in March. The trade surplus totaled USD42.85bn in April, which was above the expected level of USD28.1bn. Looking ahead, trade volumes are probably close to a cyclical peak, Julian Evans-Pritchard, an economist at Capital Economics, said. Admittedly, the current supply constraints should ease over the coming quarters. (RTT)

China: April foreign exchange reserves rise to USD3.2trn . China's foreign exchange reserves, the world's largest, increased in April from a month earlier, official data showed, as the US dollar weakened. Reserves rose by USD28.15bn to USD3.198 trn, data from the central bank showed. The increase was due to the dollar's fall against other major currencies held in the reserves, and to rises in global asset prices, the foreign exchange regulator said in a statement. (Reuters)

Taiwan: April exports rocket up on tech demand, outlook robust. Taiwan’s exports rose for a 10th straight month in April, and far exceeded expectations, as global demand for microchips and hi-tech gadgets remained strong in the work-from-home COVID-19 pandemic boom, and the outlook looks robust. Exports rose 38.7% from a year earlier to USD34.96bn last month, the Ministry of Finance said, the second highest monthly figure on record. Analysts in a Reuters poll had forecast a rise of 26.9% for April, compared with a 27.1% increase in March. The ministry attributed the growth to continued strong demand for tech products to support remote working and the “home economy” even in what is normally the low season. (Reuters)

Markets

WCT (Neutral, TP: RM0.53): Proposes to re-concession, not acquire Subang Airport. WCT has clarified that it has proposed to re-concession and not to acquire the Sultan Abdul Aziz Shah Airport (formerly known as Subang Airport) as reported by several media organisations. WCT also said that it would operate the airport the same way under a lease whereby the government would continue to own the land and Subang Airport. “The proposal is currently at a concept paper stage which SSSB submitted to the Ministry of Transport (MoT), Ministry of Finance, and Ministry of Energy and Natural Resources on March 1, 2021. (The Edge)

M&G: Bags RM13m supply vessel contract from Petronas Carigali. Marine and General (M&G) has secured a RM13m work order award from PETRONAS Carigali SB for the provision of an anchor handling tug and supply vessel. M&G said the work order is effective from June 2021 till a primary duration of 315 days from the commencement date. (Bernama)

Amcorp Properties: Azman Hashim to take it private at 90sen per share. Major shareholders of Amcorp Properties (Amprop) have proposed to take the company private via selective capital reduction (SCR) and repayment exercise of 90 sen per share. The repayment of 90 sen per share is at 35.5 sen, 65% premium over its last traded price of 54.5 sen. The shareholders comprise Amcorp Group, Clear Goal SB and banker Tan Sri Azman Hashim together with Amprop Trust, of which Azman has deemed interest, said Amprop. (The Edge)

Pharmaniaga: Proposes four-for-one bonus issue. Pharmaniaga has proposed a bonus issue of 1.06bn shares on the basis of four bonus shares for every share held. The proposed bonus issue is an appropriate avenue to reward its shareholders as it will enable the existing shareholders to have greater participation in the equity of the company whilst maintaining their percentage of equity interest. It is also expected to enhance the affordability, marketability and trading liquidity of its shares, and thus provide opportunity for greater participation from a broader range of investors. (The Edge)

Careplus: Posts strong 1Q results, says glove prices may have peaked. Careplus posted a net profit of RM123.5m in 1QFY21 on increased sales volume and ASP. Revenue more than doubled YoY to RM241m. Careplus has declared an interim dividend of 2 sen a share. "We are now running 34 lines with an annual capacity of 5.82bn pieces of gloves," Careplus said. "The ASP should have reached its peak in current quarter and began to soften gradually," it added. (StarBiz)

Pentamaster: 1Q net profit slides 4% despite stronger revenue as costs climb. Pentamaster’s net profit slid 4.16% YoY to RM16.07m in 1QFY21, despite stronger revenue, as it incurred higher costs. Its costs of goods sold increased 22.24% YoY to RM80.83m, while distribution costs spiked 64.54% YoY to RM3.11m. The rise in costs could not be fully offset by the 15.04% YoY increase in quarterly revenue to RM115.17m, on the back of increased contribution from the group's automated test equipment (ATE) and factory automation solutions (FAS). Pentamaster said it has been seeing an increase in order intake momentum, on the back of improving sentiment for the equipment market. (The Edge)

Market Update

The FBM KLCI might open higher today after US stocks notched a record close on Friday in what proved to be a volatile day in financial markets following a much weaker than expected jobs report. US employers hired 266,000 new workers in April, according to the labour department’s monthly non-farm payrolls report — far below the level of at least 1m jobs that economists had expected. US equities advanced with the blue-chip S&P 500 notching a record close up 0.7% to 4,232.60, led by the energy and real estate sectors. The Nasdaq Composite index gained 0.9%. For the week, the indices were up 1.2% and down 1.5% respectively. In Europe, the Stoxx 600 index gained 0.9%, led higher by utilities and tech shares.

Back home, the FBM KLCI closed 9.12 points or 0.58% higher at 1,587.45, tracking gains on Wall Street on Thursday, backed by bargain hunting in glove heavyweights. The regional markets traded mixed Friday, with some indices shedding gains, ahead of the US jobs report due later in the day that might provide some indication on what the Fed could do next. Japan’s Nikkei 225 almost gave up all its gains to close 0.09% higher at 29,357.82, South Korea’s Kospi advanced 0.58% to 3,197.2. In China, Hong Kong’s Hang Seng Index fell 0.09% to 28,610.65, while the Shanghai Stock Exchange Composite Index closed down 0.65% to 3,418.87.

Source: PublicInvest Research - 10 May 2021

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