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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 15 Nov 2019, 9:19 AM

 

PublicInvest Research Headlines - 6 May 2019

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Economy

US: Job growth surges, unemployment rate drops to 3.6%. US job growth surged in April and the unemployment rate dropped to the lowest in nearly half a century, pointing to sustained strength in economic activity even as last year’s massive stimulus from Republican tax cuts and spending increases fades. The Labor Department’s closely watched monthly employment report on Friday showed the greater than-expected 263,000 new jobs created last month were spread across most industry sectors, and the unemployment rate was just 3.6%, the lowest since Dec 1969. (Reuters)

US: Some Fed officials are more worried by weak inflation. Two Federal Reserve policymakers on Friday said they were increasingly worried about weak inflation, an indication that some US central bankers see a growing case for a future interest rate cut even as others push for continued patience. Chicago Fed President Charles Evans, speaking at a conference in Stockholm, said this year’s drop in inflation excluding the impact of food and energy was worrisome. He said he was also concerned the economy might underperform. (Reuters)

US: Service sector growth unexpectedly slows in April. A report released by the Institute for Supply Management (ISM) on Friday unexpectedly showed a continued slowdown in the pace of US service sector growth in the month of Apr. The ISM said its non-manufacturing index dropped to 55.5 in April after falling to 56.1 in Mar, with the index hitting its lowest level since a matching reading in Aug of 2017. (RTT)

US: Employment jumps much more than expected in April. Employment in the US jumped by much more than expected in the month of Apr, according to a report released by the Labor Department on Friday, with the unemployment rate dropping to its lowest level in nearly fifty years. The Labor Department said non-farm payroll employment surged up by 263,000 jobs in April following a downwardly revised increase of 189,000 jobs in March. (RTT)

EU: Eurozone inflation jumps beyond expectations in April. Euro zone inflation surged beyond expectations last month, mild relief for the European Central Bank, even if much of the jump was likely related to seasonal effects due to the timing of Easter. Inflation in the 19 countries sharing the euro accelerated to 1.7% in Apr from 1.4% a month ago, beating expectations for 1.6%, Eurostat data showed. More crucially, underlying prices excluding food and energy, picked up to 1.3% from 1%. (Reuters)

UK: Services sector expands in April despite subdued demand. UK services sector expanded in April, after contracting in the previous month, even as demand remained subdued, survey data from IHS Markit showed on Friday. The IHS Markit/CIPS UK Services Purchasing Managers' Index, or PMI, climbed to 50.4 from March's 32-month low of 48.9. Economists had forecast a score of 50.4. Survey respondents continued to report that Brexit uncertainty and concerns about the UK economic outlook had encouraged clients to postpone spending decisions. (RTT)

Markets

Malakoff (Trading Buy, TP: RM1.02): Subsidiary to sell renewable power to Tenaga for 21 years. Malakoff Corp will sell its green energy generated by its proposed 2.4MW Sungai Kachur Biogas power plant located in Kota Tinggi, Johor to Tenaga Nasional. It said its subsidiary Green Biogas SB (GBSB) had signed a 21-year renewable energy power purchase agreement with Tenaga. (StarBiz) Comments: Green Biogas SB is a 60-40 JV company between Malakoff and Concord Alliance SB. The biogas power plant may takes between 2-3 years to build, with estimated capex of RM10m- 15m. We expect the contribution to Malakoff's bottom-line upon its Commercial Operation Date (COD) to be minimal. Hence, we maintain our forecast for now.

Gamuda (Neutral, TP: RM2.88): Gamuda Land signs several MoUs with its partners. Gamuda Land, the property arm of Gamuda has inked several MoUs with its partners who will contribute their presence in its new township Gamuda Gardens. The partners come from several sectors, namely sports, tourism, education and services. It will be collaborating with New Zealand tourism company Skyline Enterprises to offer Luge’s innovative outdoor adventure activities, to be built on a 30,000 sq m hill site. (StarBiz)

Daibochi: To buy plastic packaging printer and manufacturer for RM125m. Daibochi has proposed to acquire plastic packaging printer and manufacturer Mega Printing & Packaging SB (MPP) for RM125m cash. The group said it is looking to complete the acquisition during the 3Q19. As for the funding of the acquisition, Daibochi said 20% of the purchase price, RM25m, would be internally generated, and the balance 80%, RM100m, from bank borrowings. The acquisition is subject to approval from Daibochi's shareholders. (The Edge)

Ewein: To raise up to RM60m from warrants issue. Ewein has proposed to undertake a bonus issue of up to 75.4m free warrants with a tenure of three years, to potentially raise maximum gross proceeds to RM60.3m. It said the proceeds will be utilised for the future working capital requirements of the group. The exercise price will be determined by the BOD at a later date with the indicative exercise price assumed to be 80 sen per warrant. (StarBiz)

Dynaciate: Bags two construction contracts worth RM35.6m. Dynaciate Group (previously known as Tatt Giap Group) has bagged two contracts worth a total of RM35.6m to undertake construction works. “The projects are expected to contribute positively to the earnings and net assets of Dynaciate Group for the FYE Nov 30, 2019 (FY19) and Nov 30, 2020 (FY20) during the tenure of the projects,” it added. (The Edge)

YFG: Bags RM21m job. YFG has bagged a RM20.8m contract to undertake mechanical and electrical works for the construction of a 41-storey office suites in Bandar Sunway, Selangor. The duration of the project is 36 months. "The project is expected to contribute positively to the group's revenue and earnings for the FYE Sept 30, 2019," said YFG. (The Edge)

PRG: Issues net loss warning for HK subsidiary Furniweb. PRG Holdings' 63%-owned Hong Kong Stock Exchange (HKEX)-listed subsidiary Furniweb Holdings Ltd has issued another earnings warning, this time saying it may be reporting losses. PRG said based on the preliminary review, Furniweb is expected to record a net loss of approximately RM1.2m for the 1QFY19. (The Edge)

Market Update

The FBM KLCI might open higher today as the dollar fell while Wall Street bounced back after two days of losses and tested its record high on Friday following a mixed batch of US economic data this morning showed the labour market remained strong but the vast services sector cooled. Treasuries were steady after the jobs data, which some described as a goldilocks report, because the number of jobs created in April significantly beat forecasts but wages stagnated. However, that was followed by the ISM non manufacturing index, which showed the vast US services sector fell to its lowest in 20 months. The reports come after Federal Reserve chair Jay Powell on Wednesday indicated no immediate need to move interest rates higher or lower, coming as markets had begun to see a possibility of a rate cut this year. Other officials, including St Louis Fed president James Bullard, said Friday a rate cut may be warranted if price growth remains soft later this year. The S&P 500 climbed 1% to 2,945.64, just a fraction below its closing high. The Nasdaq Composite was up 1.6% to 8,164. Both gauges notched weekly gains of roughly 0.2%. London’s FTSE 100 gained 0.4%, helped by a weaker pound. The Europe-wide Stoxx 600 rose 0.4%.

Back home, the FBM KLCI index gained 5.06 points or 0.31% to 1,637.30 points on Friday. Trading volume increased to 2.82bn worth RM2.11bn. Market breadth was positive with 447 gainers as compared to 395 losers. Hong Kong‘s Hang Seng index added 0.5%, helped by gains of over 2 per cent for HSBC after the bank reported earnings ahead of estimates. Chinese and Japanese markets remained closed for public holidays.

Source: PublicInvest Research - 6 May 2019

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