PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 21 Nov 2019, 11:24 AM


PublicInvest Research Headlines - 29 Jul 2019

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US: Economy slows in 2Q, weak business investment a red flag. US economic growth slowed less than expected in the 2Q as a surge in consumer spending blunted some of the drag from declining exports and a smaller inventory build, which could further allay concerns about the economy’s health. But the fairly upbeat report from the Commerce Department had some red flags for the 10-year-old economic expansion, the longest on record. Business investment contracted for the first time in more than three years and housing declined for a sixth straight quarter. GDP increased at a 2.1% annualized rate in the 2Q, stepping down from an unrevised 3.1% pace in the Jan-March period. (Reuters)

EU: Russia cuts rate again, signals more easing. Russia's central bank slashed its key interest rate for a second policy session in a row, in line with its earlier guidance, and signaled more easing in future as growth remains below expectations. The Board of Directors, led by Governor Elvira Nabiullina, decided to cut the key rate by 25bp to 7.25%, the Bank of Russia said in a statement. In June, the bank had slashed the rate by a quarter-point, which was the first reduction since March 2018. Prior to that, the bank had kept the rate unchanged for three policy sessions in a row after hiking it in Dec 2018. (RTT)

UK: Economy mixed signals hard to read for new PM Johnson. Rarely has Britain’s economic outlook been so unclear for a new prime minister as it is for Boris Johnson, with strengths such as the lowest unemployment in 44 years contrasting with signs in business surveys of a slowdown or even a recession. More than three years into the Brexit crisis, Britain’s economy probably slowed to a standstill in the April-June period and might even have contracted for the first time since 2012. At least part of the weakness can be attributed to a hangover from a stockpiling boom in the run-up to the original Brexit date of March 29, when companies brought forward work to get ready for possible disruption. Business investment has flat-lined since the Conservative Party won the 2015 general election with a pledge to hold a referendum on membership of the European Union. (Reuters)

China: Industrial profits fall in June, add to fears of slowdown. Profits earned by China’s industrial firms contracted in June after a brief gain the previous month, fuelling concern that a slowdown in manufacturing from a bruising trade war will drag on economic growth. China’s industrial profits have been softening since the 2H of 2018 as the economy slowed and the US-China trade dispute escalated, with many industrial firms putting off business decisions and scaling back manufacturing investment. Industrial profits fell 3.1% in June from a year earlier to CNY601.9bn (USD87.5bn), according to data released, following a 1.1% gain in May. In the first six months, industrial firms earned profits of CNY2.98trn, down 2.4% YoY. (Reuters)

Singapore: Industrial production falls in June. Singapore's industrial production declined further in June, data from the Economic Development Board showed. Manufacturing output dropped 6.9% YoY in June, following a 2.0% fall in May. On a MoM basis, manufacturing output increased a seasonally adjusted 1.2% in June, after a 0.1% decrease in the previous month. Economists had expected a fall of 0.8%. Excluding bio-medical manufacturing, output fell 9.9% from a year ago and declined 2.9% from the previous month. The general manufacturing, biomedical manufacturing and precision engineering logged output growth, while the rest of the manufacturing clusters contracted. (RTT) 


Yong Tai (Neutral, TP: RM0.38): Received a termination notice from FIIL. In pursuant to the Subscription Agreement entered between Full Intelligent International Limited (FIIL) and Yong Tai (YTB) for the 100m shares at RM0.36 per share, YTB has received a termination notice from FIIL in view of YTB’s current financial and share price performance, to which YTB had sought clarification and received confirmation from FIIL on 25 July 2019. (Bursa)

Comment: The announcement is a negative surprise considering FIIL is a related party of its current significant shareholder Full Winning Developments Ltd, both wholly-owned by Asia Television Holdings Limited. While an unwelcome setback, we gather management will still proceed with placing out 200m shares at 36sen apiece in raising RM72m for now, while looking for other subscribers to take up the remaining 200m shares. Its current share price may prove to be a slight obstacle unless investors are fully convinced of its long-term prospects. Our Neutral call and 38sen target price are unchanged.

AHB: Plans to raise RM9.8m via private placement. AHB Holdings proposes to raise a total of RM9.86m from its private placement exercise. AHB estimates that the 10% and 30% private placement to raise RM2.46m and RM7.4m respectively based on the indicative price of 14 sen per share. Proceeds from the private placement will be used for working capital (RM4.8m), capex (RM4.1m) and marketing expenses. (SunBiz)

FGV: Exploring potential collaborations in palm, sugar industries. FGV Holdings said it is exploring potential collaborations in the palm and sugar industries, both in the upstream and downstream sectors. “These potential collaborations include strategic alliances,” it said. “Since MSM’s Johor refinery came onstream in 2019, its total refining capacity increased to 2.2m tonnes, enabling the company to serve both its domestic requirements and seek new opportunities in export markets.” With that, FGV and MSM are exploring all avenues to successfully enter regional and international markets. “Discussions are still at a preliminary stage.” (SunBiz)

TCMH: Vietnamese unit inks MoU with Chinese marque. Tan Chong Motor Holdings' (TCMH) Vietnamese unit has signed a MoU with a Chinese company to collaborate on manufacturing, importing and distributing cars within the country. “The proposed project, if materialised, could provide Tan Chong with the opportunity to expand its foothold in the automotive industry in Vietnam,” the group said. It added that the MoU is effective until Dec 31, 2019 or the signing of the cooperation agreement, whichever is earlier. (The Edge)

Kejuruteraan Asastera: Sees FY19 revenue growth. Kejuruteraan Asastera (KAB) expects to see revenue growth in current FYE Dec 31, 2019, as the electrical engineering specialist looks to include mechanical engineering and energy efficiency (EE) solutions as new revenue streams for the company. KAB MD Datuk Lai Keng Onn said the group also plans to expand its operations into other states in Malaysia. (The Edge)

Westports: 2Q net profit rises to RM166m. Westports Holdings posted a stronger set of financial results in the 2QFY19 as it achieved record-breaking container throughput level. It said its net profit rose by 36.5% to RM166.3m from RM121.8m a year ago. EPS rose to 4.88 sen from 3.57 sen. It declared an interim dividend of 6.74 sen compared with 5.4 sen. (StarBiz) 

Market Update

The FBM KLCI might open stronger today after U.S. stocks closed at fresh highs Friday, buoyed by bullish earnings reports and a better-than-expected reading on second-quarter domestic GDP. The Dow Jones Industrial Average was up about 0.19% to close around 27,192. The S&P 500 rose 0.74%, to close near 3,025, a new all-time high. The Nasdaq Composite also charted a new high, closing at 8,330, up about 92 points, just over 1%. Technology heavyweights like Alphabet and Twitter were up sharply Friday on solid earnings, while shares of T-Mobile US Inc and Sprint Corp surged after the Department of Justice approved their planned merger. European markets also finished higher on Friday with shares in London leading the region. The FTSE 100 was up 0.80% while France's CAC 40 was up 0.57% and Germany's DAX was up 0.47%.

Back home, the FBM KLCI closed down 8.62 points or 0.52% at 1,647.96 points, its intraday low Friday, tracking the fall across Asian share markets after the European Central Bank (ECB) on Thursday disappointed investors, who had anticipated an immediate interest rate cut. Across Bursa Malaysia, decliners outnumbered gainers at 457 stocks to 340, respectively. A total of 2.56bn shares, worth RM2.05bn, were traded. In the region, Japan’s Nikkei 225 closed down 0.45%, South Korea’s Kospi fell 0.4%, while Hong Kong’s Hang Seng declined 0.69%.

Source: PublicInvest Research - 29 Jul 2019

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