PublicInvest Research

PublicInvest Research Headlines - 24 Mar 2021

Publish date: Wed, 24 Mar 2021, 09:45 AM
An official blog in I3investor to publish research reports provided by PublicInvest Research team.

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US: New home sales plummet much more than expected to nine month low. A report released by the Commerce Department showed a nosedive by US new home sales in February. The Commerce Department said new home sales plummeted by 18.2% to an annual rate of 775k in February after jumping by 3.2% to an upwardly revised rate of 948k in January. Economists had expected new home sales to tumble by 5.2% to a rate of 875k from the 923k originally reported for the previous month. With the much bigger than expected decrease, new home sales plunged to their lowest rate since hitting 698k last May. The steep drop in new home sales reflected sharp declines in all four regions of the country, with new home sales in the Midwest leading the way lower with a 37.5% nosedive. New home sales in the West and South also plummeted by 16.4% and 14.7%, respectively, while new home sales in the Northeast slumped by 11.6% . The report also showed the median sales price of new houses sold in February was USD349.4k, down 1.1% MoM but up 5.3% YoY . (RTT)

UK: Unemployment rate declines unexpectedly. The UK unemployment rate dropped unexpectedly in the three months to January, thanks to the extended furlough scheme, data from the Office for National Statistics revealed. Moreover, there was small increase in the number of payroll employees in three months to February. The unemployment rate came in at 5.0% in three months to January, below economists' forecast of 5.2% and 5.1% seen in three months to December. However, the rate was 1.1ppts higher YoY . At the same time, the employment rate dropped 1.5ppts from the previous year to 75.0% . The headline employment is nearing its trough, Capital Economics said. Still the economist expects the unemployment rate to rise to 6.0% by early 2022. But the bulk of that will be driven by those who left the labor force returning once the economy reopens, rather than people losing their jobs, Capital Economics added. (RTT)

UK: Manufacturers expect output to rise rapidly – CBI. UK manufacturers expect output to pick up rapidly over the coming three months, the Industrial Trends Survey from the Confederation of British Industry showed. A balance of +30% expects output to pick up in the coming three months, the strongest expectations since August 2017. A net 3% respondent said output increased in three months to March versus -8% in February. The order book balance rose to -5% from - 24% in February. This was the strongest position since April 2019. Similarly, the export order books balance advanced to -20% from - 39% a month ago. ”It's great to see the mood lift among manufacturers, buoyed by a jump in order books,” CBI said. But firms continue to grapple with higher freight costs as well as raw material shortages. (RTT)

Singapore: Inflation rises in February. Singapore's consumer prices rose in February, data from the Monetary Authority of Singapore and the Ministry of Trade and Industry showed. The consumer price index rose 0.7% YoY in February, following a 0.2% increase in January. Economists had expected a 0.6% rise. This latest consumer prices outcome was largely due to a rise in core inflation and prices for private transportation cost. MAS core CPI, which excludes costs of accommodation and private road transport, grew 0.2% annually in February, reversing a 0.2% decrease in the preceding month. The statistical office expects external inflation to rise in the coming quarters, amid a recovery in global oil prices. Domestic cost pressures are expected to stay low, as wage growth and commercial rent are likely to remain subdued. (RTT)

Taiwan: Industrial production growth slows in February. Taiwan's industrial production grew at a softer pace in February, data from the Ministry of Economic Affairs showed. Industrial output grew 2.96% YoY in February, after a 19.04% increase in January. Manufacturing output gained 3.79% yearly in February. Meanwhile, mining and quarrying production declined 3.68%. Electricity and gas supply decreased 7.03% and water supply output fell 1.54% . On a monthly basis, industrial production rose 4.37% in February, following a 3.16% growth in the prior month. Another report from the ministry showed that retail sales accelerated 12.56% annually in February, following a 3.39% increase in January. Wholesale trade grew 7.5% yearly in February. (RTT)

Indonesia: Expects to exit recession in 2Q with GDP seen up over 7%. Indonesia's economy is on course to emerge from a pandemic-induced recession in 2Q, with GDP seen growing by more than 7% YoY, government officials said. It suffered its first recession in over two decades last year, posting negative growth in each quarter from April to June 2020 as the country battled with one of the worst Covid-19 outbreaks in Asia. GDP contracted 2.1% in 2020 and the government sees a rebound this year to a growth range of 4.5% to 5.3%. Based on February data, GDP was set to contract 1.0% to 0.1% YoY in 1Q, an improvement from a 2.2% 4Q contraction on rising consumption, Finance Minister Sri Mulyani Indrawati told, adding a coronavirus vaccine roll-out would also help the economy. (Reuters)

Thailand: Approves USD11.3bn of support measures for businesses. Thailand's cabinet approved financial measures worth THB350bn (USD11.31bn) to help the business sector recover from the impact of coronavirus outbreaks, government officials said. The measures include THB250bn of soft loans provided by the central bank and another THB100bn and for a so-called "asset warehousing" scheme to support debtors who are unable to repay loans. The support for debtors includes the transfer of collateral assets for debt settlement and giving debtors the right to rent their assets or buy back their assets later. The Covid-19 outbreak situation at home and abroad has had "a widespread and longer than expected impact", affecting the business sector's ability to access liquidity and capital, Finance minister Arkhom Termpittayapaisith told. The cabinet also agreed on additional subsidies to boost domestic travel to help a struggling tourism industry in the absence of foreign visitors. (Reuters)


Axiata (Neutral, TP: RM3.85), Media Prima (Underperform, TP: RM0.33): China's iQiyi joins forces with Media Prima and Celcom to boost footprint in Malaysia . Baidu-backed Chinese video streaming giant iQiyi has teamed up with Celcom Axiata and Media Prima content production and distribution arm Primeworks Studio, to boost its footprint in Malaysia. (The Edge) Comments: The partnership aims at positioning iQiyi as the preferred streaming destination for Asian entertainment, ad personalization and targeted digital video advertising. For Media Prima, this is in line with its digital expansion strategy to reach a wider audience outside Malaysia via iQiyi's platform. Audiences are also expected to be able to enjoy contents made exclusively on demand. Meanwhile, Celcom will be the official telco partner for iQiyi, providing its users with tailored contents through exclusive packages on the go and at home. We are generally positive on this collaboration given the benefits and synergies to be reaped. Nevertheless, we believe financial impact is likely to be minimal in the immediate term. We maintain our Neutral and Underperform rating on Axiata and Media Prima.

PDZ: Plans RM100m fund raising scheme for glove venture . PDZ Holdings is planning a scheme to raise as much as RM100m for its glove manufacturing venture. PDZ said the proposed diversification was expected to contribute significantly to the group's future revenue and earnings. To raise fund for the proposed new business, the company has proposed a corporate exercise. First, PDZ has proposed to consolidate its existing shares and warrants on the basis of 10 units into one unit. It will then proceed with the plan to issue new rights shares and free warrants. (StarBiz)

Industronics: Signs MoU to acquire stake in HK's Bluemount . Industronics has signed a MoU on the proposed acquisition of a stake in Hong Kong's Bluemount Financial Group Ltd. It said in a statement that it entered the MoU with Bluemount and Li Hok Yin, a shareholder of the company, to discuss and negotiate the details of the proposed acquisition. (StarBiz)

Techfast: Secures RM540m contract to supply marine gas oil products . Techfast Holdings has secured a contract worth RM540m to supply marine gas oil products to Huang Fan SB. Its wholly-owned subsidiary Fast Energy SB had entered into a supply agreement with Huang Fan for the contract to supply up to 6m litres of the product each month to the group for the consumption of its vessels, Techfast said. “The supply agreement shall be effective for a period of 45 months from its date (Contract Period),” said Techfast. This worked out to RM12m per month or RM144m a year. (The Edge)

Sin Heng Chan: RPT of RM145.9m deemed fair and reasonable. Sin Heng Chan (Malaya)'s proposed acquisition of facility management and construction outfit Tunas Selatan Pagoh SB (TSP) for RM145.9m in a related-party transaction has been deemed fair and reasonable by independent adviser Mercury Securities SB. The proposal entailed a cash payment of RM70m via borrowings, and issuance of ordinary and preference shares worth a combined RM75.9m, as consideration for TSP to Tunas Selatan Construction SB. (The Edge)

Market Update

The FBM KLCI might open lower today after global equity benchmarks and oil prices drifted lower on Tuesday while safe haven assets gained as an extended economic lockdown in Germany and U.S. and European sanctions on China curbed risk appetite. Rising concerns over a third wave of the coronavirus pandemic amid slow vaccine rollouts in Europe hurt oil and travel companies as investors priced in a longer road to economic recovery. Germany extended its lockdown until April 18, and Chancellor Angela Merkel urged citizens to stay at home for five days over the Easter holiday. On Wall Street, the Dow Jones Industrial Average fell 308.05 points, or 0.94%, to 32,423.15, the S&P 500 lost 30.07 points, or 0.76%, to 3,910.52 and the Nasdaq Composite dropped 149.85 points, or 1.12%, to 13,227.70. The pan-European STOXX 600 index fell 0.7% after a new round of sanctions aimed at China hit Asian markets.

Back home, the FBM KLCI plunged 21.44 points or 1.33% after trading downwards, as the market reflected the rest of the broader region which was in negative territory on dampened risk appetite. At 5pm, the benchmark index closed at 1,595.29. It had earlier traded at a high of 1,616.78. Regional markets also mostly feel. Japan’s Nikkei 225 index fell 0.61%, while South Korea’s Kospi composite index dropped 1.01%. In China, the Hang Seng declined 1.34% and the Shanghai composite index dipped 0.93%.

Source: PublicInvest Research - 24 Mar 2021

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