PublicInvest Research

PublicInvest Research Headlines - 10 Nov 2021

PublicInvest
Publish date: Wed, 10 Nov 2021, 10:28 AM
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An official blog in I3investor to publish research reports provided by PublicInvest Research team.

All materials published here are prepared by Public Investment Bank Berhad. For latest offers on Public Invest trading products and news, please refer to: https://www.publicinvestbank.com.my/pbswecos/default.asp

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Economy

US: Gasoline, auto retailing boost US producer prices. US producer prices increased solidly in Oct, driven by surging costs for gasoline and motor vehicle retailing, suggesting that high inflation could persist for a while amid tight global supply chains related to the pandemic. The Federal Reserve last week restated its belief that current high inflation is “expected to be transitory.” A tightening labor market as millions remain at home is adding to price pressures, which together with shortages of goods sharply restrained economic growth in the 3Q. The Fed this month started reducing the amount of money it is injecting into the economy through monthly bond purchases. The acceleration in inflation may not fade as quickly as previously thought, particularly for businesses because of the global supply-chain issues. (Reuters)

EU: German ZEW economic confidence rises for first time in 6 months. German economic confidence improved for the first time in six months as financial market experts were more optimistic about the coming six months. The ZEW Indicator of Economic Sentiment rose more-than-expected to 31.7 in Nov from 22.3 in Oct. This was the first time since May that the indicator logged an improvement. The expected score was 20. However, the assessment of current economic situation deteriorated again, with the indicator falling to 12.5 from 21.6 in Oct. The score was also below economists' forecast of 18. Experts assume that the supply bottlenecks for raw materials and intermediate products as well as the high inflation rate will have a negative impact on the economic development in the current quarter. (RTT)

EU: Germany exports unexpectedly fall, imports growth eases. Germany's exports declined unexpectedly in Sept and imports registered a marginal growth. Exports declined 0.7% on a monthly basis, following a 0.8% fall in Aug. Shipments were forecast to climb 0.5%. At the same time, imports growth eased sharply to 0.1% from 2.1% in the previous month. This was also weaker than the expected growth of 0.6%. As a result, the trade surplus decreased to a seasonally adjusted EUR13.2bn from EUR14bn in the previous month and remained below economists' forecast of EUR13.6bn. Data showed that exports were 0.3% lower and imports 7.8% higher than in Feb 2020, the month before restrictions were imposed due to the coronavirus pandemic in Germany. (RTT)

EU: IMF says no rush for France to rein in public finances next year. France should keep the public purse strings loose next year to support the economy before reining in spending gradually from 2023. In a statement concluding an annual staff visit to France, the IMF raised its growth forecast for the euro zone’s second-biggest economy this year to 6.75% from an estimate in Oct of 6.3%. However, it trimmed France’s outlook for 2022 to 3.7% from a previous forecast of 3.9% as growth moderates after an exceptional rebound from the pandemic this year. With the economy still in recovery mode and health risks still a threat, the IMF said there was no rush to rein in the public finances next year and that the government should focus on growth-boosting investments. (Reuters)

EU: France current account gap rises in 3Q. France's current account deficit widened in the 3Q largely due to the increase in the visible trade gap. The current account deficit totaled EUR7.6bn compared to a shortfall of EUR4.1bn in the 2Q. The trade in goods showed a deficit of EUR18.5bn, bigger than the 2Q EUR13.9bn deficit. On the other hand, the surplus on services trade increased to EUR10.2bn from EUR8.5bn in the prior quarter. Primary and secondary income totaled EUR0.7bn versus EUR1.3bn in 2Q. The shortfall on financial account balance rose to -EUR33.1bn from - EUR18.0bn in 2Q. In Sept 2021, the current account deficit stood at EUR2.7bn, a deterioration of EUR1.3bn compared to Aug. (RTT)

UK: Retail sales decline in Oct. UK retail sales increased at a faster pace in Oct. Total retail sales grew 1.3% YoY in Oct, faster than the 0.6% increase seen in Sept. At the same time, like-for-like sales fell only 0.2% annually. Some people started their Christmas shopping early with beauty advent calendars flying off the shelves and searches for Christmas items ramping up online. The much reported squeeze on household spending has yet to materialise as consumers seem happy to carry on shopping. (RTT)

Japan: Overall bank lending climbs 0.9% on year in Oct. The value of overall bank lending in Japan was up 0.9% on year in Oct, coming in at JPY577.857trn. That follows the 0.6% increase in Sept. Excluding trusts, bank lending rose an annual 0.8% to JPY501.525trn, accelerating from 0.4% in the previous month. Lending from trusts increased 1.3% on year to JPY76.332trn. Lending from foreign banks dropped 5.3% on year to JPY3.233trn after sinking 4.3% in the previous month. (RTT)

Japan: Sept real wages fell for first time in 3 months as inflation bites. Japan’s real wages declined in Sept for the first time in three months as inflation picked up faster than growth in nominal pay, a sign of global cost-push inflation starting to affect Japanese households. In Sept Japan’s core consumer price index (CPI) posted 0.1% growth from a year earlier, the first positive figure since March 2020, driven by rising energy and raw material costs. Inflation adjusted real wages, a key gauge of households’ purchasing power, fell 0.6% in Sept compared with the same month a year earlier. (Reuters)

Japan: JPY1,033.7bn current account surplus in Sept. Japan posted a current account surplus of JPY1,033.7bn in Sept. That missed forecasts for a surplus of JPY1,060.1bn and was down from JPY1,665.6bn in Aug. Imports jumped 41.6% on year to JPY7.137trin, while exports gained an annual 16.1% to JPY6.907trn for a trade deficit of JPY229.9bn. The capital account had a deficit of JPY187.7bn in Sept and the financial account saw a surplus of JPY2,760.3bn. (RTT)

Australia: NAB business conditions, confidence strengthen in Oct. Australia business conditions and confidence strengthened in Oct as lockdowns came to an end in both NSW and Victoria. The business conditions index advanced to 11 from 5.0 in Sept. All components of conditions rebounded, with trading conditions posting the strongest growth. Similarly, the business confidence indicator improved to 21 from 10 a month ago. Retail, business, finance and property, and personal and recreation services all saw large confidence improvements. There is still scope for things to improve further in coming months, particularly in Victoria, but overall this is an encouraging result with conditions back above their long-run average. (RTT)

Markets

Genting (Outperform, TP: RM5.70): Genting Singapore reports 3QFY21 earnings of SGD60.7m. Genting Singapore has reported a lower revenue of SGD251.5m for 3QFY21, down 16% YoY. (The Edge)

Comments: Genting Bhd’s (GENT) 52.7%-owned subsidiary, Genting Singapore (GENS), posted an 11% YoY increase in 3QFY21 net profit despite a 16% drop in revenue. This was mainly due to a write-back of accounting accruals amounting to SDG45.9m in relation to its bid for Yokohama IR. Operationally, adjusted EBITDA dipped 31% YoY due to a series of measures introduced to curb the surge of community cases that resulted in lower business activities at Resorts World Sentosa (RWS) with gaming revenue falling by 9% YoY. Although the implementation of vaccinated travel lanes (VTL) should help to improve business activities, we are only expecting minimal increase in overseas visitor footfalls at RWS as the traditional large source of visitors are not on the VTL list yet. However, given the high vaccination rates achieved by Malaysia and elsewhere globally, we believe the worst is over for the tourism industry and GENT is likely to chalk better performance in FY22F.

Hibiscus (Outperform, TP: RM1.05): Gets extension of USD80m prepayment deal with Trafigura. Hibiscus Petroleum has obtained an extension of its existing prepayment facility with Trafigura Pte Ltd of up to USD80m till end of 2023. Hibiscus had on Nov 8 executed the amendment and restatement agreement with Trafigura for the prepayment agreement originally dated Oct 8, 2018.(BTimes)

Astro (Outperform, TP: RM1.43): Expands content offering with Netflix partnership. Astro Malaysia Holdings has formed a partnership to leverage Netflix content. However, it declined to reveal the company's projection on the number of subscribers who would sign up for the new content. The new features on the Ultra Box will enable customers to enjoy local shows and live sports from Astro and includes all of Netflix's originals, films and documentaries. (The Edge)

Nestcon: To form JV company with SGX-listed Hatten Land unit for solar photovoltaic project in Melaka. Nestcon has entered into an agreement with Singapore’s firm Hatten Land Ltd’s subsidiary to form a JV company to secure, supply, construct, develop and manage solar photovoltaic plants and facilities. As for the shareholding structure of the JV company, 70% will be owned by Nestcon, while 30% owned by Hatten. (The Edge)

Aneka Jaringan: Indonesia subsidiary bags RM14m contract. Aneka Jaringan Holdings has accepted a contracting job in Indonesia to perform piling and pile test works for the Sky House Alam Sutera+ Project Phase 2. The price of the contract is IDR48.75bn inclusive of value-added tax, which is equivalent to approximately RM14.24m. (The Edge)

Permaju Industries, Focus Dynamics: In pact to set up EVs showroom. Permaju Industries and Focus Dynamics Group have teamed up to open a state-of-the-art digital retail concept electric vehicle (EV) showroom at The Arch here. In light of the recent Budget 2022 announcement on EV, this venture is timely in its nature and hopes to accelerate the introduction of more luxury and premium EV motor vehicles. (The Edge)

Market Update

The FBM KLCI might open weaker today after US stock markets closed lower on Tuesday, snapping an eight-day winning streak as Tesla shares dropped and investors took a cautious approach ahead of a round of important data on inflation. The blue-chip S&P 500 share index, which on Monday closed out its longest unbroken series of all-time highs since 1997, closed down 0.3%. The technology-focused Nasdaq Composite was 0.6% lower at the bell as both Wall Street indices were dragged down by a fall in the shares of Tesla. Shares of the electric car maker slid after Twitter users polled by co-founder Elon Musk voted that he should sell 10% of his stake in the company. Its shares declined 12% on Tuesday, taking their two-day drop to more than 16%. Since the start of the week, just under $200bn has been sliced off of its market capitalisation. In Europe, the regional Stoxx 600 share index closed down 0.2%.

Back home, Bursa Malaysia ended lower on Tuesday, driven by continued profit-taking in the industrial products and services as well as plantation counters, amid mixed sentiments on the regional markets. At 5pm, the benchmark FBM KLCI declined 11.38 points to 1,524.03 from Monday's close of 1,535.41. Regional markets finished mixed. The Shanghai Composite gained 0.24% and the Hang Seng rose 0.20%. The Nikkei 225 lost 0.75%.

Source: PublicInvest Research - 10 Nov 2021

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