PublicInvest Research

PublicInvest Research Headlines - 3 Mar 2022

PublicInvest
Publish date: Thu, 03 Mar 2022, 09:11 AM
PublicInvest
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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: Private payrolls increase solidly in Feb- ADP. US private employers hired more workers than expected in Feb and data for the prior month was revised sharply higher as the labor market recovery gathers steam. Private payrolls increased by 475,000 jobs last month. Data for Jan was revised higher to show 509,000 jobs were added instead of 301,000 lost as initially reported. The ADP report is jointly developed with Moody's Analytics and was published ahead of the Labor Department's more comprehensive and closely watched employment report for Feb. (Reuters)

EU: Inflation at record high. Eurozone inflation accelerated further in Feb to hit a fresh record high driven by energy prices. Inflation advanced to 5.8% in Feb from 5.1% in Jan. Inflation was forecast to climb to 5.3%. Core inflation that excludes energy, food, alcohol and tobacco, increased to 2.7% from 2.3% in the previous month. Among components of inflation, energy logged another sharp growth of 31.7%. This was followed by a 4.1% rise in food, alcohol and tobacco prices. Non-energy industrial goods prices were up 3% and services cost grew 2.5%. (RTT)

EU: German labor market continues to improve. Germany's unemployment declined further in Feb, reflecting the improvement in the labor market. The number of people out of work decreased 33,000 from Jan, which was bigger than the economists' forecast of -23,000. In Jan, unemployment had declined 48,000. The jobless rate fell to 5.0% in Feb from 5.1% in the previous month. The rate was forecast to remain unchanged at 5.1%. The labor market continued its upward trend until Feb. However, the war in Ukraine is not yet reflected in the current indicators.

EU: Spain unemployment declines in Feb. Spain unemployment logged its biggest drop for the month of Feb since 2015. The number of unemployed decreased by 11,394, or 0.36% in Feb from the previous month, the largest fall in Feb since 2015. The registered unemployment came in at 3.11m in Feb, down 897,105 from the previous year. This was the largest annual decline in the historical series. Unemployment among those under 25 years fell by 38.5% YoY to a total of 225,480 people, the lowest figure in a month of Feb. (RTT)

UK: House price inflation strongest since June 2021. UK house prices grew at the fastest pace in eight months in Feb driven by robust demand and limited stock of homes. House price inflation unexpectedly increased to 12.6% from 11.2% in Jan. This was the strongest since June last year. On a monthly basis, house prices gained 1.7%, faster than the 0.8% rise posted in Jan. Prices were forecast to rise 0.6%. The price of a typical home rose above GBP260,000 for the first time in Feb. Prices climbed GBP29,162 over the past twelve months. This was the largest ever annual increase in cash terms since the start of the monthly index in 1991. The price of a typical home was 20% higher than in Feb 2020 - the month before the pandemic struck the UK. (RTT)

India: Manufacturing growth remains strong in Feb. India's manufacturing activity increased in Feb. The manufacturing Purchasing Managers' Index rose to 54.9 in Feb from 54.0 in Jan. A score above 50.0 indicates expansion. New business inflows increased in Feb and demand from international clients rose at the quickest pace in three months. Production rose for the eighth month in a row. New orders and output increased in Feb. Backlogs of work rose marginally in Feb and employment declined, with the overall rate of job shedding being only fractional. Business sentiment improved sharply in Feb and the degree of optimism remained below the long-run average. (RTT)

South Korea: Industrial production gains 0.2% in Jan. Industrial output in South Korea was up a seasonally adjusted 0.2% on month in Jan. That exceeded expectations for a decline of 0.6% following the downwardly revised 3.7% gain in Dec (originally 4.3%). On a yearly basis, industrial production gained 4.3%, which missed forecasts for a gain of 6.5% and was down from the upwardly revised 7.4% jump in the previous month (originally 6.2%). The Index of all industry production in Jan fell 0.3% on month and increased by 4.3% on year. The Manufacturing Production Index rose 0.1% on month and 4.4% on year. (RTT)

Australia: GDP climbs 3.4% on quarter in 4Q. Australia's GDP expanded a seasonally adjusted 3.4% on quarter in 4Q of 2021. That beat forecasts for a gain of 3.0% following the 1.9% contraction in the three months prior. On a yearly basis, GDP gained 4.2% - again exceeding expectations for an increase of 3.7% and up from 3.9% in 3Q. Real net national disposable income rose 1.7%, while the terms of trade fell 5.1%. Household saving ratio decreased to 13.6% from 19.8%. (RTT)

Markets

Wegmans (Outperform, TP: RM0.35): Proposes one-for-four bonus issue of warrants. Wegmans Holdings proposed to undertake a bonus issue of up to 168.76m free warrants on the basis of one warrant C for every four existing ordinary shares. (The Edge) Comments: Apart from rewarding shareholders, the proposed bonus issue of warrants is to provide Wegmans with additional working capital. Assuming full conversion of Warrants B and Warrants C, Wegmans enlarged share base will increase to 843.8m, which could potentially lead to c.35% EPS dilution. We leave our earnings estimates unchanged for now, pending further clarification with management on the use of proceeds from these warrant conversions. Maintain Outperform .

TCS Group: Bags RM225.0m construction projects from Remedy Power. TCS Group has bagged a RM225m construction project in Taman Desa, Kuala Lumpur from Remedy Power SB. The project includes foundation, and main building works for one office block with commercial space, podium and basement carparks, lobby and amenity floors. The contract is 30 months and will commence in April 2022. (BTimes)

Aneka Jaringan: Bags RM20m piling works contract for condo project. Aneka Jaringan Holdings has secured a RM20.18m contract to undertake piling and substructure works for a 45-storey condominium project in Setapak. The contract was awarded by A&A Architects SB on behalf of Curvo Development SB. The project's commencement date is March 1, and it is expected to be completed by Dec 31. (The Edge)

Willowglen: Bags RM14m contract for provision of RTS supervisory control system. Willowglen MSC has been awarded a contract worth RM14.4m from Sapura Rail Systems SB. The contract is for the provision of a systems package integrated supervisory control system in respect of a rapid transit system (RTS). The commencement date of the contract is March 2, 2022, and it will be completed by Sept 30, 2026. (The Edge)

PetGas: PGU tariff lower at RM1.128/GJ in 2022. Petronas Gas (PetGas) incentive-based regulation (IBR) tariff for its Peninsular Gas Utilisation (PGU) facility has been adjusted to RM1.128/GJ through 2022, from RM1.129/GJ. This follows the approval by the Energy Commission for the adjustment, which is an annual process under the IBR framework during the three year Regulatory Period 1 from 2020 to 2022. (The Edge)

Berjaya Land: Withdraws from RM3.05bn mixed development project in Myanmar. Berjaya Land has pulled out from the deal to undertake a housing and mixed development project with an estimated GDV of USD746.08m (RM3.05bn) in Yangon, Myanmar. It has served a written notice on the Yangon Region Government (YRG) to terminate the concession agreement due to non-fulfilment of conditions. (The Edge)

OpenSys: Rolls out Smart CIT secure logistics, cash management solution for TNB. OpenSys (M) has rolled out it's Smart CIT secure logistics and cash management solution for TNB to enhance process efficiencies and reduce up to 33% in overall processing costs. OpenSys targets to complete its Smart CIT solution rollout across all 114 TNB's retail outlets nationwide in the 1Q 2022. (Btimes)

Market Update

The FBM KLCI might open higher today after Wall Street stocks rose and a powerful rally in debt markets reversed on Wednesday, as Federal Reserve chair Jay Powell signalled that the US central bank would raise interest rates this month despite economic uncertainty created by Russia’s invasion of Ukraine. The S&P 500 share index ended the day 1.9% higher, and the technology-heavy Nasdaq Composite rose 1.6%. In Europe, the regional Stoxx 600 equity benchmark added 0.9%. The equity moves came as Brent crude oil climbed 7.6% to $112.93 a barrel; Joe Biden, US president, hinted at further sanctions against Russia; European natural gas prices hit an all-time high; and data showed that eurozone inflation had surged to a new record. Powell told US legislators on Wednesday that he still saw interest rate rises coming, starting with a 0.25 percentage point increase in March, but that the Ukraine conflict had injected “uncertainty” into the Fed’s outlook.

Back home, shares on Bursa Malaysia were mostly down in line with the weaker regional market performance and overnight sell down on Wall Street. However, the FBM KLCI rebounded on late buying interest, mainly driven by plantation, and industrial product and services stocks amid the surge in oil prices. At closing, the benchmark FBM KLCI rose 0.10% or 1.66 points to 1,598.10 from 1,596.44 at Tuesday's close. Stocks in Asia mostly fell. Japan’s Nikkei 225 lost 1.7% and Hong Kong’s Hang Seng Index finished down 1.8%. South Korea’s Kospi, in contrast, added 0.2%.

Source: PublicInvest Research - 3 Mar 2022

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