PublicInvest Research

PublicInvest Research Headlines - 8 Mar 2022

PublicInvest
Publish date: Tue, 08 Mar 2022, 09:42 AM
PublicInvest
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An official blog in I3investor to publish research reports provided by PublicInvest Research team.

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Economy

US: No inflation relief in sight for US as impact of Ukraine war intensifies. Russia's invasion of Ukraine has dashed any hope US consumers might have had for relief from sky-rocketing inflation, with gasoline prices in the last week surging by the most in nearly 17 years and costs of other goods like food ready to march higher as well. Even before the invasion, the US inflation report for Feb was set to show prices rising at their fastest pace in 40 years. The data, due to be released will likely show only a preliminary impact from the swelling in US oil prices, which briefly climbed above USD130 a barrel, but the spike is expected to drive overall inflation higher in coming months. (Reuters)

EU: Euro zone investor morale plummets in March on Ukraine crisis. Investor morale in the euro zone plunged in March in the wake of the Russian invasion of Ukraine and its implications for the global economy, a survey showed. Sentix’s index for the euro zone fell to -7.0 in March from 16.6 the previous month, hitting its lowest level since Nov 2020. An expectations sub-index fell to -20.8 in March from 14.0 in Feb, the lowest reading in nearly a decade and  the biggest drop in the Sentix index’s 20-year history. A current conditions sub-index, meanwhile, fell to 7.8 in March from 19.3 in Feb. (RTT)

EU: Germany industrial orders rise more than expected; retail sales growth accelerates. Germany's industrial orders grew more than expected in Jan underpinned by robust foreign demand and retail turnover growth accelerated on non-food sales, data from Destatis revealed. Industrial orders expanded 1.8% MoM, faster than the economists' forecast of +1.0% but slower than the Dec's 3.0% increase. The slowdown was caused by the 8.3% decrease in domestic orders. Meanwhile, foreign demand was up 9.4%. New orders from the non-euro area surged 17.0%, while demand from the euro area fell 2.6%. Manufacturers of capital goods logged a monthly growth of 5.5%. (RTT)

EU: Germany retail sales growth accelerates in Jan. Germany's retail sales growth accelerated notably in Jan, data published by Destatis revealed. Retail sales advanced 10.3% YoY in January, following a 0.8% rise each in Dec and Nov. Sales were forecast to climb 9.8%. Destatis said the strong increase in sales compared to the same month last year is partly due to the partial lockdown in Jan 2021. Data showed that many consumers preferred larger purchases, such as furniture, to Dec 2020 due to the temporary reduction in VAT in the second half of 2020. (RTT)

UK: House price inflation strongest since 2007: Halifax. UK house prices rose at the fastest annual pace since mid-2007 to a record high in Feb, survey data from the Llyods Bank subsidiary Halifax showed. The house price index rose 10.8% YoY, which was the biggest increase since June 2007, when it was 11.9%. House prices climbed 9.7% in each of the previous two months. On a MoM basis, house prices rose 0.5% in Feb after a 0.2% climb in Jan. Prices rose for an eighth successive month. The average house price set a new record high of GBP 278,123 versus GBP 276,645 in the previous month. (RTT)

China: Jan-Feb trade surplus with US at USD59.77bn. China’s trade surplus with the US was USD59.77bn in the first two months of the year, data from China’s General Administration of Customs showed. Data from last year showed China failed to meet its two year purchase commitments in the “Phase 1” trade deal negotiated by former US President Donald Trump’s administration. (RTT)

China: Exports growth exceeds expectations. China's exports growth exceeded expectations in Jan to Feb period, while imports growth moderated more than expected, figures from the General Administration of Customs revealed. Exports increased 16.3% on a yearly basis, bigger than the expected growth of 15.0%. However, this was slower than the 20.9% growth logged in Dec. At the same time, imports advanced 15.5% in Jan to Feb, but slower than economists' forecast of +16.5% and Dec's 19.5% gain. As a result, the trade surplus rose to USD115.9bn. (RTT)

Australia: Job ads grow in Feb. Australia's job advertisements rose for the first time in three months in Feb, data released by ANZ showed. Job advertisements increased 8.4% MoM in Feb, after a 0.7% decline in Jan. "The Feb increase reinforces the view we expressed last month that job ads hadn't yet peaked, with labour demand continuing to grow and job-switching expected to rise," ANZ Senior Economist Catherine Birch said. On a yearly basis, job advertisements accelerated 31.5% in Feb, following a 27.3% growth in the previous month. (RTT)

Markets

Capital A (Neutral, TP: RM0.69): Airasia Super App teams up with CGS-CIMB to add share trading feature. Capital A’s airasia Super App has inked a memorandum of understanding with CGS-CIMB Securities to introduce stock trading as a new feature via ProsperUs, CGS-CIMB Securities’ digital investment platform. (The Edge).

Comments: This new venture is part of the Group’s multiple services offering strategy to build an ecosystem around itself and increase its super app “stickiness” in the mass market, though financial impact may not be as apparent yet. While we see potential in this aspect (digital) of the Group’s business, we remain wary over challenges the Group may face in pulling itself out of its PN17 status. We maintain our Neutral call.

LKL International, Vizione: LKL invests RM20m for a 12.21% stake in Vizione. LKL International is acquiring 250m shares in Vizione Holdings at an issue price of 8 sen each, representing a 12.21% stake, for RM20m cash. The stake purchase provides LKL the opportunity to venture into the manufacturing of rubber gloves and condoms, which are complementary and synergistic to its business. (The Edge)

Ancom, Nylex: Undertakes dividend-in-specie up to 18.4m shares in Nylex. Ancom has proposed dividend-in-specie by distributing up to 18.4m ordinary shares in Nylex followed by a share split to reward its shareholders. The Group is catching tailwinds in its core chemical segments on the back of new products, favourable regulatory shifts, and higher commodity prices. (BTimes)

Perdana Petroleum: Secures vessel charter contracts worth RM9.6m. Perdana Petroleum has bagged vessel chartering contracts worth approximately RM9.6m from Petronas Carigali. Perdana is to provide 3 units of anchor handling tug and supply vessels with crew and equipment to perform 24-hour services for assisting and servicing drilling rigs, offshore installation, derrick barges, towing and anchor jobs. (The Edge)

Willowglen: Bags RM33m telecommunication tower support infrastructures contract. Willowglen MSC has secured a contract worth about RM32.63m from Majubina Resources SB. The contract is for the design, build and transfer of infrastructures capable of supporting 37 telecommunication towers at various sites in Sabah. (The Edge)

Samaiden: Inks agreement with Tokyo-listed Chudenko Corporation to explore RE business in Malaysia, overseas. Samaiden Group signed a business collaboration agreement with Tokyo-listed Chudenko Corporation to explore opportunities in the area of renewable energy (RE) in Malaysia and overseas markets. (BTimes)

Omesti: Expands healthcare portfolio to include diagnostic facility, healthcare projects. Omesti is expanding its portfolio of healthcare services with the establishment of 2 strategic JV companies, leveraging the group’s digitalisation track record. The first JVC with Medical Innovation Ventures was established to set up and operate a diagnostic and testing laboratory that performs polymerase chain reaction (PCR) testing. (The Edge)

Market Update

The FBM KLCI might open lower today with oil and natural gas prices see-sawed as global stocks fell on Monday after a US push to ban Russian crude faced German resistance, leaving markets rattled over the risk of energy sanctions cascading through the economy. On a day of extraordinary volatility, the international benchmark Brent crude oil surged to a high of USD139 per barrel — a level last hit 14 years ago — before falling back to settle at USD123.21, a 4.3% increase for the day. Oil leapt after US President Joe Biden’s administration signalled it was open to a freeze on Russian oil imports, setting aside initial reservations over the hit to consumers. But the price fell back after Germany’s chancellor Olaf Scholz expressed reluctance to restrict trade of “essential importance” to Europe’s economy. Later on Monday, Moscow warned of “catastrophic consequences” from abandoning Russia’s oil. Wall Street’s benchmark S&P 500 index closed down almost 3%, its biggest drop since October 2020, while the tech dominated Nasdaq Composite entered bear market territory as it fell 3.6%. Those losses followed a 1.1% decline in the Europe-wide Stoxx 600 index.

Back home, heavy selling across the board dragged Bursa Malaysia down by 1.96% in tandem with the downtrend in regional bourses as the Russian-Ukraine tensions continued to hurt investor sentiment. The FBM KLCI earlier fell 38.37 points to its intraday low of 1,565.57 at 4.28pm, before gathering steam following nibbling on selected heavyweights led by Nestle (Malaysia), Sime Darby Plantation and MISC to end off its low. At 5pm, the FBM KLCI slid 31.38 points to 1,572.56 from 1,603.94 at Friday’s close. Stock benchmarks in the region also fell sharply, with South Korea’s Kospi Composite declining more than 2% and Japan’s Nikkei 225 shedding 2.9%, to close at its lowest since November 2020. The mainland Chinese CSI 300 and Hong Kong’s Hang Seng Index both fell more than 3%.

Source: PublicInvest Research - 8 Mar 2022

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