PublicInvest Research

PublicInvest Research Headlines - 6 Apr 2022

PublicInvest
Publish date: Wed, 06 Apr 2022, 09:11 AM
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An official blog in I3investor to publish research reports provided by PublicInvest Research team.

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Economy

US: Trade deficit nearly unchanged as imports, export both increase. A report released by the Commerce Department on April 5 showed the US trade deficit was nearly unchanged in Feb, as imports and exports both increased. The Commerce Department said the trade deficit narrowed by less than USD0.1bn to USD89.2bn in Feb. The report also showed the goods trade deficit narrowed to USD107.5bn in Feb from USD108.6bn in Jan, while the services trade surplus shrank to USD18.3bn from USD19.4bn. (RTT)

US: Services sector regains momentum; inflation clouds outlook. Services industry activity picked up in March, boosted by the rollback of pandemic restrictions, but higher prices for fuel and other commodities because of Russia’s war against Ukraine are creating uncertainty for many businesses. The Institute for Supply Management’s survey on April 5 showed capacity constraints and inflation remained major challenges, though the labour crunch had eased. The Russia-Ukraine war has impacted material costs, most notably fuel and chemical prices. (RTT)

EU: Germany flash inflation data due. Flash consumer prices from Germany and economic confidence from euro area are due on April 6. Germany’s consumer price inflation is seen at 6.7% in March versus 5.5% in Feb. Statistics Sweden releases retail sales for Feb. Sales had increased 4.5% on month in Jan. Spain's INE releases flash consumer and harmonized prices for March. EU harmonized inflation is forecast to rise to 8.1% from 7.6% in February. (RTT)

UK: Service sector growth accelerates despite high inflationary pressures. Despite strong inflationary pressures, the UK service  sector grew the most in ten months in March as the removal of pandemic restrictions and return to offices had led to a sharp rebound in customer demand, final survey data from S&P Global showed. The Chartered Institute of Procurement & Supply services Purchasing Managers' Index rose to 62.6 in March from 60.5 in Feb. The reading was above the flash 61.0. The score signaled the second strongest growth since May 1997. There was a strong rise in new work in March. Greater business requirement and expansion plans fueled firms to recruit more people. (RTT)

Japan: Services PMI improves to 49.4 in March. The services sector in Japan continued to contract in March, albeit at a slower rate of 49.4, up from 44.2 in February, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction. While firms were still impacted by high case numbers, others reported that the easing of restrictions had boosted customer numbers. New business inflows returned to expansion territory for the first time in 3 months during March. New export orders saw the rate of decline accelerate to the fastest since Jan 2021 as a result of renewed restrictions across China and uncertainty due to the Russia-Ukraine war. (RTT)

India: Needs USD12.4trn for net-zero transition. India will need investments worth USD12.4trn, nearly half of US GDP, from developed nations and investors to help its economy transition to net-zero carbon emissions by 2060, according to a report. Without capital inflows and grants from the developed world, emerging economies including India’s will see household consumption fall by 5% on average each year. Eight emerging markets i.e. India, China, Indonesia, Kenya, South Africa, UAE, Nigeria and South Africa, will together need USD94.8trn in transition finance from developed markets if they are to meet climate goals without affecting their citizens’ cost of living. (Bloomberg)

Australia: Keeps rate unchanged as expected. Australia's central bank kept its key interest rate unchanged at a record low and signalled a hawkish stance going forward. The policy board of the Reserve Bank of Australia decided to maintain its cash rate target at 0.10%. The bank no longer says it is prepared to be 'patient'. The board noted that inflation has picked up and a further increase is expected, but growth in labour costs has been below rates that are likely to be consistent with inflation being sustainably at target. (RTT)

Singapore: Retail sales down 3.4% ending 5-month growth streak. Retail sales fell 3.4% YoY in Feb, reversing from last month's 12% increase and snapping a 5-month growth streak. The decline in Feb was attributed partly to lower sales compared to a year ago when sales were boosted by pre-Chinese New Year (CNY) spending. This year's pre-CNY spending took place mostly in January 4. (Business TImes)

Philippine: Inflation surges to 4% in March. YoY headline inflation in the Philippines accelerated to 4% in March from 3% in Feb, mainly due to higher inflation rates for food, utilities, and transport. The increase in fuel prices in the international market affected the three sectors, causing the March inflation to rise. Higher inflation rates for food and non-food commodity groups resulted in faster inflation for March, adding food inflation increased to 2.8%, up from 1.1% in Feb. Meanwhile, non-food inflation increased to 5.0% in March from 4.1% in Feb, primarily due to elevated oil prices. Transport inflation also increased to 10.3% from 8.8%. (StarBiz)

Markets

Axiata (Neutral, TP: RM4.30): PLDT said to pick Edgepoint, edotco, Axiata’s 63%-owned subsidiary, for USD1.5b tower. PLDT Inc, the Philippines’ biggest telecommunications and digital services provider by market value, has picked Edgepoint Infrastructure and edotco Group as the preferred bidders for its local towers, according to people familiar with the matter. (The Edge)

Comments: PLDT is the biggest telecommunications and digital services provider (by market value) in the Philippines and it is looking to selling and leasing back its telco towers. PLDT has chosen Edgepoint Infrastructure (backed by Digital Bridge and Abu Dhabi Investment Authority) and edotco to be in exclusive talks to purchase PLDT’s 3,000 towers in the greater Manila area and another 3,000 towers outside of Manila. The 2 deals could be valued at about USD1.5bn. Our preliminary estimates suggest that the valuation for the towers is fair considering that it could cost approx. USD290k to build a site in the Philippines. Also note that the telco sector in the Philippines has grown rapidly in recent years amid the increasing demand for connectivity. There is a need to expand and upgrade existing infrastructure to improve on quality and coverage. However, as the discussion has yet to be finalized and could still fall apart, we maintain our Neutral rating on Axiata at this juncture.

Catcha: Bursa approves Catcha Digital’s regularisation plan. Bursa Malaysia has approved Catcha Digital’s revised proposed regularisation plan about 19 months after the GN2 company first proposed its acquisition of iMedia Asia in Sept 2020. (The Edge)

Khee San: Candy maker Khee San diversifies into pharmaceutical product distribution. Candy maker Khee San has entered into two distribution agreements which include a deal with pharmaceutical product manufacturer Jardin Pharma, from which Khee San Marketing secured the exclusive right to distribute Jardin Pharma's products for two years. (The Edge)

Reservoir Link: Gets annulus wash, services contract from ExxonMobil. Reservoir Link Energy (Reservoir Link) has received a letter of award from ExxonMobil Exploration and Production Malaysia Inc (EMEPMI) for the provision of annulus wash and cement placement equipment and services. The company was glad to secure another contract for its oil and gas (O&G) segment. (BTimes)

Samaiden: Proposes 2-for-3 bonus issue. Samaiden Group has proposed a bonus issue of up to 224m shares, on the basis of two bonus shares for every three existing shares. The proposed bonus Issue is intended to reward the existing shareholders of the company for their loyalty and continuing support to Samaiden and its subsidiaries. (StarBiz)

AEON Credit: Net profit rose 56.2% to RM365.42m for FY22. AEON Credit Service (M)'s net profit rose 56.2% to RM365.42m for the FY22 from RM233.96m last year. The positive net earning was attributed to the higher transaction volume and improved collections. This resulted in an increase in earnings per share from 87.67sen in FY21 to 139.17sen for FY22. However, the company's revenue fell 2.4% to RM1.52bn in FY22 from RM1.56bn a year ago due to the lower interest income recorded from a lower average financing receivables base. (BTimes)

Market Update

The FBM KLCI might open lower today after the US’s benchmark S&P 500 closed 1.3% lower, while the technology-heavy Nasdaq Composite dropped 2.3%, its worst day since mid-March. Europe’s Stoxx 600 index closed 0.2% higher, while Germany’s Dax slid 0.6%. Data released on Tuesday showed that rising prices for energy and food pushed inflation to a 30-year high in February across the OECD group of rich countries. The annual rate of consumer prices across the 38 member countries advanced 7.7%, up from 1.7% a year before.

Back home, Bursa Malaysia ended mixed on Tuesday with the key index easing slightly on selling in selected heavyweights, mainly in banking stocks, while the broader market showed a positive tone. At 5pm, the benchmark FBM KLCI was 2.13 points easier at 1,596.79 compared with Monday's close of 1,598.92. In the region, stock markets mostly inched higher. In Japan, the Nikkei 225 gained 0.2% while in Korea, the Kospi index added less than 0.1%. Stock markets in Hong Kong and mainland China were closed Tuesday for a public holiday.

Source: PublicInvest Research - 6 Apr 2022

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