PublicInvest Research

PublicInvest Research Headlines - 27 Apr 2023

Publish date: Thu, 27 Apr 2023, 09:18 AM
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US: Core capital goods orders and shipments drop in March. New orders for key US manufactured capital goods fell more than expected in March, while shipments declined, suggesting that business spending on equipment was likely a drag on economic growth in the first quarter. Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.4% last month, the Commerce Department said. (Reuters)

US: Goods trade deficit narrows sharply in March, retail inventories rise. The US trade deficit in goods narrowed sharply in March as exports surged and imports declined, which augurs well for economic growth in the first quarter. The goods trade deficit contracted 8.1% last month to USD84.6bn, the Commerce Department said. Exports of goods increased USD4.9bn to USD172.7bn. They were boosted by industrial supplies, which include crude oil, motor vehicles as well as consumer goods. Food exports fell 4.5%. Goods imports fell USD2.5bn to USD257.3bn, pulled down by decreases in industrial supplies, capital goods and other goods. Imports of consumer goods rose 2.4%. (Reuters)

US: Republican debt bill passed by House has no chance of becoming law - White House. The Republican debt ceiling bill passed on Wednesday by the House of Representatives has “no chance of becoming law,” the White House said in a statement. The Republican-controlled House narrowly passed the bill on Wednesday to raise the nation’s USD31.4trn debt ceiling, defying President Joe Biden by attaching sweeping spending cuts for the next decade. (Reuters)

EU: Eurozone bond yields fall as bank worries nag investors. Eurozone government bond yields fell on as growing concern about the stability of the US banking sector prompted investors to seek out safe-haven assets. First Republic Bank, which reported a steep drop in customer deposits in the first quarter of the year, saw its shares hit a record low and trading briefly halted. CNBC reported the US government was unwilling at this point in time to intervene to prop up the lender. (Reuters)

EU: German consumer morale picks up on income expectations. German consumer sentiment is set to pick up in May as moderating energy prices and expected wage increases help to dissipate households’ initial fears about a loss in purchasing power, a GfK institute survey showed. The institute’s consumer sentiment index improved to -25.7 heading into May from a slightly upwardly revised -29.3 in April, the seventh increase in a row and above expectations of analysts polled by Reuters of a reading of -27.9. (Reuters)

EU: French consumer confidence improves slightly in April. French consumer confidence improved for the first time in three months in April, as households' future saving capacity and financial situation increased amid a sharp easing in inflation expectations, survey results from the statistical office Insee showed. The consumer sentiment index rose slightly to 83 in April from a revised 82 in March. The score was expected to fall to 81. The index remained well below its long-term average of 100. (RTT)

EU: Austria's manufacturing downturn deepens on lower demand. Austria's manufacturing sector deteriorated at the steepest pace in almost three years amid a sharp fall in new orders, survey data from S&P Global showed. The UniCredit Bank manufacturing Purchasing Managers' Index, or PMI, fell to 42.0 in April from 44.7 in March. The latest reading was the lowest since May 2020. New orders declined at the fastest pace in five months due to the effects of market uncertainty, high prices, and full warehouses among customers. Similarly, new export orders fell sharply and at the quickest rate this year so far. (RTT)

South Korean: Consumers' inflation expectations fall to 11- month low. South Korean consumers' inflation expectations fell in April to the lowest in nearly a year, a central bank survey showed, while overall consumer sentiment hit a 10-month high. The median of consumers' inflation expectations for the next 12 months fell to 3.7% in April from 3.9% in March, according to the Bank of Korea's monthly survey of consumers. It was the lowest reading since May 2022. (Reuters)

Australia: Inflation slows in 1Q. Australia's consumer price inflation slowed in the first quarter, easing pressure on the central bank to lift its interest rate next week. Consumer prices increased 7.0% from the last year, slower than the 7.8% rise in the preceding quarter, the Australian Bureau of Statistics reported. New dwellings, domestic holiday travel and accommodation and electricity prices were the most significant contributors. (RTT)

Singapore: Industrial production falls 4.2%. Singapore's industrial production declined for the sixth straight month in March, largely due to a slump in chemical and electronics output, according to data from the Economic Development Board revealed on Wednesday. Industrial production fell 4.2% YoY in March, slower than the 9.7% fall in Feb. Economists had expected a decrease of 6.1%. (RTT)


Gamuda (Outperform, TP: RM5.10): Penang South Islands (PSI) reclamation project has received EIA approval. Chief Minister Chow Kon Yeow said they were notified of the approval through a letter from Department of Environment (DoE) Putrajaya, dated 11 April, to the Penang state secretary. (The Edge)

Comments: Moving forward, the PSI committees would proceed to submit for EIA approval at the state-level DoE. We anticipate the next approval to roughly take another 3-4 months for reclamation works to commence in 4QFY23. We estimate net profit recognition of RM304m - RM342m from this reclamation works by assuming a 10% pre-tax margin. Nonetheless, we retain our forecasts and TP of RM5.10 unchanged as we have accounted for this project into our FY23-FY24F orderbook replenishment assumption. Reiterate Outperform .

Nestle: Announces the retirement of Datin Sri Azlin Arshad from the board. Nestle Malaysia has announced the retirement of its independent director Datin Sri Azlin Arshad with effect from 26 April 2023. Datin Sri Azlin, 48, was appointed to the board in 2020 and has served in various capacities including as Commercial Director with MEASAT Broadcast Network Systems SB. (Business Today)

Teladan: Offers solar-ready homes in Melaka. Teladan Setia Group through its wholly-owned subsidiary, Teladan Setia SB (TSSB) has signed a MoU with Micro Energy Holdings SB (MEH) to install solar photovoltaic (PV) systems in its Taman Bertam Heights Phase 2A gated and guarded housing development project in Melaka. (StarBiz)

Careplus: Tie up with solar energy expert. Careplus Group is partnering with a private individual named Woon Howl Chuen to enter the renewable energy and energy efficiency management market in an effort to offer a different revenue stream that will increase the group’s profitability in the long run. (The Malaysian Reserve)

Borneo Oil: Victoria Capital resurfaces as Borneo Oil’s substantial shareholder. Sabah-based Victoria Capital SB, has resurfaced as a substantial shareholder of Borneo Oil after exiting the company in 2019. Victoria Capital bought 488.1m shares or a 5.026% stake in the company on Wed (26 April). (The Edge)

Green Ocean: To dispose of land, plant, machinery in Klang for RM23.4m. Green Ocean Corporation’s wholly-owned subsidiary, Ace Edible Oil Industries SB (AEOI), had entered into two SpA with Wilee Vegetable Oils SB (WVO) for the disposal of a piece of freehold land and plant and machinery for RM23.4m. The freehold land measuring approximately 19,549 sq m is located at Jalan Kapar, Klang in Selangor, with the buildings erected thereon. (StarBiz)

Aneka Jaringan: Bags RM30.3m bored piling contract. Aneka Jaringan Holdings has secured a RM30.3m contract to undertake the bored piling works for a proposed development in Melaka. Its wholly-owned subsidiary, Aneka Jaringan SB had received the LOA from Reliacon SB for and on behalf of Parkland Avenue SB. The commencement date of the contract is 2 May 2023 and shall be completed on 1 Jan 2024. (StarBiz)

Market Update

US markets stumbled again overnight as worries over embattled First Republic Bank overshadowed strong earnings reports (post market close) from Microsoft and Alphabet the day before. The Dow Jones Industrial Average and S&P 500 fell 0.7% and 0.4% though the Nasdaq Composite managed a 0.5% gain. Durable goods orders for March beat expectations, in a sign that the US economy is remaining relatively resilient. European markets were mostly lower as banking sector jitters returned. France’s CAC 40 led major markets lower with a 0.9% decline. Germany’s DAX and UK’s FTSE 100 both fell 0.5%. Asian markets were mixed meanwhile, weighed by Wall Street’s woes. Data on the day showed Australia’s inflation growth slowing to +7.0% YoY in 1Q 2023, down from a 23-year high of +7.8% the previous quarter. The country’s benchmark ASX 200 was down marginally to 7,316.3pts. The Shanghai Composite was also fractionally lower (-0.02%) though the Hang Seng Index gained 0.7%. Japan’s Nikkei 225 fell 0.7% meanwhile.

Source: PublicInvest Research - 27 Apr 2023

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