PublicInvest Research

PublicInvest Research Headlines - 2 Apr 2024

PublicInvest
Publish date: Tue, 02 Apr 2024, 10:58 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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HEADLINES Economy

US: Manufacturing on the mend; rising raw material prices pose obstacle. US manufacturing grew for the first time in 1-1/2 years in March as production rebounded sharply and new orders increased, but employment at factories remained subdued amid sizable layoff activity and prices for inputs pushed higher. The survey from the Institute for Supply Management (ISM) suggested the sector, which has been battered by higher interest rates, was on the mend, though risks remain from rising raw material prices. While the manufacturing rebound is a boost for the economy's growth prospects, the rise in raw material prices suggested goods inflation could pick up in the months ahead. (Reuters)

US: Construction spending unexpectedly sees further downside in Feb. Construction spending in the US unexpectedly saw further downside in the month of Feb, according to a report released by the Commerce Department. The report said construction spending dipped by 0.3% to an annual rate of USD2.091trn in Feb after edging down by 0.2% to a revised rate of USD2.097trn in Jan. The continued decrease came as a surprise to economists, who had expected construction spending to climb by 0.6% during the month. The unexpected decline largely reflected a steep drop in spending on public construction, which slumped by 1.2% to an annual rate of USD474.4bn. (RTT)

EU: Greece manufacturing activity expands most in over 2 years. Greece's manufacturing sector grew at the strongest pace in just over two years in March, supported by strengthening domestic and foreign customer demand, preliminary survey results from S&P Global showed. The PMI for the manufacturing sector rose to 56.9 in March from 55.7 in Feb. A reading above 50 suggests growth in the sector. This signaled the fastest improvement in the health of the sector since Feb 2022. New orders grew at the fastest pace since Nov 2021 on the back of stronger domestic and foreign client demand. (RTT)

EU: Turkey manufacturing activity stabilizes in March. The manufacturing activity in Turkey remained unchanged in March, survey results from S&P Global showed. The headline Istanbul Chamber of Industry Turkey Manufacturing PMI dropped to 50.0 in March from 50.2 in Feb. Any reading below 50.0 indicates contraction in the sector. A score above 50 indicates expansion in the sector, while any reading below 50 suggests contraction. Production ticked higher, while new orders and employment neared stabilization in March. As demand improved, firms expanded their purchasing activity, but inventories continued to decline. (RTT)

China: Industrial upswing is latest sign of economic recovery. China’s factory activity beat expectations in March, boosting optimism about the country’s ability to achieve its ambitious growth goal of around 5% this year. The Caixin manufacturing PMI rose to 51.1, above the 50 mark that indicates expansion for a fifth month, the longest streak in more than two years. Government data published showed manufacturing PMI in March snapped a fivemonth contraction to rise to the highest in a year. (Bloomberg)

Australia: Manufacturing PMI slows to 47.3. The manufacturing sector in Australia continued to contract in March, and at a faster pace, the latest survey from Judo Bank revealed with a manufacturing PMI score of 47.3. That's down from 47.8 in Feb, and it moved further beneath the boom-or-bust line of 50 that separates expansion from contraction. Incoming new orders for Australian manufactured goods declined for a sixteenth successive month in March. Additionally, the pace of decline was sharp and the joint-fastest since the height of the pandemic in May 2020 (matched only by Nov 2023). This was attributed to elevated interest rates and subdued economic conditions according to panelists. (Reuters)

Markets

Betamek: To acquire Sanshin from Japan’s Outsourcing for RM13m. Betamek, an electronic manufacturing services firm, is acquiring Sanshin (Malaysia) SB for RM13.4m from its Japanese owner, Outsourcing Inc. The acquisition aims to broaden Betamek’s product range and market reach, providing immediate entry into established markets for automotive, home appliance, and industrial products. Sanshin’s expertise will support Betamek’s production of new products under a JV with Shenzen Zhonghong Technology Co. The transaction is expected to be completed by the 2Q 2025, financed entirely through internally generated funds. (The Malaysian Reserve)

EVD: Wins contracts worth RM19.5m. EVD’s wholly owned subsidiary, EVD Engineering SB (EVE) has secured two contracts totaling RM19.5m from Sing Foong Niap Engineering SB (SFN). The first contract is a mechanical and electrical engineering (M&E) works for a wastepaper warehouse, including its coal warehouse, office and distribution room, owned by Best Eternity Recycle Technology SB (BERT) at Kuala Langat, Selangor worth RM3.51m. The second contract involves M&E works for the power generation facility of BERT's recycle pulp and packaging paper plant at Kuala Langat, Selangor worth RM16m. (StarBiz)

AZRB: Bags RM316m contract for Istana Abu Bakar renovation. Ahmad Zaki Resources (AZRB) has been awarded a contract worth RM315.9m by the Public Works Department for upgrading and renovation works on Istana Abu Bakar in Pekan, Pahang. Its wholly owned subsidiary Ahmad Zaki SB (AZSB) received the letter of acceptance and that the contract would be valid for 30 months, starting from 1 April 2024. The contract is expected to contribute positively to the group’s future earnings. (The Edge)

HSS Engineers: Boosts regional presence with 12% stake in PT Oriental. HSS Engineers (HEB) is acquiring a 12% equity stake in PT Oriental Consultants Indonesia to bolster its regional presence. PT Oriental, a 55% subsidiary of Oriental Consultants Global Co Ltd, is an Indonesian firm specialising in engineering consultancy services, including engineering design, urban planning services, and construction consultancy. The acquisition of a 12% equity stake in PT Oriental is to take advantage of the booming construction sector in Indonesia, along with our partnership with OC Global in the country. (StarBiz)

MISC: Signs charter contracts for three LNG carriers with QatarEnergy. MISC, which owns one of the world's largest fleets of petroleum shipping vessels has secured long-term contracts for three liquefied natural gas (LNG) carriers from QatarEnergy. The contract is for time charter of three newbuild LNG carriers to be built by Samsung Heavy Industries Co Ltd. The carriers will be chartered by QatarEnergy for a firm 15 years from 2026 onwards. (The Edge)

K-One: Plans to diversify into healthcare products distribution. K-One Technology plans to diversify its existing business to include the distribution and sale of healthcare products. The group has progressively obtained appointments from foreign manufacturers as authorised representatives to distribute healthcare products in Malaysia. It intends to scale up its healthcare products business and expects to contribute 25% or more of the net profits of the group and result in a diversion of more than 25% of the net assets of the group. (StarBiz)

MARKET UPDATE

The Dow Jones was down to kick off the second quarter, with traders weighing fresh US inflation data amid fears the market rally could slow down. The Dow Jones lost 0.6% while the S&P 500 dipped 0.2%. However, the tech-heavy Nasdaq added 0.1%. Investors remain cautious about the pace of the Federal Reserve’s rate-cutting timeline this year and how soon central bankers will be able to meet their 2% inflation target. Meanwhile, the European markets were closed for a public holiday. Asia markets were mostly higher with the Shanghai Composite and Singapore’s Straits Times added 1.2% and 0.3% respectively. Hong Kong’s Hang Seng remained closed for public holiday.

Back home, FBM KLCI was 7.95 points higher to close at 1,544.02. MISC Bhd announced that it has secured long-term contracts for three liquefied natural gas carriers from QatarEnergy. The contract involves the time charter of three newbuild LNG carriers to be constructed by Samsung Heavy Industries Co Ltd. These carriers will be chartered by QatarEnergy for a firm period of 15 years starting from 2026 onwards

Source: PublicInvest Research - 2 Apr 2024

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