HEADLINES

Economy

US: Tepid core capital goods orders point to weak business equipment spending. New orders for key US-manufactured capital goods increased moderately in March and data for the prior month was revised lower, suggesting that business spending on equipment likely remained weak in 1Q. The economy is expected to have delivered another quarter of strong performance, thanks to a resilient labour market that is driving consumer spending. March's increase was in line with economists' expectations. Core capital goods orders gained 0.6% YoY in March. (Reuters)

US: Crude oil inventories unexpectedly pull back sharply. Crude oil inventories in the US unexpectedly pulled back. Crude oil inventories plunged by 6.4m barrels after jumping by 2.7m barrels in the previous week. Economists had expected crude oil inventories to increase by 1.6m barrels. At 453.6m barrels, US crude oil inventories are about 3% below the five-year average for this time of year. Gasoline inventories edged down by 0.6m barrels last week and are about 4% below the five-year average for this time of year. (RTT)

US: Durable goods orders surge 2.6% in March, more than expected. Durable goods orders soared by 2.6% in March after climbing by a downwardly revised 0.7% in Feb. Economists had expected durable goods orders to spike by 2.3% compared to the 1.3% jump that had been reported for the previous month. The bigger than expected increase in durable goods orders came as orders for transportation equipment shot up by 7.7% in March. Orders for non-defence aircraft and parts led the way higher, skyrocketing by 30.6%. (RTT)

EU: German Ifo business confidence near one-year high. Germany's business sentiment strengthened for the third straight month to a near one-year high in April on a notable improvement in confidence among service providers. The business confidence index climbed to 89.4 in April from a revised 87.9 in March. This was the highest score since May 2023, when the reading was 91.4. Economists had forecast the index to rise less markedly to 88.9. (RTT)

EU: Italy consumer confidence, business morale weakens. Italy's consumer confidence decreased in April to the lowest level in five months. Consumer sentiment dropped to 95.2 in April from 96.5 in the previous month. The economic climate index fell to 99.4 in April from 101.9 in March. The index measuring the personal climate decreased to 93.7 from 94.6, and the future climate dropped from 93.9 to 97.2. Meanwhile, the current climate index rose somewhat to 96.2 from 96.0. The composite business confidence index fell to 95.8 in April from 97.0 in March. (RTT)

UK: Manufacturers' sentiment improves in April. Confidence among British manufacturers improved in April and their output expectations hit the strongest in six months. The business sentiment indicator rose to +9% in the quarter to April from -3% in Jan. Export optimism for the year ahead also advanced in April, with the index rising to +6% from -20%. Further, new orders dropped at a slower pace in April. The corresponding index posted -6% compared to -13% in Jan. A net 8% of manufacturers expect orders to return to growth over the next three months. (RTT)

India: Unemployment biggest worry in India, world's fastest growing economy. The biggest economic challenge for the government after the ongoing election is unemployment, according to economists who expected the world's most populous country to grow a healthy 6.5% this fiscal year. Despite growing at the fastest pace among major peers, the economy has failed to generate enough jobs for its large and expanding young population, a key issue among citizens in the midst of electing the next government. (Reuters)

South Korea: Consumer confidence remains stable. South Korea's consumer sentiment held steady in April after easing in the previous month. The consumer confidence index stood at 100.7 in April, unchanged from March. The sub-index for households' assessment of current living standards held steady at 89 in April. Similarly, the index measuring consumers' prospective household income remained unchanged at 99. Meanwhile, their prospective living standards improved somewhat, with the respective index rising to 94 from 93. Their interest rate expectations increased in April, with the measure climbing to 100 from 98. (RTT)

Indonesia: Central bank delivers surprise rate hike to anchor rupiah. Indonesia's central bank delivered a surprise rate hike, stepping up efforts to support the rupiah currency which has fallen to four-year lows on rising risk aversion and a delay in the expected timing of any US policy easing. Bank Indonesia (BI) raised the 7- day reverse repurchase rate by 25bps to 6.25%, its highest since the bank made the instrument its main policy rate in 2016. BI also increased the overnight deposit facility and lending facility rates by the same amount to 5.5% and 7.0%, respectively. (Reuters)

Markets

I-Bhd (Neutral, TP: RM0.26): To raise RM100m from preference share. I-Bhd, which develops properties and operates theme parks, it is planning to issue preference shares to its major shareholder in a deal that could raise up to RM100m. The proposal calls for the issuance of up to 100 million redeemable preference shares to Sumurwang SB at RM1 apiece, according to an exchange filing. The shares are non-tradable and not convertible into ordinary shares of the company, it noted. Sumurwang is controlled by I-Bhd chairman Tan Sri Lim Kim Hong, and the deal will allow I-Bhd to speed up development pipeline in i-City to “leverage the anticipated upswing” in the property market, I-Bhd said. (The Edge)

Comments: The RPS issue is an inexpensive way to raise funds, and is a welcome move considering its non-dilutive effects. Net proceeds into the company from this exercise will only amount to slightly under RM55m considering the RM45m utilised to repay previous advances by its major shareholder, though we reckon this is sufficient for its ongoing development works and working capital needs. We continue to like the longer term value proposition of the Group and see it undervalued, though we also keep our Neutral call and RM0.26 TP unchanged pending further traction on the earnings front.

Axis-REIT (Neutral, TP RM1.96): Disposes of property in Johor for RM162m. Axis Real Estate Investment Trust (Axis-REIT) is proposing to dispose of the Axis Steel Centre@SiLC in Nusajaya, Johor to a data centre operator for RM162m. Axis-REIT said it is unable to disclose the identity of the purchaser as consent was not granted due to confidentiality clauses in the sale and purchase agreement. (The Star)

Comments: This asset is currently vacant after it terminated its lease agreement with its previous tenant, Yongnam Engineering Sdn Bhd (YESB), which is a major tenant at the Axis Steel Centre @ SiLC. AXREIT acquired the property in 2014 for RM153.5m from YESB through a sale-and-leaseback exercise. We are positive with the asset disposal as it will immediately free up capital for its future its assets pipeline worth some RM200m. We understand that the expected net gain from the proposed disposal will be approximately RM500,000 only and hence keep our earnings unchanged. Maintain Neutral call with DDM-derived TP unchanged at RM1.96

Aneka Jaringan: Turns around in Q2 2024. Aneka Jaringan Holdings registered a net profit of RM1.21m for the second quarter (2Q) ended February 2024, reversing the net loss of RM5.1m a year ago. The company generated a revenue of RM54.22m, reflecting a growth of 26 per cent or RM11.24m compared to the RM42.96m recorded a year ago. Aneka Jaringan attributed this growth to the group's project execution and strategic measures, along with the favourable recovery observed in the construction industry. (New Straits Times)

Sasbadi: Reports highest ever quarterly revenue. Sasbadi Holdings reported its highest-ever quarterly revenue of RM35.02m for the second quarter ended 29 Feb, 2024 (2Q24), due to the robust sales of its academic publications for the 2024 academic year. Going forward, Sasbadi said it intends to maintain its lead in the Malaysian education landscape by building upon its longestablished digital capabilities and enhancing its hybrid academic publications. (The Star)

Sapura Industrial: Explores EV opportunities with Mili Tech. Sapura Industrial’s subsidiary, International Autoparts SB, has today signed a MoU with Mili Tech SB to explore the feasibility of electrified vehicle (xEV) products in Malaysia. The MoU aims to assess opportunities for collaboration in areas such as manufacturing, assembly, and technology related to xEVs. International Autoparts, established in 1984, primarily operates in the retail and after-sales auto parts market, while Mili Tech, founded in 2022, specialises in the wholesale and retail sale of parts, components, tools, supplies, and accessories for motor vehicles. (The Malaysian Reserve)

Eden: Major shareholder proposes land transfer to settle RM45.65m debt owed to company. Eden Inc major shareholder Tan Sri Abd Rahim Mohamad is proposing to settle a RM45.65m debt his company owes Eden by transferring the ownership of a 2.4m sq ft (about 55 acres) leasehold land to the listed entity. Abd Rahim — the father-in-law of entrepreneur Datuk Fakhri Yassin, son of former deputy prime minister Tan Sri Muhyiddin Yassin — is the sole owner of Zil Enterprise SB (ZESB), which owes Eden the sum mentioned. ZESB has a direct 6.73% stake in Eden and another 8.67% indirect stake via Serata Padu SB This gives Abd Rahim control of an indirect 15.4% in Eden. (The Edge)

OCR Group: To develop RM313m residential project in Rawang. OCR Group’s indirect subsidiary OCR Templer SB plans to develop a landed residential project on 7.44 hectares in Templer, Rawang, with an estimated gross development value (GDV) of RM313m. The property developer said OCR Templer has entered into a joint-venture agreement (JVA) with the landowner Lecca Properties (M) SB to fund and undertake the development on the freehold land. The project, expected to be launched in 2025, will comprise 118 semi-detached houses with built-up areas ranging from 3,100 sq ft)to 4,200 sq ft and 37 bungalow lots measuring 6,600 sq ft to 16,000 sq ft. (The Star)

CLMT: 1Q net property income jumps 63% to RM64m, DPU up 37%. CapitaLand Malaysia Trust (CLMT) reported a 63% in its first quarter net property income to RM63.98m from RM39.24 m a year ago, driven by full quarter revenue contribution from Queensbay Mall, higher occupancies and positive rental reversions. Revenue for the quarter ended 31 March, 2024 (1QFY2024) rose 42.5% to RM111.88m from RM78.49m in 1QFY2023, said the trust's manager CapitaLand Malaysia REIT Management SB (CMRM). Distributable income grew 69.8% to RM33.62 million from RM19.81 million, with distribution per unit (DPU) improving 36.8% to 1.19 sen from 0.87 sen. CMRM said CLMT's retail occupancy rose to 92.4% from 88.3% in 1QFY2023, while its overall portfolio occupancy improved to 93.1% as at 31 March, 2024 from 92.6% as at 31 Dec 2023. (The Edge)

United Plantations: Keeping fingers crossed for 2024. United Plantations is hopeful of a satisfactory 2024, buoyed by an increase in palm oil prices in the first quarter of the year (1Q24), while remaining cautious over uncertain global economic growth sentiments. Reporting that prices of palm oil have recovered from a low of RM3,607 per tonne in early January to about RM4,197 in late March, the group attributed the price escalation to lower-thanexpected production in Malaysia and Indonesia resulting in reduced stocks. United Plantations said net profit for 1Q24 jump 18.5% (YoY) to RM132.9m, supported by a 3.6% (YoY) improvement in revenue to RM476.7m. (The Star)

MARKET UPDATE

The FBM KLCI might open flat today after US stocks drifted to a mixed finish Wednesday as Wall Street’s momentum eased following some sharp swerves. The S&P 500 was virtually flat and edged up by 1.08, or less than 0.1%, to 5,071.63. It had jumped sharply in the first two days of the week to claw back nearly twothirds of last week’s steep loss. The Dow Jones Industrial Average slipped 42.77, or 0.1%, to 38,460.92, and the Nasdaq composite added 16.11, or 0.1%, to 15,712.75. Tesla jumped 12.1% after saying the night before that it would accelerate production of new, more affordable vehicles, which investors have been hoping will kickstart growth. The announcement helped investors look past the 55% drop in profit that Tesla reported. Stock indexes rose across much of the rest of Asia but dipped modestly in Europe. Back home, Bursa Malaysia closed at a two-year high on Wednesday with the key index rising 0.63%, driven by a positive outlook on the local bourse and amid an upbeat performance by regional peers. At the closing bell, the FBM KLCI rose 9.84 points to 1,571.48 from Tuesday's close of 1,561.64

Source: PublicInvest Research - 25 Apr 2024