HEADLINES

Economy

EU: Factories stuck in a rut as Asia shows tentative signs of recovery. HCOB's final euro zone manufacturing PMI, compiled by S&P Global, stood at 45.8 in August, just ahead of a 45.6 preliminary estimate but well below the 50 mark separating growth from contraction. That decline came as euro zone manufacturers raised their prices for the first time in 16 months, driven by factories in France, the Netherlands, Greece and Italy. (Reuters)

EU: Italy Q2 GDP confirmed at 0.2% QoQ, 0.9% YoY. Italy's economy grew by 0.2% in the second quarter from the previous three months, national statistics bureau ISTAT said, confirming a preliminary estimate. On a YoY basis, second quarter GDP was confirmed at 0.9%. In January-March, the economy had grown by 0.3% on a quarterly basis and by 0.6% from the previous year. Between April and June services supported growth, whereas both industry and agriculture showed a decrease in output, according to ISTAT. (Reuters)

UK: Factories report strongest month since 2022, PMI shows. British factories had their strongest month in more than two years in August as demand at home offset a fall in exports, according to a survey published on Monday that added to signs of momentum in the economy. The S&P Global UK Manufacturing PMI rose to 52.5 from 52.1 in July, its highest reading since June 2022 and unchanged from a preliminary flash reading for August.(Reuters)

China: Solar group, regulator propose tendering reforms to boost prices. A Chinese solar sector association and the country's industry ministry are proposing reforms to power plant tendering to address plunging equipment prices that have led manufacturers to make losses. China's solar panel producers have urged government intervention to shore up prices kept low by overcapacity even as China's trading partners have complained about the effects of overproduction on their own domestic industries. Under the proposed plan, buyers would take non-price factors into account in procuring solar equipment and adopt a more in-depth two-stage tendering system, the China Photovoltaic Industry Association (CPIA) said in a WeChat post. (Reuters)

Japan: Factory activity contracts at milder pace, PMI shows. Japan's factory activity contracted at a slower pace in August thanks to a recovery in output and new orders, a private-sector survey showed on Monday, offering some hope for an economy that is starting to find its feet. The final au Jibun Bank Japan manufacturing PMI rose to 49.8 in August versus 49.1 in July, and was up from 49.5 reported in the flash reading. It remained below the 50.0 threshold that separates growth from contraction for two straight months. (Reuters)

India: Factory activity growth hits three-month low, PMI shows. India's manufacturing activity growth eased to a threemonth low in August as demand softened significantly, a privatesector survey showed, casting another shadow over the otherwise robust economic outlook. The HSBC final India Manufacturing PMI fell for a second month in August, dropping to 57.5 from July's 58.1 and below a preliminary estimate of 57.9. Despite falling, the index beat its average and held above the 50-mark, where it has been since July 2021. (Reuters)

South Korea: Inflation slows to 3.5 year low, hits central bank target. South Korea's consumer inflation slowed in August to the weakest in nearly 3.5 years, official data showed on Tuesday, supporting market expectations for an imminent easing of monetary policy. The consumer price index rose 2.0% from a year earlier, after rising 2.6% the previous month, marking the slowest annual rise since March 2021. It matched the median 2.0% increase tipped in a Reuters survey of economists and the central bank's mediumterm inflation target of 2%. On a monthly basis, the index was up 0.4%, the fastest in six months, after rising 0.3% in the prior month and beating forecast by economists for 0.3%. (Reuters)

Markets

DRB-Hicom (Neutral, TP: RM1.38): Unit slapped with RM246m additional taxes, penalty by IRB. DRB-HICOM's subsidiary Hicom Holdings has received a notice of assessment from the Inland Revenue Board (IRB) for the 2020 assessment year, amounting to RM246m, including penalties. (BTimes)

Comments: It was reported that the notice was issued following the IRB decided to classify a gain from the disposal of a long-term investment in a subsidiary as taxable income under the Section 4(a) of the Income Tax Act 1967 for the 2020 assessment year. Upon consulting its tax counsel and solicitors, management believe there are strong legal grounds to contest the notice. Therefore, management plans to appeal and if necessary, initiate legal action to challenge the IRB’s notice. Pending outcome of the appeal or legal proceedings is determined, we keep our earnings unchanged for now.

Binastra: Wins RM235m contract to build 39-storey apartment in PJ. Binastra Corp has secured a RM235.5m contract from Mightyprop SB to undertake construction work for a 39-story serviced apartment in Petaling Jaya, Selangor. The latest contract win boosts Binastra's year-to-date new contract total to RM1.6bn, with the group’s outstanding order book valued at RM2.5 billion as of Sept 2. (The Edge)

Econpile: Wins RM71.2m contract for basement-related job in downtown KL. Econpile Holdings has secured a RM71.2m contract to undertake demolition, substructure and basement work for a 55-storey building located along Jalan Sultan Ismail, Kuala Lumpur. The contract was awarded to its wholly-owned Econpile (M) SB by Platinum Victory Property SB, according to the construction firm's filing. (The Edge)

Ocean Vantage: 23% stake in Ocean Vantage traded off-market at premium. Ocean Vantage Bhd saw 97.9m shares representing a 23.32% stake change hands in a direct business transaction. The block of shares was transacted at 20.4 sen a share, or RM20m in total. The transacted price was at a 16.57% or a 2.9 sen premium to the closing price of Ocean Vantage at 17.2 sen a share. It is not known who had purchased the block of shares of the upstream O&G service provider. (The Edge)

Pekat: Signs RM29.8m PPA for Maldives solar project. Pekat Group’s indirect wholly-owned subsidiary, Solaroo RE (Maldives) Pvt Ltd, has signed a power purchase agreement (PPA) with Sun Investments Pvt Ltd. The agreement is for supplying electricity generated from a solar photovoltaic power system that Solaroo will develop. Pekat said the estimated contract value of the PPA, based on the generation of approximately 25.5m kilowatt peak (kWp) of electricity over the 10-year contract period, is approximately USD6.9m, or RM29.8m. (StarBiz)

IPO: Main Market-bound 99 Speed Mart's profit jumps 66% YoY. 99 Speed Mart Retail Holdings posted a 66.3% YoY jump in its second quarter net profit, driven by higher sales from an expanded number of outlets and higher other operating income. Its net profit for the March to June quarter (2QFY2024) rose to RM125.5m from RM75.5m in 2QFY2023. Revenue for 2QFY2024 rose 8.2% to RM2.42bn from RM2.24bn in 2QFY2023, following positive contributions from 59 new outlets during the quarter, bringing the group's total outlet count to 2,646 as at June 30, 2024. (The Edge)

MARKET UPDATE

The FBM KLCI might open flat today as global shares were mixed in cautious trading Monday ahead of the Labor Day holiday in the US, when stock exchanges are closed. France’s CAC 40 slipped 0.3% in early trading to 7,611.64, while Germany’s DAX fell 0.1% to 18,881.14. Britain’s FTSE 100 was little changed, down less than 0.1% at 8,370.39. US shares were set to drift lower with Dow futures down 0.1% at 41,613.00. S&P 500 futures fell 0.1% to 5,654.25. Investors were also looking ahead to the US employment report set for release Friday for an indication of the strength of the American economy. In Asia, Japan’s Nikkei 225 gained 0.1% to finish at 38,700.87, after the Finance Ministry reported capital spending by Japanese companies in the April-June quarter increased 7.4% from the previous year. After a period of stagnation, Japan’s economy is showing signs of a recovery. Next week, Japan will release revised gross domestic product, or GDP, data, a measure of the value of a nation’s goods and services. The preliminary data released earlier showed the first growth in two quarters. Australia’s S&P/ASX 200 rose 0.2% to 8,109.90, while South Korea’s Kospi gained nearly 0.3% to 2,681.00. Hong Kong’s Hang Seng slipped 1.7% to 17,691.97. The Shanghai Composite dipped 1.1% to 2,811.04. Back home, Bursa Malaysia ended marginally lower with the benchmark index recouping most of its earlier losses, lifted by substantial gains in YTL counters and CIMB. At the close, the FBM KLCI eased 0.61 of-a-point to 1,678.19 from Friday's close of 1,678.80.

Source: PublicInvest Research - 3 Sept 2024