PublicInvest Research Headlines - 20 Jun 2024

Date: 
2024-06-20
Firm: 
PUBLIC BANK
Stock: 
Price Target: 
21.33
Price Call: 
HOLD
Last Price: 
20.52
Upside/Downside: 
+0.81 (3.95%)

HEADLINES

Economy

US: Homebuilder confidence unexpectedly dips to six-month low in June. A report released by the National Association of Home Builders unexpectedly showed a continued deterioration in US homebuilder confidence in the month of June. The report said the NAHB/Wells Fargo Housing Market Index fell to 43 in June after slumping to 45 in May, while economists had expected the index to come in unchanged. With the unexpected decease, the housing market dropped to its lowest level since hitting 37 last Dec. (RTT)

US: Increased spending pushes 2024 budget deficit estimate to USD1.9trn. The US budget deficit will jump to USD1.9trn for fiscal 2024, topping last year's USD1.695trn gap as the largest outside the COVID-19 era, the Congressional Budget Office said, citing increased spending for a 27% increase over its previous forecast. The CBO said in an update to its budget outlook, opens new tab that higher outlays for student loan relief, Medicaid healthcare for the poor, higher Federal Deposit Insurance Corp costs to resolve bank failures and US aid to Ukraine and Israel make up the bulk of a USD408bn increase in this year's projected deficit since Feb. (Reuters)

EU: Construction output falls 0.2%. Eurozone construction output decreased for the second straight month in April, largely due to weaker civil engineering projects, data from Eurostat showed. Construction output dropped 0.2% MoM in April, following a 0.5% fall in March, which was revised from a 0.1% growth estimated earlier. Civil engineering posted a monthly contraction of 1.1%, reversing a 0.2% rise in the prior month. Data showed that specialized construction activities fell 0.1%, while activity on building construction showed a flat change. (RTT)

EU: German tax revenues up 2.6% in May. German federal and regional tax revenues rose 2.6% to EUR61.2bn (USD65.8bn) in May from the previous year, helped by a one-off base effect that boosted income on the federal level, the finance ministry said. Growth in wage tax and in flat-rate withholding tax on interest and capital gains contrasted with lower revenues from sales tax and corporation tax compared with a year ago. In the first five months of the year, tax revenues in Europe's biggest economy rose 2.8% to EUR322.3bn, said the ministry. (Reuters)

UK: Inflation drops to 2% target for first time since 2021. British inflation returned to its 2% target for the first time in nearly three years in May, but strong underlying price pressures all but rule out a pre-election interest rate cut. While Prime Minister Rishi Sunak welcomed the fall in headline inflation in May, it has likely come too late to turn around his fortunes in British elections on 4 July or to prompt a BOE rate cut. Office for National Statistics data showed services price inflation, which the BOE thinks gives a better picture of medium-term inflation risks, was 5.7%. (Reuters)

UK: House prices show second monthly rise in April. British house prices rose for a second month in a row in April, increasing by an annual 1.1% to an average of GBP281,000 (USD358,000) after a 0.9% rise in March, the Office for National Statistics said. The ONS's gauge of private-sector rents increased by 8.7% in the year to May, a slightly smaller pace of the rise seen in the 12 months to April when it rose 8.9%. Britain's housing market has in recent months shown signs of recovery from the slowdown in late 2022 and 2023 which was spurred by the surge in mortgage rates. (Reuters)

Japan: Exports rise most since late 2022. Underpinned by weaker yen, Japan's exports grew at the fastest pace since 2022 in May despite the fall in sales volume, official data revealed. Exports advanced 13.5% on a yearly basis after rising 8.3% in April, the Ministry of Finance said. This was the fastest expansion since late 2022 and marked the sixth consecutive rise. Also, the rate surpassed economists' forecast of 13.0%. The increase reflects higher shipment of cars and chip-making machinery. At the same time, growth in imports rose to 9.5% from 8.3% in April. Imports were forecast to climb at a faster pace of 10.4%. (RTT)

Indonesia: Trade surplus grows in May. Indonesia's foreign trade surplus increased notably in May from a year ago as exports rose amid a significant fall in imports, figures from Statistics Indonesia showed. The trade surplus rose to USD2.9bn in May from USD0.4bn in the same month last year. In April, the surplus was USD2.7bn. Exports climbed 2.9% YoY in May, versus an expected rise of 0.8%. Meanwhile, imports plunged by 8.8% from last year, slightly faster than the 8.6% fall expected by economists. (RTT)

Markets

KLK (Neutral, TP:RM21.33): Subsidiary ends contract with recruitment agency. Kuala Lumpur Kepong (KLK) announced that its subsidiary, KL-Kepong Rubber Products SB, is no longer in any contractual relationship with Agency Pekerjaan UKHWAH SB with immediate effect. By extension, any affiliation with SOS Manpower Service (SOS) will cease, it said. KLK said that an independent third-party assessment provided recommendations to enhance due diligence, standard operating procedures, and grievance management, which KL-Kepong Rubber Products and the group are fully committed to implementing. (The Star)

LBS Bina: Unit disposing entire stake in Lamdeal investments for RMB192.18m. - LBS Bina’s (LBGB) wholly-owned subsidiary in Hong Kong, Dragon Hill Corporation Ltd is disposing of its entire equity interest in Lamdeal Investments Ltd (LIL) to Huafa Urban Operation (HK) Ltd for RMB192.18m (RMB1.00 = RM0.65). (Bernama)

Perak Corp: Refutes claims of land losses due to unpaid rent. Perak Corp, which is 52.9% owned by the Perak State Development Corp, has dismissed allegations that it is losing significant land parcels due to unpaid rent, saying they are "categorically false". The company stated that when the land confiscation occurred, Perak Corp had already derecognised the assets and liabilities of its wholly owned subsidiary PCB Development SB and PCB Development’s 51%-owned subsidiary Animation Theme Park SB from the consolidated statement of financial position as of Dec 20, 2021. (The Edge)

Binastra: Bags RM314m construction contract in Sabah. Binastra Corporation said its subsidiary, Binastra Builders SB, has accepted a RM313.7m contract from FYT Land (KK) Sdn Bhd for construction works in Kota Kinabalu, Sabah. The project involves external works, piling, and main building works for Phase 1 of Lot 1, which includes Tower A (34-storey, 373 units) and Tower B (30- storey, 389 units) with a 7-storey car park podium. The project commenced today and is scheduled for completion by 31 July, 2027. (The Malaysian Reserves)

Yinson: 1Q net profit slips to RM203m, declares one sen dividend for FY2025. Yinson Holdings' net profit slid to RM203m in the first quarter ended 30 April, 2024 (1Q) from RM208m in the same period a year ago, dragged by lower revenue registered in the current quarter. The energy infrastructure and technology company said revenue fell to RM2.21bn from RM3.01bn, mainly attributable to lower contribution from its engineering, procurement, construction, installation and commissioning (EPCIC) business activities, due to lower reported progress for three floating production storage and offloading (FPSO) assets -- FPSO Atlanta, FPSO Maria Quitéria and FPSO Agogo -- which are under construction. (Bernama)

Scientex Packaging: 3Q profit slips on higher tax expenses, declares 2.5 sen dividend. Scientex Packaging’s net profit slipped by 1.2% to RM10.02m the third quarter ended 30 April 2024 (3QFY2024), from RM10.14m a year earlier, despite higher revenue, primarily due to increased tax expenses. EPS declined to 2.86 sen from 2.89 sen. Revenue for the quarter under review rose 3% to RM182.85m from RM177.49m in the previous corresponding period, as the group recorded higher sales in its export market. (The Edge)

MARKET UPDATE

US markets were closed overnight for the Juneteenth holiday, with stock futures remaining largely unchanged as investors look to benchmarks to keep breaking new highs. Concerns are starting to rise however, on the lack of market breadth beyond the largest technology companies. On the data front, initial jobless claims and housing starts numbers are due out later today. European markets lost some positive momentum from earlier in the week, closing lower on the day as major bourses and sectors diverged. Technology-based stocks led losses as mining one led gains. UK’s inflation reading came in at 2% in May, hitting the Bank of England’s target ahead of its policy meeting later today where it is widely expected to hold its rates steady at 5.25%. Eurozone inflation growth was higher at 2.6% (Apr: +2.4%). UK’s FTSE 100 inched 0.2% higher though Germany’s DAX and France’s CAC 40 fell 0.4% and 0.8% respectively. Asian markets were mostly higher on the back of gains in Hong Kong (+2.9%) and Taiwan (+2.0%). Investors in Asia also assessed Japan’s trade data for May, with exports beating expectations with a +13.5% YoY growth. The Nikkei 225 inched 0.2% higher. Elsewhere, the Shanghai Composite Index fell 0.4% as the FBM KLCI slipped below the psychological 1,600-pt level to also close 0.4% lower at 1,599.79 points.

Source: PublicInvest Research - 20 Jun 2024

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