PublicInvest Research

Author: PublicInvest   |   Latest post: Mon, 30 Nov 2020, 4:57 PM


PublicInvest Research Headlines - 2 Sept 2020

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US: Manufacturing expands at fastest pace since late 2018. US manufacturing expanded in August at the fastest pace since late 2018, powered by growth in new orders that are a bright spot in an otherwise struggling economy. A gauge of factory activity increased to 56 during the month from 54.2 in July, Institute for Supply Management data showed. The purchasing managers group’s measure of orders, which jumped more than 6 points, reached the highest point since the start of 2004. The increase in bookings, along with declining inventories, should continue to underpin production. The ISM’s gauge of output improved to a more than two-year high. (Bloomberg)

US: Construction spending inches up less than expected in July. Construction spending in the US saw a modest increase in the month of July, according to a report released by the Commerce Department. The report said construction spending inched up by 0.1% to an annual rate of USD1.365trn. Economists had expected  construction spending to jump by 1.0% compared to the 0.7% drop originally reported for the previous month. The uptick in construction spending came as spending on private construction climbed 0.6% to an annual rate of USD1.014trn. Spending on residential construction spiked 2.1% to a rate of USD546.6bn, while spending on non-residential construction slumped by 1.0% to a rate of USD466.9bn. (RTT)

EU: Factory output stayed strong in August – PMI. Eurozone manufacturing activity remained on a recovery path last month, a survey showed today, but factory managers were wary about investing and hiring workers as the coronavirus pandemic rages on. Manufacturing output, which did not suffer quite as sharp a decline as the service industry during the height of the pandemic, increased for a second straight month. IHS Markit's final Manufacturing PMI dipped to 51.7 from July's 51.8, in line with an earlier flash reading. An index measuring change in output, which feeds into a composite PMI that is seen as a good gauge of economic health, rose to 55.6 from 55.3, just below the flash reading of 55.7 but its highest level since April 2018. (Reuters)

EU: Germany revises upward 2020 GDP forecast, sees weaker rebound in 2021 – sources. Germany expects the economic devastation caused by the Covid-19 pandemic to be less severe than originally feared this year, but it now sees a weaker rebound for Europe's largest economy next year, two sources told. The government revised upward its economic forecast for 2020 to a decline of 5.8% from a previously expected slump of 6.3%, said two people with knowledge of the figures. Still, this would be the biggest plunge since the end of World War Two. During the world financial crisis, the German economy contracted by 5.7%. For 2021, the government revised downward its growth forecast to an expansion of 4.4% from its previous estimate of 5.2%, said the two people. This means the German economy will not reach its pre-pandemic level before 2022. (Reuters)

UK: Manufacturing output expands at fastest pace in six years. UK factory output expanded at the quickest rate in more than six years as firms ramped up operations following the nationwide Covid-19 lockdown. IHS Markit’s measure of production posted its highest reading since May 2014. The overall manufacturing PMI climbed to 55.2 in August, the highest in more than two years. Britain is emerging from the worst economic slump in centuries after the coronavirus brought activity to halt in the second quarter. The question now is how well the rebound can be sustained as government support programs taper and firms adjust to the new reality. (Bloomberg)

Hong Kong: July retail sales plunge as spending, tourism evaporate. Hong Kong's retail sales slumped for the 18th straight month in July as a resurgence of Covid-19 cases in the city and tightening of social measures battered consumption and tourism. Small, sporadic anti-government protests have also weighed on business activity in the Chinese-ruled financial hub, where the coronavirus crisis has pushed many retailers and restaurant operators to the brink of collapse. Sales plunged 23.1% to HKD26.5bn (USD3.42bn), government data showed. In June, they tumbled by a revised 24.7% in value. In volume terms, July retail sales fell 23.9%. (Reuters)


Media Prima (Neutral: TP: RM0.19): Buys remaining stake in home shopping company CJ Wow Shop. The acquisition is part of the group's transformation plan to tap into the strong prospects of the home shopping and e-commerce industry. (The Edge)

Comments: Although the segment managed to turn profitable this year, we are of the view that the home shopping and e commerce sales may weaken moving forward given the easing of lockdown measures. For the 1HFY20, CJ Wow delivered RM6m net profit. For full-year FY20, we are projecting c.RM9m profit from CJ Wow. Impact on Media Prima's bottomline may be smaller depending on the cost of funding for this acquisition. We leave our earnings estimates unchanged at this juncture pending further clarity over the acquisition. Maintain Neutral with a TP of RM0.19.

IHH (Neutral, TP: RM5.90): Completes Prince Court buy, now has 16 hospitals in Malaysia . IHH Healthcare has completed its acquisition of Prince Court Medical Centre for RM1.02bn. Prince Court is now the 16th hospital under IHH in Malaysia. (The Edge)

Oceancash: To raise cash via share placement for expansion into PPE production . Oceancash Pacific has entered into a conditional subscription with Macquarie Bank Ltd for the proposed allotment and issuance of up to 24.5m shares to raise capital for its expansion of production of nonwoven materials used in PPE. The group’s proposed placement shares to raise an estimated RM21.2m based on an indicative issue price of 86.6 sen. (SunBiz)

Kerjaya Prospek: Secures contract from Gamuda worth RM203.7m . Kerjaya Prospek has accepted a letter of award for a RM203.7m from Gamuda Land to undertake main building works for a proposed residential and commercial development project in Kuala Langat, Selangor, known as Maya Bay Residences, Gamuda Cove. This contract swells the YTD contract wins to RM1.2bn. (SunBiz)

T7 Global: Inks agreement with Mitsui E&S to supply ships in Vietnam . T7 Global has inked a memorandum of agreement (MOA) with Japanese shipbuilding giant Mitsui E&S Shipbuilding Co Ltd to explore new business opportunities on the supply of ships to the Vietnamese Navy and Coast Guard. The MOA, in effect for three years, will also provide opportunities for the parties to collaborate in the ship or vessel business in Vietnam. (The Edge)

PetChem: Partners PT AKR for chemicals distribution in Indonesia . Petronas Chemicals Group (PetChem) is partnering Indonesia’s PT AKR Corporindo Tbk to distribute chemicals across Indonesia. Both PetChem and PT AKR's respective subsidiaries recently signed an agreement to formalise the JV. (StarBiz)

Permaju, Vsolar: Team up to bid for RM217m large-scale solar power project . Permaju Industries has teamed up with Vsolar Group, via a JV agreement, for a RM217m large-scale solar power project in Seremban. The project consists of terms including a concession period under a power purchase agreement with Tenaga Nasional, spanning 21 years starting from the commercial operation date by Dec 31, 2023. (The Edge)

Market Update

The FBM KLCI might open higher today after major US stock indices closed higher Tuesday, ending near or above prior all-time records, as upbeat economic reports and dovish tones from the Fed helped feed the buying momentum on Wall Street. The ascent for stocks comes despite expectations for a seasonally challenging month for equities, following the best August returns in more than 30 years. The Dow Jones Industrial Average rose 215.61 points to end at 28,645.66, or 0.8% higher, the S&P 500 index added 26.34 points to close at a record 3,526.65, a gain of 0.8%, after setting an intraday record of 3,528.03; while the Nasdaq Composite Index advanced 165.21 points to a record 11,939.67 finish, a rise of 1.1%, after touching a new intraday all-time high of 11,945.72. The Stoxx Europe 600 closed 0.4% lower, while UK’s FTSE 100 benchmark tumbled 1.7% Tuesday.

Back home, the FBM KLCI slipped 0.25% as investors opted for selective rebalancing among their portfolios following the end of the results season last week. The benchmark index closed the day 3.78 points lower at 1,521.43, dragged by losses in Public Bank Bhd, CIMB Group Holdings Bhd, Malayan Banking Bhd and Petronas Dagangan Bhd (PetDag). Elsewhere in the region, markets were largely mixed. The Nikkei 225 traded sideways to close down 0.01%, South Korea's Kospi rose 1.01% while Hong Kong's Hang Seng Index rose 0.03%.

Source: PublicInvest Research - 2 Sept 2020

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