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PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 24 Nov 2020, 10:34 AM

 

PublicInvest Research Headlines - 8 Sept 2020

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Economy

US, China: Trump vows to sharply scale back US economic ties with China. President Donald Trump said he intends to curb the US economic relationship with China, contrasting himself with Joe Biden by threatening to punish any American companies that create jobs overseas and to forbid those that do business in China from winning federal contracts. “We’ll manufacture our critical manufacturing supplies in the US, we’ll create ‘made in America’ tax credits and bring our jobs back to the US and we’ll impose tariffs on companies that desert America to create jobs in China and other countries,” Trump said on Monday. “If they can’t do it here, then let them pay a big tax to build it someplace else and send it into our country,” he said of US corporations. (Bloomberg)

EU: Slowing German industry output points to long recovery ahead. German manufacturers ramped up production for the third straight month, though the pace of growth slowed considerably in July. Industrial output rose 1.2%, less than forecast by economists. The increase was led by carmakers while machinery retreated. Investment-goods production still increased 2.1%. The Economy Ministry said Germany’s industry is back at nearly 90% of pre-crisis levels, and predicts that improved sentiment and declining short time work will continue to drive the recovery, although it will take some time. A separate report on Friday showed factory demand slowed. Germany’s economy is trying to claw back the ground it lost during months of lockdowns that left factories shattered and many workers furloughed, if not unemployed. (Bloomberg)

UK: House price growth strongest since 2016 – Halifax. UK house prices increased at the fastest pace since late 2016 driven by the pent-up demand and stamp duty reduction, data from the Lloyds Bank subsidiary Halifax and IHS Markit showed Monday. House prices increased 5.2% on a yearly basis in three months to Aug, which was the strongest since late 2016. Prices had advanced 3.8% in three months to July. Average price of a property tipped over GBP245,000 for the first time on record. On a quarterly basis, house prices gained 1.3% in three months to Aug. Russell Galley, Managing Director, Halifax, said a surge in market activity has driven up house prices through the post-lockdown summer period, fuelled by the release of pent-up demand, a strong desire amongst some buyers to move to bigger properties, and of course the temporary cut to stamp duty. (RTT)

China: Exports rise the most in nearly 1-1/2 years as economies reopen, imports slip. China’s exports rose for the third consecutive month in Aug, eclipsing an extended fall in imports, as more of its trading partners relaxed coronavirus lockdowns in a further boost to the recovery in the economy. Exports in Aug rose a solid 9.5% from a year earlier, customs data showed on Monday, marking the strongest gain since March 2019. The figure also beat analysts’ expectations for 7.1% growth and compared with a 7.2% increase in July. Imports however slumped 2.1%, compared with market expectations for a 0.1% increase and extending a 1.4% fall in July. The strong exports suggest a faster and more balanced recovery for the Chinese economy, which is rebounding from a record 1Q slump thanks largely to domestic stimulus measures. (Reuters)

Taiwan: Trade surplus rises in Aug. Taiwan's trade surplus increased in Aug as both exports and imports rose strongly, figures from the Ministry of Finance showed on Monday. The trade surplus increased to USD6.5bn in Aug from USD6bn last year. Economists had expected a surplus of USD5.8bn. In July, the trade surplus was USD5.4bn. Exports rose 8.3% YoY in Aug, following a 0.4% rise in July. Economists had expected a rose 1.6%. Imports grew 8.5% annually in Aug, after a 6.8% decrease in the preceding month. Economists had forecast a rise of 0.7%. Exports of parts of electronic products, information, communication and audio-video products grew in Aug, while those of base metals and related products, machinery, plastics and rubber, and related articles declined. (RTT)

Australia: ANZ job ads growth eases sharply in Aug. Australia's job advertisement grew at a much slower pace in August, data from ANZ showed on Monday. Job ads increased 1.6% MoM in Aug, after a 19.1% rise in July. At the same time, job advertisements decreased by 27% since Feb and declined 30% on a yearly basis in Aug. "With Victoria accounting for more than 26% of the nation's pre-pandemic employment, the Stage 4 restrictions in Melbourne and Stage 3 in regional Victoria have undoubtedly put the brakes on," ANZ Senior Economist Catherine Birch said. "This is consistent with weekly payroll data, which show Victorian jobs falling and New South Wales jobs coming to a standstill," Birch said. "4Q is also looking worrying, given the amount of fiscal support to workers, businesses and households scheduled to be withdrawn, particularly with Victoria only gradually emerging from lockdowns," Birch said. (RTT)

Markets

AirAsia (Underperform, TP: RM0.50): Aims to raise RM2.5bn, to evaluate Japan operations. AirAsia Group is looking to raise as much as RM2.5bn by year end, and is also reviewing its business in Japan as the airline seeks to weather the Covid-19 crisis, its CEO said. Group CEO Tan Sri Tony Fernandes told that the group, Malaysia's flagship budget airline, could raise up to RM1.5bn from bank loans and another RM1bn from investors. The investors it is talking to include private equity players, strategic partners, and conglomerates, both local and foreign, he said. (The Edge)

Iris: Receives LoI from India Security Press. Iris Corp has received Letter of Intent (LoI) from India Security Press in relation to the procurement of 15m International Civil Aviation Organisation (ICAO) compliant electronic contactless inlays for USD27.54m (RM114.48m). The LoI also entails the inlays' operating system (in 2Ups) required to produce Indian e passports. Iris said it would supply pre-production sample of 1,000 inlays within three months after issuance of the LoI. (NST)

Mesiniaga: Bags RM42m contract from Customs. Mesiniaga has bagged a RM42.01m contract from the Royal Malaysian Customs Department. It had accepted a letter of award for the provision of MYGST maintenance services and licence renewal services from 2020 to 2022. No further details were provided about its job scope. (The Edge)

Dancomech: Bags RM36.5m sub-contract in Singapore. Dancomech has secured a SGD12.01m (RM36.52m) sub contract from SH Design & Build Pte Ltd for the design, supply, assembly (off-site) and delivery of the material handling equipment in Singapore. It said the sub-contract was inclusive of site coordination, supervision on the installation works, testing and commissioning with complete hand over to Jurong Port Pte Ltd. (NST)

Nova MSC: Bags five-year contract from Singapore’s Health Ministry to deploy AI-based retinal screening product. Nova MSC has bagged a five-year contract from Singapore’s MoH for the deployment of SELENA+, EyRIS’ first AI-based product. Nova MSC said SELENA+ will be part of Singapore’s national screening programme and is expected to deliver a “tremendous” recurring income for the group over the long run. However, no value was disclosed for this newly awarded contract. (The Edge)

Lien Hoe: Sells Johor land for up to RM88.7m. Lien Hoe Corp is selling a parcel of freehold land in Bandar Seri Alam, Johor for either RM88.67m in cash, or a reduced price of RM64.62m if certain conditions are not met. It has entered into a conditional SPA with Countryland Realty SBfor the land disposal. The market value of the land is RM90m. (The Edge)

Comfort Gloves: 2Q net profit up by six times on higher prices and sales. Comfort Gloves' 2QFY20 net profit jumped by six times to RM42.8m, from RM7.12m a year ago, on the back of higher prices and sales volume, and better economies of scale that boosted the profit margin to 22% from 6%. On prospects, Comfort Gloves said the flexibility of its manufacturing process and customer base outside the medical market had allowed the group to effectively manage the shortage of synthetic latex in the market. (The Edge)

Market Update

US markets were closed for a holiday. European equities were mostly higher on the day meanwhile, as investors monitored developments on several coronavirus vaccines. The president of Sanofi France said over the weekend that a vaccine being developed by Sanofi and Britain’s GlaxoSmithKline will likely cost less than EUR10 (USD11.80). The eighth round of Brexit negotiations are recommencing this week, with UK Prime Minister Boris Johnson expected to say that Britain and the European Union should “move on” if no free trade deal can be agreed before Oct 15. UK’s FTSE 100 and Germany’s DAX jumped 2.4% and 2.0% higher. France’s CAC 40 rose 1.8%. Asian markets were mostly lower as tensions between Beijing and Washington flared up again. President Trump is threatening to impose export restrictions on Semiconductor Manufacturing International Corporation, China’s largest chipmaker. Reports of China’s dollar denominated exports beating expectations failed to lift sentiment. The Shanghai Composite Index slumped 1.9%. The Hang Seng Index and Nikkei 225 fell 0.4% and 0.5% meanwhile.

Iris Corporation has received a letter of intent to procure 15m International Civil Aviation Organization-compliant electronic contactless inlays along with its operating system which is required for the manufacture of Indian e-passports, worth USD27.5m. LKL International, which has received a query from Bursa Malaysia in relation to the supply of nitrile gloves to a China-based customer, said it cannot disclose the name of the client due to "confidentiality and sensitivity". Lien Hoe Corporation is selling a parcel of freehold land in Johor for either RM88.7m in cash, which is more than its current market capitalisation, or for a reduced price of RM64.6m if certain conditions are not met.

Source: PublicInvest Research - 8 Sept 2020

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