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PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 1 Dec 2020, 10:01 AM

 

PublicInvest Research Headlines - 10 Sep 2020

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Economy

  • US: Job openings push higher, more workers quitting. US job openings increased further in July, though more workers quit their jobs in the retail as well as professional and business services industries likely because of fears of exposure to Covid-19 and problems with childcare. Despite the surge in vacancies reported by the Labor Department in its monthly Job Openings and Labor Turnover Survey, or JOLTS, the number of unemployed people competing for a new job remained relatively high in July. (Reuters)
  • EU: ECB forecasts said to show more confidence in economic outlook. Some ECB policy makers have become more confident in their forecasts for the region’s economic recovery, potentially reducing the need for more monetary stimulus this year, according to euro-area officials familiar with the discussions. The latest projections for output and inflation will show only slight changes to the June outlook, the people said, asking not to be named because the report will only be published after the Governing Council meets on Thursday. The ECB predicted a record 8.7% contraction for 2020 back in June. That figure will now show an improvement, one person said, with private consumption in particular doing much better than expected. T (Bloomberg)
  • UK: Temp job placements rise as economy reopens - REC/KPMG. UK firms raised temporary job placements in Aug following the relaxation of public health measures and reopening of the UK economy after the Covid-19 outbreak, the latest KPMG and REC Report on Jobs showed Wednesday. According to the report compiled by IHS Markit, permanent placements increased only slightly, while temp billings expanded at the fastest rate for 20 months. Increased worker availability and muted demand for staff continued to weigh on starting pay in Aug. Both starting salaries and temporary wages declined at weaker rates. (RTT)
  • UK: Home-price growth at four-year high in rush for green space. Surging demand pushed UK house-price growth to the highest level in four years as city dwellers sought homes with bigger backyards. Inquiries, sales and new listings all rose in Aug, according to the Royal Institution of Chartered Surveyors. Its measure of price gains was the highest since 2016, and property agents said they expect homes with outdoor space will become even more desirable as more people work remotely. The report comes amid concerns that the bounceback from the coronavirus is under threat from renewed outbreaks, the end of government subsidies and a disorderly Brexit transition at the end of the year. (Bloomberg)
  • China: Aug PPI -2.0% YoY, CPI up 2.4% YoY. China’s factory gate prices fell in annual terms for the seventh straight month in Aug, but at the slowest rate since March, official data showed on Wednesday, suggesting the country’s industries continue to recover from the Covid-19 outbreak. The producer price index (PPI) fell 2.0% last month from a year earlier, the National Bureau of Statistics said, in line with expectations for a 2.0% decline in a Reuters poll. It fell 2.4% YoY in July. (Reuters)
  • Japan: Machine tool orders decline slows slightly. Japan's machine tool orders continued to fall at a sharp rate in Aug, albeit at a slower pace, preliminary data from the Japan Machine Tool Builders' Association showed on Wednesday. Machine tool orders decreased 23.3% YoY following a 31.1% slump in July. The pace of decline slowed for a third straight month after a 52.8% crash in May. In Aug, domestic demand decreased 38.6% and foreign orders shrunk 12%. (RTT)
  • Australia: Consumer confidence surges in Sept. Australia's consumer sentiment strengthened in Sept even though the economy plunged into its first recession since 1992, survey data from Westpac showed Wednesday. The Westpac-Melbourne Institute Index of Consumer Sentiment climbed 18% to 93.8 in Sept from 79.5 in Aug. The indicator logged sharp fall in Aug in reaction to the deteriorating virus situation in Victoria. But this month's 18% rebound was a pleasant surprise, Westpac said. (RTT)

Markets

  • Magni-Tech (Outperform: TP: RM2.85): Sells industrial land in Pulau Pinang for RM22m. Magni-Tech Industries said that it is disposing of a piece of freehold industrial land with a factory on site in Seberang Perai, Pulau Pinang for RM22m cash. (The Edge)
    • Comments: Upon completion, Magni is expected to generate a c.RM15.1m gain from the sale. We are positive on this development as it will further improve Magni’s cash position to fund for its future business plans or M&A activities should an opportunity arises. Based on its latest quarterly results announcement, Magni is currently sitting on a cash pile of RM320m. We maintain our Outperform call with an unchanged TP of RM2.85.
  • AirAsia (Underperform, RM0.50): Forms new engineering services ram to serve airlines in the region. AirAsia Group has established a new wholly-owned unit which aims to be Asia’s leading provider of engineering services for AirAsia’s group of airlines and other commercial airlines. The unit, Asia Digital Engineering SB (ADE), will be an avenue to earn additional income, which will contribute to the overall increase in revenue for AirAsia. The group said ADE will operate as a centralised and independent maintenance, repair & overhaul (MRO) unit to service all of AirAsia’s group airlines and third party airlines in the region, focusing on key services such as line maintenance, workshop, engineering support, component and warehouse, as well as digital and innovation. (The Edge)
  • Pansar: To acquire Sarawak builder for RM151m, plans cash call. Pansar is buying a construction and civil engineering firm in Sarawak in a RM151m deal. To pay for the acquisition, Pansar has proposed to issue 346m new redeemable convertible preference shares (RCPS), on the basis of one RCPS for every two Pansar shares. Based on the indicative issue price of 53 sen, the exercise will raise as much as RM183.6m for the company. Pansar has entered into a deal with PE Holdings SB to acquire a 100% stake in Perbena Emas SB. (StarBiz)
  • Dutch Lady: Mulls sale of Petaling Jaya factory land. Dutch Lady Milk Industries is assessing the prospects of a potential sale of its current factory land in Petaling Jaya. The land comprises factory buildings, office complex and warehouse, and carries a net book value of RM28.4m or 0.44 sen per share as at end last year. The assessment came as the group had received shareholders’ approval last July for the purchase of land in Bandar Enstek, Negeri Sembilan to construct its new manufacturing facilities. It was also brought about considering the current economic climate which resulted from the Covid-19 pandemic, Dutch Lady said. (The Edge)
  • Ho Wah Genting: Mulls partnership with China’s biotech firm to produce Covid-19 vaccine. Ho Wah Genting is considering appointing Xinkexian (Beijing) Biotechnology Co, Ltd (XKX) as its non-exclusive manufacturer to produce Covid-19 vaccines. Ho Wah has entered into a MoU with XKX for a possible partnership. “The MoU aims to appoint XKX as a nonexclusive manufacturer to produce the vaccines upon successful completion of the R&D of vaccines, immunological treatment and diagnostic product development in relation to the Covid-19 virus and upon approval from the US FDA,” said Ho Wah. (The Edge)

MARKET UPDATE

The FBM KLCI might recover some of the losses today after U.S. stocks booked sharp gains Wednesday, snapping a three-day selloff that a day earlier drove the Nasdaq Composite into a correction at the fastest pace in history, following its record high last week. On Wednesday the Nasdaq posted its largest one day point and percentage gain since Wednesday, April 29. The Dow Jones Industrial Average rose 439.58 points, or 1.6%, to end at 27,940.47, while the S&P 500 closed at 3,398.96, an increase of 67.12 points, or 2%. The Nasdaq Composite jumped 293.87 points, 2.7%, to finish at 11,141.56. In pandemic news, the global death toll edged toward 900,000 and a trial for a potential COVID19 vaccine being developed by AstraZeneca PLC was halted after a participant was struck by an unexplained illness. The drugmaker, in what it described as a “routine action,” paused late-stage trials of its vaccine candidate. The Stoxx Europe 600 index ended 1.6% higher, while the U.K.’s benchmark FTSE gained 1.4%.

Back home, the FBM KLCI closed down 22.6 points or 1.49% at 1,496.72, the first close under 1,500 since June 29 this year, as the broader market fell amid a confluence of factors including lower crude oil prices today and expectation of Bank Negara Malaysia’s (BNM) overnight policy rate (OPR) decision today. In the region, Hong Kong’s Hang Seng Index fell 0.6% to close at 24,468.9, while Japan’s Nikkei, settled at 23,032.5, down 1%.

Source: PublicInvest Research - 10 Sept 2020

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