PublicInvest Research

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PublicInvest Research Daily - 24 Nov 2020

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US: Business borrowing for equipment falls 9% in Oct - ELFA. US companies’ borrowings for capital investments fell 9% in Oct from a year earlier, the Equipment Leasing and Finance Association (ELFA) said. The companies signed up for USD9.2bn in new loans, leases and lines of credit last month. Borrowings in Oct rose 6% from the previous month. The equipment finance industry shows resilience in the face of a worsening health pandemic and uneven economic performance in the US. (Reuters)

EU: Private sector shrinks in Nov amid Covid-19 lockdowns. The euro area private sector contracted sharply in Nov as member countries reintroduced more restrictions to counter the spread of Covid-19 infection, flash survey data from IHS Markit showed. The composite output index plunged to a six-month low of 45.1 from the neutral 50.0 in Oct. The score was forecast to fall to 45.8. After a 7.4% contraction of GDP in 2020, IHS Markit expects only a 3.7% expansion in 2021. (RTT)

EU: Germany's private sector growth moderates on renewed Covid-19 restrictions. Germany's private sector growth moderated to a 5-month low in Nov amid tightening of Covid-19 restrictions, flash survey data from IHS Markit showed. The composite output index dropped to 52.0 in Nov from 55.0 in Oct. The reading was forecast to fall sharply to 50.4. The decline was driven by an accelerated fall in services activity, while manufacturing continued to exhibit strong growth. At 46.2, the services Purchasing Managers' Index reached a 6-month low. (RTT)

UK: Economy shrinks as new lockdown shuts services firms - PMI. British business activity has contracted in Nov as a new wave of coronavirus restrictions hammered the huge services industry, but news of possible vaccines has boosted hopes for 2021. An early flash reading of the IHS Markit/CIPS UK Composite Purchasing Managers’ Index (PMI) tumbled to a 5-month low of 47.4 in Nov from 52.1 in Oct. It is the first time the index has gone below the 50.0 growth threshold since June. A poll of economists had pointed to an even bigger decline to 42.5. (Reuters)

UK: Household finance perceptions at 6-month low. UK households' finance perceptions weakened to a 6-month low in Nov as savings and earnings declined sharply, survey data from IHS Markit and Ipsos MORI showed. The household finance index, which measures households' overall perceptions of financial wellbeing, fell to 40.0 from 40.8 in Oct. The decline signaled a more intense strain on the household finances amid a second lockdown in England and ongoing restrictions across the rest of the UK. (RTT)

Singapore: Upgrades 3Q GDP, sees economy returning to growth next year. Singapore’s economy contracted much less than estimated in 3Q due to gradual easing of lockdown measures and authorities expect the city-state to bounce back to growth next year from its worst recession. GDP fell 5.8% YoY in 3Q, versus the 7% drop seen in the government’s advance estimate. The government now expects full-year GDP to contract between 6.5% and 6% versus its prior forecast for a 5% to 7% decline. (Reuters)

Singapore: Consumer prices fall in Oct. Singapore's consumer prices declined in Oct, data from the Monetary Authority of Singapore and the Ministry of Trade and Industry showed. The consumer price index fell 0.2% YoY in Oct, after remaining unchanged in Sept. Economists had expected the price to remain unchanged. This latest consumer prices outcome was largely due to a sharper decline in private transport costs. MAS core CPI fell 0.2% annually in Oct, following a 0.1% decrease in the preceding month. Economists had forecast a 0.1% fall. (RTT)


Top Glove (Trading Buy, TP: RM9.70): 28 factories in Klang to close down temporarily to enable Covid-19 testing. A total of 28 Top Glove Corporation factories in Klang will be shut down temporarily in stages to enable the Health Ministry to conduct Covid-19 screening and quarantine its workers. (NST)

Comment: It was reported that 28 Top Glove factories in Klang will be shut down temporarily, in stages, to enable the Ministry of Health to conduct Covid-19 screening and quarantine its workers. We understand that at this point, 16 Top Glove factories in the affected area have temporarily ceased operations since 18th November, following the authorities’ orders, while the remaining 12 plants are running at a reduced capacity due to manpower shortage. The operating plants are expected to be shut in stages to facilitate the Covid-19 test procedures. However, as of now, there are still no firm arrangements on the gradual shut down for testing and we maintain our Trading Buy call on Top Glove as we await more clarity from the management. Downside risk to our call includes an extended testing period, which would disrupt Top Glove’s operations and production.

Hibiscus Petroleum (Neutral, TP: RM0.65): Raises RM203.6m from CRPS issue, eyes stakes in Southeast Asia O&G assets. Hibiscus Petroleum has raised RM203.6m through the issuance of 203.6m Islamic convertible redeemable preference shares (CRPS) with the proceeds going towards the acquisition of interests in producing upstream oil and gas assets in the Southeast Asia region. (SunBiz)

Samaiden: Subsidiary secures RM115.6m power plant contract. Samaiden Group’s wholly-owned subsidiary Samaiden SB has secured a RM115.6m contract from BTM Resources’ wholly-owned subsidiary BTM Biomass Products SB to develop a biomass-based power plant in Terengganu. It said that it had received and accepted the letter of award for EPCC work in relation to the development of a 10MWac biomass power plant. (The Edge)

Mesiniaga: To provide hardware and software services to Maxis for RM22m. Mesiniaga has inked an agreement to provide hardware and software services for an information technology (IT) and engineering network modernisation project with Maxis Broadband SB for RM22m. (The Edge)

Kanger: Gets greenlight to distribute Covid-19 vaccines. Kanger International has received the nod from the National Institutes of Biotechnology Malaysia (NIBM) to distribute Covid19 vaccines and medical equipment in Malaysia. (Business Times)

Eonmetall: In talks to acquire 51% stake in glove maker. Eonmetall Group, which was slapped with an unusual market activity (UMA) query by Bursa Malaysia, said it is in talks to acquire a glove manufacturer. "The company is currently in negotiation/discussion to purchase an equity interest of 51% in a company, of which its intended principal activity is in the production of medical grade (nitrile) gloves and non-medical grade gloves. (The Edge)

Market Update

The FBM KLCI might open higher today after US stocks edged higher on Monday following the announcement of another Covid19 vaccine breakthrough that showed the shot being developed by AstraZeneca and Oxford University had exceeded the level of efficacy sought by regulators. The S&P 500 index rose 0.6%, outpacing the tech-heavy Nasdaq Composite, which advanced 0.2%. Wall Street’s gains followed a mixed session in Europe. The Stoxx 600 index climbed to its highest level since February before reversing course in the afternoon to close down 0.2%. Still, the continent-wide benchmark has risen almost 14% so far in November, putting it on course for its best month on record. London’s FTSE 100 closed down 0.3%, while Germany’s Xetra Dax ended the day 0.1% lower.

Back home, the FBM KLCI closed up 3.73 points or 0.23% at 1,597.48 following news of successful Covid-19 vaccine trials. The KLCI’s gain was, however, limited by investors' caution ahead of Malaysia's parliamentary voting on the proposed Budget 2021. Across Bursa, 9.4bn securities were traded for RM4.5bn as oil and gas (O&G)-related shares rose among the top gainers. In the region, China’s CSI 300 closed up 1.3% and Australia’s S&P/ASX 200 rose 0.3%.

Source: PublicInvest Research - 24 Nov 2020

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