PublicInvest Research

PublicInvest Research Headlines - 11 Apr 2023

Publish date: Tue, 11 Apr 2023, 09:52 AM
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An official blog in I3investor to publish research reports provided by PublicInvest Research team.

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US: Wholesale inventories inch up slightly less than expected in Feb. Wholesale inventories in the US edged slightly higher in the month of Feb. Wholesale inventories inched up by 0.1% in Feb after falling by 0.6% in Jan. Economist had expected inventories to rise by 0.2%. The uptick in inventories came as a 0.5% increase in inventories of durable goods was largely offset by a 0.5% decrease in inventories of non-durable goods. Meanwhile, wholesale sales climbed by 0.4% in Feb, matching the growth seen in the previous month. (RTT)

US: Outlook for credit access hits record low while inflation expectations jump. Consumers are getting more pessimistic about inflation and their access to credit. Respondents expect prices to rise by 0.5 ppt in the year ahead, equating to a 4.7% annual gain. That’s the first time the near-term outlook increased since Oct and runs counter to the narrative from Fed officials that they expect inflation to subside as a series of interest rate increases take hold. In their most recent economic projections, policymakers said they anticipate inflation including food and energy prices to decline to 2.5% in 2024. (CNBC)

EU: Argentina looks to defuse economic time bomb with soy export boost. Argentina has patched up its wobbly economy with a so-called “soy dollar” preferential exchange rate to boost grains exports and bring in much-needed foreign currency. The measures, which kicked in fully on April 10, give soy exporters a better exchange rate than the controlled official one, aiming to spur exports of some USD15bn of soy in the second and third quarters of the year to refill depleted reserves. Argentina has been battered by drought over the last year which is weighing on grains production, its top export. (Reuters)

EU: Portugal trade deficit widens in Feb. Portugal's foreign trade deficit widened in Feb from a year ago. The trade deficit rose to EUR2.37bn in Feb from EUR2.24bn in the corresponding month last year. In Jan, the shortfall was EUR2.03bn. Exports were 7.0% higher in Feb compared to last year, much slower than the 13.8% gain a month ago. The annual growth in imports was almost in line with exports. Incoming flows rose 6.7% in Feb, after a 10.8% growth seen in Jan. Excluding fuels and lubricants, there were annual increases of 10.0% in exports and 14.3% in imports. (RTT)

EU: Greece inflation at 17-month low, industrial output rises for second month. Greece's consumer price inflation eased further in March to reach its lowest level in nearly one-and-a-half years, while industrial production expanded for the second straight month and at a faster rate in Feb. The consumer price index climbed 4.6% YoY in March, slower than the 6.1% increase in Feb. Prices have been rising since May 2021. Further, this was the lowest inflation rate since Oct 2021, when prices had risen 3.4%. Prices for clothing and footwear logged a double-digit annual growth of 14.4%. (RTT)

Japan: Eco watchers index at 15-month high; outlook brightens further. A measure of public opinion about the Japanese economy strengthened in March to hit its highest level in over a year. The current conditions index of the Economy Watchers' Survey, which measures the present situation of the economy, climbed to 53.3 in March from 52.0 in Feb. Economists had forecast the index to rise to 52.9. A reading above 50 indicates optimism. Further, this was the highest score since Dec 2021, when it was 58.3. Both household and cooperative activities contributed to the increase in the overall index. (RTT).

India: Seeks key supply-chain role as firms shift from China. India seeks to be more involved in world supply chains and serve as an alternative to China through output-incentive plans and the growth of its domestic consumer market. So-called production linked incentive schemes covering 13 manufacturing sectors including for semiconductors “are bringing in global value chains into India. By doing that, the nation hopes to have production of many of these large, bulk-manufactured goods which can go from India to meet both international and local demand. India last month laid out an ambitious target of hitting USD2trn annually in overall exports by 2030 as the South Asian country makes a renewed push to become a top choice for companies shifting supply chains away from China. (Bloomberg)

Turkey: Jobless rate rises slightly to 10.0%. Turkey's unemployment rate increased somewhat in Feb after falling in the previous month. The seasonally adjusted jobless rate rose to 10.0% in Feb from 9.8% in Jan. In the corresponding month last year, the jobless rate was 10.7%. The number of unemployed increased by 65,000 to 3.514m in Feb from 3.449m in Jan. Data also showed that the employment rate dropped to 48.2% in Feb from 48.8% a month ago. (RTT)


V.S. Industry (Outperform, TP: RM1.14): Acquisition of properties. V.S. Industry to announced that the Company’s wholly owned subsidiary, V.S. Plus SB had on 10 April 2023 entered into a Sale and Purchase Agreement with ACME Zone Sdn. Bhd. To acquire two parcels of 60-year leasehold land together with a unit of Single Storey Detached factory with an attached Double-Storey office erected thereon for a total consideration of RM6.0m only. (Bursa Malaysia)

Comment: The acquisition is timely and relatively inexpensive, considering that it comes with an immediate manufacturing facility. Despite expectedly weaker near-term sales in light of slowing consumption spending, we continue to like the longer-term investment merits of the company, underpinned by steady order flows from its key customers. Our Outperform call and RM1.14 TP are retained.

UMW: Bags RM1bn contract from Rolls-Royce . UMW Holdings Bhd has secured a second contract worth RM1bn from British aerospace company Rolls-Royce Holdings plc to manufacture rear cases for the latter's Trent 1000 and Trent 7000 aircraft engines. The new 15-year contract was bagged by its wholly owned company UMW Aerospace Sdn Bhd, which will invest up to RM65m to set up chemical milling and related processes to manufacture the rear case at its existing facility in the UMW High Value Manufacturing Park. At present, the rear case is imported from overseas and assembled into a complete fan case. (The Edge)

Powerwell: Secures RM40m order from Bangladeshi solar power company . Powerwell Holdings wholly-owned subsidiary, Powerwell International SB, has secured a RM40m purchase order from Bangladesh-based solar power providing company, Dynamic Sun Energy Private Ltd, a subsidiary of Paramount Group Bangladesh. The PO came after the previous month’s RM7.1m contract with Siemens Industrial Ltd, the first project that Powerwell acquired in Bangladesh in 2023, to supply LV switchboards for garments and yarn producer company as well as two expansion projects for a garments plant and a yarn dyeing plant in Bangladesh. (Bernama).

Mudajaya: Bags RM64.1m warehouse contruction project. Mudajaya Group’s wholly owned subsidiary Mudajaya Corp has secured a contract from Kotra Pharma (M) SB to undertake the construction of a one-storey warehouse with six mezzanine floors in Taman Teknologi Cheng, Melaka. The contract was for RM64.1mil subject to final re-measurement of the contract. The project is targeted to be completed by Oct 2024 with a construction period of 18 months from the date of possession. (StarBiz).

Hong Seng: Receives MoH approval on MCO application . Hong Seng Consolidated Bhd’s 60% owned subsidiary, eMedAsia SB, today received a letter of approval from the Health Ministry (MOH) regarding its application to carry on the business of a managed care organisation (MCO). This allows eMedAsia to import, store and generally deal with all poisons by wholesale and retail or wholesale only in the applied premise, for the period from 11 Jan 2023, to 31 Dec 2023 (StarBiz)

Market Update

The FBM KLCI might nudge higher today after stocks recovered from an early dip as US equity markets reopened from the long Easter weekend on Monday, with investors weighing up the potential for more interest rate rises from the Federal Reserve. The S&P 500 closed 0.1% higher after a late pick-up, while the tech heavy Nasdaq Composite ended the day flat despite dropping as much as 1.4% in early trading. Monday marked the first opportunity traders had to respond to data released on Friday showing the continued strength of the US labour market. The US economy added 236,000 new positions last month, fewer than in February but not enough of a slowdown to discourage the central bank from making another rate rise to tamp down inflation. European markets remained closed for Easter Monday. Hong Kong was also closed. Japan’s Topix stock index added 0.6%. Back home, Bursa Malaysia closed marginally higher as the FBM KLCI inched up 1.09 points to 1,428.13 from last Friday's closing of 1,427.04.

Source: PublicInvest Research - 11 Apr 2023

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