Malaysia Daybreak | 3 September 2021 FBMKLCI Index
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Malaysia | September 3, 2021 Key Metrics Malaysia Daybreak | 3 September 2021 FBMKLCI Index 1,700 ▌What’s on the Table… 1,650 ———————————————————————————————————————————————————————————————————————————————————————— 1,600 1,550 Strategy Note – 2Q21 results not as bad as feared 1,500 2Q21 earnings revision ratio fell to 0.53x due to MCO. However, corporate 1,450 earnings grew 5% qoq due to higher CPO and petrochemical prices. Earnings 1,400 could weaken sequentially, and we predict more results disappointments in Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 3Q21F due to EMCO in Klang Valley and ongoing MCO. We raise our 2021F ——————————————————————————— year-end KLCI target to 1,629 pts (from 1,604 pts). Our revised top three picks FBMKLCI are now more skewed towards recovery plays. 1,582.19 -4.70pts -0.30% SEP Future OCT Future 1569.5 - (-0.41%) 1568 - (-0.44%) ——————————————————————————— Banks – Deterioration in GIL ratio within expectation Gainers Losers Unchanged The industry’s loan growth moderated from 3.4% yoy at end-Jun 21 to 3.1% yoy 437 572 463 ——————————————————————————— as at end-Jul 21 due to weaker momentum in household loans. As expected, GIL Turnover ratio rose from 1.62% as at end-Jun 21 to 1.67% at end-Jul 21. We expect the 4059.3m shares / RM2767.995m GIL ratio to increase to 2% by end-Dec 21F. We retain our Overweight call on 3m avg volume traded 4890.44m shares banks premised on the expected recovery in the sector’s core net profit growth to 3m avg value traded RM2916.90m ——————————————————————————— our projected 9.4% in 2021F. Regional Indices FBMKLCI FSSTI JCI SET HSI 1,582 3,089 6,078 1,648 26,090 LBS Bina Group – Ramping up site activities by end-Sep ———————————————————————————————— Market Indices LBS expects to ramp up project sites’ capacity by end-Sep as all of its staff/ Close % chg YTD % chg contractors should be fully vaccinated by then. No projects delayed for now. LBS FBMKLCI 1,582.19 (0.3) (2.8) FBM100 11,237.98 (0.2) (2.3) is open to strategic partnerships and monetisation opportunities for ZIC; it is also FBMSC 16,020.73 (0.3) 2.9 seeking key investors for its Melaka project. FBMMES 7,217.59 0.0 (32.8) Dow Jones 35,443.82 0.4 15.8 NASDAQ 15,331.18 0.1 19.0 FSSTI 3,088.84 0.0 8.6 FTSE-100 7,163.90 0.2 10.9 ▌News of the Day… SENSEX 57,852.54 0.9 21.2 ———————————————————————————————————————————————————————————————————————————————————————— Hang Seng 26,090.43 0.2 (4.2) JCI 6,078.23 (0.2) 1.7 • Malaysia plans to reopen Langkawi to locals under travel bubble program KOSPI 3,175.85 (1.0) 10.5 Nikkei 225 28,543.51 0.3 4.0 • Ceiling price of Covid-19 self-test kits fixed at RM19.90 PCOMP 6,834.66 0.7 (4.3) • Govt to announce investments similar to Microsoft’s US$1bn data centres SET 1,647.75 0.8 13.7 Shanghai 3,597.04 0.8 3.6 investment soon Taiwan 17,319.76 (0.9) 17.6 ———————————————————————————————— • Malaysia can't afford a cut in corporate tax, now at 24% Top Actives • Southern Cable wins RM30m contract from TM Close % chg Vol. (m) • MAA Group emerges as KNM’s substantial shareholder HO WAH GENTING 0.330 10.0 105.8 BINTAI KINDEN 0.530 (6.2) 96.6 TFP SOLUTIONS 0.230 4.5 93.2 TA WIN HLDGS 0.160 (5.9) 91.1 PA RESOURCES 0.415 (9.8) 89.8 KNM GROUP 0.275 (1.8) 71.0 DESTINI 0.260 6.1 66.7 DAGANG NEXCHANGE 0.730 0.7 64.9 ———————————————————————————————— Economic Statistics Close % chg US$/Euro 1.1874 (0.02) RM/US$ (Spot) 4.1585 (0.04) RM/US$ (12-mth NDF) 4.1973 (0.49) OPR (%) 1.75 0.00 GOLD ( US$/oz) 1,809.34 (0.02) WTI crude oil US spot (US$/barrel) 69.99 2.04 CPO spot price (RM/tonne) 4,482.00 (0.92) ———————————————————————————————————————— Ivy NG Lee Fang, CFA T (60) 3 2261 9073 E [email protected] Show Style "View Doc Map" IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. IF THIS REPORT IS DISTRIBUTED IN Powered by the THE UNITED STATES IT IS DISTRIBUTED BY CGS-CIMB SECURITIES (USA), INC. AND IS CONSIDERED THIRD-PARTY AFFILIATED RESEARCH. EFA Platform Sources: CIMB. COMPANY REPORTS Sources: CIMB. COMPANY REPORTS Malaysia Daybreak | September 3, 2021 Global Economic News Half of US small-business owners reported unfilled job openings in Aug as finding qualified workers remains an ongoing challenge, a trade group said. The National Federation of Independent Business said in its monthly jobs report that 50% of small business owners reported unfilled job openings in Aug on a seasonally adjusted basis, up from 49% in Jul. August’s reading is 28 percentage points higher than the 48-year average of 22%. (Reuters) China ramped up financial support for small businesses and pledged better use of local government bonds as the economy showed further signs of a slowdown because of tight property controls and fresh virus outbreaks. The People’s Bank of China will provide 300bn yuan (US$46.4bn) of low-cost funding to banks so they can lend to small and medium-sized companies, according to a statement released after a Wednesday meeting of the State Council, China’s equivalent of a government cabinet. Other measures include interest subsidies to firms hit hard by the pandemic and a bigger role for local special bonds in driving investment. (Bloomberg) South Korea's Aug consumer inflation stayed at a nine-year peak, raising the chances the central bank will hike rates again this year as strong demand adds to price pressures. Consumer prices in Aug rose 2.6% yoy, Statistics Korea said on 2 Sep, matching the rate in Jul, driven by a spike in fresh food prices due to a heat wave and high cost of oil products, housing rental and other services. The 2.6% rise was first seen in May, when inflation marked the fastest pace since Apr 2012, and continued to stay above the central bank's 2% target for a fifth straight month. (Reuters) Bank of Japan board member Goushi Kataoka said on 2 Sep the coronavirus pandemic may weigh on the economy longer than initially expected, warning of heightened risks to the central bank's forecast of a moderate, export-driven recovery. Kataoka also stressed the BOJ's readiness to ramp up stimulus if needed, reinforcing market expectations Japan will lag other countries in exiting crisis-mode policies. (Reuters) Malaysia Economic News Malaysia plans to reopen the tourist haven of Langkawi islands as it renews efforts to rebuild parts of the economy worst hit by the pandemic. Langkawi, in the state of Kedah, will open to locals under a travel bubble plan from 16 Sep, Prime Minister Ismail Sabri Yaakob said in a statement on 2 Sep. Other destinations will be allowed to operate when the locality’s vaccination rate hits 80%, he said. (Bloomberg) Melaka state will move into the second phase, and Negeri Sembilan into the third stage of the national recovery plan from 4 Sep after meeting the threshold limits in reducing Covid infections, the prime minister said. The decision was made by the National Security Council, which will now be renamed as the Special Committee on Pandemic Management, he said. The committee will include representatives from opposition parties as well. (Bloomberg) The Ministry of Housing and Local Government will be providing residence for groups affected by Covid-19 at minimum rent for at least two years, said Minister Datuk Seri Reezal Merican Naina Merican. He said he will announce further information on the residence aid initiative for residents affected by the Covid-19 pandemic, which will be a primary focus when he leads the Ministry of Housing and Local Government (KPKT), on 6 Sep. (Bernama) 2 Malaysia Daybreak | September 3, 2021 Bank Negara Malaysia (BNM) said it will be joining forces with the Bank for International Settlements (BIS) Innovation Hub, Reserve Bank of Australia (RBA), Monetary Authority of Singapore (MAS) and South African Reserve Bank (SARB) to test the use of central bank digital currencies (CBDCs) for international settlements. In a statement, BNM said the project, dubbed Project Dunbar, aims to develop prototype shared platforms for cross-border transactions using multiple CBDCs, which will allow financial institutions to transact directly with each other in the digital currencies issued by participating central banks. It said this will eliminate the need for intermediaries and also reduce the time and cost of transactions. (The Edge Markets) The government has set the maximum ceiling prices for Covid-19 self-test kits, with the wholesale price fixed at RM16 a unit and a retail price of RM19.90 a unit, which will take effect from 5 Sep. The pricing was made to ensure the self-test kits are affordable for businesses as well as the public, according to a joint statement today by the Domestic Trade and Consumer Affairs (KPDNHEP) Minister Datuk Seri Alexander Nanta Linggi and Health Minister Khairy Jamaluddin. (The Edge Markets) The Sabah government hopes to get over 2.88m doses of the Covid-19 vaccine this month to enable its vaccination programme to run smoothly, said Local Government and Housing Minister Datuk Masidi Manjun. He said the Sabah State Health Department (JKNS) was also making efforts to increase the vaccination rate this month and targeting an average of 60,000 doses of vaccines a day.