Malaysia Daybreak | 30 August 2021 FBMKLCI Index

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Malaysia Daybreak | 30 August 2021 FBMKLCI Index Malaysia | August 30, 2021 Key Metrics Malaysia Daybreak | 30 August 2021 FBMKLCI Index 1,700 ▌What’s on the Table… 1,650 ———————————————————————————————————————————————————————————————————————————————————————— 1,600 1,550 Strategy Note – Reaction to new cabinet and events to watch 1,500 Market likely to be neutral on the new cabinet as key ministers were retained. 1,450 This suggests there will be continuity to policies implemented previously. The 5% 1,400 gain in KLCI in the past week suggests market has priced in political stability in Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 the near term. Maintain KLCI target of 1,608 pts and top picks. ——————————————————————————— FBMKLCI Bumi Armada – A robust 2Q21 as FPSO assets working well 1,590.16 4.42pts 0.28% 1H21 core net profit of RM361m was above expectations, at 82% of our full-year AUG Future SEP Future 1595 - (0.60%) 1579.5 - (0.45%) forecast (76% of consensus) due to better-than-forecast FPSO profits. Upgrade ——————————————————————————— from Hold to Add, with higher SOP-based TP of 55 sen as we raise our earnings Gainers Losers Unchanged forecasts and use a stronger US$ rate of RM4.15 (vs. RM4). Likely strong 2H21F 397 616 445 ——————————————————————————— earnings may re-rate the stock; share price is down 9% from its 16 Jun-high of 49 Turnover sen; a good opportunity to buy, in our view. 4083.21m shares / RM2960.129m 3m avg volume traded 5042.52m shares Public Bank Bhd – A prudent move to enhance provision buffer 3m avg value traded RM2963.34m ——————————————————————————— PBB’s 1H21 net profit was within expectations at 53% of our full-year forecast Regional Indices and 50% of the Bloomberg consensus estimate. PBB provided a total LLP of FBMKLCI FSSTI JCI SET HSI RM396m in 2Q21, leading to a strengthening of its loan loss coverage from 247% 1,590 3,081 6,041 1,611 25,408 in Mar 21 to 275.1% in Jun 21. Retain Add on PBB on the expected recovery in ———————————————————————————————— FY21F net profit growth and its defensive qualities against credit risks triggered Market Indices Close % chg YTD % chg by the Covid-19 outbreak. FBMKLCI 1,590.16 0.3 (2.3) FBM100 11,273.38 0.2 (2.0) Telekom Malaysia – 2Q21: Good Unifi net adds & cost initiatives FBMSC 15,914.89 (0.2) 2.2 FBMMES 7,214.87 (0.7) (32.8) 2Q21 core EPS was in line, down 23% qoq due to weaker seasonality and VSS Dow Jones 35,455.80 0.7 15.8 cost. We view the latter positively as it will structurally lower future costs. Another NASDAQ 15,129.50 1.2 17.4 FSSTI 3,080.77 (0.9) 8.3 record Unifi net adds (+188k, +10% qoq) in 2Q21. ARPU eased, but this is FTSE-100 7,148.01 0.3 10.6 expected given the sizeable net adds from the wider mass market. Reiterate Add, SENSEX 56,124.72 0.3 17.5 Hang Seng 25,407.89 (0.0) (6.7) with a 7% higher DCF-based target price of RM7.50. JCI 6,041.37 (0.3) 1.0 KOSPI 3,133.90 0.2 9.1 Genting Bhd – Temporary setback; robust start for RWLV Nikkei 225 27,641.14 (0.4) 0.7 PCOMP 6,786.62 (0.5) (4.9) 1H21 core net loss (weak GENS profits) and nil DPS missed our expectation. We SET 1,611.20 0.6 11.2 Shanghai 3,522.16 0.6 1.4 think FY22F core net profit may rebound to RM1.5bn, before rising more. Taiwan 17,209.93 0.8 16.8 Reiterate Add, with a slightly lower SOP-based target price of RM7.25. ———————————————————————————————— Top Actives Affin Bank Berhad – Positive trends to spur FY21F NII growth Close % chg Vol. (m) KNM GROUP 0.260 8.3 278.1 Alliance Bank Malaysia Berhad – One of the highest CCORs in the sector AVILLION 0.145 16.0 249.6 D'NONCE TECH 0.455 (17.3) 106.9 Awanbiru Technology Bhd – In the midst of transformation SCOPE INDUS 0.310 (8.8) 97.4 FOCUS DYNAMICS 0.050 0.0 73.3 TFP SOLUTIONS 0.230 4.5 69.8 Media Chinese Int'l – Not the time to fly DAGANG NEXCHANGE 0.745 0.0 67.6 AT SYSTEMATIZATION 0.055 0.0 50.8 Power Root Bhd – Better times in 2HFY22F ———————————————————————————————— Economic Statistics WCT Holdings – Eyeing a potential recovery in 4Q21F Close % chg US$/Euro 1.1798 (0.02) Yinson Holdings Bhd – Yinson replaces Parque with Atlanta in Brazil RM/US$ (Spot) 4.1910 (0.05) RM/US$ (12-mth NDF) 4.2125 (1.25) Economic Update – Jul 21 trade OPR (%) 1.75 0.00 GOLD ( US$/oz) 1,818.01 0.02 WTI crude oil US spot (US$/barrel) 68.74 1.96 CPO spot price (RM/tonne) 4,563.00 0.26 ▌News of the Day… ———————————————————————————————————————— ———————————————————————————————————————————————————————————————————————————————————————— Ivy NG Lee Fang, CFA • PM wants vaccination rates in six states to reach 50% by end-September T (60) 3 2261 9073 E [email protected] • Yinson unit engages in negotiation for potential charter of FPSO in Brazil • MAHB allocates RM600m-700m for Airports 4.0 initiative Show Style "View Doc Map" • Dialog Group’s unit inks a JV agreement with MTS to collaborate and provide one-stop engineering fabrication services • Axiata: Fate of Celcom-Digi merger in the hands of regulator now 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 | August 30, 2021 Global Economic News Federal Reserve Chair Jerome Powell, in a speech that affirmed an ongoing US economic recovery and explained why there is no rush to tighten monetary policy, gave a detailed account of why he regards a spike in inflation as temporary and offered no signal on when the central bank plans to cut its asset purchases beyond saying it could be "this year." In remarks to the annual Jackson Hole economic conference, Powell indicated the Fed will remain cautious in any eventual decision to raise interest rates as it tries to nurse the economy to full employment, saying he wants to avoid chasing "transitory" inflation and potentially discouraging job growth in the process - a defense in effect of the new approach to Fed policy he introduced a year ago. (Reuters) US consumer spending slowed in Jul as a decline in motor vehicle purchases due to shortages offset a rise in outlays on services, supporting views that economic growth will moderate in the third quarter amid a resurgence in Covid-19 infections. But the foundation for the recovery remains solid, with the report from the Commerce Department on 27 Aug showing wages rising and Americans further boosting savings. Inflation appears to have peaked, which could preserve households' purchasing power. Businesses are also restocking and exporting more goods, suggesting a slowdown in growth this quarter could be temporary. (Reuters) Profit growth at China's industrial firms in Jul grew at its slowest clip this year, as elevated raw material prices and supply chain constraints from extreme weather as well as sporadic coronavirus cases weighed on the manufacturing sector. The data adds to a recent batch of indicators highlighting loss of momentum in the world's second-biggest economy, suggesting policymakers are likely to maintain support measures to underpin growth. Industrial firms' profits increased 16.4% on an annual basis in Jul to US$108.51bn, data from the National Bureau of Statistics (NBS) showed on 27 Aug. That compared to a 20% gain in Jun. (Reuters) Single-use plastic plates, cutlery and cups are among a raft of items that could be banned in England as part of a new public consultation being launched in the autumn, the British government said on 28 Aug. "We will also introduce a world-leading plastic packaging tax from Apr 2022, set at 200 pounds (US$275.32) per tonne, on plastic packaging which doesn't meet a minimum threshold of at least 30% recycled content", the Department for Environment, Food & Rural Affairs said in a statement. Malaysia Economic News According to The Ministry of International Trade and Industry (MITI), Malaysia's trade performance maintained upward movement in Jul as trade increased by 13% yoy to RM180.96bn. This was the sixth consecutive month of double-digit growth since Feb 2021. Exports grew by 5% to RM97.32bn, the 11th consecutive month of yoy expansion since Sep 2020. Imports rose by 24% yoy to RM83.64bn while trade surplus contracted 45.8% yoy to RM13.68bn. (NST) Please refer to our note for details There is a possibility that Klang Valley can be moved to the next phase (Phase Two) of the National Recovery Plan (NRP), Prime Minister Datuk Seri Ismail Sabri Yaakob said. He said this is likely possible since Klang Valley’s vaccinated numbers have arrived at 89.5%, a number that is close to the herd immunity requirement. (Malay Mail) 2 Malaysia Daybreak | August 30, 2021 Prime Minister Datuk Seri Ismail Sabri Yaakob stressed that all factory owners who employ foreign workers should set up vaccination centre (PPV) at their premises. Factories should contribute to economic growth and not be the epicentre of Covid-19 outbreak, he said in a post on his Facebook page. (Bernama) All vaccination-related programmes and health strategies related to Covid-19 will from now on only be handled by the Ministry of Health (MoH) through its newly appointed minister Khairy Jamaluddin, said Prime Minister Datuk Seri Ismail Sabri Yaakob.
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