Malaysia | June 29, 2021 Key Metrics Malaysia Daybreak | 29 June 2021 FBMKLCI Index 1,700 ▌What’s on the Table… 1,650 ———————————————————————————————————————————————————————————————————————————————————————— 1,600 1,550 Strategy Note – PEMULIH stimulus may not boost sentiment 1,500 Malaysia has unveiled a RM150bn stimulus package, dubbed PEMULIH, of 1,450 which RM10bn is a direct fiscal injection. The key measures include a blanket 1,400 new automatic loan moratorium for all individual borrowers and SMEs and a new Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 EPF withdrawal scheme. Overall, we are neutral on PEMULIH and would focus ——————————————————————————— on reopening timeline. FBMKLCI 1,544.71 -14.97pts -0.96% Economic Update – Stimulus #10: Stabiliser rather than panacea JUN Future JUL Future 1542 - (-1.00%) 1542.5 - (-1.03%) RM150bn PEMULIH adds RM10bn fiscal measures, extending cash transfers ——————————————————————————— and wage subsidies, while loan moratorium and EPF withdrawals reinstated. We Gainers Losers Unchanged view measures as lockdown stabilisers rather than recovery catalysts, and 139 973 339 ——————————————————————————— reiterate GDP growth forecasts at 4.4% in 2021 and 4.7% in 2022. Turnover Genetec Technology Bhd – Driving ahead with growing demand of EVs 4730.99m shares / RM2405.107m 3m avg volume traded 6548.41m shares Genetec said it made a breakthrough in producing Smart Factory Automation 3m avg value traded RM3788.11m ——————————————————————————— systems for electric vehicle, energy storage and autonomous driving in 2020. The Regional Indices group plans to ride on the structural shift in the global automotive industry from FBMKLCI FSSTI JCI SET HSI internal combustion engine (ICE) towards electric vehicles (EV). 93% of 1,545 3,127 5,939 1,579 29,268 Genetec’s RM205m current outstanding order book is related to EV and battery ———————————————————————————————— assembly. Total order book has exceeded FY3/21 sales by 2.1x. Market Indices Close % chg YTD % chg Cypark Resources Bhd – Waiting for power plants to come on board FBMKLCI 1,544.71 (1.0) (5.1) FBM100 10,937.97 (1.0) (4.9) Cypark’s LSS 2 is relocated from Empangan Terip to Danau Tok Uban. We FBMSC 15,454.44 (1.7) (0.7) FBMMES 6,995.54 (3.1) (34.8) project delays in LSS 2’s COD due to relocation and recent lockdowns. We Dow Jones 34,283.27 (0.4) 12.0 believe EPCC revenue and LSS 3 plant progress could be affected by slower NASDAQ 14,500.51 1.0 12.5 FSSTI 3,126.88 0.2 10.0 work progress as a result of FMCO. Our SOP-based TP is cut to RM1.00 after FTSE-100 7,072.97 (0.9) 9.5 adjusting for its enlarged share base from the private placement and changes in SENSEX 52,735.59 (0.4) 10.4 Hang Seng 29,268.30 (0.1) 7.5 plants’ COD. JCI 5,939.47 (1.4) (0.7) KOSPI 3,301.89 (0.0) 14.9 Oceancash Pacific Bhd – Near-term disruptions in customer demand Nikkei 225 29,048.02 (0.1) 5.8 PCOMP 6,937.96 (0.2) (2.8) 1QFY21 core net profit of RM1.5m (-7.8% yoy) came in below expectations, SET 1,579.17 (0.2) 9.0 Shanghai 3,606.37 (0.0) 3.8 mainly due to weak sales volumes for its hygiene segment. While OCP is allowed Taiwan 17,590.97 0.5 19.4 to operate during the current lockdown, demand for its insulation segment from ———————————————————————————————— Top Actives automotive customers has been disrupted. End-demand should recover swiftly Close % chg Vol. (m) upon the easing of restrictions. Reiterate Add with a lower TP of RM0.60. SERBA DINAMIK 0.325 (20.7) 612.7 FINTEC GLOBAL 0.030 (14.3) 148.1 Economic Update – May 2021 trade DAGANG NEXCHANGE 0.725 (0.7) 92.6 BOUSTEAD HLDGS 0.710 (6.6) 75.5 Imports (+50.3% yoy) grew at a stronger pace than exports (+47.3% yoy) for the PUC 0.160 6.7 69.2 KPOWER 0.625 (16.1) 57.9 first time in 13 months, leading to a smaller trade surplus of RM13.7bn. PRIVASIA TECH 0.190 (7.3) 53.4 Restrictions on sectors allowed to operate under Phases 1 and 2 of the National SCIB 0.455 (22.9) 52.1 ———————————————————————————————— Recovery Plan will likely disrupt trade flows until Aug 21. Trade growth to also Economic Statistics moderate significantly going ahead as base effect fades. We retain our exports Close % chg and imports forecasts at 14.0% and 15.6% in 2021. US$/Euro 1.1925 (0.04) RM/US$ (Spot) 4.1470 (0.06) RM/US$ (12-mth NDF) 4.2000 (0.46) OPR (%) 1.75 0.00 GOLD ( US$/oz) 1,777.12 (0.08) ▌News of the Day… WTI crude oil US spot (US$/barrel) 72.91 (1.80) ———————————————————————————————————————————————————————————————————————————————————————— CPO spot price (RM/tonne) 3,691.00 1.40 ———————————————————————————————————————— • PM unveils RM150bn PEMULIH aid package Ivy NG Lee Fang, CFA • Malaysia's 5M21 total trade grows 26% to RM867.4bn T (60) 3 2261 9073 E [email protected] • Six-month loan moratorium to be granted to all borrowers regardless of income • EPF: Applications for i-Citra withdrawals can be made from 15 Jul Show Style "View Doc Map" • TNB says gov’t maintains ICPT rebate after electricity-generation cost reduction • Maybank’s Group CFO Amirul Feisal resigns to take on MD role at GLC • Cypark to build and operate IIUM's solar PV system 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 | June 29, 2021 Global Economic News The US Federal Reserve has made “substantial further progress” toward its inflation goal in order to begin tapering asset purchases, Federal Reserve Bank of Richmond President Thomas Barkin said, as he indicated US employment numbers may soon follow. (Reuters) Drug maker AstraZeneca said it was on schedule to meet its commitments for supplying coronavirus vaccines in Southeast Asia, after some initial delays in regional production and delivery. AstraZeneca said Thailand, which is manufacturing its vaccine locally, will have received its agreed quota of 6m doses within this month, while export to other Southeast Asian countries will start in early Jul. In a statement, AstraZeneca Thailand said partner Siam Bioscience, owned by King Maha Vajiralongkorn, will produce 180m doses this year, just over a third for Thailand and two-thirds for elsewhere in Southeast Asia. (Reuters) Malaysia Economic News Prime Minister Tan Sri Muhyiddin Yassin on 28 Jun unveiled Pakej Perlindungan Rakyat dan Pemulihan Ekonomi (PEMULIH) worth RM150bn, inclusive of a fiscal injection of RM10bn. To date, the government has introduced various economic stimulus packages worth RM380bn to support the domestic economy and protect livelihoods amid the Covid-19 pandemic. The PEMULIH package outlines three main focuses, namely to continue upholding the public’s agenda, supporting businesses and expediting the national vaccination programme. (The Edge Markets) Highlight of the package include: B40 households to receive RM500 from the government in Aug and RM300 in Dec; B40 singles to receive RM200 in Aug M40 households to receive RM250 in Aug; M40 singles to receive RM100 in Aug Govt allocates RM300,000 to MPs for food basket assistance to help affected groups in their respective constituencies Govt allocates RM10m for food basket programme for indigenous peoples An electricity bill discount of between 5-40% for domestic users — in accordance with electricity usage up to a maximum of 900kwh per month — worth RM346m, to be given for three months RM18m allocation for local banks to provide 30 mobile banks nationwide Micro SMEs to receive additional assistance of RM500 in September and RM500 in Nov Additional RM100m under SME Digitalisation Grant for SMEs and micro SMEs to get matching grants of up to RM5,000 for purchase or subscription of digital systems Govt to allocate RM100m to assist those in the creative arts sector Govt to allocate RM400m to increase national vaccine supply to cover 130% of the population, from previous targeted 120% Govt to allocate RM200m for 29 new vaccination centres and to upgrade existing ones, as well as to introduce drive-through vaccination centres, mobile vaccination centres and to fund outreach home-to-home vaccination programmes There will be RM150m allocation for public-private partnership immunisation programme (PIKAS) Govt announces Covid-19 Special Aid (BKC) with RM4.6bn allocation Govt continues to maintain the retail price of RON95 petrol, diesel and LPG, which is expected to involve a subsidy of more than RM6bn this year (The Edge Markets) 2 Malaysia Daybreak | June 29, 2021 Malaysia’s total trade grew by 26% yoy to RM867.4bn in the first five months of 2021, the Ministry of International Trade and Industry (MITI) said. The trade surplus surged by 112.2% to RM92.79bn as exports rose by 31.1% to RM480.09bn and imports increased by 20.1% to RM387.31bn. The ministry said the country’s trade performance maintained its upward trend in May 2021, with trade expanding by 48.7% to RM170.88bn compared to May 2020. (Bernama) Please refer to our note for details A six-month bank loan moratorium will be granted to all individual borrowers and micro-entrepreneurs to help them weather the economic effects of the Covid-19 pandemic. Prime Minister Tan Sri Muhyiddin Yassin, in unveiling the Pakej Perlindungan Rakyat dan Pemulihan Ekonomi (Pemulih) assistance programme on 28 Jun, said the moratorium will be given to all individuals, regardless of their income bracket, and would be approved automatically after application.