Malaysia May 6, 2021 Key Metrics Malaysia Daybreak | 6 May 2021 FBMKLCI Index 1,700 ▌What’s on the Table… 1,650 ———————————————————————————————————————————————————————————————————————————————————————— 1,600 1,550 Agribusiness – Palm oil stock preview for Apr 2021F 1,500 1,450 Malaysia’s palm oil stocks likely grew by 1.8% mom to 1.47m tonnes at end-Apr 1,400 2021F, driven mainly by strong output. A survey by CGS-CIMB Futures reveals 1,350 that Apr output was probably 6.8% higher mom, while export volumes probably May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 rose by 12.5% mom. Rising prices of competing edible oils are supporting ——————————————————————————— demand and will likely keep CPO prices firm in the near term. Reiterate Neutral FBMKLCI sector rating. 1,575.67 -12.58pts -0.79% MAY Future JUN Future 1576 - (-0.91%) 1573.5 - (-0.88%) ——————————————————————————— Supermax Corp – Any ASP decline likely to be gradual Gainers Losers Unchanged 9MFY6/21 net profit of RM2.9bn were 9% below our expectation, as a result of 301 811 414 ——————————————————————————— lower production volume recorded in the quarter. In tandem with higher glove Turnover supply globally, SUCB indicates current ASPs for gloves have dipped by 15-25% 7367.94m shares / RM4238.901m since end-3QFY21 (c.US$120 per 1k pieces). Maintain Add with a lower TP of 3m avg volume traded 8500.57m shares RM6.60 (15x CY23F P/E) in tandem with our EPS cut and as we roll over our 3m avg value traded RM4720.28m ——————————————————————————— valuation year to CY23F. Regional Indices FBMKLCI FSSTI JCI SET HSI 1,576 3,154 5,976 1,549 28,418 Gas Malaysia Berhad – Stronger gas volume sold lifted earnings ———————————————————————————————— Market Indices 1QFY21 core earnings came in within expectations, up 16% yoy on higher gross Close % chg YTD % chg FBMKLCI 1,575.67 (0.8) (3.2) margin and stronger gas volume sold. We raise our FY21-23 EPS estimates by FBM100 11,256.40 (0.8) (2.1) 1-4% due to lower costs but we cut our revenue forecasts on lower natural gas FBMSC 17,026.05 (1.0) 9.4 FBMMES 8,469.94 (1.8) (21.1) tariff. Reiterate Add with a higher TP of RM2.97 given the stable earnings profile Dow Jones 34,230.34 0.3 11.8 and decent dividend yields. NASDAQ 13,582.42 (0.4) 5.4 FSSTI 3,153.59 (0.8) 10.9 FTSE-100 7,039.30 1.7 9.0 SENSEX 48,677.55 0.9 1.9 Fraser & Neave Holdings – Rising commodity prices may affect margins Hang Seng 28,417.98 (0.5) 4.4 JCI 5,975.91 0.2 (0.1) FN continues to experience higher sales in Malaysia and Thailand, thanks to a KOSPI 3,147.37 0.6 9.5 Nikkei 225 28,812.63 (0.8) 5.0 recovery in domestic demand and higher export sales. It did not discount the PCOMP 6,299.69 (0.9) (11.8) possibility of raising selling prices in the event that commodity prices rise beyond SET 1,549.22 (2.1) 6.9 Shanghai 3,446.86 (0.8) (0.8) current elevated levels. We reiterate our Hold call with a DCF-based TP of Taiwan 16,843.44 (0.5) 14.3 RM31.60. ———————————————————————————————— Top Actives Close % chg Vol. (m) FOCUS DYNAMICS 0.100 (4.8) 501.2 SEDANIA 0.305 29.8 348.3 ▌News of the Day… DAGANG NEXCHANGE 0.695 2.2 196.0 ———————————————————————————————————————————————————————————————————————————————————————— KTG 0.220 4.8 143.3 LION INDUSTRIES 0.925 (0.5) 140.2 • US CBP seizes 4m disposable gloves from Top Glove based on information VELESTO ENERGY 0.150 (6.3) 137.7 related to forced labour TA WIN HLDGS 0.155 14.8 118.3 DATAPREP HLDGS 1.950 30.0 116.8 • Top Glove said it is working with US to get ban lifted ———————————————————————————————— Economic Statistics • Supermax said rubber glove spot prices on downtrend, falling 15% to 25% Close % chg • IHH Healthcare partners Indian biotech company to provide Covaxin in India US$/Euro 1.2006 0.00 RM/US$ (Spot) 4.1205 (0.05) • IRB slaps two UEM Sunrise units with RM82.2m tax bill RM/US$ (12-mth NDF) 4.1678 (0.40) • F&N to keep any product price hike rate within single-digit range, says CEO OPR (%) 1.75 2.34 GOLD ( US$/oz) 1,785.87 (0.06) • PM launches RM3.5bn Jaringan Prihatin programme to benefit 8.4m BPR WTI crude oil US spot (US$/barrel) 65.63 (0.09) recipients CPO spot price (RM/tonne) 4,530.00 0.03 ———————————————————————————————————————— 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 | May 6, 2021 Global Economic News The US has backed a temporary suspension of intellectual property rights for Covid-19 vaccines in a move likely to enrage the pharmaceutical industry, which strongly opposes the waiving of patents. In theory, a waiver would allow any pharmaceutical manufacturer in the world to make “copycat” vaccines without fear of being sued for intellectual property infringement. (Financial Times) US private payrolls rose by 742,000 jobs in Apr, the largest gain since last Sep, the ADP National Employment Report showed. Companies hired 565,000 workers in Mar. The acceleration in hiring was across the board, with the leisure and hospitality sector adding 237,000 jobs. Manufacturers hired 55,000 workers and payrolls in the construction sector increased by 41,000 jobs. (Reuters) US Trade Representative Katherine Tai said she expects to engage “in the near term” with Chinese officials to assess their implementation of the “Phase 1” trade deal between the two countries, with the outcome to influence the fate of Washington’s punitive tariffs on Beijing. (Reuters) US services industry activity grew at a slightly slower pace in Apr, likely restrained by shortages of inputs amid a burst of demand that is being driven by massive fiscal stimulus and a rapidly improving public health environment. The Institute for Supply Management (ISM) said its non-manufacturing activity index fell to a reading of 62.7 last month from 63.7 in Mar, which was the highest on record. (Reuters) Euro zone business activity accelerated last month as the bloc's dominant services industry shrugged off renewed lockdowns and returned to growth, according to a survey on Wednesday that also showed firms were facing soaring costs for raw materials. IHS Markit's final composite Purchasing Managers' Index (PMI), seen as a good gauge of economic health, climbed to 53.8 last month from Mar's 53.2. That was just ahead of the preliminary 53.7 reading and comfortably above the 50 mark separating growth from contraction. (Reuters) Thailand's central bank left its key interest rate unchanged at a record low of 0.50% on Wednesday, preserving its limited ammunition to support Southeast Asia's second-largest economy struggling with a third wave of coronavirus infections. The latest outbreak has slowed domestic activity for the tourism-reliant economy at a time when it was preparing to reopen to travellers, but increased exports, another key growth driver, have lent some support. (Reuters) Indonesia's economy shrank for the fourth straight quarter in Jan-Mar but at a much more modest pace as the government boosted spending and higher commodity prices helped exports, statistics bureau data showed on Wednesday. Southeast Asia's largest economy contracted 0.74% in Jan-Mar from the same period a year earlier, compared with a 2.19% contraction in Oct-Dec. (Reuters) Commodities jumped to their highest in almost a decade as a rebound in the world’s largest economies stokes demand for metals, food and energy, while poor weather harms crops and transportation bottlenecks curb supplies. The Bloomberg Commodity Spot Index, which tracks prices for 23 raw materials, rose 0.8% Tuesday to its highest since 2011. The gauge has climbed more than 70% since reaching a four-year low in Mar of last year. (Bloomberg) 2 Malaysia Daybreak | May 6, 2021 Malaysia Economic News All economic sectors including the manufacturing sector in six districts in Selangor placed under the Movement Control Order (MCO) are allowed to operate as usual except for certain activities listed under the negative list under the MCO 3.0 general Standard Operating Procedures (SOP). The MCO 3.0 general SOP were based on existing SOP except for dine-in activities which are not allowed in restaurants. (Edge Markets) Kuala Lumpur and several districts and mukims in Terengganu, Johor and Perak will be placed under the Movement Control Order (MCO) from 7 to 20 May. (Bernama) Vehicles may carry passengers up to their legal capacity in areas under the movement control order, the government reiterated in an updated list of standard operating procedures (SOPs). The SOPs also did not include a limit to how far residents may travel from their homes within the MCO. However, they do state that vehicular travel in MCO zones was limited to purposes of procuring food, groceries, essential supplies, and medical treatment within the same administrative district or the next nearest, if necessary. (Malay Mail) After banning Indian nationals from entering Malaysia, the government on 5 May extended the ban to cover travellers from Bangladesh, Pakistan, Nepal and Sri Lanka.