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SECTOR RESEARCH
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New Price Control and Anti-Profiteering
Regulations
by Liew
Wei Han
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The new Price Control and Anti-Profiteering
Regulations (PC&APR) 2016 only to (i) F&B and (ii) household
goods. We believe that it could be positive for sectors such as
apparel, tobacco, retailers as they are no longer subjected to
pricing restrictions (on non-F&B and HH-goods for retailers). As
for F&B, based on our understanding that companies are still
allowed to increase prices to maintain margins, we believe that it is
short term neutral. No change to our earnings forecasts, stock calls.
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MACRO RESEARCH
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Boost from tourism recovery
by
Suhaimi Ilias
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Distributive Trade Index (DTI) in Nov 2016 reported
its slowest growth rate in four months i.e. +5.6% YoY (Oct 2016:
+6.1% YoY) on slower wholesale trade (Nov 2016: +6.0% YoY; Oct 2016:
+8.1% YoY). However retail trade growth – a proxy of consumer spending
– was sustained (Nov 2016: +7.7% YoY; Oct 2016: +7.4% YoY), supported
by recovery in tourist arrivals, hence tourist spending.
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Suhaimi Ilias
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Zamros
Dzulkafli
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NEWS
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Outside Malaysia:
U.S: Retail sales figures bear out America's online
shopping shift. Holiday sales at Macy's Inc., Sears Holdings Corp., and
J.C. Penney Co. were anemic as the nation's traditional department stores
are steadily losing ground to their online rivals — a shift in the retail
landscape that shows both the change in Americans' shopping patterns and
where the job growth is taking place. Sales at all U.S. retailers
increased 4.4% YoY in December on an unadjusted basis, according to
Commerce Department figures released. The breakdown showed purchases at
department stores fell 7.2% YoY, marking the 23rd consecutive month of
year over-year declines in the beleaguered sector. (Source: Bloomberg)
U.K: GBP drops below $1.20 as May reported to seek hard
Brexit. Sterling declined against all of its major peers after the Sunday
Times said that May will prepare to withdraw from tariff- free trade with
the region in return for the ability to curb immigration and strike
commercial deals with other countries. The currency has fallen 19%
against the dollar since the nation opted to leave the EU in June’s
referendum, with declines since the initial aftermath of the vote mainly
sparked by concern May would pursue a so-called hard Brexit. (Source:
Bloomberg)
Crude Oil: Halts decline as U.S. drilling slows amid OPEC
output cuts. Oil halted its decline after the biggest weekly drop since
November as drillers in the U.S. slowed an expansion while OPEC and other
producing nations cut production to stabilize the market. Rigs targeting crude
in the U.S. fell for the first time in 11 weeks, according to data from
Baker Hughes Inc. Colder weather in Siberia made only a minor
contribution to Russia’s roughly 150,000 barrel-a-day output reduction
during the first part of January as voluntary cuts by companies were the
decisive factor, according to the country’s energy ministry. Oil has
advanced since the deal among the Organization of Petroleum Exporting
Countries and 11 other nations to trim supply, but was unable to sustain
its rally above USD 55/bbl amid concern that rising prices will spur more
production. Brent for March settlement closed at to USD 55.52/bbl.
(Source: Bloomberg)
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Other News:
DNeX: DNeX subsidiary bags deal worth MYR104m. Its
51%-owned subsidiary DNeX RFID S/B has bagged a contract worth MYR104.3m
from TCSens S/B to undertake the entire works for the road charges and
vehicle entry permit project. TCSens is the main contractor of the
project. The five-year contract is expected to contribute positively to
the DNeX group’s future earnings and net assets. (Source: The Sun Daily)
MMC Corp: To acquire 70% stake in KMB Seaport for MYR21m.
The group has signed a conditional share sale and purchase agreement
(SPA) with Seaport Management Services S/B to acquire a 70% share in KMB
Seaport S/B for MYR21m. It proposed to acquire 7,000 shares and 4.99
million irredeemable convertible cumulative preference shares subjected
to terms and conditions of the SPA. The proposed acquisition is also in
line with MMC’s board initiative to make further strategic investments in
its core business and to strengthen the financial position of MMC and its
subsidiaries. (Source: The Malay Mail)
OCK: Takes over Vietnamese telco. The group has completed
the acquisition of the entire stake in Vietnam’s Southeast Asia
Telecommunications Holdings Pte Ltd (SEATH) for USD50m (MYR223m) cash.
The acquisition is part of the group regional expansion plans in
achieving a wider business footprint in the Asean region. The group
managing director, Sam Ooi said “We intend to grow the business and will
leverage on OCK’s experience to expand further into Vietnam. We will tap
onto the launch of the 4G/LTE in Vietnam,”. (Source: The Sun Daily)
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