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| | | | SECTOR RESEARCH | | | | | | | Let's talk about consumption
by Liew Wei Han |
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| | | | | | Revenue growth for our consumer companies has, on aggregate, mirrored real private consumption trends, but earnings have been mixed. We forecast cumulative CY17/18 earnings growth of 6%/8% for our basket, on the back of 5%/7% revenue growth. Maintain NEUTRAL on the sector and our BUYs are Atlan and BFOOD. | |
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| | | | MACRO RESEARCH | | | | | | | Keep growing and carry on…
by Suhaimi Ilias |
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| | | | | | Export and import growth stayed robust in Aug 2017 at +21.5% YoY (July 2017: +30.9% YoY) at +22.6% YoY (July 2017: +21.8% YoY). Trade surplus widened +14.4% YoY to +MYR9.9b (July 2017: +MYR8.0b). Global manufacturing PMI, US ISM new orders index and intermediate goods imports point to firm external demand amid mixed signal on domestic demand as consumption goods imports surged while capital goods imports lagged. | |
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| | | | | | | | Reserves rise further
by Suhaimi Ilias |
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| | | | | | Total gross external reserves rose +USD0.4b to USD101.2b at end-Sep 2017 (mid-Sep 2017: USD100.8b), supported by portfolio capital and trade flows. Year to date, external reserves rose +7.0% from USD94.6b at end-Dec 2016, and at current pace, it could be at USD103b-USD104b by end-2017. | |
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| | | | | | | | The Hunt for Red October – Will History Repeat Itself?
by Nik Ihsan Raja Abdullah |
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| | | | | | Using cycle and seasonality studies, we made an assessment on the Dow Jones Industrial Average Index (INDU Index). Since 1,896, there were 20 occasions where the INDU Index underwent a big correction in the month of October. Another finding is that after Oct 1977, we notice that corrections took place every ten years – 1987, 1997 and 2007. That said, at this point in time, the INDU Index is still moving in an upward trajectory, with no visible major reversal signal. | |
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| | NEWS | | | Outside Malaysia:
U.S: Payrolls fall 33,000 on storms; Jobless rate at 4.2%. The number of workers on U.S. payrolls declined last month for the first time since 2010, reflecting major disruptions from hurricanes Harvey and Irma, Labor Department figures showed. The jobless rate fell to a new 16-year-low while wage gains accelerated. Payrolls fell 33k after 169k advance; revisions subtracted combined 38k in July-Aug. Unemployment rate, derived from a separate Labor Department survey of households, dropped to 4.2% from 4.4%; lowest since Feb. 2001. (Source: Bloomberg)
Germany: Factory orders surge as economy sustains strong momentum. German factory orders rebounded in August in a sign that Europe's largest economy is set to sustain its robust pace of growth. Orders, adjusted for seasonal swings and inflation, rose 3.6% in August after a revised decline of 0.4% in July, data from the Economy Ministry in Berlin showed. That's the biggest increase since December. Demand was up 7.8% YoY from the previous year. (Source: Bloomberg)
U.K. Home-Price inflation accelerates to fastest in seven months. U.K. house prices rose in September, pushing the annual rate of growth to the fastest in seven months, according to Halifax. Values increased 0.8% from August, a third consecutive monthly advance, the mortgage lender said in a statement. The year-on-year increase jumped to 4% YoY. Despite the improvement, the overall picture is one of a softer market. The pace of national price increases is down from a peak of 10% in early 2016 and other reports show declines in values in some regions. (Source: Bloomberg) | |
| | | | | Other News:
Ports: Carey Island port necessary to handle future capacity. According to Transport Minister Datuk Seri Liow Tiong Lai, the planned Carey Island port development is necessary to handle future demand once Westports Holdings expanded terminal reaches full capacity in 2030. "Carey Island will be ready by that time", said Liow, adding that the expected rise in Westport's handling capacity to 30-million twenty foot equivalent units (TEUs) is "not enough". In August, Westports announced it would expand its container terminal facilities by 10 more berths on top of its existing nine container terminals. The proposed Carey Island port-industrial city development which will have a similar handling capacity of 30-million TEUs, signaled the government's confidence that Malaysian ports can expect stronger volume going forward. (Source: The Edge Financial Daily)
Aeon: Not closing down Quill City Mall outlet. The company has refuted market talk of an impending closure of its outlet at Quill City Mall in Kuala Lumpur, which has underperformed its peers in the challenging market environment. In an email reply to SunBiz, the company said it is in the midst of refurbishing and upgrading its existing malls and stores while expanding its customer experience throughout the country by setting up new malls, with the latest being the one in Bandar Dato' Onn, Johor Bahru. The retailing group highlighted that its revenue growth remains commendable, albeit the poor consumer sentiment due to the rising cost of living that has affected all sectors of the retailing business, thanks to customer loyalty and the group's ability to deliver quality customer shopping experience. Currently Aeon operates 27 malls, 34 outlets and three MaxValu supermarkets throughout the country. (Source: The Sun Daily)
Emico: Hopes revolutionary machine will raise revenue. The company is hoping for a bigger top-line growth after introducing a new sublimation printing machine in the market. According to its managing director, Jimmy Ong Chin Keng, the machine is seen as revolutionary in the Malaysian trophy industry as it is able to print on wooden, glass, aluminum or flat-surface plaques for souvenir and trophies. "We expect the effects [on revenue] to kick in the fourth quarter. For the whole calendar year, we expect to see about MYR3m from the sale of the machines to our distributors," Ong told The Edge Financial Daily. (Source: The Edge Financial Daily) | |
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