HEADLINES

Economy

• US: Producer prices revised lower in Dec. US producer prices fell more than initially thought in Dec. The PPI for final demand dropped 0.2% in Dec instead of dipping 0.1% as previously reported. Data for Oct and Nov were unrevised to show PPI declining 0.4% and slipping 0.1%, respectively. (Reuters)

• EU: Euro zone 4Q GDP confirmed flat QoQ, up 0.1% YoY. Euro zone economic growth was flat in the last three months of the 2023 against the previous quarter and up 0.1% against the same period of 2022. After euro zone output contracted 0.1% QoQ in the third 3Q, the result for the last three months is a narrow escape from a technical recession, defined as two consecutive quarters of negative growth. (Reuters)

• UK: Inflation holds at 4.0% in relief for BoE and Sunak. British inflation unexpectedly held steady at 4.0% in Jan, defying forecasts of a rise, offering relief for the BoE and Prime Minister Rishi Sunak too ahead of a national election expected this year. Economists had expected an increase in the annual rate to 4.2%. (Reuters)

• India: Wholesale prices rise 0.27%, less than forecast. India's wholesale prices increased for the third straight month in Jan, though at a slower-than-expected pace. The WPI rose 0.3% YoY in Jan, slower than the 0.7% gain in Dec. Economists had expected a 0.5% increase for the month. The overall upward trend was primarily due to the increase in prices of food articles, machinery and equipment, other manufacturing, minerals, and other transport equipment. (RTT)

• South Korea: 2024 inflation forecast lowered to 2.5%. The Korea Development Institute lowered South Korea's inflation forecast for this year to 2.5% from 2.6% projected earlier, citing slower growth in domestic demand. It expects employment to grow by 220,000 persons, despite the slowdown in domestic demand, which was slightly better than the 210,000 projected earlier. (RTT)

• Australia: Warns of economic downside as profit dips. Commonwealth Bank of Australia (CBA) warned of downside economic risks building in Australia from continued high interest rates and persistent inflation, as the country's largest lender posed a drop in its first-half profit. As cash rate increases have a lagged impact on households and business customers, it expects financial strain to continue in 2024, with an uptick in our arrears and impairments. (Reuters)

Markets

• Dayang Enterprise (Outperform, RM2.50): Secures two more workboat contract extensions from Petronas Carigali. Dayang Enterprise Holdings Bhd has secured two more contract extensions from Petronas Carigali SB for the provision of two accommodation work boats, namely Dayang Ruby and Dayang Opal. Dayang Ruby's contract was extended for 203 days, starting from 11 Nov 2023, while Dayang Opal's was extended for 270 days from 5 Nov 2023. (The Edge)
  
  Comment: As we highlighted yesterday, the contracts for Dayang Opal and Dayang Ruby are extended for a similar period. Hence, all 5 accommodation work boats vessels are under chartered contracts until 2Q and 3Q 2024. On another note, its 64%-owned subsidiary Perdana Petroleum also secured a contract extension and a new contract with a higher daily charter rate for a single client. Overall, this indicates offshore vessel supports (OSV) market remain tight as the demand remains strong amidst robust offshore activity. We maintain our recommendation on Dayang Enterprise with Outperform call and TP RM2.50.
   
• Perdana Petroleum: Secures new work barge job, extension of existing contract. Perdana Petroleum has secured a new contract, along with a seven-month extension of an existing contract, from Saujana Marine SB, with a combined value of RM38.3m. In a bourse filing, the offshore support vessel operator said the new contract is related to the provision of a unit of accommodation work barge (AWB) of up to 240 days, with an extension option of up to 30 days, starting from 15 Jan, with a contract value of RM22.1m. (The Edge)
   
• Pansar: Inks RM130m deal to build Sarawak infectious disease centre. Pansar Bhd has inked a RM130m deal with the Borneo Development Corporation (Sarawak) SB (BDC) to build the proposed Sarawak Infectious Disease Centre in Samarahan. In an exchange filing today, Pansar said its wholly owned subsidiary Perbena Emas SB has signed the letter of acceptance from BDC for package 1 of the project at Muara Tuang Land District at Sungai Jernang. The scope of work includes the construction and completion of the centre within the contract period of 30 months. (The Malaysian Reserve)

• PLB Engineering: External auditor raises concern over company's ability to stay afloat. PLB Engineering Bhd's external auditor has raised concern over the company's ability to stay afloat based on its audited financial statement for the financial year ended 31 Aug 2023. Its external auditor, Messrs Grant Thornton Malaysia PLT cited losses, liabilities that far exceed assets and negative cashflows at group and company levels, as key issues which will hamper its ability to operate as a going concern. (New Straits Times)

• HSS Engineers: Associate wins RM9.5m job. HSS Engineers’ (HEB) associate SMHB SB has secured a RM9.52m contract from Pengurusan Aset Air for engineering consulting services of the proposed water systems upgrade project in Kuantan, Pekan and Rompin in Pahang. The engineering and project management firm said the contract would commence on Feb 19 and is estimated to be completed in July 2027. It said services conducted by SMHB included but not limited to detailed design and construction supervision. (The Star)

MARKET UPDATE

• Wall Street clawed back some of the steep losses suffered in the previous session. The S&P 500 advanced 1% to finish while the Nasdaq Composite climbed 1.3%. The Dow Jones Industrial Average added 151.52 points or 0.4%, closing at 38,424.27. Lyft shares jumped 35% after the ride-hailing company posted betterthan-expected earnings in the fourth quarter. Airbnb slipped 1.7% even as the company beat on revenue expectations in its latest quarter. European markets also closed higher as investors assessed incoming corporate earnings and inflation prints. UK inflation data held steady at 4% year-on-year in January, undershooting expectations as food and non-alcoholic beverage prices eased. The UK’s FTSE, German’s DAX and France’s CAC rose 0.8%, 0.4% and 0.7% respectively. Most Asia-Pacific markets fell on Wednesday, with the exception of Hong Kong, after hotterthan-expected US inflation data sent Wall Street tumbling on Tuesday. Hong Kong’s Hang Seng index reversed losses to gain 1%, bucking the wider downturn as the city returned to trade after the Lunar New Year holiday. Mainland Chinese markets will remain closed for the week.
  
  Back home, FBM KLCI was down 2.04 points to close at 1,529.33. Malaysia Marine and Heavy Engineering Holdings Bhd incurred a net loss RM484.2m for FY2023, contrasting sharply with the RM67.8m net profit recorded a year earlier, due to additional cost provisions recognised for ongoing heavy engineering projects and the adverse impact of the weakening ringgit against the US dollar on the hedging of receivables for a heavy engineering project. This was despite its full-year revenue doubling to RM3.3bn from RM1.7bn.

Source: PublicInvest Research - 15 Feb 2024