Mercury Securities Research

Daily Newswatch - 7 Jan 2025

MercurySec
Publish date: Tue, 07 Jan 2025, 08:42 AM
An official blog in i3investor to publish research reports provided by Mercury Securities Research team.

All materials published here are prepared by Mercury Securities Sdn. Bhd.

Mercury Securities Sdn. Bhd.
L-7-2, No.2, Jalan Solaris,
Solaris Mont Kiara, 50480, Kuala Lumpur
Tel: 603-6203 7227
Email: mercurykl@mersec.com.my

Market Review

The FBM KLCI extended its downtrend yesterday, closing at 1,625.5 (- 0.2%), driven by h ightened profit-taking from foreign funds, particularly in Petronas-linked constitu nts foll wing their rec nt strong rallies. Key laggards within the index i cluded PETDAG (-3.1%), MRDIY (-2.7%), and PETCHEM (-2.0%) Sector-wise, Consumer Products & Services (-0.6%) emerged as the weakest performer, weighed down by declines in heavyweights such as F&N (-2.0%), NESTLE (-1.8%), and QL (-1.1%). Therefore, the broade market lso refl cted bearish s ntiment, with 577 decliners outpacing 503 advancers.

Economics

US: Trump's team mulls narrowing universal tariffs, Washington Post reports

Aides to US President-elect Donald Trump are reportedly exploring a tariff plan targeting specific critical import, a narrower approach compared to the universal tariffs proposed during his campaign. The plan could focus on sectors vital for economic and national security, including defense materials, medical supplies, and energy resources, while broader tariffs on China, Mexico, and Canada remain uncertain. The report has already unsettled global markets, with the US dollar declining and investors betting on Fed rate cuts due to potential inflationary impacts. Companies, anticipating disruptions, have begun front- loading orders and renegotiating contracts, intensifying global trade uncertainty. (Bloomberg)

EU: ECB sees labour market normalising after puzzling post-Covid boom

The European Central Bank (ECB) expects the eurozone labour market to normalise as the post-pandemic boom subsides, driven by factors like stabilising profits, weakening demand, and reduced incentives for labour hoarding. While inflationary pressures from rising wages remain a focus, the ECB foresees a relatively stable job market ahead, though it is unlikely to return fully to pre-pandemic norms due to structural changes. These include shifts toward green and digital transitions, sociodemographic changes, and reduced working hours, which are expected to shape long-term labour market dynamics. (Bloomberg)

German: Inflation up more than expected, backing ECB caution

German inflation rose to 2.9% in December, exceeding expectations and driven by energy and food costs, while short-term yields climbed and traders adjusted ECB rate-cut expectations. Despite the recent uptick, inflation is expected to gradually ease, with the Bundesbank forecasting a decline to 2.4% in 2025 and a return to the ECB's 2% target by 2026. Underlying price pressures, particularly in services, remain elevated at 4.1%, but the ECB anticipates further gradual rate cuts in 2025 to reach a neutral policy stance. (Bloomberg)

Japan: BOJ's Ueda sends fresh reminder to bankers on raising rates

Bank of Japan Governor Kazuo Ueda reiterated that the central bank may raise its benchmark rate if economic and price conditions continue to improve, leaving the timing of the hike dependent on data. While Ueda's recent dovish comments reduced expectations for a January hike, market speculation remains as rising bond yields and a weak yen signal anticipation of tightening in the near future. The BOJ's next policy meeting on January 23-24, along with a January 14 speech by Deputy Governor Ryozo Himino, will be closely watched for further rate hike signals. (Bloomberg)

UK: One in four UK firms cut jobs after Reeves budget, PMI shows

Nearly 25% of UK businesses cut jobs in December, with S&P Global's PMI revealing the fastest job- shedding in over 15 years (excluding the pandemic) due to Labour's £26 bn payroll tax hike in October. Business confidence has slumped to post-Truss-era lows, as rising costs, stagnant economic growth, and inflationary pressures weigh heavily on employers' outlook for 2025. Despite Labour's promises of rapid economic growth, the economy has stalled, with firms citing higher wages, raw material costs, and concerns over new labour policies as additional challenges. (Bloomberg)

China: Services gauge rises to highest since May on stimulus

China's services activity expanded in December, with the Caixin Services PMI rising to 52.2, its fastest pace since May, driven by Beijing's recent stimulus measures. While domestic demand showed improvement, new export business declined, and the employment gauge contracted for the first time in four months, reflecting cautious hiring and global trade uncertainties. Economists highlighted ongoing pressures from weak domestic demand, squeezed profit margins, and external challenges. Chinese leaders, prioritizing consumption and domestic demand for 2025, have outlined goals like aiding low- income groups and enhancing the social safety net, though detailed plans remain pending. (Bloomberg)

Companies

Toyo Ventures: Issues dispute notice to Vietnamese govt over power plant termination

Toyo Ventures Holdings Bhd, through its subsidiary SH2P, issued a notice of dispute to Vietnam's Ministry of Industry and Trade (MOIT) following the termination of the Song Hau 2 thermal power plant project, citing unresolved financial arrangements. Despite announcing a US$980m financing facility in June 2024, the Vietnamese government terminated the BOT contract in July due to failure to meet financial requirements within the stipulated timeframe. Toyo Ventures plans to engage in discussions for 45 days as per the contract terms and pursue legal remedies if no resolution is reached. (The Edge)

T7 Global: Secures maintenance, construction and modification services contract

T7 Global Bhd announced that its subsidiary, Tanjung Offshore Services Sdn Bhd, has secured a contract from Carigali Hess Operating Company Sdn Bhd for maintenance, construction, and modification (MCM) services. The contract, commencing on Jan 15, 2025, has a three-year initial term with an option for a two- year extension and is expected to positively impact the company's earnings from FY2025 onwards. (The Edge)

Aizo: Selected by EC to develop 99.99MW solar plant in Perak

Aizo Group Bhd, through its subsidiary Wawasan Demi Sdn Bhd, has been selected to develop a 99.99MW large-scale solar photovoltaic plant in Kampar, Perak, under Malaysia's Large Scale Solar 5 (LSS5) programme. The project, expected to commence commercial operations by October 2027 under a 21-year solar power purchase agreement, reflects Aizo's focus on renewable energy despite its consecutive annual losses since 2022. (The Edge)

XOX: Proposes share capital reduction to eliminate losses

XOX Networks Bhd has proposed a share capital reduction to eliminate up to RM55m of its accumulated losses, leaving it with retained net earnings of RM7.82m. The company, which has been operating at a loss for nine consecutive years, plans to reduce its issued share capital of RM87.76m to offset these losses. This proposal is subject to shareholder approval at an extraordinary general meeting, with completion expected in the second quarter of 2025. (The Edge)

Keyfield: Acquires platform supply vessel for US$17.6m

Keyfield International Bhd is acquiring a five-year-old platform supply vessel, Keyfield Gratitude, for US$17.6m (RM79.2m) to expand its fleet and enhance its vessel chartering business. The acquisition will be funded through proceeds from a sukuk issuance and an additional US$2m from internal funds for capital expenditure. The vessel will be used to transport materials and equipment between shore and offshore platforms, supporting Keyfield's participation in chartering contracts. (The Edge)

Citaglobal: Acquires 55% stake in waste-to-energy partner LAWI Germany for undisclosed value

Citaglobal Bhd acquired a 55% stake in Germany's LAWI Engineering GmbH (LAWI Germany) for an undisclosed value, with the aim of providing advanced waste-to-energy (WTE) technology and solutions for global waste management projects. The acquisition, made through its subsidiary Citaglobal Environment Management Sdn Bhd (CGEM), enables Citaglobal to offer end-to-end WTE solutions without relying on foreign technology imports. This investment is linked to Citaglobal's collaboration with Shanghai SUS Environment Co Ltd on developing WTE projects in Pahang, Malaysia. (The Edge)

D&O: Signs MOU with China-listed Beijing Jingwei Hirain Technologies for automotive module business

D&O Green Technologies Bhd's subsidiary, Dominant Electronics Sdn Bhd (DESB), signed an MOU with Jing Wei Hirain Automotive Electronics Malaysia Sdn Bhd to establish a new company in Malaysia focused on engineering services and automotive module production. The joint venture will leverage DESB's local production and R&D capabilities, while Hirain will contribute technical expertise and sales channels. The collaboration, which aims to target global markets, is expected to be finalised within 90 days, though it is not anticipated to have an immediate impact on D&O's financials. (The Edge)

Kumpulan Kitacon: Bags RM66m residential project in Sungai Buloh

Kumpulan Kitacon Bhd has secured an RM65.68m residential construction contract in Sungai Buloh, Selangor, to build bungalows for KL-Kepong Country Homes Sdn Bhd. The project, set to begin on February 3, 2025, is expected to be completed within 20 months. This marks Kitacon's first contract win for 2025 and is anticipated to positively impact its earnings and net assets per share from the financial year ending December 31, 2025. (The Edge)

Kerjaya Prospek: Wins first job in 2025 - RM256m contract in Shah Alam for E&O's unit

Kerjaya Prospek Group has secured an RM256.4m contract from Eastern & Oriental Express Sdn Bhd to build 360 terrace houses, a clubhouse, landscaping, and related infrastructure in Elmina West, Shah Alam. The project, to be completed in 26 months, will contribute to Kerjaya's total outstanding order book of RM4.2bn. This deal, classified as a related party transaction, highlights the company's ongoing growth and strong position in the construction sector. (The Edge)

Source: Mercury Securities Research - 7 Jan 2025

Related Stocks
Market Buzz
Discussions
Be the first to like this. Showing 0 of 0 comments

Post a Comment