The Department of Statistics Malaysia today (Feb 27) released its Business Tendency Statistics for the First Quarter 2024 which presents expectations on business performance for the upcoming three and six  months.

The statistics are based on the Business Tendency Survey which is conducted on a quarterly basis.

Chief Statistician of Malaysia Dato’ Sri Dr. Mohd Uzir Mahidin said, “Businesses are  confident about the business environment in the first quarter of 2024, with a positive confidence indicator of 4.2 per cent, continuing its increasing trend since the third quarter of 2023 with all sectors expect stronger business conditions in the first quarter of 2024.

Sentiment  in the Wholesale & Retail Trade sector returns positive after recording negative trend for the previous three quarters, posting +4.7 per cent as compared to -3.6 per cent in  the fourth quarter of 2023.

The business confidence for Services sector continues to  be optimistic, with the confidence indicator increasing to +8.6 per cent as against +6.3  per cent in the last quarter.

After reverting to a positive trajectory, the Construction sector continues its positive momentum, with a confidence indicator of +10.3 per cent  as opposed to +1.7 per in the previous quarter.

Meanwhile, Industry sector remains  on a positive trajectory, with a confidence indicator of +0.6 per cent for the  corresponding quarter as compared to +4.0 per cent in the fourth quarter of 2023.

Looking ahead, business perception for the first half of 2024 improves marginally with  a net balance of +10.0 per cent as against +9.8 per cent recorded previously, which  all sectors showing positive signs.

Wholesale & Retail Trade sector turns optimistic  about the business landscape in the first half of 2024.

Sentiment within Wholesale &  Retail Trade sector increases, with a net balance of +15.2 per cent bolstered by a  brighter outlook in both Wholesale Trade & Retail Trade sub-sectors.

Construction  sector likewise anticipates a better business outlook, with a net balance of +6.9 per  cent for the period of January to June 2024.

Sentiments in Services sector also remain  positive, with a net balance of +24.0 per cent compared to  +19.0 per cent recorded in the last quarter.

Meanwhile, Industry sector shows a neutral  sentiment regarding the business prospect for the next six months, influenced by the  mixed perception within the Industry sub-sectors.

Malaysia’s Producer Price Index (PPI) decreased 0.6 per cent in January 2024 from a negative 1.3 per cent in December 2023.

The Department of Statistics Malaysia (DOSM), released its Producer Price Index – Local Production, January 2024 today (Feb 27) which stated the Mining sector decreased by negative 1.3 per cent (December 2023: -3.4%), affected by the drop in the index of Extraction of natural gas (-6.8%).

At the same time, the Manufacturing sector also decreased by negative 0.9 per cent (December 2023: -1.5%) due to the decline in Manufacture of coke & refined petroleum products (-11.3%) and Manufacture of food products (-3.6%) indices.

The Electricity & gas supply sector also continued to decrease by negative 0.8 per cent (December 2023: -0.6%). Contrarily, the Agriculture, forestry & fishing sector went up by 3.2 per cent (December 2023: 1.3%), contributed by Animal production (5.4%) and Growing of perennial crops (3.6%) indices.

The Water supply index also posted an incline of 0.6 per cent in this month (December 2023: 0.4%).

On a monthly basis, PPI Local Production marginally decreased by negative 0.1 per cent from a negative 0.2 per cent drop in the previous month.

The Mining sector declined by negative 0.7 per cent, dragged down by both Extraction of natural gas (-1.4%) and Extraction of crude petroleum (-0.4%) indices.

Likewise, the Manufacturing sector decreased by negative 0.2 per cent, affected by Manufacture of coke & refined petroleum products (-1.3%) and Manufacture of computer, electronic & optical products (-0.1%) indices.

In contrast, the Agriculture, forestry & fishing sector edged up by 2.0 per cent due to Growing of perennial crops (3.2%) and Growing of non-perennial crops (2.3%).

Meanwhile the utility sector also posted an increase for Electricity & gas supply (0.1%) and Water supply (0.3%).

In terms of stage of processing, the Crude materials for further processing index increased by 2.3 per cent in January 2024 (December 2023: 0.4%), with the Foodstuffs & feedstuffs index posting an increase of 3.5 per cent.

The Finished goods index inched up by 0.5 per cent (December 2023: 1.1%), attributed to the increase in the Capital equipment (1.4%) index.

On the other hand, the Intermediate materials, supplies & components index decreased by negative 2.0 per cent (December 2023: -3.0%) due to Processed fuel & lubricants (-12.9%) and Materials & components for manufacturing (-1.1%) indices.

On a monthly basis, Intermediate materials, supplies & components index increased by 0.1 per cent while Crude materials for further processing index remained unchanged. Meanwhile, Finished goods index decreased by negative 0.5 per cent.

The Malaysian government has earmarked a substantial RM58.1 billion in Budget 2024 towards subsidies, incentives, and assistance programs aimed at addressing the cost of living for the populace said Minister of Domestic Trade and Consumer Affairs, Datuk Armizan bin Mohd Ali during National Action Council on Cost of Living (NACCOL) Question and Answer session today.

Initiatives covered under this allocation include various subsidy programs, incentives, and assistance schemes designed to support the livelihoods of Malaysians across different sectors.

Noteworthy programs encompass the Rahmah Madani and Agro Madani sales programs, Rahmah Cash Contribution (STR) and Basic Contribution (SARA), FlySiswa and Seasonal Celebration Discount Ticket Scheme, MyLesen program (B2, PSV, E, and GDL), Monthly Unlimited Pass My50, and the Madani Medical Scheme.

In January, trade with ASEAN, comprising 27.6% of Malaysia’s total trade, witnessed a robust double-digit growth of 17.4% year-on-year, amounting to RM64.87 billion. Exports to ASEAN expanded by 9.5% to RM37.33 billion, driven by increased shipments of petroleum products, machinery, equipment and parts, and chemicals. Notably, imports from ASEAN rose significantly by 30.2% to RM27.54 billion. Despite some fluctuations in trade volumes with individual ASEAN countries, Malaysia’s overall trade with the region showcased resilience and positive momentum.

China
Trade with China, constituting 16.9% of Malaysia’s total trade, recorded a modest growth of 6.9% year-on-year, totaling RM39.57 billion. Despite a slight decline in exports to China, imports surged by 16.7%, indicating continued economic engagement between the two countries. While exports of electronic and electrical (E&E) products saw a decline, exports of petroleum products, manufactures of metal, and paper and pulp products contributed to trade growth with China.

The U.S.
Trade with the U.S., representing 9.4% of Malaysia’s total trade, exhibited a strong double-digit growth of 18.2% year-on-year, amounting to RM22.11 billion. Exports to the US increased by 11.9% to RM13.48 billion, driven by robust shipments of E&E products, iron and steel products, and wood products. Imports from the US surged by 29.5%, reflecting increased demand for various goods and products from Malaysia.

The EU
Trade with the EU, making up 7.6% of Malaysia’s total trade, rebounded by 5.4% year-on-year, reaching RM17.87 billion. Exports to the EU improved by 6.4% to RM9.95 billion, led by strong performances in E&E products, palm oil-based manufactured products, and manufactures of metal. Imports from the EU also expanded, reflecting sustained economic cooperation and trade relations between Malaysia and the European bloc.

Japan
Trade with Japan, comprising 5.9% of Malaysia’s total trade, witnessed a marginal decline of 1% year-on-year, totaling RM13.95 billion. Despite the overall decline, exports to Japan increased by 2.8% to RM8.41 billion, driven by higher shipments of crude petroleum, optical and scientific equipment, and petroleum products. Imports from Japan, however, decreased by 6.3%.

Free Trade Agreement (FTA) Partners
Malaysia’s trade performance with Free Trade Agreement (FTA) partners showcased positive momentum in January 2024, with notable export growth to key countries such as the Republic of Korea (ROK), Australia, India, Pakistan, Chile, and Turkey.

Republic of Korea (ROK)
Trade with the ROK expanded by 5.1% year-on-year, totaling RM4.22 billion. Malaysia’s exports to the ROK increased, supported by higher shipments of E&E products.

Australia
Exports to Australia surged by 34.6% year-on-year, reaching RM4.89 billion. This growth was attributed to strong exports of petroleum products, reflecting the robust economic ties between Malaysia and Australia.

India
Trade with India recorded a notable increase of 18.7% year-on-year, totaling RM3.68 billion. Malaysia’s exports to India grew, driven by higher shipments of palm oil and palm oil-based agriculture products.

Pakistan
Trade with Pakistan expanded significantly by 83.9% year-on-year, amounting to RM570.7 million. Malaysia’s exports to Pakistan were bolstered by strong shipments of petroleum products.

Chile
Exports to Chile increased by 38.4% year-on-year, reaching RM51.9 million. This growth was attributed to robust exports of processed food products from Malaysia to Chile.

Turkey
Trade with Turkey expanded by 28.8% year-on-year, totaling RM1.84 billion. Malaysia’s exports to Turkey increased, particularly in iron and steel products.

Overall, Malaysia’s trade performance with FTA partners demonstrated resilience and positive growth, reflecting the country’s commitment to enhancing economic cooperation and leveraging strategic trade agreements for mutual benefit.

Source: Ministry of Investment, Trade and Industry

Trade figures for January 2024 surged by an impressive 13.3%, reaching a substantial value of RM234.73 billion. The latest data released by the authorities indicates a robust double-digit expansion, signaling a remarkable turnaround for the nation’s economy.

Exports saw a modest increase of 8.7% to RM122.43 billion, while imports surged by 18.8% to RM112.3 billion, marking a record high for January. Simultaneously, Malaysia maintained its trade surplus, reaching RM10.12 billion for the 45th consecutive month since May 2020.

This rebound in trade performance can be attributed to various factors, including increased shipments of petroleum products, machinery, equipment, and parts, as well as iron and steel products. Notably, exports to key trading partners such as ASEAN, the United States, the European Union, and Japan recorded significant expansions, further fueling Malaysia’s trade resurgence.

Compared to December 2023, trade, exports and imports increased by 4.3%, 3.4%,and 5.3%, respectively while trade surplus contracted by 13.8%.

Export Sector Analysis
Malaysia’s export sector in January 2024 exhibited resilience and dynamism across various categories. Manufactured goods, constituting a significant portion of total exports, demonstrated notable growth, while mining goods and agriculture goods also contributed to the overall positive performance.

Manufactured goods, accounting for 84.7% of total exports, showcased a commendable expansion of 9.3% year-on-year, totaling RM103.65 billion. This growth was widespread across most manufactured goods categories, with petroleum products, machinery, equipment and parts, iron and steel products, and manufactures of metal driving the increase. However, electrical and electronic (E&E) products experienced a slight decline of 6.5%, attributed mainly to reduced exports to China and Singapore.

Exports of mining goods, comprising 7.9% of total exports, declined by 4.9% year-on-year to RM9.72 billion. This decrease was primarily driven by reduced exports of liquefied natural gas (LNG).

Agriculture goods, representing 6.7% of total exports, rebounded strongly with a double-digit expansion of 17.5% to RM8.24 billion. This growth, reversing the negative trend observed since November 2023, was fueled by robust exports of palm oil and palm oil-based agriculture products.

Major Export Products:
Several key export products played pivotal roles in driving Malaysia’s export performance in January 2024. Notably, electronic and electrical (E&E) products, despite experiencing a slight decline of 6.5%, remained the top export product, valued at RM44.02 billion and accounting for 36% of total exports.

Petroleum products emerged as another significant contributor, witnessing a robust growth of 24.2% to RM14.81 billion, constituting 12.1% of total exports. This surge in petroleum product exports further solidifies Malaysia’s position as a key player in the global energy market.

Palm oil and palm oil-based agriculture products also made substantial contributions, with exports totaling RM6.15 billion, marking a notable increase of 16.3%. This category accounted for 5% of total exports and reflected Malaysia’s strength in the agriculture sector.

Despite a decline of 9.3%, LNG remained a significant export product, valued at RM6.05 billion and constituting 4.9% of total exports. Additionally, chemicals and chemical products experienced a moderate growth of 4.4%, totaling RM6.03 billion and representing 4.9% of total exports.

Overall, these major export products underscore Malaysia’s diversified export portfolio and its ability to capitalize on various sectors to drive economic growth and resilience.

Source: Ministry Of Investment, Trade and Industry

Malaysia has officially ratified the World Trade Organisation’s (WTO) Fisheries Subsidies Agreement (FSA), joining 68 other member nations in a collective effort to combat harmful fishing subsidies and safeguard fish stocks. This announcement was made by Investment, Trade, and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz during his attendance at the 13th WTO Ministerial Conference in Abu Dhabi, United Arab Emirates.

The FSA, adopted in June 2022, aims to address critical threats to oceans and promote sustainable fishing practices worldwide. By curbing illegal, unreported, and unregulated (IUU) fishing, the agreement seeks to mitigate overfishing and maintain the delicate balance of marine ecosystems.

In his statement on social media, Tengku Zafrul emphasised Malaysia’s dedication to global cooperation and responsible ocean stewardship. He urged remaining WTO members to expedite their domestic ratification processes, emphasising the importance of collective action in preserving marine biodiversity and safeguarding the livelihoods of millions dependent on fishing.

Furthermore, the FSA ensures transparency and accountability in fishing subsidies provided by member countries. Tengku Zafrul highlighted that this transparency fosters responsible fishing practices and facilitates effective compliance monitoring.

As part of the agreement, the WTO will establish technical assistance and capacity-building programs aimed at aiding developing and least developed countries in integrating sustainability elements into their policies and enhancing their fisheries management systems. This initiative underscores a concerted effort to support global sustainability goals and secure a better future for generations to come.

Cambodia Prime Minister, Hun Manet arrived in Malaysia today for a one-day official visit at the invitation of Prime Minister Datuk Seri Anwar Ibrahim. Hun Manet and his delegation landed at 9.30am at the Bunga Raya Complex of the Kuala Lumpur International Airport (KLIA).

Digital Minister Gobind Singh Deo, Malaysian Ambassador to Cambodia Datuk Eldeen Husaini Mohd Hashim, and Cambodian Ambassador to Malaysia Ouk Chandara were there at the airport to welcome Hun Manet.

Since he became Prime Minister in August last year, replacing his father Hun Sen, this is his first visit to Malaysia. Hun Manet will be given an official welcoming ceremony at Perdana Putra Square, Perdana Putra Complex, Putrajaya, which Anwar and Deputy Prime Ministers Datuk Seri Ahmad Zahid Hamidi and Datuk Seri Fadillah Yusof will attend.

Hun Manet and Anwar then are set to engage in a series of meetings and events aimed at bolstering bilateral ties. Following a bilateral meeting, they will witness the signing of a Memorandum of Understanding on Cooperation in Financial Innovation and Payment Systems between the Central Bank of Malaysia and the National Bank of Cambodia. Anwar will host a luncheon thereafter.

Hun Manet is also scheduled to have an audience with His Majesty Sultan Ibrahim, King of Malaysia, and courtesy calls on Dewan Negara President Datuk Mutang Tagal and Dewan Rakyat Speaker Datuk Johari Abdul. The visit will conclude with the Malaysia-Cambodia Business Forum organized by the Cambodia Chamber of Commerce and the Malaysian Business Council in Cambodia.

Anwar’s previous visit to Cambodia in March last year laid the groundwork for discussions during the bilateral meeting. Key agenda items include progress in bilateral relations, cooperation in trade, investment, agriculture, halal industry, energy, security, information, communication, and Malaysia’s contributions to the socio-economic development of Cambodia’s Muslim community.

Wisma Putra emphasised that Hun Manet’s visit would strengthen Malaysia-Cambodia relations bilaterally and within ASEAN. Diplomatic relations, established in 1957, have resulted in cooperation across various sectors including trade, investment, education, and employment opportunities.

In 2023, Cambodia emerged as Malaysia’s 9th largest trading partner in ASEAN. Bilateral trade reached RM3.02 billion, with Malaysian exports to Cambodia valued at RM2.35 billion, marking a 1.6% increase from the previous year. Malaysian companies have invested RM14.4 billion across 162 projects in Cambodia.

PETRONAS Dagangan Berhad’s Q4 FY2023 revenue saw steady growth, with a 6 per cent increase to RM10.1 billion compared to the corresponding quarter, and a 2 percent increase to RM37.5 billion for the full year.

Notably, the pre-tax profit climbed 18 per cent from the same quarter last year to RM285.9 million. The momentum carried over to the full-year performance, with pre-tax profit registering a 17 per cent increase to RM1.3 billion.

In Q4 FY2023, its registered a sales volume of 4.2 billion litres, bringing its yearly total to a historic high of 16.3 billion litres. This achievement was principally driven by the increase in traffic volume that boosted direct demand during key periods like festive seasons and school holidays.

Its financial results for the quarter ended 31 December 2023 (Q4 FY2023), ended the year with a record annual volume and robust financial growth mirroring the surge in sales volume.

PETRONAS Dagangan’s Managing Director and Chief Executive Officer Azrul Osman Rani said, “2023 was a landmark year, one that signalled our capacity for strong, profitable growth at scale and represented a key inflection point for PETRONAS Dagangan.”

“We were able to manage market volatility to deliver an all-time high sales volume which further fuels our commitment to making our customers’ lives simpler and better, while delivering value for all stakeholders.”

PETRONAS Dagangan’s achievements were primarily driven by strong performance in both the Retail and Commercial segments.

The Retail segment enjoyed improved margins due to strong volume demand for Diesel and Mogas.

Moreover, favourable margins in jet fuel and commercial Diesel further contributed to the Company’s performance, bolstered by stable price trends during the quarter, which closely followed the movement of crude oil prices throughout the period.

The quarter under review saw impactful strides in sustainability, notably through its ongoing efforts in biofuel, solar and electric vehicle (EV) infrastructure initiatives, for example the Company’s collection of more than 120,000 kg of used cooking oil (UCO) since its launch in July 2023, PETRONAS Dagangan said in a statement today (Feb 27).  

Additionally, PETRONAS Dagangan has enhanced 26 retail stations with EV chargers and completed the solarisation of 60 sites in collaboration with Gentari.

To elevate customer experience, PETRONAS Dagangan has launched Mesra Rewards loyalty programme with a cardless feature, which saw more than 50 per cent growth in active members.

The Company also continues to champion inclusive mobility through Setel, which was selected by the Ministry of Finance for the eMADANI programme.

Azrul concluded, “As we enter 2024, we will remain focused on further enhancing operational efficiency and expanding our market presence to be well-positioned for continued growth in a dynamic and evolving landscape. Even though the anticipated momentum of Malaysia’s economy and resilient domestic demand make for a promising backdrop to the year, we will remain vigilant in navigating potential global headwinds and rising inflation with a commitment to long-term, sustainable success.”

PDB declared an interim dividend of 27 sen per ordinary share. For the financial year 2023, PDB has declared total dividend of 80 sen per ordinary share.

Cryptocurrency bitcoin hit a two-year high above $57,000 in Asia trade on Tuesday on signs of heavy institutional buying, while smaller rival ether topped $3,200 for the first time in two years.

Bitcoin has rallied more than 10 per cent in two sessions, helped by a Monday disclosure from crypto investor and software firm MicroStrategy that it had recently purchased about 3,000 bitcoins for an outlay of $155 million.

The original and largest cryptocurrency by market value has also been buoyed recently by the approval of bitcoin-owning exchange-traded funds (ETFs) in the United States. On Monday, trading volumes in several of the funds spiked and crypto-linked firms rallied too, in contrast to nervous broader markets. – Reuters

Malaysian and Singaporean regulators have recently taken a significant step to combat telecommunications scams that have inflicted substantial financial losses on citizens of both countries.

Singapore’s Infocomm Media Development Authority (IMDA) and the Malaysian Communications and Multimedia Commission (MCMC) signed a memorandum of understanding (MOU) on February 25 in Barcelona, Spain, at the Mobile World Congress.

Reports from Nikkei Asia highlight the severity of the issue, with Singaporeans reportedly losing S$651.8 million last year, averaging around S$110 per person. Similarly, Malaysians suffered losses amounting to RM287 million in 6,003 cases of phone scams in 2020.

The primary aim of the agreement is to bolster the exchange of “strategic intelligence” across borders to combat scams conducted via telecommunications channels, particularly through phone calls and texts. This collaborative effort seeks to implement a coordinated regional approach to better protect citizens from falling victim to such fraudulent activities.

Key areas of cooperation outlined in the MOU include providing regulatory assistance and cooperation related to scam telephone calls and text messages, conducting research and education initiatives on scam prevention, and facilitating the mutual exchange of knowledge and expertise through training programs and staff exchanges.

IMDA emphasised the importance of strong cooperation among countries in tackling online scams, which are a cross-border issue. Singapore and Malaysia have a history of successful collaboration on various fronts, including cross-border enforcement actions against scammers.

The MOU was signed by MCMC chairman Tan Sri Mohamad Salim Fateh Din and Lew Chuen Hong, chief executive of IMDA. Additionally, both countries plan to share knowledge and expertise through training programs and staff exchanges. Singapore already has similar agreements in place with countries like New Zealand, the US, and Australia.

With an increasing number of scammers taking advantage of developed networks to perpetrate schemes involving jobs, e-commerce, and investment, this collaborative effort between Malaysia and Singapore aims to better equip authorities to combat telecommunications scams and protect citizens from financial harm.

Maybank Investment Bank (Maybank IB) today (Feb 27) has cut their FY24-25E EPS for PETRONAS Chemicals Group Berhad (PCHEM) by – 33%/-37% to account for: i) lower EBITDA margins for its O&D segment; ii) post results house-keeping; and iii) incorporating Pengerang ops beginning 2H24.

Maybank IB has lowered its TP to MYR5.05 (from MYR5.75) after rolling forward valuation to FY25E (from FY24E) based on 18.1x PER (previously 16x), its updated 5Y mean. They Maintain SELL.

4Q23 missed expectations but DPS was in-line

Ex-one-off (MYR78m inventory write down to NRV), 4Q23 core net profit was MYR161m (-61% QoQ, -81% YoY). FY23 core earnings of MYR1,774m (-69% YoY) was only 86%/82% of ours/consensus estimates.

Key variance against Maybank IB’s forecast was due to: i) unexpected shutdown at PC Aromatics and slowdown at PC Olefins due to steam interruption issues, resulting in lower production & sales volume in 4Q23; and ii) crimping of EBITDA and PAT margins due to operating leverage (lower sales volumes), coupled with higher maintenance costs throughout the quarter.

A 2nd interim 5sen DPS brings FY23 DPS to 13sen (62% DPR), well within Maybank IB’s forecast.

FY23 dragged by lower product ASPs and margins

Based on Maybank IB findings from Bloomberg data, all product spreads were down YoY. For instance, FY23 average polyethylene prices (HDPE, LDPE, LLDPE) were down 12-27% YoY (vs. FY22).

Also, urea prices sank -42% YoY while methanol prices fell -15% YoY.

PCHEM’s O&D and F&M segments’ PAT margins dropped to 5.1% (-14.8 ppts) and 19.5% (-12.1 ppts) respectively due to lower product spreads coupled with higher energy/utilities costs.

Group CNP margin was down 16.5 ppts YoY to 6.2%.

Consolidation of Pengerang ops to drag earnings

PCHEM is hopeful that the consolidation of its Pengerang ops will commence in 2Q24 and with that, Maybank IB has pencilled in additional fixed costs from the Pengerang Petrochemical Complex (PPC) for the entirety of 2H24 (additional MYR500m/year).

Note that PPC will introduce to PCHEM the exposure of polymer-naphtha spreads, which are currently negative.