Stock Market Today

23 May 2024

Trades Initiated in the past week


Singapore stocks slipped on Tuesday (May 21), as the Singapore market was not spared from the mounting gloom across South-east Asian indices and market traders. Stocks shed 0.2 per cent or 6.15 points to close at 3,307.9. Across the broader market, decliners outnumbered advancers 330 to 245, after 1.2 billion securities worth a collective S$920.8 million changed hands. It was a sea of red across the region, as traders took to capital markets with caution against a backdrop of uncertainty about interest rates.

Wall Street stocks fell on Wednesday following mixed earnings reports as Federal Reserve meeting minutes highlighted inflation worries. Equities spent much of the day essentially flat, but tripped into the red after the Fed minutes showed that policy makers were frustrated with the lack of progress in bringing inflation towards the central bank’s two percent target. The Dow Jones Industrial Average finished down 0.5 per cent at 39,671.04. The broad-based S&P 500 shed 0.3 per cent to 5,307.01, while the tech-rich Nasdaq Composite Index declined 0.2 per cent to 16,801.54, pulling back after two straight records. Among individual companies, Target slumped 8.0 per cent after reporting a drop of 3.7 per cent in comparable sales in the first quarter. The big-box retailer characterised the results as being in line with expectations.

Top gainers & losers


Events Of The Week



Seatrium said on Tuesday (May 21) that it has agreed to pay US$68 million to MH Wirth to make good on the interest payable and all outstanding issues arising from an arbitration with the provider of deep-sea mining and extraction services. MH Wirth commenced arbitration against Seatrium’s wholly-owned subsidiary Jurong Shipyard in December 2021 over the supply of equipment. Seatrium said last month that the arbitration tribunal had ruled in favour of MH Wirth. The company was ordered to pay US$108 million, comprising US$101 million in vendor termination fees, and US$7 million for ancillary, and legal and arbitration proceeding fees. The tribunal also awarded interests, which will be calculated later.

DBS, South-east Asia’s largest lender, will be loaning an undisclosed sum of money under a blended-finance project that supplies fresh water to three cities in Indonesia. The Singapore bank was among the signatories at the signing of the loan agreement at the World Water Forum in Bali on Tuesday (May 21); also present were representatives of Indonesian water purification company Karian Water Services, the Asian Development Bank, the International Finance Corporation, as well as Export-Import Bank of Korea, South Korea’s official export-credit agency. The total project, estimated to cost around 3.4 trillion Indonesian rupiah (S$285.8 million), marks the first time a mix of public- and private-sector funds have been used in the country’s water sector. Such blended-finance projects entail corralling “catalytic capital” (in the form of grants or concessional loans) to lower the costs of financing, and so attract private sources of capital. The water project aims to develop a regional supply system that would pipe fresh water to some two million residents in Jakarta, Tangerang and South Tangerang.

Australia’s media regulator is taking legal action against telecom carrier Optus, owned by Singapore Telecommunications, over a cyberattack it faced in September 2022, the telecom operator said on Wednesday (May 22). The Australia’s No 2 telco faced a massive data breach which exposed personal information including home addresses, passport numbers and phone numbers of customers. That cyberattack had then led to the country’s prime minister Anthony Albanese calling to toughen privacy rules to force companies to notify banks faster when they experience similar data breaches.


Nvidia, the chipmaker at the centre of an artificial intelligence (AI) boom, gave another bullish sales forecast, showing that spending on AI computing remains strong. Second-quarter revenue will be about US$28 billion, higher than estimates of US$26.8 billion. Results in the fiscal first quarter, which ran to April, also beat projections. The upbeat outlook reinforces Nvidia’s status as the biggest beneficiary of AI spending. The company’s so-called AI accelerators – chips that help data centres develop chatbots and other cutting-edge tools – have become a hot commodity in the past two years, sending its sales soaring. Nvidia’s market valuation has skyrocketed as well, topping US$2.3 trillion. The shares rose about 4 per cent in extended trading on Wednesday. They had already gained 92 per cent this year to the close, fuelled by investor hopes that the company would continue to shatter expectations.

Micron Technology on Tuesday (May 21) slightly raised its capital expenditure forecast for 2024, as the US chipmaker invests heavily to make high bandwidth memory (HBM) semiconductors to meet surging demand from the AI industry. Boise, Idaho-based Micron is one of the three large providers of HBM chips, an essential part of the hardware used in artificial intelligence servers. Its advanced HBM3E will be used in AI chip leader Nvidia’s H200 chips. The company said in March its HBM chips, which refer to semiconductors used in the development of AI applications, were sold out for 2024. A majority of its 2025 supply has also been allocated.

US announces details on higher China tariffs, some to start Aug 1. The US Trade Representative’s (USTR) office on Wednesday (May 22) said some of the steep tariff increases on an array of Chinese imports including electric vehicle (EV) batteries, computer chips and medical products will take effect on Aug 1. President Joe Biden will keep tariffs put in place by his Republican predecessor Donald Trump while ratcheting up others, including a quadrupling of EV duties to over 100 per cent and doubling the duties on semiconductor tariffs to 50 per cent. reported on Wednesday (May 22) that it is working on an artificial intelligence-driven overhaul of its Alexa voice assistant and plans to charge a monthly subscription fee to offset technology costs. The online retail giant will launch a more conversational version of the voice assistant later this year, positioning it to better compete with AI-powered chatbots from Microsoft and Alphabet’s Google. A subscription to Alexa will not be included in the company’s US$139 Prime offering and Amazon is yet to nail down the price of the new services.

Walt Disney has struck a deal to sell its minority stake in a subscription television broadcaster to Tata Group, allowing the US media giant to focus on the merger of its Indian unit with billionaire Mukesh Ambani’s media arm. The transaction values Tata Play at about US$1 billion. Tata Group took full control of the TV platform after buying the 29.8 per cent stake from Disney. The deal came as the India’s media landscape is going through a major shakeup. Disney signed a binding agreement in late February to combine its India unit with Viacom 18 Media Pvt, creating an US$8.5 billion entertainment giant that will have 750 million viewers and dominate the sector in the world’s populous country.

Nintendo has acquired Miami-based Shiver Entertainment to help bring more games from outside developers to its next-generation Switch platform. The 11-year-old studio focuses on adapting video games developed for one platform to others, called porting, and did so successfully with Hogwarts Legacy and Mortal Kombat 1 for the current Switch console. Nintendo “aims to secure high-level resources for porting and developing software titles”, the Kyoto-based company. The move signals greater interest from Nintendo to bring in content to bolster the offerings from its in-house creative studios, after decades of relying mostly on its own software to drive console sales. The company signed a 10-year pact with Microsoft last year to ensure the Call of Duty series will be on Switch platforms for the foreseeable future. The Shiver deal may also be a measure to address existing and future performance gaps with rival consoles.

Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR


LHN Ltd – Co-living profits tripled, more growth expected

Recommendation: BUY (Maintained); Last Done: S$0.33 TP: S$0.42; Analyst: Paul Chew

  • 1H24 revenue was within expectations, but earnings exceeded. Revenue and adjusted PATMI were 51%/65% of our FY24e forecast, respectively. Margins for co-living were higher than expected due to the high occupancy and room rates.
  • 1H24 adj. PATMI rose 25% YoY to S$16mn. Growth was driven by co-living revenue doubling and earnings tripled to S$9mn. The number of keys rose 28% YoY to 2,151, but occupancy dipped 5% points to 92%. We believe room rates rose around 70% YoY due to the commencement of Coliwoo Orchard and the overall health of the residential rental market. Coliwoo has also started to manage 3rd party properties. LHN targets to grow co-living by 800 keys every year.
  • We raised our FY24e earnings by 7% to account for the better-than-expected earnings from Coliwoo. Our target price is raised from S$0.39 to S$0.42. We peg our valuations to 6.5x FY24e P/E, while the industry is trading around 13x. We expect growth to remain stable for LHN in 2H24, supported by stable room rates. FY25e will be a banner year of growth. The number of keys in co-living will expand by at least 900 (187 in Coliwoo GSM Building and 700 healthcare professionals). In addition, the sale of 49 food processing industrial units will be another one-off gain from the property development business. We maintain our BUY recommendation. The Coliwoo franchise is scaling up and expanding into 3rd party management contracts. The stock pays a dividend yield of 6% and trades at a PE of 5.2x and 40% discount-to-book value of S$0.55.

NetLink NBN Trust – Higher rates start to bite

Recommendation: NEUTRAL (Maintained); TP S$0.87, Last close: S$0.865; Analyst Paul Chew

  • 2H24 results were within expectations. FY24 revenue and EBITDA were 98%/97% of our FY24e forecast, respectively. Final DPU increased 1.1% YoY to 2.65 cents (FY24: 5.3 cents).
  • 2H24 revenue was negatively impacted by a 16% decline in diversion revenue. EBITDA was weaker due to the S$8.8mn decommissioned asset write-off offset by a power charge refund of S$5.5mn. Residential connections recovered in 2H24 to annualised 21,726 (FY23: 21,054).
  • FY25e cash-flows will be negatively impacted by the lower residential connection charges (from S$13.80 to S$13.50), elevated capex for a new central office, and higher interest rates. Our target price of S$0.87 and NEUTRAL rating are unchanged. The current distribution is sustainable, with the ability to tap on additional borrowings. Interest rate pressure on cash flow will persist, especially in FY26, when interest rate hedges on a substantial portion of the debt are unwound.

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