DAILY MORNING NOTE | 22 March 2023

Singapore stocks rebounded on Tuesday (Mar 21) rising 1.1 per cent, led by the trio of local banks. DBS jumped 2.1 per cent or S$0.69 to S$32.91, UOB added 1.7 per cent or S$0.47 to S$28.68, while OCBC ended 1 per cent or S$0.12 higher at S$12.20.

US stocks ended the day higher Tuesday (Mar 21). The broad-based S&P 500 rose 1.3 per cent to 4,002.87, while the Dow Jones Industrial Average ended 1.0 per cent higher at 32,560.60. Meanwhile, the tech-heavy Nasdaq Composite Index rose 1.6 per cent to close at 11,860.11.

Top gainers & losers





APAC Realty, which operates the ERA brand, announced on March 21 that it had entered into a ERA Master Franchise Agreement with ERA Laos Co. Ltd. Under the Agreement, ERA Laos is granted exclusive rights to operate or grant memberships for the operation of ERA member broker offices in Laos. The agreement is for an initial term of 25 years commencing from March 21 and may be renewed for a further 25 years subject to the fulfilment of certain conditions as set out in the agreement.

A subsidiary of Tung Lok Restaurants (TLR) has entered into an agreement with Safra to manage a cafe through a joint venture. The food and beverage group said in a bourse filing on Tuesday (Mar 21) that the joint venture, Camo Cafe & Bar, was incorporated with an initial issued and paid-up capital of S$1,000. All shares will be subscribed for by Tung Lok Millennium (TLM), a wholly-owned subsidiary of TLR.

Asian Eco Technology — formerly a joint venture (JV) between MeTech International’s subsidiary Asian Green Tech and X Diamond Capital (XDC) — is taking legal action against their former director Deng Yiming in the High Court once again. In a bourse filing on Tuesday (Mar 21), Metech International said it has reason to believe that XDC sold five of those machines, known as microwave plasma chemical vapour deposition machines, to Asian Eco Technology at a price higher than their fair market value on Oct 19, 2021.

Lim Kwang Ming, a managing director at HSBC Holdings Plc’s investment bank in Singapore, is leaving the company after serving almost 16 years, according to people with knowledge of the matter. He is set to join Sembcorp Industries Ltd.


NVIDIA, the computing company powering the bulk of artificial intelligence (AI), is positioning itself as a key player in quantum computing with the launch of new software and hardware. On Tuesday (Mar 21) at its developer conference GTC, Nvidia unveiled Cuda Quantum, a platform for building quantum algorithms using popular classical computer coding languages C++ and python. The program would help run the algorithm across quantum and classical computers depending on which system is most efficient in solving the problem.

Adobe added artificial intelligence to some of its most popular software, including Adobe Photoshop and Adobe Illustrator, to speed the process of generating images and text effects, noting that creators whose work was used by the tools will be able to get paid. The technology was developed in partnership with Nvidia, which unveiled its own service, known as “Picasso,” that uses AI to generate images, videos and 3D applications from text descriptions. Nvidia trained the technology on images licenced from Getty Images, Shutterstock, and Adobe, and plans to pay royalties.

Alphabet’s Google on Tuesday (Mar 21) began the public release of its chatbot Bard, seeking users and feedback to gain ground on Microsoft in a fast-moving race on artificial intelligence technology. Starting in the US and the UK, consumers can join a waitlist for English-language access to Bard, a programme previously open to approved testers only. Google describes Bard as an experiment allowing collaboration with generative AI, technology that relies on past data to create rather than identify content.

Microsoft on Tuesday (Mar 21) rolled out an image-creation feature for search engine Bing and browser Edge that will use the technology behind OpenAI’s DALL-E to create pictures based on text prompts. The tool, named ‘Bing Image Creator’, will be available to users of the latest AI-powered version of Bing and Edge preview. Bing Image Creator will be integrated into Bing chat, rolling out initially in Creative mode starting Tuesday for users on desktop and mobile, Microsoft said in a blog post.

BYD has reduced shifts at two auto assembly plants in China, in a sign of how weaker demand in the world’s largest auto market is affecting its best-selling electric vehicle (EV) brand. BYD, which outsells Tesla in China, asked some of the workers at its Xian plant, its biggest manufacturing hub, to work only four days a week in a factory running two eight-hour shifts per day, according to an internal memo sent earlier this month.

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


Adobe Inc – Digital content creation remains resilient

Recommendation: ACCUMULATE (Downgraded); TP: US$402.00

Analyst: Ambrish Shah

– 1Q23 revenue/PATMI was within expectation at 24% of our FY23e forecasts. Total revenue grew 9% YoY to US$4.7bn, primarily driven by a 9% rise in digital media and 11% increase in the digital experience divisions. Adj. PATMI, which excludes its stock-based compensation and acquisition-related expenses, grew 9% YoY to US$1.7bn.

– For FY23e, Adobe raised its EPS forecast to US$11.00 (vs US$10.90 prior) and maintained its revenue guidance of US$19.2bn at the midpoint. The guidance was slightly below our initial forecast of EPS of US$11.38 on revenue of US$19.3bn.

– We downgrade to ACCUMULATE from BUY with a reduced DCF target price of US$402 (prev. US$408), a WACC of 7.5%, and a terminal growth rate of 4.0%. Our FY23e revenue was nudged lower by 0.4% to reflect ongoing macro challenges as cost-cutting customers delay software license purchases, while PATMI was cut by 3% due to higher expenses. Overall, Adobe enjoys long-term tailwinds from digital transformation of paper-based processes, explosion in digital content creation and continued shift to the cloud.

NVIDIA Corporation – AI is the future

Recommendation: BUY (Initiation); TP: US$315.00

Analyst: Maximilian Koeswoyo

– Market leadership in PC/data centre dGPU market with 88%/95% share. The leadership has been accompanied by attractive and stable gross margins of ~60%.

– Data Centre revenue quintupled in 3 years to be company’s largest segment with growth expected to continue at 2-year CAGR of 19%, leveraging on the increasing popularity of AI adoption in enterprises.

– Initiate coverage with a BUY recommendation and DCF-based target price (WACC 6.8%, g 4.5%) of US$315.00. We expect NVDA to benefit heavily from the increasing popularity of AI, and Gaming to recover as channel inventory normalizes.

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