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Daily Morning Note – 17 August 2018
Stocks closed higher on Thursday on renewed hope that a resolution to a trade dispute with China could be on the horizon. Investors also cheered strong quarterly results from Walmart and Cisco Systems. The Dow Jones Industrial Average rose 396.32 points to 25,558.73 — its biggest one-day jump since April 10.
National Economic Council Director Larry Kudlow confirmed that China and the U.S. will hold a fresh round of trade talks later in August, giving investors hope that the two world's largest economies can solve an ongoing trade spat.
Walmart shares surged 9.3 percent after the company reported its biggest jump in U.S. sales in a decade. Nvidia stock fell by 6 percent after the company reported better-than-expected earnings but lower-than-expected revenue guidance.RESEARCH REPORT Y Ventures Group Ltd – Expecting a stronger 2H18 Recommendation: BUY (Maintained), Last Done Price: S$0.44 Target Price: S$0.61, Analyst: Alvin Chia - Revenue and net profit in 1H18 weaker than expected. - Gross margin improved from 41% to 45% and expected to remain firm. Maiden revenue contribution from Faire Leather at US$0.5m. - Maintain BUY with a lower target price of S$0.61 from S$0.70. We lowered of FY18e earnings by 18%. Singapore Industrial REITs - Sector remains lacklustre and recovery could be delayed Recommendation: Equal Weight (Unchanged), Analyst: Richard Leow - Maintain Equal Weight view on Industrial REITs sub-sector - Sector occupancy ticked down QoQ; Rental Index stabilising but inched lower as well - Rental in general has yet to bottom, but Business Park was the lone bright spot with its fifth consecutive quarter of higher rental - Tapering of new supply in 2018 is a tailwind for the sector, but absorption of vacant space remains slow – evident from occupancy not picking up - Manufacturing and export data already moderating, and the outbreak of a full-blown trade war could be the proverbial last straw - Slight change to our view from the previous quarter: Now opine that bottoming of rent might be delayed to 2019, instead of by end-2018 Singapore REITs Monthly – Monthly Tracker: August 2018 Analyst: Tara Wong - FTSE S-REIT Index declined 1.9% YTD. Sector yield spread over the benchmark 10-year SGS (10YSGS) yield fell further below the -1SD level, at 275bps, from 294bps in June. - 3m SOR rose to 1.60% as at end July 2018, near 10-year highs. - Remain NEUTRAL on S-REITs sector. Sub-sector preferences: Office and Hospitality. Q&M Dental Group – Organic growth picking up Recommendation: BUY (Upgraded), Last Done price: S$0.510 Target Price: S$0.649, Analyst: Phillip Research Team - 1H18 Revenue/PATMI met 39.3%/49.7% of our full year expectations; 2Q18 effective tax rate was lower than our assumption. - Opened 3 new clinics in 1H18. Another 4 more clinics for Singapore and 3 for Malaysia in 2H18. - Adoption of dividend policy of paying out at least 30% of core operating earnings. Interim dividend was lower at 0.4 cents per share (-43% YoY). - Upgraded to BUY and TP of S$0.65 (previously S$0.63), based on estimated 2.3 SCents FY18 EPS and 28x FY18e PER. No change to our earnings estimates. TECHNICAL PULSE KrisEnergy Ltd – Daily timeframe – Bearish - The bearish rejection since 14/08/18 has succeeded in breaking price back below the 20 day moving average and 0.088 range low with increasing volume suggests the resumption of the downtrend next. - Expect price to head lower next to test the 0.085 support area followed by 0.081. For more information and additional disclosures, refer to the link here. BREAKING NEWS
Stock market closes higher as Dow has best day in 4 months. The Dow Jones Industrial Average DJIA, +1.58% jumped 396.32 points, or 1.6%, to 25,558.73. The S&P 500 index SPX, +0.79% advanced 22.32 points, or 0.8%, to 2,840.69 with all its 11 sectors ending in positive territory, led by telecommunications services, consumer staples and financials. The Nasdaq Composite Index COMP, +0.42% added 32.41 points, or 0.4%, to 7,806.52.
US jobless claims fall for second straight week. Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 212,000 for the week ended Aug 11, the Labor Department said on Thursday. Data for the prior week was revised to show 1,000 more applications received than previously reported.
Oil steadies but outlook for demand grows gloomy. Brent crude oil futures settled 67 cents higher at US$71.43 a barrel, while US crude futures rose 45 cents to US$65.46 a barrel. As the end of the summer driving season approaches, crude oil processing is likely to have peaked and should decrease from now on. Net crude oil imports, therefore, need to decline steeply so that crude oil stocks do not rise any further.
Singapore non-oil exports notch 11.8% growth in July, beating forecasts. NODX grew by 11.8 per cent on the previous year - far ahead of the revised 0.8 per cent uptick in June, and well up on the market consensus of a 7.4 per cent rise.
Oslo Stock Exchange moves again to delist Emas Offshore. The Financial Supervisory Authority of Norway made the decision on Aug 15, and Emas has three weeks from that date to appeal. This is the stock exchange's second attempt to delist Emas this year, after it passed the first resolution in February. The company succeeded in appealing against it in April.Source: SGX Masnet, Bloomberg, Reuters, The Business Times, Channel NewsAsia, Phillip Securities Research Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research
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