Daily Morning Note – 01 March 2021


Australian bonds rallied strongly in early Asia trading with investor focus firmly on yields after last week’s turmoil. Asian stocks looked set for a muted start. Ten-year Australian yields fell over 20 basis points, paring some of last week’s 48 basis point surge. Equity futures were little changed in Japan and Australia. U.S. tech stocks staged a modest rebound on the last day of a tumultuous week as a global bond rout eased. The S&P 500 Index closed lower, while Bitcoin fell below $45,000.

Yields have surged as an acceleration in the pace of vaccinations globally and optimism over improving global growth bolster bets that inflation will rise. That has also led investors to price in earlier monetary tightening than the Federal Reserve and other central banks have signalled. The benchmark 10-year Treasury yield surged above 1.6 per cent on Thursday for the first time in a year after a weak seven-year note auction. It was last at 1.45 per cent.



Yanlord Land Group’s net profit edged down 3 per cent to 2.1 billion yuan (S$431.8 million) in the half-year ended December 2020, from 2.2 billion yuan in the corresponding period of the previous year. Lower other operating income and other gains, share of loss of joint ventures and a decrease in fair value gain on investment properties dragged down a 35 per cent rise in revenue during the same period. Higher HoH revenue was attributed the rise to an increase in gross floor area (GFA) delivered to customers and higher average selling prices (ASPs) per square metre in H2 2020 compared to H2 2019.

Riverstone Holdings Q4 net profit rises to RM331.1m, full-year profit reaches record high. Malaysian glove maker Riverstone posted a net profit of RM331.1 million (S$108.8 million) for the fourth fiscal quarter ended December 2020, up from RM32.1 million in the year-ago period. Revenue for the full fiscal year also rose 85 per cent to RM1.83 billion from RM989 million in FY 2019. Riverstone said the increase was attributable to higher quantities of both healthcare and cleanroom gloves being shipped.

UOL full-year profit dives 97% to S$13m; better second-half more than offsets H1 loss. This was due mainly to attributable fair-value losses on its investment properties and other losses totalling S$246.7 million, compared to gains of S$165.1 million in the previous year. Excluding fair value and other losses/gains, Group attributable profit declined 17% to $259.8 million against $313.7 million previously. Group revenue fell 13% to $2.0 billion with lower contributions from most segments except property development and technology operations.

CNMC Goldmine Holdings reported a net loss of US$2.6 million for the second half of the fiscal year ended December 2020, reversing from a net profit of US$2.2 million in the year-ago period. This is CNMC’s first annual loss since 2011 on Covid-19 fallout. This caused the Catalist-listed firm to report a loss of US$3.5 million for FY 2020 versus a net profit of US$4.4 million in the previous year. This marked the group’s first annual loss since 2011.

Wilmar International led the buyback consideration tally over the five sessions, buying back 463,000 shares at an average price of S$5.38 per share. As of Feb 24, Wilmar International had purchased 0.71 per cent of its issued shares (excluding treasury shares) on the current mandate. With its FY20 results reported on Feb 22, Wilmar said that to demonstrate its belief in its business model and the prospects of its business, in FY20, it bought back about S$190 million of its shares. The five sessions also saw Singapore Technologies Engineering buy back 655,000 shares at an average price of S$3.80 per share and Keppel Corporation bought 449,000 shares at an average price of S$5.05 per share..


Biden’s US$1.9t COVID-19 relief plan passes hurdle in US House. The US House of Representatives moved toward a late-night vote on President Joe Biden’s US$1.9 trillion coronavirus aid bill on Friday as Democrats who control the chamber steered the sweeping measure toward approval. The measure would pay for vaccines and medical supplies and send a new round of emergency financial aid to households, small businesses and state and local governments.

The Biden administration plans to allow a Trump-era rule targeting Chinese technology firms deemed to pose a threat to the United States to go into effect despite objections from US businesses, the US Commerce Department said on Friday. The department issued an interim final rule in the final days of the Trump administration aimed at addressing information and communications technology supply chain concerns and said it would become effective after a 60-day period of public comment.

Internet investor SoftBank Group said Saturday it reached a settlement with WeWork co-founder Adam Neumann and other investors in the office sharing giant, amid reports that the deal would give the ex-CEO an extra US$50 million. Under the deal, the Wall Street Journal reported, SoftBank Group would buy about US$1.5 billion of stock from other investors, including nearly US$500 million from Neumann, roughly a half of what it originally planned to buy. But the deal would give the controversial founder a US$50 million windfall, another US$50 million to cover his legal fees and extend by five years a $430 million SoftBank Group loan, according to reports.

Astrazeneca , has sold its stake in Moderna for more than US$1 billion. AstraZeneca Plc has sold its stake in Moderna Inc for more than US$1 billion after the American biotechnology company’s shares soared on the back of its coronavirus vaccine breakthrough, The Times reported.

Facebook to pay US$650m settlement over US privacy dispute. A US federal judge has given final approval to Facebook’s US$650 million payment to settle a privacy dispute between the California group and 1.6 million users in the US state of Illinois. Chicago attorney Jay Edelson sued Facebook in 2015, alleging the social network illegally collected biometric data to identify faces in violation of a 2008 Illinois privacy lawp>

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


RaOversea-Chinese Banking Corp Ltd – Emerging with capital strength

Recommendation: BUY (Upgrade); TP: S$13.65 (prev. S$9.68)

Last Done: S$10.99, Analyst: Tay Wee Kuang

– FY20 earnings beat estimate by 61% with the variance coming from S$28mn of JSS income and new COVID-19-related services.

– Healthcare services grew 18% YoY as PCR and serology testing offset loss of foreign patients due to travel restrictions.

– China operations improved from FY19. RafflesHospitalChongqing narrowed losses. Completion of RafflesHospitalBeijing’s upgrading to accelerate growth in China

Upgrade from NEUTRAL to ACCUMULATE with higher TP of S$1.18 from S$0.94, as we roll forward our DCF (WACC 6.6%) valuation. China operations expected to turn around.

Koufu Group – Slower than expected consumption recovery

Recommendation: Accumulate (Downgrade), Last Done: S$0.66

Target price: S$0.68, Analyst: Terence Chua

– FY20 revenue came in at 99% of our estimates as consumption recovers slower than expected.

– Expected TOP of Integrated Facility (IF) delayed again, to 1Q21.

– 30% improvement in footfall in Singapore and Macau in 2H20

– We are downgrading our BUY rating to ACCUMULATE with a lower target price of S$0.68 (previously S$0.77) as we benchmark our valuation to 18.5x FY21e. We lowered our revenue estimates for FY21e and FY22e by 6.5% and 6.2% respectively and consequently PATMI estimates for FY21e and FY22e is reduced by 11.5% and 10.4% respectively as the consumption recovery takes a longer than expected time to pan out

PropNex Ltd – 33% ROE, 6.8% dividend yield

Recommendation: BUY (Maintained); TP S$1.00

Last close: S$1.57; Analyst Paul Chew

– 4Q20 results beat, with FY20 revenue and PATMI at 108%/108% of our forecasts. Recovery in resale transactions was stronger than expected.

– Revenue grew 19% YoY to S$155mn on a 51% jump in HDB resales and 26% increase in private resales. PATMI declined 9% YoY to S$7.5mn due to associate impairment and lower margins.

– Net cash of S$105.8mn (FY19: S$81.6m) from S$42mn of operating cash flows in FY20. Final DPS was up more than 1.5x to 4 cents

– Maintain BUY with a higher DCF TP (WACC 9.8%) of S$1.00, from S$0.85. We raised our FY21e PATMI by 11% to S$30.8mn. Revenue estimates increased as we expect a healthier property market in 2021, led by resales. Yields of 6.8% backed by S$105mn net cash, 33% ROEs and an estimated 53% share of residential property transactions

Venture Corporation Ltd – New growth drivers

Recommendation: NEUTRAL (Maintained); TP S$19.20

Last close: S$19.20; Analyst Paul Chew Chew

– 4Q20 net profit declined 10% YoY to S$86.6mn. FY20 profit was in line at 101% of our forecast Revenue was slightly below at 96%.

– Net cash piled to a record S$928mn, supported by FCF of S$425mn in FY20.

– VMS is pivoting to new growth drivers: electric-vehicle (EV) batteries and wafer-fab equipment. EVs are expected to experience explosive multi-year growth, especially in the Chinese market. VMS intends to expand its manufacturing cluster in China. Equipment for gene sequencing is another exciting area undergoing massive innovation

– Remain NEUTRAL. We nudge up FY21e PATMI by 3%. Accordingly, our target price climbs to S$19.20 from S$18.60, still at 5-year historical average P/E of 16x. Attractive 4% yields are backed by a large cash hoard

IREIT Global – Another year of resilience

Recommendation: ACCUMULATE, Last Done: S$0.655

Target Price: S$0.700, Analyst: Tan Jie Hui

– FY20 NPI and DPU at 102%/103% of our forecasts, in line. Rental collection exceeded 99%.

– FY21 lease breaks/expiries minimal at 3.7%/3.3%. Portfolio occupancy remained high at 95.8%. Portfolio valuation increased by 1.2% with high occupancies anchored by blue-chip tenants in German portfolio.

– Maintain ACCUMULATE with raised DDM TP (7.85% discount rate) of S$0.70, from S$0.68. Our TP implies yields of 7.3% and total prospective returns of 14.2%. FY21e DPU has been raised by 7% for better operational performance

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