Daily Morning Note – 02 March 2021
PHILLIP SUMMARY
Global equities markets rose and the S&P 500 on Monday had its best day since June 5, with investors taking lower US bond yields in stride on optimism over the US$1.9 trillion coronavirus relief bill and distribution of Johnson & Johnson’s newly authorized Covid-19 vaccine. Wall Street’s rise follows a jump in European shares and solid gains on Asian stock markets.
A global equity rally is set to extend in Asia after investors shook off concerns about the impact of higher bond yields. Benchmark Treasuries retreated. Futures pointed to a stronger open in Japan, Australia and Hong Kong. In a broad-based rally, the S&P 500 notched its biggest advance in almost nine months and the Nasdaq Composite jumped almost 3%. Longer-dated Treasuries resumed their selloff even as shorter-term maturities found support. The dollar dipped against most major peers. Oil declined ahead of a key OPEC+ meeting this week that may return more supply back to the market.
BREAKING NEWS
SG
Lippo Malls Indonesia Retail Trust (LMIRT)’s distribution per unit (DPU) for the fourth quarter ended Dec 31, 2020 plunged 92.3 per cent to 0.04 Singapore cent from 0.52 Singapore cent a year ago. Gross revenue was down 60.7 per cent to S$27.35 million due to discounts given to its tenants as a result of shorter opening hours amid the pandemic. Net property income (NPI) shrank nearly 78 per cent year-on-year to S$10.63 million while the distribution to unitholders worked out to S$3.04 million, down nearly 80 per cent from a year ago.
Singapore’s bank lending rose for the third straight month in January on higher loans to businesses, data from the Monetary Authority of Singapore (MAS) showed on Monday. Loans through the domestic banking unit – which captures lending in all currencies, but reflects mainly Singapore-dollar lending – climbed 0.7 per cent to S$683.59 billion in January, compared with S$678.72 billion in December. Business loans grew 0.9 per cent month on month to S$422.73 billion in January. Loans to the single-largest business lending segment – building and construction – inched up 0.3 per cent to S$150.40 billion to reverse a 0.6 per cent contraction in December. Consumer loans were also up 0.5 per cent to S$260.87 billion in January on the back of a steady increase in housing loans, which rose 0.4 per cent to S$202.14 billion month on month.
Golden Energy and Resources posts 18.7% drop in FY2020 earnings after acquisitions. Coal mining and trading company Golden Energy and Resources (Gear) on Monday announced FY2020 net profit of US$8.1 million, 18.7 per cent lower than the previous year’s net profit of US$9.9 million a year ago. This comes after consolidating the results of the group’s new subsidiary Stanmore Coal, as well as factoring in the impact of its investment in the Ravenswood Gold project. Gear increased its stake in Australia-listed Stanmore Coal to 75.33 per cent from 31.35 per cent previously with effect from May 18, 2020. In March 2020, it completed its acquisition of Ravenswood Gold Mine in Queensland.
Q&M Dental Group (Singapore) recorded a net profit of S$19.7 million for the full year ended Dec 31, 2020, 10 per cent higher than its FY2019 profit of S$18 million. In its results released on Monday, the mainboard-listed group said this was mainly due to higher revenue and lower operating expenses. Earnings per share stood at 2.5 Singapore cents, up from 2.29 cents a year ago. Total revenue grew 8 per cent year on year to S$137.6 million from S$128 million, mainly boosted by 26 per cent higher revenue contributions in H2. This comes as revenue from existing and new dental outlets in both Singapore and Malaysia – which includes profit-guarantee income – generated significantly more revenue in H2 than in the pre-Covid-19 period and compared to the corresponding period in FY2019, said the group.
Healthcare player Medtecs International Corp posted a net profit of US$131.7 million for the full year ended Dec 31, 2020 – almost 110 times the US$1.2 million net profit a year ago. This was attributed to improved economies of scale and higher proportion of sales of Medtecs-branded products and personal protective equipment (PPEs), the medical equipment supplier said in a regulatory filing on Monday. Earnings per share came in at 23.973 US cents for FY2020, up from 0.211 US cent for the preceding year. Revenue jumped to US$400.3 million, nearly six times the US$69 million a year earlier. This came on the back of a global surge in the demand for PPEs arising from the Covid-19 pandemic, which led to an increase in sales, Medtecs said.
Resort-developer Banyan Tree sank deeper into the red with losses of $49.8 million in 2H2020 ended December, down from earnings of $5.2 million in the year before. This follows a 61% plunge in its revenue to $82.5 million in 4Q2020 from $213.97 million in the year before that came as a result of the travel restrictions imposed globally to curb the spread of the coronavirus. Specifically, hotel investments contributed to less than 20% of 2H2020 revenue as compared to the 37% it accounted for 2H2019. Hotel occupancy levels increased by 29% in 2H2020 as compared to 26% in 1H2020.
Industrial automation firm ISDN Holdings has reported earnings of $5.6 million and $15.1 million for the 2HFY2020 and FY2020 ended December, representing a 271.4% and 114.8% y-o-y increase from the previous year’s earnings. The results came in line with the company’s guidance on Feb 19, who expected earnings to grow by over 80% for the FY2020. Earnings per share (EPS) for the 2HFY2020 and FY2020 stood at 1.28 cents and 3.51 cents on a fully diluted basis. Revenue for the 2HFY2020 rose 35.2% y-o-y to $194.7 million while FY2020 revenue rose 24.4% y-o-y to $361.9 million.
US
United Airlines has ordered 25 new Boeing 737 MAX aircraft for delivery in 2023, the US airline said on Monday. The airline also moved up the delivery of 40 previously ordered MAX aircraft to 2022 and 5 to 2023. “With a number of our aircraft nearing the end of their lifecycle and the growth opportunities that we know will exist in the Covid-19 recovery period, this agreement will help us to grow as demand returns,” chief commercial officer Andrew Nocella said in a memo.
South Korea’s Coupang Inc , which is backed by SoftBank Group, is targeting a blockbuster stock market debut that would value the e-commerce giant at well over US$50 billion (S$66.4 billion) and make it the largest US initial public offering this year. In a regulatory filing on Monday (March 1), Coupang said it would price its offering between US$27 and US$30 a share. At the upper end of that range, Coupang will raise as much as US$3.6 billion. The massive offering comes as US capital markets gear up for another banner year for new listings, underscoring unprecedented investor appetite for technology companies, which have seen sales skyrocket during the Covid-19 pandemic.
US manufacturing expanded in February at the fastest pace in three years and a gauge of materials costs accelerated the most since 2008 as supply shortages challenge the industry. A gauge of factory activity increased to 60.8 from 58.7 a month earlier. At a time when household and business demand is off to a solid start to the year amid lean inventories, producers are struggling with rising costs for raw materials, labour force disruptions and higher shipping rates. The ISM’s measure of prices paid for inputs climbed nearly 4 points in February to 86, the highest since July 2008. Orders, production and factory employment measures all expanded at faster paces last month, highlighting robust and resilience in manufacturing that’s helping power the economy. At the same time, a measure of unfilled orders surged to the highest level in nearly 17 years while another gauge showed delivery times were the second-longest since 1979.
Shares of Apple closed up 5.39% on Monday to a price of $127.79, outpacing the NASDAQ, which was only up 3.01% percent. It was Apple’s biggest day since Oct. 12, when shares rose 6.35%. The bump came after Berkshire Hathaway chairman and CEO Warren Buffett said in his annual letter to investors published this weekend that his investment firm owns 5.4% of Apple’s stock, making it Berkshire’s third-most valuable asset. The letter praised Apple’s approach to dividends and share buybacks.
Zoom shares rose as much as 11% in extended trading on Monday after the video-calling software maker reported fiscal fourth-quarter earnings and guidance that were stronger than analysts had expected. Revenue grew 369% year over year in the quarter that ended on Jan. 31, according to a statement. In the year-ago quarter people began to use Zoom more heavily as the Covid-19 virus emerged in China, leading to the World Health Organization calling the virus a pandemic in March 2020. In the previous quarter revenue had grown some 367%..
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
TECHNICAL REPORTS
SembCorp Industries Ltd
Analyst: Chua Wei Ren
Recommended Action: Technical BUY
Sembcorp Industries (SGX: U96) sell-call has been stopped out after prices managed to sustain above the support level at $1.62 based on our report on 18th Feb 2021 . Also, we have updated our wave count as the previous wave count is not in tune with the time period especially the sub-waves. As such, the 5th wave tentatively is yet to complete.
>> Read more Technical reports
RESEARCH REPORTS
SG Bonds Weekly – Week 9 – Inflation Worries
Credit Analyst: Timothy Ang
– Market turmoil sweeping across equity and debt markets overnight puts a dent in the budding optimism surrounding economic recovery.
– A lacklustre US treasury auction overnight fuelled a sharp steepening of the yield curve, with 10yr yields surging as high as 23bps last night to 1.60%.
– New issue pipeline remains muted with the heightened market volatility with 1 new mandate outstanding from the ones announced over the fortnight
CapitaLand Limited – Good fight in a tough year
Recommendation: BUY (Maintained), Last Done: S$3.17
Target Price: S$3.75, Analyst: Natalie Ong
– FY20 net loss per share of 30.5 Scts was worse than our profit estimate of 30 Scts. DPS of 9 Scts, down 25% YoY, formed only 75% of our estimate
– Net loss was S$1.57mn. Operating PATMI of S$770mn was wiped out by S$1.6bn in revaluation losses and S$861mn in impairment losses. But in spite of the pandemic, FY20 residential and industrial portfolio beat FY19 performance.
– Maintain BUY. TP lower at S$3.75 from S$3.82, still based on a 20% discount to RNAV. Development and investment property book values are lower as we roll forward our estimates. CAPL remains our top pick in the sector as high recurring income and a pivot to New Economy assets are expected to keep earnings stable and future-proof its portfolio. FY21e EPS lowered by 15% from 40 Scts to 34 Scts
HK Reports – Read up on our Hong Kong reports here
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