Daily Morning Note – 02 May 2018

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RESEARCH REPORT

DBS Group Holdings Ltd – ROE at multi-year highs
Recommendation: Accumulate (Downgraded), Last Close Price: S$30.84
Target Price: S$32.70, Analyst: Phillip Research Team
– 1Q18 PATMI was in-line with expectations (after excluding S$86mn disposal gain)
– The standout performers were group NIMs, wealth management and Hong Kong
– Growth momentum in NII provides sustainability and visibility in earnings. ROE
was 12.5% excluding disposal gain.
– We raised our target price to S$32.70 (previously S$29.30). Our rating has been
downgraded to ACCUMULATE due to the share price performance.

Micro-Mechanics (Holdings) Ltd – Healthy growth against aggressive expectations
Recommendation: Buy (Upgraded), Last Close Price: S$1.82
Target Price: S$2.30, Analyst: Soh Lin Sin
– 3Q18 revenue and PATMI fell short of our expectations. We are trimming our
earnings forecast by 10% for FY18e.
– Margins were hurt by higher cost in capacity expansion and accounting changes.
– In line with our lower earnings forecast, our target price is lowered to S$2.30
(previously S$2.50). We are upgrading to BUY after the recent share price
correction.

Sheng Siong Group – Expansion mode on, not stopping at 50
Recommendation: Accumulate (Downgraded), Last Close Price: S$1.01
Target Price: S$1.13, Analyst: Soh Lin Sin
– 1Q18 Revenue/PATMI met 26.6%/25.3% of our full year estimations
– Earnings growth driven by new stores contribution, tailwinds from favourable
macro backdrop and improving gross margin
– Reaching its 50 stores target by 1H18 from current 48 stores; Will continue to
expand its outlet network to grab market share
– Downgraded to ACCUMULATE on recent stock price run-up; TP unchanged at
S$1.13

Raffles Medical Group – Sign of stronger pulse
Recommendation: Accumulate (Maintained), Last Close Price: S$1.15
Target Price: S$1.32, Analyst: Soh Lin Sin
– 1Q18 Revenue/PATMI met 23.5%/23.1% of our full year expectations
– Stronger performance on uptick in private healthcare service demand in 1Q18
– New capacities in Singapore and China to meet growing regional healthcare needs
– Maintained Accumulate with unchanged TP of S$1.32


TECHNICAL PULSE

China Everbright Ltd – Daily timeframe – Bullish
– The recent bullish price action is signalling for a near-term bottoming price action
next with a bullish break above the 0.405 range high on 30/04/18 with increasing
volume.
– Expect a reversal higher next for price to test the 0.460 resistance area followed
by 0.490.

For more information and additional disclosures, refer to the link here.

BREAKING NEWS

Wall Street rises on optimism on NAFTA deal and China trade. The Nasdaq composite advanced 0.91% to end at 7,190.70 as Apple stock jumped ahead of expectation-topping results released after the market close, and the S&P 500 gained 0.25% to close at 2,654.80. The Dow Jones industrial average, however, slipped 0.27% to finish the session at 24,099.05. Almost 80% of S&P 500 companies that had reported first-quarter results as of Monday had topped expectations.

The dollar’s rally continued, with the greenback posting its biggest advance in more than a week as it breached a number of key resistance levels. The dollar, traded against a basket of major currencies, rose as high as 92.566, the highest since Jan 10, before retracing to 92.454. The greenback is approaching this year’s high of 92.64 reached on Jan 9. and is above the year’s open at 92.24. The currency’s strength weighed on commodities, with oil retreating and gold headed for the lowest since December.

U.S. Commerce Secretary Wilbur Ross said on Tuesday that the Trump administration was prepared to levy tariffs on China if an American delegation heading to Beijing did not reach a negotiated settlement to reduce trade imbalances.

Apple reported revenue and profit that beat analysts’ estimates and projected continued sales momentum, calming concern about demand for the iPhone. The Cupertino, California-based company also unveiled a new plan to return more money to shareholders and said services sales jumped 31%.

The Reserve Bank of Australia left its cash rate unchanged at 1.5 percent in a widely anticipated move.

The London Stock Exchange’s clearing arm LCH has begun clearing interest rate swaps denominated in yuan, won and rupees to bolster its Asia base as euro business faces the threat of relocation. LCH has begun clearing non-deliverable rate swaps in the three Asian currencies for the first time, pitting it more directly against rival clearers like the Singapore Exchange.

Addvalue Technologies is raising up to S$10 million through a stock placement of 250 million shares at four Singapore cents apiece, the satellite communications company.

Australian energy company AusNet Services will be delisting from the Singapore Exchange (SGX) after 13 years.

SPH Reit has agreed to acquire The Rail Mall for S$63.24 million, in a transaction expected to be funded by a combination of debt and internal resources.

Procurri will not be raising any equity this year as its major shareholder DeClout has blocked it from renewing a mandate to issue and allot new shares.

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

Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research

Read the research report(s), available through the link(s) above, for complete information including important disclosures

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