Daily Morning Note – 04 March 2020
WEEKLY MARKET OUTLOOK WEBINAR
A rapidly spreading coronavirus outbreak will likely be a “material headwind” for the US economy with the hit expected to be longer and deeper than previously anticipated, S&P Global Ratings said on Tuesday as it cut its growth forecast.
The epidemic is plunging the world economy into its worst downturn since the global financial crisis more than 10 years ago, the Organisation for Economic Cooperation and Development warned on Monday, urging governments and central banks to fight back to avoid an even steeper slump.
In a bid to shield the world’s largest economy from the coronavirus, the Federal Reserve on Tuesday cut interest rates by half a percentage point to a target range of 1.00 per cent to 1.25 per cent. Also on Tuesday, Australia’s central bank cut interest rates to a record low 0.5 per cent.
S&P had earlier expected US GDP growth in the first quarter would be closer to 1 per cent than its pre-virus forecast of 2.2 per cent, with a recovery in subsequent quarters.
The global oil benchmark ended Tuesday slightly lower under pressure from falling equities, but the losses were contained slightly as top producers considered more output cuts to support prices and the Federal Reserve cut US interest rates to support the economy.
Eagle Hospitality Trust’s (EHT) sponsor-cum lessee and manager have taken initiatives to preserve and enhance portfolio performance amid softening market fundamentals and uncertainties due to the impact of the Covid-19 virus, EHT said.
Tee International has released its external investigator summary, which reported that former group chief executive Phua Chian Kin had admitted to taking company funds to repay his own debts and satisfy margin calls.
United Hampshire US Reit launches IPO at US$0.80 per unit.
METECH International’s Simon Eng has resigned as chairman and chief executive officer (CEO) of the company, in view of its “new business direction and investment parameters”, the Catalist-listed firm said in a bourse filing on Tuesday.
Olam International has agreed to sell its remaining 50 per cent stake in its Indonesian sugar joint venture (JV), Far East Agri, for between US$82.5 million and US$85 million, subject to final adjustments as provided for in the sale-and-purchase agreement.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Sembcorp Marine Ltd
Recommended Action: Technical SELL
Sembcorp Marine (SGX: S51) bearish momentum will continue based on the technical indicated:
JEP Holdings Limited – Next phase is revenue growth
Recommendation: BUY (Maintained), Last Done: S$0.21
Target Price: $0.26
– FY19 PATMI more than tripled to the S$6.5mn, the highest on record.
– Results were below our forecast. We were too aggressive on our margin and revenue assumptions.
– The turnaround came from new management realigning the whole cost structure of the company and improving pricing.
– Maintain BUY. We are raising our target price to S$0.26 (prev. S$0.20). After major cost restructuring, we believe the next phase of growth will be expanding revenues and new customers. The aerospace supply chain is looking to outsource more from Asia but this will require time. Our higher target price is due to valuation expansion closer to industry peers. After the major turnaround, we expect more stable earnings which deserve higher valuations, in our opinion. We moved our target valuations from 10x to 14x peer and closer to industry peer.
CapitaLand Limited – Hyperdrive – the new normal
Recommendation: Buy (Maintained), Last Done: S$3.54
Target Price: $4.20
– FY19 revenue came in broadly in line at 105.6% of our estimates while DPS came in flat, meeting our 12cents forecast
– A strong set of results – achieved ROE of 10% after 10 years, due to higher PATMI across all segments – operating PATMI (+21%), portfolio gains (+25%) and revaluation gains (19%)
– Deleveraging achieved ahead of target, S$13bn headroom from cash and undrawn debt facilities to be deployed opportunistically.
– Maintain BUY with higher TP of S$4.20.
HK Reports – Read up on our Hong Kong reports here.
Webinar Of The Week
Date: 2 March 2020
Phillip Research in 3 minutes: #18 – Singapore Budget 2020
|The information contained in this email and/or its attachment(s) is provided to you for information only and is not intended to or nor will it create/induce the creation of any binding legal relations. The information or opinions provided in this email do not constitute an investment advice, an offer or solicitation to subscribe for, purchase or sell the e investment product(s) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise. You may wish to seek advice from an independent financial adviser before making a commitment to purchase or investing in the investment product(s) mentioned herein. In the event that you choose not to do so, you should consider whether the investment product(s) mentioned herein is suitable for you. PhillipCapital and any of its members will not, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached to this email. The information and/or materials provided 揳s is?without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials.|
|This e-mail and its attachment(s) may contain privileged or confidential information, which is intended only for the use of the recipient(s) named above. If you have received this message in error, please notify the sender immediately and delete all copies of it. If you are not the intended recipient, you must not read, use, copy, store, disseminate and/or disclose to any person this email and any of its attachment(s). PhillipCapital and its members will not accept legal responsibility for the contents of this message. Thank you for your cooperation.|