Daily Morning Note – 08 March 2021

PHILLIP SUMMARY

U.S. stock futures jumped on Sunday evening as a new stimulus package from Washington headed toward final passage this week. Futures contracts tied to the Dow Jones Industrial Average jumped 219 points, or 0.7%. Those for the S&P 500 and the Nasdaq 100 composite gained 0.5% and 0.6%, respectively. The move in futures came after the Senate passed a $1.9 trillion economic relief and stimulus bill on Saturday, paving the way for extensions to unemployment benefits, another round of stimulus checks and aid to state and local governments. The Democrat-controlled House is expected to pass the bill later this week. President Joe Biden is expected to sign it into law before unemployment aid programs expire on March 14.

The fresh round of government spending could cause ripples in the U.S. Treasury market, where the benchmark 10-year yield has risen sharply in recent weeks. The yield rose as high as 1.62% on Friday after starting the calendar year below the 1% mark. The rapid move in the bond market has unnerved equity investors as well, contributing to weakness in stocks with high valuations. Futures contracts tied to the 10-year Treasury price fell 0.2% on Sunday night at the open of trading, implying higher yields.

BREAKING NEWS

SG

Innopac Holdings (SGX: I26) has clarified that its application to be placed under judicial management has been dismissed as a result of an unsuccessful application to adjourn the court hearing for the application. The Mainboard-listed company made this clarification in a bourse filing on Saturday following an update on Feb 24, when it only said that its application to adjourn the court hearing for the judicial management application was unsuccessful.

Top Glove (SGX: BVA) said the proposed issue of new shares will enable it to “raise fresh capital without having the need to undertake a cash call from its existing shareholders”. It said the Hong Kong listing would widen its investor base and strengthen its position to raise capital in the future.

Lian Beng’s (SGX: L03) 75 per cent-owned subsidiary has exercised a call option to acquire the BreadTalk IHQ Building from BreadTalk Group. Consequently, it is deemed that BreadTalk and Lian Beng (Tai Seng) have entered into a binding contract for the sale and purchase of the property. The property is being acquired through a consortium in which Lian Beng holds a 75 per cent direct stake via its wholly owned subsidiary, while its consortium partners, Apricot Capital and 32RE Investments hold 20 per cent and 5 per cent respectively.

IHH Healthcare (SGX: Q0F), Asia’s biggest hospital group by market value, is exploring a sale of its medical education arm International Medical University, according to people with knowledge of the matter. IHH Healthcare is working with Rippledot Capital Advisers on the potential deal, the people said. A sale of the education unit could fetch about US$300 million, said the people, asking not to be named as the process is private.

Yongnam Holdings (SGX:AXB) has bagged five contracts worth S$32.8 million in Singapore and Hong Kong. Four out of five are specialist civil engineering contracts. Yongnam, a provider of structural steel contractor and specialist civil engineering solutions, expects the contracts to have a positive impact on its financial performance for the year ending Dec 31, 2021, it said in a bourse filing on Friday. In Singapore, the group will supply, fabricate and install structural steelwork for the construction of a new integrated services centre and retrofitting works to the Immigration & Checkpoints Authority Building. The contract will conclude by the end of 2022.

US

Twitter CEO Jack Dorsey (US: TWTR) appears to be offering to sell the very first tweet as a non-fungible token, or NFT. The Twitter CEO shared a link Friday afternoon to a platform called “Valuables,” where his March 21, 2006 tweet “just setting up my twttr” was up for bidding. The highest offer is from Sina Estavi, CEO of Bridge Oracle, for $2.5 million as of Saturday afternoon, according to the website. Ownership of these assets is recorded on a blockchain — a digital ledger similar to the networks that underpin bitcoin and other cryptocurrencies. However, unlike most currencies, a person can’t exchange one NFT for another as they would with dollars or other assets. Each NFT is unique and acts as a collector’s item that can’t be duplicated, making them rare by design.

The Senate passed a $1.9 trillion coronavirus relief package on Saturday as Democrats rush to send out a fresh round of aid. The Democratic-held House aims to pass the bill on Tuesday and send it to President Joe Biden for his signature before a March 14 deadline to renew unemployment aid programs. The Senate approved the plan in a 50-49 party line vote as Republicans questioned the need for another broad spending package. The legislation includes direct payments of up to $1,400 to most Americans, a $300 weekly boost to jobless benefits into September and an expansion of the child tax credit for one year. It also puts new funding into Covid-19 vaccine distribution and testing, rental assistance for struggling households and K-12 schools for reopening costs.

Restaurants and bars gained 286,000 workers in February following several months of losing jobs, the latest sign that the industry’s recovery is on the horizon after a long, cold winter. Freezing temperatures, coupled with a resurgence of new Covid-19 cases, hurt eateries at the end of 2020 and into the new year. But after harsh winter storms, warmer temperatures are starting to hit some parts of the country. Vaccine distribution, which started off sluggish, has rapidly picked up steam in the last month. More than 54 million Americans — about 16% of the total population — have received at least one dose as of Thursday morning, according to data from the Centers for Disease Control and Prevention. The approval of the Johnson & Johnson (US: JNJ) vaccine, which is being distributed with help from Merck and Co (US: MRK), will further accelerate those numbers.

Salesforce Inc (US: CRM) reported a $2.17 billion annual gain from its investments in other tech companies. A few days later, the company’s venture arm extended its winning streak with another big exit. In a boom time for large tech IPOs and software consolidation, Salesforce’s name is showing up everywhere. CEO Marc Benioff has proven that he’s not only a mega-dealmaker when it comes to buying high-priced cloud companies like Slack and Tableau, but has also turned Salesforce, with its hefty balance sheet, into a major force in Silicon Valley venture capital.

Shares in Tesla (US: TSLA) were down as much as 8% Friday morning. They’ve since recovered to finish down less than 4% as markets showed a dramatic bounceback late on Friday, but the stock has still lost more than 15% of its value the year and finished below $600 for the first time since Dec. 4. Here are some of the biggest factors weighing down the cult stock and knocking the world’s wealthiest crown off Elon Musk’s head — the CEO owns about 22% of Tesla shares.

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

TECHNICAL REPORTS

Micron Technology Inc

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

Micron Technology Inc (US: MU) strong upside is still roaring with strength despite a correction and technical indicate that the bullish upside will continue.

Applied Materials Inc

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

Applied Materials Inc (US: AMAT) strong upside is set to continue based on recent technical.

Skyworks Solution Inc

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

Applied Materials Inc (US: AMAT) strong upside is set to continue based on recent technical.

>> Read more Technical reports

RESEARCH REPORTS

Asian Pay Television Trust – 9.3% yield while waiting for 5G

Recommendation: BUY (Maintained); TP S$0.15, Last close: S$0.107;
Analyst: Paul Chew

– 4Q20 revenue and EBITDA were within expectations, at 101%/99% of our FY20 forecasts.

– 4Q20 cable subscribers contracted 7,000 QoQ to 716,000. But ARPU was stable at NT$482.

– FY20 capex was down 29% to S$51mn, bumping up adjusted FCF by S$21mn to a record S$67mn.

– FCF of S$67mn to support DPU of 1 cent for 9.3% prospective yields. 5G data backhaul still seen as a multi-year revenue opportunity. DPU of 0.25 cent/quarter will be maintained in FY21. Our forecasts are largely unchanged. Maintain BUY and target price of S$0.15. Set at 9x EV/EBITDA, a 20% discount to Taiwanese peers given the smaller scale, higher leverage and softer growth profile.

>> Read more research reports

HK Reports – Read up on our Hong Kong reports here

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