DAILY MORNING NOTE | 1 August 2022

WALL Street stocks finished a strong week on a positive note Friday (Jul 29), extending its rally to 3 days behind strong gains from Amazon, ExxonMobil and other giants following earnings results.Investors shrugged off the latest indicator of persistent inflation, as Commerce Department data showed the personal consumption expenditures price index jumped 1.0 per cent in June compared to May, outpacing personal income gains, which rose just 0.6 per cent. But stocks continued to push higher, rising again after the Federal Reserve’s second straight 75 basis point increase and negative GDP data suggesting a heightened risk of a US recession. The broad-based S&P 500 finished at 4,130.29, up 1.4 per cent for the day and 4.3 per cent for the week. The Dow Jones Industrial Average climbed 1.0 per cent to 32,845.13, while the tech-rich Nasdaq Composite Index jumped 1.9 per cent to 12,390.69.

Top gainers & losers



CREDIT Bureau Asia (CBA), which runs the largest consumer credit bureau in Singapore, is eager for the local digital banks to finally launch. CBA’s growth is linked to the growth of its member network. The inclusion of a new financial institution in Credit Bureau (Singapore)’s (CBS) platform has a ripple effect, amplifying the data pool for all members while creating more revenue opportunities for the group. CBS’ fees are based on how many reports it generates for its customers (the banks), whether each report comes with a score, the size of the portfolio the customer is monitoring, and the number of triggers or alerts sent out. When an individual signs up for a new credit card or loan with a digital bank, the bank uses CBS’ platform to generate a credit report. But it is not only the digital banks that will generate these reports. If the consumer has existing relationships with other banks, CBS’ monitoring system alerts them to the consumer’s increased credit exposure. The banks might decide to review that customer’s status, prompting them to pull reports of their own.

In the current earnings season to-date, 23 S-Reits and property trusts have released their financial results or business updates for period ending Jun 30. Another 15 trusts are expected to announce between Aug 1 to Aug 12.Last week, 14 S-Reits and property trusts unveiled half year or first quarter financial results ending Jun 30 while another 4 released quarterly business updates. Starhill Global Reit (SGReit) also announced its full year earnings last week. SGReit reported full year net property income (NPI) of S$144.7 million, increasing 7.4 per cent from last year. As a result, income available for distribution grew 1.8 per cent on a full year basis to S$89.8 million. The Reit manager will retain S$1.9 million of the H2 FY21/22 income available for distribution for working capital requirements.The Reit manager noted that its Singapore portfolio, comprising interests in Wisma Atria and Ngee Ann City, continue to contribute the bulk of total revenue at 59.9 per cent of total revenue in H2 FY21/22. During the period, Wisma Atria and Ngee Ann City saw significant improvements in tenant sales and shopper traffic with the arrival of international tourists, as well as increased domestic consumption following the relaxation of Covid-19 safe management measures.

The manager of First Reit on Friday (Jul 29) reported a 1.5 per cent increase in its distribution per unit (DPU) for first half of 2022, boosted in part by income from newly acquired nursing homes in Japan.DPU was 1.32 cents for the six months ended Jun 30, compared with 1.30 cents in the same period last year, the interim financial statements of the real estate investment trust (Reit) indicated. Net property and other income in H1 jumped 40.2 per cent year on year to S$52.7 million, while its distributable amount rose 20.9 per cent year on year to S$25.3 million.Its manager said this was due to new income contribution from the 12 nursing homes in Japan acquired on Mar 1 as well as from the restructured master-lease agreements for 14 Indonesia hospitals, the manager said.


The US dollar dropped to a 3-week low in choppy trading on Friday (Jul 29), as investor concerns about recession outweighed inflation worries, for now, amid a mixed batch of economic data. There was also a lot of month-end position-squaring, analysts said.Earlier, US economic numbers showed that inflation continued its red-hot rise in June, keeping the Federal Reserve on track to raise interest rates as aggressively as it deems necessary.The personal consumption expenditures (PCE) price index jumped 1 per cent last month, the largest increase since September 2005 and followed a 0.6 per cent gain in May. In the 12 months through June, the PCE price index advanced 6.8 per cent, the biggest gain since January 1982. Excluding the volatile food and energy components, the PCE price index shot up 0.6 per cent after climbing 0.3 per cent in May.The dollar initially rose on the inflation numbers, but gains fizzled amid the final University of Michigan report showing consumers’ inflation expectations slipped in July.

OPEC’S new secretary general said that Russia’s membership in Opec+ is vital for the success of the agreement, Kuwait’s Alrai newspaper reported on Sunday, quoting an exclusive interview with Haitham al-Ghais. He said Opec is not in competition with Russia, calling it “a big, main and highly influential player in the world energy map”, Alrai reported. Opec+ is an alliance of the Organization of the Petroleum Exporting Countries (Opec) and allies led by Russia. Al-Ghais, Kuwait’s former Opec governor, will head his first Opec+ meeting on Aug 3, in which the group will consider keeping oil output unchanged for September, despite calls from the United States for more supply, although a modest output increase is also likely to be discussed, eight sources told Reuters last week.AL-Ghais told Alrai that “Opec doesn’t control oil prices, but it practices what is called tuning the markets in terms of supply and demand,” describing the current state of the oil market as “very volatile and turbulent.”He added of the recent hikes in oil prices, “As for me, I still stress that the recent rise in oil prices is not only related to the developments between Russia and Ukraine.“

A HONG Kong politician has urged HSBC to spin off its Asia business and appoint representatives of Chinese insurer Ping An to its board, as the global lender prepares to meet with Hong Kong shareholders this week. Ping An Insurance Group Co of China Ltd, the bank’s biggest shareholder, called on London-headquartered HSBC in April to explore strategic options such as spinning off its mainstay Asian business to unlock greater shareholder value. Since then, the proposal has won support from some retail investors in Hong Kong who were disgruntled with dual-listed HSBC’s decision to cancel its dividend payment in 2020. “We would suggest separate out its (HSBC) Asian Business for HSBC. Bringing back primary listing in Hong Kong is the best way to protect interest for minority shareholders,” Christine Fong, a district council member in Hong Kong, said in a Facebook post on Sunday (Jul 31). “We suffered the 2020 cancel dividend lesson, that’s why we strongly support Ping An should take seats in director board of HSBC,” she said. HSBC derived about 65 per cent of its reported profit before tax in 2021 from Asia, with Hong Kong its biggest market.

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


Keppel Corporation – Another step toward transformation into an asset light recurring income business model

Recommendation: BUY (Maintained), Last Done: S$6.88

Target price: S$8.95, Analyst: Terence Chua

• 1H22 net profit below expectations, at 43% of FY22e profit but interim dividend of 15 cents exceeds expectations. Net profit of $498mn (+66% YoY) was slightly under our expectations as Urban Development dragged due to headwinds from China’s property market.

• $710mn of assets monetised YTD, on-track to hit $5bn target by end-2023. However, we expect that the Group will cross the $5bn mark by 1Q23 should the proposed O&M transactions are completed on schedule in 4Q22.

• We welcome the bolder statements made on Keppel Land’s transformation to be asset-light. We believe this will not only crystalise the value of its landbank, but it will also allow the Group to re-invest the proceeds into new growth areas and share some of the gains with shareholders through dividends.

Maintain BUY with higher SOTP TP of $8.95 (prev.$7.07). We revised our valuation on Keppel O&M (KOM) and Keppel Land after greater clarity on its monetisation path. We valued the Group based on the four new segments unveiled during Vision 2030 to better reflect the Group’s reporting segments going forward. Our TP translates to about 1.2x FY22e book value, a slight premium to its historical average as the Group’s transformation plans gain traction and ROE rises to 8.8%. Catalysts expected from approvals obtained for the transaction.

Sheng Siong Group Ltd – Sales normalising, but with exceptional margins

Recommendation: BUY (Maintained); TP S$1.86, Last close: S$1.60; Analyst Paul Chew

• 1H22 PATMI beat expectations at 59% of our FY22 forecast. Gross margins surprised on the upside, a record 30.2% in 2Q22 (2Q21: 28.8%).

• Revenue is beginning to contract with the relaxation of social and work restrictions. Grocery demand will soften with less home dining post-pandemic. A 5% net increase in store footprint will be supportive of revenue in 2H22.

• We are lifting our FY22e earnings by 6%, from higher gross margins. Our BUY recommendation is maintained. The target price is lifted from S$1.75 to S$1.86, due to higher earnings. Valuation is pegged to 23x PE, a 10% discount to the 5-year historical average of 25x PE. We expect revenue to normalise in FY22e/FY23e, placing downward pressure on growth. New store openings of three to five per year, rising market share and improving gross margins will help stem part of the earnings decline.

United Overseas Bank Limited – Boosted by higher net interest income

Recommendation: Buy (Maintained), Last done: S$27.55

TP: S$35.70, Analyst: Glenn Thum

• 2Q22 earnings of S$1,113mn were in line with our estimates due to higher net interest margin and healthy net interest income growth. 1H22 PATMI is 43% of our FY22e forecast.

• NII was up 18% YoY from a NIM increase of 11bps YoY to 1.67% and loan growth of 8% YoY. Fee income fell 1% QoQ while other non-interest income was up 170% QoQ. Management is guiding single-digit loan growth with higher NIMs, stable cost-to-income ratio and slightly higher provisions.

• UOB has guided NIM to expand at 9bps each quarter and to reach 1.90% by the end of 2022. We estimate 2H22 NII to jump 7% YoY.

• Maintain BUY with an unchanged target price of S$35.70. Our FY22e estimates remain unchanged. We assume 1.46x FY22e P/BV and ROE estimate of 11.5% in our GGM valuation. There is upside to our estimates from further GP write-backs and higher NIMs. Every 25bps rise in interest rates can raise NIM by 0.04% and PATMI by 4.3%.

Meta Platforms Inc – Reels drives positive user growth

Recommendation : BUY (Maintained); TP: US$221.00, Last Close: US$159.10

Analyst: Jonathan Woo

• 2Q22 revenue in line with expectations, with earnings missing target slightly. 1H22 revenue/PATMI at 43/42% of our FY22e forecasts.

• Reels driving positive user growth across all metrics for 2Q22, with 15% YoY increase in ad impressions. Business messaging potential additional revenue driver because of its growing popularity amongst SME business owners.

• Soft revenue guidance for 3Q22 from slowing advertising demand and 600 basis points YoY revenue headwind from strengthening US dollar.

• We lower our FY22e revenue/PATMI forecast by 5/10% to account for slower revenue growth, slightly higher-than-expected R&D expenses, and increasing FX headwinds. We maintain a BUY recommendation with a lowered DCF target price of US$221.00 (prev. US$231.00).

Microsoft Corp – Azure deals supporting growth

Recommendation: BUY (Maintained); TP: US$332.00

Analyst: Ambrish Shah

• 4Q22 results were in line with expectations. FY22 revenue/PATMI was at 99% of our forecasts. Total revenue grew 12% YoY to US$51.9bn in 4Q22, mainly due to Productivity and Business Processes and Intelligent Cloud revenues. PATMI was only up 2% YoY as margins contracted due to investments in cloud engineering and FX headwinds (4% of 4Q22 PATMI).

• Azure revenue grew 46% YoY in constant currency in 4Q22 driven by continued demand for cloud computing. Office 365 Commercial revenue grew 19% YoY due to higher volumes and prices.

• We maintain a BUY recommendation with a lower DCF target price of US$332 (WACC 7.1%, g 4%), down from US$338. This is mainly because we reduced our FY23e revenue/PATMI by 3%/4% to account for headwinds from a stronger USD and slowing sales of PCs. Overall, we believe that Microsoft will be a long-term beneficiary of continued shift to the cloud, businesses reopening, cybersecurity upgrades, and price increases at renewals.

Upcoming Webinars

Guest Presentation by SATS [NEW]

Date: 4 August 2022

Time: 2.30pm – 3.30pm

Register: https://bit.ly/3IXysX5


Guest Presentation by Prime US REIT

Date: 4 August 2022

Time: 3.30pm – 4.30pm

Register: https://bit.ly/3uYlNgS


Guest Presentation by Pan-United Corporation Limited

Date: 5 August 2022

Time: 11am – 12pm

Register: https://bit.ly/3OFbJ41


Guest Presentation by A-Sonic Group

Date: 11 August 2022

Time: 12pm – 1pm

Register: https://bit.ly/3PmoIrl


Guest Presentation by Marathon Digital Holdings

Date: 18 August 2022

Time: 10am – 11am

Register: https://bit.ly/3yNSfUu


Guest Presentation by First REIT

Date: 18 August 2022

Time: 12pm – 1pm

Register: https://bit.ly/3BqQe3q


Guest Presentation by Audience Analytics

Date: 23 August 2022

Time: 12pm – 1pm

Register: https://bit.ly/3P3eBYR


Guest Presentation by Meta Health Limited (META)

Date: 24 August 2022

Time: 12pm – 1pm

Register: https://bit.ly/3nYZXWx

POEMS Podcast:

Research Videos

Weekly Market Outlook: Netflix, SembCorp, SATS Ltd, Sabana REIT, FAANGM Monthly, SG Weekly…
Date: 25 July 2022
Click here for more on Market Outlook.
Sign up for our webinars here, and be among the first to receive economy and market updates.


Phillip Research in 3 minutes: #29 Keppel Corporation; Initiation
Click here for more on Phillip in 3 mins.

Follow our Socials

Facebook Social Icon Instagram Icon Twitter Social Icon Youtube Social Icon Linkedin Social Icon TikTok Social Icon Spotify Social Icon

Join our Singapore Equity Research Community on POEMS Mobile 3 App for the latest research reports, market updates, insights and more

Click to join!


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.

Confidentiality Note

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.

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you


This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  


Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com