DAILY MORNING NOTE | 1 August 2023
Trade of the Day
Analyst: Zane Aw
(Current Price: US$7.15) – TECHNICAL BUY
Buy stop price: US$7.28 Stop loss: US$6.00 Take profit: US$10.00
Singapore shares closed 0.1 per cent higher on Monday (Jul 31) tracking gains across the region, following signs of easing inflation in the US. Shares of Keppel Corp led the gainers, rising 2.5 per cent to close at S$7.38. Other top gainers for the day include Sats and Yangzijiang Shipbuilding, which rose 2.2 per cent to S$2.80 and 2 per cent to S$1.54, respectively.
Wall Street stocks finished a choppy session narrowly positive on Monday (Jul 31) ahead of key economic and earnings releases later in the week. The Dow Jones Industrial Average finished up 0.3 per cent at 35,559.53. The broad-based S&P 500 added 0.2 per cent at 4,588.96, while the tech-rich Nasdaq Composite Index also won 0.2 per cent to 14,346.02.
CapitaLand Integrated Commercial Trust (CICT) reported a distributable income of S$353.2 million for the six months ended 30 June 2023 (1H 2023), an increase of 1.7% year-on-year (y-o-y) compared to the S$347.3 million for 1H 2022. This is driven by CICT’s proactive portfolio management and value creation initiatives, particularly from its acquisitions and the completed asset enhancement at Raffles City Singapore, offset by higher finance costs from the additional borrowings for its acquisitions and increases in interest rates. CICT’s 1H 2023 distribution per unit (DPU) was 5.30 cents, up 1.5% y-o-y. Gross revenue increased 12.7% y-o-y and 10.1% in net property income, reaching S$774.8 million and S$552.3 million, respectively. The improvement was mainly attributed to contributions from the acquisitions of CapitaSky and the Australia portfolio, as well as the completion of the asset enhancement initiative (AEI) at Raffles City Singapore. This was also boosted by higher rental income from a majority of CICT’s Singapore properties.
CapitaLand Ascendas REIT (CLAR) has declared 2.0% lower distribution per unit (DPU) y-o-y of 7.719 Singapore cents for the 1HFY2023 ended June, despite reporting 6.7% higher net property income (NPI) of $508.8 million for the same period. According to the REIT’s manager, the total amount available for distribution declined by 1.0% y-o-y to $327.5 million mainly due to higher interest expense resulting from rising interest rates. DPU declined on account of the lower distribution and an enlarged unit base following CLAR’s private placement in May, says the manager on July 31. Meanwhile, gross revenue for 1HFY2023 rose 7.7% y-o-y to $718.1 million, owing to newly-acquired properties in Singapore during the period and the US during FY2022.
Mapletree Pan Asia Commercial Trust (MPACT) has declared 12.8% lower distribution per unit (DPU) y-o-y of 2.18 cents for 1QFY2024 ended June, despite gross revenue and net property income (NPI) for the quarter growing 75.6% and 68.0% y-o-y to $237.1 million and $179.2 million respectively. The REIT’s manager says the y-o-y surges were driven by the effects of the merger between Mapletree Commercial Trust and Mapletree North Asia Commercial Trust in June 2022. MPACT’s Singapore assets also played a part, says the manager on July 31. Its Singapore assets recorded a $5.5 million revenue growth, mitigating the impact of higher utility expenses, which grew 392.1% y-o-y and 5.5% to nearly $10 million for the quarter.
Keppel REIT has secured a new renewable energy solutions tenant at KR Ginza II, formerly known as Ginza 2-chome, in Japan. The new renewable energy solutions tenant will occupy three floors, spanning approximately 14,100 sq ft, announced the REIT’s manager on July 31. With this, the building’s committed occupancy has increased from 36.3% to nearly 75%. KR Ginza II is a freehold boutique office building in Tokyo’s prime Ginza District, which was acquired by Keppel REIT in November 2022. KR Ginza II is currently anchored by Netyear Group Corporation, a subsidiary of NTT Data Corporation.
Japfa reported a loss of US$53.6 million for the first half of 2023, from a profit of US$44 million in H1 2022. Revenue for the period fell 4 per cent from US$2.2 billion to US$2.1 billion a year prior. Margins were compressed due to external factors that impacted production costs and average selling prices (ASPs) of Japfa’s products. High raw material costs increased input costs across the agri-food company, from breeding, fattening and other operations. Inflationary pressures had an effect on demand and Japfa’s ability to increase ASPs. Japfa’s animal protein business was boosted by the rebound in poultry prices in the second quarter of 2023, while feed remains profitable, delivering a profit of US$79.5 million. Its animal protein other business fared worse, with low ASPs and high production costs across all markets impacting results. This segment recorded a loss of US$17.7 million.
Shareholders holding about 99.99% of the total share capital in LHN Limited have voted for the potential disposal of LHN Logistics at an extraordinary general meeting (EGM) held on July 31. The approval, coupled with the consent given by JTC Corporation, means that the offer from China’s Milkyway Chemical for LHN Logistics will go through. Shanghai-listed Milkyway, on June 4, made an offer for LHN Logistics at 22.66 cents apiece, 13.3% over LHN Logistics’ initial public offering (IPO) price of 20 cents in April 2022.
SoFi Technologies turned in Q2 revenue that exceeded Wall Street expectations as personal loan originations climbed and the company attracted new members with good credit scores, boosting deposit levels at lower cost of funding, it said on Monday. The company known for refinancing student loans now expects 2023 adjusted net revenue of $1.974B-$2.034B vs. the $1.99B consensus and up from its prior range of $1.955B-$2.02B. It also raised its outlook for adjusted EBITDA to $333M-$343M from its prior guidance of $268M-$288M, vs. The consensus of $289M. Management expects SoFi will achieve quarterly GAAP net income profitability by Q4 2023, the same as its previous guidance. Q2 GAAP EPS of -$0.06, matched the consensus estimate, compared with -$0.05 in Q1 and -$0.12 in Q2 2022. Q2 adjusted EBITDA of $76.8M rose from $75.7M in the prior quarter and $20.3M a year ago.
Chipmaker ON Semiconductor Corp on Monday forecast third-quarter revenue above market estimates, on optimism that strong demand from the automotive sector will offset broader weakness in the semiconductor industry. Onsemi, which makes sensors and supplies chips to companies like Volkswagen, expects revenue between $2.10 billion to $2.20 billion in the third quarter and forecast adjusted earnings of $1.27 to $1.41 per share. For the second quarter ended June 30, the company’s revenue rose to $2.09 billion, ahead of expectations of $2.02 billion. The revenue was boosted by Onsemi’s power solutions group, which provides power management chips, making up about 53% of total quarterly revenue. On an adjusted basis, the company earned $1.33 per share in the reported quarter, compared with estimates of $1.21 per share.
The US Securities and Exchange Commission (SEC) had asked Coinbase to stop trading in all cryptocurrencies except bitcoin before suing the cryptocurrency platform in June, the Financial Times (FT) reported on Monday (Jul 31), citing CEO Brian Armstrong. “We really didn’t have a choice at that point. Delisting every asset other than bitcoin, which by the way is not what the law says, would have essentially meant the end of the crypto industry in the US,” Armstrong told the FT. “It kind of made it an easy choice … let’s go to court and find out what the court says,” he added. The SEC had accused Coinbase of operating illegally because it failed to register as an exchange. It also alleged that Coinbase traded at least 13 crypto assets that are securities that should have been registered, including tokens such as Solana, Cardano and Polygon.
Walmart has paid $1.4 billion to buy out a large investor in Flipkart, further cementing its control of the Indian e-commerce giant. In recent days, Walmart bought the remaining shares of Flipkart owned by Tiger Global, according to a letter the New York hedge-fund sent to its investors that was reviewed by The Wall Street Journal. The transaction valued Flipkart at $35 billion, down from nearly $38 billion when it sold shares to Japan’s SoftBank, Walmart and other investors in 2021. The investment offers the U.S. retail behemoth greater exposure to the fast-growing global digital-consumer market. Privately held Flipkart is one of the largest e-commerce companies in India. Started in 2007, Flipkart said last month it had a customer base of over 450 million and offered over 150 million products across 80-plus categories through its marketplace.
Taiwan’s Foxconn has signed a deal with Tamil Nadu to invest US$194 million in a new electronic components manufacturing facility that will create 6,000 jobs, the government of the southern Indian state said on Monday (Jul 31). The Foxconn Industrial Internet (FII) facility will be built in the Kancheepuram district near the state capital of Chennai, a state government source said on condition of anonymity as details are not yet public.
Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR
PSR Stocks Coverage
For more information, please visit:
Guest Presentation by Audience Analytics
Date: 10 Aug 2023
Time: 12pm – 1pm
Guest Presentation by Paragon REIT
Date: 10 Aug 2023
Time: 3pm – 4pm
Guest Presentation by Prime US REIT
Date: 17 Aug 2023
Time: 12pm – 1pm
Guest Presentation by Netlink NBN Trust
Date: 24 Aug 2023
Time: 12pm – 1pm
Guest Presentation by Uni-Asia Group Limited
Date: 30 Aug 2023
Time: 12pm – 1pm
PHILLIP RESEARCH IN 3 MINS
Phillip Research in 3 minutes: #29 Keppel Corporation; Initiation
Click here for more on Phillip in 3 mins.
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.