Daily Morning Note – 1 Febraury 2021


U.S. equity futures fell Monday amid lingering concerns about the impact of retail trading and disappointing economic data from China. Silver futures surged in the latest manifestation of retail investor enthusiasm. S&P 500 contracts fell as much as 1% in Asia trading after the U.S. benchmark closed about 2% lower on Friday. Silver futures opened more than 7% higher. The dollar edged higher against major peers. The Australian dollar slipped after Perth in Western Australia state went into a five-day lockdown due to a coronavirus case. The yield on 10-year Treasuries ended last week around 1.07%.


ABOUT 280 of the 300 residential units currently offered at The Reef at King’s Dock were sold over the launch weekend from Jan 30 to 31, joint developers Mapletree Investments and Keppel Land said on Sunday. Prices ranged from S$2,000 per square foot (psf) to S$2,800 psf, with average price at S$2,330 psf. Due to the strong demand, another 100 units were added to the initial 200 units released, said the developers in a statement. Located near Harbourfront MRT, The Reef at King’s Dock comprises 429 units in total.

MARKETNODE, the joint venture between Singapore Exchange (SGX) and Temasek announced last week, has entered into a partnership with fixed income issuance and data company, Covalent Capital. In an exchange filing on Friday, SGX said Marketnode will acquire a minority stake in Covalent as part of the partnership. Under the partnership, Marketnode and Covalent will collaborate and build the Asia-Pacific’s first, end-to-end digital infrastructure in the fixed income space, SGX said. The entities will streamline the listing, straight-through processing and settlement of bonds and activities in bond lifecycle management.

PARKWAY Life Reit on Friday said that it is divesting its non-core industrial property in Japan known as P-Life Matsudo for a total consideration of 2.9 billion yen (about S$37.1 million) to a real estate company in Japan. It is expected to recognise an estimated gain of about S$5.1 million, as Parkway Life Reit originally purchased the property at S$33.2 million in 2008.

SIA Engineering, the maintenance arm of Singapore Airlines, posted a net profit of S$7.7 million for the third quarter ended Dec 31, 2020, down 85.7 per cent from the same period a year ago, it said in a business update. The group recorded revenue of S$104.6 million for the quarter, down 58.5 per cent year-on-year as all business segments continued to be adversely affected by low flight activities and the reduction in the number of active aircraft.

CDL Hospitality Trusts’ (CDLHT) distribution per stapled security (DPS) for the second half of 2020 declined by 29.2 per cent to 3.44 Singapore cents, from 4.86 cents a year ago. Gross revenue was down 36.5 per cent to S$65.5 million for the six months ended Dec 31, 2020, from S$103.1 million the year before. Meanwhile, net property income (NPI) sank 46.2 per cent to S$39.6 million for the same period, from S$73.6 million a year ago.

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


Keppel DC REIT – Riding technology growth

Recommendation: Accumulate (Upgraded); Last Done: S$2.95

TP: S$3.20; Analyst: Natalie Ong

– FY20 DPU of 9.17 Scts (+20.5% YoY) was in line, forming 97.1% of our estimate.

– Earnings improved on the back of acquisitions and higher portfolio occupancy.

– Upgrade to ACCUMULATE from NEUTRAL with DDM-based TP raised from S$2.91 to S$3.20 (COE 5.75%) after we raise occupancy. We assume S$500mn of acquisitions in our forecasts.

Keppel Corporation – O&M unit restructured

Recommendation: BUY(Maintained); Last close: S$5.01

TP S$6.12; Analyst: Terence Chua

– Keppel O&M restructured into three units (Op co, Rig co and Dev co) with Rigco eyed for potential divestment/monetisation.

– Remain on track to unlock S$3 – 5bn of assets in the next three years with S$1.2bn already announced. ROE target of 15% affirmed.

– We maintain our BUY recommendation with an unchanged target price of S$6.12. Our target price translates to about 1.0x FY21e book value, which is a slight discount to their 5-year average of 1.05x.

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