Daily Morning Note – 1 June 2020
PHILLIP SUMMARY
Stocks in Asia looked set for a mixed start as investors weighed the simmering U.S.-China tensions against violent protests in some American cities. President Donald Trump’s long-touted response to China’s crackdown on Hong Kong included a barrage of criticism but stopped short of fully escalating tensions between the two nations. The S&P 500 ended higher on Friday, when futures in Japan and Hong Kong climbed. Global stocks rose for a second month in May.
BREAKING NEWS
Thai Beverage Public Co (ThaiBev) has dismissed reports it is seeking a buyer for its businesses in Vietnam. It said in a Friday filing after the market close that the claim, made in recent reports by news media in Vietnam, is “entirely without merit”.
Shares of Broadway Industrial Group surged 24.5 per cent on Friday after the company announced it has taken another step in its plan to dispose of its hard disk drive business.
CAPITALAND will deploy tech solutions such as disinfecting robots and air disinfection systems at its malls to enhance its cleaning and disinfecting routines ahead of Singapore’s Phase One reopening in June, it said in a bourse filing on Friday.
ASCOTT Residence Trust (ART) will not be redeeming its S$250 million, 4.68 per cent perpetual issue on its first call date next month. The move sets a precedent for real estate investment trust (Reit) perpetuals.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
TECHNICAL PULSE
Technical Analysis: U.S Market – Potential market tops as the rally continues
Analyst: Chua Wei Ren
– The stock market is seeing recovery on optimism from the opening of the US economy. However, investors remain concerned that a 2nd wave of infection might push the market back down.
– Trump’s remarks with regards to China without mentioning any new tariffs or sanctions provided some relief to the market.
– However, as the severity of looting and riots in major U.S states worsens, curfew and lockdown have returned. As such, the market on Monday may adopt a wait-and-see approach.
– As key levels mentioned on our report dated 11th May are broken, we are looking at stocks testing higher levels.
– However, the neutrality remains as the next level of resistance remain untested.
>> Read more technical reports
RESEARCH REPORTS
Singapore Telecommunications Limited – Outlook is down (and under)
Recommendation: NEUTRAL (Maintained); Last close: S$2.49
Target Price: S$2.44, Analyst: Paul Chew
– 4Q20 revenue and earnings were below expectations. Australia is the largest drag to earnings. Optus earnings were down 83% YoY. Singapore mobile suffered from weaker roaming revenue but wage credits provided an uplift to margins.
– India was the highlight for associates with a turnaround in profits of almost S$98mn.
– FY20 final dividend was cut by 49% to 5.45 cents. No earnings guidance provided for FY21.
– Maintain NEUTRAL with a lower TP of S$2.44 (prev. S$3.18). Our FY21e PATMI is cut by 16%. Outlook will be weak for Singtel. Reduced international travel will lead to lower high margin roaming revenue. The soft economic background will hurt discretionary spending via lower prepaid usage and top-ups, negatively impacting the associates. Australia faces an added challenge of lower fixed broadband business post-NBN.
HK Reports – Read up on our Hong Kong reports here
RESEARCH VIDEOS
Webinar Of The Week
Market Outlook: (PSR) IREIT, ECW REIT, PropNex, CDG, ThaiBev, Singapore REITs/Banking Sector & SG Weekly
Date: 26 May 2020
Phillip Research in 3 minutes: #22- Singapore Banking Sector
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