DAILY MORNING NOTE | 10 May 2023
Singapore shares ended lower on Tuesday (May 9), losing 0.5 per cent or 14.71 points to close at 3,242.95. Losers outnumbered gainers 315 to 250, after 1.3 billion securities worth S$925.5 million changed hands. In Singapore, the top gainer was hospitality player Genting Singapore, which rose 1.8 per cent or S$0.02 to S$1.11. Meanwhile, the top decliner was Frasers Logistics and Commercial Trust, which lost 2.2 per cent or S$0.03 to S$1.31. Venture Corporation also extended its decline and fell 2 per cent to close at S$15.63. As for the trio of local banks, DBS lost 0.8 per cent or S$0.25 to S$31.70, while UOB fell 0.9 per cent or S$0.24 to S$28.17. OCBC closed flat at S$12.25.
Wall Street stocks retreated on Tuesday ahead of key US inflation data as markets awaited talks between President Biden and House Republican leader Kevin McCarthy to try to reach agreement on lifting the national debt ceiling. Investors were cautious ahead of Wednesday’s consumer price data. The Dow Jones Industrial Average finished down 0.2 per cent at 33,561.81. The broad-based S&P 500 shed 0.5 per cent to 4,119.17, while the tech-rich Nasdaq Composite Index dropped 0.6 per cent to 12,179.55. Boeing jumped 2.3 per cent as it reached an agreement to sell as many as 300 planes to Ryanair over the next decade. But Paypal plunged 12.7 per cent despite reporting better-than-expected results as analysts pointed to a lowered profit margin outlook. Under Armour dropped 5.4 per cent after the apparel maker projected that revenue would be flat to “up slightly” in 2023. But Palantir surged 23.3 per cent as the software company predicted it would profitable in each quarter of 2023 citing the demand for its artificial intelligence offerings.
OCBC’s 1Q2023 results beat expectations with net profit of S$1.88bn vs consensus estimate of S$1.74bn. Bulk of the beat was from stronger than expected net interest income of S$2.34bn (+56% YoY) and net interest margin growth to 2.30% (+75bps YoY). Non-interest income fell 11% YoY to S$1.01bn, led by a decrease in wealth management fees, which was partly compensated by a rise in trading income and net realised gains from the sale of investment securities. Total allowances increased to S$110mn (+151% YoY) mainly due to higher allowances set aside for non-impaired assets. More details to follow after 9.15am analyst call.
Lendlease Global Commercial Reit (Lendlease Global Reit) on Tuesday (May 9) reported a committed portfolio occupancy of 99.8 per cent for the third quarter ended Mar 31, 2023, unchanged from the previous quarter. The Reit’s manager said its portfolio’s weighted average lease expiry (Wale) for the period stood at 8.3 years by net lettable area (NLA) and 5.4 years by gross rental income (GRI). As at Mar 31, 2023, the Reit’s retail portfolio occupancy stood at 99.5 per cent, with positive year-to-date retail rental reversion of 3.3 per cent.
Olam Group aims to launch in June the dual initial public offering (IPO) of its agricultural unit that could raise up to US$1 billion in Singapore and Saudi Arabia, two sources with knowledge of the matter said. The IPO, the first of such a dual listing in the world, is subject to regulatory approval, one of the sources added. Most of the IPO’s processes have been completed, ranging from hosting global roadshows to getting indicative commitments from anchor investors, one of the sources added.
Best World International reported on Tuesday (May 9) a 25.7 per cent decline in net profit on the back of lower revenue. Net profit for the three months ended Mar 31, 2023 fell to S$20.5 million from S$27.6 million in the year-ago period. On a per-share basis, earnings fell to S$0.0471 from S$0.0521 in Q1 FY22. No dividend was declared. The weaker profits came as revenue for the quarter slid 30.8 per cent to S$80 million from S$115.6 million in the year-ago period. Best World noted that the fall in revenue was mainly due to lower contributions from its franchise segment.
Grand Venture Technology posted a 58.3 per cent fall in net profit after tax to S$1.5 million for the first quarter ended Mar 31, 2023, from S$3.6 million the year before. Revenue for Q1 fell 17 per cent to S$26.9 million, from S$32.5 million a year earlier. The decline was mainly due to a contraction in activity in the company’s semiconductor segment, it said in a business update on Tuesday (May 9). Even so, the decline was partially mitigated by higher revenues from the company’s electronics, aerospace, medical and others segment. While the semiconductor industry is expected to remain muted in the first half of 2023, Grand Venture believes industry momentum will pick up in the later half of the year as excess inventories are digested.
Dyna-Mac Holdings saw its net profit more than double to S$3.9 million for the first quarter ended Mar 31, from S$1.9 million in the year before. This was due to a higher gross profit that was partially offset by higher administrative expenses. Revenue for Q1 rose 29.3 per cent to S$87.3 million, from S$67.5 million the year before. The increase was due mainly to higher progressive recognition achieved for the projects carried out during the period. Earnings per share stood at 0.37 Singapore cent for the quarter, up from 0.19 cent in the preceding year-ago period. As at Mar 31, the group had a net order book of S$338.1 million, which it hopes to build on this year.
Roots Communications, a wholly-owned subsidiary of iWOW Technology, has been awarded three separate contracts worth an approximate total of $11.5 million. As a result of the newly awarded contracts, the company’s current order book stands at $87.1 million, a 60% increase from $54.4 million as of September 30, 2022. The contracts secured are not expected to have any material impact on the performance of iWOW Technology for its FY2024 ending March 31, 2024.
Rivian Automotive reported its first-quarter results that beat analysts’ expectations. The company’s net loss narrowed to $1.35 billion, or $1.45 per share, from $1.59 billion, or $1.77 per share, during the year-earlier period. Total revenue soared year over year to $661 million, from $95 million, according to the company. The automaker confirmed that it remains on track to hit its full-year production guidance of 50,000 vehicles, roughly twice the number it made in 2022, with total capital expenditures of about $2 billion for the year.
Nikola reported its first-quarter results. The company’s adjusted net loss for the quarter was $169.1 million, or 26 cents per share, compared to the $152.9 million adjusted net loss, or 21 cents per share, a year ago. Revenue for the quarter was $11.1 million, compared to $1.9 million last year. Nikola had $121.1 million in cash remaining as of March 31, down from $233.4 million at the end of 2022. Nikola announced overnight that it has sold its share of a European joint venture to its longtime partner, Iveco Group, for $35 million in cash and 20.6 million Nikola shares that will be returned by Iveco. Under the deal, Iveco will continue to supply chassis and related components to Nikola and will remain an investor in the company. Nikola produced 63 battery-electric trucks and delivered 31 to dealers in the quarter. Its dealers sold 33 trucks to end customers during the period. Production of Nikola’s next model, a longer-range fuel-cell powered version of its semitruck, is on track to begin in July as previously expected. Nikola currently has orders for a total of 140 fuel-cell trucks for 12 fleet customers.
Airbnb reported its first-quarter earnings that beat analyst estimates on the top and bottom lines. Revenue for the quarter was up 20% year over year to $1.82 billion. Airbnb swung to a net profit of $117 million, or 18 cents per share, from a net loss of $19 million, or 3 cents per share, in the year-earlier period. The figure marks the first time Airbnb has been profitable during its first quarter on a GAAP basis. However, it warned that second-quarter comparisons would be tough, saying, “Nights and Experiences Booked will have unfavorable year-over-year comparisons in Q2 2023 as we overlap pent-up 2022 demand following the COVID Omicron variant.”
Under Armour reported its fiscal fourth quarter results that beat expectations. The company reported adjusted earnings per share of 18 cents. Its net income for the three-month period that ended March 31 was $170.5 million, or 38 cents per share, compared with a net loss of $59.6 million, or 13 cents per share, during the year-earlier period. Sales jumped 8% to $1.4 billion from $1.3 billion in the year-ago period. However, Under Armour missed fiscal fourth-quarter expectations on gross margin as it leaned more on promotions than expected. Under Armour warned the issues could persist as it expects margins will still be under pressure as higher promotions outweigh lower freight costs. Diluted earnings per share are expected to range between a loss of 3 cents to a loss of 5 cents in the first quarter, below expected earnings of 6 cents per share. It said it expects margins to improve as the year goes on.
Fox beat estimates for third-quarter revenue on Tuesday (May 9), as recession-wary companies continued to advertise on its network even as they cut their spending on other marketing channels. Total revenue rose 18 per cent to US$4.08 billion in the quarter ended Mar 31, inching past analysts’ estimates of US$4.03 billion.
Ryanair on Tuesday (May 9) ordered 300 Boeing 737 MAX jets worth more than US$40 billion at list prices, massively boosting the US aviation giant as the sector recovers after Covid. The order comprises of 150 firm orders and 150 options for the new fuel-efficient aircraft. The jets are set for delivery between 2027 and 2033, while airlines traditionally negotiate substantial discounts on list prices, especially for big orders. Ryanair said the deal would be subject to shareholder approval at its annual general meeting in September, owing to the size and scale of the transaction.
Porsche will incorporate automated assistance and navigation functions from Mobileye’s so-called “SuperVision” technology platform in future models, Mobileye said on Tuesday (May 9). The agreement is the technology provider’s second large signing for the platform with a large automotive group after China’s Geely. Mobileye’s “SuperVision” system allows drivers to take their hands off the wheel in certain road types and enables the car to follow navigation routes chosen by the driver, change lanes and overtake slower vehicles ahead.
LinkedIn said on Monday it will pare down its operations in China, capping a multiyear pullback that exemplified the challenges of running a foreign business in China. The company, owned by Microsoft, said it will lay off 716 employees worldwide, including teams dedicated to engineering and marketing in China, because of slumping demand. It did not say how many of those layoffs will be in China. LinkedIn will also shut its China job posting app, a bare-bones version of its international service, by August. Users of the app, called InCareer, could only search for jobs and not post or share articles the way they can on LinkedIn.
Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR
PSR Stocks Coverage
For more information, please visit:
Guest Presentation by OUE Commercial REIT [NEW]
Date: 10 May 2023
Time: 12pm – 1pm
Guest Presentation by ITT [NEW]
Date: 11 May 2023
Time: 8:30pm – 9:30pm
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.