DAILY MORNING NOTE | 11 August 2023

Trade of the Day

Citigroup, Inc (NYSE: C)

Analyst: Zane Aw

(Current Price: US$44.40) – TECHNICAL SELL
Sell price: US$44.40 Stop loss: US$46.20
Take profit 1: US$41.50 Take profit 2: US$38.30

The application for the second fortnightly August tranche of MAS 6-month T-bills is open on Thursday for investors to apply. The Auction Date, where the cut-off yield for this tranche will be announced on 17th Aug 2023.

Latest Singapore 6-Month Treasury Bill result
Cut-Off Yield: 3.75%
% of Non-Competitive Application Allotted: 100%

Singapore stocks inched higher on Thursday (Aug 10) amid mixed trading in the region. Thursday’s top gainer was Singapore Airlines, which rose 2.6 per cent or S$0.19 to close at S$7.40. Meanwhile, the index’s biggest loser was City Developments Limited. It fell 1.8 per cent or S$0.13 to end at S$6.99. The trio of local banks traded mixed. OCBC gained 0.7 per cent or S$0.09 to close at S$13.25, and UOB rose 0.8 per cent or S$0.22 to S$29.18. Meanwhile, DBS fell 0.2 per cent or S$0.07 to S$34.23.

Wall Street stocks edged higher on Thursday after US data showed consumer inflation inched up in July, broadly in line with expectations. Although inflation picked up for the first time in around a year, at an annual rate of 3.2 per cent, the moderate figure could support the case that the central bank can hold rates steady at its next policy meeting. The Dow Jones Industrial Average finished up 0.2 per cent at 35,176.15. The broad-based S&P 500 rose less than 0.1 per cent to 4,468.83, while the tech-rich Nasdaq Composite Index added 0.1 per cent at 13,737.99.

Top gainers & losers





Resort operator Banyan Tree Group on Thursday (Aug 10) reported a net profit of S$981,000 for the six months ended Jun 30, 2023, up 91 per cent from the S$514,000 in the corresponding period last year. H1 revenue rose 21 per cent to S$143.7 million – from S$118.6 million in the corresponding period a year ago – fuelled by “better” performance in its hotel investments and fee-based segments, said the group in a bourse filing. The hotel investments segment grew 57 per cent year on year to S$95.3 million, from S$60.8 million a year ago, as revenue from hotels in Thailand almost doubled after the country lifted its pandemic travel restrictions.

Property and hospitality group UOL Group on Thursday (Aug 10) posted a 63.6 per cent fall in net profit to S$135 million for the six months ended Jun 30, 2023, from S$371 million that it posted in the corresponding period a year earlier. This came as revenue fell 11 per cent to S$1.4 billion over the same period, from S$1.5 billion in the year-ago period. In its bourse filing, the group attributed the fall in net profit to significantly lower attributable fair value gains on its investment properties of S$3.5 million in the first half of the year, against S$190 million over the same period last year. Earnings per share for the period stood at S$0.1599, compared with S$0.4394 in the same period the year before.

Recruitment company HRnetGroup on Thursday (Aug 10) reported a net profit of S$28.3 million for the first half ended Jun 30, 2023, down 18.3 per cent from S$34.6 million in the corresponding period last year. H1 revenue saw a 6.2 per cent year-on-year decline to S$294.8 million, from S$314.2 million a year ago. This came after the group’s professional recruitment and flexible staffing segments both registered decreased topline earnings from the year-ago period. The professional recruitment segment plunged 34.3 per cent year on year to S$34.3 million, from S$52.2 million previously. “Strong economic headwinds (impacted) permanent hiring first, resulting in weak hiring sentiment across most sectors and levels, in line with the wider recruitment industry across the world,” said HRnetGroup in a bourse filing.

Food and beverage manufacturer Food Empire Holdings posted a 1.5 per cent decline in net profit to US$26.7 million in the six months ended Jun 30, 2023, from US$27.1 million in the corresponding period a year earlier. This was despite an 11.8 per cent increase in revenue to US$198.2 million over the same period, from US$177.4 million the year before. In its bourse filing on Thursday (Aug 10), the group said that the higher revenue was a result of higher volumes and higher pricing across most of its core markets. This was offset by depreciation of the Russian rouble and Ukrainian hryvnia against the US dollar, as well as lower revenue from the European market after the group divested its business there in FY2022. Still, the group’s Russia as well as Ukraine, Kazakhstan and Commonwealth of Independent States (CIS) revenue segments saw the largest increases.

Specialized accommodation assets player Centurion Corporation on Thursday (Aug 10) announced earnings of S$38.3 million for the first half of its 2023 financial year, up 16 per cent from S$32.9 million in the year-ago period. Earnings from its core business operations – excluding fair-value adjustments – stood at S$36 million in the latest half-year ended Jun 30, representing an 11 per cent increase from S$32.4 million a year ago. Centurion’s H1 2023 revenue rose 8 per cent year on year to S$97.9 million from S$90.5 million. The group attributed this to stronger demand for workers’ accommodation and student accommodation across Singapore, Malaysia and Australia.

Real estate group Ho Bee Land posted a net loss of S$155.7 million for the six months ended Jun 30, 2023, from a net profit of S$149.9 million over the same period a year earlier. Revenue fell 12.8 per cent to S$155.5 million over the same period, from S$178.3 million the year before. Loss per share for the period came in at S$0.2345, from earnings per share of S$0.2257 a year earlier. In a bourse filing on Thursday (Aug 10), Ho Bee Land said this was mostly due to the unrealised fair-value loss of S$208.3 million it recorded for the group’s London portfolio, as well as higher interest costs.

Mainboard-listed Nanofilm Technologies, which specialises in advanced materials and coatings, reported a loss of S$7.6 million for the first half of 2023, compared with a profit of S$18.8 million in the year-ago period. Revenue plummeted 34.4 per cent to S$73.2 million, from S$111.3 million the previous year – driven by decreases in its industrial equipment, nanofabrication and advanced materials business units, said the group in a bourse filing on Thursday (Aug 10). Revenue from its industrial equipment business unit had more than halved to S$8.9 million, from S$19.5 million a year ago. That of the nanofabrication unit declined 36.2 per cent year on year to S$4.7 million, from S$7.3 million. Both came on the back of lower sales, said Nanofilm. The losses were slightly offset by revenue growth in the group’s Sydrogen business unit, which climbed to S$377,000 from S$15,000.

Genting Singapore posted a net profit of S$276.7 million for the six months ended Jun 30, 2023, more than three times the S$84.4 million in earnings in the same period a year ago. This came on the back of a 62.9 per cent increase in revenue to S$1.1 billion over the same period, from S$663.1 million a year ago. In a bourse filing on Thursday (Aug 10), the company attributed the better performance to a higher number of foreign visitor arrivals into Singapore, even as limited air capacity from certain regional countries and higher airfares impacted leisure travel.

The trustee of Mapletree Logistics Trust (MLT) has entered into an agreement with an unrelated third party to divest a six-storey cargo lift warehouse at 8 Loyang Crescent. In an announcement on Thursday (Aug 10), the real estate investment trust’s (Reit) manager noted that the proposed sale price of S$27.8 million is 17.3 per cent higher than the warehouse’s latest valuation, which was S$23.7 million as at Mar 31, 2023. The warehouse was completed in 2001 and has a gross floor area of 14,522 square metres (sq m) on a land site of 7,921 sq m. The divestment is scheduled to be completed by the second quarter of FY2024, and is not expected to have a material impact on the Reit’s net asset value and distribution per unit, the manager said.


Ralph Lauren reported a surprise rise in quarterly revenue on Thursday (Aug 10), as demand for its high-end sweaters, shirts and outdoor clothing saw a strong rebound in China, offsetting a slowdown in luxury spending in the US. Luxury brands have seen a pick-up in China demand as the market reopens from Covid-19 curbs, propping up sales at several high-end labels at a time when US demand has cooled. While China only accounts for 6 per cent of Ralph Lauren’s revenue, according to research firm Jane Hali & Associates, the company saw sales in the market jump more than 50 per cent in the first quarter, pulling Asia region revenues up 13 per cent to US$378 million. However, the company forecast second-quarter revenues to be flat to slightly up year over year, compared to analysts’ estimate for a 3.3 per cent rise, sending shares down 3 per cent in premarket trading. Net revenue rose to US$1.50 billion in the first quarter, from US$1.49 billion a year earlier.

The US dollar fell on Thursday (Aug 10) after data showed American consumer prices rose moderately last month, while initial jobless claims gained in the latest week, reinforcing expectations that the Federal Reserve will not raise interest rates at the next policy meeting. The US dollar index was last down 0.5 per cent at 102.01, while the euro rose 0.6 to US$1.1040.

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


Singapore Banking Monthly – Dividends jumped 39% with NIM boost

Recommendation: Overweight (Maintained)

Analyst: Glenn Thum

– July’s 3M-SORA was up 5bps MoM to 3.69% and 3M-HIBOR was up 26bps MoM to 5.10%.

– 2Q23 bank earnings were slightly above expectations. PATMI rose 35%, supported by NII growth of 37% YoY. Guidance for FY23e NIMs (from 2.05-2.20% to 2.10-2.20%) and loans growth (maintained at low to mid-single digit). Interim dividend jumped 39% YoY in 1H23.

– Singapore domestic loans dipped 5.02% YoY in June, below our estimates. Loans were stable MoM, for the second time in 10 months. CASA balance grew to 18.9% (May23: 18.8%), the first MoM growth in 16 months.

Maintain OVERWEIGHT. We remain positive on banks. Bank dividend yields are attractive at ~6.0% with upside surprise in dividends due to excess capital ratios and push towards higher ROEs. SGX is another major beneficiary of higher interest rates (SGX SP, BUY, TP S$11.71).

BRC Asia – 3Q23 in line, construction progress still muted

Recommendation: BUY (Maintained); Last Done: S$1.67

Target Price: S$1.99; Analyst: Peggy Mak

3Q23 net profit was in line. The marginal 10.9% gain was driven by forex gain from a stronger US dollar, and writeback in provisions for onerous contracts with a fall in steel price (about -25% YTD). Volume remains below pre-COVID though safety controls at worksites were lifted in May.

Demand remains robust, though construction progress is still inhibited by shortage of manpower and new enforcement measures by the authorities. BRC’s orderbook is S$1.34bn at end June.

Maintain BUY with unchanged target price of $1.99.

Airbnb Inc – Travel rebound continues

Recommendation: ACCUMULATE (Downgraded); TP: US$152.00

Analyst: Ambrish Shah

– 1H23 revenue/PATMI was within expectations at 46%/32% of our FY23e forecasts because of seasonality weakness. In 2Q23, PATMI rose 71% YoY to US$650mn. We expect Airbnb to demonstrate strong profit growth in 2H23e supported by busy summer travel and higher operating leverage.

– Airbnb expects 3Q23e revenue growth of 14% to 18% YoY. Management also guided for a modest sequential acceleration in YoY growth rate of booking volumes. For FY23e, adj. EBITDA margin is anticipated to be modestly higher than FY22 of 35%.

– We downgrade to ACCUMULATE from BUY recommendation after the recent jump in its stock price. We raise our DCF target price to US$152.00 (prev. US$143.00) with a WACC of 7% and terminal growth of 4%. We increase our FY23e revenue/PATMI by 3%/8% to account for higher average daily rates and interest income. We believe Airbnb is well-positioned to benefit from shift towards alternative accommodations as it offers record levels of active listings on its platform, benefits from travelers looking for long-term stays, and is more family and group travel-friendly.

Amazon.com Inc. – Efficiency enhancements bearing fruit

Recommendation: BUY (Upgraded); TP: US$175.00; Last Close: US$137.85

Analyst: Maximilian Koeswoyo

– 2Q23 revenue was in line with our expectation, while earnings exceeded. 1H23 revenue/PATMI at 47%/68% of our FY23e forecasts. Earnings outperformance was due to higher-than-expected gross margins.

– Revenue grew 10.8% YoY, beating top-end of company guidance. AWS was up 12% and growth seems to have bottomed out.

– We upgrade to a BUY rating with an increased DCF target price of US$175.00 (prev. US$120.00), with a WACC of 6.4% and terminal growth rate of 5%. We increase our FY23e PATMI forecast by 39% to account for the higher margins as well as the lower CAPEX spending plans.

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