Daily Morning Note – 11 March 2019

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YOUR PHILLIP SUMMARY

Major stock indexes posted their fifth straight decline Friday, leaving the S&P 500 down 2.2% for the week. The Dow Jones Industrial Average DJIA suffered a weekly fall of 2.2%, while the Nasdaq Composite COMP lost 2.5%. It was the worst week of 2019 for all three gauges. But stocks are still sporting strong gains for the year to date, with the S&P 500 and Dow up more than 9% and the Nasdaq up 11.7%, marking a strong rebound from a sharp end-of-year selloff.

Stocks ended off session lows on Friday, but slumped early after data showed a sharp slowdown in U.S. job creation in February. Earlier, Chinese data showing a 20.7% year-over-year drop in exports in February put pressure on global equities, the latest in a series of downbeat readings from the world’s second-largest economy that have fueled global growth concerns.

The European Central Bank unnerved investors when it slashed its forecasts for eurozone growth, pushed back its guidance on when it expects to begin raising interest rates and introduced fresh stimulus measures, while warning that risks to the economic outlook still were skewed to the downside due to external uncertainties.

Meanwhile, the U.S. and China have yet to reach an agreement that would end a trade battle between the economic superpowers. Stocks had ran up in recent weeks in part on optimism for a deal.



RESEARCH REPORT

Banyan Tree Holdings Limited – Gathering momentum in management contracts

Recommendation: Accumulate (Maintained); Last Close Price: S$0.58

Target Price: S$0.76; Analyst: Tara Wong

– PATMI met expectations excluding the surge in effective tax due to higher withholding tax
and under provision of taxes in prior years.

– Sizable uptick in property sales from Phuket. Secured a record 28 new hotel management
contracts in 2018, with a pipeline of 53 hotel openings from 2019 to 2022.

– Hotel investments segment took a hit from Thailand underperformance and Seychelles
deconsolidation effect. Decline in forward bookings, dragged down largely by Thailand.

– Long-term growth catalysts remain intact.Focus would be the continued build-up in feebased
income and property sales.

– Maintain ACCUMULATE with adjusted target price of S$0.76 (prev. S$0.73).


BREAKING NEWS

US payroll gains plunge to 20,000 as wages top estimates. Nonfarm payrolls increased by 20,000 after an upwardly revised 311,000 gain the prior month, a Labor Department report showed on Friday. The median estimate in a Bloomberg survey called for an increase of 180,000. Average hourly earnings rose a better-than-projected 3.4 per cent from a year earlier, while the jobless rate declined to 3.8 per cent, near a five-decade low.

China has less room for reserve ratio cuts, PBOC’s Yi says. China still has some room to cut the amount of money banks have hold in reserve, but it’s much smaller than in previous years, the People’s Bank of China Governor Yi Gang said. “At China’s current stage of development, a certain level of reserve-requirement ratios is necessary and appropriate,” Mr Yi said at a press conference during the National People’s Congress in Beijing Sunday, without specifying what that level is.

Keppel O&M clinches repeat order for semi rig worth about US$425m from Awilco. The repeat order represents the exercise of an option that Awilco had as part of an earlier US$425 million contract for a similar rig signed in March last year. Awilco has independent options to order up to another two rigs to be exercised in 2020 and 2021.

DLF Holdings in JV to collaborate on marine engineering contract. DLF Holdings, a mechanical and electrical engineering services firm, has entered into a joint venture (JV) agreement with Prosper Environmental & Engineering (PEE) to collaborate on a work order through a JV company.

The sponsor of Singapore-listed ESR-Reit files for HK listing. ESR Cayman, the sponsor of Singapore-listed ESR-Reit, yesterday said that it had on Feb 28 made submissions to the Hong Kong stock exchange operator for a proposed initial public offering (IPO) of its shares to be listed on the exchange. ESR, the largest Asia-Pacific-focused logistics real estate platform, was formed by a merger of Shanghai-based warehousing services firm e-Shang and Singaporean logistics real estate investment firm The Redwood Group in 2016.

Water-treatment firm gets proofs of claims of $3.51b from 73 parties. Hyflux has received proofs of claims from 73 parties amounting to $3.51 billion. Retail investors in Hyflux’s perpetual securities and preference shares have filed proofs for some of the largest claim amounts. Owners of its $500 million, 6 per cent perpetual securities are claiming $540.7 million while owners of its $400 million, 8 per cent preference shares are claiming $429.3 million. Medium-term note-holders are claiming a combined total of $277.7 million.

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

Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research

Read the research report(s), available through the link(s) above, for complete information including important disclosures

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