Daily Morning Note – 11 Nov 2019
WEEKLY MARKET OUTLOOK WEBINAR
The S&P 500 gained 0.25% to 3,093.08, led by gains in the tech and health care sectors. The Dow Jones Industrial Average climbed 6.44 points, or 0.02% to 27,681.24, led by Disney shares. The Nasdaq Composite advanced 0.5% to 8,475.31.
Oil prices pared losses on Friday, ultimately finishing the session higher while also posting a gain for the week. Earlier in the session prices fell more than 1% following comments from U.S. President Donald Trump that he has not agreed to roll back tariffs on China.
Global oil demand may peak within the next 20 years, according to an assessment included in the prospectus for Saudi Aramco’s initial public offering, suggesting views are slowly changing in the kingdom where officials long dismissed the notion as overblown.
DBS Group’s net profit for first quarter 2019 increased 9% to a record SGD 1.65 billion. Total income grew 6% to a new high of SGD 3.55 billion. Healthy business momentum and a higher net interest margin more than offset the impact of a high base for wealth management, brokerage and investment banking fee income as well as a property gain a year ago. New non-performing asset formation remained low and total allowances halved. Return on equity rose to 14.0%, the highest in more than a decade.
China will take steps including management reshuffles and fund infusions to bolster the weakening profiles of its smaller banks, said the vice-chairman of the banking and insurance regulator , according to financial news outlet Caixin on Sunday.
Alibaba Group’s Singles’ Day shopping bonanza got off to a strong start, logging 6 billion yuan (S$1.17 billion) of purchases within the first minute. An estimated half-billion shoppers from China to Russia and Argentina are expected to swarm the e-commerce giant’s sites to scoop up everything from iPhones and refrigerators to cashew nuts.
Tee International and Hatten Land have been given disclaimers of opinion by their respective auditors on their financial statements. Deloitte & Touche, the independent external auditor of engineering group Tee International, said it has not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements for the year ended May 31, 2019.
St Engineering reported net income for the third quarter of S$139.1 million. 3Q revenue of S$2.07 billion. Revenue for company’s aerospace unit grew 53%YoY to approximately S$1.1 billion from S$689 million. Company says it will pursue smart city related contracts in and outside of Singapore for Electronics unit.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Recommended Action: Technical SELL
*This is an updated report from 4th November 2019.
Tencent Holdings (HK: 700) will likely head down before a bullish rally as highlighted in the reports on 4th November 2019 technicals below:
Venture Corporation Ltd– Near-term volatility, long-term intact
Recommendation: ACCUMULATE (Downgraded), Last Done: S$16.60
Target Price: S$17.18, Analyst: Alvin Chia
– Revenue met expectations while NPAT disappointed by 6.5%.
– VMS is gaining more customers and projects, partially due to the shift in supply chain to SEA
– Net margin declined to 9.8% from 10.5% a year ago from pricing pressure we expect it to continue in the near-term.
– Downgrade to ACCUMULATE with a lower TP of S$17.18 (prev. S$17.68). We revised our FY19e revenue upwards by 2.5% and lowered NPAT by 2.8%. We are still positive on VMS for the attractive yield and rising profit share amongst its U.S. peers.
Penguin International Ltd – Another bumper quarter with record net cash
Recommendation: BUY (Maintained), Last Done: S$0.66
Target Price: S$0.93, Analyst: Paul Chew
– Earnings and revenue was a beat. We raise our FY19e/20e earnings by ~10%.
– The YoY comparables will look exaggerated due to seasonally weak quarter last year. The rolling 4-quarter (or annual) earnings run-rate is a healthy S$21mn.
– Record net cash position of S$53.1mn and other balance sheet metrics suggest another healthy quarter ahead.
– We are raising our target price to S$0.93 (5x PE excluding net cash) as we roll over our target price to FY20e net earnings. Our BUY recommendation is maintained.
Webinar Of The Week
Market Outlook: : (PSR) Hyphens Pharma, Uunited Overseas Bank Limited (UOB), CapitaLand Mall Trust, Frasers Centrepoint Trust, Sheing Siong Group, Phillip SG Weekly, US Weekly, US Banking & Technical Analysis
Date: 04 November 2019
Phillip Research in 3 minutes: #16- JEP Holdings Ltd
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