Daily Morning Note – 12 February 2020



Asian stocks looked set for modest gains Wednesday as investors weighed the spreading coronavirus against expectations for policy support. U.S. equities closed off their highs on reports of fresh antitrust scrutiny for tech firms.

Shares in Australia opened up as investors cheered earnings from the country’s biggest bank. Futures pointed higher in Hong Kong and Japan, which reopens after a holiday. Earlier, the S&P 500 Index pared gains amid reports the Federal Trade Commission is looking into acquisitions by some large technology firms, though still posted a fresh all-time high. Ten-year Treasury yields rose, while the dollar dropped for the first time in five sessions.


MAINBOARD-LISTED Singtel‘s Thai associate, Advanced Info Service (AIS), has won in arbitration against Thai telco TOT Public Company’s claim for extra roaming revenue share.

CITING the outbreak of a deadly virus that has so far infected 47 people in Singapore, Thai Beverage Public Co (ThaiBev) has cancelled a shareholder meeting that was to have been held on Feb 28, the Mainboard-listed brewer announced on Tuesday.

MAINBOARD-LISTED property group Roxy-Pacific Holdings has taken a 49 per cent stake in a retail building in Tokyo, it disclosed in a bourse filing on Tuesday. Roxy-Pacific made the purchase through an injection of roughly US$10 million in investment company Vivel SG, which paid 5.2 billion yen (S$65.7 million) for the building at 23-10 Udagawa-cho, Shibuya-Ku.

MAINBOARD-LISTED construction and civil engineering contractor Tiong Seng Holdings announced on Tuesday that its subsidiaries have bagged contracts for two private-home projects worth S$123.9 million in all, taking the group’s construction order book to about S$1 billion until 2023.

CONSTRUCTION and property group OKH Global‘s net profit dwindled in the second quarter, as its share of contributions from associates turned negative, according to results on Tuesday. Net profit shrank to S$54,000 for the three months to Dec 31, 2019, down from S$3.99 million in the same period the year before, even as revenue stayed flattish at S$4.2 million.

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


Mapletree Industrial Trust

Recommended Action: Technical BUY

Mapletree Industrial Trust (SGX: ME8U) bullish upside is still strong but the likelihood of a correction is inevitable as suggested by the technical

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Asian Pay Television Trust – Some stability creeping in

NEUTRAL (Maintained); TP S$0.165, Last close: S$0.167

– 4Q19 revenue and EBITDA were around 5% better than our expectations. Revenue and EBITDA fell 6% and 3% respectively in 4Q19. DPU guidance of 1.2 cents for FY20e is maintained.

– Some signs of stability in operations – cable TV ARPU flat QoQ after 13 quarters of decline and broadband revenue modest rise QoQ

– We were surprised by the stability in certain operational data. Cable TV ARPU finally stopped sliding albeit subscribers are still contracting. Broadband subscribers responded well to the lower prices offered, which helped to keep revenues stable.

– APTT has guided that data backhaul services offered to Taiwanese mobile operators will materialise when 5G services are rolled out. At present, there are limited data points for us to model this market opportunity. Our target price will peg APTT at around 10x EV/EBITDA. This is a 10% discount to their much larger Taiwanese peer valuations. We maintain NEUTRAL and keep our target price unchanged at S$0.165.

Micro-Mechanics (Holdings) Ltd – Signs of recovery, but priced in

REDUCE (Maintained); TP S$1.60, Last close: S$1.88

– 2Q20 revenue and PATMI were within our expectations. Interim dividends increased by 25% to 5 cents per share. MMH pays an attractive yield of 6%.

– Recovery is underway with the first revenue and earnings growth after 5 quarters of decline. FY18’s record revenue was a challenging comparable.

– We have not changed our FY20e earnings forecast. It still implies a 40% YoY jump in 2H20e earnings. The recent closure of the Suzhou plant will be disruptive as China represents 30% of sales. We expect some customers to shift some of their orders to MMH other SE Asian plant. But this event has raised downside risk to our forecast as global growth slows. Our REDUCE recommendation and target price of S$1.60 is unchanged. We benchmark our valuations to 15x PE, semiconductor back-end peer valuations.

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