DAILY MORNING NOTE | 12 March 2024

Trades Initiated in the past week

Factsheets


Singapore shares closed lower on Monday (Mar 11) amid a mixed performance across the region. The benchmark fell 0.3 per cent or 8.67 points to close at 3,138.42. Elsewhere in the region, major indices in Australia, Japan and South Korea were also in the red, falling between 0.8 and 2.2 per cent. However, stocks in Hong Kong, Shanghai and Kuala Lumpur finished in the black, rising between 0.3 and 1.4 per cent.

The Dow Jones Industrial Average was the only major Wall Street index to gain, rising 0.1 per cent to 38,769.66.The broad-based S&P 500 fell 0.1 per cent to 5,117.94, while the tech-rich Nasdaq lost 0.4 per cent to finish at 16,019.27.

Top gainers & losers

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Events Of The Week

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SG

The government has put up two residential sites for tender in River Valley Green near Great World City, with one including a serviced apartment component, under its current Government Land Sales (GLS) programme. The smaller plot, on the confirmed list, can yield about 380 private housing units on a site area of 9,291.1 square metres (sq m) with maximum gross floor area (GFA) of 32,519 sq m.

PGIM Real Estate (PGIM RE) has started selling strata office space out of 108 Robinson Road, which the asset manager acquired in 2021. Three floors of the downtown office building are up for sale at S$18.2 million per floor, or a total of S$54.6 million. Each of the three office floors is estimated to be 4,800 square feet (sq ft) in size. At S$18.2 million per floor, the guide price translates to S$3,850 per square foot for the freehold space.

ESR Group has entered into share purchase agreements to divest its ARA Private Funds (APF) business in Australia, Singapore, South Korea and the United States at an agreed enterprise value of US$270 million. The deal is part of the asset manager’s strategy to divest up to US$750 million of non-core businesses following a detailed review of the businesses acquired after it bought ARA Asset Management for US$5.2 billion in 2022.

Frasers Property’s wholly owned subsidiary, Frasers Property Treasury (FPT), is redeeming S$600 million fixed-rate subordinated perpetual securities. It will be redeemed at S$250,000 for every S$250,000 in nominal amount of the perpetual securities, together with distribution accrued to but excluding Apr 11, said Frasers Property on Monday (Mar 11).


US

Global benchmark Brent slipped on Monday (Mar 11), dipping below US$82 a barrel, as persistent geopolitical concerns in the Middle East and Russia collide with jitters about softening demand in China. Brent futures were down 31 US cents at US$81.77 a barrel as at 1222 GMT, while US West Texas Intermediate (WTI) slipped 34 US cents to US$77.67.

Artificial intelligence (AI) bulls are increasingly gravitating towards an exchange-traded fund (ETF) that amps up bets on Nvidia as trading volumes and inflows hit all-time highs. After notching a record US$252 million in fresh capital last week, the GraniteShares 2x Long NVDA Daily ETF saw its second-biggest trading volume on Monday (Mar 11) as Wall Street’s AI darling extended its Friday retreat.

Abu Dhabi is setting up a technology investment firm targeting deals in artificial intelligence and semiconductors that could surpass US$100 billion in assets under management (AUM) in a few years, according to people familiar with the matter.

The US National Highway Traffic Safety Administration (NHTSA) on Monday (Mar 11) launched a preliminary probe into about 250,712 Honda Insight and Honda Passport vehicles over inadvertent activation of automatic emergency braking.

Reddit and its investors disclosed further details of what is set to be one of the year’s biggest initial public offerings in which they are seeking to raise as much as US$748 million. The social media platform said in a filing on Monday (Mar 11) that it and its investors are planning to sell 22 million shares for US$31 to US$34 each. About 15.3 million those shares will be sold by the company and the rest by investors and Reddit employees.

Oracle surged 11 per cent after signalling that growth in its closely watched cloud computing business is stabilising, showing progress in its bid to capture more market share in the competitive market. Cloud revenue jumped 25 per cent to US$5.1 billion in the period that ended in February, surpassing Wall Street’s US$5.06 billion estimate.

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


RESEARCH REPORTS

Resources Global Development – Riding on Indonesia’s energy demand

Recommendation: Not rated; Last Done: S$1.07

Target Price: Not rated; Analyst: Peggy Mak

– RGD engages in coal trading and shipping of hard commodities in Indonesia. It owns a fleet of 22 Indonesian-flagged vessels to operate trans-shipment services or chartered out to third parties. FY23 gross profit split was 90.5%/9.3% for shipping/trading. Trading volume dwindled due to the depletion of output from the coal mines.

– The acquisition of Batubara Development Pte Ltd in Jan 24 for S$10mn (a mix of equity and debt) gives it an indirect 18.7% stake in four greenfield coal mines in Central Kalimantan. Production is expected to begin in late 2024. RGD is issuing 10mn new shares to fund the acquisition.

– Of its net cash of S$24mn at end 2023, S$13mn has been pledged as cash collateral to secure loans for fleet expansion. It plans to add 33% fleet capacity in 2024.

– Net profit grew at a 4Y CAGR of 102.8%—though it fell 36% YoY in FY23 due to reduced trading volume—on the back of higher shipping earnings. FY23 ROE was 21.2% in spite of net cash. The operation generated strong operating cash flow of S$0.51/share in FY23.

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Factsheets


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