Trade of the Day

Lendlease Global Commercial REIT (SGX: JYEU)

Analyst: Zane Aw

(Current Price: S$0.685) – TECHNICAL BUY
Buy price: S$0.680 Stop loss: S$0.665
Take profit 1: S$0.720 Take profit 2: S$0.740

Singapore stocks ended lower on Thursday (May 11), falling 0.4 per cent or 12.74 points to 3,229.55. Losers outnumbered gainers 287 to 246, after 1.5 billion securities worth S$1 billion changed hands. The top gainer was Genting Singapore, which rose 1.8 per cent or S$0.02 to S$1.12. The top decliner was Frasers Logistics and Commercial Trust, which fell 3 per cent or S$0.04 to S$1.28. The trio of local banks ended lower on Thursday. DBS fell 1.7 per cent or S$0.52 to S$31.10, OCBC lost 0.2 per cent or S$0.02 to S$12.30, and UOB declined 0.5 per cent or S$0.14 to S$27.98.

Wall Street stocks ended mostly down on Thursday as regional banks again came under pressure, struggling to shake off investor worries about the sector. The Dow Jones Industrial Average closed 0.7 per cent lower at 33,309.84, while the broad-based S&P 500 nudged down 0.2 per cent to 4,130.57. The tech-heavy Nasdaq Composite Index edged up 0.2 per cent to 12,328.51. The mixed showing came as shares of regional bank PacWest slumped 22.7 per cent, after it reported seeing deposits drop around 9.5 per cent in the week of May 5. Several other regional lenders saw weakness as well including KeyCorp, Zions Bancorporation and Western Alliance Bancorporation.

Top gainers & losers





Singapore’s latest six-month Treasury bill (T-bill) closed its auction with a cut-off yield of 3.78 per cent on Thursday (May 11), down from the 3.83 per cent offered in the previous auction. Demand inched up from the previous auction – the latest tranche was 2.4 times subscribed, and received S$12 billion in applications for the S$5 billion on offer. In the latest issuance, non-competitive bids totalled S$1.3 billion and were fully allotted.

Manulife US Reit announced on Thursday (May 11) that its portfolio occupancy has fallen to 86.1 per cent for the first quarter ended Mar 31, after top tenant The William Carter Company gave up close to a quarter of its space leased at the Phipps building in Atlanta. With the Reit’s portfolio having a weighted average lease expiry of five years, its manager expects positive rental reversion for 2023. Around 7.6 per cent of Manulife US Reit’s leases by gross rental income will expire this year. About half of its leases (50.2 per cent) will expire in 2028 and beyond.

CapitaLand Investment (CLI) revenue from its fee income-related businesses in lodging, property and fund management fell 3 per cent year on year to S$255 million for Q1 2023, from S$262 million. This was because its fee income-related business revenue for Q1 2022 included performance fees of S$31 million from a Singapore and Vietnam fund. Excluding the S$31 million performance fees received in Q1 2022, revenue from its fee income-related businesses for Q1 2023 would have increased by 10 per cent. Its lodging management business posted a 42 per cent rise in revenue per available unit (RevPAU) for the quarter on the sustained recovery of tourism. Meanwhile, revenue from its real estate investment business rose 11 per cent to S$447 million for Q1 2023, from S$403 million the previous year.

SingPost announced on Thursday (May 11) that it is evaluating the commercial sustainability of its domestic postal business as part of a strategic review of its portfolio. The company delivered 28 per cent lower earnings at S$34.6 million for the second half of financial year 2023 ended Mar 31, from S$48.1 million in the year-ago period. Earnings per share for H2 fell to S$0.013, from S$0.0186 in the corresponding period of FY2022. The firm attributed the fall in its bottom line to losses from its post and parcel business, which recorded a S$3.8 million operating loss for the half-year, compared to an operating profit of S$13.6 million previously. Revenue for the group stood at S$913.4 million, falling 2.2 per cent from the S$934.2 million posted for the year-ago period.

StarHub posted a 26 per cent rise in net profit to S$37.5 million for the first quarter ended Mar 31, from S$29.7 million a year ago. This was due mainly to higher service revenue, which grew 11 per cent year on year and was lifted by the consolidation of MyRepublic broadband. Revenue for Q1 was up 8.7 per cent to S$557.4 million, from S$512.7 million a year earlier. All service segments reported growth in the first quarter.

Marco Polo Marine posted a 60.7 per cent drop in net profit to S$4.2 million for the first half ended Mar 31, 2023, from S$10.8 million the year before. This comes as revenue for the period more than doubled to S$55.9 million, from S$27.6 million a year earlier. Earnings per share stood at 0.16 Singapore cent for the first half, down from 0.30 cent the previous year. No dividend was declared for the half year, unchanged from the year before. Cost of sales grew 96.5 per cent to S$38.2 million, from S$19.5 million in the preceding year-ago period. The group’s other operating income fell to S$2.2 million, from S$10.7 million, due primarily to the decrease in gains from non-recurring items.

AEM Holdings posted a 61.8 per cent drop in net profit to S$15.6 million for the first quarter ended Mar 31, 2023, from S$40.8 million the year before. This comes as the group’s revenue for the quarter fell 41.7 per cent to S$152.7 million, from S$261.9 million in the preceding year-ago period. In the near term, the group sees a “flickering of positive signs” across the semiconductor industry. “Technology nodes are continuing to advance as two of the world’s most advanced foundries are forecasting new process nodes to be up and generating revenue in the second half of 2023,” said the company, and this is expected to drive demand for new test capability. Beyond 2023, AEM is positive that the future of the industry “has never been more promising”.

Thai Beverage (ThaiBev) posted a 3.4 per cent rise in net profit to 7.4 billion baht (S$289.6 million) for the second quarter ended Mar 31, 2023, from 7.1 billion baht the year before. Earnings per share for the quarter stood at 0.29 baht, up 3.6 per cent from 0.28 baht previously. Revenue for the quarter rose 2.4 per cent to 67.4 billion baht, from 65.8 billion baht the preceding year-ago period. This was due to higher sales from the company’s spirits, non-alcoholic beverages, and food businesses. An interim dividend of 0.15 baht per share was declared for the quarter, unchanged from the year before.

Frasers Property posted a 52.2 per cent rise in attributable profit to S$197.2 million for its first half ended Mar 31, from S$129.6 million the year before. Group revenue increased 15.6 per cent to S$1.9 billion for the six-month period, from S$1.7 billion a year earlier. Earnings per share (EPS) was S$0.0502 for the first half, up 51.7 per cent. No interim dividend was declared, unchanged from the previous year. Frasers Property noted that its Singapore residential development business had benefited from increased sales of units and selling prices on a buoyant residential market.

Food Empire posted a 50.9 per cent rise in net profit after tax to US$13.8 million for its first quarter ended Mar 31, from US$9.2 million the year before. Revenue for Q1 rose 24.2 per cent to US$102.6 million, from US$82.6 million a year earlier, on stronger demand for the company’s branded products. The higher year-on-year revenue came also from lower sales recorded in the first quarter of 2022, following Russia’s attack on Ukraine.

Kimly posted a 0.7 per cent rise in net profit to S$18.7 million for its first financial half ended Mar 31, from S$18.5 million the year before. But its revenue for the half year fell 0.9 per cent to S$155.5 million, from S$156.9 million a year earlier. Kimly said a 5.7 per cent drop in revenue from its food retail division, which brought in S$91.2 million in the half year, contributed to the revenue drop. Earnings per share stood at 1.5 Singapore cents for the first half, up from 1.49 cents the previous year. An interim dividend of 0.56 Singapore cents per share was declared for the half.

Vicom posted a 8 per cent rise in profit after tax and minority interest for its first quarter ended Mar 31, 2023, from S$6.3 million in the year-ago period. This was due to higher operating profit as well as higher interest income. Revenue rose 6.6 per cent on the year to S$27.8 million for the quarter, from S$26 million previously, mainly due to higher business volume in its non-vehicle testing business.

Dyna-Mac Holdings announced on Thursday (May 11) that the group has secured several firm contracts worth S$270 million in total from its repeat customers. The new order wins will add to the global multi-disciplinary contractor’s net order book of S$338.1 million as at end-March 2023, bringing it up to S$608.1 million stretching into 2025. The new orders are not expected to have a material impact on the group’s earnings per share and net tangible assets for the current financial year ending Dec 31, 2023.

OCBC Bank has priced A$1 billion (S$894.8 million) of senior floating-rate green notes due 2026 under its US$30 billion global medium term note programme. The notes will be issued by OCBC, acting through its Sydney branch, and are expected to be repo eligible by the Reserve Bank of Australia. The notes will bear interest at the three-month bank bill swap rate plus 0.78 per cent per annum, payable quarterly in arrears. The notes are expected to be issued on May 18, 2023 and listed on the Singapore Exchange on May 19, 2023.

Ever Glory United Holdings plans to raise over S$3 million through an initial public offering (IPO) on the Singapore Exchange (SGX). The company is offering 14 million placement shares at S$0.22 apiece. Shares of Ever Glory will begin trading on the Catalist board of the SGX on May 18.


Polestar announced its first-quarter earnings results. For the period ended March 31, Polestar’s net loss was $9 million, or less than a penny per share, thanks to about $213.4 million in positive changes in the valuation of some of Polestar’s obligations related to its merger with a special-purpose acquisition company last year. A year ago, the company’s net loss was $274.5 million, or 14 cents per share. On an adjusted basis, excluding the accounting changes, the company lost $222.4 million in the period, or about 10 cents per share. Revenue grew to $546 million from $452.2 million a year earlier. Polestar cut its full-year production guidance to between 60,000 and 70,000 vehicles in 2023, down from 80,000 in its earlier outlook, because the launch of the upcoming Polestar 3 SUV will be delayed until 2024 due to software issues. The company also said it will cut about 10% of its workforce to reduce costs.

Apple supplier Foxconn reported on Thursday (May 11) a 56 per cent plunge in first-quarter net profit. The company said net profit for the January-March quarter fell to T$12.8 billion (S$553 million) from T$29.45 billion in the same period the previous year. Foxconn chairman Liu Young-way said the slump in profit was due to an unspecified asset write-off from non-operational business. Foxconn said it expected revenue for its key consumer electronics products to decline year on year in the second quarter. Overall, revenues for the second quarter would fall, while full-year revenues would be flat, the Taiwanese company said.

Elon Musk said Thursday that Twitter is getting a new CEO and that he will move to a product and technical role. Musk said via Twitter that the new CEO, an unnamed woman, would start in about six weeks. He added that he would transition “to being exec chair & CTO, overseeing product, software & sysops.”

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


Oversea-Chinese Banking Corp Ltd – Fee income recovers while NII continues to surge

Recommendation: Buy (Maintained), Last done: S$12.30, TP: S$14.96, Analyst: Glenn Thum

– 1Q23 earnings of S$1.88bn were slightly above our estimates. It came from higher net interest income and a reversal of fee income decline offset by lower insurance income. 1Q23 PATMI was 28% of our FY23e forecast.

– NII grew 56% YoY as NIM surged 75bps YoY to 2.30% and loan growth remained flat YoY. Total non-interest income dipped 11% YoY from lower fees and insurance, but fee income momentum was building up with a 65% QoQ rise. Allowance remained subdued with credit costs at 12bps.

– Maintain BUY with an unchanged target price of S$14.96. We maintain FY23e earnings as we increase NII estimates for FY23e due to higher NIMs, offset by lower other non-interest income and higher allowance estimates. We assume 1.29x FY22e P/BV and ROE estimate of 10.8% in our GGM valuation. Catalysts include continued interest income growth and fee income recovery as economic conditions improve. OCBC is our preferred pick among the three banks due to attractive valuations and dividend yield of 6.5%, buffered by a well-capitalised 15.9% CET 1, and fee income recovery from China’s re-opening.

Meta Platforms Inc. – Results beat on higher ad sales, cost discipline

Recommendation : NEUTRAL (Maintained); TP: US$235.00, Last Close: US$233.08 Analyst: Jonathan Woo

– 1Q23 revenue and earnings modestly beat expectations on higher Ad sales. 1Q23 revenue/PATMI at 23%/20% of our FY23e forecasts.

– Investments in AI driving improvements in ad tech, with Reels user engagement and monetization starting to ramp up.

– Optimistic outlook with 2Q23e revenue guidance of 7% YoY growth at the midpoint (11% YoY top-end), while reducing FY23e total expense growth by 5%. Expectations for a final wave of headcount cuts in May 23.

– We increase our FY23e revenue estimates by 3%, and our FY23e PATMI/EBITDA estimates by 11% to reflect better-than-expected improvements in cost savings. We maintain NEUTRAL due to recent stock price performance, with a raised DCF target price of US$235.00 (prev. US$200.00), a WACC of 7.1%, and a terminal growth rate of 3.5%.

PayPal Holdings Inc – Cost savings drive earnings growth

Recommendation: BUY (Maintained); TP: US$103.00

Analyst: Ambrish Shah

– 1Q23 revenue/PATMI was within expectation at 24%/21% of our FY23e forecasts. Revenue growth of 9% YoY to US$7bn was led by 12% YoY increase in total payment volume. PATMI rose 56% YoY (28% normalized) driven by continued cost savings.

– For FY23e, PayPal now expects adj. operating margin to expand by 100 basis points from the previous 125 basis points due to strength in its lower-margin unbranded checkouts (Braintree). But GAAP EPS guidance raised to US$3.42 from US$3.27.

– We maintain a BUY recommendation with a DCF target price of US$103 (WACC 7%, g 4%). Our FY23e revenue estimates remain unchanged, while we nudge lower our EBITDA by 1% due to higher transaction expenses related to Braintree partially offset by lower operating expenses. PayPal enjoys long-term tailwinds from two-sided network effects, secular shift to electronic payments, as well as addition of Venmo as payment method on Amazon.

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