Daily Morning Note – 12 Nov 2019



The Dow Jones Industrial Average closed slightly higher on Monday, erasing a deficit of 163 points, as Boeing shares popped on news its will resume deliveries of beleaguered 737 Max jet next month.

The S&P 500 slipped 0.2% to 3,087.01, snapping a three-day winning streak, led lower by the utilities and energy sectors. The Nasdaq Composite dipped 0.1% to close at 8,464.28.

Oil prices dipped on Monday after U.S. President Donald Trump appeared to downplay reports of an imminent lifting of tariffs in a protracted U.S.-China trade war.


Mapletree Commercial Trust (MCT) has raised S$460.5 million in gross proceeds from its preferential offering, which was 1.45 times subscribed, it said on Monday night. Some 205.6 million new units will be issued on the basis of 71 new units for every 1,000 existing units in MCT. The issue price for the new units is S$2.24 apiece. They will begin trading on the main board of the Singapore Exchange with effect from 9.00 a.m. on Nov 15.

Investment holding company Innopac Holdings on Monday night said that Saxo Bank has resumed its claims of nearly S$14.7 million against the company, over the negative account balances of two subsidiaries. Although Innopac had filed counterclaims against Saxo Bank, stating that the negative balances were incurred without any guarantee by the company, the counterclaims did not proceed as the settlement was dependent on the proceeds of proposed placements announced on Oct 9, 2018 and Feb 19, 2019.

Raffles Hospital, the flagship of mainboard-listed Raffles Medical Group, has become the first private hospital in Singapore to allow the Healthcare Services Employees’ Union (HSEU) to represent its staff. The medical firm signed an agreement on Monday to enable about 500 employees, including nurses, allied health staff and ancillary and administrative workers, to sign up as union members.

Food Empire, which manufactures instant coffee and snacks, has posted a net profit of US$7.9 million in the third quarter, up 34.4 per cent from the same period a year earlier on sales growth in Russia, Ukraine and IndoChina. Revenue in the three months ended Sept 30 rose 5.4 per cent to US$76.8 million, partially offset by lower contributions from the rationalisation of underperforming businesses.

TECHNICAL testing and vehicle inspection group Vicom has posted a net profit of S$7.2 million in the third quarter, up 6.5 per cent from the same period a year earlier. Revenue in the three months ended Sept 30 was S$26.4 million, up 4.7 per cent from the same period a year earlier on higher business volumes.

Regional dealer Jardine Cycle & Carriage (Jardine C&C) is looking to privatise its Malaysian arm Cycle & Carriage Bintang Berhad (CCB) for RM90.6 million (S$29.8 million), or RM2.20 per share, the firm said in a bourse filing on Monday.

Jardine C&C holds about 59.1 per cent of Bursa Malaysia-listed CCB, whose shares were down 3 per cent or four sen to RM1.29 on Friday. CCB has suspended trading of its shares on Monday, with Jardine C&C having submitted a formal proposal for the deal to CCB’s board of directors.

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



Recommended Action: Technical SELL

SATS (SGX:S58) bullish sentiment might pause based on the technicals.

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DBS Group Holdings Ltd – Substantial provisioning overlay to cushion credit risk

Recommendation: ACCUMULATE (Maintained), Last Done price: S$26.6

Target Price: S$27.3 (previous TP: S$27.6), Analyst: Tin Min Ying

– 3Q19 revenue and PATMI exceeded our estimates by 4% and 7% respectively.

– NII supported by 4bps YoY NIM expansion to 1.90% as loans were repriced with higher interest rates in Singapore and Hong Kong. Loans growth softer at 4% YoY.

– Fee income at a record high of $814mn. Strong trading income growth of 22% to $431mn due to higher gains in interest rate activities.

– CIR% well contained, improving 2p.p. from a year ago to 42%.

– Declared a quarterly dividend of 30 cents per share. We forecast 2019 dividend of $1.20/share.

– Maintain ACCUMULATE at a lower target price of S$27.30 (previous TP: S$27.60). Our TP is based on target price-to-book of 1.4x, derived from the Gordon Growth model (long term ROE assumption: 12.4%, COE: 9.3% (Beta: 1.2x), Growth: 2.0%).

Asian Pay Television Trust – Running but at the same spot for now

Recommendation: NEUTRAL (Maintained), Last Done: S$0.171

Target Price: $0.165, Analyst: Paul Chew

– Revenue was in line, but EBITDA was marginally below our estimates. Expenses such as content and staff cost were higher than modelled.

– Broadband reported record net additions of 9,000 subscribers in 3Q19. But revenue was still down 5% due to weaker ARPU.

– Falling revenue is still the biggest challenge. We estimate revenues will fall S$9mn in FY20e (FY19e down S$25mn). The annual dividend pay-out of S$17.4mn per annum is well funded by adjusted FCF of $46m. Nevertheless, it will be challenging for the stock to outperform until investors get some visibility of revenue stabilising. We believe the roll-out of data back-haul services for 5G in 2021 will be the opportunity for revenue to stabilise or even grow. We peg APTT at around 9.5x EV/EBITDA. This is a 20% discount (prev. 15%) to their much larger Taiwanese peer valuations. We maintain NEUTRAL and keep our target price unchanged at S$0.165.

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Date: 04 November 2019

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This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

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