Daily Morning Note – 12 November 2021

PHILLIP SUMMARY

Asian stocks looked set to climb Friday, bolstered by improving sentiment toward Chinese shares. Treasury futures suggested higher yields when cash trading resumes after a holiday. Australian shares rose, while equity contracts for Japan and Hong Kong advanced. A gauge of U.S.-listed Chinese stocks jumped more than 5%, helped by Alibaba Group Holding Ltd.’s blowout Singles’ Day shopping festival and a report that Didi Global Inc. is getting ready to relaunch its apps. S&P 500 futures were in the green after the index snapped a two-day drop.

Futures prices fell across the maturity spectrum in Treasuries. That points to another tough session ahead after Wednesday’s bond rout, when the fastest U.S. inflation in three decades raised the odds of quicker monetary tightening. The dollar extended a rally in the wake of the inflation print and caution triggered by a U.S. warning that Russia may be weighing a potential invasion of Ukraine. Oil slipped, while gold and Bitcoin held gains.


BREAKING NEWS

SG

Flag carrier SIA has reported a smaller net loss of S$427.6 million for the second quarter to September, as passenger traffic rose amid Singapore’s launch of vaccinated travel lanes (VTLs). Its cash burn rate also has narrowed to S$18 million per month or S$106 million in the first half of FY 2022 as operating performance improved, down from S$1.7 billion in H1 FY2021.

ComfortDelGro registered a third quarter profit after tax and minority interests (PATMI) of S$25.8 million, up 19.4 per cent year-on-year. Revenue was 7.4 per cent higher at S$880.3 million, lifted by higher revenue from public transport services and automotive engineering services. Revenue for its public transport services rose 10.3 per cent to S$710.6 million due in part to higher revenue in Singapore. In Australia, public transport schedules were stable while the United Kingdom continued to see full schedules for public transport services.

Sembcorp Marine on Thursday (Nov 11) posted an order book of over S$1.42 billion as at the end of the third quarter. This includes S$180 million of ongoing repairs and upgrades for delivery by 2022, according to an interim business update.

Frencken Group‘s earnings rose 10.7 per cent year-on-year to S$14.77 million in Q3 as it registered higher revenue. Revenue increased 18.7 per cent year-on-year to S$196.46 million, boosted by stronger sales of its semiconductor analytical, medical and automotive segments. Gross profit increased nearly 15 per cent to S$33.5 million even as gross profit margin eased by half a percentage point to 17.1 per cent owing to higher material and freight costs.

Frasers Logistics and Commercial Trust’s (FLCT) distribution per unit (DPU) rose by 6.3 per cent to 3.88 Singapore cents for its second half ended Sep 30, from 3.65 cents a year ago. Gross revenue was up 11.4 per cent to S$237.6 million for the half-year period, from S$213.3 million a year ago. This was mainly attributable to acquisitions undertaken in FY2020 and FY2021, although it was partially offset by divestment activities during the same period, the manager said in a bourse filing on Thursday (Nov 11).

SBS Transit‘s third quarter profit-after-tax (PAT) shrank around 28 per cent year-on-year to S$13.86 million, it said in a filing to the Singapore Exchange on Thursday (Nov 11). SBST warned that the current restrictions, which have been extended to Nov 21, will result in a slow recovery for rail ridership.

Mainboard-listed Halcyon Agri Corporation saw earnings before interest, tax, depreciation and amortisation (Ebitda) fall 21.8 per cent to US$9.7 million for the third quarter ended Sep 30, 2021, from US$12.4 million a year ago. However, revenue in the same period rose 51.9 per cent to US$602.1 million from S$396.4 million a year ago. The natural rubber supplier attributed this to robust downstream demand, with sales volume in Q3 FY2021 growing by 11.6 per cent. Higher average selling prices also buoyed revenue for the quarter.

Best World International posted a 11.1 per cent year-on-year drop in net profit to S$25.1 million in the third quarter ended Sept 30, 2021. The group highlighted that it is already seeing the effects of second waves of the pandemic in its key markets, Taiwan and Malaysia. It warned that it expects continued disruptions – in the form of scaled down or cancelled marketing events and activities – in another key market, China, for the rest of the year.

Catalist-listed Old Chang Kee posted a net profit decline of 45.1 per cent to S$3.4 million for the first half of its financial year ended Sep 30, 2021 from S$6.1 million a year earlier. The group saw its profit margin decrease by 1.7 per cent to 64.3 per cent in H1 FY2022 due mainly to an absence of economies of scale savings from the large-scale catering of packed meals for foreign workers living in dormitories.

US

Tesla Inc chief executive officer Elon Musk unloaded US$5 billion of stock in the electric-car maker, shortly after holding a poll on Twitter over whether he should sell 10 per cent of his massive stake in the company. The world’s richest person so far has disposed of more than 4.5 million shares this week, according to regulatory filings. Those were his first sales in more than 5 years.

Goldman Sachs Group‘s asset management arm is starting 3 actively managed exchange-traded funds (ETFS) that aim to profit from companies that will disrupt industries. The Goldman Sachs Future Consumer Equity ETF will look to invest in companies that can appeal to younger consumers. The Goldman Sachs Future Health Care Equity ETF will look for healthcare companies that are developing new treatments or technologies in areas such as genomics, precision medicine, technology-enabled procedures, and digital healthcare. The Goldman Sachs Future Real Estate and Infrastructure Equity ETF will focus on companies that can profit from changes like demographic shifts that might make some real estate and infrastructure more profitable.

Boeing has reached an agreement with the families of victims of the 737 MAX crash that killed 157 people in Ethiopia, and has admitted responsibility for the crash, according to legal documents filed in a Chicago court on Wednesday. “Boeing is committed to ensuring that all families who lost loved ones in the accidents are fully and fairly compensated for their loss,” the company said in a statement passed to AFP.

Sony Group Corp has reduced its PlayStation 5 production outlook for this fiscal year due to component and logistics constraints, Bloomberg News reported on Wednesday. The company has cut down the number of PS5 units assembled for the fiscal year to about 15 million, from its previous target of 16 million units, the report added, citing people familiar with its operations.


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

Technical Pulse: China Merchant Bank Co Ltd

Recommended: BUY; Analyst: Chua Wei Ren

China Merchant Bank (HKEX: 3968) has been on a corrective downtrend since it met our first target price at HK$70.32 based on our report dated 6th May 2021. Technicals also indicate that China Merchant Bank will have a bullish rebound.

Buy spot: 64.95 Stop loss: 58.50 Take profit 1: 72.20 Take profit: 79.00

Technical Pulse: Geely Automobile Holdings Ltd

Recommended: BUY; Analyst: Chua Wei Ren

Geely Automobile (HKEX: 175) trading range is likely to persist longer.Recent technicals indicate our previous report dated 30th July is still valid after fresh signals emerge that a new upside will start once prices breach the HK$27.40 resistance level.

Buy spot: 28.85 Stop loss: 22.50 Take profit 1: 30.80 Take profit: 35.50

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