Daily Morning Note – 13 April 2020

PHILLIP SUMMARY

Stocks looked set to for a mixed start to the week as investors mulled a slowdown in new coronavirus cases and readied for the start of earnings season. Oil futures swung after a historic deal to cut output.

U.S. equity futures declined in early Asia trading and Japanese contracts retreated. Many markets remained closed for holidays. The euro steadied after France, Germany, Italy and Spain reported a slowdown in new cases. Canada’s dollar opened higher after OPEC+ agreed to cut 9.7 million barrels a day from global crude output — just below the initial plan of 10 million. The yen ticked higher.

BREAKING NEWS

A China unit of mainboard-listed property developer GuocoLand will sell Guoman Hotel in Shanghai and 256 of its underground carpark spaces for 1.44 billion yuan (S$290.7 million) in cash. The net book value of the real estate is about 509.5 million yuan as at March 31, and GuocoLand is expected to record a net gain of S$90.6 million.

CHINA Haida’s request for more time to release its FY2019 results has been rejected by the Singapore Exchange (SGX); the aluminium panel maker now has up to April 15 to do so.

Top Glove Corp, the world’s biggest maker of medical gloves, plans to start producing face masks to meet rising demand from the coronavirus outbreak, a top executive told Reuters. The Malaysian company, which makes one out of every five gloves in the world, will have a facility ready in two months with a production capacity of 110 million masks a year.

BROADWAY Industrial Group‘s independent auditor has raised doubts about the group’s ability to continue as a going concern. However, RSM Chio Lim’s audit opinion remains unqualified, the mainboard-listed precision manufacturing group said on Sunday in a regulatory filing.

DATAPULSE Technology gave an update on Saturday on the operations of its hotel Travelodge Myeongdong City Hall in Seoul. The property was formerly known as Hotel Aropa. “The novel coronavirus (Covid-19) outbreak is continuing to have a significant adverse impact on the hospitality industry in South Korea, with both international and domestic travel restrictions and flight suspensions affecting hotel occupancy levels. The group’s results for the financial year ending July 31, 2020 will be adversely impacted as a result of, among other things, the very low occupancy of Travelodge Myeongdong City Hall,” Datapulse said in its regulatory filing with the Singapore Exchange.

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

RESEARCH REPORTS

Singapore Banking Monthly – Relief to tide through challenging times

Recommendation: Overweight (Maintained)

Analyst: Tay Wee Kuang

– Despite the rate cut by the Federal Reserve totalling 150 bps in March, local interest rates are showing short-term resilience. NIMs may compress by mid-teens level for the full year, less than previously expected.

– February loans growth was stable at 3.05% YoY. Loans will likely sustain at current levels of growth with various government measures to encourage lending amidst liquidity crunch faced by businesses as the COVID-19 pandemic ensues.

– Derivatives volume rose 34% YoY in March as volatility is at the highest monthly levels since the 2008 Global Financial Crisis.

– Maintain Singapore Banking Sector at Overweight. Local banks will benefit from the slew of measures introduced by the government to reduce the strain on the financial system through risk-sharing and provision of low-cost funding.


Singapore REITs Monthly – The virus reiterating trends of the future

Recommendation: OVERWEIGHT (Upgraded), Analyst: Natalie Ong

– Sell down in SREITs (-29.4%) surpassed the market (-20.6%) sell down as SREITs were hurt by containment measures. Hospitality and retail trading at 0.5x P/NAV

– Correspondingly, the dividend yield and yield spread expanded 197bps (+45.9%) and 215bps (+70.4%) MoM to 6.2% and 5.2%. Sector yield spread at the +2.57 standard deviation level

– Upgrade to OVERWEIGHT on S-REITs sector. Sub-sector preferences: Office and Industrial


Oxley Holdings Ltd (Credit Commentary) – Company Update Highlights

Credit Commentary, Credit Analyst – Timothy Ang

– Primary goal is to conserve and accumulate cash to settle maturing debt

– Project completions have been delayed, however no cashflow issues for now.

– Low completion risk for key projects

– Chevron House sale delayed by due diligence process during the lockdown


Read more research reports

HK Reports – Read up on our Hong Kong reports here

RESEARCH VIDEOS

Webinar Of The Week

Market Outlook: (PSR) City Development Limited, CapitaLand Limited, Dasin, EC World, REITS & Banking Monthly, SG Weekly & Technicals

Date: 16 March 2020

For more on Market Outlook

Phillip Research in 3 minutes: #19 – Singapore Banking Sector Update

For more videos on Phillip in 3 Mins

Read the research report(s), available through the link(s) above, for complete information including important disclosures Important Information





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