Daily Morning Note – 14 Aug 2020

PHILLIP SUMMARY

Asian stocks looked set for a muted start Friday after a lackluster U.S. session as investors mulled the stalemate in stimulus negotiations and parsed signs of an economic recovery. Treasury yields rose to an eight-week high after the government sold a record amount of 30-year bonds. Futures were little changed in Japan, Australia and Hong Kong. S&P 500 futures were also flat and the Nasdaq Composite Index closed in positive territory. Trading volume was about 20% below the 30-day average.

Gold resumed its advance, and the dollar slipped against a basket of its peers. Elsewhere, oil fell the most in nearly a week as investors assessed the International Energy Agency’s reduced forecasts for global oil demand, in part due to a slowdown in air travel.

BREAKING NEWS

Agri-food giant Olam International has said it is on track to spin off one of its units in a separate listing towards the end of this year, with a second listing happening one year after that. Olam reported net profit of S$332.7 million for the first half of the year ended June, up 44.4 per cent from S$230.4 million a year ago. Revenue increased 7.1 per cent to S$17.1 billion, from S$15.9 billion. The company’s bottom line was boosted by a 379 per cent increase in other income: from S$20.9 million to S$100.1 million. Most of that came from a S$109.7 million gain on foreign currency translation adjustments compared to a loss of S$16.6 million a year ago.

Synagie Corporation has posted its first net profit since its initial public offering in August 2018 as a result of a surge in e-commerce activity during the Covid-19 pandemic. The company was S$4.1 million in the black for the half-year ended June 30, 2020, reversing from a loss of S$3.7 million a year ago. Revenue increased 325.6 per cent to S$38.3 million, while gross profit jumped 411.9 per cent to S$12.9 million. A surge in demand for products related to Covid-19 and higher e-commerce activity due to stay-home measures caused revenue from the e-commerce segment to rise 435.3 per cent.

Transport operator SBS Transit posted a 27.4 per cent fall in net profit to S$32.6 million for the half-year ended June 30, 2020 as the use of public transport declined during the pandemic. The impact of Covid-19 on the group’s bottom line was largely cushioned by government grants of S$61.6 million, with most of the support coming from a 10-month wage subsidy. Without the government grants, the company would have incurred an operating loss of S$29.4 million. Revenue was down 14.9 per cent to S$603.2 million, mainly due to lower rail ridership during the “circuit breaker” period in Singapore.

Property company UOL has sunk into the red with net losses of S$82.1 million for its first half ended June 30, 2020, compared to a net profit of S$267.7 million a year ago. This was due mainly to fair value losses on its investment properties, including retail malls and serviced suites which were severely affected by Covid-19, it said. Excluding fair value losses, the group’s operations remained in the black, with group pre-tax profit totalling S$196.8 million, down 30 per cent from S$282.8 million in H1 FY19.

A boost in semiconductor sales lifted precision engineering firm UMS Holdings‘ net profit by 43 per cent to S$11.6 million for the second quarter ended June 30, 2020. Revenue was up 35 per cent to S$40.3 million on the back of a 41 per cent increase in revenue from the semiconductor segment. The higher semiconductor revenue was driven by higher integrated system sales, which rose 65 per cent to $19.6 million.

Ho Bee Land‘s net profit for the half-year ended June 30, 2020 was up 115.4 per cent to S$90.6 million on the back of increased profits from associates and jointly-controlled entities.The share of profits from associates was S$31.3 million, compared with a loss of S$407,000 a year ago. The group recorded share of profits from the Shanghai and Zhuhai associates due to units that were sold prior to the pandemic. Share of profits from jointly controlled entities was S$3 million compared with a loss of S$2.3 million a year ago, mainly due to higher profits from the Seascape and Cape Royale developments in Sentosa Cove and the residential development project in Tangshan.

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

TECHNICAL PULSE

Mapletree Industrial Trust

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

Mapletree Industrial Trust (SGX: ME8U) bullish upside is further cemented after Mapletree Industrial broke the high at $3.04 on 24th July. Based on the recent techincals, the trust will continue its bullish sentiment.

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