DAILY MORNING NOTE | 13 September 2023

Trade of the Day

Alibaba Group Holdings Ltd (NYSE: BABA)

Analyst: Zane Aw

(Current Price: US$88.71) – TECHNICAL SELL
Sell price: US$88.71 Stop loss: US$92.00 Take profit: US$80.50

Singapore stocks ended 0.1 per cent lower on Tuesday (Aug 12). The top gainer was Venture Corporation, which gained 3.2 per cent or S$0.40 to S$13.04 while the top loser was Jardine Cycle and Carriage, which fell 1.2 per cent, or S$0.38 to S$31.42. The trio of local banks ended lower on Tuesday. DBS slid 0.7 per cent or S$0.23 to S$33.26. OCBC slid 0.1 per cent or S$0.01 to S$12.52, and UOB was down 0.4 per cent or S$0.12 to S$28.30.

Wall Street closed lower on Tuesday as the tech-heavy Nasdaq Composite Index slipped, while investors looked ahead to inflation data later this week. The Nasdaq slid 1.0 per cent to end at 13,773.61, while the broad-based S&P 500 also lost 0.6 per cent at 4,461.90. The Dow Jones Industrial Average closed 0.1 per cent lower at 34,645.99.

SG

Sembcorp Gas, the wholly-owned subsidiary of Sembcorp Industries, has signed a non-binding term sheet with West Natuna Exploration Limited, which is a wholly-owned subsidiary of Conrad Asia Energy. The term sheet outlines the key terms and framework for a binding gas sales agreement (GSA) for the Mako gas field in Indonesia. The company will make the necessary announcements as appropriate or when there are any material developments on the term sheet. The signing is in the ordinary course of business of Sembcorp and is not expected to have a material impact on the earnings per share and net tangible assets per share of Sembcorp for the financial year ending December 31, 2023.

The manager of EC World Real Estate Investment Trust (Reit) announced in a bourse filing on Tuesday (Sep 12) that the China-focused Reit has failed to top up the offshore interest reserve within the requisite five business days of its release. If the Reit does not remedy the breach and top up that reserve within 10 business days, an event of default pursuant to the offshore facilities would arise and also trigger a cross-default under the existing onshore facilities of EC World Reit and its subsidiaries. About S$3.4 million of the offshore interest reserve was used to fully repay the group’s interest expenses due end-August for existing offshore facilities. The relevant lenders, as at the time of the announcement, were said to be in the process of reviewing the manager’s requests for an extension to top up the offshore interest reserve as well as not to accelerate repayments. In addition, as units of the Reit have been suspended from trading for more than five consecutive trading days, the majority lenders under the offshore facilities have the right to declare all such loans and accrued interest immediately due and payable.

Thomson Medical Group has announced that the percentage of its shares held by public shareholders had been reduced to 9.98% as at the close of business on Sept 11. As the percentage of shares held by the public falls below the requisite 10% of the total number of issued shares under Rule 723 of SGX-ST’s listing manual, the trading of its shares may be suspended. The company intends to apply to SGX-ST for a period of three months for it to restore the public float to 10%.

Southern Alliance Mining is guiding for a net loss for its FY2023 ended July 31 on the back of a decrease in revenue. In a filing, the company says the decrease in the production of iron ore concentrate is a result of intense overburden removal activities in accordance with its mining schedule as well as the transition from open pit mining to underground mining. As such, the lower sales volume of iron ore concentrate coupled with a lower average realised selling price for iron ore concentrate for FY2023 have resulted in a lower revenue for the company. The company will be announcing its FY2023 results by Sept 26.

Vertex Ventures Southeast Asia and India (VVSEAI), a Temasek-linked venture capital (VC) investor, has closed its fifth fund at US$541 million. It exceeded an initial target of US$450 million, and was higher than the US$305 million raised for the firm’s previous fund completed in 2019, Vertex said. Fund V is backed by existing and new limited partners that include sovereign wealth funds, financial institutions, corporates and family offices across Asia and Europe. The fund’s investment size will range from US$2 million to US$8 million. VVSEAI Fund V consists of a main fund of US$491 million, and a parallel co-investment envelope of US$50 million that will co-invest alongside the main fund in startups led by women founders. VVSEAI is one of six major funds in the Vertex global network of venture capital funds. Temasek-owned Vertex Holdings is an anchor investor in each fund, which is independently managed and has its own specialisation. VVSEAI was an early investor in tech unicorns such as Grab, intellectual property company PatSnap and fintech company Nium. The firm, which focuses on high-growth startups seeking their early round of institutional VC funding, has made more than 80 investments. VVSEAI has eight investing partners with 22 investing staff across its offices in Singapore, Bangalore, Jakarta, Bangkok, Ho Chi Minh City and Gurgaon, India.

Valuemax Group has launched the eighth series of its three-month commercial paper (CP) in digital securities on the ADDX, through the private market exchange’s CP programme. The mainboard-listed pawnbroking chain on Tuesday (Sep 12) said it expects to raise between S$20 million and S$50 million from both accredited and institutional investors. The digital securities are priced at 5.1 per cent per annum and are due to mature three months from the issuance date. Its last issuance was a four-month Series 001 digital securities CP, which was listed on the ADDX on Aug 23 and raised S$14.9 million at its close.

US

Apple introduced its latest iPhones at an event on Tuesday (Sep 12), banking on new materials, camera upgrades and improved performance to coax back consumers in a sluggish smartphone market. The company unveiled four new models, keeping pace with the past few generations: the iPhone 15, 15 Plus, 15 Pro and 15 Pro Max. Like last year, the entry-level models start at US$799. The Pro version will remain US$999, but the Pro Max will now begin at US$1,199 – up US$100 from last year’s instalment. In addition to the iPhone, new Apple Watches were unveiled at the event, with a focus on eco-friendly materials. However most of the details of the presentation were previously reported, and investors gave a lukewarm response to the news. Apple announced plans to start taking preorders for the latest models on Friday in more than 40 countries, including the US, India, China and Canada. The products will then start reaching consumers and stores a week later. Apple is also releasing the phone’s latest operating system, iOS 17, on Sep 18. In a long-anticipated change, the iPhone 15 models are the company’s first smartphones to feature a USB-C connector, replacing the Lightning port used since 2012. The connector, which was adopted to meet requirements imposed by the European Union, promises to make the device compatible with chargers for Android phones, as well as iPads and Macs. Apple also announced a version of its AirPods Pro that uses the USB-C standard.

TSMC, the world’s largest contract chipmaker, will invest up to US$100 million in chip designer Arm Holdings’ initial public share offering (IPO), it said on Tuesday (Sep 12). Arm has already signed up other major clients as cornerstone investors in its IPO, including Apple, Nvidia, Alphabet, Advanced Micro Devices, Intel and Samsung Electronics. TSMC’s chairman Mark Liu said last week that “Arm is an important element of our ecosystem, our technology and our customers’ ecosystem. We want it to be successful, we want it to be healthy. That’s the bottom line.” TSMC also agreed to purchase a 10 per cent equity interest in IMS Nanofabrication Global from Intel for up to US$432.8 million, the company said in a statement. The investment valued IMS Nanofabrication at approximately US$4.3 billion, said Intel, which will retain majority ownership of IMS.

Alibaba Group Holding will put artificial intelligence (AI) and user experience at the top of its priorities, as its new leadership seeks to reclaim customers and market share in a fiercely competitive arena. Chief executive officer Eddie Wu laid out his vision in a memo to staff on Tuesday (Sep 12) for the first time since officially taking over from veteran Daniel Zhang. Wu stressed that Alibaba must adjust its approach to go AI-first, while not forgetting the hundreds of millions of users who helped create one of China’s largest corporations. The Hangzhou-based e-commerce leader will reinforce strategic investments in the areas of AI-driven tech businesses, Internet platforms and its global commerce network, Wu said.

Nasdaq-listed Coinbase has launched an institutional-grade web3 wallet in Singapore, fully integrated into the Coinbase Prime platform. The launch is on the back of the Singaporean market’s heightened interest in Web3, decentralised finance (DeFi) and cryptocurrency events, says Coinbase VP of institutional sales and trading Kevin Johnson. “Many institutions have been searching for reliable Web3 and DeFi access. Our new Web3 wallet addresses these needs, providing a comprehensive, integrated solution for the modern enterprise,” he adds. Enterprises are able to tailor the Web3 wallet to align with their unique business workflows, ensuring compliance with security policies, team member permissioning and audit trail clarity. Even in extreme scenarios such as device loss, users can swiftly recover their wallets using Coinbase’s innovative mechanisms, the company says.

The US Food and Drug Administration (FDA) authorised updated Covid-19 vaccines from Pfizer/BioNTech and Moderna that target a recently circulating Omicron variant of the coronavirus, paving the way for the launch later this week of a fall vaccination campaign. A third shot, made by Novavax, is still under review by the FDA. Novavax said it did not expect its shot to be authorised in the United States before a meeting of a Centers for Disease Control and Prevention (CDC) advisory panel on Tuesday to recommend who should receive the updated vaccines. Pfizer and Moderna said their updated vaccines, which target the XBB.1.5 subvariant of the virus, were expected to be available for most people in the United States in the coming days. The FDA approved those shots for people ages 12 and above, and authorised them for emergency use in children ages six months through 11 years. An endorsement by CDC director Mandy Cohen, expected in the coming days, should clear the way for the new shots. Cohen has said she expects the shots to roll out in September.

GlobalFoundries, one of the world’s top five largest contract chipmakers, launched a US$4 billion fabrication plant in Singapore on Tuesday, as part of a major global manufacturing expansion. With its new 23,000 sqm facility, the US chipmaker said it will produce an additional 450,000 300mm wafers per year and create 1,000 jobs. Its Singapore operations, which serve 200 clients worldwide, produce 300mm wafers and 200mm wafers, which are used in cars and 5G technology. The city-state’s overall semiconductor output, which makes up 11 per cent of the global semiconductor market, is set to grow, as more chipmakers are set to either open or expand operations in the coming months.

More than a dozen investors are calling on Nike to pay garment workers in Cambodia and Thailand that a labour rights group said lost wages after Covid-19 factory shutdowns, according to a Sep 7 letter to Nike’s CEO John Donahoe seen by Reuters. The investors want Nike to provide US$2.2 million in allegedly unpaid wages to more than 4,000 workers at two suppliers in Cambodia and Thailand. The investor request could add more pressure to sportswear giant Nike, which is set to hold its annual shareholder meeting on Tuesday (Sep 12). Nike already faces growing scrutiny of its supply chain, including investigations by Canadian and US government agencies. Nike denied the allegations in a statement to Reuters. The company said it has not sourced product from the Cambodian factory since 2006 and that it also found “no evidence” that it owed workers in Thailand back pay.

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

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