Daily Morning Note – 14 August 2018


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Stocks slipped on Monday as a financial crisis in Turkey that sent its currency tumbling last week worsened, dampening investor sentiment around the world. The Dow and S&P 500 post four-day losing streaks.

The Turkish lira, which briefly tumbled more than 20 percent on Friday, reached a fresh record low on Monday before regaining some footing. Turkey’s central bank tried to assuage global investors’ fears, stating it will provide as much liquidity as needed to the country’s banks. The Turkish economy has been reeling recently as its inflation rate reached 16 percent last month, well above the central bank’s 5 percent target.

Meanwhile, Spot gold prices sank below $1,200 per ounce for the first time since last year, losing out to U.S. Treasuries and a stronger dollar as investors sought refuge from a financial market rout triggered by a crashing Turkish lira.


Singapore O&G Ltd. – Gaining market share

Recommendation: Buy (Upgraded), Last Done price: S$0.355

Target Price: S$0.420, Analyst: Phillip Research Team

– 2Q18 Revenue/adjusted PATMI met 52.0%/61.1% of our full year estimations
(Excluding the settlement fee receipt and legal fees from the dispute)

– O&G segment performed well; 6M18 profitability +23.4% YoY despite. Number of
deliveries increased despite a decline in industry deliveries. Dermatology a drag to
group earnings.

– Strong performance from cancer-related segment; 6M18 profitability +142.9%

– Upgrade to BUY (previously ACCUMULATE) with an unchanged TP of S$0.42.

Ho Bee Land Limited – Banking on recurring rental income to ride out near term

Recommendation: Accumulate (Maintained), Last Close Price: S$2.54

Target Price: S$2.98, Analyst: Tan Dehong

– Gross revenue and profits adjusted for revaluation gains within our forecast.

– S$28.3mn revaluation gain as a result of the sale of a 30-year leasehold interest in
its 999-year Bukit Timah petrol station site.

– 16% increase in total recurring rental income mainly as a result of new

– 44% increase in financing costs along with rise in net gearing ratio to 0.76x.

– Potential delay again in launch of Sentosa properties.

– Maintain ACCUMULATE with unchanged RNAV-derived target price of S$2.98.


Straits Times Index – Daily timeframe – Bearish

– With the bearish rejection off the 3,341 resistance area and 60 day moving
average since 07/08/18, price has broken below the immediate pullback line and
20 day moving average once again on 13/08/18 suggests the immediate trend has
turned bearish.

– Expect the STI to head lower next to retest the 3200 – 3189 key support area next.

For more information and additional disclosures, refer to the link here.


U.S. stocks close lower as Turkey currency crisis dampens risk appetite. The Dow Jones Industrial Average DJIA, -0.50% shed 125.44 points, or 0.5%, to 25,187.70. The S&P 500 SPX, -0.40% fell 11.35 points, or 0.4%, to 2,821.93, with energy and materials sectors among the biggest losers. The Nasdaq Composite Index COMP, -0.25% wove in and out of negative territory all day and finished down 19.40 points, or 0.3%, to 7,819.71.

Europe: Stocks dips to 3-week low as Turkey dents lenders. The pan-European SToxx 600 fell 0.2 per cent and closed at a three-week low, with Germany’s DAX down 0.4 per cent as pharmaceuticals group Bayer weighed. Euro zone bank stocks fell 1.8 per cent and touched levels not seen since December 2016 during trading.

Oil Drops on Strong Dollar, Turbulence in Turkey. Futures dipped 0.6 percent in New York on Monday, paring some of its losses as the commodity tracked choppy movements in the dollar during the session. Yet, the U.S. currency maintained its advance, reducing the appeal of raw materials as an investment.

China’s July new loans rise to 1.45 trillion yuan, above forecasts: CBIRC. China’s new loans totalled 1.45 trillion yuan in July, an increase of 623.7 billion yuan from a year earlier.

China banks bad loans surge most on record amid deleveraging. Non-performing loans rose 183 billion yuan (S$36.7billion) to hit 1.96 trillion yuan by the end of June, the biggest quarterly jump in data going back more than a decade, the China Banking and Insurance Regulatory Commission said in a statement on Monday. Soured loans represented 1.86 per cent of total advances, the highest ratio since March 2009.

Source: SGX Masnet, Bloomberg, Reuters, The Business Times, Channel NewsAsia, Phillip Securities Research

Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research

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

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