DAILY MORNING NOTE | 14 February 2023
Singapore shares failed to hang on to opening gains and finished lower on Monday (Feb 13), as caution prevailed ahead of the release of key US inflation figures on Tuesday. The key Straits Times Index fell 35.99 points or 1.1 per cent to 3,324.70. This followed the biggest weekly decline in the US’ S&P 500 and Nasdaq since December 2022. The upcoming US consumer price index data could provide more clues on the direction of the world’s largest economy and its rate path. On the broader local bourse, turnover came in at 1.2 billion units worth S$1.1 billion; losers outpaced gainers 306 to 253. The trio of local banks came up among the day’s top decliners. DBS led the pack, falling 2 per cent or S$0.71 to S$35.32. Earlier on Monday, the lender posted a 69 per cent year-on-year rise in net profit to a record S$2.3 billion for its fourth quarter ended Dec 31, 2022. Its board has recommended a final dividend of S$0.42 per share, which is S$0.06 higher than its previous payout, as well as a special dividend of S$0.50 per share. Thomson Medical Group was Monday’s second-most active counter, rising 5.6 per cent or S$0.004 to S$0.076 after 37 million shares changed hands.
Wall Street stocks won solid gains on Monday (Feb 13) in an optimistic round of trading, ahead of key inflation data that will influence US monetary policy. Market watchers awaiting Tuesday’s consumer price index report have pencilled in further moderation, which would ease pressure on the Federal Reserve to prolong interest rate hikes for significantly longer. The yield on the 10-year US Treasury dipped in a sign traders expect the Fed’s rate-hiking streak to end relatively soon. The Dow Jones Industrial Average finished up 1.1 per cent at 34,245.93. The broad-based S&P 500 also climbed 1.1 per cent to 4,137.29, while the tech-rich Nasdaq Composite Index jumped 1.5 per cent to 11,891.79. Other economic releases this week include a report on retail sales on Wednesday and housing starts on Thursday, both for January.
Singapore’s GDP grew by 2.1% y-o-y in the 4Q2022, moderating from the 4.0% expansion in the previous quarter. The GDP for the 4Q2022 brings the country’s full-year GDP to 3.6%, down from the Ministry of Trade and Industry’s (MTI) flash estimate of 3.8% and moderating from the 8.9% growth in 2021. For the full year, the manufacturing sector grew by 2.5%, slower than the 13.3% growth in 2021. All clusters within the sector expanded, aside from the chemicals and biomedical manufacturing clusters. The construction sector posted growth of 6.7%, extending the 20.5% expansion in 2021, supported by both public and private sector construction works, while the services producing industries also eased to 4.8%, from the 7.6% expansion in 2021. Overall growth for the year was driven mainly by the wholesale trade, manufacturing and other services sectors. In 2023, the MTI has kept its growth forecast for the year at 0.5% to 2.5%.
SATS has reported earnings or patmi of $0.5 million for the 3QFY2023 ended Dec 31, 2022, 90.2% lower than earnings of $5.1 million in the same quarter the year before. However, the positive patmi comes after the losses in the first two quarters of the year, reflecting an improvement in business conditions and the seasonal high, says SATS. Revenue for the 3QFY2023 rose by 54.5% y-o-y to $475.7 million as business activities increased on the back of a recovery in the aviation industry. The group reported an operating loss of $1.1 million, up 88.4% y-o-y from the previous year’s operating loss of $9.5 million and 86.3% higher than the $8.0 million in operating loss in the previous quarter. In the 9MFY2023, patmi stood at a loss of $32.0 million, down from 9MFY2022’s patmi of $18.3 million. Excluding government reliefs, group patmi would have been a loss of $65.4 million for the period, an improvement of $33.2 million compared to a loss of $98.6 million in the 9MFY2022.
Netlink NBN Trust has reported a profit after tax of $81.8 million for the 9MFY2023 ended Dec 31, 2022, 24.2% higher than the $65.8 million in the same period the year before. In its business update, the trust saw 9MFY2023 revenue increase by 6.5% y-o-y to $299.8 million. This was due to its higher ancillary project revenue, non-building address point (NBAP) & segment connections revenue and residential connections revenue and partly offset by lower revenue from its central office segment.
Paragon REIT, formerly SPH REIT, has reported a distribution per unit (DPU) of 1.72 cents for the 4MFY2022 ended Dec 31, 2022, unchanged y-o-y compared to the same period the year before. The DPU for the 4MFY2022 is expected to be paid on March 28. For the 4MFY2022, gross revenue increased by 2.1% y-o-y to $94.6 million mainly due to atrium income as atrium activities returned after the pandemic stabilised. Net property income (NPI) increased by 2.6% y-o-y to $70.2 million. Distributable income to unitholders fell by 3.4% y-o-y to $49.5 million. Distribution to unitholders, however, increased by 0.3% y-o-y to $48.3 million. As at Dec 31, 2022, the REIT’s portfolio occupancy stood at 98.5%. It had a weighted average lease expiry (WALE) of 5.2 years by a net lettable area (NLA) of 2.7 million sq ft and 2.8 years by gross rental income (GRI). During the period, the REIT’s portfolio negative rental reversion slowed down to -4.1%, compared to the -8.4% in the 12MFY2021. For the period ended Dec 31, 2022, the REIT’s fixed debt percentage stood at 84% with an average cost of debt of 2.05%. As at Dec 31, 2022, its gearing stood at 29.8% with debt headroom flexibility.
First REIT has reported a distribution per unit (DPU) of 0.66 cents for the 4QFY2022 ended Dec 31, 2022, unchanged q-o-q since the 1QFY2022. The quarterly DPU, which also stood unchanged from the same period the year before, is payable on March 30. This brings the trust’s FY2022 DPU to 2.64 cents, 1.1% higher than the DPU of 2.61 cents in FY2021. Rental and other income for the FY2022 increased by 8.7% y-o-y to $111.3 million mainly due to the contribution from the trust’s newly-acquired properties in Japan. Distributable income rose by 24.4% y-o-y to $52.4 million. As at Dec 31, 2022, the trust’s weighted average lease expiry (WALE) stood at 12.5 years on a gross floor area (GFA) basis. As at Dec 31, 2022, the trust’s gearing stood at 38.5% with an interest coverage ratio of 5.0 times. Its debt maturity profile also improved with no debt refinancing requirements until FY2025. The trust has also pegged 59.6% of its debt on fixed rates, and entered into non-deliverable forward contracts and call spreads to hedge net cashflow from Indonesia.
Tai Sin Electric has reported earnings of $11.9 million for the 1HFY2023 ended Dec 31, 2022. This is 40.4% higher than the profit of $8.5 million during the 1HFY2022. The higher earnings came on the back of a 31.33% y-o-y growth in 1HFY2023 revenue of $229.6 million. The higher revenue was due to increases across the group’s segments, except for its Testing & Inspection (T&I) segment. Earnings per share for the 1HFY2023 stood at 2.59 cents, up from the previous year’s 1.85 cents on a fully diluted basis.
Food Empire says it expects to report a “substantially higher” profit after tax for the FY2022 ended Dec 31, 2022. The increase was mainly due to better operating profit and a one-off gain from the disposal of a non-core asset, says the group. In its 9MFY2022 results, Food Empire revealed that it made US$15.0 million ($19.9 million) from the same disposal. The group had sold its light industrial building in Toa Payoh, Food Empire Building, to a wholly-owned subsidiary of Lian Beng Group for $49.3 million in June 2022. The group is expected to release its results for the full year on or around Feb 27.
Lincotrade and Associates Holdings, formerly Fabchem China, has reported a loss of $9.5 million for the 1HFY2023 ended Dec 31, 2022, down from the $251,000 in earnings in the same period the year before. The loss was mainly due to the surge in other losses, which includes the one-off non-cash reverse takeover (RTO) expense of around $10.8 million. The amount comprises $9.6 million in RTO expenses and $1.2 million in share-based payments to the group’s sponsor and arranger. Loss before tax stood at $9.0 million. Excluding the RTO expenses, the group actually registered a profit before tax of $1.7 million. During the period, the group’s revenue surged by 119.3% y-o-y to $40.9 million. The higher revenue was due to higher revenue recognised for the commercial and showflat segments but partly offset by lower revenue from the residential segment.
Pec Limited has reported earnings of $2.9 million for the 1HFY2023 ended Dec 31, 2022, 43% lower than the earnings of $5.0 million in the corresponding period the year before. Revenue fell by 2% y-o-y to $191.0 million due to lower revenue from its maintenance services segment. Profit before tax fell 31% y-o-y to $5.6 million. In a separate announcement on the same day, Pec said that it was awarded new contracts worth some $128.0 million for various engineering, procurement & construction (EPC) and construction projects for both local and overseas companies. The contacts were awarded since July 1, 2022.
Shares of Palantir popped more than 19% in extended trading Monday after the company released fourth-quarter earnings that beat analysts’ estimates on top and bottom lines. Palantir’s revenue for the quarter increased 18% year over year, and its U.S. commercial revenue grew 12%. The software company, which is known for its work with the government, said its US commercial customer count increased 79% year over year, growing from 80 customers to 143. The company also reported its first ever quarter of positive net income on a GAAP basis, at $31 million. Palantir said it expects to report between $503 million and $507 million in revenue during its first quarter, and between 2.18 billion and 2.23 billion for the full year. In a letter to shareholders, Karp said the company expects to generate profit for the current fiscal year, which would mark Palantir’s first profitable year in the company’s history.
Roomba maker iRobot on Monday announced plans to cut around 7% of its workforce. The cuts will affect roughly 85 employees, iRobot said in its fourth-quarter earnings report. The company had 1,254 employees as of Dec. 31, 2022. For the fourth quarter, the company lost $84.1 million on $357.9 million in revenue. iRobot said it expects to see “muted” orders in the first quarter of 2023. The layoffs come after iRobot last August laid off approximately 100 employees, and closed a number of open positions, as a means of better aligning its cost structure with near-term revenue and cash flow, as well as improve profitability.
Ford Motor said Monday it will collaborate with a Chinese supplier on a new $3.5 billion battery plant for electric vehicles in Michigan, despite tensions between the U.S. and China. Lisa Drake, Ford’s vice president of EV industrialization, said the automaker will own the new facility through a wholly owned subsidiary instead of operating it as a joint venture with CATL, which several automakers, including Ford, have done with non-China partners in the U.S. She said the company will license the technology from CATL, including technical expertise. Ford declined to comment on the financial details of the licensing agreement with CATL.
Zeekr, the electric car brand of China’s Geely Automobile Holdings, is raising US$750 million from five new and existing investors in a funding round that values the brand at US$13 billion. Zeekr said in a statement on Monday (Feb 13) that proceeds from the funding round will be used to support technology research and the global expansion of the Zeekr brand. The investors include Amnon Shashua, CEO and founder of autonomous driving technology company Mobileye Global — majority owned by Intel — and the Guangzhou city municipal government’s investment arm Yuexiu Industrial Fund, both new investors in the company. Supporters of the funding round also include Chinese battery maker CATL, already among Zeekr’s backers.
Finland’s Salcomp, a supplier to Apple, is planning to more than double its workforce in India to nearly 25,000 over the next three years, a company executive said on Monday (Feb 13). Salcomp, a major supplier of chargers to the iPhone maker, is also setting up a housing complex with entertainment and education for about 15,000 people, said Gendham. Salcomp, which currently employs about 12,000 people in Chennai with 85 per cent of them being women, had reached an agreement in 2019 to take over a facility, formerly owned by Finnish telecom equipment maker Nokia, in the southern Indian city of Chennai and started operations in 2020.
Twilio on Monday announced plans to cut around 17% of its workforce, or roughly 1,500 jobs based on the 8,992 employees reported as of Sept. 30, 2022. The announcement came after the cloud communications software maker already laid off around 11% of its workforce as part of a restructuring plan in September. CEO Jeff Lawson said Twilio is forming two business units to help the company spend less and become more efficient. One unit, Twilio Data & Applications, will be led by Elena Donio, and the second unit, Twilio Communications, will be led by Khozema Shipchandler. Lawson said that when executives were looking at these two business units, it was clear the company had gotten “too big,” particularly in communications. Lawson said it is clear that Twilio needed to carry out “significant structural changes” in order to better execute its strategy.
Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR
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