DAILY MORNING NOTE | 14 November 2023

Week 46 strategy: Comments by Singapore corporates on their outlook are largely subdued. The semiconductor sector appears the weakest. AEM is not expecting any recovery for semiconductor equipment demand until end-2024. Equipment spending enjoyed a spike in 2022 but utilisation is now low. Utilisation rates need to catch up before another spending cycle picks up. In palm oil, First Resources’ earnings were down 56% after the bumper prices a year ago. Its plantations are experiencing rainfall and any El Nino effect will likely be moderate. Palm oil prices could be firmer in 2024 as inventories taper down and production weakens. Production cost is still climbing due to higher fertiliser usage and upward pressure on minimum wages, especially post-election. In property development, APAC Realty is lowering its 2023 forecast for new home sales from 7,000-8000 to 6,000-7000. There has been a delay in the approval of new launches this year from the expected 11000 to 8000. New home sales help to spur the resale market with higher prices and marketing activity.

Selected companies did provide more positive outlooks. Riverstone is likely the most profitable glove manufacturer in the world. Earnings grew 26% YoY to RM59mn in 3Q23. Revenue momentum is coming from its branded gloves used in cleanroom environments for the electronics industry. Even its healthcare division is performing better with a customised product range. The highly competitive generic 3.2gm healthcare glove sector is also beginning to see some price stability. Outlook for CSE Global is also improving. The company is riding on a capex upcycle from infrastructure projects such as US water as urban areas expand and upgrading of power grid substations takes place as more renewable energy is introduced. Another segment is secured off-grid communication requested by government agencies and corporates. This can tap into CSE’s spectrum and radio stations.

Finally, we continue to recommend BUY for Valuetronics with a target price of S$0.70. Earnings in 1H24 jumped 42% YoY. We find huge downside protection for the share price. Around 90% of the market cap is backed by the company’s S$200mn net cash. It pays a 6% dividend yield and there are 58mn shares to be purchased under its buyback plan. We expect earnings growth to be supported by their four new customers.

Paul Chew
Head Of Research

Singapore shares ended the week in red, tracking regional losses in Asia-Pacific markets on Friday (Nov 10). Stocks sank across the region after United States Federal Reserve chairman Jerome Powell warned on Thursday that he “will not hesitate” to hike interest rates further in his quest to bring inflation to heel. Across the broader market, losers outnumbered gainers 356 to 233, with one billion securities worth S$816.4 million changing hands. Real estate investment manager CapitaLand Investment was the largest decliner, falling 3 per cent, or S$0.09, to close at S$2.94. The biggest gainer was spirits company Emperador which rose 2 per cent, or S$0.01, to S$0.51. Shares of Seatrium were the most actively traded by volume, with 146.5 million shares worth S$15.8 million changing hands.

US stocks finished mixed on Monday, as traders shook off a warning over the country’s credit rating and prepared for the release of key inflation data. On Friday, Moody’s downgraded its outlook on US debt to “negative” from “stable,” ahead of a Nov 17 deadline for a budget deal in Congress to avert a government shutdown. The Dow Jones Industrial Average was the only major index on Wall Street to increase, ticking up 0.2 per cent to 34,337.87. The broad-based S&P 500 Index slipped 0.1 per cent to 4,411.55, while the tech-rich Nasdaq Composite Index fell 0.2 per cent to 13,767.74. The closely-watched consumer price index (CPI) gauge of inflation will be published on Tuesday, shedding light on the Federal Reserve’s progress in tackling high inflation.

Top gainers & losers



Best World International posted a 1.5 per cent drop in net profit to S$21.7 million for its third quarter ended September, from S$22.1 million in the previous corresponding period. A marginal increase in revenue was offset by higher cost of sales and weaker contributions from the skincare and wellness retailer’s franchise business in China, it said on Monday (Nov 13). Earnings per share stood at S$0.05, unchanged from the same period last year. Revenue in Q3 rose 4.2 per cent to S$104.5 million, largely from Best World’s direct selling segment but was offset by poorer performance in the China market due to ongoing macroeconomic challenges. Cost of sales increased 31.8 per cent to S$21.9 million in Q3 due to higher packaging charges and overheads linked to the group’s Tuas manufacturing facility. Distribution costs for the quarter held steady at S$36.7 million as a result of the slight increase in revenue when compared to the same period last year.

Sembcorp Industries will be acquiring majority interests in various subsidiaries of Vietnam’s Gelex Group Joint Stock Company for a maximum equity consideration of about S$218 million. The move is to boost its renewables portfolio. The group announced on Friday (Nov 10) that its wholly owned subsidiary, Sembcorp Solar Vietnam, has reached an agreement to purchase majority interests ranging from 73 per cent to 100 per cent in various subsidiaries of Gelex, subject to regulatory and other approvals. Gelex is a leading industrial production and infrastructure player in Vietnam. Through this deal, Sembcorp will add 245 megawatt (MW) of operational renewable wind, solar and hydropower assets to its current portfolio in Vietnam, allowing it to expand its renewables presence in the market to over 450MW. Upon completion of the acquisition, the group’s gross renewables capacity will increase to 12.2 gigawatts in total.

Frasers Property posted a net loss of S$74 million for the six months ended Sep 30, from a net profit of S$741.8 million a year earlier. The net loss came amid an 8.8 per cent decline in revenue to S$2 billion for the period, from S$2.2 billion a year before. In its results release on Friday (Nov 10), the company attributed the fall in revenue to lower contributions from residential projects in Singapore and from industrial projects in its industrial segment. The group also recorded net fair-value losses of S$441.8 million for the half year, as compared to net fair-value gains of S$902.3 million in the same period last year. These net losses were attributed to net fair-value losses from the group’s industrial and logistics assets in Australia, Europe and the UK, as well as commercial assets in the UK. Loss per share for the half-year period stood at 1.9 Singapore cents, compared to earnings per share of 18.9 cents over the same period a year earlier. For the full year, Frasers Property saw its net profit fall 85.9 per cent to S$123.2 million as revenue rose 1.8 per cent to S$3.9 billion.


ExxonMobil plans to begin producing lithium in Arkansas, marking an entry into the provision of a key component of large-scale batteries. It is the first time the oil giant has invested in a major non-fossil fuel extraction project in recent history. The company acquired rights to 120,000 acres in the Smackover formation in southern Arkansas and plans to begin output of lithium by 2027, the Texas-based company said on Monday (Nov 13). The project will make Exxon a “leading supplier for electric vehicles by 2030”, it added. Exxon is one of several oil and gas companies looking to expand into lithium, which would help provide a foothold in the rapidly growing market for energy storage. The metal’s use in electric vehicle batteries would also help mitigate losses from the expected reduction in petrol and diesel demand over the coming decades. Lithium is not geologically scarce like fellow battery metals cobalt and nickel, but mining high-grade quantities at scale is a major challenge. Exxon chief executive Darren Woods has said producing it from saltwater such as brine could be both cheaper and greener than mining, currently the most common production method.

Boeing is closing in on a major order for its 777X wide-body model from Emirates, according to people familiar with discussions, in what would provide an important boost to a programme that’s years behind schedule. Already the biggest buyer of the wide-body aircraft, Emirates is poised to order a high double-digit number of the 777X, said the people, asking not to be identified discussing private negotiations. As part of the deal, regional affiliate FlyDubai could take on some smaller 787 Dreamliners, the people said. Boeing and Emirates declined to comment. An accord with the biggest international airline would be a vital endorsement of Boeing’s newest and largest aircraft, which has struggled to pull in sales as it remains behind schedule for entry into service. Any additional purchase of the plane, which comes with novel folding wing tips, would add to a backlog of 115 777X that Emirates previously ordered. Other operators likely to announce major commitments at the event include Turkish Airlines, which is close to an order for about 350 Airbus SE aircraft, including both narrow and wide-body jets, people close to the talks said earlier. Expanding its fleet with wide-body aircraft such as the 787 would mark a strategic shift for FlyDubai, which now relies on the Boeing 737 aircraft for shorter routes around the Middle East, parts of Africa and as far as Malaysia, according to the carrier’s website.

Chinese chipmaker Yangtze Memory Technologies Co (YMTC) has filed a lawsuit against US rival Micron Technology alleging infringement of eight of its patents. According to the lawsuit, Micron turned to YMTC’s patented technology to fend off competition from the Chinese company, and to gain and protect market share. It said Micron was not paying its fair share to use the patented inventions. “While we cannot discuss the specifics of pending litigation, I can confirm that YMTC recently filed a lawsuit in the US District Court for the Northern District of California against Micron Technology, for infringement of our company’s patents related to the design, manufacture and operation of 3D NAND technology,” YMTC said on Monday (Nov 13). “We are confident that this matter will be resolved swiftly.” Micron declined to comment on pending litigations. Micron makes DRAM chips and NAND flash memory chips, and competes with South Korea’s Samsung Electronics and SK Hynix as well as Japan’s Kioxia, a unit of Toshiba. YMTC is a much smaller rival which was last year barred by the US from buying certain American components. The US in recent years has increased restrictions on exporting chipmaking technology to China on the grounds of security.

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


CapitaLand Investment Limited – Growing recurring income streams

Recommendation: Buy (Maintained), Last Done: S$3.03

Target price: S$3.68, Analyst: Darren Chan

– 9M23 revenue of S$2.085bn (-3% YoY) was slightly below our estimates, forming 69% of our FY23e forecast.

– Fee-related revenue is on the rise, driven by a 31% increase in lodging management fees and a 9% growth in recurring fund management fees. However, this is offset by a significant decrease of 64% in event-driven fees. Including embedded funds under management (FUM) of S$10bn that is pending deployment, CLI has reached its 2024 FUM target of S$100bn. Total recurring income for 9M23 grew by 9% YoY.

– Maintain BUY with an unchanged SOTP TP of S$3.68. No change in our estimates. Our SOTP-derived TP of S$3.68 represents an upside of 25.3% and a forward P/E of 18x. We like CLI for its robust recurring fee income stream and asset-light model. We expect the lodging business to continue to improve with higher RevPAU (9M23: +25%) and more lodging units turning operational (>20 properties to be opened in 4Q23).

Oversea-Chinese Banking Corp Ltd – Higher NII and fee income raise profits

Recommendation: Buy (Maintained), Last done: S$12.97,
TP: S$14.96, Analyst: Glenn Thum

– 3Q23 earnings of S$1.81bn were slightly above our estimates. It came from higher net interest income and higher fee income offset by lower insurance income and higher allowances. 9M23 PATMI was 77% of our FY23e forecast.

– NII grew 17% YoY as NIM rose 21bps YoY to 2.27% and loan growth declined 2% YoY. Total non-interest income rose 4% YoY as higher fee income was offset by lower insurance income while trading income was flat. Allowances rose 19% due to higher SPs as credit costs increased 4bps YoY to 17bps.

– Maintain BUY with an unchanged target price of S$14.96. Our FY23e estimates remain unchanged. We assume 1.29x FY22e P/BV and ROE estimate of 10.8% in our GGM valuation. In FY24, we anticipate NII growth driven by stable NIMs and rising loans amid stabilised rates, with fee income recovery boosting earnings. OCBC is our preferred pick among the three banks due to attractive valuations and dividend yield of 6.6%, buffered by a well-capitalised 14.8% CET 1, and fee income recovery from China’s re-opening.

Singapore Banking Monthly – Higher NII hampered by allowances

Recommendation: Overweight (Maintained)

Analyst: Glenn Thum

– October’s 3M-SORA was up 2bps MoM to 3.72% and was 3bps higher than the 3Q23 average of 3.69%. 3M-HIBOR was up 27bps MoM to 5.22%.

– 3Q23 bank earnings were slightly above expectations. PATMI rose 15%, supported by NII growth of 14% YoY. Guidance for FY23e remains unchanged with NIMs stable QoQ at around 2.10-2.25% and loans growth maintained at low to mid-single digit.

– Singapore domestic loans dipped 6.1% YoY in September, below our estimates. The loan decline was lower than in the previous month. The CASA balance rose slightly to 18.9% (Aug23: 18.8%).

– Maintain OVERWEIGHT. We remain positive on banks. Bank dividend yields are attractive at 5.7% with upside surprise in dividends due to excess capital ratios and push towards higher ROEs. SGX is another major beneficiary of higher interest rates (SGX SP, BUY, TP S$11.71).

Valuetronics Holdings Ltd- Returning to growth, trading around 90% cash

Recommendation: BUY (Maintained); TP S$0.70, Last close: S$0.545; Analyst Paul Chew

– 1H24 PATMI grew 42% YoY to HKD82.1mn, and above our expectations. Revenue and PATMI were 42%/62% of our FY24e estimates. Revenue decline was due to lower component prices. The company announced a special dividend of HKD4 cents in addition to interim HKD4 cents.

– Earnings growth was driven by (i) gross margin expansion from lower component prices and a weaker renminbi; (ii) an increase in interest income; and (iii) lower operating expenses, especially depreciation.

– We raise our FY24e PATMI forecast by 15% and maintain our BUY recommendation. Our target price is raised from S$0.61 to S$0.70. We peg our target price to the industry valuation at 11x PE. With the current cash hoard of HKD1.143bn (or S$199mn), around 90% of the market capitalisation is net cash. There is visibility of earnings growth over the next two years as Valuetronics’ four new customers ramp-up production. The company trades at a dividend yield of 6% and has an outstanding share buyback plan of HKD182mn (or approx. 58mn shares at current share price).

Singapore Telecommunications Ltd – Aggressively restructuring to reality

Recommendation: BUY (Maintained); TP S$2.80, Last close: S$2.36; Analyst Paul Chew

– 1H24 revenue and EBITDA were within our expectations at 46% of our FY24e forecast. EBITDA declined 5% YoY to S$1.78bn due to an 11% contraction in Optus earnings. Underlying net profit rose 11% to S$1.12bn despite a 4% point drag on currency.

– Singtel increased interim dividends by 13% to 5.2 cents and revised higher its payout ratio from 60-80% to 70-90%. A 3-year programme to remove S$600mn (of S$200mn p.a. FY24-26) of indirect cost was announced.

– We maintain BUY with an unchanged target price of S$2.80. Our earnings are largely unchanged before incorporating exceptional items. We believe Singtel is making significant strides in restructuring the entire group, monetising assets, and shedding unprofitable entities. Mobile competition in Australia is not abating and Optus needs to realign its cost structure to this reality. Underlying net profit in 1H24 fell 69% YoY to A$13mn.

Sasseur REIT – Record occupancy and robust outlet sales

Recommendation: BUY (Maintained), Last Done: S$0.67, Target price: TP: S$ 0.90, Analyst: Liu Miaomiao

– 3Q23 results were within expectations. 9M23 rental income in SGD/RMB terms was 75%/75% of our FY23e estimates. No change in SASSR’s FY23 guidance.

– Outlet sales in 3Q23 surged 15.8% to RMB1.1bn due to the success of a series of sales events. EMA rental income was lifted by 6.5% YoY in RMB terms. Depreciation of RMB by 8.2% YoY and higher financing cost continue being a drag for SASSR.

– EMA rental income for 3Q23 in SGD terms slid by 1.5% YoY, and DPU decreased by 17.7% (S$2.1m one-time tax refund in 3Q22; without that, DPU would be down 9.7% YoY). 9M23 DPU of S$4.834 cents was in line with our expectations and formed 75% of our FY23e forecast.

– We reiterate our BUY recommendation with an unchanged DDM TP of S$0.9. We expect the strong value offers to offset the seasonal weakness in 4Q23 and achieve full-year sales growth of 29%. FY23e-FY24e DPU forecast is for 6.45 – 6.61 Singapore cents.

SATS – A weary recovery

Recommendation: REDUCE (Downgraded) Last Done: S$2.56, Target Price: S$2.23; Analyst: Peggy Mak

– The results were in line with our expectations, though the mix was disappointing. Food solutions remained in the red with operating loss of S$0.9mn despite recovery in revenue to pre-Covid levels. WFS contributed operating profit of S$73mn for the first time, or operating margin of 5.1%. 2Q24’s net profit turned around to S$22.2mn (1Q24: net loss S$29.9mn). This was also due to lower depreciation charge of about S$20mn.

– EBIT barely covered the higher interest expenses on debt incurred for the acquisition. Net debt as at end Sep 2023 was S$2.3bn or net gearing of 0.9x.

– Maintain our earnings forecast, but downgrade to REDUCE (from NEUTRAL) and a lower TP of S$2.23 (prev. S$2.51), to factor in higher working capital at WFS.

ST Engineering – Defence and security will move to the forefront

Recommendation: BUY (Maintained) Last Done: S$3.76, Target Price: S$4.50; Analyst: Peggy Mak

– 3Q23 revenue growth of 8.7% YoY was in line with our FY23e expectations. No detailed financial data was provided. Order wins of S$2.2bn were lower than the average of S$4.6bn-4.8bn, which could be due to the timing of the tender closure. The orderbook stood at a high S$27.5bn (Jun 2023: S$27.7bn).

– Commercial aerospace led the growth, despite no booking of aircraft sale. Recovery in aviation volume and tight hangar capacity underpin demand and rates. However, manpower remains a constraint.

– Management lowered its guidance for the Urban Solutions and Satcom division (USS). It expects a bigger severance provision for Satcom of S$7mn for FY23e (1H23: S$2mn), resulting in YoY EBIT decline at USS.

– We maintain our earnings forecast and BUY recommendation, and TP of S$4.50.

PSR Stocks Coverage



For more information, please visit:


Upcoming Webinars

Corporate Insights by Sasseur REIT

Date & Time: 15 Nov 2023 | 12pm – 1pm

Register: https://tinyurl.com/464ndms7

Corporate Insights by Keppel REIT

Date & Time: 16 Nov 2023 | 12pm – 1pm

Register: https://tinyurl.com/bdzcs5jm

Corporate Insights by NIO [NEW]

Date & Time: 18 Nov 2023 | 10pm – 12pm

Register: https://tinyurl.com/8t44wn7d

Corporate Insights by CSE Global

Date & Time: 22 Nov 2023 | 12pm – 1pm

Register: https://tinyurl.com/55rwwvxk

Corporate Insights by First REIT

Date & Time: 28 Nov 2023 | 12pm – 1pm

Register: https://tinyurl.com/58ynewt4

POEMS Podcast:

Research Videos

Weekly Market Outlook: Apple, PayPal, Airbnb, Venture Corp, CLAS, Tech Analysis, SG Weekly & More!
Date: 6 November 2023
Click here for more on Market Outlook.
Sign up for our webinars here, and be among the first to receive economy and market updates.


Phillip Research in 3 minutes: #29 Keppel Corporation; Initiation
Click here for more on Phillip in 3 mins.

Follow our Socials

Facebook Social Icon Instagram Icon Twitter Social Icon Youtube Social Icon Linkedin Social Icon TikTok Social Icon Spotify Social Icon

Join our Singapore Equity Research Community on POEMS Mobile 3 App for the latest research reports, market updates, insights and more

Click to join!


The information contained in this email and/or its attachment(s) is provided to you for information only and is not intended to or nor will it create/induce the creation of any binding legal relations. The information or opinions provided in this email do not constitute an investment advice, an offer or solicitation to subscribe for, purchase or sell the e investment product(s) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise. You may wish to seek advice from an independent financial adviser before making a commitment to purchase or investing in the investment product(s) mentioned herein. In the event that you choose not to do so, you should consider whether the investment product(s) mentioned herein is suitable for you. PhillipCapital and any of its members will not, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached to this email. The information and/or materials provided 揳s is?without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials.

Confidentiality Note

This e-mail and its attachment(s) may contain privileged or confidential information, which is intended only for the use of the recipient(s) named above. If you have received this message in error, please notify the sender immediately and delete all copies of it. If you are not the intended recipient, you must not read, use, copy, store, disseminate and/or disclose to any person this email and any of its attachment(s). PhillipCapital and its members will not accept legal responsibility for the contents of this message. Thank you for your cooperation.

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you


This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  


Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com