Daily Morning Note – 14 Sep 2020
PHILLIP SUMMARY
Stocks were on course for a cautious start to the week as investors assessed valuations in the wake of the steep slide in tech giants and looked ahead to a Federal Reserve policy meeting that could provide clues on the outlook. S&P 500 Index futures open stronger in Asia. The dollar edged up. Currency markets saw muted moves as trading began Monday. Global stocks are coming off the back of the first consecutive weeks of declines since March, with futures pointing to a mixed start in Asia. September has brought with it a shattering of calm that had largely prevailed in the previous five months, with tech stocks leading losses.
With the Fed expected this week to maintain its dovish stance on policy, investors will continue to monitor signs the global economy is recovering from the pandemic. Oil was flat.
BREAKING NEWS
Mapletree Industrial Trust announce the proposed acquisition of a data centre and office located in Virginia, United Stated. The acquisition will cost between US$200.6mn and US$262.1mn. The Property is fully leased on a triple net basis with a balance lease term of more than five years to a multinational company with strong credit standing. The target completion for the Proposed Acquisition is expected to be in the first quarter of 2021.
Keppel REIT has entered into an agreement with the Goodman Group to acquire a 100% stake in Pinnacle Office Park, a freehold Grade A commercial property comprising three office buildings located within Macquarie Park in Sydney. The agreed property value is A$306.0 million. The asset has an initial NPI Yield of 5.24%. Pinnacle Office Park has a total net lettable area (NLA) of 35,132 sm (378,165 sf) across three office buildings.
Even as Covid-19 fuels economic headwinds, Chasen Holdings is capitalising on emerging trends to drum up business for certain business segments. Its third party logistics (3PL) segment, for instance, has seen a spike in revenue during the pandemic owing to the crunch in the air cargo market, which in turn has fuelled demand for cross-border land freight. The latter is cheaper than transporting cargo by air and faster than the sea route. As a result of the shift towards 3PL, there has also been a bump in demand for warehouses. Chasen is planning to expand its warehouse in Penang by 128,000 square feet as well as add 22 trucks to its fleet in Malaysia, Thailand and Vietnam by end-2021.
Catalist-listed food caterer, Neo Group, remains on the lookout for mergers and acquisitions (M&As) deals. Neo Group has been the largest caterer in town since 2011, with a 20.5 per cent market share in 2019. The group has set its sights on up to a 50 per cent market share by capturing more brands under its growing portfolio of companies. To date, the group has 16 brands under its catering arm. Other than food catering, its other main business segments are in food manufacturing, food retail, and supplies and trading.
There were 14 primary-listed stocks conducting share buybacks over the five sessions with a total consideration of S$22.0 million, up from the S$6.0 million for the preceding week. Yangzijiang Shipbuilding Holdings, Keppel Corporation, First Resources, Silverlake Axis and Global Investments led the consideration tally. The five trading sessions again saw approximately 90 changes in director interests and substantial shareholdings, filed for close to 40 primary-listed stocks. This included 19 company director acquisitions, with two disposals filed, and substantial shareholders filing 12 acquisitions and six disposals.
A pivate fund managed by CapitaLand is understood to be the frontrunner for ABI Plaza, a 12-storey freehold office building in the Tanjong Pagar area. Talk on the grapevine is that an entity linked to the private fund is in exclusive discussions to buy ABI Plaza at about S$206 million. This is significantly lower than the guide price of above S$280 million, when the property was put on the market in June. The building, on a freehold site area of 20,338 square feet with triple frontages along Keppel, Tanjong Pagar and Lim Teck Kim roads, is owned by listed MYP Ltd.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
TECHNICAL PULSE
Top Glove Corporation Bhd
Analyst: Chua Wei Ren
Recommended Action: Technical BUY
Top Glove (SGX: BVA) correction and rebound has played out exactly based on our report on 31st August. Based on the recent technicals, we believe that prices will continue to edge higher.
>> Read more technical reports
RESEARCH REPORTS
Singapore REITs Monthly – From defensive to offensive – More acquisitions to come
Recommendation: OVERWEIGHT (Maintained), Analyst: Natalie Ong
– FTSE S-REIT Index gained +1.8% MoM in September. Strongest gains observed from the hospitality subsector (+6.9%) while weakest performance in the industrial subsector (-7.1%), likely due to profit taking.
– FTSE REIT Index has been trading sideways for the past 4 months. Sector yield spread of 354bps over the benchmark 10-year SGS (10YSGS) yield was at the +0.11 standard deviation (SD) level.
– Maintain OVERWEIGHT on SREITs sector with sub-sector preferences in Office and Industrial portfolios.
SG Bonds Weekly – Week 38
Credit Analyst: Timothy Ang
– The Federal Reserve sets interest rate policy on Thursday. Following the groundbreaking policy changes at the end of August meeting, this FOMC meeting will be focused on how to put the new policy into action. In anticipation of higher inflation, we are tilted towards shorter tenor bonds due to the risk of longer term interest rates rising.
HK Reports – Read up on our Hong Kong reports here
RESEARCH VIDEOS
Webinar Of The Week
Market Outlook: (PSR) MMH, FCT, Proposed Merger of CMT and CCT, SG Banks, Technicals, SG Weekly and more
Date: 7 September 2020
Updates summarised in 3 minutes
Phillip Research in 3 minutes: #25 – Prime US REIT; Initiation
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