DAILY MORNING NOTE | 14 September 2023

Singapore shares edged up 0.1 per cent on Wednesday (Sep 13). The top performer was UOB which rose 1.2 per cent or S$0.33 to S$28.63 while the top loser was Yangzijiang Shipbuilding, shedding 1.7 per cent or S$0.03 to S$1.69. The other local banks also ended the day in the black. DBS rose 0.8 per cent or S$0.28 to S$33.54, while OCBC climbed 0.5 per cent or S$0.06 to S$12.58.

Wall Street stock indices moved in opposite directions on Wednesday. Consumer inflation accelerated to 3.7 per cent in August, up from 3.2 per cent in July, an increase fueled by higher petrol prices. The Dow Jones Industrial Average declined 0.2 per cent to 34,575.53. But the broad-based S&P 500 added 0.1 per cent at 4,467.44, while the tech-rich Nasdaq Composite Index climbed 0.3 per cent to 13,813.59.

Top gainers & losers

Factsheets


EVENTS OF THE WEEK

Factsheets


SG

Olam Group has confirmed that it has paid a bond to secure the release of its director in Nigeria. Olam Nigeria had informed the group that it had posted a bond for its senior vice president, Prakash Kanth, in relation to the fraud allegations made to secure his continued cooperation with any legitimate requests from relevant Nigerian authorities for information or assistance. According to the Daily Nigerian, the amount for the bond was $1 billion Nigerian dollars ($1.9 million).

The Singapore Exchange Group (SGX) has reported a total securities market turnover value of $23.6 billion for the month of August, 2.88% lower y-o-y, although the figure was up by 10% on a m-o-m basis. During the month, the securities daily average value was unchanged y-o-y at $1.1 billion but is up 5% m-o-m. Derivatives volume rose strongly in August as more international investors turned to SGX’s platform to manage risk amid China’s efforts to boost its economic recovery. Derivatives traded volume increased 16% in August on both a m-o-m and y-o-y basis to 23.7 million contracts, with broad-based gains across equities, foreign exchange (FX) and commodities. Derivatives daily average volume (DAV) climbed 7% m-o-m to 1 million contracts.

Cordlife Group has updated that a possible transaction announced earlier in relation to its shares is not on the table anymore. The mainboard-listed cord blood banking company, in a bourse filing on Wednesday (Sep 13), said it had been notified that the confidential discussions between Cradle Investments and the third party in relation to a possible transaction has ceased.

XMH Holdings Ltd provided a quarterly update on the financial results, future direction and other material development that may have a significant impact on the Group’s financial position. Revenue, cost of goods sold and gross profits for Q1FY2024 increased by about 44.6%, 27.0% and 105.0% respectively as compared with the corresponding quarter in FY2023. This was mainly due to significant increase in revenue from Distribution segment with better margin. The increase was attributable to continual demand for engines to build tugboats which was in turn due to the increase in demand for tugboat transportation. However, the Group remains cautious in terms of its outlook given the challenging environment. The Group will continue to focus on further improving its operational capabilities, strengthening its existing business and cost-tightening measures across its business segments. In the meantime, the Group has also been considering and evaluating its options to fulfil the market capitalisation criterion to exit the watch-list. On many accounts, market capitalization is very much dependent on the prevailing market forces so much so that even corporate actions, if taken, do not guarantee success in achieving this. As such, the Group will adopt a holistic approach and will take into account all relevant factors and market conditions before making a decision for the benefit of shareholders. In the meantime, what the Group can do is to continue to focus and strive for profitability which it has managed to achieve in the last three financial years.

Singapore’s sovereign wealth fund GIC is considering selling its stake in the Philippines’ Emperador, the world’s biggest brandy manufacturer and owner of scotch brands including Jura and The Dalmore, according to people with knowledge of the matter. The state-owned firm has had talks with financial advisers about the possibility of an eventual divestment, said the people, asking not to be identified as the process is private. GIC hasn’t decided whether to pursue a sale and a deal isn’t imminent, some of the people said. GIC owns about 12 per cent of Manila-based Emperador via its private equity arm Arran Investment, the people said. Based on the brandy maker’s current market value, the stake is worth S$950 million. GIC originally invested in Emperador via Arran in 2014, according to a stock exchange filing at the time.

All Singapore REITs (S-REITs) have made climate-related disclosures in their latest sustainability reports, with over half issuing such disclosures for the first time. However, S-REITs are falling short of their global peers in terms of setting metrics and targets for decarbonisation, say EY and the REIT Association of Singapore (REITAS). The findings, released on Sept 13, are part of the “Climate risk disclosures in real estate investment trusts (REITS)” study, which reviewed the coverage and quality of climate-related disclosures by the 40 S-REITs traded on the Singapore Exchange (SGX), based on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Singapore Exchange Regulation (SGX RegCo) has mandated climate reporting for all issuers on a “comply-or-explain” basis, effective for financial years starting on or after Jan 1, 2022.

US

Inflation posted its biggest monthly increase this year in August as consumers faced higher prices on energy and a variety of other items. The consumer price index, which measures costs across a broad array of goods and services, rose a seasonally adjusted 0.6% for the month, and was up 3.7% from a year ago against estimates for 0.6% and 3.6%, the U.S. Department of Labor reported Wednesday. The two numbers were up 0.2% and 3.2% in July. However, excluding volatile food and energy, the core CPI increased 0.3% and 4.3%, respectively, against estimates for 0.2% and 4.3%. Energy prices fed much of gain, rising 5.6% on the month, an increase that included a 10.6% surge in gasoline. Food prices rose 0.2% while shelter costs, which make up about one-third of the CPI weighting, climbed 0.3%.

Arm, the chip design firm that supplies core technology to companies including Apple and Nvidia, priced its initial public offering at US$51 a share. Arm’s fully diluted market cap, which includes outstanding restricted stock units, is over US$54 billion at the US$51 offer price. The company said in a press release that it will start trading on Thursday under the symbol “ARM.” The U.K.-based company is listing at least 95.5 million American depository shares on the Nasdaq, and SoftBank, its current owner, will control about 90% of the company’s outstanding shares. The offering is at the top of Arm’s expected price range of US$47 to US$51. Arm would carry a price-to-earnings multiple of about 105, based on profit in the latest fiscal year.

Apple said on Wednesday its iPhone 12 model was certified by multiple international bodies as compliant with global radiation standards after a French watchdog ordered it to stop selling the handset on the grounds it breaches European exposure limits. The ANFR radiation watchdog told Apple on Tuesday to halt sales of iPhone 12s in France after tests which it said showed the phone’s Specific Absorption Rate (SAR) – a measure of the rate of radiofrequency energy absorbed by the body from a piece of equipment at 5.74 watts per kilogram was higher than the European standard of 4.0 watts per kilogram. Apple said it had provided ANFR with multiple Apple and independent third-party lab results proving its compliance with all applicable SAR regulations and standards in the world. It said it was contesting the results of AFNR’s review and would continue to engage with the agency to show it is compliant.

Netflix leadership does not see meaningful impact in the near-term from its advertising tier. Chief Financial Officer Spence Neumann said the streaming service saw a “muted” cancelation reaction after it cracked down on password sharing. An estimated 100 million people were not paying for a subscription and taking advantage of family and friend accounts. “Revenue is building,” Neumann said, and will continue to do so through 2024. Those “spinoff” subscribers, however, are trending more towards ad-free viewing, which isn’t ideal for building up an ad business” the executive said at a Bank of America conference. The executive also said games remain a relatively small percentage of the content budget, and won’t see a big impact on growth in the short-term. Finally, he doesn’t see sports being profitable.

Alibaba said on Wednesday (Sep 13) it would open its artificial intelligence (AI) model Tongyi Qianwen to the public, in a sign it has gained Chinese regulatory approval to mass-market the model. The Alibaba Cloud Intelligence Division said organisations including OPPO, Taobao, DingTalk and Zhejiang University have reached cooperation agreements to train their own large language models or develop language model applications based on Tongyi Qianwen, according to a post published on its WeChat account. The post also said that in the near future, an open source version of the large language model would become available for free commercial use “by the whole society”.

Tencent Holdings has secured the rights to develop and publish the mobile edition of Bandai Namco Holdings’ Blue Protocol, betting on one of this year’s most anticipated multiplayer games to rekindle international growth, according to people familiar with the matter. The world’s biggest games company has assembled a developer team for the project and holds the global distribution rights, the sources said, asking not to be identified discussing private plans. It’s not clear when Tencent will debut Blue Protocol’s mobile game, which could take a year or more for development. The PC edition of the game launched in Japan in June. Blue Protocol is the latest large-budget online role-playing game that’s free to play and relies on in-game purchases for monetisation. That’s proven a lucrative business model for established titles such as League of Legends, from Tencent-owned Riot Games. In its first week, the game attracted 600,000 players – including 200,000 simultaneous connections at its peak – marking the fastest launch for any Bandai Namco domestic PC online game.

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


RESEARCH REPORTS

Arm Holdings Limited – IPO Fact Sheet

Analysts: Jonathan Woo, Maximilian Koeswoyo

– Offering 95,500,000 shares at US$47-US$51 per share for a total offer amount of US$5.2bn. Largest IPO valuation of ~US$55bn with 1,026,078,866 shares outstanding.

– ARM mainly generates revenue from licensing and royalty fees from its semiconductor architecture design. It does not sell or manufacture any semiconductors.

– Top end of IPO range will put ARM’s LTM P/S ratio at 20x, with a LTM P/E ratio of 105x. Peer valuation of Broadcom and Qualcomm are 31x and 10x LTM P/E, respectively.

**Update 14/9/23: ARM has priced its IPO at US$51 per share.

PSR Stocks Coverage

Factsheets

Factsheets


For more information, please visit:

https://www.stocksbnb.com/singapore-stocks-coverage/


Upcoming Webinars

Guest Presentation by CNMC Goldmine Holdings Limited

Date & Time: 15 Sept 2023 | 12pm – 1pm

Register: https://tinyurl.com/2xp3fy7c


Guest Presentation by PropNex Limited

Date & Time: 19 Sept 2023 | 12pm – 1pm

Register: https://tinyurl.com/4subthpr


Guest Presentation by ComfortDelGro Corporation Limited

Date & Time: 20 Sept 2023 | 12pm – 1pm

Register: https://tinyurl.com/mr27xw2r


Guest Presentation by Centurion Corporation Limited [NEW]

Date & Time: 3 Oct 2023 | 12pm – 1pm

Register: https://tinyurl.com/ye32bdzc


Strategy & Stock Picks (SG Market) [NEW]

Date & Time: 7 Oct 2023 | 10am – 12pm

Register: https://tinyurl.com/ycy2ezwu


Strategy & Stock Picks (US Market) [NEW]

Date & Time: 12 Oct 2023 | 7.30pm – 9pm

Register: https://tinyurl.com/ycy2ezwu


Guest Presentation by Keppel Pacific Oak US REIT (KORE) [NEW]

Date & Time: 19 Oct 2023 | 12pm – 1pm

Register: http://tinyurl.com/5n8kh8ta


POEMS Podcast:

Research Videos

Weekly Market Outlook: Suntec REIT, Food Empire Holdings, Tech Analysis, SG Bank, SG Weekly & More!
Date: 11 September 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 MINS

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!

Disclaimer

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

IMPORTANT INFORMATION

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