Daily Morning Note – 15 May 2020

PHILLIP SUMMARY

Wall Street surged on Thursday as investors weighed the prospect of economic recovery against bellicose remarks from President Donald Trump regarding US-China trade and a whistleblower’s dire warnings about the US response to the coronavirus pandemic.

While all three major US stock indexes ended the session solidly higher, they see-sawed for much of the day, with reopening state economies and the possibility of additional stimulus doing battle with revived trade war fears and bleak economic data.

BREAKING NEWS

Centurion Corp on Thursday posted higher first-quarter revenues on the year for its key student and worker accommodation businesses, but flagged that there have been disruptions due to Covid-19 and that operating costs are set to rise.

Jumbo on Thursday recorded a 71.5 per cent year-on-year fall in half-year net profit to S$2.1 million amid the novel coronavirus outbreak, calling the past few months the “most challenging” since the group was established 33 years ago.

Best World International, which remains under a bourse probe over its sales model in China, on Thursday recorded a 28.6 per cent year-on-year rise in its first-quarter net profit to S$13.3 million.

Singapore Press Holdings (SPH) has launched a call for proposals for short-form video content from all media or production companies.

The chairman of the House Transportation and Infrastructure Committee on Thursday urged US airlines to maintain at least one seat between all passengers and cap seating at 67 per cent of capacity on narrow-body airplanes to address the coronavirus pandemic.

The New York Stock Exchange (NYSE) trading floor will partially reopen on May 26, over two months after it closed down to control the spread of the coronavirus, NYSE president Stacey Cunningham said in an opinion piece in the Wall Street Journal.

Asia-focused insurer AIA Group reported a 27 per cent drop in quarterly new business value on Friday for the first time since listing in Hong Kong in 2010, hit by disruptions caused by the Covid-19 pandemic in its main markets.

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

TECHNICAL PULSE

Dairy Farm International Holdings Ltd

Recommended Action: Technical SELL

Dairy Farm (SGX: D01) has been on a downtrend since January 2019.

>> Read more technical reports

RESEARCH REPORTS

EC World REIT – Income visibility from master leases

Recommendation: BUY (Maintained), Last Done: S$0.66

Target Price: S$0.77, Analyst: Natalie Ong

– 1Q20 revenue and DPU came in 18.2% and 26.7% below our forecasts due to the one-off RMB23.7mn (S$4.6mn) of rental rebates given to tenants, and 5% retention of distributable income, excluding which, revenue and DPU would have been in line.

– High income visibility due to portfolio occupancy of 99.1% and WALE of 3.8 years.

– Maintain BUY with lower TP of S$0.77. Our TP translates to a FY20e DPU yield of 8.2%

IREIT GLOBAL – Visibility amidst uncertainty

Recommendation: BUY (upgraded), Last Done: S$0.660

Target Price: S$0.770 , Analyst: Tan Jie Hui

– IREIT did not release any financial results for 1Q20 as they move to semi-annual reporting with effect from FY20. However, IREIT has provided a business update for the quarter. The next financial reporting will be for the half-year period ending 30 June 2020.

– We still favor IREIT for its income visibility and stability. Overall occupancy remained stable QoQ at 94.7% with 95% of the leases locked-in till 2022. Portfolio WALE stands at 3.9 years.

– FY20e yield remains attractive at 8.2%; Upgrade to BUY at a lower target price of S$0.770.

>> Read more research reports

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Market Outlook: (PSR) DBS, UOB, OCBC, FCT, CMT, CCT, Ascendas REIT, ART, CAPL, SSG, STRH, NLT, VMS & Phillip Singapore Weekly

Date: 11 May 2020

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