DAILY MORNING NOTE | 16 February 2024

Trades Initiated in the past week

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Singapore shares soared on Thursday (Feb 15), as the upbeat mood across the region driven by domestic factors spilled over, ahead of the unveiling of its own national Budget on Friday. Shares advanced 37.62 points or 1.2 per cent to 3,176.69, following overnight gains on Wall Street, as markets shrugged off the previous day’s dampener – a hot and sticky January inflation print – as a one-off aberration. Singapore’s gross domestic product growth for the final quarter of 2023 was revised downwards by the Ministry of Trade and Industry on Thursday.

Wall Street stocks climbed again on Thursday (Feb 15), shrugging off weak retail sales data as investor bullishness lifted the market. The Commerce Department reported a bigger than expected 0.8 per cent decline in January retail sales, a pullback after the holiday season. Auto sales and gas prices also bogged down the overall performance. The Dow Jones Industrial Average finished up 0.9 per cent at 38,773.12. The broad-based S&P 500 gained 0.6 per cent to 5,029.73, while the tech-rich Nasdaq Composite Index added 0.3 per cent at 15,906.17.

Top gainers & losers

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Events Of The Week

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SG

Aircraft maintenance provider SIA Engineering posted a net profit of S$26.9 million for its third quarter ended Dec 31, 2023, more than double the S$12.8 million in the corresponding period a year earlier. Revenue for the quarter increased 40.2 per cent to S$291.7 million from S$208.1 million a year ago, reported the mainboard-listed company on Thursday (Feb 15). As global flight activities steadily return to pre-pandemic levels, demand for aircraft maintenance, repair and overhaul (MRO) services “remained healthy” in the quarter. The number of flights handled by its line maintenance unit in Singapore recovered to 94 per cent of pre-pandemic levels in December 2023, compared to 75 per cent a year earlier. But while the increase in demand was broad-based, supply-chain challenges continued to affect turnaround times and output rates at the industry level.

Singtel Innov8, a Singapore-based venture capital (VC) firm, has sold all of its 80 preference shares in Vizzio Technologies to the embattled artificial intelligence (AI) firm’s founder Jon Lee. According to filings with Singapore’s Accounting and Corporate Regulatory Authority, the transaction also removes the S$1 million in paid-up share capital that Singtel Innov8 injected into Vizzio – an amount now shouldered by Lee. Singtel Innov8 acquired the 80 shares only four months ago.

The Singapore Exchange, Bursa Malaysia, the Stock Exchange of Thailand (SET) and the Indonesia Stock Exchange (IDX) have formalised the Asean-Interconnected Sustainability Ecosystem (Asean-ISE), said the exchanges in a joint statement on Thursday (Feb 15). They also agreed on a foundational governance structure and operational blueprint for building this ecosystem. The initiative aims to implement common ESG (environmental, social, and governance) metrics in their respective data infrastructures and advance the region’s sustainable development.


US

Jeff Bezos has unloaded another 12 million shares of Amazon.com valued at US$2 billion, bringing the total sold in the past week to more than US$6 billion. He sold the latest tranche on Tuesday (Feb 13) and Wednesday. The sales are part of an already disclosed plan to dispose of as many as 50 million shares of the company he founded. In total, he’s now sold about 36 million shares. Bezos has not explained why he’s selling, but the timing of when he instituted the trading plan may provide a clue. He announced on Nov 2 that he was moving to Miami from the Seattle region.

Doordash forecast first-quarter core profit largely below estimates and reported a wider-than-expected quarterly loss on Thursday (Feb 15), signalling higher costs were offsetting the benefits from a surge in delivery orders, sending its shares down 7 per cent in extended trading. The delivery firm has been grappling with elevated labour costs as well as stiff competition from rivals UberEats and Instacart. To attract more customers, it has been heavily investing in marketing and expanding out of its core restaurant delivery business to newer categories such as grocery, convenience and alcohol.

Microsoft-backed OpenAI is working on software that can generate minute-long videos based on text prompts, the company said on Thursday (Feb 15). The software, called Sora, is currently available for red teaming, which helps identify flaws in the artificial intelligence (AI) system, as well as for use by visual artists, designers and filmmakers to gain feedback on the model, the company said in a statement. Sora is able to generate complex scenes with multiple characters, specific types of motion, and accurate details of the subject and background. It can also create multiple shots within a single video.

Alphabet’s Google is rolling out a new version of its powerful artificial intelligence model that it says can handle larger amounts of text and video than products made by competitors. The updated AI model, called Gemini 1.5 Pro, will be available on Thursday (Feb 15) to cloud customers and developers so they can test its new features and eventually create new commercial applications. Google and its rivals have spent billions to ramp up their capabilities in generative AI and are keen to attract corporate clients to show their investments are paying off. The mid-size version of the new AI model, Gemini 1.5 Pro, performs at a level similar to the larger Gemini 1.0 Ultra mode.

Nokia and Dell Technologies have agreed a partnership to help deploy private 5G networks and adapt networks to the cloud, they said in a joint statement on Thursday (Feb 15). Private 5G networks tend to be owned, operated or leased by individual organisations. Customers of Nokia AirFrame, the telecom equipment maker’s cloud-focused data centre business, will in time migrate to Dell’s PowerEdge servers that are “purpose built for modern telecom network workloads”. Nokia’s Digital Automation Cloud (NDAC), meanwhile, will become Dell’s preferred private wireless platform for certain enterprise customers’ requirements. The companies will expand on an existing partnership and work to integrate NDAC with Dell’s NativeEdge software platform, as they look “to advance open network architectures in the telecom ecosystem and private 5G use cases among businesses.

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


RESEARCH REPORTS

Thai Beverage PLC – No celebrations, yet

Recommendation: BUY (Maintained); TP S$0.67, Last close: S$0.48; Analyst Paul Chew

– Results were within expectations. 1Q24 revenue and EBITDA were at 26%/27% of our FY24e forecasts. 1Q24 EBITDA rose 1.9% YoY to Bt13.8bn.

– 1Q24 beer revenue suffered a 14% YoY decline in revenue, consistent with the 15% drop in volumes. Spirits operations were stable with revenue largely flat YoY. Margins for both businesses rebounded on lower production costs and marketing spend.

– We maintain our FY24e forecasts. Our BUY recommendation and target price of S$0.75 is unchanged. We peg our target price to 16x FY24e core earnings, the 3-year historical average. And listed associates are valued at market valuations. We remain positive on a recovery of volumes this year as economic conditions improve via government stimulus and a rebound in exports.

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