Daily Morning Note – 16 January 2019


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Stocks ended higher on Tuesday thanks to a rally in tech equities and reports of further stimulus measures from China. Stocks received a boost after China’s Ministry of Finance said it would cut taxes and increase infrastructure spending, following lackluster trade data earlier this week. Tech equities were buoyed by climbing shares for Netflix Inc. after the video-streaming firm said it would raise prices for U.S. subscribers.

The S&P 500 rose 1.1% to end around 2,610, based on preliminary numbers. The Dow Jones Industrial Average advanced 155 points, or 0.6%, to 24,065. The Nasdaq Composite climbed 1.7% to finish near 7,024. U.S. equity benchmarks rose to key levels, with the Nasdaq ending above its 50-day moving average for the first time since early October.

Kansas City Fed President Esther George said the central bank likely should “pause” from rate hikes until it assesses conditions. She mentioned that a pause in the normalisation process would give the Fed time to assess if the economy “is responding as expected with a slowing of growth to a pace that is sustainable over the longer run.”

Source: CNBC, MarketWatch


First Reit – Challenging Times

Recommendation: Neutral (Maintained)

Target Price: S$0.88, Analyst: Tara Wong

– FIRT will be re-positioned to identify more strongly with the new co-Sponsor, OUELH.

– No compromise on paying distributions to unitholders, against the backdrop of extended receivables days.

– Price overhang as fund-raising is likely in the near-horizon in order to execute portfolio diversification strategy of acquiring from new co-Sponsor, OUELH.

– De-rating catalyst: expiring leases likely to be re-negotiated with a lower quantum and/or on IDR-denominated terms (currently on SGD-denominated terms).

– Maintain Neutral; new target price of $0.88 (previously $1.30).


ST Engineering announced after trading hours on Tuesday that its aerospace arm secured new contracts worth S$450 million in the fourth quarter of 2018 for services including maintenance and modification for wide-ranging aircraft parts from the airframe to components.This brings the total value of the contracts to S$2.06 billion for 2018.

Sembcorp Marine’s subsidiaries Sembcorp Marine Repairs and Upgrades, and Semb-Eco on Tuesday entered into a share swap agreement with Ecospec Global Technology and their shareholders Chee Hwee Hong and Neonlite Investments. Some 10 million shares representing 20 per cent of the issued share capital of Ecospec Global Technology will be exchanged for 23.8 million shares representing 45 per cent of the issued share capital of Semb-Eco.

JP Morgan Chase posted quarterly profit below analysts’ expectations for the first time in 15 quarters as whipsawing markets late last year impacted bond trading desks. The bank generated $1.98 per share in profit for the fourth quarter of 2018, below the $2.20 per share average estimate of analysts surveyed by Refinitiv.

IPS Securex Holdings announced that it has received a letter of acceptance from an undisclosed government agency in South-east Asia for a contract worth S$19.1 million.Out of the S$19.1 million, up to S$10.1 million is for IPS to supply, deliver, install, commission and test an integrated security solution (System A) and provide maintenance support services for seven years for System A following its complete implementation, as well as other System A support and professional services.

Source: SGX Masnet, The Business Times

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