Daily Morning Note – 16 July 2020

PHILLIP SUMMARY

Asian stocks looked set to gain Thursday as the Dow posted a 4-day winning streak, jumping more than 200 points on virus vaccine hopes, and Goldman Sach’s blowout earnings. Futures pointed to modest gains in Tokyo, as the earnings season gets underway, giving investors a clearer picture of the overall health of corporate America.

BREAKING NEWS

Sembcorp Marine posted a net loss of S$192.1 million in the half-year ended June 30, due to the shutdown of production activities at all its Singapore yards since April as a result of the Covid-19 pandemic. By comparison, the group made a net loss of S$6.8 million in the same period the year before. Revenue in the first half was S$906 million, down 41% from the same period a year earlier. All segments posted losses in the six-month period, with the exception of the repairs-and-upgrades business, which reported higher profits on better product mix of higher-margin upgrade projects executed in the first quarter of 2020.

Frasers Property brought in strategic capital partner for Northpoint City (South Wing). TCC Prosperity, through its wholly-owned subsidiary Bright Bloom Capital, has subscribed for 50% of units of North Gem Trust, which owns the mall. The transaction values Northpoint City (South Wing) at S$1.1 billion and allows the group to recognise a gain of S$50 million over the asset’s last audited book value as at Sept 30, 2019. Following the deal, Frasers Property’s subsidiary, FCL Amber, will hold the remaining 50% stake in North Gem Trust. It was completed in December 2017 and has a lettable area of 26,994 square metres.

Keppel Offshore & Marine (Keppel O&M) has, through its wholly-owned subsidiaries in Singapore and Brazil, secured two contracts worth a combined valued of about S$73 million. The contracts were awarded by Modec Offshore Production Systems (Singapore), a subsidiary of Tokyo-listed Modec Inc. In Singapore, Keppel Shipyard will fabricate, complete and integrate the topside modules and mooring support structure for a floating production storage and offloading (FPSO) vessel. Slated for delivery in Q2 2021, this FPSO will be able to process 90,000 barrels of oil and 75 million standard cubic feet of gas per day. It will have a storage capacity of 700,000 barrels of oil, said Keppel Corp. Keppel O&M chief executive officer Chris Ong said that over the years, the company has completed 11 projects with the Modec group.

Genting Singapore-owned Resorts World Sentosa (RWS) announced “the difficult decision to implement a one-off workforce rationalisation”. The move, which was carried out on the same day, came after earlier rounds of cost-cutting efforts. RWS operations most recently reported a 53.1% year-on-year fall in earnings before interest, tax, depreciation, amortisation to S$159.3 million for the quarter to March 31. That was before the pandemic forced international borders to close and a two-month quasi-lockdown to take place. Genting Singapore, which had issued a profit guidance in March for the half-year to end-June 2020, later told shareholders at its annual general meeting that it also expects its full-year performance to “be significantly and adversely impacted”.

Biolidics signed five-year license with A*Star arm for the use of the agency’s technology for the detection of Covid-19 viral spike/Angiotensin Converting Enzyme 2 (ACE2) blocking antibodies. Under the agreement, Accelerate Technologies has granted Biolidics non-exclusive worldwide rights to use the technology for diagnostic use for the five-year term to further develop the technology, and the right to market serology tests which incorporate the technology. It said the agreement is not expected to have a material impact on its earnings per share and the net asset value of the group for the current financial year ending Dec 31, 2020.

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

TECHNICAL PULSE

City Developments Ltd

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

City Developments (SGX: C09) recovery since March 2020 has further upside. There was a sell-down, but it did not break below the support level at $8.14-$8.23. Further technicals indicate a strong bullish momentum.

>> Read more technical reports

RESEARCH VIDEOS

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Market Outlook: Market Outlook: SG Banking Monthly, SG Bonds Weekly and SG Strategy 3Q20 (with stock picks)

Date: 06 July 2020

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Phillip Research in 3 minutes: #23- Yoma Strategic Holdings; Initiation

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