Daily Morning Note – 16 November 2020


U.S. equity futures opened higher Monday and Asian stocks looked poised to gain amid positive sentiment on trade in the region and after a national U.S. lockdown was ruled out.

Shares kicked off the week firmer in Australia. Asia Pacific nations including China, Japan and South Korea on Sunday signed the world’s largest regional free-trade agreement. Meanwhile, advisers to President-elect Joe Biden said they opposed a nationwide U.S. lockdown despite the pandemic accelerating, favoring targeted local measures instead. Oil advanced.


Eagle Hospitality Trust (EHT) will probably not have income available for distribution for the year to Dec 31, the manager has said. Given factors such as the trust’s loans and liquidity, as well as master lessees’ inability to make rental payments.

An agreement between Keppel Corp associate Floatel International and its bondholders has been extended by another two weeks, as talks with creditors continue. Floatel’s forbearance and deferral agreement with an ad-hoc committee of first-lien bondholders was most recently pushed from Nov 15 to Nov 30, according to an update on Saturday.

Genting Singapore continues to experience weak demand at its Resorts World Sentosa (RWS) property, even after the property reopened from July 1 amid the deadly Covid-19 pandemic. Genting released its third-quarter business update on Saturday, showing a 65.7 per cent slide in net profit for the three months to Sept 30..

Securities Investors Association (Singapore), or Sias, said that it is ready to work with all investors to support Hyflux preference shares and perpetual securities (P&P) holders, after a new rescue offer for the beleaguered water treatment company. American fund manager Strategic Growth Investments (SGI) – Hyflux’s fourth and most recent suitor – has proposed to buy and privatise Hyflux with an investment of some S$208 million in cash.

Cinema and events businesses. mm2 posted a net loss of S$22.4 million for the half-year to Sept 30, against a net profit of S$9.18 million in the year-ago period, according to unaudited results out on Saturday.

British Prime Minister Boris Johnson is self-isolating after coming into contact with someone who tested positive for Covid-19, a fresh setback after infighting among his top advisers plunged Downing Street into chaos last week.

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


FedEx Corp

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

FedEx (US: FDX) is on track to the upside and based on the report on 30th of October 2020, we are still on track to the final leg of wave (b):

DocuSign Inc

Analyst: Chua Wei Ren

Recommended Action: Technical SELL

DocuSign Inc (US: DOCU) upside has capped since prices fails to advance beyond US$247.00 since its high in mid-August at US$290.23. To further add on, technical is showing signs of further weakness:

>> Read more Technical reports


Hyphens Pharma International Ltd – Series of unfortunate events

Recommendation: Accumulate (Maintained); TP: S$0.365

Last Done: S$0.345, Analyst: Tay Wee Kuang

– 9M20 earnings of S$5.1mn was 17% below our estimates

– Revenue grew 2% YoY to S$31.4mn, as strong growth in proprietary brands segment offset weaker revenues from specialty pharma and medical hypermart segment.

– Ramifications of COVID-19 led to an excess of S$565k in inventory obsolescence and S$217k of foreign exchange losses, which heavily impacted earnings.

– Short-term earnings weakness expected as company reorganises business operations to manage thinning margins and heightened inventory levels.

– The company signed two distribution agreements over the past month, highlighting deliberate efforts to grow its proprietary brands.

– Maintain ACCUMULATE with reduced TP of S$0.365 from S$0.495. We revise our FY20e earnings downwards by 20% as we expect business to recover pre-COVID momentum only in FY22.

Singapore Telecommunications Ltd – Same pain points for now

Recommendation: NEUTRAL (Maintained); TP S$2.44

Last close: S$2.30; Analyst Paul Chew

– 1H21 ex-exceptional results within expectations, 1H21 EBITDA at 45% of our FY21e forecast.

– Two major exceptionals were dilution gain on Airtel of S$550mn and Airtel’s exceptional losses of S$912mn from additional licence fees and spectrum charges.

– Optus’ EBITDA fell 30% YoY to A$977mn due to loss of on-net broadband subscribers and weaker equipment sales.

– Interim dividend cut by 25% to 5.1 cents (1H20: 6.8 cents).

– Only FY21 guidance was dividends from associates will be S$1.3bn (FY20: S$1.3bn). Maintain NEUTRAL and SOTP TP of S$2.44. Operationally, the worst appears over as EBITDA is improving QoQ. The two pain points remain declining roaming revenue as borders shut and loss of high-margin broadband business in Australia to NBN.

PropNex Ltd – More resilient than expected

Recommendation: BUY (Maintained); TP S$0.85

Last close: S$0.68; Analyst Paul Chew

– 3Q20 PATMI rose 10.6% YoY to S$6.8mn, far exceeding our forecast. 9M20 earnings form 111% of our FY20e forecast. Despite lockdown, new project revenue was more resilient than expected.

– Revenue from new projects rose 15% YoY to S$51.9mn. Higher market share, billing of earlier projects and successful virtual selling were some of the reasons.

– Net cash of S$94.7mn, up from 3Q19’s S$74.5mn.

– Maintain BUY with a higher DCF TP of S$0.85, from S$0.70. Circuit breaker might have affected resale and rental revenue but not new project sales. Yields of 6% and cash flows of S$28mn p.a. with modest capex and working-capital requirements are what we like about PropNex.

ComfortDelGro Corp Ltd – Recovery underway, back to net cash

Recommendation: BUY (Upgraded); TP S$1.83

Last close: S$1.54; Analyst Paul Chew

– 3Q20 PATMI below expectations due to lower-than-expected rail ridership and bus-service fees. 9M20 PATMI at 18% of our FY20e forecast.

– Revenue rebounded S$152mn QoQ to S$816mn. Operating losses narrowed by S$118mn QoQ. There is large operating leverage for Comfort as revenue rebounds. We expect a stronger recovery in the coming quarters.

– Net cash of S$115mn vs. net debt of S$115mn a year ago.

– Most restrictions on group gatherings in Singapore will be lifted only in 4Q20. Phase 3 easing should further increase transportation volumes. Upgrade stock from ACCUMULATE to BUY with earnings catalysts expected from this. PATMI for FY20e cut by 50% but FY21e estimate raised by 16%. Accordingly, our DCF TP climbs to S$1.83 from S$1.65. Comfort is our preferred proxy for a recovery in the transportation sector. Unlike air transport, passenger-volume rebounds are more immediate and pronounced with pricing more stable in a regulated industry.

Asian Pay Television Trust– Dividends maintained for FY21

Recommendation: BUY (Maintained); TP S$0.15

Last close: S$0.117; Analyst Paul Chew

– 3Q20 revenue and EBITDA were within our expectations, at 76%/78% of our FY20e forecasts.

– Revenue rose 4% YoY and EBITDA, 5%. FX contributed 6.3% points to the improvements.

– Cable subscribers contracted 5,000 QoQ to 716,000. Offset by higher premium digital TV (+10,000) and broadband (+2,000) subscribers.

– Management guided that DPS of 0.25 cent/quarter will be maintained for FY21. Our forecasts are largely unchanged. Maintain BUY and target price of S$0.15. Our valuation is benchmarked to 9x EV/EBITDA, a discount to Taiwanese peers. Dividend yield of 8.5% is attractive and sustainable.

SG Bonds Weekly – Week 47

Credit Analyst: Timothy Ang

– The Asia primary debt market restarted its engines this week post US presidential elections, with 19 deals priced entirely from Chinese issuers or with a Chinese company guarantee.

– Halcyon Agri Corporation priced a USD 200mm PerpNC5 at 3.8%, 30bps tighter from the initial price guidance.

– Singapore Airlines (SIA) is proposing to issue up to S$850 million in the principal amount of bonds, convertible into new ordinary shares in the company’s capital.

– Singpost Group Treasury issued a S$250 million in 10-year fixed-rate notes guaranteed by postal service provider Singapore Post.

>> Read more research reports

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