Daily Morning Note – 17 July 2020

PHILLIP SUMMARY

Asian stocks looked set to gain Friday despite a volatile session in U.S. stocks on Thursday night that snapped a four-day winning streak. Futures pointed to modest gains in Tokyo and U.S., as markets try to recover from Thursday’s drop.

BREAKING NEWS

ESR-Reit and Sabana Reit announced a proposed merger, by way of a trust scheme of arrangement, which will see ESR-Reit acquiring all units of Sabana Reit in exchange for new units in ESR-Reit. The enlarged entity will become the fourth-largest industrial S-Reit by market share based on gross floor area (GFA). By way of illustration, if the scheme becomes effective, each Sabana unitholder will receive 94 new ESR-Reit consideration units for every 100 Sabana units held. The illustrative issue price is S$0.401 per new ESR-Reit consideration unit, and the gross exchange ratio is 0.94 times. The enlarged Reit will have an expanded network of 75 assets with a total GFA of about 19.2 million square feet across Singapore. The proposed merger will be accretive to the distribution per unit on a pro forma basis for ESR-Reit unitholders by 3.5% and for Sabana unitholders by 12.9%.

CDL Hospitality Trusts (CDLHT) has completed the sale of its entire stake in Novotel Singapore Clarke Quay, while Ascott Residence Trust (ART) has sold its interest in the land which includes Somerset Liang Court Singapore. These form part of the transaction for the Liang Court site’s redevelopment – by a consortium comprising real estate heavyweights CapitaLand, City Developments Limited (CDL) and ART – that was announced last November. On the site sits Liang Court mall, mid-scale hotel Novotel and serviced residence Somerset Liang Court Singapore. The ultimate owners – ART’s trustee, Gemini One Trust and two associated companies of CapitaLand – signed a joint development deed to undertake, among other things, the development of the respective components of the project. The upcoming mixed-use development will include a new serviced residence property with a hotel licence, which will be fully owned by ART.

ST Engineering announced that its land systems arm has signed an agreement with state-owned Israel Aerospace Industries (IAI) to set up a joint-venture (JV) company in Singapore. ST Engineering and IAI, one of Israel’s three major aerospace and defence companies, will each have a half stake in the JV. Named Proteus Advanced Systems, the JV will leverage the strengths and track record of its parent companies to market and sell advanced naval missile systems, including a next-generation anti-ship missile system. ST Engineering said it does not expect a material impact on its consolidated net tangible assets per share and earnings per share from the setup of this JV.

Singapore Airlines (SIA) flew just 13,900 passengers in June 2020, down from nearly 1.9 million the same period a year ago – and the group is now expecting a material operating loss for the first quarter of its financial year. The group said group passenger capacity plunged 95.1% year on year in June, although this is a marginal improvement over the 96.2% seen in May. Group passenger capacity is measured in available seat kilometres. In addition, the lower oil prices are expected to have an impact on the group’s profits for the first quarter of FY20/21, which ended in June. This is because the lower capacity projection has reduced expected fuel consumption, rendering more fuel hedges ineffective under applicable financial reporting standards, SIA said.

Keppel Pacific Oak US Reit (KORE) obtained US$115 million five-year term loan facility to pay off its borrowings that are due in November 2021.The loan facility will be used for the early refinancing of KORE’s borrowings, which were obtained during its initial public offering in November 2017, its manager said. KORE has also restructured the interest rate swap in relation to these borrowings.

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

TECHNICAL PULSE

Ascendas REIT

Analyst: Chua Wei Ren

Recommended Action: Technical SELL

Ascendas REIT (SGX: A17U) enjoyed a stellar rise since after the slide down in March 2020. Recovery was strong and prices managed to clear the $3.00 hurdle in May 2020. However, recent technicals suggest a correction is coming as prices are approaching nearing a top

>> Read more technical reports

RESEARCH VIDEOS

Webinar Of The Week

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

Date: 06 July 2020

For more on Market Outlook

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

For more videos on Phillip in 3 Mins

Read the research report(s), available through the link(s) above, for complete information including important disclosures Important Information





Disclaimer
The information contained in this email and/or its attachment(s) is provided to you for information only and is not intended to or nor will it create/induce the creation of any binding legal relations. The information or opinions provided in this email do not constitute an investment advice, an offer or solicitation to subscribe for, purchase or sell the e investment product(s) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise. You may wish to seek advice from an independent financial adviser before making a commitment to purchase or investing in the investment product(s) mentioned herein. In the event that you choose not to do so, you should consider whether the investment product(s) mentioned herein is suitable for you. PhillipCapital and any of its members will not, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached to this email. The information and/or materials provided 揳s is?without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials.
Confidentiality Note
This e-mail and its attachment(s) may contain privileged or confidential information, which is intended only for the use of the recipient(s) named above. If you have received this message in error, please notify the sender immediately and delete all copies of it. If you are not the intended recipient, you must not read, use, copy, store, disseminate and/or disclose to any person this email and any of its attachment(s). PhillipCapital and its members will not accept legal responsibility for the contents of this message. Thank you for your cooperation.

 

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you

IMPORTANT INFORMATION

This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  

 

Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com