DAILY MORNING NOTE | 17 October 2023

Singapore shares fell on Monday (Oct 16), tracking losses in most major markets in the region after a sell-off on Wall Street last Friday. It slipped 21.9 points or 0.69 per cent to 3,163.89. Decliners outnumbered advancers 340 to 231, as one billion securities worth S$713.1 million changed hands. Key major markets in Asia finished the trading day in a sea of red. Japan’s Nikkei 225 led the day’s decline after the index slipped 2 per cent, while the ASX 200 dipped 0.4 per cent. Bursa’s KLCI declined 0.4 per cent; the Kospi fell 0.8 per cent, and the Hang Seng Index dropped nearly 1 per cent.

US stocks rose sharply on Monday (Oct 16), with traders looking ahead to a flurry of high-profile company earnings this week. Major banks including Bank of America and Goldman Sachs will publish their third-quarter results early Tuesday, with other big US firms including Netflix and United Airlines to follow later in the week. The Dow Jones Industrial Average rose 0.9 per cent to 33,984.54, while the broad-based S&P 500 closed up 1.1 per cent at 4,373.63. The tech-rich Nasdaq Composite index jumped by 1.2 per cent to end the day at 13,567.98.

SG

Keppel DC Reit reported a 3.6 per cent decline in distribution per unit (DPU) for the third quarter on the back of higher finance costs and less favourable foreign exchange hedges. According to its business update filed on Monday (Oct 16), DPU for the three months ended Sep 30 fell to S$0.02492 from S$0.02585 in the year-ago period. Distributable income was also down 6.5 per cent to S$43.9 million. The distributions were weighed down by higher finance costs, which rose 56.9 per cent to S$12.8 million. Gross revenue for the third quarter climbed slightly to S$70.7 million, up from S$70.3 million a year earlier, due to contribution from acquisitions as well as “overall positive income reversions and income escalations”. Net property income was also slightly higher, rising 0.8 per cent to S$64.6 million. For the nine-month period ended September 2023, Keppel DC Reit’s DPU stood at S$0.07543, down 1.2 per cent year on year. Distributable income for the nine months was down 2.1 per cent at S$135.2 million.

Aztech Global has posted a 15.9 per cent increase in net profit to S$73.8 million for its first nine months ended Sep 30, 2023, up from S$63.7 million in the corresponding period of the year before. Earnings per share stood at 9.56 Singapore cents for the nine-month period, up from 8.25 Singapore cents from 9M 2022. Revenue for the first nine months of the year rose 10.7 per cent to S$672 million, from S$607 million a year ago. This was mainly driven by a year-on-year increase in sales of Internet of Things (IoT) devices and data-communication products, said the company in a business performance update on Monday (Oct 16). For Q3 alone, the company posted a net profit of S$30.9 million, an increase of 4.7 per cent from the previous quarter; and revenue jumped 24.8 per cent to S$283.4 million from S$227 million in Q2. This was largely due to revenue growth, greater economies of scale, higher interest income and net fair value gain on foreign exchange contracts, said Aztech.

Human resources provider Sheffield Green is seeking to raise over S$6 million through an initial public offering (IPO) on the Catalist board of the Singapore Exchange. The Singapore-based company, which mainly fulfils the staffing needs of the renewable energy industry, is offering 24 million new shares at S$0.25 apiece – 3.6 million shares will be offered to the public, with the remaining 20.4 million as placement shares. The counter is expected to begin trading on Oct 30, said its final offer document registered on Monday (Oct 16). After taking into account expenses relating to the listing, the company expects net proceeds of S$3.8 million from the sale of the shares. Based on the issue price of S$0.25 a share and assuming all shares on offer are successfully subscribed, Sheffield Green will have a market capitalisation of S$46.6 million at listing. The company directors also intend to distribute 30 per cent of the net profit after tax as dividends to shareholders.

New private home sales continued to decline in September, weighed down by an absence of new project launches amid the inauspicious Hungry Ghost Festival. According to data released by the Urban Redevelopment Authority (URA) on Monday (Oct 16), developers sold a total of 217 private homes in September, down 44.9 per cent from the 394 units moved in August. The latest September sales figure – which excludes executive condominiums (ECs) – is less than a quarter of the 987 units sold in the same month in 2022. It is also the month with the lowest sales recorded in the year thus far, as well as since December 2022, when developers sold 170 units. That brings primary home sales for the first nine months of 2023 to 5,407 units – 15.6 per cent lower than the 6,409 units transacted in the same period last year. The nine-month tally is also the lowest since 2016, when 5,656 units were sold

Singapore Airlines (SIA) Group reported a 24.8 per cent year-on-year increase in passenger traffic in September 2023, as demand for air travel remained robust. Its bourse filing on Monday (Oct 16) indicated that revenue passenger-km, which measures the number of passengers carried multiplied by the distance flown, rose to 11.6 billion in Sept 2023, up from 9.3 billion a year earlier. The growth in passenger traffic outpaced capacity expansion, which rose 23.7 per cent. This meant that passenger load factor (PLF) for the group’s airlines improved to 87.7 per cent, up from 87 per cent in September 2022, with SIA and Scoot posting monthly PLFs of 87.6 per cent and 88.1 per cent, respectively. The overall PLF, however, was slightly lower than the 88.2 per cent reported in August 2023. Both airlines carried a combined total of 2.9 million passengers during the month, up 36 per cent from a year before. However, this was slightly lower than the three million passengers carried in August this year.

US

Microsoft’s LinkedIn said on Monday (Oct 16) it would lay off 668 employees across its engineering, talent and finance teams in the second round of job cuts this year for the social media network for professionals as demand for hiring services slows. The cuts, which affect more than 3 per cent of the 20,000-strong staff, add to the tens of thousands of job losses this year in the technology sector amid an uncertain economic outlook. The sector has laid off 141,516 employees in the first half of the year compared with about 6,000 a year ago, according to employment firm Challenger, Gray & Christmas. LinkedIn makes money through ad sales and by charging for subscriptions to recruiting and sales professionals who use the network to find suitable job candidates. The social media network had in May decided to cut 716 jobs across sales, operations and support teams to streamline its operations and remove layers to help make quicker decisions.

Oil futures fell more than US$1 a barrel on Monday (Oct 16) as expectations rose the US and Venezuela could soon reach a deal easing sanctions on Venezuelan crude exports, while traders said the Israel-Hamas conflict did not appear to threaten oil supplies in the short term. Brent crude futures settled at US$89.65 a barrel, down US$1.24, or 1.4 per cent. US West Texas Intermediate crude fell US$1.03, or 1.2 per cent, to finish at US$86.66 a barrel. Venezuela’s government and opposition will return to political negotiations this week after nearly a year, the two sides said, while sources said the US has reached a preliminary deal to ease sanctions on Venezuela’s oil industry in return for a competitive, monitored presidential election in Venezuela next year.

The global smartphone market contracted by 8 per cent to its lowest third-quarter level in a decade on subdued demand for major brands including Apple and Samsung in most developed markets, according to data from Counterpoint Research. The data, shared exclusively with Reuters, showed that the share of the top five brands, which also include Chinese companies Xiaomi, Oppo and Vivo, had fallen to a three-year low. The report fans fear that the market’s ongoing slump could sap upcoming earnings at companies like Apple, whose shipments declined by 8 per cent in the quarter. Market leader Samsung posted a 13 per cent drop in sell-through volumes in the period. Among those that gained market share in the quarter are Apple’s Chinese rival, Huawei, which despite the strict US sanctions against it, shocked the industry earlier this year with its Mate 60 Pro smartphone that uses an advanced domestically made chip.

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

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