Daily Morning Note – 18 Febraury 2021
Asian stocks looked set for a muted open after a mixed session from their U.S. peers as investors weighed strong retail sales against concerns about inflation. Treasury yields retreated from a one-year high.
Futures were little changed in Japan and Hong Kong. Australia nudged higher at the open. S&P 500 futures were flat. The S&P 500 Index finished little changed, while the Nasdaq slipped as stocks seen as most sensitive to higher inflation — such as technology shares — retreated. The 10-year Treasury yield briefly climbed as high as 1.33% before falling back. Australia’s 10-year yield also dropped. The dollar rallied against most major peers.
Elsewhere, China’s markets reopen after the Lunar New Year break with stocks near record highs. Oil extended a rise above $61 a barrel as the deep freeze causing historic power outages across the central U.S. has led crude output in the country to plunge by a third. Bitcoin jumped past $52,000 for the first time.
As Soilbuild Business Space Reit’s (Soilbuild Reit) appointed independent financial adviser, KPMG said the offer to take the Reit private at S$0.55 per unit is “fair and reasonable”, and recommended the Reit’s independent directors to advise unitholders to vote in favour of the scheme of arrangement. Since the Reit declared a Q4 distribution of 1.194 Singapore cents per unit, the scheme consideration has been adjusted to 53.806 cents per unit. The Reit manager said that the adjusted scheme consideration implied a price to net asset value (P/NAV) multiple of 0.96 to 0.99 times, which exceeds the historical pre-Covid-19 P/NAV trading multiples of the Reit’s units.
A recently-added property and a pick-up in leasing momentum have buoyed office-focused Prime US Reit results amid the pandemic. The Reit posted a distribution per unit (DPU) of 3.42 US cents for H2 ended December 2020. This is 8.4 per cent higher than the comparable period in 2019, from its July 19 listing date to the year-end. Prime US Reit’s portfolio was “highly resilient” in FY2020, said its manager, with full-year DPU coming in at 6.94 US cents, 3.6 per cent higher than its IPO forecast. The Reit recorded US$72.4 million in gross revenue and US$47.5 million in net property income (NPI) for H2, higher than the comparable year-ago period by 19.3 per cent and 18.3 per cent respectively.
Two units of First Ship Lease Trust (FSL Trust) have entered an agreement to sell two LR2 product tanker new-building vessels, the FSL Suez and FSL Fos, the firm’s trustee-manager announced in a Wednesday bourse filing. The vessels are being sold to an unaffiliated third party following their deliveries from COSCO Shipping Heavy Industry. FSL Trust has received the initial 15 per cent deposit in escrow. Details of the net proceeds will be announced at a later date. FSL Trust’s trustee-manager has waived the acquisition fee of 1.0 per cent on the purchase price, as well as the divestment fee of 0.5 per cent on the disposal price, that would otherwise be payable to it.
Technology solutions provider CSE Global has secured S$98.4 million in new orders for Q4 ended December, down from S$230.1 million in new orders bagged in the same period a year ago. This brings CSE’s new orders for FY2020 to S$431.5 million, down from S$578.8 million in FY2019. Its order book stood at S$236.0 million as of end-2020. About S$63 million of the new orders in Q4 were secured by the oil-and- gas segment, down from the S$189.8 million in orders the segment clinched a year ago. The fall was due to the absence of large greenfield oil-and-gas orders.
Personally identifiable information of 129,000 Singtel customers, including their NRIC numbers, as well as the data of 23 enterprises has been leaked in a cyber security breach of a third-party file-sharing system that the telco uses. Singtel is now reaching out to all affected individual and corporate customers (including suppliers and partners) to support them in managing the risks involved. It will appoint a global data and information service firm to provide identity monitoring services for free to these affected customers, it announced in a Wednesday bourse filing after the market close. The service monitors public websites and non-public places on the internet, and notifies users of any unusual activity.
Facebook Inc. has started restricting the sharing of news on its service in Australia, defying a controversial proposed law that would require technology companies to pay publishers when their articles are posted by users. The ban constitutes the strongest action yet in response to the proposed legislation, which would force Facebook and Alphabet Inc.’s Google to pay publishers for the value their articles generate on the digital platforms. News outlets have demanded such payments, arguing they should be fairly compensated for their journalism as Google and Facebook capture much of the advertising market.
Google struck a deal with the Murdoch family owned media conglomerate News Corp. as proposed legislation in Australia threatens to jeopardize the tech platform’s future operations in the country. Under the three-year deal announced Wednesday, News Corp. brands in the U.S., U.K. and Australia like The Wall Street Journal and New York Post will be featured in the Google News Showcase. The companies will enter into an ad revenue-sharing agreement, develop a subscription platform and YouTube will invest in video journalism as part of the deal, according to a press release.
Amazon on Wednesday announced a new program called Build It that lets consumers have a say in some of the products Amazon will produce. In a Kickstarter-like effort, Amazon customers can choose to back a new product, and if it gets enough support within 30 days, Amazon will build it. Customers will get charged only if the product is developed and ships. The program should help Amazon decide what products will be popular before it even builds them. Amazon has used a similar program in the past, called Day 1 Editions, to build experimental products like its Echo Frames smart glasses. Amazon wouldn’t say whether it plans to use this program for all of its products or if it may open it up to third-party inventors.
Epic Games announced Wednesday that it has filed an antitrust complaint against Apple with the European Commission, the executive arm of the European Union. In a complaint filed with the commission’s directorate-general for competition, the Fortnite developer said the 30% cut that Apple takes on App Store purchases is anti-competitive. Epic said Apple has “not just harmed but completely eliminated competition in app distribution and payment processes.” The iPhone maker “uses its control of the iOS ecosystem to benefit itself while blocking competitors,” Epic said.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
SembCorp Industries Ltd
Analyst: Chua Wei Ren
Recommended Action: Technical SELL
Sembcorp Industries (SGX: U96) Upside has come to a halt after prices fails to sustain the rally above $1.80. Based on the wave analysis and technical, the stock is heading for another fresh round of bearish correction.
First Sponsor Group Limited – Large pipeline of sales
Recommendation: BUY (Maintained), Last Done: S$1.32
Target Price: S$1.56, Analyst: Tan Jie Hui
– FY20 net profit 28% below forecast due to lower share of after-tax profits from associates and JVs as well as lack of other gains
– ASPs for Dongguan projects exceeded estimates by 10-30%. Unrecognised Dongguan sales rose from S$599mn to S$935mn. Gross development value (GDV) for unlocking surged from S$1.9bn to S$4.1bn, with the addition of new Fenggang and Panyu projects.
Record FY21 pretax profit expected from revenue backlog
HK Reports – Read up on our Hong Kong reports here
Webinar Of The Week
Date: 08 February 2021
Updates summarised in 3 minutes
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