Daily Morning Note – 18 February 2019
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YOUR PHILLIP SUMMARY
China-U.S. trade talks resume in Washington this week, after last week’s negotiations yielded claims of progress with few public details. Beijing claimed a “consensus in principle.” President Trump called the meetings “very productive,” and reiterated his willingness to extend a March 1 deadline for increasing tariffs on Chinese goods.
Asian stocks are poised to jump after U.S. equities Friday surged to a 10-week high on trade talk optimism and rebounding American consumer sentiment. The dollar fell, with the pound, Australian and New Zealand dollars outperforming. Treasuries edged lower. Oil spiked and gold also advanced. Volume may be thin with the U.S. on holiday Monday. Among events traders will be watching this week apart from developments on trade and Brexit: Singapore’s budget announcement on Monday; Australian wages on Wednesday followed by jobs Thursday; a Bank of Indonesian rate decision also on Thursday, and Japan CPI on Friday.
StarHub Limited – Triple whammy, only enterprise shines
Recommendation: NEUTRAL (Downgraded), Last Done: S$1.67
Target Price: S$1.58, Analyst: Alvin Chia
– Results were below our expectations. EBITDA and net profit disappointed 13% and 20%
– Switching from fixed to variable dividend policy and to at least pay 80% of net profit each
year. Cuts dividend to 9 cents per share from current 16 cents.
– We revised our FY19e EBITDA and net profit downwards by 12% and 16% respectively due
to the results. Downgrade to NEUTRAL with a lower target price of S$1.58 (prev. S$1.88).
Singtel Limited – Delay in recovery of associates
Recommendation: ACCUMULATE (Downgraded), Last Done: S$2.99
Target Price: S$3.27, Analyst: Alvin Chia
– Overall results were within our expectations. Management lowered their guidance
for FY19e EBITDA by 1-5%
– Associates dragged down earnings especially from Airtel, recovery in Telkomsel is moderate
and at the lower end of our expectations
– We revised our FY19e EBITDA and net profit downwards by 8% and 6% respectively in light
of the change in guidance. Downgrade to ACCUMULATE with a lower TP of S$3.27 (prev.
The Dow Jones Industrial Average jumped 443.86 points to 25,883.25 as J.P. Morgan Chase and Goldman Sachs outperformed. The S&P 500 gained 1.1 percent to close at 2,775.60, led by the energy and industrials sectors. The Nasdaq Composite advanced 0.6 percent to end the day at 7,472.41.
Iran‘s foreign minister on Sunday accused Israel of looking for war and warned that its actions and those of the United States were increasing the chances of a clash in the region.
Starting this year, U.S companies are required to record the cost of renting assets used in their operations, such as office space, equipment, planes and cars, on their balance sheets rather than bury that expense in the footnotes of their financial statements, thanks to a new accounting standard now in effect — U.S. public companies are committed to a total of $3 trillion in operating leases.
British Prime Minister Theresa May is to hold Brexit talks with European Commission President Jean-Claude Juncker next week, her office said on Saturday.
Hundreds of passengers throughout Europe have been stranded by the abrupt collapse of the British regional airline Flybmi. British Midland Regional Limited, which operates as Flybmi, said it’s filing for administration because of higher fuel costs and uncertainty caused by Britain’s upcoming departure from the European Union.
KEPPEL Corporation’s and Singapore Press Holdings’ joint offer for telco M1 has turned unconditional after acceptances and shares owned by the offer vehicle crossed the 50 per cent mark of the company’s maximum potential share capital. The period for accepting the S$2.06-a-share offer will now be extended till 5.30pm on March 4.
A portfolio of 23 hotels, mostly under the Fragrance brand, is up for sale by Global Premium Hotels (GPH) at an indicative price of S$1.4 billion. They have been on the market since the second half of last year.
Cromwell European Reit (E-Reit) has acquired a logistics property located in France for 6.9 million euros (S$10.58 million) and three office assets in Poland for 69.38 million euros.
Singapore O&G (SOG), recorded a dip in net profit for the fourth quarter ended Dec 31 to S$23,200 from S$2 million a year ago, dragged down by a goodwill impairment of S$2.8 million, relating to the excess of the carrying amount of the cash-generating unit (CGU) over the recoverable amount of the CGU as at Dec 31 of the Dermatology segment.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research
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