DAILY MORNING NOTE | 18 January 2024

Trade of the Day

Genting Singapore Ltd (SGX: G13)

Analyst: Zane Aw

(Current Price: S$0.985) – TECHNICAL SELL
Sell price: S$0.985 Stop loss: S$1.02 (-3.55%)
Take profit 1: S$0.925 (+6.09%) Take profit 2: S$0.900 (+8.63%)

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Trades Initiated in the past week

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Singapore shares were not spared the rout on Wednesday (Jan 17), ending 1.3 per cent lower, as key regional bourses swam in a sea of red. This came as investors realised that early interest rate cuts might not materialise, with central bank officials pushing back on such bets. The only counter that ended higher was Singapore Exchange which was up 0.1 per cent to S$9.64. Across the broader market, decliners beat gainers 413 to 173, with some 1.2 billion securities with a total value of S$1.2 billion changing hands.

US stocks fell on Wednesday as Treasury yields tracked higher following the release of stronger-than-expected US economic data. The Dow Jones Industrial Average declined 94.45 points, or 0.25%, to close at 37,266.67. The S&P 500 slid 0.56% to close at 4,739.21, and the Nasdaq Composite lost 0.59%, ending the session at 14,855.62.

Top gainers & losers

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Events Of The Week

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SG

Yangzijiang Shipbuilding Holdings has secured a contract to build six units of 13,000 twenty-foot equivalent units (TEU) methanol dual-fuel containerships for Ocean Network Express (ONE) on Jan 17. Yangzijiang will jointly design the vessels, leveraging its strong technological capabilities to meet customers’ evolving demand and ensuring alignment with the maritime decarbonisation agenda. The vessels are scheduled to be delivered from 2027 onwards. The value of the order was not disclosed by Yangzijiang. The vessels will be designed to feature cutting-edge technologies such as optimized hull forms, waste heat recovery systems and bow windshields.

Thomson Medical Group has completed the acquisition of FV Hospital. Thomson had agreed to acquire the Vietnamese group for up to 9 trillion VND or US$381.4 million (S$517.1 million at the time) in July 2023. The acquisition is the biggest in the healthcare sector to-date in Vietnam and the largest in Southeast Asia since 2020. It gives Thomson Medical Group – a strategic position in the Vietnamese market while unlocking a new era of growth for FV Hospital. The transaction also marks the former’s official entry into Vietnam and now makes Thomson one of the leading listed healthcare providers in Southeast Asia. According to Thomson, its bid stood ahead of its competitors for its longer-term investment horizon and its focus on creating impact to the community and the wider healthcare fraternity.

Kim Heng’s wholly-owned subsidiary Kim Heng Agency has entered into a joint venture (JV) agreement on Jan 17 with RUHM Holdings and Wardatul Wahdah Binti Ahmad Nokman to subscribe for shares in a JV company. Kim Heng Agency has subscribed to 49% of the RM100,000 (S$28,378) issued and paid-up capital of the Malaysia-incorporated JV company, Mazu Offshore, with RUHM and Wahdah subscribing to 31% and 20%, respectively. The investment in the JV company is expected to enhance Kim Heng’s business potential in Malaysia and represents a further expansion by the group of its offshore marine business in the country. In addition, Kim Heng says the JV positions it well for the expected upturn of the oil and gas industry. The RM49,000 subscription will be funded through the company’s internal resources and is presently not expected to have any material impact on its earnings per share or net tangible assets per share for the FY2024 ending Dec 31.

Hafary Holdings has announced the proposed acquisition of the remaining 19.0% issued share capital of subsidiary World Furnishing Hub (WFH) for S$4.5 million. On Jan 17, the company announced that its wholly-owned subsidiary had entered into a sale and purchase agreement with non-executive director and controlling shareholder Low See Ching for the purchase of the target shares. According to Hafary, the proposed acquisition represents an opportunity to increase its stake in WFH at a favourable price. WFH’s principal asset is the leasehold interest of the property located at 18 Sungei Kadut Street 2. Based on the management accounts of WFH for the FY2023 ended Dec 31 and based on a valuation conducted on the property an independent valuer, the market value of the property is S$72 million, which ascribes a value of S$4.76 million to the target shares. Upon completion of the sale, the company’s legal and beneficial ownership of the share capital of WFH will increase from 81.0% to 100.0%.

First Resources Limited’s indirect subsidiary, PT Karya Tama Bakti Mulia, has successfully bid for the acquisition of plantation assets held by PT Tri Bakti Sarimas for a cash consideration of IDR1.9 trillion (S$164.9 million) on Jan 17. The assets comprise mills, plantations and unplanted land bank covering a total site area of approximately 17,600 hectares located in Riau Province, Indonesia, and was concluded on 28 Dec 28, 2023 via a public auction. The purchase price was arrived at based on the auction reserve price, which was set by Bank BRI after taking into consideration the most recent valuation performed by its appointed independent appraiser. First Resources says the addition of these plantation assets marks a significant step in its expansion strategy. The company anticipates that the integration of these assets will yield operational synergies and contribute positively to its overall performance, reinforcing the its position in the market and enhancing shareholder value. The acquisition was funded by internal resources and is not expected to have any material impact on the consolidated net tangible assets and earnings per share of the company for the FY2023 ended Dec 31, 2023.

Sats has launched and priced its inaugural issue of US$500 million (S$671.4 million) worth of fixed rate senior unsecured notes. The notes, which are issued under the group’s US$3 billion multicurrency debt issuance (EMTN) programme, carry a coupon of 4.828% per annum (p.a.) and are due on Jan 23, 2029. The programme was newly established on Nov 17, 2023. The notes are immediately converted into Euros through a cross currency swap to achieve a fixed rate of 3.498% per annum. This is to match the currency of the existing bridge loans to hedge SATS’s foreign currency exposure. According to SATS, this refinancing exercise will result in an “all-in” interest saving of approximately S$8.8 million per year. The proceeds from the issuance of the notes will be used entirely for refinancing SATS’s existing EUR1 billion (S$1.46 billion) bridge loans that are maturing in May. The notes have been assigned a senior unsecured rating of A3 by Moody’s Investors Service. Moody’s has rated the EMTN programme a rating of (P)A3. The notes were listed by SATS Treasury, SATS’s treasury funding vehicle and are expected to be listed on the Singapore Exchange (SGX) on Jan 24.


US

Charles Schwab posted sharply lower fourth-quarter profits, but beat analysts expectations. Net income fell to US$1 billion from US$2 billion for the same period a year ago and its adjusted earnings per share fell to 68 cents from US$1.07. Wall Street analysts had expected Schwab to report fourth quarter earnings per share of 64 cents and revenue of US$4.5 billion. Schwab’s revenue was slightly lower than expected, decreasing to US$4.45 billion from US$5.5 billion. Net interest revenue for 2023 dropped to US$9.4 billion, down from US$10.7 billion for 2022 due to soaring interest expenses. The company also continues to rake in new client money. Schwab reported US$43 billion in core net new assets in December alone; and US$306 billion for 2023. Total client assets reached a record US$8.5 trillion at the end of 2023, up 21% compared to 2022. Schwab’s fourth-quarter results were impacted by a US$172 million special assessment by The Federal Deposit Insurance Corporation, which the agency is also imposing on other banks after last year’s regional bank crisis.

US retail sales increased more than expected in December as consumers stepped up purchases of motor vehicles and retailers offered discounts, keeping the economy on solid ground heading into the new year. Retail sales rose 0.6% last month, the Commerce Department’s Census Bureau said on Wednesday. Data for November was unrevised to show sales rising 0.3% as previously reported. Economists had forecast retail sales gaining 0.4%. Excluding automobiles, gasoline, building materials and food services, retail sales jumped 0.8% last month. November core sales were revised higher to show them rising 0.5% instead of 0.4% as previously reported.

Tesla has slashed prices of its Model Y cars in Germany, where it lost the spot as top electric vehicle seller to Volkswagen in 2023, a week after the carmaker reduced its Model 3 and Model Y prices in China. Tesla reduced prices for Model Y Long Range and Model Y Performance by 5,000 euros to 49,990 euros and 55,990 euros respectively, representing a discount of 9% and 8.1% compared to the previous prices. It also cut the price of Model Y rear-wheel drive models by 1,900 euros, or 4.2%, to 42,990 euros, according to data on its website. In 2023, Volkswagen overtook Tesla as the largest seller of EVs in Germany, taking a 13.5% share of the market compared to Tesla’s 12.1%, according to figures from the German federal motor authority KBA.

Apple is opening its United States App Store to allow outside payment options after the Supreme Court refused to consider the company’s appeal in an antitrust suit challenging its practices. The company plans to let all third-party apps sold in the US include an outside link to a developer website to process payments for in-app purchases. That will bypass Apple’s own payment system, which charges developers a commission of either 15 per cent or 30 per cent. Still, the iPhone maker said it would attempt to collect a 12 per cent or 27 per cent revenue share from developers that opt out of the Apple system. The Supreme Court decision let stand a 2023 appeals court ruling that found Apple’s business model did not violate antitrust laws, but that it did flout California’s Unfair Competition Law by limiting the developers ability to communicate about alternate payment systems that may cost less. Both Apple and Fortnite maker Epic Games had asked the court to hear an appeal related to the case. The justices turned down the appeals without explanation.

Amazon is rolling out an artificial intelligence tool that can answer shoppers’ questions about a product, a spokesperson confirmed, as the company continues to experiment with generative AI. The new feature in Amazon’s mobile app prompts users to ask questions about a specific item. It then returns an answer within a few seconds, primarily by summarizing information collected from product reviews and the listing itself. The feature could keep shoppers from scrolling through pages of reviews or reading through a listing to find information about a product. Unlike OpenAI’s ChatGPT, Amazon’s new feature isn’t equipped to carry out a conversation, but it can respond to creative prompts.

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


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