Daily Morning Note – 18 November 2021
Stocks fell on concern that inflation could pose a challenge to the global economic rebound, forcing central banks to raise interest rates sooner than expected. Treasuries rose.
Traders took some risk off the table as data signaled homebuilders are struggling to break ground on projects amid high materials prices and ongoing labor shortages. Target Corp. sank after warning that cost pressures are creeping up, stoking fears they will dent profits at retailers. In late trading, Cisco Systems Inc., the biggest maker of computer networking equipment, slumped on a lackluster revenue forecast, hurt by a shortage of components that’s making it difficult to keep up with demand.
Medical consumables supplier Medtecs International Corporation is warning that its 3QFY2021 earnings is “not expected to be as strong” as the first half of the year. It expects to remain profitable though. “This is mainly due to existing customers completing their stockpiling exercises in 2020, subsequent inventory adjustment attributable to certain customers, and the stabilization of the supply and prices of the PPE market globally,” says the company. “Notwithstanding the above, such market changes are not expected to have a material adverse impact on the overall financial position of the group, which remains healthy,” the company adds.
Mainboard-listed SMI Vantage on Wednesday (Nov 17) said it is planning to develop a non-fungible token (NFT) publishing business to tap the growing interest in crypto assets. The company noted that sales of NFTs – unique digital assets that can be traded online, often using cryptocurrency – surged to US$10.7 billion in the third quarter of 2021. Market tracker DappRadar noted that this was a more than eightfold increase from the previous quarter. In a bourse filing on Nov 17, SMI Vantage said it has signed a memorandum of understanding with Nasdaq-listed substantial shareholder The9 Limited to explore developing the NFT publishing business. It added that it expects to conclude finalisation of the plans “within the next few weeks”.
Mooreast Holdings, a mooring systems company, on Wednesday (Nov 16) launched its initial public offering (IPO) for a listing on the Catalist board of the Singapore Exchange (SGX). The company will offer 0.8 million offer shares and 38.05 million placement shares at S$0.22 apiece. This will bring the total gross proceeds from the IPO to some S$8.5 million. EDBI, the investment arm of Singapore’s Economic Development Board, has invested S$10 million in the company as a pre-IPO investor.
Medtech firm QT Vascular on Wednesday (Nov 17) announced that it will hold an extraordinary general meeting (EGM) on Dec 2 to seek shareholders’ approval for the appointment of 5 new directors. This comes a day after the company said it had received a notice of intention from Mission Well Limited and Tansri Saridju Benui, who together hold more than 10 per cent of the company, to call for an EGM to remove QT Vascular’s 4 current board members, including executive director and chief executive officer Eitan Konstantino.
Apple announced a new self-service repair program on Wednesday that will let customers buy parts to fix their own iPhones or Macs. The program will first allow iPhone owners to replace their screen, battery or camera, with more parts coming later. The move appears to be a big win for “right-to-repair” advocates and is an about-face for Apple. Repair shops and lobbyists who support repair reform have called on lawmakers to implement a variety of rules that would allow for increased access to manuals and official parts. But Apple has lobbied against allowing customers to fix their own products over the years, specifically citing concerns with safety or performance issues from third-party parts. It also sells a subscription AppleCare+ service for its products that offers consumers repairs at a lower cost than non-subscribers.
Target shares fell Wednesday, as the big-box retailer opted to emphasize its focus on value as prices of groceries, fuel and other goods rise. Shares were down about 4% in premarket trading, despite beating earnings expectations for the fiscal third quarter. Target CEO Brian Cornell said on a call with reporters that the company is absorbing some of the higher costs it’s seeing, rather than passing it on to customers. That strategy could squeeze margins. Target topped analysts’ predictions as sales jumped 13% after shoppers bought Halloween costumes, stocked up on back-to-school supplies and kicked off the search for holiday gifts early. It also raised its fourth-quarter forecast, predicting comparable sales could rise at between a high-single digit and low double-digit pace in the holiday period. Previously, it estimated a high single-digit increase.
Amazon plans to stop accepting payments made via Visa credit cards issued in the U.K. starting next year. The e-commerce giant has told some customers that, from Jan. 19 onward, the company will no longer accept Visa credit cards issued in Britain ” due to the high fees Visa charges for processing credit card transactions.” Visa shares fell 2.5% in U.S. premarket trading.
Cisco shares tumbled as much as 8% in extended trading on Wednesday after the computer networking company reported quarterly revenue that fell short of analysts’ expectations and issued weaker-than-expected guidance. Cisco said per-share earnings in the fiscal second quarter will be between 80 cents and 82 cents, excluding some items, on 4.5% to 6.5% annualized revenue growth. Analysts polled by Refinitiv had expected 82 cents per share in adjusted earnings on $12.85 billion in revenue, which implies 7.4% growth.
Lowe’s beat analysts’ expectations for fiscal third-quarter earnings on Wednesday, as the company got a bump in business from home professionals and online sales. The home improvement retailer raised its forecast, saying it anticipates $95 billion in sales. It had previously predicted revenue of $92 billion. Shares rose about 2% in premarket trading. Lowe’s profits rose to $1.90 billion, or $2.73 per share, from $692 million, or 91 cents a share, a year earlier. The results outmatched the $2.36 per share expected by analysts surveyed by Refinitiv.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
Recommendation: Buy (Maintained), Last Done: S$5.30
Target price: S$7.07, Analyst: Terence Chua
– Singapore Press Holdings (SPH SP, Non-rated) (SPH) and Cuscaden Peak (Cuscaden) have entered into an implementation agreement to privatise SPH via a scheme of arrangement, after Cuscaden raised its offer to $2.36-2.40 per share.
– We compared the two offers. Despite offering more certainty of deal completion and the shortest time to payout under Keppel’s offer, we believe SPH shareholders will likely go for Cuscaden’s offer as this provides a higher total consideration value and value certainty.
– Maintain BUY with unchanged SOTP TP of S$7.07. We valued the Group based on the four new segments unveiled during Vision 2030 to better reflect the Group’s reporting segments going forward. Our TP translate to about 1.0x FY22e book value, in-line with its 5-year average. Catalysts expected from SPH resolution and a successful resolution to its O&M unit.
Recommended: Technical BUY; Analyst: Chua Wei Ren
ASM Pacific Technology Ltd (HKEX: 522) has been on a corrective downtrend since January 2021. Recent technicals indicate that there is a potential upside in prices
Buy spot: 86.00 Stop loss: 76.20 Take profit 1: 100.20 Take profit: 110.00
Recommended: Technical BUY; Analyst: Chua Wei Ren
Ming Yuan Cloud Group Holdings Ltd (HKEX: 909) has been on a corrective downtrend since February 2021. Recent technicals indicate bullish upside
Buy spot: 26.60 Stop loss: 20.00 Take profit 1: 40.20 Take profit: 43.30
Recommended: Technical BUY; Analyst: Chua Wei Ren
Visa Inc (US: V) downtrend has been ongoing after it broke off the larger rising wedge which starts from 27th March 2020 to 26th July 2021. Despite the ongoing downtrend, Visa’s technical indicate that there is a short term rebound to test the higher gap resistance zone at US$225.26-US$231.12:
Buy spot: 205.06 Stop loss: 197.00 Take profit 1: 220.34 Take profit 2: 230.41
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Weekly Market Outlook: Lendlease, Sunpower Group, Comfort DelGro, PropNex, Starhub, SPH, SG Weekly..
Date: 15 November 2021
Updates summarised in 3 minutes
Phillip Research in 3 minutes: #29 Keppel Corporation; Initiation
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