Daily Morning Note – 19 February 2018
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Singapore O&G Ltd. – Strong finish to 2017
Recommendation: Accumulate (Maintained), Last Close Price: S$0.39
Target Price: S$0.42 (Downgraded), Analyst: Soh Lin Sin
– FY17 Revenue and PATMI were in line with our full year FY17e estimations
– Solid result from O&G amidst challenging business environment, and stellar
performance from Cancer-related segment
– Declared final dividend of 0.89 SCents per share (FY17 total dividend of 1.50
– Maintained Accumulate at a lower TP of S$0.42 (previously S$0.62)
Straits Times Index – Daily timeframe – Bullish
– The bullish rejection off the 3354 – 3341 support area and 200 day moving
average succeeded in closing price back above the 20 day moving average and
pullback line on 19/02/18 signals further sign of strength.
– Expect the long-term uptrend to sustain for price to retest the 3550 resistance
area followed by 3600.
Sunright Ltd – Daily timeframe – Bullish
– The bullish follow through on 19/02/18 succeeded in breaking price back
above the 20 and 60 day moving average with increasing volume signals the
resumption of the uptrend next.
– Expect the next upswing to take over for price to test the 0.975 resistance
area followed by 1.000 psychological round number.
For more information and additional disclosures, refer to the link here.
Singapore Budget 2018 Property/REIT related measures and impact
Property – Top marginal buyer’s stamp duty (BSD) raised from 3% to 4% for portion of home values above S$1mn.
Enhanced proximity housing grants for families/singles buying resale HDBs to stay with parents – from 20k to 30k for families.
REITs – Tax transparency for exchange-traded funds (ETFs) of Singapore real estate investment trusts (S-Reits). Reits ETF will no longer be subjected to 17% corporate tax on the specified income that is distributed to the unitholders.
Impact: Bigger ticket purchases and en bloc purchases will be impacted more as the incremental 1% tax is only on the portion of home values above S$1mn. Last 2 years, the average transaction value was c.S$1.5mn and below, for condominium units with average size of c.100sqm. For the average transaction, impact will be smaller – 0.3% or S$5,000 extra for a $1.5mn house. As the quantum goes higher, the closer the impact to the full 1% of purchase price. We do not expect a material negative impact on demand given the relatively small full impact vs purchase price for the average transaction. En bloc sales momentum, which has slowed lately with lower premiums paid vs reserve prices, could see further slowdown.
REITs – This has been what SGX and MAS have been lobbying for, for more than 2 years. Positive for S-REIT sector as a whole given that the increased demand for S-REIT ETFs will translate to higher demand for S-REITs as a whole. Given the relatively low number of S-REIT ETFs listed, the impact could be less significant for now.
Source: ChannelNewAsia, Phillip Securities Research
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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