Daily Morning Note – 19 February 2019


Register HERE for MONDAY’s 11.15am webinar.

Archived webinars available.


Singapore unveiled its 2019 budget on Monday, announcing tighter restrictions on foreign workers, a boost in spending on health care for its aging population and a tax rebate for some citizens ahead of an election that could come as early as this year. Authorities are trying to strike a careful balance: bolstering an economy that’s been hit by weaker global demand, providing more support for elderly citizens, while still sticking to a tradition of fiscal prudence. The budget comes against the backdrop of a weakening economy, with growth being hit by global trade worries. Here are this year’s budget winners and losers.

Stocks in Asia looked set to drift Tuesday with little direction from the U.S.with markets on holiday and a mixed session in Europe. The dollar steadied while the yen ticked lower. Futures in the region were little changed with global trade remaining foremost in investors minds. European shares edged higher. A gauge of commodities climbed the most since December, with WTI oil futures rising to around $56 a barrel. The euro strengthened despite dovish comments from a European Central Bank governing council member, while the pound strengthened after seven members of the U.K. Parliament said they’ll stand as independents after quitting the main opposition Labour Party over issues including Brexit and antisemitism.


DBS Group Holdings Ltd – Stellar ROE supported by recurrent interest income

Recommendation: BUY (Maintained), Last Done price: S$25.2

Target Price: S$29.0, Analyst: Tin Min Ying

– FY18 Revenue and PATMI met our estimates.

– FY18 NIM expanded 13 bps YoY to 1.85% (FY17: 1.75%). 4Q18 NIM rose 1 bps QoQ to 1.87%
(3Q18: 1.86%).

– Loans grew 6.7% YoY, driven by non-trade corporate loans across the region.

– Allowances declined 71.0% YoY due to accelerated provisions made for weak oil and gas
support service last year. NPL ratio improved to 1.6% (4Q17: 1.7%).

– Full-year ROE rose 2.4% to 12.1%, the highest since FY2007.

– A proposed final dividend of $0.60/share, bringing full-year dividend to $1.20/share.

– Maintain BUY at an unchanged target price of S$29.00.

Thai Beverage PLC – A spirited recovery

Recommendation: NEUTRAL (Upgraded), Last Done price: S$0.82

Target Price: S$0.81, Analyst: Paul Chew

– Revenue and EBITDA were above expectations but was offset by higher than expected
interest expense and weaker earnings from Sabeco.

– Recovery in spirits volume was better than expected despite moderate improvement in
farm income. Thailand rice aid scheme has boosted farm incomes.

– Upgrade to NEUTRAL and increased our SOTP-derived TP to S$0.81 (previously S$0.57). Our
aggressive upgrade in share price is due to: (i) We raised our earnings by 7% as we expect
demand to remain vibrant over the next few quarters; (ii) We raised our SOTP valuation to
the middle (from lower) EV/EBITDA band of global peers.


PSR brief comment on Budget 2019: Ongoing effort by the government to restructure the economy as our working population ages and deepen the capabilities businesses and workforce. More funds set aside to build an ecosystem for start-ups to flourish and scale. New initiatives launched such as Scale-up SG programme, Innovation Agents programme and SME Co-Investment Fund III.There is minimal near-term impact on the stocks under our coverage. However, sectors most affected include:

1. Healthcare sector will benefit the most as there will be more allocation of funds for the medical needs of the elderly plus higher insurance coverage. The S$8bn Merdeka package is mainly in the form of “medical bills” such as Medisave top-ups, CHAS subsidies, MediShield Life premium subsidy and incentive to join the new CareShield Life. Non-Merdeka package will be S$3.1bn for CareShield Life subsidies and ElderFund.

2. The dependency ratio for the services industry will be lowered 5% points to 35% by 2021. This is to reduce reliance on foreign worker. Most impacted will be restaurants, hotels and supermarkets.

3. Construction and marine sector no change to their dependency ratio ceiling.

4. Higher spending on defence will be supportive for ST Engineering. Defence expenditure will rise 5% to S$15.5bn.

5. Supermarkets will benefit marginally from lower duty-free allowance and lower value of goods granted GST relief for travellers outside Singapore.

6. Consumer sector, in general, will get some boost from the S$1.1bn Bicentennial Bonus via $300 GST Voucher, $100 Workfare Income Bonus, $200 personal income tax rebate and $150 Edusave top-up.

7. No changes to the planned GST rise from 7% to 9% from 2021 to 2025.

Singapore unveiled its 2019 budget on Monday, announcing – among other items – a S$1.1bn Bicentennial Bonus, a doubling of diesel tax and lower GST import relief for some travellers, tighter restrictions on foreign workers, a boost in spending on health care for its aging population and a tax rebate for some citizens ahead of an election that could come as early as this year.

DBS Group Holdings reported a 10 per cent increase in net profit after one-off items to $1.32 billion for the fourth quarter, up from $1.19 billion the year before. While business momentum remained healthy with “sustained loan growth and net interest margin progression”, results were “dampened” by weakness in treasury markets income.

SoftBank has provided half the money for a $400 million fund that will allow Abu Dhabi’s state investment firm to invest in European start-ups.

Best World International requested a halt in the trading of its shares with immediate effect on Monday morning at 11.23am, pending an announcement.

IX Biopharmahas entered into an agreement with independent third party Eurofins Australia New Zealand Holding for the proposed disposal of its entire stake in its wholly owned subsidiary, Chemical Analysis, for A$12.5 million (S$12 million) in cash.

Frasers Property has entered into an agreement to acquire a 17.8 per cent stake in PGIM Real Estate Asia Retail Fund Ltd (PGIM Real Estate) for S$356.4 million – subject to determination of the dividend amount payable in respect of the sale shares for Q4 2018.

KOH Teck Chuan, formerly chief executive at Hongkong Land subsidiary MCL Land, has been appointed chief executive of Frasers Hospitality, effective Feb 19.

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

Read the research report(s), available through the link(s) above, for complete information including important disclosures

Important Information

The information contained in this email and/or its attachment(s) is provided to you for information only and is not intended to or nor will it create/induce the creation of any binding legal relations. The information or opinions provided in this email do not constitute an investment advice, an offer or solicitation to subscribe for, purchase or sell the e investment product(s) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise. You may wish to seek advice from an independent financial adviser before making a commitment to purchase or investing in the investment product(s) mentioned herein. In the event that you choose not to do so, you should consider whether the investment product(s) mentioned herein is suitable for you. PhillipCapital and any of its members will not, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached to this email. The information and/or materials provided “as is” without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials.
Confidentiality Note
This e-mail and its attachment(s) may contain privileged or confidential information, which is intended only for the use of the recipient(s) named above. If you have received this message in error, please notify the sender immediately and delete all copies of it. If you are not the intended recipient, you must not read, use, copy, store, disseminate and/or disclose to any person this email and any of its attachment(s). PhillipCapital and its members will not accept legal responsibility for the contents of this message. Thank you for your cooperation.


Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you


This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  


Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com