Daily Morning Note – 19 February 2020



European shares dropped on Tuesday as a revenue warning from Apple hammered iPhone parts makers and underlined the impact of the coronavirus outbreak on global supply chains.

However, the pan-European Stoxx 600 index ended off session lows helped by defensive buying as well as merger activity among Italian banks.

Milan shares closed at their highest in over a decade as Intesa Sanpaolo’s 4.86 billion euro (S$7.32 billion) bid for smaller rival UBI Banca sparked hopes of much-awaited consolidation among other Italian banks.

Italy’s banking index jumped 1.6 per cent to close at a 1-1/2 year high, with UBI Banca soaring 24 per cent.


Property investment firm IPC Corp said on Tuesday that the Covid-19 outbreak has negatively impacted the business of Nest Hotel Japan Corporation (NHJC), in which IPC owns preference shares.

Hotel Properties Limited (HPL) plans to add another Italian hotel to its portfolio, this time from Italy’s Dolomites region. HPL Dolomites, which is 80 per cent owned by HPL Europe, has agreed to acquire 90 per cent of the corporate capital and voting rights in Alpina Dolomites SRL from Misam S.r.l. for 40.6 million euros (S$61 million), with a net working capital adjustment to be finalised later.

AEI Corp, which has been placed on the SGX Watchlist, said on Tuesday that it expects to report a loss for the 2019 financial year ended Dec 31, 2019. The loss was mainly due to the operating and impairment loss on the disposal of the company’s existing business and the prevailing poor business environment.

Security firm Secura on Tuesday said it made a net profit of S$366,000 last year, down 80 per cent from 2018. Revenue in the 12 months ended Dec 31, 2019 was S$38.7 million, down 6 per cent from 2018. The group cautioned that its security guarding segment will decline substantially in the next financial year as a few major contracts were not renewed. Security guarding accounted for S$26.2 million of group revenue last year.

Sing Holdings posts 305% jump in 2019 earnings of S$45.4m. Sing Holdings made a net profit of S$45.4 million last year, up 305 per cent from S$11.2 million in 2018.

Pan-United Singapore’s biggest producer of ready-mix concrete, on Tuesday posted a fourth-quarter net profit of S$5.4 million, up 167 per cent from S$2 million in the same period a year earlier.

Oil prices were near flat on Tuesday, pressured by concerns over the impact on crude demand from the coronavirus outbreak in China, but prices drew support from a reduction in supply from Libya.

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


Henderson Land Development Co Ltd

Recommended Action: Technical SELL

Henderson Land (HK: 12) bullish move from 34.70 seems to be a correction rather than a bullish impulse based on the technical.

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Singapore Strategy – Big fiscal boost to relief cost

Analyst: Paul Chew

— Singapore GDP forecast for 2020 downgraded by MTI to -0.5% to +1.5% (previously +0.5% to +2.5%). Baseline growth rate for 2020 is 0.5% (2019: +0.7%)

— Overall 2020 fiscal deficit of S$10.9bn (2.1% of GDP). This compares with the 2019 S$1.6bn deficit (0.3% of GDP). Net Investment Returns is expected to be the largest contributor to government coffers in 2020 at S$18.6bn.

— Planned 2% point increase in GST to be deferred to 2022 to 2025.

— Major stimulus includes wage relief, payouts to households and income tax rebate. The government added it is prepared to offer more if the situation worsens.

— There is no change to our recommendations or forecast. The budget provides some near-term cost relief but it does not change the demand dynamics. A beneficiary of the budget will be supermarket operator Sheng Siong through the wage relief and cash disbursements to households.

ComfortDelGro Corp Ltd – Hurt by one-offs

ACCUMULATE (Maintained); TP S$2.20, Last close: S$2.09

— Revenue and PATMI were within expectations, excluding S$27.3mn impairment on the taxi business. Excluding provisiionsgroup PATMI would have declined an estimated 5%.

— Public transport services was surprisingly the worst hit segment with 25% YoY drop in 4Q19 operating profit. We believe a lumpy license fee could have been the trigger.

— Headline results was weak due to provision in taxi business and likely license fee expenses. We maintain ACCUMULATE but with a lower target price of S$2.20 (prev: $2.56). Our PATMI for FY20e is lowered by 16% to account for weaker traffic, rental rebates and disruption in China operations.

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Market Outlook: Market Outlook: (PSR) DBS, IREIT, APTV, MMH, NTL, SATS, Singtel, ThaiBev, REITs Monthly & SG Bonds

Date: 18 February 2020

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Phillip Research in 3 minutes: #17 – IREIT Global; Initiation

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