DAILY MORNING NOTE | 19 June 2023
Week 25 equity strategy: The market would likely look past the risk of a QoQ contraction in 2Q GDP to focus on the visit of US Secretary of State to China. Optimism over China is raised as the visit could initiate meaningful dialogue and potentially ease tensions between the two economies. China cut the medium-term lending rates further to 2.65%, which would translate to lower mortgage rates. The market is expecting more stimuli to be rolled out at the July Politburo meeting.
Corporate earnings growth might be lacklustre in the 2Q reporting season from mid-July due to base effect, and the market will be seeking yields. REITs are well-placed as Fed’s policy stance suggests that rates might have peaked, which help stabilise asset value and cap the rise in funding costs.
We are pleased to share that the highly anticipated Strategy & Stock Picks for 3Q2023 is happening next month! Join us online to get valuable insights from our Research Analysts:
US Market: Thu, 13 July, 7.30pm – 9pm
Singapore Market: Sat, 15 July, 10am – 12pm
Singapore stocks closed 0.5 per cent higher on Friday (Jun 16), marking a second consecutive winning week. Sats led the gainers, climbing 5.8 per cent to close at S$2.74. Other top gainers for the day include Frasers Logistics & Commercial Trust and Venture Corp, which were up 2.4 and 2.3 per cent respectively.
Wall Street stocks gave back a fraction of the week’s gains on Friday (Jun 16), dipping after the prior session’s surge. The broad-based S&P 500 finished at 4,409.59, down 0.4 per cent for the day, the Dow Jones Industrial Average dipped 0.3 per cent to 34,299.12 and the tech-rich Nasdaq Composite Index dropped 0.7 per cent to 13,689.57.
Singapore’s non-oil domestic exports (NODX) fell by 14.7% on a y-o-y basis in May, lower than the forecast of 7.9% y-o-y decline. Electronic NODX fell by 27.2% in May, extending the decline from April while Non-electronic NODX fell by 10.7%, also extending April’s decline. Exports to Singapore’s top markets fell with Hong Kong, Malaysia and Taiwan being the largest contributors to the decline at 41.2%, 26.2% and 19.4% respectively. Meanwhile, NODX to China and the US rose.
Two major shareholders cum executive directors of property developer and hotel group Amara Holdings, Albert Teo Hock Chuan and Susan Teo Geok Tin, are currently engaged in confidential discussions with a third party in relation to a possible transaction involving the company. Amara Holdings, in its regulatory filing on Sunday (Jun 18), referred to “unusual price movements and the higher than usual volume of trading” in its shares last Thursday and Friday.
ISDN’s two additional mini-hydropower plants, Anggoci and Sisira, have received their commercial operation date (COD) on June 15. Both plants will operate on a commercial basis immediately as of the COD. The commercialisation of both plants, which have a capacity of 10MW and 4.6MW for Anggoci and Sisira respectively, is expected to make “meaningful contributions” to the group’s earnings moving forward. Anggoci and Sisira represent the second and third successful hydropower launches for ISDN’s clean energy business unit in the last 12 months.
Glove manufacturer Top Glove Corporation on Friday (Jun 16) posted a net loss of RM130.6 million (S$37.8 million) for the third fiscal quarter ended May 31, a turnaround from its earnings of RM15.3 million in the corresponding year-ago period. The latest quarterly loss took the company’s net loss for the nine-month period ended May 31 to RM463.5 million. In the corresponding period ended May 31, 2022, it had booked a net profit of RM288.6 million.
Samudera Shipping Line on Jun 7 agreed to buy two container vessels from unrelated third parties for a total of US$59.9 million. Each vessel has a capacity of 1,500 twenty-foot equivalent units. They are expected to be delivered in the second half of this year, Samudera said in a bourse filing on Friday (Jun 16). The purchase is not expected to have any material impact on the net tangible assets and earnings per share of the group for the financial year ended Dec 31, 2023.
US chipmaker Micron said on Friday (Jun 16) it would invest more than US$600 million in its packing and testing factory in northwest China, less than a month after Beijing banned its chips from critical infrastructure projects. In a WeChat statement, the firm said it would invest the sum over the next few years in its plant in the city of Xi’an to acquire equipment and add a new factory at the facility. Micron said it would buy the chip-packaging equipment from the Xi’an-based Licheng Semiconductor, which had already been operating some equipment in the US company’s facility under a previous agreement.
Meta, owner of Facebook and Instagram, plans to lower the recommended age for using its Quest headset to 10 from 13, the company said in a blog post on Friday (Jun 16), a move that could set off new privacy and safety concerns with parents and global watchdogs. Meta said it would require a preteen’s parental approval to set up an account, and that young users would only see apps and content rated for the preteen age group. The Quest headset allows people to enter the so-called metaverse – an immersive online world – and to play virtual reality games and do other tasks.
Britain’s competition regulator on Friday (Jun 16) cleared Amazon.com’s planned US$1.7 billion acquisition of iRobot Corp, maker of the Roomba vacuum cleaner. The Competition and Markets Authority (CMA) said it had concluded that the deal would not lead to competition concerns in the UK. In April, the CMA had launched a “Phase 1“ probe into the deal which was announced in August last year as Amazon sought to expand its stable of smart-home devices, which include the Alexa voice assistant, smart thermostats, security devices, wall mounted smart displays and a canine-like robot called Astro.
Intel said on Friday (Jun 16) it will invest up to US$4.6 billion in a new semiconductor assembly and test facility near Wroclaw, Poland, as part of a multi-billion-US dollar investment drive across Europe to build chip capacity. The facility in Poland will employ 2,000 workers and create several thousand additional jobs during the construction phase and hiring by suppliers, the company said in a statement. Design and planning for the facility will begin immediately, with construction to commence pending European Commission approval.
Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR
Recommendation: Accumulate (Maintained), Last Done: S$7.11
Target price: S$8.33, Analyst: Darren Chan
• Impact of latest cooling measures manageable with most of its launches in the mid-tier and mass market segments. The Myst remains on track for launch in 2H23.
• Hospitality segment continues to benefit from travel recovery with RevPAR surging 65.4% YoY to S$131.2 in 1Q23, driven by increases in room rates and occupancy in Asia and Australia.
• Maintain ACCUMULATE with a lower RNAV-derived TP of $8.33, a 45% discount to RNAV of S$15.13. We view CDL as a proxy for the Singapore residential market and hospitality recovery. Asset monetisation, unlocking value through AEIs and redevelopments, and faster-than-expected recovery in the hospitality portfolio are potential catalysts for CDL, which could help narrow the discount between CDL’s share price and RNAV.
PSR Stocks Coverage
For more information, please visit:
Guest Presentation by Uni-Asia Group Limited [NEW]
Date: 23 June 2023
Time: 12pm – 1pm
Guest Presentation by United Hampshire US REIT [NEW]
Date: 28 June 2023
Time: 7pm – 8pm
PHILLIP RESEARCH IN 3 MINS
Phillip Research in 3 minutes: #29 Keppel Corporation; Initiation
Click here for more on Phillip in 3 mins.
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 揳s 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.
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.