Daily Morning Note – 2 Aug 2019
WEEKLY MARKET OUTLOOK WEBINAR
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Stocks fell sharply on Thursday, erasing a big surge from earlier in the day, after President Donald Trump said the U.S. would impose an additional 10% tariff on Chinese imports to the U.S.
The Dow Jones Industrial Average closed 280.85 points lower at 26,583.42 after rallying as much as 311 points earlier in the day. The S&P 500 ended the session down 0.9% at 2,953.56 after rallying more than 1%. The Nasdaq Composite closed down 0.8% at 8,111.12 after jumping more than 1.6%.
President Donald Trump announced Thursday he will hit China with punitive tariffs on another US$300 billion in goods. The 10 per cent duties will take effect September 1, and come on top of the 25 per cent tariffs on US$250 billion in imports already in place.
CapitaLand Retail China Trust, which is buying three shopping centres from CapitaLand, launched on Thursday the equity fundraising exercise for the purchase. The manager plans to raise gross proceeds of between S$273.4 million and S$279.4 million, in a private placement and a pro rata and non-renounceable preferential offering for unitholders.
Jardine hotelier Mandarin Oriental’s profit plunged by 52 per cent year-on-year to US$10.7 million for the six months to June 30, as revenue fell by 8 per cent to US$641 million on the closure of the iconic The Excelsior in Hong Kong, and lower earnings from a Bangkok hotel shut in March for renovation.
BreadTalk Group’s second-quarter net profit fell by 57.9 per cent to S$1.02 million for the three months to June 30, even as revenue rose by 9.8 per cent to S$163.3 million. Despite higher takings across the key bakery, food atrium, restaurant and “4orth” food concept businesses, the bottom line was done in by a jump in distribution and selling expenses.
Hi-P International’s cost controls paid off in the second quarter, as earnings rose despite a decline in revenue. Net profit for the three months to June 30 was up by 16.9 per cent year-on-year to S$14.4 million.
Dairy Farm International rose 5.4 per cent to US$176.6 million for the half-year ended June 30, from a restated US$167.5 million a year ago. The accounts were restated due to changes in accounting policies.
Chip Eng Seng turned in a net profit of S$3.99 million for the three months to June 30, less than one-third of the S$12.2 million that it earned in the year-ago period. Group revenue fell by 7.2 per cent year-on-year to S$237.4 million, with hospitality the only division to post growth.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Keppel DC REIT
Recommended Action: Technical SELL
Keppel DC REIT had a strong start this year. The bulls charging up strongly for the whole of July. However, during the period between June and July, the bulls were exhibiting exhaustion.
Singapore Exchange Limited – Record derivatives performance cushions equities softness
Recommendation: ACCUMULATE (Maintained), Last Done price: S$7.92
Target Price: S$8.09, Analyst: Tin Min Ying
– 4Q19 net profit up 24% YoY, 7.6% above our forecast.
– Derivatives volume surged 33% YoY, driven by FTSE China A50 futures, MSCI Taiwan and iron ore derivatives contracts.
– SDAV fell 14% YoY as investors adopt a cautious stance in face of slowing economic growth.
– Full dividend per share of 30 cents fell short of our FY19 DPS target of 31.5 cents.
– We maintain ACCUMULATE at an unchanged TP of S$8.09. We peg our TP to 21x P/E, 1 SD below SGX’s 5-year mean.
Phillip Macro – 5 key points arising from July FOMC Meeting
Analyst: Edmund Xue
– Federal Reserve ends quantitative tightening and cuts rate for the first time since 2015
– The Fed reduced the Fed funds rates by 25bps instead of a bigger 50bps as predicted by the Fed funds futures prices.
– GDP data point to continued strength in the economy.
– A steady rise in inflation and record-low unemployment
– The Fed also announced its decision to reduce its balance sheet, two months earlier than previously indicated.
Webinar Of The Week
Date: 29 July 2019
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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