DAILY MORNING NOTE | 2 March 2023

Trade of the Day

CapitaLand China Trust (SGX: AU8U)

Analyst: Zane Aw

(Current Price: S$1.16) – TECHNICAL BUY

Buy price: S$1.16 Stop loss: S$1.11 Take profit 1: S$1.24
Take profit 2: S$1.29

Singapore shares ended lower on Wednesday (Mar 1), tracking overnight losses on Wall Street amid rising concerns of persistent inflation. The Singapore market fell 0.2 per cent or 7.55 points to close at 3,255.08. Gainers outnumbered losers 323 to 236, after 4.5 billion securities worth S$1.4 billion changed hands.

Wall Street’s main indexes opened lower on Wednesday (Mar 1) as Treasury yields rose on bets of more rate hikes by the Federal Reserve that offset optimism from strong China manufacturing data. The Dow Jones Industrial Average fell 0.33 points, or 0.00 per cent, at the open to 32,656.37. The S&P 500 opened lower by 6.81 points, or 0.17 per cent, at 3,963.34, while the Nasdaq Composite dropped 7.96 points, or 0.07 per cent, to 11,447.58 at the opening bell.

SG

Agribusiness giant Japfa on Wednesday (Mar 1) posted a net loss of US$35.9 million for the second half of 2022, a reversal from net profit of US$0.3 million in the corresponding period for 2021. Earnings for the full year came in at US$8.2 million, down from US$118.8 million in 2021. The group said its margins were impacted by high raw material costs combined with limited increases in average selling prices (ASPs) across all the businesses in its PT Japfa Tbk and Animal Protein Other (APO) segments. Revenue for H2 was up 3 per cent to about US$2.2 billion from US$2.1 billion, while full year revenue rose 7 per cent to US$4.4 billion.

Property developer OUE Limited reported earnings of S$101.2 million for the second half of 2022, close to double that of its net profit of S$50.9 million in the corresponding prior-year period. The stronger bottomline showing was due chiefly to higher revenue, which rose to S$292.4 million from S$148.8 million. The board of directors has proposed a final cash dividend of S$0.015 per share, up from the final dividend of S$0.01 per share in 2021. The dividend, if approved by shareholders at the annual general meeting on Apr 25, will be paid out on May 31.

ValueMax Group on Wednesday (Mar 1) reported earnings of S$19.2 million for the second half of 2022 ended December, down 16.8 per cent from the net profit of S$23.1 million in the corresponding period in 2021. Revenue for the period was down 7.1 per cent at S$133.6 million from S$143.9 million. Topline contributions from the group’s retail and trading of jewellery and gold business declined by S$17.3 million during H2. This was, however, partially offset by higher revenue contributions from the company’s money lending business and interest income from pawnbroking business, which saw revenue rise by S$4 million and S$3 million respectively.

Interest rates on the latest issuance of Singapore Savings Bonds (SSBs), which opened on Wednesday (Mar 1), have risen again, following a series of declines in recent months. The April tranche of SSBs, which are backed by the Singapore government, is offering a first-year interest rate of 3.01 per cent, and a 10-year average return of 3.15 per cent. A month earlier, the March issuance opened with a first-year interest rate of 2.76 per cent, and a 10-year average return of 2.9 per cent. Coupon rates of SSBs rose alongside rising interest rates in 2022. They peaked during December 2022’s tranche, which offered a record high first-year interest rate of 3.26 per cent and an average 10-year return of 3.47 per cent.

OIL exploration and production company Rex International on Wednesday (Mar 1) posted a net loss of US$5.8 million for the second half of 2022, versus a net profit of US$43.2 million in the corresponding period in 2021. Revenue for the period from the sale of crude oil was down 14 per cent to US$70.8 million from US$82.7 million, The group has proposed a final dividend of S$0.005 per share, unchanged from the final dividend in 2021. Rex International is targeting to pay out the dividend in May, assuming shareholders approve the dividend payout at the company’s upcoming annual general meeting that will be convened on or before Apr 30.

US

PropertyGuru reported an 80.7 per cent drop in losses for Q4 FY2022 to S$5.2 million from S$27.2 million in Q4 FY2021. Q4 FY2022 revenue grew 16.8 per cent to S$40.1 million from S$34.3 million a year prior. For FY2022, the property listings portal reported a 31.1 per cent year-on-year drop in losses from S$187.4 million to S$129.2 million, as FY2022 revenue grew 35 per cent to S$135.9 million from S$100.7 million in FY2021. Marketplaces continue to be the main revenue driver for PropertyGuru, with Singapore being the top revenue contributor. The Singapore marketplace grew 24 per cent from S$55.9 million in FY2021 to S$69.2 million in FY2022. The growth was driven by the increase in average revenue per agent (ARPA) and an increase in overall agents.

Salesforce shares soared 16% in extended trading on Wednesday after the cloud software maker beat Wall Street estimates on profit and issued a better-than-expected forecast. Salesforce’s revenue grew 14% year over year in the fiscal fourth quarter, which ended on Jan. 31, consistent with the previous quarter, according to a statement. The company reported a loss of $98 million, compared with a loss of $28 million in the year-ago quarter. The adjusted operating margin, at 29.2%, was the highest in the company’s history and wider than the 25% goal for the fiscal 2026 fiscal year that executives had laid out at its investor day in September.

Oil prices settled up slightly on Wednesday as signs of ample supply, including growing US crude inventories, offset growing hopes for higher demand after a jump in manufacturing in top crude importer China. Brent crude futures settled up 86 cents, or 1 per cent, to US$84.31 a barrel. US West Texas Intermediate crude (WTI) settled up 64 cents, or 0.8 per cent, to US$77.69. US crude inventories rose by 1.2 million barrels last week to 480.2 million barrels last week to the highest since May 2021, government data showed, beating analyst expectations of a 457,000-barrel rise. It was the 10th straight weekly increase.

Gold prices edged lower on Wednesday (Mar 1) as the dollar ticked up, while investors braced for more US interest rate hikes amid stubbornly high inflation. Spot gold was down 0.2 per cent at US$1,824.06 per ounce, as of 0047 GMT. US gold futures fell 0.3 per cent to US$1,831.30. The dollar index rose 0.1 per cent, making bullion more expensive for buyers holding other currencies.

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

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