Daily Morning Note – 20 Aug 2019


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Stocks rose sharply on Monday as Treasury yields rebounded, quelling fears of a possible recession. Equities also got a boost after the U.S. agreed to extend a temporary reprieve to Chinese telecom giant Huawei.

The Dow Jones Industrial Average closed 249.78 points higher, or 1%, at 26,135.79. The S&P 500 gained 1.2% to close at 2,923.65 as the energy and tech sectors outperformed. The Nasdaq Composite advanced 1.4% to end the day at 8,002.81.


A former Walt Disney accountant has accused the company of overstating revenue for years and has filed a series of whistleblower tips with the US Securities and Exchange Commission.

European shares ended higher for a second straight session on Monday on signs that measures would be adopted to prop up growth in major economies, while bond yields rebounded amid improved global sentiment plagued by recession worries.

Wall Street stocks rose for a third straight session on Monday, joining a global rally amid talk of economic stimulus in Germany and China and expectation of further Federal Reserve interest rate cuts.

HONG Leong Asia’s takeover offer for its Malaysian subsidiary Tasek closed at 5pm on Aug 19, with Hong Leong Asia holding an 88.16 per cent stake.

Singapore dividend payout slides 11.6% to US$3.8b in Q2: index

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


China Shenhua Energy Co Ltd

Recommended Action: Technical SELL

We expect China Shenhua (1088 HK) continued bearish momentum will continue based on the technicals.

Read more technical pulse


CapitaLand Limited – All systems go

Recommendation: BUY (Upgraded), Last Done: S$3.40

Target Price: S$4.20, Analyst: Natalie Ong

– 2Q19 was down -19.3% YoY due to timing difference of residential handovers in China and Vietnam (back-ended into 2H19, Figure 1 and 2).

– Gradual relaxation of the price caps in China led to a 19% QoQ increase in sales price for 2Q19 – sales momentum remains healthy.

– Expanding recurring income stream through fund management platform and management contracts via Lodging segment (Ascott).

– Deleveraging a near-term focus. Aggressive divestment of non-core assets will help CAPL achieve 0.64x gearing ahead of 2020 target.

– Upgrade to BUY with higher TP of S$4.20, due to incorporation of CAPL-ASB merger.

PropNex Ltd – The clear leader

Recommendation: BUY (Maintained), Last Done: S$0.50

Target Price: S$0.59 Analyst: Paul Chew

– 2Q19 results missed our estimates. We slashed our FY19e earnings by 32%. Transaction volumes were much weaker than our initial assumptions.

– PropNex maintained its impressive market share of new launches at around 48%. It expanded its agency force by 649, the most in the industry this year. PropNex maintains its status as the largest real estate agency in Singapore with 8049 agents.

– Net cash of S$73mn and interim dividend payout of 81% (or S$ 1.25 cents).

– We maintain our BUY recommendation. Our target price is lowered to S$0.59 (previously S$0.63). We cut our FY19e and FY20e net profit forecast by 32% and 35% respectively. Our target price was cut less materially as we lowered our estimates in working capital required.

Asian Pay Television Trust – Earnings still downtrend, but a place to hide

Recommendation: NEUTRAL (Upgraded), Last Done: S$0.17

Target Price: S$0.165 Analyst: Paul Chew

– Revenue met our estimates but EBITDA was modestly better than expected due to the significant fall in content cost.

– Both subscribers and ARPU for cable TV still trending down. Broadband revenues finding some stability on a QoQ basis.

– Capital expenditure remains elevated at almost 25% of revenue (1H19) vs 22% a year ago (1H18).

– The attraction of APTT is the committed two-year DPU of 1.2 cents per year (or yield of 7.1%). The yield stands out in the current environment of depressed interest rates. We raised our target price marginally to S$0.165 as we increased our EBITDA forecast and lowered our interest expense assumptions. We peg APTT at around 9.5x EV/EBITDA. This is a 15% discount (prev. 10%) to their much larger Taiwanese peer valuations. We are upgrading our recommendation from REDUCE to NEUTRAL.

Read more research reports.

Webinar Of The Week

Market Outlook: : Market Outlook: (PSR) China Aviation (Singapore) Oil, China Everbright Water Limited, CNMC Goldmine Holdings Limited, Dasin Retail Trust, EC World REIT, ComfortDelGro Corp Ltd, Banyan Tree Holdings Limited, US Weekly, China Weekly, Technical Outlook

Date: 19 August 2019

For more on Market Outlook

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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