DAILY MORNING NOTE | 20 September 2023

Trade of the Day

Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6)

Analyst: Zane Aw

(Current Price: S$1.65) – TECHNICAL SELL
Sell price: S$1.65 Stop loss: S$1.70 (-3.03%)
Take profit 1: S$1.55 (+6.06%) Take profit 2: S$1.50 (+9.09%)

Singapore shares fell in tandem with most regional indices, with investors cautiously waiting on the upcoming US Federal Reserve meeting that is taking place over the next two days. Fed officials are widely expected to hold interest rates at their current level. It was 0.7 per cent or 22.64 points lower at 3,240.75 points. Gainers beat decliners marginally 256 to 253 across the broader market, with 1.1 billion securities worth a total of S$888.9 million in value transacted.

Wall Street stocks retreated on Tuesday as markets prepared for a Federal Reserve decision and monitored lofty Treasury bond yields and the oil market. The Fed is widely expected on Wednesday to keep interest rates unchanged, but markets are focused on the risk of additional interest rate hikes later in 2023. The Dow Jones Industrial Average declined 0.3 per cent to 34,517.73. The broad-based S&P 500 dipped 0.2 per cent to 4,443.95, while the tech-rich Nasdaq Composite Index also lost 0.2 per cent at 13,678.19.

SG

Thomson Medical Group has been granted three months by the Singapore Exchange (SGX) to explore options to restore its public float, which dropped below 10 per cent last week. The company has until Dec 10, 2023 to do so, it said in a bourse filing on Tuesday (Sep 19). It is also allowed to continue in the trading of its shares during this period. The company applied to the SGX on Sep 13 to seek approval for a period of three months for the public float to be restored, and to not suspend trading of its shares in the meantime. On Sep 12, Thomson Medical reported that an internal verification it had carried out found that the percentage of shares held by public shareholders – amounting to more than 8,000 – had dipped to 9.98 per cent. Under the public float rule, at least 10 per cent of the company’s shares must be held by public investors.

The offeror of coal miner Golden Energy and Resources (Gear) has exercised the right to compulsorily acquire all shares of the company, especially those from shareholders who have not accepted the exit offer by the close date of Aug 15. Following the completion of compulsory acquisition, the offeror, Duchess Avenue, will own all the shares of the company. Duchess Avenue is a wholly-owned subsidiary of Star Success, whose director is Sinar Mas’ Indra Widjaja. Gear will become a wholly-owned subsidiary of Duchess Avenue, and will be delisted from the Singapore Exchange at a date and time to be announced. Duchess Avenue’s initial offer price for Gear was S$0.16 per share, but this was later raised by 13 per cent to an offer price of S$0.181 per share. The cash alternative price was raised by 18 per cent to 6,500 rupiah from 5,500 rupiah, with the revised cash alternative price being paid in Singapore dollars based on a fixed exchange rate of S$1 to 11,432.09 rupiah. As at 6 pm on Aug 10, the exit offer for Gear received valid acceptances representing 97.21 per cent of the total shares in the company.

From Oct 9, SingPost will increase its standard regular mail rates by S$0.20 or 65 per cent to S$0.51, from the current S$0.31. The last significant rate increment was in 2014, when postage increased to S$0.30 from S$0.22. “SingPost has been absorbing inflationary costs and essentially kept our postage rates constant since 2014. With the intensifying cost pressures and challenging business landscape, it is inevitable that we raise our prices to remain commercially sustainable so that we can continue providing the essential postal service for the nation,” said Neo Su Yin, the group’s Singapore chief executive. The move comes amid a global structural decline in postal volumes over the last decade, which SingPost attributed to digital disruption which impacted the commercial viability of postal firms globally. It noted that its mail volumes have declined more than 40 per cent between FY2018/19 and FY2022/23.

US

Intel said on Tuesday (Sep 19) that a new chip due in December will be able to run a generative artificial intelligence chatbot on a laptop rather than having to tap into cloud data centres for computing power. The capability, which Intel was expected to show during a software developer conference held in Silicon Valley, could let businesses and consumers test ChatGPT-style technologies without sending sensitive data off of their own computer. It is made possible by new AI data-crunching features built into Intel’s forthcoming “Meteor Lake” laptop chip and from new software tools that the company is releasing. Intel executives also expect to say that the company is on track to deliver a successor chip called “Arrow Lake” next year, and that Intel’s manufacturing technology will rival the best from Taiwan Semiconductor Manufacturing Co, as it has promised. Intel was once the best chip manufacturer, lost the lead, and now says it is on track to return to the front.

Oil prices rose to 10-month highs on Tuesday before easing, as investors took profits following three sessions of gains that followed extended production cuts from Saudi Arabia and Russia. Global benchmark Brent crude futures settled 9 cents lower at US$94.34 a barrel. Earlier, it hit a session peak of US$95.96 a barrel, their highest since November. US West Texas Intermediate crude futures dropped 28 cents to US$91.20 after earlier reaching US$93.74 a barrel, also the highest since November.

Walt Disney said on Tuesday (Sep 19) it would nearly double its capital expenditure for the parks business to about US$60 billion over the next 10 years. Disney CEO Bob Iger and parks chief Josh D’Amaro announced the accelerated pace of investment at a gathering of Wall Street analysts and investors at Walt Disney World Resort in Orlando, Florida. The parks business has become a reliable profit engine for the company and has helped cushion losses in the Disney+ streaming business, which is expected to become profitable only next year. Iger has described the parks as “a tremendous business” for Disney. Disney said its parks, experiences and products segment has expanded at a combined annual growth rate of 6 per cent since fiscal 2017, and generated US$32.3 billion in operating income over the last 12 months, according to a presentation included in a regulatory filing.

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

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