Daily Morning Note – 21 Aug 2020
Asian stocks looked set for gains Friday after a rise in U.S. technology shares drove the Nasdaq 100 to a record, tempering concern over a bumpy economic recovery. Treasuries climbed. Futures pointed higher in Japan, Hong Kong and Australia. The S&P 500 saw modest gains as a rally in technology heavyweights offset a slide for energy producers and banks amid light trading volume. The benchmark shrugged off earlier weakness from disappointing jobs data. Money managers are bracing for upheaval, with stocks at an all-time high. The 10-year Treasury yield fell to 0.65% and the dollar weakened. Crude oil retreated, while gold rose.
The Office of the Comptroller General of Brazil (CGU) has suspended its administrative enforcement procedure (AEP) against five subsidiaries of Keppel Corp in relation to “alleged irregularities under the Brazilian Anti-Corruption Statute”. In a bourse filing on Thursday, Keppel announced that it had received confirmation of the suspension, and will make further announcements should “material developments” arise.
Pandemic-related movement restrictions and economic deterioration hit Singtel‘s performance “especially hard” in the first quarter of fiscal 2021, Standard & Poor’s (S&P) Global Ratings said on Thursday.
United Overseas Bank (UOB) is resuming full branch operations in Singapore on Thursday with the reopening of its remaning seven branches, concluding the final phase of its safe reopening branch plan amid the Covid-19 pandemic.
Shares of agri-food giant Wilmar International fell 10 per cent on Thursday morning after one of its largest shareholders, Archer Daniels Midland (ADM), announced plans to sell off shares and bonds worth US$800 million.
Singapore Airlines (SIA) has used S$4.4 billion, or half, of the S$8.8 billion that it has raised during the rights issue in June, it said in an update.
China Aviation Oil (Singapore) (CAO) on Thursday called the allegations made against the company by Banque de Commerce et de Placements SA, DIFC Branch (BCP) “entirely unmeritorious and misconceived”, and said that it has sought legal advice from a local law firm.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Analyst: Chua Wei Ren
Recommended Action: Technical BUY
SATS Ltd (SGX: S58) Strong bearish trend has met with a series of correction since Mid-March 2020. Although the dominant trend is still ongoing, technicals suggest that the stock will make another high at wave E of the corrective 5-wave Elliott triangle before a strong impulse sell down.
Yoma Strategic Holdings – Topline positive amidst COVID-19
Recommendation: BUY (Maintained), Last Done: S$0.29
Target Price: S$0.46, Analyst: Tan Jie Hui
– Overall revenue saw 3.2% growth YoY underpinned by 21.4% and 33.3% growth in Yoma Land and Yoma Motors respectively, offset by -30.9% YoY performance by Yoma F&B.
– Yoma Land’s revenue is well supported by a backlog of unrecognized revenue, while Yoma Motors’ growth is attributable to pent up demand in the Heavy Equipment segment.
– Maintain BUY with an unchanged target price of $0.46.
JEP Holdings Ltd – Aviation to hibernate
Recommendation: REDUCE (Downgraded), Last Done: S$0.19
Target Price: S$0.158, Analyst: Paul Chew
– 1H20 results were below expectations, excluding the government grant, PATMI would have declined 22% YoY to an estimated S$2.6mn.
– The collapse in international air travel has reversed from the previous insufficiency in aircraft production capacity to the current overcapacity. Orders have been mothballed.
– We are downgrading to REDUCE. Aerospace was around 60% of JEP revenues. We are not expecting any recovery in aerospace orders until end 2022. Semiconductor project and cost restructuring will be the company focus in the medium term, in our opinion. Our target price is now cut to S$0.158 and benchmarked to the book value of the company.
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Date: 17 August 2020
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