Daily Morning Note – 24 Febraury 2021


US stocks bounced back after sharp early losses, to end Tuesday’s session largely stable following Federal Reserve Chair Jerome Powell pledging to keep interest rates low until inflation rises consistently.

The benchmark Dow Jones Industrial Average dropped nearly 350 points in early trading, but recovered to close with a scant gain of less than 16 points at 31,537.35, while the broad-based S&P 500 edged up 0.1 per cent to finish at 3,881.37. But the tech-rich Nasdaq Composite Index fell another 0.5 per cent to 13,465.2.

Markets have become jittery about the prospects that the pandemic recovery – fueled by the US$1.9 trillion economic stimulus package making its way through Congress – will ignite inflation leading to rising lending rates.



Food-court operator Koufu’s net profit for the six months ended Dec 31, 2020 nearly halved year on year – from S$13.58 million down to S$7.35 million – as the pandemic impacted revenue. Revenue for H2 2020 was 15 per cent lower at S$103.4 million, on the back of lower contributions from both its outlet and mall-management business segment, as well as its food and beverage (F&B) retail business segment. Earnings per share worked out to 1.32 Singapore cents for the period under review, down from 2.45 cents a year ago.

Singapore Airlines (SIA) will proceed with plans to retrofit three more Airbus A-380 aircraft with newer cabin products despite the current Covid-19 pandemic. The airline has moved one of its A-380s from the Alice Springs storage facility in Australia to Sydney. The plane will undergo routine checks in the city before being moved back to Singapore for a scheduled retrofitting and maintenance programme, SIA said on Monday.

Singtel associate Bharti Airtel said on Tuesday it would collaborate with US chipmaker Qualcomm for 5G services to the world’s second largest wireless market. The country’s No 2 telecom operator will use Qualcomm’s Radio Access Network platform, which runs services on the cloud, to roll out 5G networks in the country, it said in a statement to stock exchanges. India is yet to auction 5G airwaves, while telecom service providers globally are locked in a race for 5G roll out, which promises internet speeds up to 20 times faster than existing networks.

OUE Lippo Healthcare (OUELH) on Tuesday announced a recapitalisation plan backed by its major shareholders to convert its S$189.6 million of shareholder loans from OUE to 4 per cent convertible perpetual bonds that can be converted into ordinary shares at 7 cents each. This came on the same evening as it announced staggering net losses of S$97.5 million in its second half ended Dec 31, 2020, a reversal from a net profit of S$3 million a year ago. Revenue was flat at S$10.1 million for the six months.

EC World Reit’s (ECW) distribution per unit (DPU) for the fourth quarter ended Dec 31, 2020 fell 5.5 per cent to 1.427 Singapore cents, from 1.51 cents a year ago. However, gross revenue rose 14.2 per cent year on year to S$29.53 million, while net property income (NPI) was up 11.1 per cent at S$27.2 million. Gross revenue and NPI were bolstered by the acquisition of e-commerce logistics asset Fuzhou E-commerce, organic rental escalations and the appreciation of the RMB against the Sing dollar, it said.

Developer United Industrial Corp (UIC) reported an 85 per cent year-on-year slump in net profit for the full year ended Dec 31, 2020 to S$90.23 million. The group was weighed down by a fair-value loss on investment properties of S$125.8 million in FY2020, compared to a fair-value gain of S$148.5 million in FY2019. At the same time, its results in FY19 were boosted by a one-off gain of S$210.3 million from the acquisition of additional interest in Aquamarina Hotel.


Shopee the e-commerce arm of South-east Asia’s Sea, has launched an app for Mexico, where it plans to offer online sales in what would be its second market in the Americas, a Reuters review showed on Monday. The expansion to Mexico, Latin America’s second-largest economy, could mark a major new growth opportunity in cross-border sales, a market already explored by shopping app Wish. According to a preview of the app on the Apple website in Mexico, Shopee will offer free shipping throughout Mexico, offering items including electronics, clothes, toys and home goods.

Asian mixed martial arts firm One Championship is considering options including seeking a listing in the US via a merger with a special purpose acquisition company (SPAC), according to people familiar with the matter. The Singaporean sports media company has picked Credit Suisse Group and Goldman Sachs Group to help prepare for the potential listing, the people said. Discussions are preliminary and no final decision has been made, the people said.

Facebook said on Tuesday it will restore Australian news pages after negotiating changes with the government to a proposed law that forces tech giants to pay for media content displayed on their platforms. Australia and the social media group have been locked in a standoff for more than a week after the government introduced legislation that challenged Facebook and Alphabet’s Google’s dominance in the news content market.

Top executives at Texas-based software company SolarWinds , digital giant Microsoft and cybersecurity firms FireEye and CrowdStrike are expected on Tuesday to defend their companies’ responses to a sprawling series of breaches blamed on Russian hackers when they face the US Senate’s Select Committee on Intelligence. The four companies are key players in the response against a spectacular set of intrusions that have allowed alleged Russian spies to run amok across American networks, compromising a total of nine federal agencies and 100 private-sector companies.

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


Bank of China Ltd

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

Bank of China Ltd (HKEX: 3988) bearish downtrend is beginning to see some light. Key technicals are prompting a rebound in prices.

>> Read more Technical reports


PEC Ltd. – Cash-rich

Recommendation: NON-RATED, Last Done: S$0.405

Target Price: N.A., Analyst: Tan Jie Hui

– PEC is the largest single-source plant and terminal maintenance service provider in Singapore.

– Project Work (PW) orderbook grew at a 5-year CAGR of 3.4% to S$191mn in FY20. Topline anchored by S$200mn worth of recurring maintenance service (MS) revenue.

– Net cash is 76% of PEC’s market cap

First Ship Lease Trust – Calmer seas ahead (Erratum to BV and TP)

Recommendation: ACCUMULATE (Initiation); TP: S$0.050

Last Done: S$0.085; Analyst: Vivian Ye

– Projected distribution yields of 46.9%/12.0% for FY21e/FY22e

– Diversified lease portfolio and vessel employment provide downside protection through contracted revenue as well as freight-rate upside potential. US$29.8mn of contracted revenue as of 31 December 2020.

– Initiate coverage with ACCUMULATE and TP of S$0.050. We peg FSL at 0.9x FY22e P/B, higher than its 10-year historical average of 0.34, but on par with peers with similar risk profiles. The trust has been disposing of vessels that are not deemed profit-making.

>> Read more research reports

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