Daily Morning Note – 22 May 2019

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YOUR PHILLIP SUMMARY

Asian stocks looked set to track an advance in U.S. equities and Treasury yields climbed as investors showed some willingness to buy riskier assets despite the ongoing trade turmoil. The dollar edged up.

Donald Trump delayed blacklisting Huawei on concerns it could disrupt China trade talks. Asia equities are in the green following a rebound in U.S. stocks as the trade war remains in focus.


TECHNICAL PULSE

DBS Bank Ltd

Current Sentiment: BEARISH-RANGING

DBS has retested and broken the uptrend line for the 2nd time yesterday and most likely the market will continue its bearish correction. Despite turning lower, the market still has potential to rally as the 2 demand zone confluence strongly with the 78.6% and 88.6% of the Fibonacci retracement level.

To further add on, the 200 Simple moving average is trending near the 1st demand zone and this may be a clue that market may find itself at that level to rally. So do watch out for that level.


RESEARCH REPORT

CNMC Goldmine Holdings Limited – Ongoing output improvement

Recommendation: BUY, Last Closing Price: S$0.20

Target Price: S$0.31, Analyst: Chen Guangzhi

– 1Q19 production well improved YoY but underperformed QoQ

– Several expansion plans to boost output and lower operating costs

– Most expansion plans are on track

Singapore REITs Monthly – May 2019

NEUTRAL (maintained); Analyst: Tara Wong

– FTSE S-REIT Index gained +9.9% YTD. Strongest gains from the Commercial
sub-sector (+14.0% YTD) and weakest showing at the Industrial sub-sector
(+12.5%).

– Performance in April: Best performer – Lippo Malls Indonesia Retail Trust
(+11.9%), Worst performer – Suntec REIT (-5.6%)

– Sector yield spread of 241bps over the benchmark 10-year SGS (10YSGS)
yield dipped further below the -1 standard deviation (SD) level as at end-
April.

– 3m SOR inched back up to 1.97% at end-April from 1.93% at end-March.

– Remain NEUTRAL on S-REITs sector. Sub-sector preferences: Office and
Hospitality.

United Overseas Bank Limited – UOB Corporate Day 2019

Recommendation: ACCUMULATE (Maintained), Last Close Price: S$24.8

Target Price: S$30.9 (unchanged), Analyst: Tin Min Ying

– UOB shared some of its key strategies to expand revenue mix outside
Singapore to close to 50%.

– Digitisation to drive the next leg of efficiency improvement with a cost-toincome
ratio of 42% in 3 years (1Q19: 44.6%).

– Most interesting was the new Digital Bank app called “TMRW” in Thailand.
It will be ASEAN’s first mobile-only Digital Bank with 500 kiosks in Bangkok.

– Maintain Accumulate with an unchanged target price of S$30.90. We
maintain our existing earnings forecasts.

Read more research reports

BREAKING NEWS

Chinese ambassador says Beijing ready for further trade talks. hinese Ambassador to the United States Cui Tiankai said on Tuesday that Beijing was ready to continue trade talks with Washington. “China remains ready to continue our talks with our colleagues to reach a conclusion. Our door is still open,” Mr Cui said in an interview on Fox News Channel. No further trade talks between top Chinese and US negotiators have been scheduled since the last round ended on May 10.

May to ask lawmakers to vote on a second Brexit referendum. British Prime Minister Theresa May said her government will include in her Withdrawal Agreement Bill a requirement for lawmakers to vote on whether to hold another Brexit referendum. “I recognise the genuine and sincere strength of feeling across the House on this important issue,” Mrs May said. “The government will therefore include in the Withdrawal Agreement Bill at introduction a requirement to vote on whether to hold a second referendum.”

US existing home sales unexpectedly fall in April. US home sales unexpectedly fell in April amid persistent weakness in the lower-priced segment of the market, which has experienced an acute shortage of properties. The National Association of Realtors said on Tuesday existing home sales fell 0.4 per cent to a seasonally adjusted annual rate of 5.19 million units last month. March’s sales pace was unrevised at 5.21 million units.

Oil little changed as US-Iran dispute supports, trade war weighs. Oil futures were steady on Tuesday as the prospect of mounting US-Iran tensions disrupting supply was offset by concerns that a lengthy trade war between Washington and Beijing would limit crude demand. Brent crude futures settled at US$72.18 a barrel, gaining 21 cents. US West Texas Intermediate (WTI) crude futures settled at US$62.99 a barrel, down 11 cents ahead of the front month contract for June delivery expiring on Tuesday. The July contract settled at US$63.13 a barrel.

Acromec unit to build, operate waste-to-energy plant for Chew’s Agriculture poultry farm. Specialist engineering firm Acromec’s 80 per cent owned unit will build, own and operate a waste-to-energy power plant at Chew’s Agriculture’s new poultry farm at Neo Tiew Road, off Lim Chu Kang. The power plant – which would be Acromec’s first – is meant to boost recurring income and diversify the company’s business into renewable energy, it announced on Tuesday.

Pacific Radiance JV gets US$2.78m in HK arbitration for failed vessel delivery. A joint-venture of offshore marine company Pacific Radiance on Friday announced that it has been awarded about US$2.78 million plus interest as part of arbitration against two Chinese shipyard groups, Shanghai Waigaoqiao Shipbuilding & Offshore and China Shipbuilding Trading (Shanghai). They had failed to deliver two platform supply vessels as part of two 2013 shipbuilding contracts.

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

Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research

Read the research report(s), available through the link(s) above, for complete information including important disclosures Important Information





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