Daily Morning Note – 23 April 2021
Wall Street stocks finished solidly lower on Thursday following reports the White House will propose a steep increase in capital gains taxes on wealthy individuals.
The Biden administration is developing a plan to increase the tax rate on profits from stock transactions to 39.6 per cent from 20 per cent on people earning more than US$1 million, according to reports in The New York Times and Bloomberg, citing government officials.
Any such proposal faces a long process on Capitol Hill before becoming a reality, but analysts said the reports indicate tax hikes are very much in the mix in Washington.
The Dow Jones Industrial Average fell 0.9 per cent to end at 33,815.90.
Fabchem China on Thursday proposed to fully acquire Singapore-based interior fit-out company Lincotrade & Associates for S$25 million. Fabchem, which manufactures explosives, intends to pay for the acquisition by issuing new shares to Lincotrade’s directors, which will result in a reverse takeover of Fabchem. The purchase consideration of S$25 million is more than five times the watch-listed company’s market capitalisation.
Top Glove Corp Bhd announced on Thursday that it will sell 793.5 million new shares, an issuance expected to raise HK$7.94 billion (S$1.36 billion). Malaysia-headquartered Top Glove said net proceeds, after deducting underwriting commissions, the discretionary incentive fee and revised estimated expenses in relation to the global offering payable by the company, is estimated at HK$7.84 billion.
AEM Holdings has acquired 26.59 per cent of the outstanding share capital of South Korean company Ateco Inc for approximately US$3.8 million. As part of the investment done through AEM’s wholly-owned subsidiary AEM Singapore, the group, which provides electronic and semiconductor solutions, has been given rights to acquire further shares of Ateco.
iFast Corporation posted a record net profit of S$8.82 million in the first quarter, almost 2.5 times the S$3.64 million in the year-ago period. This comes on the back of a 51.4 per cent increase in net revenue, and a 43.8 per cent rise in gross revenue, iFast said in a quarterly financial update on Thursday. Net revenue went up to S$28.5 million for the three months ended March 31, 2021. The group’s assets under administration (AUA) rose to a new record of S$16.1 billion, while net inflows of client assets also registered a record S$1.28 billion.
Keppel Corporation on Thursday posted a revenue of S$1.89 billion for its first quarter ended March 31, a 1.72 per cent increase from its S$1.86 billion in revenue the previous year. This was “mainly due to higher contributions from the urban development and asset management segments, offset by lower revenues from energy and environment”, said Keppel in its business update.
Mapletree North Asia Commercial Trust (MNACT) on Thursday posted a distribution per unit (DPU) of 6.175 Singapore cents for the year ending March 31, down 13.3 per cent from the previous year. Distributable income was down 7.8 per cent at S$210.2 million. The manager of the Real Estate Investment Trust (Reit) attributed the decrease to the Covid-19 pandemic, but said it was cushioned by acquisitions in Japan and South Korea.
Intel Corp on Thursday raised its annual sales outlook on booming demand for personal computers, but its second-quarter profit forecast fell short of analyst expectations as the company spends heavily to get its manufacturing operations back on track and catch up to rivals with faster chips. Intel shares were down 3.1 per cent to US$60.60 in after-hours trading after the results. The company also missed first-quarter expectations in its closely watched data centre chip unit.
Facebook said on Thursday it would emphasise user feedback when prioritising posts on the leading social network, the latest move to quell concerns over its algorithms. The California giant said it would add weight to surveys asking users if certain messages are “worth your time” as part of its ranking process for its main news feeds. “Our algorithm uses thousands of signals to rank posts for your News Feed with this goal in mind,” said a blog post from Aastha Gupta, Facebook product management director.
Delta Air Lines announced on Thursday it was exercising options to buy 25 Airbus A321neo aircraft and accelerating deliveries of three other planes as it banks on a rebound in travel demand as Covid-19 ebbs. The US carrier also announced an additional 25 purchase rights for the A321neo, the latest model in Airbus’s A320 narrowbody series, the most-ordered series in commercial aviation history ahead of the Boeing 737.
US regulators said on Thursday they continue to work with Boeing to assess an electrical problem that has grounded more than a hundred 737 MAX planes, as airlines expressed hope for a speedy resolution. The problem, which surfaced during Boeing’s manufacturing process, has so far not significantly affected airlines given the still-lackluster travel volume during Covid-19, but demand is expected to pick up significantly this summer. The Federal Aviation Administration (FAA) described the problem as “an electrical bonding and grounding issue,” according to an agency notice to civil aviation authorities.
Tesla came under renewed scrutiny on Thursday following a report its cars could be fooled into driving with no one behind the wheel and as two senators demanded a federal probe of a recent crash. Engineers from Consumer Reports “easily tricked” Tesla’s Autopilot to drive without anyone in the driver’s seat, “a scenario that would present extreme danger if it were repeated on public roads”, the magazine said on its website.
US home sales fell to a seven-month low in March, pulled down by an acute shortage of properties, which is boosting prices and making owning a house more expensive for some first-time buyers. Existing home sales dropped 3.7 per cent to a seasonally adjusted annual rate of 6.01 million units last month, the lowest level since August 2020, the National Association of Realtors said on Thursday. Sales fell in all four regions. Economists polled by Reuters had forecast sales at a rate of 6.19 million units in March. The second straight monthly decline in sales was flagged by a sharp decline in signed contracts and applications for home purchasing loans in February.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Top Glove Corp Bhd
Analyst: Chua Wei Ren
Recommended Action: Technical BUY
Top Glove (SGX: BVA) initial sell-call on 11th March 2021 was met with limited success as price rebounded at $1.50 psychological level. As such, the technical indicates that Top glove is heading for a bullish rebound:
HK Reports – Read up on our Hong Kong reports here
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