Daily Morning Note – 23 August 2021
Dear valued client,
Asian stocks look set to rise Monday after bargain hunters spurred a U.S. rally, with traders also weighing growth risks and awaiting the Jackson Hole symposium for clues on the Federal Reserve’s policy outlook.
Futures advanced in Japan, Australia and Hong Kong, while U.S. contracts edged higher. The S&P 500 and tech-heavy Nasdaq 100 rose at the end of last week. Beijing’s regulatory crackdown saw Chinese shares listed in the U.S. suffer their longest streak of weekly losses in a decade despite a climb on Friday.
Shares in Viking Offshore & Marine (VOM) will resume trading at 9 am on Aug 23, as the company has received approval-in principle (AIP) to do so from the Singapore Exchange (SGX). Trading in the shares in the company, which has completed a court-supervised restructuring exercise, has been suspended from trading on the SGX since June 14, 2019. In a filing to the Singapore bourse on Friday, VOM said that it has fulfilled all the AIP conditions set out.
Mapletree Logistics Trust (MLT) has entered into a new sale and purchase agreement to acquire Mapletree Logistics Hub – Tanjung Pelepas for RM404.8 million (S$130.2 million) after an agreement lapsed. In a filing to the Singapore Exchange on Friday, it said that the new conditional sale and purchase agreement had been entered into by Semangkuk 2, a bankruptcy-remote special purpose vehicle incorporated in Malaysia, with Trinity Bliss. Trinity Bliss is a company indirectly owned by Mapletree Investments (MIPL) and Itochu Corporation, with MIPL holding 80 per cent and Itochu the rest. As such, Trinity Bliss is a subsidiary of MIPL, which is also considered a controlling unitholder of MLT.
Astaka Holdings’ current executive director and former chief executive Zamani Bin Kasim has been ordered by the Singapore Exchange (SGX) to resign from all his current positions for causing the company to breach Catalist rules. SGX also reprimanded the group for failure to disclose three letters of demand relating to loan defaults. SGX, via a bourse filing on Friday, said it brought three charges against the Catalist-listed Astaka for failing to promptly disclose three letters of demand received by its wholly-owned indirect subsidiary, Astaka Padu Sdn Bhd (APSB), from China State Construction Engineering (CSCE) between October 2018 and July 2019.
General Motors (GM) is recalling more than 73,000 of its Bolt electric vehicles (EVs) at a cost of US$1 billion due to the risk of their batteries catching fire. The recall is an expansion of a similar action the company took last month when it discovered a defect in the battery that powers the EV. The latest move covers all Bolt EVs and Bolt electric utility vehicles from the model years of 2019 through 2022, the automaker said in a statement Friday. GM is replacing the battery modules in those vehicles. Faced with the expanding recall, the automaker said it was pressing its battery supplier, South Korea’s LG Chem, “for reimbursement of this field action”. LG said it was working to ensure that the recall is carried out smoothly.
British retailer Marks & Spencer upgraded its profit outlook on Friday after a jump in demand for food and a surge in online clothes’ orders indicated that its latest turnaround plan was starting to deliver. Shares in the 137-year-old chain, one of the biggest names on the British high street, jumped 12 per cent as the company said it was enjoying more than just pent-up consumer demand that followed months of lockdowns and disruption during the pandemic. With a drive to improve the quality of products and heavy investment in technology and e-commerce, Marks & Spencer’s clothing and home division revenue almost doubled in the 19 weeks to Aug 14 from a year earlier and was down just 2.6 per cent on pre-pandemic 2019.
Cruise shares slipped in after-market trading late Friday after the Centers for Disease Control and Prevention (CDC) said high-risk travellers should avoid cruise ship travel, whether they are vaccinated or not. “Travelers who are at an increased risk of severe illness from Covid-19 should avoid travel on cruise ships, including river cruises, worldwide, regardless of vaccination status,” the CDC said in the updated guidance on Friday. The CDC defined those at heightened risk as older adults and those with underlying medical conditions and weakened immune systems. Authorities are still trying to grasp the full extent of so-called breakthrough infections, in which vaccinated people get sick. Hospital officials say the vast majority of those hospitalised and dying from the virus are unvaccinated.
Foot Locker shares soared more than 10% in early trading Friday after the company crushed analysts’ fiscal second-quarter earnings estimates and voiced optimism about the back half of the year. Consumers have continued to spend on athletic footwear and workout apparel during the Covid pandemic, with these segments outperforming others such as dress wear and high heels. Now, parents are budgeting their paychecks to buy new Nike and Adidas sneakers for their kids who are preparing to head back to school. Foot Locker reported net income for the quarter ended July 31 of $430 million, or $4.09 per share, compared with $45 million, or 43 cents per share, a year earlier. Excluding one-time gains, the company earned $2.21 per share. Analysts polled by Refinitiv were looking for adjusted earnings per share of $1.01.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
Q & M Dental Group Ltd – Rebound on track
Recommendation: BUY (Maintained); TP S$0.98
Last close: S$0.775; Analyst Paul Chew
– 2Q21 PATMI within expectations, at 49% of our adjusted FY21e forecast. Revenue spiked 105% YoY to S$50.8mn. Normalised PATMI was up 10x. 1-for-5 bonus issue and 1 cent quarterly dividend announced.
– Earnings from Acumen Diagnostics’ COVID-19 PCR tests were an estimated S$3mn, up from S$0.6mn the previous quarter.
– Maintain BUY. Target price dips to S$0.98 from S$1.00 as we revamp our valuations. We now peg Acumen at S$60mn, at the proposed purchase price by Aoxin for a 49% stake. We roll over our 25x core P/E valuation to FY22e. Another S$0.04 has been added from the market value of listed associate, Aoxin Q & M Dental (S$0.225, Not Rated), at a 20% discount.
Thai Beverage PLC – Still in good spirits
Recommendation: BUY (Maintained); TP S$0.86
Last close: S$0.67; Analyst Paul Chew
– Results in line, with 9M21 revenue and EBITDA at 72%/75% of our FY21e forecasts.
– Spirits stole the limelight with a 21% YoY EBITDA surge, as volume recovered and costs were contained.
– Maintain BUY and target price of S$0.86, at 18x FY21e earnings, its 5-year average. Restricted on-premise consumption of beer and closure of F&B outlets to be compensated by resilience of spirit business together with aggressive cost-control. Spirits account for around 90% of PATMI. Catalysts expected from removal of lockdown measures in Thailand and Vietnam.
HK Reports – Read up on our Hong Kong reports here
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