DAILY MORNING NOTE | 23 August 2023

Trade of the Day

Nike, Inc (NYSE: NKE)

Analyst: Zane Aw

(Current Price: US$102.86) – TECHNICAL SELL
Sell price: US$102.86 Stop loss: US$108.00
Take profit 1: US$92.00 Take profit 2: US$82.00


Singapore shares posted gains on Tuesday (Aug 22) as the country’s presidential hopefuls filed their nomination papers. Singapore stocks snapped a seven-day losing streak, rising 0.2 per cent or 5.85 to 3,159.88. Across the broader market, gainers outnumbered losers 334 to 257 as 1.2 billion securities worth S$925.4 million changed hands. Japan’s Nikkei 225 climbed 0.9 per cent, while South Korea’s Kospi Composite Index was up 0.3 per cent. The Hang Seng Index gained 1 per cent and the FTSE Bursa Malaysia KLCI increased 0.1 per cent.

The S&P 500 fell Tuesday, weighed by concerns over rising Treasury yields ahead of a key speech later this week from Federal Reserve Chairman Jerome Powell, as well as declines in banking and retail shares. The S&P 500 edged 0.3% lower to 4,387.55, while the Dow Jones Industrial Average slid 174.86 points, or 0.5% to 34,288.83. The tech-heavy Nasdaq Composite eked out a small gain to close at 13,505.87.

Top gainers & losers

Factsheets


EVENTS OF THE WEEK

Factsheets


SG

A unit of Boustead Singapore has secured a contract related to once through steam generators (OTSGs) worth around S$31 million, the company said on Tuesday (Aug 22). As part of the contract, wholly-owned subsidiary Boustead International Heaters will design, engineer and supply the generators for a floating production, storage and offloading vessel, to be deployed in Latin America. This is the second contract for OTSGs secured by the unit in the past year, and rides on its efforts to bolster its product offerings and enhance capabilities in OTSGs. The contract will raise the group’s engineering order backlog to S$587 million. Boustead Singapore expects the contract to have a positive material impact on its profitability and earnings per share for its financial year ending Mar 31, 2024, although it will unlikely have a material impact on its net tangible asset value per share.

ComfortDelGro on Tuesday (Aug 22) said it will pay out its interim dividend of S$0.029 per ordinary share a day earlier than planned, because the original payment date – Sep 1 – has been declared a public holiday for the Presidential Election. The interim dividend, for its financial year ending Dec 31, 2023, was declared on Aug 14. The land transport company said the dividend would be issued on the back of its strong performance for its fiscal half ended Jun 30. The S$0.029 interim dividend represents a dividend payout ratio of 80 per cent of Patmi, the group emphasised in its statement, noting that it has generally paid out 70 to 80 per cent of Patmi in dividends over the years. With the change in payment date, ComfortDelGro said it closed the share transfer books and register of the members of the company at 5pm on Tuesday, to determine shareholders’ entitlement to the declared interim dividend.

Seatrium Group’s unit Seatrium New Energy, formerly known as Keppel Fels, on Tuesday (Aug 22) delivered its second jackup rig to Adnoc Drilling. Announcing this in a bourse filing, the Singapore-based shipbuilder, which was renamed from Sembcorp Marine, said this was significant as the rig, called AlSila, was delivered on schedule, showcasing the group’s ability to “deliver world-class assets on time and on budget”. Seatrium and Seatrium New Energy were given new names following Sembcorp Marine’s merger with Keppel Offshore & Marine (Keppel O&M) earlier this year. The jackup rig delivered on Tuesday was built at Seatrium’s Pioneer Yard in Singapore, and is part of a series of five rigs that Seatrium New Energy had been building for Borr Drilling.


US

The Subway sandwich chain is near a deal to be acquired for more than US$9 billion in a transaction that could be announced as soon as Wednesday, a person familiar with the matter said. Bids for the sandwich chain were due on Tuesday, the person said, with competing offers from Roark Capital and a consortium that includes private equity firms TDR and Sycamore. The winner is expected to be the high bid in an all-cash deal. Originally founded in 1965 as an Italian-style submarine sandwich shop, Subway today has nearly 37,000 restaurants in more than 100 countries. The fast-food chain announced in February it hired JPMorgan to advise it on a possible sale, while saying it “remains committed to the future,” according to a February 14 press release.

Call of Duty maker Activision Blizzard will sell its streaming rights to Ubisoft Entertainment in a fresh attempt to win approval from Britain’s anti-trust regulator for its US$69 billion sale to Microsoft. Microsoft announced the biggest gaming deal in history in early 2022, but the acquisition was blocked by Britain’s competition regulator, which was concerned the US computing giant would gain too much control of the nascent cloud gaming market. After months of back-and-forth, the Competition and Markets Authority (CMA) said on Tuesday (Aug 22) it had stuck by its original decision to veto the deal, forcing Microsoft to come forward with new terms. Under the restructured deal, Ubisoft will acquire the cloud streaming rights for Activision’s existing PC and console games, and any new games released by Activision in the next 15 years.

Macy’s said Tuesday it will open four more stores that look a lot different than its typical giant mall anchors as it tries to refresh a brand that has lost luster with many shoppers. The struggling retailer thinks the format is working. The new shops will open in the fall in Boston, Las Vegas and San Diego, and another debuted this month in suburban Indiana. The locations will be smaller and situated in strip malls. They will host events and frequently swap out merchandise. CEO Jeff Gennette said on Tuesday (Aug 22) Macy’s smaller stores outperformed the company in the most recent quarter. Those that have been open for more than a year posted sales growth in the three-month period. Across the company overall, comparable sales on an owned-plus-licensed basis dropped 7.3%.

Dick’s Sporting Goods reported a 23% drop in profits and slashed its earnings guidance for the year after it saw an uptick in retail theft and implemented aggressive markdowns to clear out excess inventory in its outdoor category, the company announced Tuesday. For the first time in three years, Dick’s fell short of Wall Street’s estimates on the top and bottom lines. It also announced cuts to its global head count. The company’s shares closed 24% lower Tuesday, wiping out the stock’s 22% year-to-date gain through Monday’s close. The company’s reported net income for the three-month period that ended July 29 was $244 million, or $2.82 per share, compared with $318.5 million, or $3.25 per share, a year earlier. Sales rose to $3.22 billion from $3.11 billion a year earlier.

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


RESEARCH REPORTS

Hyphens Pharma International – Year of investment and challenges

Recommendation: BUY (Maintained); TP S$0.35 Last close: S$0.28; Analyst Paul Chew

– 2Q23 PAT was down 29% YoY and below expectations. 1H23 revenue and PATMI were 46%/39% of our forecasts. The discontinuation in Biosensors distribution, absence of a major hospital tender and supply disruptions of several specialty pharma products was a drag on earnings.

– Hyphens announced a 3.6 cents special interim dividend for the 5th anniversary of its IPO.

– We maintain our FY23e revenue but lower our PATMI by 11% to S$8.0mn. Our operating expense forecast is raised as Hyphens will be investing more in senior hires and building up the DocMed platform. Our DCF target price is lowered to S$0.35 (prev. S$0.39). Our BUY recommendation is maintained.

NetLink NBN Trust – Waiting for tariff review

Recommendation: NEUTRAL (Maintained); TP S$0.87, Last close: S$0.85; Analyst Paul Chew

– Results were within expectations. 1Q24 revenue and EBITDA were 25%/25% of our FY24e forecasts. Core residential fibre revenue was up 1.4% YoY to S$61.5mn.

– 1Q24 EBITDA was up 3% YoY to S$75mn excluding the 38% surge in interest expense to S$4.3mn. Residential connections during the quarter was 4,023, below our trendline growth of 5,500 per quarter.

– No change to our FY24e forecast and DCF target price of S$0.87. Our NEUTRAL rating is unchanged. The new fibre rates NetLink can charge its customers is expected to be announced soon. Our base case is that fibre rates will see a modest decline. The distribution yield is sustainable from stable operating cash-flows from 1.48mn subscribers and access to financing.

PSR Stocks Coverage

Factsheets

Factsheets


For more information, please visit:

https://www.stocksbnb.com/singapore-stocks-coverage/


Upcoming Webinars

Guest Presentation by Netlink NBN Trust

Date: 24 Aug 2023

Time: 12pm – 1pm

Register: https://tinyurl.com/2hpm7puv


Guest Presentation by Uni-Asia Group Limited

Date: 30 Aug 2023

Time: 12pm – 1pm

Register: https://tinyurl.com/y5nhcvzn


Guest Presentation by Sunpower Group Limited [NEW]

Date: 5 Sep 2023

Time: 12pm – 1pm

Register: https://tinyurl.com/33cua346


Guest Presentation by Elite Commercial REIT

Date: 8 Sept 2023

Time: 7pm – 8pm

Register: https://tinyurl.com/544xs5v6


Guest Presentation by TDCX

Date: 13 Sept 2023

Time: 12pm – 1pm

Register: https://tinyurl.com/4xwwexvx


Guest Presentation by CNMC Goldmine Holdings Limited [NEW]

Date: 15 Sept 2023

Time: 12pm – 1pm

Register: https://tinyurl.com/2xp3fy7c


Guest Presentation by PropNex Limited [NEW]

Date: 19 Sept 2023

Time: 12pm – 1pm

Register: https://tinyurl.com/4subthpr


Guest Presentation by ComfortDelGro Corporation Limited

Date: 20 Sept 2023

Time: 12pm – 1pm

Register: https://tinyurl.com/mr27xw2r


POEMS Podcast:

Research Videos

Weekly Market Outlook: Sea Ltd, SGX, Lendlease, CityDev, CLI, ComfortDelGro, SG Weekly & More!
Date: 21 August 2023
Click here for more on Market Outlook.
Sign up for our webinars here, and be among the first to receive economy and market updates.

PHILLIP RESEARCH IN 3 MINS

Phillip Research in 3 minutes: #29 Keppel Corporation; Initiation
Click here for more on Phillip in 3 mins.

Follow our Socials

Facebook Social Icon Instagram Icon Twitter Social Icon Youtube Social Icon Linkedin Social Icon TikTok Social Icon Spotify Social Icon

Join our Singapore Equity Research Community on POEMS Mobile 3 App for the latest research reports, market updates, insights and more

Click to join!

Disclaimer

The information contained in this email and/or its attachment(s) is provided to you for information only and is not intended to or nor will it create/induce the creation of any binding legal relations. The information or opinions provided in this email do not constitute an investment advice, an offer or solicitation to subscribe for, purchase or sell the e investment product(s) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise. You may wish to seek advice from an independent financial adviser before making a commitment to purchase or investing in the investment product(s) mentioned herein. In the event that you choose not to do so, you should consider whether the investment product(s) mentioned herein is suitable for you. PhillipCapital and any of its members will not, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached to this email. The information and/or materials provided 揳s is?without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials.

Confidentiality Note

This e-mail and its attachment(s) may contain privileged or confidential information, which is intended only for the use of the recipient(s) named above. If you have received this message in error, please notify the sender immediately and delete all copies of it. If you are not the intended recipient, you must not read, use, copy, store, disseminate and/or disclose to any person this email and any of its attachment(s). PhillipCapital and its members will not accept legal responsibility for the contents of this message. Thank you for your cooperation.

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you

IMPORTANT INFORMATION

This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  

 

Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com