DAILY MORNING NOTE | 23 February 2024

Trades Initiated in the past week

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Singapore stocks ended Thursday (Feb 22) in the black, tracking climbs in regional markets as Japan’s Nikkei 225 broke a bubble-era record. It inched up 0.2 per cent or 5.83 points to 3,222.94. Across the broader market, gainers beat losers 326 to 219, as 1.4 billion securities worth S$1.5 billion changed hands. Across the region, key indices finished mostly higher. South Korea’s Kospi Composite Index expanded 0.4 per cent, while the Hang Seng Index in Hong Kong rose 1.5 per cent. The Bursa Malaysia Kuala Lumpur Composite Index slid 0.5 per cent. Japan’s Nikkei 225 jumped 2.2 per cent as it closed at 39,098.68. Earlier in the day, the blue-chip stocks index hit a peak of 39,156.97, beating the record of 38,957.44 set in Dec 29, 1989.

The Dow Jones index finished above 39,000 for the first time Thursday following mammoth earnings from Nvidia that prompted a fresh round of bullish buying over artificial intelligence. The Dow finished at 39,069.11, up 1.2 per cent. The broad-based S&P 500 jumped 2.1 per cent to 5,087.03, also a record, while the tech-rich Nasdaq Composite Index surged 3.0 per cent to 16,041.62, leaving it about 15 points short of an all-time high. Shares of Nvidia surged 16.4 per cent, lifting its market value to almost US$2 billion, after reporting that quarterly profits soared to US$12.3 billion – on record high revenue driven by demand for its technology to power artificial intelligence.

Top gainers & losers

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Events Of The Week

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SG

HRnetGroup posted a 7.1 per cent rise in net profit to S$35.3 million for the second half of 2023, from S$32.9 million in the previous corresponding period. This was mainly due to factors including a strong profit margin, partially offset by lower revenue, the recruitment and consulting company said in a regulatory filing on Thursday (Feb 22). Revenue for H2 2023 fell 4.7 per cent to S$283.7 million, from S$297.6 million a year earlier. This was due to tough economic conditions and sector-wide profit downgrades. Earnings per share stood at 3.58 Singapore cents for the half-year ended Dec 31, up from 3.3 Singapore cents the previous year. A final dividend of 2.13 Singapore cents per share was proposed for 2023, up from 1.87 Singapore cents the year before, subject to shareholders’ approval at the group’s upcoming annual general meeting in April.

IReit Global reported on Thursday (Feb 22) a 26.6 per cent decline in distribution per unit (DPU) for the second half, on the back of lower income to be distributed and a larger unit base. DPU for the six months ended Dec 31, 2023, fell to 0.0094 euro, from 0.0128 euro in the prior year period. Meanwhile, income to be distributed fell 13.5 per cent on year in the second half to 12.8 million euros (S$18.6 million). The manager said the performance was mainly due to retention of the dilapidation cost payable to finance the repositioning of Berlin Campus, rent-free granted to tenants at Bonn Campus and Darmstadt Campus, and an enlarged unit base. Gross revenue for the second half rose 15.7 per cent on year to 36.5 million euros, while net property income increased 14.6 per cent to 27.9 million euros. The increase was mainly due to contribution from the acquisition of 17 retail properties in France starting from September, and other income from dilapidation cost payable by the main tenant of Berlin Campus.

Integrated resort operator Genting Singapore posted a 31 per cent rise in net profit to S$334.9 million for the second half of 2023, from S$255.7 million in the previous corresponding period. This was mainly due to the significant post-pandemic recovery of its businesses across the board, leading to strong revenue gains, the company said in a regulatory filing on Thursday (Feb 22). Revenue for H2 rose 26 per cent to S$1.3 billion, from S$1.1 billion a year earlier. Earnings per share stood at 5.07 Singapore cents for the full year ended Dec 31, 2023, up from 2.82 cents the previous year. A final dividend of two Singapore cents per share was proposed for the full year, unchanged from the year before, for shareholders’ approval at the upcoming annual general meeting.

Aztech Global’s net profit rose 134.6 per cent on year in the second half of 2023 to S$57.1 million, bringing the group’s net profit for the full year to a record S$100 million. In a bourse filing on Thursday (Feb 22), the technology solutions provider said higher revenue, greater economies of scale, interest income and net fair-value gain on foreign exchange contracts led to higher net profit for H2 2023. Earnings per share for H2 rose 134.9 per cent on year to S$0.074, from S$0.0315 in the prior-year period. A final dividend of S$0.05 per share was proposed, higher than the S$0.015 per share final dividend in FY2022. Including the interim dividend of S$0.03 per share, the total dividend for FY2023 amounts to S$0.08 per share, an improvement from S$0.045 per share in FY2022. Revenue for H2 climbed 11.4 per cent on year to S$507.7 million. For the full year, revenue was up 9.3 per cent to S$896.3 million.

Venture Corp reported on Thursday (Feb 22) a 33.4 per cent decline in net profit for the second half, on the back of lower revenue. Net profit for the six months ended Dec 31, 2023 fell to S$130 million, down from S$195.3 million in the year-earlier period. On a per-share basis, earnings slipped to S$0.447 in H2 FY23, from S$0.671 the previous year. A final dividend of S$0.50 per share was proposed, unchanged from a year earlier. Including the interim dividend of S$0.25, which was paid in September, total dividend for FY2023 will amount to S$0.75 per share. The full-year dividend has remained at this level since FY2020. Revenue for H2 fell 30.2 per cent on year to S$1.4 billion. The group said the lower revenue year on year (yoy), against a high base the previous year, was mainly attributable to softening demand across its technology domains and customers’ inventory destocking.


US

The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting that job growth likely remained solid in February. Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 201,000 for the week ended Feb 17, the Labor Department said on Thursday (Feb 22). Economists polled by Reuters had forecast 218,000 claims for the latest week. Claims are hovering at historically low levels, despite high profile layoffs at the start of the year. Difficulties finding labour during and after the Covid-19 pandemic have generally left employers reluctant to reduce head count. Worker productivity has also increased while the economy continues to expand despite hefty interest rate increases from the Federal Reserve.

Rivian Automotive and Lucid Group tumbled on Thursday (Feb 22) after their earnings reports pointed to the impact of slowing electric-vehicle demand on their costly ramp-up plans. Rivian tanked 25 per cent to a record low after it forecast flat growth in annual production, also hurt by a shutdown of its assembly line for upgrades. Lucid sank 9 per cent as its production forecast also came below estimates. The companies said an uncertain economic outlook and high interest rates were hitting demand for EVs, echoing remarks from market leader Tesla and legacy automakers like Ford . EV startups have been burning billions of US dollars in cash in their efforts to develop, source and ramp up manufacturing of vehicles, hoping to be the next Tesla.

Grab is reporting its first profitable quarter since business combination, with a profit of US$11 million. Revenue for the quarter grew 30 per cent to US$653 million from US$502 million a year prior. This exceeded analysts’ consensus of US$638.6 million for the quarter. Revenue growth was attributed to improved performance across all business segments as well as reductions in incentives. Incentives for the fourth quarter of 2023 were cut to 7.3 per cent of gross merchandise value (GMV), from 8.2 per cent of GMV in Q4 2022. Group adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) for Q4 2023 was US$35 million, a reversal from a negative group adjusted Ebitda of US$111 million in Q4 2022. The quarter’s group adjusted Ebitda is also higher than Q3 2023’s Ebitda of US$29 million. Profit was driven by improvements to group adjusted Ebitda, fair-value changes in investments, and lowered share-based compensation expenses. A reversal of an accounting accrual being no longer required also aided the group in turning profitable.

Moderna reported fourth-quarter revenue that beat analysts’ expectations by gaining Covid vaccine market share on its rival, Pfizer.The company posted quarterly revenue of US$2.8 billion for its Covid-19 vaccine, including US$800 million in US sales and US$2 billion of international sales. While that was about a 45 per cent decline from a year ago, it topped analysts’ estimates of US$2.5 billion. Fourth-quarter sales included US$600 million in deferred revenue related to Moderna’s work with GAVI, a global health initiative to boost immunisation. The Cambridge, Massachusetts-based company said it captured roughly half the US retail market during the fall Covid season, up from 37 per cent in 2022. Moderna also reaffirmed its 2024 sales forecast of about US$4 billion.

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


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