Daily Morning Note – 23 July 2020
Asian stocks were on course for a mixed start to Thursday trading as investors weighed the likelihood for a new U.S. spending bill and potential coronavirus vaccines against concern about an escalation of tensions with China. The dollar weakened to the lowest level since March.
Equity futures were little changed in Australia and Hong Kong, with Japan closed Thursday and Friday for holidays. Contracts on the S&P 500 opened flat after the gauge earlier rose to a five-month high, with utilities, real estate and industrial shares leading the gains. Trump administration officials are said to be discussing a short-term extension of unemployment insurance before the benefits lapse. Shares of Microsoft Corp. dropped and Tesla Inc. surged after the companies released earnings following the close of regular trading.
KEPPEL Pacific Oak US Reit (KORE) on Wednesday posted a second-quarter distribution per unit (DPU) of 1.56 US cents, 4 per cent higher than a year ago, helped by factors such as positive rental reversion from lease renewals and income from new leases. For the half year ended June 30, DPU was 3.10 US cents, a 3.3 per cent increase year on year. KORE declares its distributions semi-annually, and unitholders can expect to receive their distributions on Sept 24. This comes as second-quarter distributable income rose 18.5 per cent on the year to US$14.7 million. Gross revenue was US$35.2 million, up 20.1 per cent year on year. Net property income increased 16.3 per cent on the year to US$20.9 million.
THE distribution per unit (DPU) of First Reit fell by 79.5 per cent to 0.44 Singapore cent for Q2 ended June 30, compared to 2.15 cents a year ago. This brings the Reit’s DPU for the first half of the year to 2.3 cents, 46.5 per cent lower than the 4.3 cents for the corresponding period last year. Income available for distribution for H1 slid 46 per cent to S$18.4 million, while rental and other income for the period fell 33 per cent to S$38.6 million, due primarily to rental relief initiatives that were extended to all tenants to “cushion the strains” caused by the Covid-19 pandemic. The rental relief, extended in the month of May and June 2020 to all of First Reit’s tenants in Singapore, Indonesia and South Korea, amounted to a total of S$19.6 million.
KEPPEL Infrastructure Trust (KIT) on Wednesday posted a second-quarter distribution per unit (DPU) of 0.93 Singapore cent, unchanged from a year ago, even as its distributable cash flow increased.
For the second quarter ended June 30, distributable cash flow increased 35.8 per cent year on year to S$62.2 million, driven by a better performance in its mainstay distribution and network segment.
Cash flow from that segment increased 83.8 per cent on the year to S$40.2 million, even as other segments (energy, and waste and water) saw declines. Businesses and assets in the distribution and network segment include City Gas and City-OG Gas in Singapore, and Ixom in Australia.
AN offer made by a consortium of shareholders to take Perennial Real Estate Holdings private has turned unconditional, the real estate developer said in a bourse filing on Tuesday night. It also extended the date of the close of the offer from Aug 3 to Aug 17. Earlier last month, Perennial announced that an entity called Primero Investment Holdings was offering S$0.95 a share in cash for all its shares.
ASIAN Healthcare Specialists (AHS) said on Wednesday that it is partnering Temasek Holdings’ Heliconia unit to pursue healthcare investments in South-east Asia. The two have formed a co-investment vehicle, Fansipan 2, for this purpose, with Heliconia taking a majority stake. Heliconia, through its Encyclia 1 Investments unit, will take a 76.2 per cent in Fansipan 2 for S$25.6 million. Meanwhile, AHS, through subsidiary Salvia Ventures, will subscribe for a 23.8 per cent stake for S$8 million. The total sum of S$33.6 million will serve as the first tranche of funding for any healthcare or healthcare-related investments in South-East Asia – as identified by Heliconia, after consulting with AHS.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Analyst: Chua Wei Ren
Recommended Action: Technical SELL
SATS (SGX: S58) had a very strong impulse down move since the start of 2020 and based on the recent technicals, the stock is heading for another round of selling.
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