Singapore stocks fell slightly by 0.04 per cent on Thursday (Jun 22) at the close, tracking losses on Wall Street. The trio of local banks recorded mixed trading. The top gainer was DBS, which rose 1.5 per cent or S$0.47 to close at S$31.82. UOB rose 0.2 per cent or S$0.06 to S$28.05, while OCBC lost 1 per cent or S$0.12 to S$12.39. Bourse operator Singapore Exchange was also one of the top gainers, rising 1.3 per cent or S$0.12 to S$9.58.

Tech shares powered higher on Thursday (Jun 22) as markets shook off recent weakness. Google parent Alphabet rose 2.2 per cent and Amazon won 4.3 per cent as the S&P 500 and Nasdaq broke a three-day losing streak. The tech-rich Nasdaq Composite Index finished up 1.0 per cent at 13,630.61. The broad-based S&P 500 advanced 0.4 per cent to 4,381.89, while the Dow Jones Industrial Average was essentially unchanged at 33,946.71.

Top gainers & losers



The cut-off yield on the latest six-month Treasury bill (T-bill) in Singapore has risen to 3.89 per cent, at the close of its auction on Thursday (Jun 22). Applications for the government-backed fixed income product totalled S$9.9 billion for the S$5 billion on offer, resulting in a bid-to-cover ratio of 1.98. In the latest auction, non-competitive bids totalled S$1.8 billion and were fully allotted. Those who submitted competitive bids at the cut-off yield were allotted around 74 per cent of their applications. Those who specified a lower yield were fully allotted, and those who specified a higher yield were not allotted.

SIA Engineering Company announced an agreement with Hawaiian Airlines on June 22, to perform airframe maintenance services for its A321neo fleet of 18 aircraft into year 2027. The maintenance services will be undertaken at one of SIAEC Base Maintenance’s network of facilities in Clark, Philippines. Currently, SIAEC is providing A330 maintenance services at its Singapore facility for Hawaiian Airlines’ 24 A330 aircraft. The transaction is not expected to have a material impact on the earnings per share or the net tangible assets per share of SIAEC for the financial year ending March 31, 2024.

Sabana Real Estate Investment Management has criticised activist investor Quarz Capital’s proposal for Sabana Industrial Real Estate Investment Trust (Sabana Reit) to use an internal manager instead. The Reit manager also warned unit holders that following through on the proposal might destroy the value of their investment. Sabana Real Estate Investment Management, the current manager of Sabana Reit, filed a 35-page document and a 26-slide presentation deck to the bourse on Thursday (Jun 22) to make its rebuttals. Quarz’s requisition and its reasoning were “overly simplistic and lacked clarity” on how the proposals were to be implemented; it also did not offer a timeline for the move, said the Reit manager. It added that the activist investor also had not flagged the inherent risks associated with its proposed resolutions; neither had it assured unit holders of the Reit’s continuity.

Cyxtera Technologies, Digital Core REIT’s second largest tenant and Mapletree Industrial Trust’s third largest tenant, has received six letters of intent (LOI) to acquire it. Cyxtera is also a tenant of Keppel DC REIT in Europe. On June 4, Cyxtera voluntarily filed for Chapter 11 bankruptcy relief and is seeking court approval for a series of steps to sell or attract investment for its reorganised assets. The process involves setting up marketing, auction and bidding procedures aimed at identifying the highest or most beneficial offers, with the ultimate goal of maximising value for its first lien lenders.

Mainboard-listed Datapulse Technology has received a requisition notice from shareholder and board director Ang Kong Meng to convene an extraordinary general meeting (EGM) to pass eight resolutions, it said on Thursday (Jun 22). The resolutions seek to remove five fellow board members and appoint two others to the board. The first resolution is to remove board chairman Aw Cheok Huat as the company’s director, from the date of the EGM. The second, third and fourth resolutions seek to remove Datapulse directors Choong Chee Peng Bert, Yeung Koon Sang and Lau Yan Wai from their posts, also from the date of the EGM. Ang also requested for Yee Chia Hsing to be removed as the company’s director, but to remain as its chief executive.


The Bank of England raised interest rates by a bigger-than-expected half a percentage point on Thursday (Jun 22) after it said there had been “significant” news suggesting British inflation would take longer to fall. The BOE’s Monetary Policy Committee (MPC) voted 7-2 to raise its main interest rate to 5 per cent from 4.5 per cent, its highest since 2008 and its largest rate increase since February, following stickier inflation and wage growth since its policymakers met last in May. “Second-round effects in domestic price and wage developments generated by external cost shocks are likely to take longer to unwind than they did to emerge,” the MPC said. Official figures on Wednesday showed consumer price inflation was unchanged at 8.7 per cent in May and underlying inflation rose to its highest since 1992.

Tesla is poised to remain the top seller of electric vehicles (EV) in the US through at least 2026 as it benefits from renewed sales momentum sparked by a recent discounting binge, according to a new report. The automaker’s models should account for 18 per cent of the domestic EV market that year, leaving General Motors and Ford Motor to fight for second place, with about 14 per cent share each, followed by Stellantis at 8 per cent. Tesla chief executive officer Elon Musk has been willing to take lower profits as he reduces prices to keep market share. With affordability an increasingly important factor in wider EV adoption, Tesla is in line to protect its market-leading position through additional price reductions and new models.

US banks are pushing to soften a major regulatory proposal to hike bank capital requirements, worried it could prove too onerous, according to six people briefed on the matter. Bank regulators led by the US Federal Reserve are finalising the proposal, which would implement international capital standards agreed by the Basel Committee on Banking Supervision in the aftermath of the 2007-2009 financial crisis. Bankers are particularly concerned by an aspect of the draft proposal that would apply higher capital charges on non-interest revenue, such as the fees lenders charge on credit cards or investment banking services. That capital charge is part of the package agreed by the Basel Committee in 2017, but the industry says it overstates the risk for banks that have a high proportion of non-interest income and had hoped US regulators would mitigate its impact, the people said.

Accenture fanned concerns about dwindling IT spending on Thursday with a quarterly revenue forecast that was below Wall Street estimates. CEO Julie Sweet said clients were “holding back on small deals” in the face of an uncertain economic outlook. Accenture forecast current-quarter revenue in the range of $15.75 billion to $16.35 billion, lower than expected revenue of $16.35 billion. The company blamed the weakness on its business catering to the tech, media and communications industries, which have sharply dialed back spending in recent months to cope with slowing growth. Revenue for that group fell 8% in the third quarter. North America – Accenture’s biggest market – also performed poorly in the March to May period, with revenue growth slowing there to a near three-year low of about 2%.

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


Singapore Airlines – Rising pressures on load factors and yields

Recommendation: REDUCE (Re-initiation); Last Done: S$7.40

Target Price: S$6.80; Analyst: Peggy Mak

– After an exceptional year in FY23 driven by early-mover advantage, we expect SIA’s net profit in FY24e and FY25e to decline by 24% and 46%, respectively, with tapering passenger yields and passenger load factors.

– We expect net cash outflow in FY24e as it spends on aircraft fleet renewal, redeems 50% of the remaining mandatory convertible bonds, and invests in the merger of Vistara and Air India. We expect FY24e dividends to be cut.

– Air cargo demand may fall in the next two years with slower global trade and manufacturing output and competition from lower-cost sea freight. Industry cargo capacity is back to pre-pandemic levels.

– We resume coverage with a REDUCE recommendation and TP of S$6.80, based on 1.1x price to book for FY24e. This is in line with historical P/B of 1.1x.

PSR Stocks Coverage



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