Singapore stocks gained 0.3 per cent or 8.5 points to 3,211.09 points amid a regional rally on Monday (May 22). Regional markets appeared to cheer news of a positive discussion between US President Joe Biden and Republican House Speaker Kevin McCarthy on raising the federal debt ceiling over the weekend. Japan’s Nikkei 225 climbed 0.9 per cent, South Korea’s Kospi rose 0.8 per cent, and Hong Kong’s Hang Seng Index gained 1.2 per cent. Back in Singapore, across the broader market, losers narrowly beat gainers 278 to 277 after 1.3 billion shares worth S$976.3 million changed hands.

Wall Street stocks were mixed at the end of Monday’s session ahead of White House negotiations with Republican leaders to avert a US debt default. After a weekend of near deadlock, President Joe Biden arrived back in Washington late Sunday, ahead of the US Treasury’s June 1 deadline for Congress to authorize more borrowing. Talks were expected to resume on Monday night. The Dow Jones Industrial Average finished down 0.4 per cent at 33,286.58. The broad-based S&P 500 was flat at 4,192.66, while the tech-rich Nasdaq Composite Index gained 0.5 per cent to 12,720.78.

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Singapore’s largest lender has forecast a return on equity (ROE) of between 15 per cent and 17 per cent in the medium term, as well as earnings of more than S$10 billion within the same timeframe. These targets, announced during DBS’ investor day presentation on Monday (May 22), are set to be driven by a strong balance sheet and tech capabilities the bank has been honing the past few years.

Bukit Sembawang Estates posted a 26.2 per cent drop in net profit to S$21.8 million for its second half ended Mar 31, 2023, from S$29.6 million in the previous corresponding period. This was mainly due to lower profits recognised on development projects, the property development and investment group said in a regulatory filing on Monday (May 22) evening. Earnings per share stood at 8.43 Singapore cents for the half year, down from 11.42 cents the previous year. Revenue for the second half fell 14.5 per cent to S$76.5 million, from S$89.4 million a year earlier. Gross profit for the half year tumbled 53.7 per cent to S$13.9 million, from S$30 million the year before.

Alpina Holdings, through its wholly-owned subsidiary Digo Corp, has been awarded a 48-months contract to provide its services to a ministry of the Singapore government for a provisional sum of around $39.6 million. The term contract is for the provision of mechanical and electrical systems maintenance, on top of additions and alteration works. It is expected to commence in June 2023 and complete by June 2027. The customer will have the option to extend the contract for another 12 months. The company expects this to contribute positively to its financial results and net tangible assets per share as well as EPS for the duration of the term contract.

The Singapore Exchange (SGX) and Shanghai Stock Exchange (SSE) have signed a memorandum of understanding (MoU) to launch an exchange-traded fund (ETF) link, further strengthening the connectivity between Singapore and China. Under this agreement, the SGX and SSE will jointly develop and promote the ETF markets in both countries through a master-feeder fund model. This latest collaboration bridges the two rapidly growing ETF markets in Asia, aside from extending the range of ETFs available for listing of feeder funds between China and Singapore. The SGX-SSE link also facilitates greater collaboration opportunities between issuers in both markets, enhancing investment options for investors.

Singapore is seeking to expand the talent pool for artificial intelligence (AI) and data analytics in the finance sector. The city-state’s banks and schools will work with the financial regulator on training programmes that incorporate the latest AI developments and trends, the Monetary Authority of Singapore (MAS) said on Monday (May 22). “If you look at all the trends, almost every function of the finance sector requires AI,” Sopnendu Mohanty, the MAS’ chief fintech officer, said. There is a “serious challenge” in terms of AI resources around the world, he added.


Mizuho Financial Group is forging further into US investment banking through a deal to buy Greenhill . as it seeks to accelerate growth. The Japanese banking giant agreed to buy Greenhill for US$15 a share in an all-cash transaction, which values the firm at US$550 million including debt, the firms said on Monday (May 22) in a statement. The lender will retain Greenhill’s leaders, including chief executive officer Scott Bok, who will be chairman of mergers, acquisitions and restructuring.

JPMorgan Chase will gain an even bigger benefit from rising interest rates because of its purchase of First Republic Bank. The biggest US bank raised its guidance for net interest income this year to US$84 billion, excluding its trading business, up from a previous forecast of US$81 billion, according to a presentation on its website released ahead of its Investor Day on Monday (May 22). The lender said several “sources of uncertainty remain,” including the Federal Reserve’s plans and how consumers react to higher borrowing costs.

Facebook owner Meta Platforms was hit by a record 1.2 billion euros (US$1.3 billion) European Union (EU) privacy fine and given a deadline to stop shipping users’ data to the US after regulators said it failed to protect personal information from the prying eyes of American security services. The social network giant’s continued data transfers to the US didn’t address “the risks to the fundamental rights and freedoms” of people whose data was being transfered across the Atlantic, according to a decision by the Irish Data Protection Commission announced on Monday (May 22).

Pacwest Bancorp, one of the regional US lenders that was engulfed in turmoil earlier this month, said it agreed to sell a US$2.6 billion portfolio of 74 real estate construction loans as part of its plan to shore up liquidity. Kennedy-Wilson Holdings will buy the loans at a discounted price of US$2.4 billion, the company said on Monday (May 22). The buyer will also assume all future funding obligations of about US$2.7 billion. Beverly Hills-based PacWest will also sell six more loans to Kennedy-Wilson for about US$363 million if it wins certain approvals, it said in a filing on Monday.

Nvidia on Monday (May 22) said it has worked with the UK’s University of Bristol to build a new supercomputer using a new Nvidia chip that would compete with Intel and Advanced Micro Devices (AMD). Nvidia is the world’s top maker of graphics processing units (GPUs), which are in high demand because they can be used to speed up artificial intelligence work. OpenAI’s ChatGPT, for example, was created with thousands of Nvidia GPUs. But Nvidia’s GPU chips are typically paired with what is called a central processing unit (CPU), a market that has been dominated by Intel and AMD for decades. This year, Nvidia has started shipping its own competing CPU chip called Grace, which is based on technology from SoftBank Group Corp-owned Arm.

Ford Motor on Monday (May 22) unveiled three deals for the supply of lithium products, including lithium hydroxide, as the automaker ramps up electric vehicle (EV) production to 2 million units by the end of 2026. Shares of the company, which is holding a “Capital markets” event later in the day, edged up about 1 per cent before the bell. The deals come as North American automakers race to secure supplies of battery materials to boost EV output and catch up with market leader Tesla amid surging demand for environment-friendly vehicles.

TikTok on Monday filed suit in US federal court to stop the state of Montana from implementing an overall ban on the video sharing app. The unprecedented ban, set to start in 2024, violates the constitutionally protected right to free speech, TikTok argued in the suit. “We believe our legal challenge will prevail based on an exceedingly strong set of precedents and facts,” a TikTok spokesperson told AFP. Montana Governor Greg Gianforte signed the unprecedented prohibition into law on May 17.

American International Group (AIG) said it will sell virtually its entire reinsurance business to RenaissanceRe Holdings in a deal worth roughly US$3 billion as chief executive officer Peter Zaffino continues his effort to streamline the New York-based firm. RenaissanceRe will pay US$2.74 billion in cash and US$250 million of common shares for AIG’s Validus Re unit as well as the AlphaCat and the Talbot Treaty reinsurance business, AIG said on Monday (May 22) in a statement.

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


NetLink NBN Trust – Stable but higher rates start to nibble

Recommendation: NEUTRAL (Maintained); TP S$0.87, Last close: S$0.90; Analyst Paul Chew

– FY23 revenue and EBITDA were within expectations, at 101%/103% of our FY23e forecasts. A diversion revenue spike of 130% YoY in 4Q23 surpassed our expectations.

– Core residential revenue was stable at S$61.4mn, up 1.4% YoY. Interest expense almost doubled to S$5.4mn due to higher interest rates and capital expenditure.

– The new fibre rates NetLink can charge its customer is expected to be announced soon. Our base case is that fibre rates will be nudged marginally lower. Any impact on dividends is muted due to the ability to raise borrowings. Our FY24e EBITDA is raised by 2% and DCF target price nudged up to S$0.87 (prev. S$0.85). Our NEUTRAL recommendation is maintained. The distribution yield is sustainable from stable operating cash-flows and access to financing.

Sea Ltd. – Shopee picking up the slack

Recommendation : BUY (Maintained); TP: US$100.00, Last Close: US$70.16

Analyst: Jonathan Woo

– 1Q23 revenue missed expectations marginally due to decline in gaming revenue. Earnings were above our expectations, but negatively impacted by a 121% YoY increase in loan provisions. 1Q23 revenue was at 21% our FY22e forecasts, with PATMI ~US$670mn better than our FY23e forecasts due to better monetization and lower marketing spend.

– Shopee growth is re-accelerating on better monetization and resilient GMV trends in Southeast Asia. Expenses continued to decline, increasing operating profitability across all business segments.

– We cut our FY23e/FY24e revenue by 9%/12% respectively to reflect slower growth as Garena continues to drag, while increasing FY23e PATMI/EBITDA by US$940mn/US$838mn on profitability across all segments. We maintain BUY with a reduced DCF target price of US$100.00 (prev. US$120.00), using a WACC of 7.6%, and a terminal growth rate of 3.0%.

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