Daily Morning Note – 24 May 2022
Stocks to watch: Yangzijiang Financial Holding
The Straits Times Index (STI) fell 0.83 per cent, or 26.93 points, to close at 3,213.65 on Monday (May 23) amid a mixed regional showing. Despite starting the day higher, the index trended downward throughout the day. Losers beat winners 270 to 233 in the broader Singapore market, with 1.61 billion securities worth S$1.08 billion changing hands. Singapore on Monday announced that core consumer prices have continued to climb, with core inflation in April at its highest level since early 2012. Among major regional indices, Hong Kong’s Hang Seng Index fell 1.19 per cent, Jakarta Composite Index fell 1.12 per cent, and Kuala Lumpur Composite Index slipped 0.43 per cent, while Japan’s Nikkei 225 gained 0.98 per cent and South Korea’s Kospi rose 0.31 per cent.
Wall Street stocks finished solidly higher on Monday following hints the United States could end some tariffs on China as investors pondered whether the year’s bearish trend may have ebbed. The S&P 500 finished up 1.9 per cent at 3,973.75. The broad-based index briefly tumbled into a bear market on Friday, a drop of more than 20 per cent from its peak. The Dow Jones Industrial Average jumped 2.0 per cent to 31,880.24, while the tech-rich Nasdaq Composite Index advanced 1.6 per cent to 11,535.27.
SG
Yangzijiang Financial Holding, the spin-off from Yangzijiang Shipbuilding, will host an extraordinary general meeting on June 8 to seek shareholders’ approval for the company to adopt a share buyback mandate, it announced in a bourse filing on Monday (May 23). The proposed mandate is to allow the company to buy back up to 10 per cent of its own issued ordinary share capital. Its terms stated that the purchase price to be paid for a share must not exceed 105 per cent of the average closing market price of the shares in the case of an on-market share buyback. In the case of an off-market share buyback, the purchase price must not exceed 120 per cent of the average closing market price of the shares. As of May 13, its issued and paid up capital is S$4.264 billion, comprising 3.95 billion shares. This means that the company will be able to buy back up to 395 million shares, if the resolution is passed.
Unitholders of Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) have voted in favour of the merger to create one of Asia’s 10 largest real estate investment trusts (Reits). The merged entity, to be named Mapletree Pan Asia Commercial Trust (MPACT), will have a theoretical market capitalisation of approximately S$10.5 billion – ranking it among the top 3 Reits listed in Singapore, behind CapitaLand Integrated Commercial Trust (CICT) and Ascendas Reit. At separate extraordinary general meetings (EGMs) on Monday (May 23), all resolutions to pave the way for the merger were duly passed. At MCT’s EGM in the morning, some 91.7 per cent of MCT unitholders voted to approve the merger. Around the same percentage of votes were also in favour of the proposed allotment and issuance of MCT units to MNACT unitholders as consideration for the merger.
THE leases of 3 properties belonging to Capitaland Integrated Commercial Trust (CICT) are being renewed with Temasek subsidiaries, triggering an interested persons transactions announcement. CICT will be renewing leases between StarHub, Temasek Foundation and a new service agreement with Certis Cisco. StarHub is renewing its ground floor lease at Plaza Singapura for S$5.2 million commencing for 3 years from May 28, 2022. The rent was benchmarked against comparable leases in similar malls, and has been reviewed by an independent valuer to be in accordance with market standards. Temasek Foundation is renewing its lease for the fourth floor of Atrium@Orchard for S$1.5 million commencing for 5 years from Sept 1, 2022. The space is classified as a community/sports facility scheme space, hence the rental is charged on a different basis compared with other commercial spaces. An independent valuer has reviewed the renewal as in accordance with market standards. CICT will be entering into a new service agreement with Certis Cisco to provide security for Raffles City Singapore for S$4.3 million by RCS Trust. The fees were benchmarked against Certis Cisco fees charged for other CICT properties and took into account additional costs driven by the outcome of the review of the Progressive Wage Model in November 2021.
US
Zoom Video Communications projected sales and profit for the current quarter that topped Wall Street’s estimates, a sign that the software vendor is finding ways to sustain growth beyond the pandemic boom. Shares jumped about 6 per cent in extended trading. Revenue will be as much as US$1.12 billion in the period ending in July, the San Jose, California-based company said Monday (May 23) in a statement. Analysts, on average, estimated US$1.11 billion, or growth of about 9 per cent from a year earlier, according to data compiled by Bloomberg. Profit, excluding some items, will be as much as 92 US cents a share compared with analysts’ average estimate of 84 US cents. For the full year, Zoom raised its earnings forecast to as much as US$3.77 a share from its February projection of US$3.51. The company’s new products are “enhancing the customer experience and promoting hybrid work”, chief executive officer Eric Yuan said in the statement. “We believe these innovative solutions will further expand our market opportunity for future growth and expansion with customers.”
Airbnb is shutting its operations in China, choosing to focus instead on outbound Chinese tourism as the country continues its aggressive approach to containing Covid-19. The San Francisco-based company will stop offering rental homes and experiences in the country this summer, according to a person familiar with the matter. But it will still maintain a presence in China with an office in Beijing as the company expects outbound tourism to improve when restrictions loosen. Airbnb launched its China operations in 2016, and the pandemic added to the difficulties and complexities of operating within the country, the person said. Because rentals in China account for just 1 per cent of Airbnb’s revenue, the company sees a bigger opportunity in outbound tourism from China – in particular, travel in the Asia-Pacific region. “China is primarily an outbound business,” Airbnb chief executive officer Brian Chesky said on the company’s first-quarter earnings call earlier this month. “People go to China but primarily they travel to China and they go to other communities, especially around Asia.” At an event in New York earlier in May, Chesky said he expects the Asia region to recover in 2023.
T-Mobile on Monday (May 23) launched a suite of 5G products to lure business clients and capture some of the market share of rivals Verizon and AT&T, and has signed up customers including an automaker, an airline operator and a theme park. The product suite, what it calls 5G advanced network solutions, will offer three levels — from a complete private 5G network to sharing space over a public network, said Callie Field, T-Mobile’s president of business group. She declined to name the customers. T-Mobile, armed with a bigger share of spectrum that is ideal for 5G than Verizon and AT&T, is trying to make a dent in acquiring business customers despite the dominance of its more established rivals. One of its clients, SailGP, is using T-Mobile’s private 5G in San Francisco, where it saw latency drop by 50 per cent, compared with Wi-Fi while sending real-time analytics from boats traveling at 95 kph. Having a private 5G network helps businesses avoid jostling for speed with others on a public network and enables data-intensive applications.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
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Date: 23 May 2022
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