Daily Morning Note – 25 Aug 2020

PHILLIP SUMMARY

The S&P 500 and the Nasdaq reached new record closing highs on Monday as optimism over potential medical advances in the war against the coronavirus pandemic pushed all three major US stock indexes higher. The benchmark S&P 500 reclaimed its February closing high last week, confirming a bull market and the fastest recovery from a bear market trough on record. The blue-chip Dow, while leading Monday’s gains, remains nearly 4.2 per cent below its all-time high, and down 0.8 per cent year-to-date. Of note, the Dow Transports index, often considered a barometer of US economic health, handily outperformed the broader market.

The Nasdaq and the S&P have gained 26.8 per cent and 6.2 per cent, respectively, since the final closing bell of 2019.

Markets worldwide were given a boost by new developments in the global race to battle the coronavirus, including an announcement from the Food and Drug Administration that it had given emergency authorisation for the use of plasma from recovered patients as a treatment option.

BREAKING NEWS

Koufu Group wants to expand its Supertea and R&B Tea brands to the Philippines, and has given the Philippine-listed F&B group Shakey’s Pizza Asia Ventures the rights to retail them under a master franchise agreement. “We have carefully considered the market trends and found the conditions in the Philippines to be favourable; there has been a growing receptiveness towards the bubble tea culture in recent years,” said Pang Lim, the mainboard-listed group’s executive chairman and chief executive officer.

GuocoLand on Monday reported that its full-year net profit has halved year on year to S$114.1 million, largely due to the absence of fair-value gains on investment properties. Still, the group has proposed a first and final ordinary dividend of 6 Singapore cents per share for FY2020 ended June 30.

Axington shares closed lower on Monday amid sharp intra-day hits following controversy around its owners’ bid for English football club Newcastle United. The Singapore Exchange’s regulatory arm, SGX RegCo, has also weighed in, saying on Monday that it has “engaged” the company’s continuing sponsor Novus Corporate Finance.

Tiong Woon Corporation Holding on Monday posted a net profit of S$7.6 million for its financial year to June, more than double the S$2.9 million it posted a year ago. The mainboard-listed group has proposed a final dividend of 0.3 Singapore cent per ordinary share, with the date payable to be announced later.

China‘s banking regulator pledged its backing for Hong Kong as a finance hub and reiterated a commitment to opening up the Chinese financial sector amid a deepening standoff with the US.

Video app TikTok on Monday said it had filed a lawsuit challenging the US government’s crackdown on the popular Chinese-owned platform, which Washington accuses of being a national security threat.

Oil prices rose on Monday as storms headed for the Gulf of Mexico shut more than half of the region’s offshore production, with the more dangerous of the two storms expected to strike later in the week.

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

TECHNICAL PULSE

Jardine Matheson Holdings Ltd

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

Jardine Matheson (SGX: J36) had a wild swing to the downside after our buy call on 29th July 2020. Which had a strong gap down below the support level at $40.00 and cleared out stop loss level. Since the gap below, prices swiftly recovered and filled up the selling gap which turns out that the selling gap is an exhaustion gap. Hence, the bearish momentum has lacked the strength. Based on the technical, the stock is likely to reverse on the upside.

>> Read more technical reports

RESEARCH REPORTS

SATS Ltd – Operations bottomed but recovery subdued

Recommendation: SELL (Maintained), Last Done: S$3.08

Target Price: S$1.95, Analyst: Paul Chew

– 1Q21 results were within expectations. Revenue declined 55% YoY to S$209mn with a net loss of S$43mn in 1Q21.

– The net loss was after tax credit and government relief of totalling around S$80mn.

– Operationally the airport traffic has bottomed but any recovery will be tepid. We maintain our SELL recommendation with an unchanged target price of S$1.95. Our valuations are pegged to P/B average of 1.35x during the global financial crisis in 2009. The trajectory for any meaningful recovery in air traffic is uncertain and prolonged.


City Developments Limited – Near-term pain but focused on the future

Recommendation: BUY (Maintained), Last Done: S$7.97

Target Price: S$10.68, Analyst: Natalie Ong

– COVID-19 impacted all segments, hotel operations accounted for 82% of decline in revenue due to closure of 28% of hotel inventory and lower RevPAR (-56.6%) and lower sales value from few units sold from mass market projects in 1H20 vs ultra-luxury projects in 1H19.

– Refreshing portfolio and unlocking additional GFA through redevelopment of Fuji Xerox and Central Mall.

– Maintain BUY with lower TP of S$10.68, after factoring in the protracted recovery in the hospitality segment. FY2020/21e EPS was cut by 26.1% and 7.2% respectively.


>> Read more research reports

HK Reports – Read up on our Hong Kong reports here

RESEARCH VIDEOS

Webinar Of The Week

Market Outlook: Hyphens, Dasin, CDL, Singtel, SREITs and Banking Monthly, Bonds Weekly and more

Date: 24 August 2020

For more on Market Outlook

Phillip Research in 3 minutes: #25 – Prime US REIT; Initiation

For more videos on Phillip in 3 Mins

Read the research report(s), available through the link(s) above, for complete information including important disclosures Important Information





Disclaimer
The information contained in this email and/or its attachment(s) is provided to you for information only and is not intended to or nor will it create/induce the creation of any binding legal relations. The information or opinions provided in this email do not constitute an investment advice, an offer or solicitation to subscribe for, purchase or sell the e investment product(s) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise. You may wish to seek advice from an independent financial adviser before making a commitment to purchase or investing in the investment product(s) mentioned herein. In the event that you choose not to do so, you should consider whether the investment product(s) mentioned herein is suitable for you. PhillipCapital and any of its members will not, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached to this email. The information and/or materials provided 揳s is?without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials.
Confidentiality Note
This e-mail and its attachment(s) may contain privileged or confidential information, which is intended only for the use of the recipient(s) named above. If you have received this message in error, please notify the sender immediately and delete all copies of it. If you are not the intended recipient, you must not read, use, copy, store, disseminate and/or disclose to any person this email and any of its attachment(s). PhillipCapital and its members will not accept legal responsibility for the contents of this message. Thank you for your cooperation.