Daily Morning Note – 25 February 2019


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President Donald Trump said he’s extended a deadline to raise tariffs on Chinese goods until he can meet Chinese President Xi Jinping after the two sides made “substantial progress” in the latest round of trade talks that wrapped up Sunday. If the sides make further progress, Trump said he and Xi planned to meet in Mar-a-Lago to conclude an agreement, though he didn’t specify the timing around it. The U.S. and China are currently stuck on how to ensure Beijing lives up to its promise it won’t weaken the yuan as part of a trade deal, according to people familiar. There are several ways China influences its currency, such as driving up the cost of betting against the currency in Hong Kong and the central bank’s daily fixing. Secretary Steven Mnuchin said the two sides agreed on a currency provision and China’s Liu He voiced optimism that an accord would be reached. Meanwhile, U.S. President Donald Trump is becoming frustrated with his top negotiator, Robert Lighthizer.


China Everbright Water Limited – Steady and healthy growth

Recommendation: BUY ; Last close: S$0.355

Target Price: S$0.48, Analyst: Chen Guangzhi

– As of Jan-19, CEWL has a portfolio of 118 projects, 87 are operating, 13 under construction and 13 in the preparatory stage..

– CEWL Increased dividend to 0.99 SG cents in FY18 (FY17: 0.49 SG cents).

– Secured more funding with relatively low costs.

United Overseas Bank Limited – Profit momentum to continue

Recommendation: BUY (Maintained); Last close: S$25.58

Target Price: S$32.50, Analyst: Tin Min Ying

– FY18 revenue and PATMI were in line with our expectations.

– FY18 NIM rose 5bps YoY to 1.82%; but 4Q18 NIM contracted 1bps QoQ to 1.80% due to the rise in cost of funds and time lag in repricing.

– Loan growth of 10.9% YoY was led by broad-based increase across all territories and industries.

– Allowances declined 46% YoY due to benign credit environment; and NPL improved to 1.5% (FY17: 1.8%).

– Proposed higher final dividend of 50 cents per share and special dividend of 20 cents per share. This brings full year dividend to $1.20 per share (FY17: $1.00).

– Maintain BUY with an unchanged target price of S$32.50.

Oversea-Chinese Banking Corp Ltd – Further upside for NIM expansion

Recommendation: BUY (Maintained), Last Close Price: S$11.39

Target Price: S$13.70, Analyst: Tin Min Ying

– FY18 revenue and PATMI missed our estimates by 3.5% and 5.2% respectively due to a decline in net gains from investment securities and other income.

– FY18 NIM met our expectations by expanding 5 bps YoY to 1.70%.

– FY18 loans grew 8.6% YoY, driven by Building & Construction (+51.2% YoY) and Greater China loans (+8.9% YoY).

– FY18 NPL ratio remained stable at 1.5% (FY17: 1.4%); while credit costs normalised to 11 bps (FY17: 27 bps).

– Proposed final dividend increased to 23 cents per share, bringing full-year dividend to 43 cents per share (FY17: 37cents per share.

– Maintain BUY with an unchanged target price of S$13.70.

Source: Bloomberg; PSR


Sarine Technologies has recorded a fourth-quarter net profit of US$93,000, down 84.8 per cent from US$613,000 the year before, the diamond technologies company said in a regulatory filing on Monday before the market opened.

Raffles Medical Group has posted a net profit of S$71.1 million for 2018, up 0.4 per cent from S$70.8 million for 2017as a 7.8 per cent rise in Ebitda (earnings before interest, taxes, depreciation, and amortisation) was offset by higher tax expense and additional depreciation from the recently completed Raffles Specialist Centre in Singapore.Revenue for the 12 months ended Dec 31 was S$489.1 million, up 2.4 per cent from S$477.6 million for 2017.

Dasin Retail Trust which holds four malls in Zhongshan city in China’s Guangdong province, on Sunday posted its distribution per unit (DPU) for its fourth quarter that slightly beat its forecast for the quarter by0.9 per cent. DPU for the three months ended Dec 31, 2018 stood at1.83 Singapore cents, up from a projected 1.81 Singapore cents. This DPU takes into account a “distribution waiver”, through which major unitholders -Aqua Wealth Holdings Limited and Bounty Way -have waived a portion of their entitlement to distributions from Dasin Retail Trust. The total amount of the waived distribution has been distributed to the rest of the unitholders.

Best World Internationa is hiring an independent reviewer to scrutinise its business and accounting practices, afterThe Business Timesraised concerns last week over the challenges in tracking sales of its DR’s Secret line of premium skincare products in China. In astatement on Saturday, the company told shareholders that it has conducted its business ethically and in compliance with applicable laws, but “is not responsible for the accounting and sales records of the franchisees, who are independent third parties.”

Source: Business Times

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