Daily Morning Note – 25 June 2021

PHILLIP SUMMARY

Asian stocks look set to climb Friday after U.S. shares hit a record on a bipartisan $579 billion U.S. infrastructure deal that stoked economic optimism. The dollar held a retreat.

Futures advanced in Japan, Australia and Hong Kong. U.S. contracts were little changed after the S&P 500 and Nasdaq 100 reached new peaks, with sectors seen as beneficiaries of the recovery from the pandemic, such as energy, leading gainers. U.S. banks rose in postmarket trading after clearing stress tests.

President Joe Biden celebrated the bipartisan plan, which is expected to move through Congress alongside a separate bill that would spend trillions more on what he called “human infrastructure.” It’s not yet assured either measure will get enough wider lawmaker support given the political splits in the U.S.

BREAKING NEWS

SG News

Sembcorp Marine is planning an additional S$1.5 billion rights issue to shore up its financial position and accelerate its pivot towards clean energy, it said in a filing to the Singapore bourse on Thursday evening. In addition, it has inked a memorandum of understanding with Keppel Corp to explore a potential combination of Sembcorp Marine and Keppel Offshore & Marine. Sembcorp Marine is proposing a fully committed, renounceable rights issue of up to 18.83 billion new shares on the basis of three new shares for every two existing shares held, at S$0.08 per share. This works out to a 35.7 per cent discount to the theoretical ex-rights price and a bigger 58.1 per cent discount to the counter’s close at S$0.191 on June 23.

Keppel Corp and Sembcorp Marine have signed a non-binding memorandum of understanding (MOU) to enter into exclusive talks with the aim of merging Keppel Offshore & Marine (O&M) and Sembcorp Marine. If the proposed transaction is successfully completed, the combined entity will be a listed entity, in which Keppel will receive shares and a cash consideration of up to S$500 million. Keppel said in a media release on Thursday that it intends to distribute the shares in the combined entity to its shareholders. The key terms of the transaction, however, are still being discussed.

UOB said on Thursday that it aims to double its wealth income and increase its assets under management (AUM) compound annual growth rate by double digits in five years, as part of its plan to capitalise on the burgeoning base of the emerging affluent in the region. This comes amid a push by the bank to democratise access to wealth management solutions with the launch of its new digital investment offering known as SimpleInvest, which allows customers to invest for as low as S$100 from three portfolios based on their objectives and risk appetite. With digital adoption accelerated over the past year due to Covid-19, the bank is expecting one in four customers to carry out digital self-serve wealth transactions in two years. This is up from the 10 per cent who do so currently, said Jacquelyn Tan, head of Group Personal Financial Services, UOB.

CapitaLand on Thursday announced its registration as a private equity (PE) fund manager with the Asset Management Association of China (AMAC). In a bourse filing before markets opened, the property giant said it was “one of a select few” wholly foreign-owned enterprises to do so. Its new PE fund manager status will not only allow the group to carry out RMB-denominated capital raising, but also provide fund management services for prospective RMB funds in China. This enhances the capability of the group’s investment management platform to forge more capital partnerships with China’s domestic institutional investors, CapitaLand said. The group aims to launch its first RMB-denominated fund product in Q4 of 2021. It expects this upcoming fund to capture investment opportunities in new economy assets such as business parks, logistics and data centres.

Del Monte Pacific is looking at ways to offset margin erosion across its different product lines and markets, as higher commodity prices and increased transportation costs hit its expenses, top executives said in a call on Thursday to discuss the company’s latest financial results. Parag Sachdeva, chief financial officer of Del Monte’s subsidiary Del Monte Philippines Inc (DMPI), said the company is likely to see “cost headwinds” in the form of raw commodities as well as the metal packaging that the company uses to can its fruits and vegetables. Del Monte sells a range of fruits and vegetables in canned, frozen and other forms. It also recently expanded its product line to include milk and biscuits.

The manager of Prime US Reit has agreed to acquire two properties in the US for US$245.5 million, with the purchase to be partially funded through a private placement exercise to raise gross proceeds of at least US$80 million. Comprising two freehold seven-storey Class A office towers, Sorrento Towers sits above a three-level podium garage at 5355 and 5375 Mira Sorrento Place, San Diego, California, and will be acquired by the real estate investment trust (Reit) at its valuation price of US$146 million. It was built in 1989 with its last refurbishment completed in 2020, and comes with a net leasable area (NLA) of 296,327 square feet (sq ft) as well as 1,052 parking lot spaces at 3.9 lots per 1,000 sq ft.

Yangzijiang Shipbuilding on Wednesday announced that it had recently secured agreements to build and deliver 14 vessels with a total contract value of US$715 million. Of the new orders, three of the vessels ordered by a German shipowner are 40,000 cubic metre (cu m) liquefied petroleum gas (LPG) vessels, said the group in a bourse filing. Executive chairman and chief executive officer of the group Ren Letian said that its maiden batch of 40,000 cu m LPG carriers marks a breakthrough for the group and is a recognition of “the group’s strengths in the design and building of clean-energy vessels”.

Rex International on Thursday said the senior secured bond, worth 500 million Norwegian krones (S$78.9 million), of its 90 per cent-owned subsidiary Lime Petroleum has been fully subscribed. The 2.5-year senior secured bond, with a maturity date of Jan 9, 2024, is a condition precedent for Lime Petroleum’s acquisition of Brage field in Norway, the group said in an exchange filing on Thursday. The group expects the bond to be listed on the Oslo Børs within six months, with a coupon rate of three months Norwegian Interbank Offered Rate plus 8.25 per cent. The settlement date for the bonds is expected to be on July 9, 2021. It added that it has appointed financial adviser ABG Sundal Collier as the manager of the bond issue.

US News

Google is pushing back its timeline to kill third-party tracking cookies from 2022 to 2023, giving the digital advertising industry more time to plan for more privacy-conscious targeted ads. Cookies are small pieces of code that websites deliver to a visitor’s browser and stick around as the person visits other sites. They can be used to track users across multiple sites to target ads and see how they perform. Google said last year it would end support for those cookies in Chrome by early 2022 once it figured out how to address the needs of users, publishers and advertisers and come up with tools to mitigate workarounds. Google is updating that timeline. “While there’s considerable progress with this initiative, it’s become clear that more time is needed across the ecosystem to get this right,” Vinay Goel, Director of Privacy Engineering at Chrome, wrote in a blog post.

BuzzFeed, a 15-year-old digital media company, announced Thursday it plans to go public via a merger with a publicly traded special purpose acquisition company. The company, merging with 890 Fifth Avenue Partners, is targeting a $1.5 billion valuation. The deal is expected to close in the fourth quarter. BuzzFeed also plans to acquire Complex Networks, a digital publisher that specializes in streetwear, music and culture, for $300 million. The deal is made up of $200 million in cash and $100 million of equity in BuzzFeed, the company said. They added it will “immediately accelerate BuzzFeed’s revenue growth.”

Multiple users experienced a brief outage at Amazon.com’s platforms including Alexa and Prime Video late Wednesday before services were restored, according to outage monitoring website Downdetector. More than 6,200 user reports had indicated issues with Amazon’s online store site, as of 1.48am GMT, while about 1,700 users reported problems with Prime Video and more than 400 with Alexa, according to Downdetector. Outage reports dropped significantly to double digits on the platforms in a little over an hour, Downdetector showed.

The Biden administration on Wednesday ordered a ban on U.S. imports of a key solar panel material from Chinese-based Hoshine Silicon Industry over forced labor allegations, said two sources briefed on the matter. The U.S. Commerce Department separately restricted exports to Hoshine, three other Chinese companies and the paramilitary Xinjiang Production and Construction Corps (XPCC), saying they were involved with the forced labor of Uyghurs and other Muslim minority groups in Xinjiang. The three other companies added to the U.S. economic blacklist include Xinjiang Daqo New Energy, a unit of Daqo New Energy; Xinjiang East Hope Nonferrous Metals, a subsidiary of Shanghai-based manufacturing giant East Hope Group; and Xinjiang GCL New Energy Material, part of GCL New Energy Holdings.

Darden Restaurants on Thursday reported that its fiscal fourth quarter same-store sales nearly returned to 2019 levels as states rolled back dining restrictions. The company also released an outlook for fiscal 2022, predicting that that its total sales for the year will top pre-pandemic revenue. Shares of the company rose more than 2% in morning trading.

A CDC safety group said there’s a “likely association” between a rare heart inflammatory condition in adolescents and young adults mostly after they’ve received their second Covid-19 vaccine shot, citing the most recent data available. There have been more than 1,200 cases of a myocarditis or pericarditis mostly in people 30 and under who received Pfizer’s or Moderna’s Covid vaccine, according to a series of slide presentations published Wednesday for a meeting of the Centers for Disease Control and Prevention’s Advisory Committee on Immunization Practices. Myocarditis is the inflammation of the heart muscle, while pericarditis is the inflammation of the membrane surrounding the heart.

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

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