Daily Morning Note – 25 March 2021
Asian markets will likely open mixed on Thursday after global equities dipped and U.S. investors considered which stock market sectors would most benefit from strengthening growth. Concerns about extended economic lockdowns in Europe and potential U.S. tax hikes also weighed on investor sentiment. “Rising interest rates, uncertainty of tax policy, concern over inflation all remain top of mind for investors. However, none of these themes speak to rising appetite for risk,” said Peter Kenny of Kenny’s Commentary LLC and Strategic Board Solutions LLC in Denver. European shares closed near two-week lows, while oil prices resurged from steep losses earlier in the week after one of the world’s largest container ships ran aground in the Suez Canal. Authorities were still trying to clear the ship from the vital shipping lane on Wednesday afternoon.
TWO appointed independent non-executive directors of Sabana Shari’ah Compliant Industrial Reit (Sabana Reit) have resigned following “certain unitholders” refusal to endorse their appointments, the Reit’s manager announced in regulatory filings on Wednesday night. The announcements did not name the unitholders, but noted that they hold about 12 per cent of the total units in the Reit. Earlier this month, minority unitholders Quarz Capital Management and Black Crane Capital had said in an open letter that they would not endorse the proposed directors.
THE offer for mainboard-listed Penguin International closed with the offeror and its concert parties holding an aggregate of 166.6 million shares, representing 75.68 per cent of the shares in the company, the firm said in a regulatory filing on Wednesday night. The offer closed at 6pm with valid acceptances amounting to 130.7 million shares, or 59.39 per cent of the company’s total shares. Separately, offeror Emet Grace has acquired 35.87 million shares on the Singapore Exchange, representing a 16.29 per cent stake.
MAINBOARD-LISTED Olam International has priced US$100 million in five-year notes due 2026, via a private placement, the food and agri-business firm said on Wednesday night in a Singapore Exchange announcement. Part of Olam’s US$5 billion euro medium term note programme, the notes will be issued on March 31, 2021 at a fixed coupon of 3.25 per cent, payable semi-annually in arrears. Scotiabank was the sole manager for this transaction. Olam said the proceeds will be used by it and its subsidiaries for working capital and general corporate purposes, “including financing capital expenditure and potential acquisition opportunities which the group may pursue in the future as part of its strategic objectives”.
Tesla Inc customers can now buy its electric vehicles with bitcoin, its boss, Elon Musk, said on Wednesday, marking a significant step forward for the cryptocurrency’s use in commerce. “You can now buy a Tesla with bitcoin,” Musk said on Twitter, adding that the option would be available outside the United States later this year. The electric-car maker said last month it bought $1.5 billion worth of bitcoin and would soon accept it as a form of payment for cars, in a large stride toward mainstream acceptance that sent bitcoin soaring to a record high of nearly $62,000. Bitcoin, the world’s biggest digital currency, rose more than 4% after Musk’s tweet and was last up 3.5% at $56,178.
Intel Corp will greatly expand its advanced chip manufacturing capacity as the new chief executive announced plans to spend as much as $20 billion to build two factories in Arizona and open its factories to outside customers. The move by CEO Pat Gelsinger on Tuesday aims to restore Intel’s reputation after manufacturing stumbles sent shares plunging last year. The strategy will directly challenge the two other companies in the world that can make the most advanced chips, Taiwan’s Semiconductor Manufacturing Co Ltd (TSMC) and Korea’s Samsung Electronics Co Ltd. Intel shares rose 7.5% after the company disclosed its new strategy and full-year financial guidance for 2021.
General Motors Co extended production cuts in North America on Wednesday due to a worldwide semiconductor chip shortage that has impacted the auto sector. The U.S. automaker said its Wentzville, Missouri, assembly plant would be idled during the weeks beginning March 29 and April 5. It will extend down time at its plant in Lansing, Michigan, which has been idled since March 15, by two weeks. The chip shortage came as North American auto plants were shut for two months during the COVID-19 pandemic last year and chip orders were canceled, and as demand surged from the consumer electronics industry as people worked from home and played video games. That’s now left carmakers competing for chips.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
CapitaLand Limited – Faster growth and re-rating
Recommendation: BUY (Maintained), Last Done: S$3.75
Target Price: S$4.38, Analyst: Natalie Ong
– Proposed restructuring and demerger of investment-management business to allow unitholders to realize immediate upside from development business (at 0.95x BV offered), compared to CAPL’s 20-30% historical discounts to NAV.
– Implied consideration of S$4.102 is 24% premium to last traded price and 5-year VWAP. Comprises S$0.951 cash, one CLIM unit and 0.155 unit of CICT valued at S$2.823 and S$0.328 respectively.
– Maintain BUY. TP raised from S$3.75 to S$4.38. Our new TP is based on an 80% probability-weighted RNAV that the demerger will be approved and SOTP. Demerger valuations are calculated using the average of the two valuation methods in Figures 1-2.
HK Reports – Read up on our Hong Kong reports here
Webinar Of The Week
Market Outlook: Lendlease REIT, Credit Bureau Asia, Southern Alliance Mining, CICT, SG Weekly
Date: 22 March 2021
Updates summarised in 3 minutes
Phillip Research in 3 minutes: #29 – Keppel Corporation; Initiation
For more videos on Phillip in 3 Mins
|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.|
|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.|