Daily Morning Note – 26 April 2019
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YOUR PHILLIP SUMMARY
Asia stocks were set for a muted start to Friday, after mixed messages from U.S. benchmarks. Industrial stocks were under pressure after disappointing earnings, as 3M dragged the Dow Jones Industrial Average into the red. At the same time, the Nasdaq got a lift from strong tech earnings. Microsoft’s market value hit the $1 trillion mark for the first time and Facebook stock enjoyed the buzz around its expectation-beating revenue and earnings. The S&P 500 closed just one point lower than Wednesday’s level.
The dollar extended gains to a four-month high and Treasuries dipped after solid U.S. durable-goods data. Brent crude couldn’t hold a rally past $75 a barrel.
RESEARCH REPORT
Frasers Centrepoint Trust – Growth catalysts in sight
Maintain NEUTRAL; TP: S$2.31 (prev. S$2.21), Last: S$2.36, Analyst: Tara Wong
– 2Q19 NPI and DPU in line with our forecast. Growth catalysts include increased
ability to pursue ROFR pipeline, heightened positioning of Causeway Point
(CWP), and FCT’s capability to tap on the renewed strength in fringe retail
rents.
-Stake in PGIM Real Estate AsiaRetail Fund Limited (PGIM ARF) further
entrenches FCT’s presence as the leading suburban retail landlord; potential
DPU accretion of 3.56%.
– Uplift in NPI due to lower property tax expenses. Weighted average debt
maturity extended beyond 2 years.
CapitaLand Mall Trust – Anticipating the anticipated
Maintain NEUTRAL; TP: S$2.21 (prev. S$2.09), Last: S$2.36, Analyst: Tara Wong
– 1Q19 NPI and DPU in line with our forecast.
– Stable portfolio occupancy and higher tenant retention rate.
– Funan pre-leased at 90% occupancy – on track to open in 2H2019.
– Still-weak rental reversions, dragged down by a wider mix of trade categories.
Tenant sales also slid 0.5% YoY.
Singapore Coal Monthly – No sign of unwinding China’s import restriction
Recommendation: OVERWEIGHT, Analyst: Chen Guangzhi
– 144mn tonnes of new capacity added in China in 1Q19
– China expects a 30% growth of domestic coal transport capacity by rail
– Firmer approach to ensure domestic obligation is met in Indonesia
Penguin International Ltd- This Penguin can flex and fly
Recommendation: BUY (Initiation), Last Done: S$0.435, Target Price: S$0.610,
Analyst: Paul Chew
– Expanded shipbuilding capabilities beyond crew and security boats into
passenger ferries, fire and rescue vessels, patrol boats and windfarm support
vessels
– Rising recurrent charter income from crewboats amidst rising utilisation and
charter rates. Offshore oil and gas activity is recovering and more customers
opt for more cost-effective and safer crewboats.
– Valuations attractive at 3x PE (ex-cash). Initiate coverage with a BUY and TP of
S$0.61.
BREAKING NEWS
Amazon on Thursday delivered record profits for the first quarter, fueled by gains in cloud computing and new business segments for the US technology colossus. Net profit in the quarter more than doubled from the same period last year to US$3.6 billion, extending Amazon’s trend of rising profitability.
Microsoft hit the trillion-dollar value mark on Thursday for the first time, becoming the third technology giant to reach the milestone. Shares in Microsoft rallied some five per cent in early Wall Street trade after a robust earnings report a day earlier to lift the value briefly above US$1 trillion.
HYFLUX has received a non-binding letter of intent for a possible S$400 million injection from an owner and developer of water and power utilities based in the Middle East, the troubled water treatment firm said in an exchange filing on Thursday.
MANULIFE US Real Estate Investment Trust (Reit) said on Thursday its distribution per unit (DPU) for the first quarter rose 22.8 per cent to 1.51 US cents from 1.23 cents for the year-ago quarter.
UBS Group AG is starting a new venture at its US operation, marrying its wealth-management unit and investment bank to capture more deals and trading activity among its ultra-rich clients.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research
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