Daily Morning Note – 26 Febraury 2021


Wall Street stocks were sharply lower following an ugly session on Thursday as US Treasury yields hit a new 52-week high amid ongoing investor fears about inflation.

The Dow Jones Industrial Average fell 1.8 per cent to finish at 31,402.01, retreating from an all-time high set Wednesday. The broad-based S&P 500 fell 2.5 per cent to end at 3,829.24, while the tech-rich Nasdaq Composite Index again was the biggest loser, sinking 3.5 per cent to 13,119.43.

Stocks were under pressure the entire session as investors monitored the 10-year Treasury, which have been rising sharply in recent days and got as high as 1.6 per cent.

Investors fear a spike in inflation will prompt the Federal Reserve to shift away from easy-money policies and quickly raise interest rates – despite central bank assurances to the contrary.



Yangzijiang Shipbuilding’s net profit for the fourth quarter ended Dec 31, 2020, rose 17 per cent year on year to 753.46 million yuan (S$154 million) as margins improved. Revenue was 38 per cent lower year-on-year at three billion yuan as it delivered less vessels, while earnings per share clocked 64.39 fen, down from 78.88 fen previously. For the full year, net profit shrank 19 per cent to 2.52 billion yuan while revenue was 37 per cent lower at 14.84 billion yuan. The group has proposed a dividend of 4.5 Singapore cents per share for FY20, on a par with FY19.

Golden Agri-Resources on Thursday posted a net profit of US$188.6 million (S$248.4 million) for the second half of the fiscal year ended December 2020, down 21.5 per cent from US$240.4 million in the corresponding year-ago period. This brought the integrated palm oil producer’s FY 2020 net profit to US$31.8 million, versus a profit of US$194 million in FY 2019. To recap, Golden Agri had posted a net loss of US$156.9 million in H1 FY 2020. The firm’s earnings before interest, tax, depreciation and amortisation (Ebitda) for the second half of the year fell 3.8 per cent year on year (yoy) to US$479.8 million from US$498.8 million.

Mainboard-listed UMS Holdings’ net profit for the fourth quarter ended Dec 31, 2020 slumped 86 per cent year on year to S$1.26 million from S$9.24 million a year ago. The bottom line was hit by a one-off S$7 million impairment of goodwill in subsidiary Kalf Engineering and investment in associate company JEP, as well as a S$2.5 million share of goodwill impairment in JEP. Revenue rose 9 per cent to S$44.09 million on the back of increased semiconductor demand, while earnings per share worked out to 0.24 Singapore cent, down from 1.72 cents a year ago.

Far East Orchard’s net profit for the financial year ended Dec 31, 2020 plunged about 94 per cent year-on-year to S$1.54 million as the pandemic impacted its hospitality business. Revenue was 28.1 per cent lower at S$112.21 million while earnings per share worked out to 0.35 Singapore cent, down from 5.95 cents a year ago. The decrease in revenue from its hospitality business was partly offset by higher revenue from the student accommodation properties in the United Kingdom, arising from full-year contributions from five purpose built student accommodation properties that were acquired in 2019.

Hong Leong Finance’s net profit for the 12 months ended Dec 31, 2020 dropped 38 per cent year on year to S$63.91 million. The group reported profit from operations before allowances of S$82.4 million for the year, down 34.3 per cent, due to the recession. Higher general loan loss allowances were set aside against inherent credit risk amid uncertainties arising from the pandemic, Hong Leong Finance said. Net interest income fell 27.2 per cent to S$146.85 million due to compressed net interest margins as the dip in interest yields outweighed the savings from the lower cost of funds given lower interest rates.


Twitter wants to double its annual revenue to US$7.5 billion by 2023 and expects to increase its user base by an average of almost 20 per cent each of the next three years, according to a regulatory filing. The social media company has targeted 315 million daily active users by the end of 2023, an increase from 192 million in the fourth quarter of 2020. The business goals were announced Thursday in conjunction with the San Francisco-based company’s first Analyst Day since 2014.

Coinbase Global on Thursday disclosed its regulatory filing to go public, revealing surging revenue growth and healthy earnings and setting the stage for a landmark stock market listing for the US cryptocurrency exchange. The procedural step of making its filing with US regulators public brings Coinbase a step closer to listing its shares on the Nasdaq stock exchange, which would represent a landmark victory for cryptocurrency advocates vying for mainstream endorsement.

Domino’s Pizza missed Wall Street’s estimates for its fourth-quarter earnings and revenue. U.S. same-store sales still rose by double digits, but they are slowing down compared with previous quarters. The company’s new two- to three-year outlook projects net unit growth of 6% to 8% and global retail sales growth of 6% to 10%, excluding foreign currency.

Moderna, said Thursday it expects to generate $18.4 billion in sales from its Covid-19 vaccine this year. In releasing its fourth-quarter earnings, Moderna also said its chief medical officer, Tal Zaks, will leave the company in late September. The company said it has retained Russell Reynolds “to recruit for a new CMO with global and commercial experience.” The news comes a day after the company said it was expecting to produce at least 700 million Covid vaccine doses this year. It also said it expects to produce up to 1.4 billion Covid vaccine doses in 2022.

Best Buy’s, fourth-quarter earnings beat Wall Street’s expectations but fell short on revenue. Sales growth slowed, and the retailer expects the pace will weaken even further as people shift spending away from their homes. CFO Matt Bilunas said the company expects same-store sales this year will range from a drop of 2% to a gain of 1%.

Tesla, has told workers it will temporarily halt some production at its car assembly plant in California, Bloomberg News reported on Thursday, citing a person familiar with the matter. Workers on a Model 3 production line in Fremont were told their line would be down from Feb 22 until March 7, according to the report. The report did not clarify the reason for the halt and Tesla could not be immediately reached for comment. It was also unclear how much volume or revenue Tesla would lose due to the production halt. The Fremont plant has an annual production capacity of 500,000 Model 3s and Model Ys combined.

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


Raffles Medical Group Ltd. – Convalescing

Recommendation: ACCUMULATE (Upgrade); TP: S$1.18 (prev. S$0.94)

Last Done: S$1.07; Analyst: Tay Wee Kuang

– FY20 earnings beat estimate by 61% with the variance coming from S$28mn of JSS income and new COVID-19-related services.

– Healthcare services grew 18% YoY as PCR and serology testing offset loss of foreign patients due to travel restrictions.

– China operations improved from FY19. RafflesHospitalChongqing narrowed losses. Completion of RafflesHospitalBeijing’s upgrading to accelerate growth in China

Upgrade from NEUTRAL to ACCUMULATE with higher TP of S$1.18 from S$0.94, as we roll forward our DCF (WACC 6.6%) valuation. China operations expected to turn around.

Sheng Siong Group Ltd – Demand still above trend

Recommendation: ACCUMULATE (Upgraded); TP S$1.71

Last close: S$1.57; Analyst: Paul Chew

– 4Q20 revenue and earnings were within expectations, with full-year at 102%/101% of forecasts, excluding government grant. Final dividend jumped 67% to 3 cents per share.

– Revenue grew 28% YoY to S$319mn despite a gradual return of social and outdoor activities. Same-store sales growth in 4Q20 was 18%, 10-fold higher than 1.8% in 4Q19.

– FY21 earnings could be weaker following last year’s record sales triggered by pantry-loading and dine-home demand. We have modelled a 13% drop in revenue per sq ft for FY21e. Still, revenue should be 10% higher than pre-COVID levels. Expect grocery demand to be supported by dining at home and more households present in the country with international borders largely shut

– FY21e PATMI and target price of S$1.71 unchanged. Remains based on 25x PE, its 5-year historical average. Nevertheless, we raise the stock to ACCUMULATE from NEUTRAL as demand is still above trend

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