Daily Morning Note – 26 February 2020



U.S. stocks tumbled to an almost 12-week low and bond yields plunged to records on rising concern the coronavirus will upend global supply chains critical to economic growth.

The S&P 500’s four-day rout reached 7.6%, with losses accelerating Tuesday after the U.S. Centers for Disease Control and Prevention warned Americans to prepare for a coronavirus outbreak at home. That follows a rapid increase in cases from Italy to Iran and Japan, with a growing list of companies warning that profits will suffer as economies around the world suffer. The S&P, Dow Jones Industrial Average and Nasdaq Composite indexes all set record highs this month.


A bargain-hunting session brought the Straits Times Index up 16.04 points or 0.51 per cent to 3,158.24 on Tuesday, following a sell-off at the start of the week as Covid-19 cases soared in South Korea and Italy over the weekend.

Partial returns of equity investments in two companies resulted in a significant decrease in fair value of those investments in Sakae Holdings‘ latest financial results for the half-year ended Dec 31, the company said on Tuesday in response to queries from the Singapore Exchange Securities Trading (SGX-ST).

United Hampshire US Real Estate Investment Trust (Reit) has lodged a preliminary prospectus to list a US-focused Singapore Reit on the Singapore Exchange, the Reit manager said on Tuesday.

Straits Trading‘s net profit for the fourth quarter ended Dec 31 more than doubled to S$29.7 million, largely contributed by its real estate segment even as the group continues to “exercise prudence when considering new investments” amid the growing scale of Covid-19.

Unitholders who receive odd lots of Frasers Logistics & Industrial Trust (FLT) units in its proposed merger with Frasers Commercial Trust (FCOT) will not have to pay brokerage fees to certain brokers for odd lots trades carried out within a month of the units being allotted and issued.

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


APAC Realty Ltd – The recovery is underway

Recommendation: ACCUMULATE (Maintained), Last Done: S$0.49

Target Price: S$0.55, Analyst: Paul Chew

– 4Q19 revenue met our estimates. Net profit was below due to higher than expected provision for doubtful debts and effective tax. Net earnings rebounded 32% YoY.

– New homes sales the largest driver to revenue. The sluggish resale market is undergoing a recovery as the gap in buyer expectation narrows.

– Maintained a market share of around 33% for all residential property transactions (resale, new, leasing and HDB).

– We maintain our ACCUMULATE recommendation. Our target price is maintained at S$0.55. The outlook is positive as property transactions are beginning to recover. New launches with attractive pricing enjoy good take-up rates. HDB resale market will be spurred by the enhanced grant and more units meeting their MOP. Resale market recovery is less clear and dependent on sentiment. But the widening price gap between new and older units will reach an inflexion point for buyers.

Raffles Medical Group Ltd – Ready for hurdle-crossing

Recommendation: Neutral (Maintained), Last Done: $1.01

Target Price: $0.99, Analyst: Tay Wee Kuang

– 4Q revenue grew 6.7% YoY, in line with estimates. Full year contribution from Healthcare Services and Hospital Services divisions grew at healthy levels of 8.8% YoY and 5% YoY respectively.

– FY19 EBITDA grew a modest 2.8% YoY despite drag from gestation costs related to opening of RafflesHospital Chongqing.

– Covid-19 outbreak may cause delay to the opening of RafflesHospital Shanghai, possibly extending gestation period.

– Despite investment in China, RFMD maintains a strong net cash position of $150.7mn.

– We maintain our NEUTRAL recommendation with a revised TP of S$0.99. Near-term drag on business is likely but recovery expected to be swift on intact long-term positive outlook.

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Webinar Of The Week

Market Outlook: (PSR) DBS, IREIT, APTV, MMH, NTL, SATS, Singtel, ThaiBev, REITs Monthly & SG Bonds

Date: 18 February 2020

For more on Market Outlook

Phillip Research in 3 minutes: #18 – Singapore Budget 2020

Updates summarised in 3 minutes

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