DAILY MORNING NOTE | 26 January 2024

Trades Initiated in the past week

Factsheets


Singapore shares fell at the close of trading on Thursday (Jan 25), even as other regional bourses rallied. The benchmark index dropped 0.2 per cent or 5.69 points to end at 3,147.64. Across the broader market, decliners outnumbered advancers 281 to 268, with 1.4 billion securities worth S$920.2 million having changed hands.

The Dow and S&P 500 powered to fresh records on Thursday (Jan 26) following solid US growth data, shrugging off big drops in Tesla and Boeing. The Dow Jones Industrial Average gained 0.6 per cent to 38,049.13, while the broad-based S&P 500 gained 0.5 per cent to 4,894.16, its fourth straight record close. The tech-rich Nasdaq Composite Index added 0.2 per cent at 15,510.50.

Top gainers & losers

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Events Of The Week

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SG

Distribution per unit (DPU) for Mapletree Industrial Trust (MIT) fell 0.9 per cent to S$0.0336 for its third quarter ended Dec 31 on an enlarged unit base, down from S$0.0339 in the year-ago period. On a quarter-on-quarter basis, the DPU in Q3 was 1.2 per cent higher than the S$0.0332 in Q2, said its bourse filing on Thursday (Jan 25). Gross revenue in Q3 was up 2 per cent to S$173.9 million, from S$170.5 million in Q3 FY 2022/2023.

The lenders to EC World real estate investment trust (Reit) have given the sponsor of the Reit until Jan 31 to remove mortgages that had been illegally entered into, the Reit announced on Thursday (Jan 25). In a letter of demand dated Jan 24, the lenders demanded that the sponsor negotiate with the government of Fuyang (a city in China’s Anhui province) to discharge the mortgages in question and avoid a similar situation in future, failing which the lenders may take legal action.

Genetic Design and Manufacturing Corporation (GDMC), an advanced therapy drug manufacturer headquartered in Singapore, has raised US$21 million in Series A funding led by Hong Kong private equity firm Celadon Partners. Advanced therapy drugs are biological medicines based on genes, tissues or cells, with the potential to treat human diseases and injuries.

Higher casino net revenue drove Marina Bay Sands’ (MBS) topline growth for the fourth quarter ended Dec 31, 2023, and also led to higher property earnings. Adjusted property earnings before interest, taxes, depreciation and amortisation (Ebitda) rose 99.3 per cent on the year to a record US$544 million from US$273 million. The last high was recorded in Q1 2018 at US$541.1 million.


US

Shein investors are trying to sell shares in private market deals that value the online fashion giant at as low as US$45 billion, reflecting dwindling appetite for a company struggling with intensifying competition and regulatory scrutiny ahead of a long-awaited US debut. Shareholders offered stock at valuations ranging from US$45 billion to US$55 billion in late 2023.

Fintec startup Sygnum has raised more than US$40 million at the interim close of its latest funding round, exceeding its initial US$35 million target. On Thursday (Jan 25), the digital asset banking company said its post-money valuation stood at US$900 million as at the interim close of the round, which was led by Milan-listed asset management group Azimut Holding.

Alaska Air Group, the operator of the Boeing plane that suffered a mid-air incident earlier this month, said on Thursday (Jan 25) it expects a $150-million profit hit in 2024 from the more-than-two-week-long grounding of 737 MAX 9 aircraft.

Blackstone’s profit climbed 4 per cent in the final quarter of 2023 as president Jon Gray sees an inflection point for private equity after one of the industry’s worst years.The world’s largest alternative-asset manager reported distributable earnings of US$1.4 billion, or US$1.11 a share, beating analysts’ 96-cent average estimate. The surprise increase snapped a run of consecutive quarterly declines that began in late 2022.

Visa reported strong first quarter earnings that beat expectations, driven by robust credit card spending reflecting ongoing consumer resilience. Net revenue for the quarter was $8.63 billion, 9% above expectations, while adjusted per-share earnings came in at $2.41, also exceeding forecasts.

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


RESEARCH REPORTS

Netflix Inc – Subscribers and margins re-accelerating

Recommendation : ACCUMULATE (Maintained); TP: US$570.00, Last Close: US$544.87

Analyst: Jonathan Woo

– 4Q23 results were in line with our estimates. FY23 revenue/PATMI were at 98%/100% of our FY23e forecast. Paid memberships grew 13% YoY – its highest growth rate in 3 years, with 13.1mn net paid additions the largest 4Q ever.

– Growth drivers for FY24e are: 1) lower-priced ad-tier supporting 8% YoY subscriber growth; 2) ~20% price increase in developed markets. NFLX also raised FY24e operating margin guidance to 24% vs 20.6% in FY23, and expect steady margin expansion from ads.

– We raise our FY24e PATMI by 6% on higher margins due to price increases and scaling of its ads business, while also forecasting 13%/18% YoY FY25e revenue/PATMI growth. We maintain ACCUMULATE with a raised DCF target price of US$570.00 (prev. US$455.00). NFLX remains our top choice for streaming entertainment given its pricing power, growing membership base, and huge advertising opportunity. Our WACC/growth rate assumptions remain the same at 12.2%/3%, respectively.

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