DAILY MORNING NOTE | 26 July 2023

SINGAPORE shares rose on Tuesday (Jul 25), in tandem with overnight Wall Street gains and the spirited trading seen in most key Asian indexes after China pledged more support for its tepid economy. Singapore shares gained 0.6 per cent or 21.02 points to 3,286.16 points.

WALL Street stocks advanced on Tuesday (Jul 25) as traders took in earnings reports and looked ahead to the US Federal Reserve’s interest rate decision.The Dow Jones Industrial Average ended 0.1 per cent higher at 35,437.93, extending its winning streak for a 12th straight session.The broad-based S&P 500 Index rose 0.3 per cent to 4,567.54, while the tech-heavy Nasdaq Composite Index gained 0.6 per cent to 14,144.56.

Top gainers & losers

Factsheets


EVENTS OF THE WEEK

Factsheets


SG

SIA Engineering: SIAEC posted its first quarterly operating profit in 1Q24 (S$0.4mn) since 4Q20. This is also the first quarter without government COVID support. It booked 1Q24 EPS of 2.41 cts/share. Revenue of S$262mn (+16% qoq) has returned to pre-pandemic level, though the number of flights handled was 84% of pre-COVID level (Mar 23: 79%). Net profit of S$27mn (+28% QoQ, +111% YoY) was led by share of profits at associates/JVs. Balance sheet is flushed with cash of S$634mn (S$0.57/share). SIA owns 77.7% of SIAEC and will report 1Q24 earnings on 27 July.

Peggy Mak Bang Mui
Manager, Research
peggymak@phillip.com.sg


THE manager of Mapletree Logistics Trust (MLT) reported a distribution per unit of S$0.02271 for the first quarter of financial year 2023 and 2024, up just 0.1 per cent from a DPU of S$0.02268 for the same period a year ago. The amount distributable to unitholders rose 3.1 per cent year-on-year to S$112 million from S$108.6 million. The increase was due to a higher divestment gain and capital gain tax write-back, said the manager in a bourse filing on Tuesday (Jul 25).

FINTECH platform iFast has reversed into the black with a net profit of S$3.6 million for its second quarter ended Jun 30, as financial market conditions stabilised this year which benefited its core wealth management platform business. A year earlier, it made a net loss of S$2.7 million. Earnings per share stood at 1.22 Singapore cents for the second quarter. In the year before period, the company had a loss per share of 0.92 Singapore cent. Net revenue for Q2 rose 6.5 per cent to S$31.8 million from S$29 million previously.

KEPPEL Reit’s distribution per unit (DPU) fell by 2.4 per cent to S$0.029 for the first half of the 2023 financial year ended Jun 30, down from S$0.0297 the year before, its manager said on Tuesday (Jul 25). Distributable income from operations fell 10.5 per cent to S$99 million and was lower due mainly to higher property expenses and borrowing. Property income rose 4.7 per cent to S$114.9 million due to higher rentals and portfolio occupancy, the manager said.

THE voluntary unconditional cash offer for consumer electronics retailer Challenger Technologies closed on Tuesday (Jul 25), with the offeror DigiTech Holding receiving valid acceptances representing about 97.8 per cent of the total number of shares in the company.

THE general insurance arm of UOB, United Overseas Insurance (UOI), reported a net profit after tax of S$12.2 million for the first half of the 2023 financial year, up 70.2 per cent from a net profit after tax of S$7.1 million for the same period a year ago. Insurance revenue increased by 17.5 per cent to S$45.4 million for the first half of FY2023 ended Jun 30, as compared with S$38.7 million in the same period a year ago.

FRASERS Centrepoint Trust’s committed occupancy for its retail portfolio rose 1.6 percentage point to 98.7 per cent year on year in the third quarter ended Jun 30, on the back of firm leasing demand. Shopper traffic and tenants’ sales both increased within the same period, with tenants’ sales averaging 16 per cent above pre-Covid-19 levels, the trust’s manager said on Tuesday (Jul 25).


US

Shares of Spotify closed down 14% Tuesday after the company released second-quarter results that missed analysts’ estimates for revenue and offered weaker-than-expected guidance. 2Q23 revenue grew 11% YoY to EUR3.2bn, in line with analyst estimates. Loss per share widened to -EUR1.55, well below analyst estimates, dragged by EUR135mn in restructuring-related costs. On the flip side, the company saw an outperformance in user metrics, reporting 551mn MAUs and 220mn premium subscribers respectively.

Jonathan Woo
Senior Research Analyst
jonathanwookj@phillip.com.sg


Alphabet shares rose about 7% in extended trading on Tuesday after the company reported better-than-expected revenue and profit, driven by growth in its cloud-computing unit. 2Q23 revenue US$74.6bn (7% YoY) vs estimates of US$72.8bn, while earnings came in at US$1.44 vs estimates of US$1.34. Google Ads remained resilient through macro headwinds with a 3% YoY growth, while Google Cloud saw another quarter of strong 25+% YoY growth, with profitability continuing for a 2nd straight quarter.

Jonathan Woo
Senior Research Analyst
jonathanwookj@phillip.com.sg


Microsoft shares slipped as much as 4% in extended trading on Tuesday after the software maker issued quarterly revenue guidance that fell short of analysts’ expectations. 2Q23 revenue US$56.2bn vs estimated US$55.5bn, earnings of US$2.69 vs estimates of US$2.55. Microsoft’s Intelligent Cloud segment contributed US$24.0bn in revenue, up 15% and above the US$23.8bn consensus estimates by analysts. Revenue growth has come in under 10% for three consecutive quarters for the first time since 2017. 1Q24e Mid-range revenue guidance of US$54.3bn fell short of estimates at US$54.9bn.

UNILEVER said on Tuesday (Jul 25) that China’s declining property market and exports have sent its consumer sentiment to a historic low.This came after the British consumer goods giant forecast a Chinese “consumption boom” earlier this year. The maker of Dove soap and Ben & Jerry’s ice cream in February flagged between US$1.5 trillion and US$2 trillion of “excess household savings” in China, which it believed could boost its sales in the country and in South-east Asia.

TIKTOK is planning to launch in early August an e-commerce platform to sell China-made goods in the United States, The Wall Street Journal reported on Tuesday (Jul 25), citing people familiar with the plan.The short-video app is seeking to replicate the American success of Chinese shopping platforms Shein and Temu and will be responsible for the storage and shipping of items on behalf of manufacturers and merchants in China, the report said.

BIOTECHNOLOGY company Biogen said on Tuesday (Jul 25) it expects to slash about 1,000 jobs, or 11 per cent of its workforce, in a fresh round of cost-cutting as it looks to the launch of a new Alzheimer’s drug to help it return to growth. The company said its costs are elevated compared to rivals and that it would focus on higher-growth products such as the recently approved Alzheimer’s drug Leqembi, which it sells with partner Eisai.

SALES at the world’s top luxury group LVMH rose by 17 per cent in the second quarter, with a sharp rebound in China helping to offset a decline in the US, where inflation and economic turbulence have dented demand for high-end goods. The French company, which owns 75 brands including fashion labels Louis Vuitton and Dior as well as Hennessy cognac and US jeweller Tiffany, said on Tuesday that sales came to 21.2 billion euros (S$31.1 billion) for the three months to the end of June.

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


RESEARCH REPORTS

Keppel DC REIT – A steady quarter with stable DPU

Recommendation: Neutral (Downgraded), Last Done: S$2.26

Target price: S$2.26, Analyst: Darren Chan

– 1H23 DPU of 5.051 Singapore cents (unchanged YoY) was in line and formed 51% of our FY23e forecast.

– Contributions from the acquisitions of Guangdong Data Centre 2 and 3, along with renewals, income escalations, and tax savings resulting from the approval of the NetCo Bonds as Qualifying Project Debt Securities, or QPDS, were offset by higher facilities expenses including increased electricity costs at some of its Singapore co-location assets, and higher finance costs due to refinanced loans, as well as floating interest rate loans.

– Downgrade from ACCUMULATE to NEUTRAL due to the recent share price performance. DDM derived target price remains unchanged at S$2.26. Catalysts include more accretive acquisitions and lower-than-expected interest costs. The current share price implies FY23e/24e DPU yields of 4.4%/4.5%.

PSR Stocks Coverage

Factsheets

Factsheets


For more information, please visit:

https://www.stocksbnb.com/singapore-stocks-coverage/


Upcoming Webinars

Guest Presentation by Sabana Industrial REIT

Date: 28 July 2023

Time: 12pm – 1pm

Register: https://tinyurl.com/5n8emjhy


Guest Presentation by Netlink NBN Trust

Date: 24 Aug 2023

Time: 12pm – 1pm

Register: https://tinyurl.com/2hpm7puv


Guest Presentation by Elite Commercial REIT

Date: 29 Aug 2023

Time: 12pm – 1pm

Register: https://tinyurl.com/3mey6sf7


Guest Presentation by Uni-Asia Group Limited

Date: 30 Aug 2023

Time: 12pm – 1pm

Register: https://tinyurl.com/y5nhcvzn


POEMS Podcast:

Research Videos

Weekly Market Outlook: Netflix, Tesla, Sabana Industrial REIT, Tech Analysis, US Banks, SG Weekly…
Date: 24 July 2023
Click here for more on Market Outlook.
Sign up for our webinars here, and be among the first to receive economy and market updates.

PHILLIP RESEARCH IN 3 MINS

Phillip Research in 3 minutes: #29 Keppel Corporation; Initiation
Click here for more on Phillip in 3 mins.

Follow our Socials

Facebook Social Icon Instagram Icon Twitter Social Icon Youtube Social Icon Linkedin Social Icon TikTok Social Icon Spotify Social Icon

Join our Singapore Equity Research Community on POEMS Mobile 3 App for the latest research reports, market updates, insights and more

Click to join!

Disclaimer

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.

Confidentiality Note

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.

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you

IMPORTANT INFORMATION

This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  

 

Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com