Daily Morning Note – 26 Oct 2020


US stocks fell last week, breaking a three-week winning streak as the odds of passing a novel coronavirus relief bill before the Nov 3 presidential election were slim even as Covid-19 cases proliferated. Tech shares underperformed after Intel Inc. plunged more than 10%, dragging chipmakers lower.

Investors remain focused on Washington, where lawmakers are haggling over a financial spending bill to prop up the economy before the Nov. 3, though optimism that a deal will come at some point this year has helped drive Treasury rates higher in recent days. Concerns remain that rising virus cases will force additional business closures. The final presidential debate appeared to do little to alter the trajectory of a race that Democrat Joe Biden leads according to polls.

Growing coronavirus infections around the world continued to weigh on markets. U.S. cases exceeded 70,000 for the first day since late July. In Europe, governments have started deploying curfews and other restrictions more widely.


NANOFILM Technologies, the spin-off company of Nanyang Technological University (NTU) lodged its final prospectus, offering 77.2 million shares at S$2.59 each for placement in its initial public offering (IPO) for a total of S$470.1 million. Based on its placement price, Nanofilm’s market capitalisation will be about S$1.7 billion post-placement. The public offer opens at 6pm on Oct 23 and will close at noon on Wednesday.

Wealth management and brokerage platform iFast Corporation reported a net profit of S$6.2 million for the third quarter ended Sept 30, up 150.6 per cent from S$2.5 million in the year-ago period. The group’s “record high” earnings were achieved on the back of a 33.3 per cent year-on-year increase in gross revenue to S$45 million from S$33.8 million last year, as both its business-to-consumer (B2C) and business-to-business (B2B) divisions booked improvements in revenue contributions. iFast CEO Lim Chung Chun said the group would be launching new products and services in Malaysia and China by early 2021.

OXLEY Holdings said that the completion of construction works in its properties is expected to be delayed by four to six weeks because of the Covid-19 pandemic, with construction sites having ceased activities to varying degrees in Singapore and overseas.

GL Limited, a UK hotel sector player, recorded an unaudited net loss after tax of US$22.5 million for its first quarter ended Sept 30, reversing from a net profit after tax of US$12 million for the year-ago quarter, on the back of the Covid-19 outbreak.

ST ENGINEERING on Friday said it has signed a memorandum of understanding (MOU) with Montran Corporation focusing on the “digitalisation of critical payments and securities settlement systems” in the Asia-Pacific region. The partnership will see the establishment of a Centre of Excellence (COE) in Singapore, both companies said in a joint statement.

Property firm The Straits Trading Company will issue at par S$200 million worth of notes maturing on Oct 29, 2025. The unsubordinated and unsecured five-year notes carry a coupon of 3.75 per cent, the mainboard-listed firm said on Friday.

Credit card issuer American Express reported a nearly 40 per cent slump in quarterly profit, hurt by lower spending by its users, while it also set aside US$665 million for potential defaults. Net income fell to US$1.07 billion, or US$1.30 per share, for the third quarter ended Sept 30, from US$1.76 billion, or US$2.08 per share, a year earlier.

PayPal Holdings is exploring acquisitions of cryptocurrency companies including Bitcoin custodian BitGo, according to people familiar with the matter, a move that would expand its embrace of digital coins.

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


Keppel DC REIT – In anticipation of acquisitions

Recommendation: NEUTRAL (Maintained), Last Done: S$3.00

Target Price: S$2.91, Analyst: Natalie Ong

– 9M20 DPU of 6.73 cents in line, forming 71.3% of our FY20e DPU estimate.

– Portfolio metrics healthy: long WALE of 7.2 years, portfolio occupancy of 96.7% and interest coverage ratio of 12.7x. AEI and rental escalations to provide organic growth.

– Reiterate NEUTRAL with a higher DDM-based target price of S$2.91 from S$2.57 after incorporating S$500mn of acquisitions for 1Q21e. Despite strong metrics and future-ready asset classes, reiterate Neutral as we believe the market has priced in potential catalysts from acquisitions and STI inclusion. Prefer Ascendas REIT (AREIT SP, Accumulate, TP: S$3.63) in the sector.

Phillip Model Bond Portfolio – Review 26 October 2020

Credit Analyst: Timothy Ang

– The Phillip Model Bond Portfolio outperformed the benchmark for the month and displayed lower volatility in returns throughout. The total portfolio return was 1.1% vs the Singapore Fixed Income index total return of 0.3%

– In terms of portfolio return, 0.8% gains was from price appreciation while 0.3% was gained in yield.

– We maintain the portfolio holdings.

>> Read more research reports

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