Daily Morning Note – 26 October 2018


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U.S. stocks surged back into positive territory, with the Nasdaq Composite Index registering its biggest increase since March, a day after a broad-based rout sent equities negative for the year. Tesla, meanwhile, posted a surprise profit, sending its shares up by 9.1 percent. Twitter also surged 15.55 percent on better-than-expected results.

U.S. government debt yields rose slightly on Thursday as equities recovered. At around 1:22 p.m. ET, the yield on the benchmark 10-year Treasury note traded at 3.141 percent, while the yield on 30-year Treasury bond traded at 3.351 percent. The European Central Bank also left its benchmark interest rates unchanged on Thursday, with the euro trading at $1.1374 as of 7:05 a.m. HK/SIN after seeing a high above 1.14 yesterday.


Ascendas REIT – Acquired second UK portfolio
Recommendation: ACCUMULATE
Target Price: $2.78

 Gross revenue and DPU were within expectation
 Acquisition of the second UK portfolio was completed on Oct. 4, subsequent to 2Q19
 Maintain Accumulate; new target price of $2.78 (previous $2.82)

CapitaLand Mall Trust – Journey to the West
Recommendation: NEUTRAL
Target Price: $2.09

 Acquisition of remaining 70% of Westgate approved by unitholders on Oct 25. Funding via private placement (c.S$245.6mn) and debt (c.S$552mn) will be accretive to FY18e and FY19e DPU. Targeted completion of transaction by Nov 1.
 3Q18 NPI/DPU within our estimates. 9M18 NPI/DPU at 75% and 74% of our FY18e estimates.
 Tepid tenant sales growth, dragged by F&B sector, CMT’s biggest tenant sector by GRI. Shopper traffic continued to decline for the third consecutive quarter this year.
 Maintain Neutral with adjusted TP of S$2.09 (prev S$2.05).


UOB has posted a net profit of S$1.04 billion in the third quarter, up 17 per cent from S$883 million a year ago, as net interest income rose 14 per cent to S$1.6 billion, driven by healthy loan growth and a net interest margin uplift of 2 basis points.

Frasers Hospitality Trust clocked a fourth fiscal quarter distribution per stapled security of 1.2154 Singapore cents, down 4.8 per cent from the 1.2763 Singapore cents for the same period last year. For the period under review, its net property income also took a hit, falling 6.7 per cent to S$29.4 million, on the back of a 6.9 per cent drop in gross revenue to S$38.7 million.

Capitaland Commercial Trust has posted a distribution per unit of 2.20 Singapore cents for the third quarter, up 8.9 per cent from the same period last year. Gross revenue for the three months ended Sept 30 was S$100.51 million, up 35.6 per cent from the same period a year earlier on contributions from the acquisitions of Gallileo in Frankfurt as well as Asia Square Tower 2, which offset the loss in revenue from divesting Wilkie Edge and Twenty Anson.

GuocoLand saw a steep drop in its first-quarter earnings, as a fall in revenue was compounded by a lower share of profit from associates and joint ventures. Net profit plunged 85 per cent on the previous year to S$26.2 million for the three months to Sept 30.

Sembcorp Marine sank into the red in the third quarter, in its second straight quarter of net losses, despite higher turnover from the sale of a rig. The offshore and marine company turned in a net loss of S$29.8 million for the three months to Sept 30, against profits of S$100.7 million in the same period the previous year.

Ascendas REIT on Thursday reported a 4.2 per cent fall in distribution per unit (DPU) to 3.887 Singapore cents for the second quarter ended Sept 30 from 4.059 cents last year. Ascendas noted that the DPU takes into account an enlarged number of units in issue. The decline was otherwise due to lower contributions from Singapore assets, higher interest expense, and the raising of S$450 million in equity for a UK portfolio acquisition completed in early October as well as a built-to-suit development in Singapore.

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

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