DAILY MORNING NOTE | 27 January 2023
The bullish momentum in Singapore stocks continued for the third consecutive day on Thursday (Jan 26), even as regional markets traded mixed. The benchmark Straits Times Index (STI) rose 0.7 per cent or 24.42 points to close at 3,377.19. Sats led the STI gainers on Thursday, with the counter rising 3.7 per cent to close at S$3.07. Other top gainers for the day included ST Engineering and Yangzijiang Shipbuilding, which climbed 2.5 per cent and 2.4 per cent respectively. Meanwhile, Emperador ended at the bottom of the STI performance table, after falling 1.9 per cent to S$0.505.
Wall Street advanced in choppy trading on Thursday as investors grappled with an onslaught of economic data and a string of mixed corporate earnings, all while eyeing the clock as it ticks down toward next week’s Federal Reserve monetary policy meeting. While all three major US stock indexes were green, megacap momentum stocks, buoyed by Tesla Inc’s earnings beat and upbeat sales forecast, helped put the Nasdaq in the lead. The Dow Jones Industrial Average rose 87.4 points, or 0.26 per cent, to 33,831.24, the S&P 500 gained 24 points, or 0.60 per cent, to 4,040.22 and the Nasdaq Composite added 122.49 points, or 1.08 per cent, to 11,435.85.
Rents and prices of Singapore industrial developments rose for the ninth straight quarter in the fourth quarter of 2022, amid growing inflationary pressures, according to JTC’s market report released on Thursday (Jan 26). Prices hiked 1.7 per cent on the quarter and 7.5 per cent on the year. This came in spite of interest-rate hikes and a plummet of 14 per cent in transaction volumes, according to estimates based on caveats lodged for industrial properties. Meanwhile, the overall occupancy rate slipped marginally by 0.3 percentage point on a quarter-on-quarter basis, and 0.8 percentage point on a year-on-year basis to 89.4 per cent. JTC also highlighted that new completions picked up significantly in Q4, with new supply exceeding new demand. Total available stock consequently rose to 52 million square metres (sq m), up 486,000 sq m from the previous quarter – making for the largest quarterly increase since 2017. Total occupied stock, on the other hand, rose by 268,000 sq m on the quarter.
YKGI on Thursday (Jan 26) launched its initial public offering (IPO) for a listing on the Catalist board of the Singapore Exchange (SGX). The group, which is best known as the operator of Yew Kee Duck Rice and bubble tea brand Chicha San Chen in Singapore, is looking to raise gross proceeds of about S$16.6 million. It will put some 82.8 million shares up for sale at S$0.20 apiece in a placement tranche. Of these, about 53.8 million shares are new shares, while the remaining 29 million shares are vendor shares sold by the current shareholder. These placement shares will constitute about 19.5 per cent of YKGI’s enlarged issued share capital post-IPO. There will be no public offer. The IPO is expected to rake in net proceeds of S$17.5 million from the sale of placement and cornerstone shares, after deducting the placement commission and listing expenses.
Amid robust tourism and travel spending recovery across all of Las Vegas Sands’ (LVS) markets, its integrated resort Marina Bay Sands (MBS) reported record levels of performance in both mass gaming and retail revenue for the fourth quarter ended Dec 31, 2022. MBS’ net revenue contribution nearly doubled in Q4 2022, up to US$682 million from US$368 million in the same period in the year before. On Thursday (Jan 26), the group also reported adjusted property earnings before interest, taxes, depreciation and amortisation (Ebitda) of US$273 million for MBS, which was up from US$177 million in 2021. Hotel occupancy at MBS also grew to 98.3 per cent in Q4 2022, from 79.1 per cent the previous year, while the average daily rate had more than doubled to hit US$550, up from US$259 a year ago. Revenue per available room also showed significant gains, increasing up to US$541 from US$205 in Q4 2022.
The manager of Frasers Centrepoint Trust (FCT) and sponsor Frasers Property Limited (FPL) announced on Thursday (Jan 26) the joint acquisition of a 50 per cent stake in suburban mall Nex for S$652.5 million. FCT and FPL will buy Mercatus’ 50 per cent interest in Gold Ridge, which owns, manages and operates Nex. The purchase consideration takes into account Gold Ridge’s adjusted net asset value (NAV) of S$1.31 billion as at Sep 30, 2022. FCT will fork out S$340 million – including related transaction fees – for its 51 per cent share of the joint acquisition. FCT’s manager said this will be financed by a mix of debt and existing cash resources. Post-acquisition, FCT’s aggregate leverage is expected to rise to 38.5 per cent, from 33 per cent previously. Based on Nex’s net property income (NPI) in 2022, the NPI yield of the transaction works out to be “in the region of high 4 per cent”, FCT and FPL said in a joint statement.
Mapletree Industrial Trust’s distribution per unit (DPU) dropped by 2.9 per cent to 3.39 Singapore cents for its third quarter of FY2022/2023 ended Dec 31, 2022, from 3.49 Singapore cents in the corresponding year-ago period. On a quarter-on-quarter basis, the DPU fell 0.9 per cent, according to a Thursday (Jan 26) bourse filing. Units of the trust closed S$0.02 or 0.8 per cent higher at S$2.39 on Thursday, before the results were released.
Singapore’s first Treasury bill (T-bill) with a one-year tenor in 2023 closed its auction with a cut-off yield of 3.87 per cent on Thursday (Jan 26). The T-bills were around 2.9 times subscribed for the S$3.6 billion allotment in the latest auction and will mature on Jan 30, 2024. The previous T-bill with a one-year tenor, which closed its auction on Oct 13, 2022, had a cut-off yield of 3.72 per cent and was 2.3 times subscribed.
Snap Inc’s shares are trading near their cheapest valuation on record, but a myriad of headwinds has investors doubtful over the prospect of a sustainable recovery ahead. The Snapchat parent will report its fourth-quarter results on Tuesday (Jan 31), and the results will serve as the season’s first major indication of the state of online advertising, a factor behind multiple recent blow-ups in the stock. Snap’s past two earnings reports were brutal for the stock, which sank 28 per cent the day after results in October, and 39 per cent in the wake of the July announcement, which followed a cut forecast in May. The shares fell 81 per cent in 2022 and have risen 8 per cent this year, equal to the performance of the Nasdaq 100 Index.
A year after Blackstone Inc chief executive officer Steve Schwarzman told investors the firm would reach US$1 trillion in assets under management in 2022, it is shy of that mark. The world’s largest alternative asset manager commanded US$975 billion at the end of last year, up from US$951 billion in the prior quarter, short of the milestone its senior leaders once thought was just around the corner. The target was originally set for 2026, but was accelerated amid a market boom. Now the private equity giant is feeling the weight of higher interest rates on its valuations of some past investments, and is confronting an era of investor caution as it tries to gather cash for new bets. The tougher environment dragged down distributable earnings 41 per cent to US$1.3 billion as the firm’s dealmakers slowed sales in the three final months of 2022, according to the company’s quarterly earnings report on Thursday (Jan 26).
American Airlines on Thursday (Jan 26) forecast sharply higher profit for the full year and beat estimates for quarterly earnings on buoyant demand for air travel. The carrier expects an adjusted profit of US$2.50 and US$3.50 per share for 2023, up from 50 cents per share a year earlier. Major airlines are trying to cash in on a travel boom since the pandemic eased its grip on the world, making the industry one of the few bright spots against the backdrop of runaway inflation, rising interest rates and a looming recession. Industry executives have said that they don’t see any signs of slowing demand in the face of a potential slowdown. Planes are packed with passengers, giving the industry more room to raise air fares, which have helped overcome the impact of rising energy and labour expenses.
Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR
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