Daily Morning Note – 27 May 2020
Asian stocks looked set for a mixed start after Bloomberg News reported the Trump administration is considering the sanctions on Chinese officials, another sign of deteriorating Sino-American relations. The dollar and Treasuries retreated.
Futures on the S&P 500 dipped at the open. Contracts in Japan and Hong Kong were flat, while those in Australia retreated. The S&P 500 Index closed at an 11-week high, but gave up almost half its earlier gains in the final half hour of trading with chipmakers exposed to China tumbling. The yen fluctuated. Oil slipped.
Deputy Prime Minister Heng Swee Keat yesterday announced a $33 billion supplementary Budget aimed primarily at helping workers and businesses pull through the Covid-19 pandemic and the bleak economic outlook ahead. Called the Fortitude Budget, Singapore’s fourth Budget in less than four months sets aside $2.9 billion to extend job protection and co-pay salaries to help firms retain workers. It also provides for the $3.8 billion that went towards helping Singaporeans tide over the extension of the circuit breaker measures. Together with the earlier Unity, Resilience and Solidarity Budgets, the Government is dedicating close to $100 billion – or nearly 20 per cent of gross domestic product – to support Singaporeans in this battle against Covid-19, said Mr Heng, who called it “a landmark package, and a necessary response to an unprecedented crisis”.
Stamford Land announced that its FY20 earnings have dropped by 47.7% to $25.0 million from $47.7 million in FY19. This came on the back of a 35.9% fall in revenue to $195.1 million from $304.2 million a year ago, mainly due to lower contribution from the group’s hotel owning and management, property development and trading business segments. This was partially offset by a significant increase in the company’s property investment business segment, which saw revenue more than double to $29.5 million from $14.6 million a year ago. Other revenue also increased by 2.4% y-o-y to $0.6 million.
Eagle Hospitality Trust’s sponsor directors Howard Wu and Taylor Woods confirm resignations on May 26. In a report by the Orlando Weekly on May 25, which referred to Urban Commons problems, including its failure to pay cleaning bills of US$420,000, it emerges that its Holiday Inn Resorts Orlando Suites – Waterpark, is valued at US$71 million, a marked difference from its valuation in the prospectus. According to the Orlando Weekly, Urban Commons also owes a staffing agency US$118,000. Holiday Inn Resorts has also furloughed 325 staff, the weekly says. For local investors, the most eye-catching statement was the valuation of Holiday Inn Resorts Orland Suites. If valuations are not what they seem, there could be very little incentive for a third party white knight to swoop in on Eagle. Its total debt as at Dec 31, 2019 was U$506 million. Based on the valuation of Holiday Inn Resorts Orlando Suites, unitholders and white knights would have to be prepared to take a valuation haircut of around 50%. EHT’s portfolio was valued at US$1.27 billion at IPO.
Pharmaceutical maker iX Biopharma has commenced the supply of its Wafesil and Silcap medicines through telemedicine in Australia, it said in a bourse filing on Tuesday. The medicines, which are supplied to Australian pharmacies and available to patients by doctors’ prescription, are for the treatment of male erectile dysfunction. The Catalist-listed company, which has facilities in Australia, identified telemedicine as a way to reach Australian patients amid the Covid-19 pandemic.
US private equity firm Warburg Pincus is set to own nearly half of ARA Asset Management, following the impending exit of AVIC Trust as a shareholder in the real estate fund manager. ARA on Tuesday announced that AVIC Trust, the investment arm of Shanghai-listed AVIC Capital, will dispose of its 20.48 per cent stake. ARA founder and group chief executive John Lim said the trust has helped and partnered the group in creating new fund products in mainland China. Meanwhile, Warburg Pincus – already ARA’s largest shareholder – will “substantially” raise its stake to 48.70 per cent from its present 30.72 per cent.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Frasers Centrepoint Trust
Recommended Action: Technical SELL
Frasers Centerpoint’s (SGX: J69U) rebound from $1.55 on 6th April was strong initially but price entered in a short sub correction on 20th April, showing signs of slowdown in bullish momentum. Based on the technical, the trust is resuming its sell down.
DBS Group Holdings Ltd
Recommended Action: Technical BUY
DBS Group (SGX: D05) impulse down move from mid-February 2020 breaks below the $20.00 psychological mark for the first time in 2 years. DBS subsequently rebound from $17.00 and is edging up towards the $20.00 psychological region. Base on the technicals, DBS is poised to break higher
Dasin Retail Trust – Recovery underway
Recommendation: ACCUMULATE (Maintained), Last Done: S$0.83
Target Price: S$0.91, Analyst: Phillip Research Team
– 1Q20 revenue came in below our forecasts due to S$6.0mn in rental rebates offered to tenants, as well as the delayed acquisition of Shunde and Tanbei Metro Mall, which seems to be headed for a 3Q20 completion.
– S$7.9mn in rental rebates (including S$1.9mn which will be recognized in 2Q20) translates to roughly 1 month of rental rebates for tenants. Dasin does not expect to provide further relief.
– Maintain ACCUMULATE with higher TP of S$0.91. We push back the acquisition of Shunde and Tanbei Metro Malls from 1Q20 to 3Q20. Along with the S$7.9mn in rental rebates for FY20, higher vacancy rates and lower rental reversions, our FY20e DPU was slashed by 16.9%. Our DPU translates to a yield of 6.3% for FY20e and 6.8% FY21e.
HK Reports – Read up on our Hong Kong reports here
Webinar Of The Week
Date: 26 May 2020
|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.|
|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.|