The Singapore market rebounded on Thursday (May 26) after 3 days of losses, tracking Wall Street gains and bucking the regional downward trend. The Straits Times Index (STI) climbed 0.9 per cent or 29.6 points to 3,209.18 at the closing bell. Singtel was the top gainer on the STI, gaining 3.4 per cent or S$0.09 to end at S$2.73. This follows reports that it has initiated talks with Bharti Airtel’s chairman Sunil Mittal on a potential sale of a “small” part of its holding in the Indian telco to the Mittal family. The stock was also the most actively traded among index constituents, with 52 million securities changing hands throughout the day. At the bottom of the table was Mapletree Commercial Trust which ended down 1.1 per cent or S$0.02 at S$1.74.
Wall Street stocks jumped Thursday (May 26) as strong results from retailers combined with investor bargain-hunting to produce a second straight positive session. Major indices followed Wednesday’s winning day with another upbeat round, posting rare back-to-back gains in 2022. The Dow Jones Industrial Average piled on more than 500 points, or 1.6 per cent, to finish the session at 32,637.19. The broad-based S&P 500 gained 2.0 per cent to end at 4,057.84, while the tech-rich Nasdaq Composite Index advanced 2.7 per cent to 11,740.65.
The Monetary Authority of Singapore (MAS) has imposed an additional capital requirement of about S$330 million on OCBC Bank for its deficiencies in responding to a wave of spoofed SMS phishing scams in December 2021. This additional capital requirement is part of the regulatory capital which MAS requires all banks to hold. The minimum amount of capital would be relative to the size and riskiness of the bank’s operations and investments, and is predominantly in the form of equity and retained earnings. “The SMS phishing attacks impersonating OCBC in December 2021 was unprecedented in that the tactics reached a level of realism not seen in previous phishing scams. While we took various actions in December to stem the scam, we should have responded faster and better to early signs of the attacks,” said Helen Wong, group chief executive officer, OCBC in a media statement. The bank is required to apply a 1.3 times multiplier to its risk-weighted assets for operational risks which is approximately S$330 million in regulatory capital based on financial statements as of Mar 31, 2022.
The latest batch of Astrea private equity (PE) bonds, launched by Temasek-backed Azalea Asset Management, was overall 3 times subscribed. Total subscription received for all 3 classes of Astrea 7 PE bonds – Class A-1, Class A-2 and Class B – was over US$2 billion, compared with the US$755 million of bonds offered in total, Azalea said on Thursday (May 26). For the retail offerings, the issuer had received S$877 million from 30,565 valid applicants for the Class A-1 bonds – which pay a fixed interest rate of 4.125 per cent per annum – representing a subscription rate of 3.1 times the offer of S$280 million. More than 75 per cent of the bonds were allocated to all valid applications of less than S$50,000, while valid applicants who applied for S$50,000 or more were balloted. Some of 92 per cent of valid applicants received allocations. Meanwhile, the issuer received US$126 million from 7,059 valid applicants under the retail offer for the Class B bonds – which pay a fixed interest rate of 6 per cent per annum – representing 1.3 times the offer of US$100 million. Some 73 per cent of the bonds were allocated to all valid applications of less than US$50,000, with all valid applicants allocated in full or in part.
The revenue for regional property marketplace PropertyGuru for Q1 FY2022 ending Mar 31 jumped 42 per cent to S$28.2 million from S$19.9 million, driven by momentum in its marketplaces, it said in a bourse filing on Thursday (May 26). However, its losses for the quarter ballooned to S$120.3 million — from S$10.8 million — driven mainly by costs incurred from the business combination with special-purpose acquisition company Bridgetown 2 Holdings. Revenue from the Malaysia marketplace surged 192.3 per cent to S$5.4 million from S$1.9 million, driven by the successful integration of the iProperty business. Over in Vietnam, revenue rose 18.6 per cent to S$5.1 million, driven by a 14.6 per cent increase in the number of listings to 1.65 million, and a 2.4 per cent growth in average revenue per listing to S$2.98. Revenue for the Singapore marketplace grew 23.8 per cent to S$15 million from S$12.1 million. The quarterly average revenue per agent rose 25.2 per cent year on year to S$947, on the back of increased premium-product adoption and an increase in subscription price in Q4 2021. There are now 14,719 agents, with a renewal rate of 79 per cent. The fintech and data-services segment also rose 50.7 per cent to S$1 million from S$676,000, driven by growth in the property mortgage marketplace.
Paypal Holdings began laying off staffers who worked in risk management and operations this week as the firm seeks to shore up profits after growth in spending on its platform stagnated in recent quarters. The company laid off dozens of staffers who worked in Chicago, Omaha, Nebraska and Chandler, Arizona, according to people familiar with the matter, who asked not to be identified discussing private information. PayPal this month also announced plans to permanently lay off more than 80 people in its headquarters in San Jose, California, according to filings with that state. “PayPal is constantly evaluating how we work to ensure we are prepared to meet the needs of our customers and operate with the best structure and processes to support our strategic business priorities as we continue to grow and evolve,” PayPal said in a statement. Spending on PayPal’s platforms climbed just 15 per cent in the first quarter to US$323 billion, the smallest increase in at least 5 years, when supply chain disruptions hindered e-commerce purchases and more consumers returned to in-store shopping as the pandemic eased. The firm’s former parent company EBay has also been rapidly moving payments away from PayPal’s platform. PayPal’s headcount has climbed in recent years and the firm ended last year with 30,900 employees, a 33 per cent increased from pre-pandemic levels.
Microsoft will slow hiring in its Windows, Office and Teams chat and conferencing software groups, citing a need to realign staffing priorities as it approaches a new fiscal year in a time of global economic uncertainty. All new hires must be approved by executive vice president Rajesh Jha and his leadership team, Jha told employees in an email on Thursday (May 26), a Microsoft spokesperson said. Those groups have expanded recently and the company wants to make sure it’s making the right hires in the right places, the spokesperson said. The slowdown is not companywide, and overall the software maker will continue to hire, the spokesperson said, noting that such caution is typical in periods of economic volatility. “As Microsoft gets ready for the new fiscal year, it is making sure the right resources are aligned to the right opportunity,” the company said in a statement. “Microsoft will continue to grow headcount in the year ahead and it will add additional focus to where those resources go.” The company’s fiscal year starts Jul 1. Other big technology companies have been slowing or freezing hiring in the past several months as stocks plummet and fears of an economic recession escalate.
Broadcom announced on Thursday (May 26) a US$61-billion deal to purchase cloud computing firm VMware in a giant tech transaction that expands the chipmaker’s software offerings. The cash and stock deal — one of the biggest tech mergers ever — will merge chipmaker Broadcom’s software assets into those of VMware, a leader in cloud computing and virtualization technology. The combination is designed to boost Broadcom’s offerings to customers enabling “greater choice and flexibility to build, run, manage, connect and protect applications at scale across diversified, distributed environments,” said a joint press release from the companies announcing the deal. Led by chief executive Hock Tan, Broadcom has grown by acquisition, reporting fiscal 2021 revenues of about US$27.5 billion.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
TDCX Inc – Accelerating Client Additions
Recommendation : BUY (Maintained); TP: US$15.76, Last Close: US$10.89
Analyst: Jonathan Woo
– 1Q22 revenue was in line, at 22% our FY22e forecasts. PATMI underperformed, at 17% of our FY22e forecasts due to higher employee benefits expense and tax rate.
POEMS Podcast: Let the Money Talk
– Total revenue grew 27% YoY, above expected growth of 25%, driven by 25%/60% YoY increases in Omnichannel CX and Sales & Digital Marketing services. TDCX added 10 new clients for the quarter.
– FY22e revenue guidance was reduced by 5%, to S$650mn-675mn, on weaker macroeconomic outlook across all services and verticals.
– We reduce our FY22e revenue by 5% to S$665mn on slower growth, and cut PATMI by 33% to S$88mn on higher-than-expected equity share payment that led to higher Employee Benefits Expense. We maintain a BUY recommendation with a lowered DCF target price of US$15.76 (previous US$22.00), with a WACC of 9.7%, and a terminal growth rate of 3.0%.
Money Never Sleeps – Ep 9
SGX Company Insights Ep 51 – Keppel DC REIT
SGX Company Insights Ep 50 – Keppel Corporation and Sembcorp Marine
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