Daily Morning Note – 28 January 2019


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U.S. stocks rose on Friday as investors looked past a poor Intel earnings report, instead focusing on a partial government shutdown solution.

Major stock indexes in Asia closed higher on Friday despite fresh overnight uncertainties surrounding the ongoing U.S.-China trade negotiations.

Gold jumped over 1 percent to a more than seven-month high on Friday, briefly surpassing the $1,300 mark, as the dollar slid ahead of a U.S. Federal Reserve meeting this week where the central bank is widely expected to leave interest rates unchanged.

Source: CNBC

Please note that there is no webinar on 4 Feb 2019 due to eve of Lunar New Year.


CapitaLand Mall Trust – Still-weak reversions despite underlying recovery in tenant sales

Recommendation: NEUTRAL (Maintained); Last close S$2.31;

Target Price: S$2.09; Analyst: Tara Wong

– FY18 NPI and DPU in line with our forecast. Higher revenue in 4Q18 4Q18 from remaining
70% stake of Westgate acquired on 1 Nov 2018.

– Slight recovery in tenant sales, with recovery in key trade categories.

– Stable portfolio occupancy amidst AEI works at Westgate and Tampines Mall.

– Still-weak rental reversions. Higher gearing and shorter term to maturity now with debt
consolidated from Infinity Mall Trust (which holds Westgate).

– Maintain Neutral with unchanged TP of S$2.09.

Singapore Exchange Limited – Boost in Derivatives Earnings to Offset Headwinds

Recommendation: BUY (Maintained); Last close S$7.57;

Target Price: S$8.36, Analyst: Tin Min Ying

– 2Q19 Revenue and PATMI were in line with our estimates.

– Derivatives business exceeded our expectations by 13.2%, with a surge of 23% YoY in volume;
driven by equity derivatives and FX futures.

– Securities business missed our estimates by 22.6% as the weaknesses in emerging markets
and concerns over economic conditions continues to trouble sentiments.

– Interim dividend declared at 7.5 cents/share. (Up 50% from 2Q18’s 5 cents/share; due to a
change in dividend policy announced in 4Q18.

– We maintain our BUY recommendation for SGX at a lower TP of S$8.36 (previously S$9.01).

Cache Logistics Trust – 2019 challenges ahead

Recommendation: NEUTRAL (Maintained); Last Close Price: $0.75

Target Price: $0.75 (unchanged); Analyst: Richard Leow

– Revenue and DPU were in line with expectations

– Tightening of capitalisation rates, offset by lower rental outlook

– Australia portfolio contributed positively, mitigating transitional weakness in Singapore

– Maintain Neutral; unchanged target price of $0.75


Micro-Mechanics net profit down 20% in Q2 amid global semiconductor slowdown. AMID moderation in the global semiconductor industry, Micro-Mechanics (Holdings) posted a 20 per cent fall in net profit to S$3.1 million in the second quarter ended Dec 31, 2018, down from S$3.9 million in the year-ago period. This was on the back of a 3.1 per cent fall in revenue to S$15.2 million, compared to S$15.6 million in the year-ago period.

Keppel to sell 70% stake in Vietnam township project for about S$136m. KEPPEL Corp is selling a 70 per cent interest in a Vietnam township project to Nam Long Investment Corp for 2.3 trillion Vietnamese dong (S$136 million) in cash. Keppel Land, Keppel’s real estate arm, is currently in the process of taking over complete control of Dong Nai Waterfront City LLC from its current joint venture partner in the project through a demerger. Keppel Land will retain a 30 per cent stake in Dong Nai Waterfront City after the sale of the 70 per cent stake to Nam Long.

Oxley, partner to sell Dublin Landings residential units for 175.5m euros. OXLEY Holdings’ wholly-owned subsidiary, Oxley Docklands Quay Three Limited, and National Asset North Quays DAC have agreed to sell 268 residential units in Ireland to Greystar Europe Holdings for 175.5 million euros (S$270.8 million). The units are part of Blocks B and E of Dublin Landings, a mixed-use development situated along Dublin’s North Wall Quay. The sale also includes external common areas and 210 car parking spaces.

Great Eastern to sell minority stake in Indonesia insurance firm for US$1.4m. INSURER Great Eastern has entered into a share and purchase agreement to divest a minority stake in Indonesia insurance firm, QBE Indonesia, for some US$1.4 million. The buyer, PT Suryasono Sentosa, will receive a 5 per cent stake in QBE Indonesia following the transaction, which is subject to approval by Indonesia’s financial services authority, Otoritas Jasa Keuangan, and the Monetary Authority of Singapore.

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

Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research

Read the research report(s), available through the link(s) above, for complete information including important disclosures

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