Daily Morning Note – 28 July 2020
PHILLIP SUMMARY
Gold soared to a record high on Monday as investors rushed into the safe-haven commodity on concerns about heightened China-US tensions, spiking virus infections and a lack of progress on a new stimulus bill in Washington.
“Always a sign of trouble, gold continued its red hot streak on Monday, the safe haven commodity looking mighty attractive after another troubling weekend of Covid-19 and US-China headlines,” said Spreadex analyst Connor Campbell.
Dollar weakness was a big factor behind gold’s takeoff, analysts said, as the greenback continued its retreat against the euro and other major currencies.
The fall in the US currency comes amid expectations that the Federal Reserve will keep interest rates lower for longer and that the economy could underperform those in other regions due to the coronavirus.
BREAKING NEWS
Coordinators of a global coronavirus vaccines funding scheme are looking at a wide range of potential prices for Covid-19 shots, with a reported US$40 per dose price tag the “highest number” in that range, one of the co-leads of the project said on Monday. Seth Berkley, chief executive of the GAVI vaccine alliance, which is co-leading the COVAX facility designed to ensure fair global access to Covid-19 shots, said the facility had no specific target price and would also seek to negotiate tiered pricing for richer and poorer countries.
Wells Fargo & Co filed documents to register its own exchange-traded funds on Monday, making it the latest asset manager to enter the quickly growing industry. If approved, the San Francisco-based bank will be able to issue its own ETFs. Banking giants JPMorgan Chase & Co and Goldman Sachs Group Inc already have their own funds.
Tech shares led Wall Street stocks higher on Monday ahead of major economic news events, including a high-stakes congressional hearing with the heads of Amazon, Apple and other giants.
Stamford Tyres on Monday posted a net loss of S$4 million for FY20, reversing from a humble profit of S$474,000 a year ago. This was due to a one-time expense relating to the closure of a loss-making operation in Australia in Q2 FY20, as well as higher allowance for doubtful receivables as a result of delayed and non-payment of trade receivables due from customers because of Covid-19 (among other reasons); the various government-imposed lockdowns in its key markets such as Malaysia and Thailand were also a factor.
Sing Investments & Finance on Monday posted a 22.2 per cent decline in net profit to S$3.9 million for its second quarter ended June 30. This was due to the additional general allowances provided in view of the severe impact of the Covid-19 pandemic on the macroeconomic situation and outlook, it said.
Mapletree North Asia Commercial Trust on Monday posted a 10.7 per cent drop in its gross revenue to S$93.7 million. Its net property income declined 19.5 per cent to S$68.5 million for its first quarter ended June 30. The decline was mainly due to rental reliefs granted to its tenants and a lower average retail rental rate at its Festival Walk property in Hong Kong, as a result of the Covid-19 situation since early 2020, as well as a lower average occupancy at Gateway Plaza, its office building in Chaoyang District in Beijing.
GL Limited on Monday said it is expected to report a net loss for FY2020, primarily due to Covid-19 as well as lower oil prices. It said that the pandemic has resulted in widespread international travel restrictions and severely disrupted the group’s United Kingdom hospitality business led by its wholly-owned subsidiary, GLH Hotels Limited.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
TECHNICAL PULSE
Mapletree Logistics Trust
Analyst: Chua Wei Ren
Recommended Action: Technical SELL
Mapletree Logistics Trust (SGX: M44U) enjoyed an impressive rally since our report on 17th June. Falling short of our target price of $2.25, we are expecting a correction after the recent technical.
Riverstone Holdings Ltd
Analyst: Chua Wei Ren
Recommended Action: Technical BUY
Riverstone Holdings Ltd (SGX: AP4) Strong upside is set to continue again based on the recent technical.
>> Read more technical reports
RESEARCH REPORTS
UG Healthcare Corp. – Never say never to blue skies
Recommendation: BUY (Initiation), Last Done: S$1.75
Target Price: S$2.70, Analyst: Paul Chew
– Pandemic has resulted in spot prices for gloves ballooning 5-fold. Order lead times have been stretched from one month to a year. Supply shortfall to continue until 2021.
– With its own branded gloves and distribution network, UG Healthcare should be able to monetize a larger share of supply-chain profits, starting from manufacturing to distribution
– Initiate coverage with BUY recommendation and target price of S$2.70. Valued at 15x FY21e PE, a 40% historical discount to peer on account of its smaller scale and size.
HK Reports – Read up on our Hong Kong reports here
RESEARCH VIDEOS
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Market Outlook: Market Outlook: SG Banking Monthly, SG Bonds Weekly and SG Strategy 3Q20 (with stock picks)
Date: 06 July 2020
Phillip Research in 3 minutes: #25 – Prime US REIT; Initiation
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