DAILY MORNING NOTE | 28 June 2023

Trade of the Day

ISDN Holdings Ltd (SGX: I07)

Analyst: Zane Aw

(Current Price: S$0.515) – TECHNICAL BUY
Buy price: S$0.510 Stop loss: S$0.490
Take profit 1: S$0.550 Take profit 2: S$0.600

Singapore shares capped the trading day on a more upbeat note on Tuesday (Jun 27), rising 0.5 per cent or 15.67 points to close at 3,205.35. Jardine Matheson Holdings was the top gainer of the day, adding 2.5 per cent or US$1.26 to close at US$52.35. Sembcorp Industries was another top advancer, rising 3.5 per cent or S$0.19 to S$5.59. Yangzijiang Shipbuilding was also on a tear on Tuesday, on the back of heavy trading. The counter rose 7.4 per cent or S$0.10 to S$1.45. Two of the three lenders were among the biggest decliners for the day. DBS lost 0.9 per cent or S$0.28 to S$31.29, and UOB fell 0.5 per cent or S$0.14 to S$27.72. OCBC fell just 0.1 per cent or S$0.01 to S$12.28.

Wall Street stocks bounced on Tuesday (Jun 27), shaking off weakness in the prior session after solid US data reassured investors on the economic outlook. US consumer confidence surged to an 17-month high in June, while new home sales jumped unexpectedly in May and orders of big-ticket manufactured items topped estimates. The Dow Jones Industrial Average finished up 0.6 per cent at 33,926.74. The broad-based S&P 500 gained 1.2 per cent to 4,378.41, while the tech-rich Nasdaq Composite Index jumped 1.7 per cent to 13,555.67.

SG

Singtel chairman Lee Theng Kiat has requested to receive S$960,000 in chairman’s fees in FY2023, instead of the all-in fee of S$1.15 million. Throughout FY2023, Lee missed one out of four corporate governance and nominations committee meetings held and both Optus advisory committee meetings held. Separately, Singtel said in its sustainability report that it would bring forward its net-zero goal to 2045, from 2050. This would be achieved by reducing energy use, improving energy efficiency and increasing the proportion of electricity consumption backed by renewable energy sources, the company said.

Nordic Group reported earnings of $5.8 million for 1QFY2023, up 11% y-o-y. Revenue in the same period ended March was up 15% to $46.2 million, says the company in a business update on June 27. For the three months, the company was able to maintain its net margins at 13%. As at March 31, the company has built up an order book of $205.2 million. Out of which, orders for maintenance work, which gives better revenue stability, constituted $134.4 million, or around two-thirds of the total. The smaller proportion came from project-based orders, which are typically lumpier in nature.

XMH Holdings has reported earnings of $3.14 million for its 2HFY2023 ended April, reversing from a loss incurred in the previous corresponding period. Revenue in 2HFY2023 amounted to approximately $70.7 million, up 83.1% y-o-y on the back of increased demand for engines to build tugboats in Indonesia as well as income recognition based on performance obligation for major contracts during the period. However, gross profit only increased by 41.4% to $15.5 million as gross profit margin decreased to 21.9% in 2HFY2023. This is due to increased materials cost as well as shortage of labour in its project segment. A special dividend of 1.25 cents and a final dividend of 0.25 cents have been proposed for its FY2023.

Don Agro International plans to sell four of its subsidiaries to another Russian company, Agroinvest Group, for 6.2 billion roubles, or $113 million, in cash. These four units control a landbank of around 67,000 ha and are primarily in crop farming and milk production. On a pro forma basis, Don Agro’s NTA will increase to $150.45 million upon completion of the sale, versus $72.8 million before the sale. That’s equivalent to 100.12 cents per share, and 48.46 cents per share, respectively. With the main operating businesses sold, Don Agro’s key remaining business is that of flour milling. CEO Marat Devlet-Kildeyev said the company may acquire new businesses, or distribute the proceeds to shareholders.

US

Orders for manufactured U.S. goods rose 1.7% in May, helped by strong demand for passenger planes and new autos. It was the third consecutive month of gains, a sign that manufacturing orders may have bottomed after slumping last year. Meanwhile, a survey of consumer confidence jumped to a 17-month high, an indication that individuals are feeling better about inflation and the economy. The Conference Board’s consumer confidence index hit 109.7 in June, higher than economists’ estimates. While higher consumer confidence is a positive for an economy driven by consumer spending, analysts say improving confidence could complicate the Federal Reserve’s campaign to tame inflation.

The Biden administration is considering new restrictions on exports of artificial intelligence chips to China, according to people familiar with the situation. The Commerce Department could move as soon as early next month to stop the shipments of chips made by Nvidia and other chip-makers to customers in China and other countries of concern without first obtaining a license, the people said. The action would be part of final rules codifying and expanding the export control measures announced last October, some of the people said. Nvidia responded to that move by making a version of its AI chips for the Chinese market called the A800 that fell below performance thresholds outlined by the Commerce Department. However, the new restrictions being contemplated by the department would ban the sale of even the A800 chips without a license, according to the people familiar with the matter.

Snowflake, a cloud data analytics company, is partnering with Nvidia to allow customers ranging from financial institutions to healthcare and retail to build artificial intelligence (AI) models using their own data. Nvidia is taking a “fairly engineering intensive” move of embedding its NeMo platform for training and running generative AI models into the Snowflake Data Cloud, said the company’s chief executive Jensen Huang. Snowflake chairman and CEO Frank Slootman said companies that use Snowflake to manage their data will be able to now use their own data to train new AI models to gain an advantage in business without risking losing control of it. No financial details of the partnership were disclosed, but Huang said Nvidia would benefit as more customers use computing for AI work.

Meta Platforms’ WhatsApp Business application is now catering to more than 200 million users on its platform, a four-fold jump from about three years ago, chief Mark Zuckerberg said on Tuesday (Jun 27). The increase in user base comes as Meta shifts focus to the development of business messaging, as an uncertain economy slows down its core advertising business. Meta said it would shortly begin testing features which will help small businesses run ads that click to the messaging platform without the need for a Facebook account. Small and medium businesses would be able to send personalised messages such as appointment reminders and updates on a holiday sale to their customers for a fee.

llumina has commenced job cuts, the genetic sequencing equipment maker said on Monday (Jun 26), as it looks to cushion the impact of sticky inflation and a strong dollar on its business. The company also intends to further cut the workforce in the third quarter and reducing its real estate footprint in California as part of a plan to reduce annualised run rate expenses. Illumina has reportedly begun to lay off 10 per cent of its research and development team. However, the company did not confirm the number of employees it laid off. The reduction in workforce commenced on Jun 21 and will result in charges of about US$25 to US$35 million, the company said, with the majority incurred in the second quarter.

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

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