DAILY MORNING NOTE | 28 March 2023

Trade of the Day

Yanlord Land Group Ltd (SGX: Z25)

Analyst: Zane Aw

(Current Price: S$0.865) – TECHNICAL BUY
Buy price: S$0.865 Stop loss: S$0.840 Take profit: S$0.955

Singapore shares ended the first trading day of the week with a gain of 0.8 per cent. Jardine Matheson Holdings was the biggest gainer on the Singapore bourse by value, rising 1.1 per cent or US$0.51 to US$48.17. Electric-vehicle player Nio was the biggest decliner, shedding 1.5 per cent or US$0.14 to US$9.10. Genting Singapore was an actively traded stock, rising 1.9 per cent or S$0.02 to S$1.10 with 42.4 million shares traded.

US markets closed mixed on Monday (Mar 27), as US regional bank stocks responded positively to the announcement that First Citizens Bank had bought large chunks of failed lender Silicon Valley Bank (SVB). The Dow Jones Industrial Average closed up 0.6 per cent at 32,432.08. The broad-based S&P 500 gained 0.2 per cent to 3,977.56, while the tech-rich Nasdaq Composite Index fell 0.47 per cent to 11,768.84.

SG

Keppel Corporation on Monday (Mar 27) said its Philippines subsidiary will divest its remaining interests in The Podium West Tower and The Podium Mall in Manila. The subsidiary, Keppel Philippines Properties, and Opon-KE Properties will sell their 50 per cent interest in SM Keppel Land, which owns the property, for around eight billion pesos (S$195 million) in cash. Keppel Corp expects the deal to complete by the first half of 2023, subject to meeting conditions such as obtaining regulatory approval and the approval of Keppel Philippines Properties and Opon-KE Properties shareholders.

Sembcorp Industries and two companies it had partnered have terminated a joint-development agreement (JDA) to build a large-scale integrated solar and energy storage project in Indonesia. The consortium has been dissolved. Sembcorp did not elaborate on the reasons for the termination of the project.

A subsidiary of Singapore Technologies Engineering (ST Engineering) has been awarded a contract by the Ministry of Defence (MINDEF) for the detailed design and construction of six Multi-Role Combat Vessels (MRCVs) for the Republic of Singapore Navy (RSN). The MRCVs will be constructed at ST Engineering Marine’s premises in Singapore. The six vessels are expected to be delivered progressively from 2028 onwards. The contract is not expected to have any material impact on either the net tangible assets per share or the earnings per share of ST Engineering group of the current financial year.

None of the lenders of Manulife US Reit is a regional bank in the United States, its manager said in a Monday (Mar 27) bourse filing. The Reit’s lenders are mainly Singapore and international banks. The manager added that the Reit’s unsecured sustainability-linked loan facility has been fully drawn to refinance its US$105 million Phipps mortgage loan. “Manulife US Reit will not have any refinancing requirements until 2024 and 100 per cent of its loans will be unsecured,” it said.

The voluntary unconditional cash offer for real estate player Boustead Projects closed on Monday (Mar 27), with its offeror and parent company Boustead Singapore garnering 95.5 per cent in shareholding interest. The disclosure came after Boustead Projects’ shares closed flat at S$0.955 on Monday, slightly above the S$0.95 offer price. The company will request that trading in its shares be suspended from Tuesday’s market open.

The Trendlines Group is positioning itself to help its portfolio companies achieve exits this year in spite of tightening financial conditions. The company will pause new investments and establishing new companies, said its co-chair and co-chief executive Todd Dollinger in an investor update call on Monday (Mar 27). The group has a portfolio of 56 companies, which Dollinger said require more of the company’s time and effort to help them mature. The company made its last planned purchase on Dec 31, 2022.

Entertainment company Vividthree Holdings has entered into a definitive conditional sale and purchase agreement to acquire a 30% stake in public relations agency Elliot Communications (Elliott & Co) for $775,393 in cash. The deal is expected to be completed by April 30.

The judicial manager of Nutryfarm International has applied to extend its suspension of trading to June 24, which coincides with the expiry date of the current judicial management period of the company. The durian and health foods distributor has been under judicial management since June 28, 2022, following a spate of legal events regarding Nutryfarm’s loans owed to its creditor, Corpbond IV. Nutryfarm’s judicial manager says it is currently working on a statement of proposals to be sent to the creditors of the company, and hopes to convene a creditors’ meeting by April 30.

US

The U.S. Federal Reserve is “still learning” how much impact its interest rate increases have had on the economy and inflation, Federal Reserve Governor Philip Jefferson said on Monday. He did not comment on recent bank stress or provide his views about whether the Fed should continue raising interest rates at upcoming meetings. However, inflation “should fall back” toward the Fed’s 2% target as higher interest rates discourage spending in interest-rate sensitive sectors of the economy like housing.

First Citizens BancShares will buy Silicon Valley Bank’s deposits and loans, the U.S. Federal Deposit Insurance Corporation said Monday. The deal includes the purchase of approximately $72 billion of SVB assets at a discount of $16.5 billion, but around $90 billion in securities and other assets will remain “in receivership for disposition by the FDIC.” First Citizens and the FDIC also entered into a “loss-share transaction” — in which the FDIC absorbs part of the loss on a particular pool of assets — on the commercial loans purchased from the SVB bridge bank. FDIC added that the estimated cost of SVB’s failure to its Deposit Insurance Fund (DIF) will be around $20 billion, with the exact cost determined once the receivership is terminated.

Disney will begin layoffs this week, the first of three rounds before the beginning of the summer that result in about 7,000 job cuts, according to a memo sent by Chief Executive Bob Iger. The cuts are part of a broader effort to reduce corporate spending and boost free cash flow. Disney said last month it plans to cut $5.5 billion in costs, including $3 billion in content spend. The job cuts will be cross-company, hitting Disney’s media and distribution division, parks and resorts, and ESPN.

Lyft’s cofounders, CEO Logan Green and president John Zimmer, will soon step back from their day-to-day roles, the company announced on Monday. David Risher, a former retail executive at Amazon, will be CEO of the ridesharing company beginning April 17, when Green will step aside to serve as chair of the board. Zimmer will transition out of his role on June 30 to serve as vice chair of the Lyft board.

The Commodity Futures and Trading Commission filed a complaint against crypto exchange Binance, its co-founder, Changpeng Zhao, and its former chief compliance officer, Samuel Lim, alleging that Binance actively solicited U.S. users and subverted the exchanges own “ineffective compliance program.” The regulator alleged that Binance, Zhao, and Lim violated eight core provisions of the Commodity Exchange Act, including laws that require controls “designed to prevent and detect money laundering and terrorism financing.”

Germany’s BioNTech said it plans to spend 2.4 to 2.6 billion euros on research and development (R&D) in 2023, up from 1.54 billion euros last year. The company said it expects to authorise new share buybacks worth up to US$500 million this year, having already spent US$1.3 billion on own shares through Mar 17. Thanks to its Covid-vaccine market lead in the Western world, BioNTech ended the year 2022 with a cash balance of 13.9 billion euros plus receivables of 7.14 billion euros. Commercial revenues from the shot slipped 9 per cent to 17.2 billion euros last year and are expected to drop further to about 5 billion euros in 2023, the company added.

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

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