DAILY MORNING NOTE | 28 November 2022

Trade of the Day

Shopify Inc. (NYSE: SHOP)

(Current Price: US$36.79) – TECHNICAL BUY

Buy price: US$36.79 Stop loss: US$34.30

Take profit 1: US$41.70 Take profit 2: US$45.40


The price broke out of a bullish inverted head & shoulders pattern and did a successful retest of the previous resistance now turned support at US$35-36 area. We are likely to see continuation of the bullish momentum to drive the stock price higher to retest the key horizontal resistance swing highs at US$41.70 and US$45.40.

Expected timeline of the trade is 1-2 weeks from the date of report issuance.

Singapore stocks fell on Friday (Nov 25), mirroring broad declines in the region as a surge in Covid-19 cases in China cast a looming shadow over the reopening of the world’s second-largest economy. The Straits Times Index (STI) fell 0.3 per cent, or 8.33 points, to 3,244.55. Advancers beat decliners 253 to 248, with 1.3 billion securities worth S$898.4 million having changed hands for the session. Regional indices were largely in the red. Hong Kong’s Hang Seng index fell 0.5 per cent, Tokyo’s Nikkei 225 was down 0.4 per cent, and South Korea’s Kospi ended the day 0.1 per cent lower. The Kuala Lumpur Composite fell 1 per cent following a surge on Thursday, after long-time opposition leader Anwar Ibrahim was announced as the new prime minister. The Jakarta Composite fell 0.4 per cent. Pan-Asian retailer DFI Retail Group ended the day at the top of the STI, after three days of decline. The counter closed 2.5 per cent or US$0.06 higher at US$2.43. At the bottom of the index was Jardine Matheson Holdings, which fell 2.2 per cent or US$1.09 to close at US$47.73. The three local banks ended the day in the red. OCBC fell 0.7 per cent to S$12.15, DBS was down 0.7 per cent to S$34.75, and UOB, down 0.1 per cent to S$30.25.

US stocks ended with a mixed showing Friday (Nov 25), after a shortened session following the Thanksgiving break and as shoppers headed out in search of Black Friday deals. Investors kept an eye on retailers as the holiday shopping season began, but had anticipated a lower trading volume ahead of the weekend. The Dow Jones Industrial Average was up 0.5 per cent at 34,347.03, while the broad-based S&P 500 ended flat at 4,026.12. The tech-rich Nasdaq Composite Index shed 0.5 per cent to 11,226.36. While there was no macroeconomic data released on Friday in the United States, investors will be watching for remarks by Federal Reserve Chair Jerome Powell in the coming week. Markets are also gearing up for indicators next week including figures on jobs and the personal consumption expenditure report – the Fed’s preferred inflation measure. As inflation in the world’s biggest economy surged to the highest level in decades, the US central bank embarked on an aggressive campaign to raise interest rates and cool the economy, fueling fears of a slowdown.

Top gainers & losers



Singapore’s factory output shrank 0.8 per cent year on year in October, reversing from the previous month’s gains of 1.6 per cent, according to Singapore Economic Development Board (EDB) data on Friday (Nov 25). Excluding the typically volatile biomedical cluster, factory output grew 1.9 per cent, though this was slower than September’s revised growth figure of 3 per cent. Despite being the first year-on-year contraction in 13 months, October’s performance was better than the 1.7 per cent decline expected by private-sector economists in a Bloomberg poll. Yet it might mark the start of several months of decline, economists warned. In October, the key electronics cluster shrunk for the fourth straight month, though at a slower pace of 0.7 per cent compared to September’s 5.7 per cent fall. This was as the semiconductors segment surprisingly rose for the first time since May.

Singapore’s services industries saw their takings rise 14.5 per cent year on year in the third quarter of 2022, easing from the 15.6 per cent growth rate in Q2, according to Department of Statistics (Singstat) figures on Friday (Nov 25). On a quarter-on-quarter, non-seasonally-adjusted basis, business receipts were also up 3 per cent in Q3, extending the previous quarter’s 5.1 per cent increase. Singstat’s business receipts index excludes wholesale trade, retail trade, and accommodation and food services, which are tracked separately. All of the services industries in the index saw year-on-year growth, and all saw quarter-on-quarter growth except information and communications, which was unchanged. Seeing the largest year-on-year rise in revenue of 70.4 per cent was the recreation and personal services industry. Singstat said this was mainly due to higher earnings of firms in the gaming and attractions segment, compared to the year-ago period when there were stricter restrictions in operating capacity and social gathering group sizes. Transportation and storage saw the next largest growth of 31.2 per cent, with increased activities in air transport as travel curbs relaxed overseas and in Singapore. Water transport takings also rose, due mainly to shipping lines. Double-digit growth was also seen in real estate (13.7 per cent), finance and insurance (12 per cent) and professional services (11.4 per cent). On a quarterly basis, business receipts rose most for recreation and personal services (10.2 per cent), real estate (9.6 per cent) and education (5.7 per cent). In Q2, both real estate and education had recorded declines quarter on quarter.

According to JLL, Singapore office rents in Q3 2022 have reached a near 14-year high, exceeding pre-pandemic peak. CBD Grade A office rents have taken just 18 months to recover the grounds lost due to Covid-19. S-Reits with Singapore based office assets reported growth in rental reversions and improvements in occupancy rates. CapitaLand Integrated Commercial Trust (CICT) reported higher Q3 2022 gross revenue and net property income (NPI) of 29.6 per cent and 27.7 per cent year on year (yoy) respectively for its office portfolio. Its Singapore offices recorded a 7.9 per cent growth in rent reversion in 9M 2022 while portfolio occupancy increased from 92.9 per cent in Q2 2022 to the current 96 per cent. CICT guided that the gap between actual and committed occupancies in four of its properties (Asia Square Tower 2, Six Battery Road, CapitaSpring, and Capital Tower) is expected to narrow by Q2 2023 and lift distributable income. Mapletree Pan Asia Commercial Trust’s (MPACT) Mapletree Business City (MBC) recorded yoy growth in both gross revenue and NPI in H1FY23. Committed occupancy has also improved marginally to 98.4 per cent. Together with Vivocity, both assets contribute approximately 63 per cent of the Reit’s gross revenue and NPI, underscoring their status as crown jewels of MPACT. Suntec Reit’s Singapore office portfolio continued to strengthen as net property income (NPI) and joint venture (JV) income increased by 3.8 per cent and 7.2 per cent yoy respectively in Q3 2022, driven by higher occupancy and rent at Suntec City Office, One Raffles Quay and MBFC Properties. Committed occupancy remained strong at 99.4 per cent, above the core CBD occupancy of 94.8 per cent.


Consumers spent a record $9.12 billion online shopping during Black Friday this year, according to Adobe, which tracks sales on retailers’ websites. Overall online sales for the day after Thanksgiving were up 2.3% year over year, and electronics were a major contributor, as online sales surged 221% over an average day in October, Adobe said. Toys were another popular category for shoppers, up 285%, as was exercise equipment, up 218%. Many consumers embraced flexible payment plans on Black Friday as they continue to grapple with high prices and inflation. Buy Now Pay Later payments increased by 78% compared with the past week, beginning Nov. 19, and Buy Now Pay Later revenue is up 81% for the same period. Some of this year’s hottest items included gaming consoles, drones, Apple MacBooks, Dyson products and toys like Fortnite, Roblox, Bluey, Funko Pop! and Disney Encanto, according to the report. Black Friday shoppers also broke a record for mobile orders, as 48% of online sales were made on smartphones, an increase from 44% last year. The record-breaking spending comes on the heels of a strong day of Thanksgiving shopping, in which consumers shelled out an all-time high of $5.29 billion online, up 2.9% year-over-year. Typically, shoppers spend about $2 billion to $3 billion online in a day, according to Adobe.

Analyst comment: We think that this could be a very positive indicator for retailers as they move towards the business end of the holiday season, especially amidst very muted earnings forecasts for this quarter and reports of sluggish sales through October and early November. At the same time, it should also boost consumer sentiment as inflation continues to remain near 40-year highs.

Jonathan Woo

Senior Research Analyst


The Biden administration has banned approvals of new telecommunications equipment from China’s Huawei Technologies and ZTE because they pose “an unacceptable risk” to US national security. The US Federal Communications Commission (FCC) said on Friday (Nov 26) it had adopted the final rules, which also bar the sale or import of equipment made by China’s surveillance equipment maker Dahua Technology Co, video surveillance firm Hangzhou Hikvision Digital Technology Co and telecoms firm Hytera Communications Corp. The move represents Washington’s latest crackdown on the Chinese tech giants amid fears that Beijing could use Chinese tech companies to spy on Americans. “These new rules are an important part of our ongoing actions to protect the American people from national security threats involving telecommunications,” FCC Chairwoman Jessica Rosenworcel said in a statement. Huawei declined to comment. ZTE, Dahua, Hikvision and Hytera did not immediately respond to requests for comment. Rosenworcel circulated the proposed measure, which effectively bars the firms from selling new equipment in the United States, to the other three commissioners for final approval last month. The FCC said in June 2021 it was considering banning all equipment authorizations for all companies on the covered list. That came after a March 2021 designation of five Chinese companies on the so-called “covered list” as posing a threat to national security under a 2019 law aimed at protecting U.S. communications networks: Huawei, ZTE, Hytera Communications Corp Hikvision and Dahua. All four commissioners at the agency, including two Republicans and two Democrats, supported Friday’s move.

The bond market is zeroing in on a US recession next year, with traders betting that the longer-term trajectory for interest rates will be down even as the US Federal Reserve is still busy raising its policy rate. Long-dated Treasury yields are already below the Fed’s overnight benchmark range – currently 3.75 per cent to 4 per cent – and there’s still an extra percentage point of central bank increases priced in for the coming months. Activity has also emerged in the options market that suggests some are hedging against the risk that policy rates could eventually halve from their current level. Rather than wait for conclusive economic evidence that this year’s frenetic monetary tightening will deliver recessionary conditions in 2023, investors have been buying bonds – a stance advocated by Pacific Investment Management, among others. Demand for Treasuries with longer tenors last week dragged the rate on 10-year and 30-year securities below the lower bound of the Fed’s overnight range. With front-end rates holding relatively steady, that’s seen an intensification of the most pronounced yield curve inversion in four decades – a widely watched indicator of potential economic pain to come.

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


TDCX Inc. – Muted by macro uncertainty

Recommendation : BUY (Maintained); TP: US$15.50, Last Close: US$10.52

Analyst: Jonathan Woo

– 9M22 revenue was in line at 73% of our FY22e forecasts. PATMI was above expectations, at 84% of our FY22e forecasts due to higher interest and other operating income.

– The travel and hospitality vertical continues to provide growth tailwinds, returning to pre-pandemic levels with 29% YoY growth for 3Q22.

– We raised our FY22e PATMI by 12% to S$108mn primarily from higher-than-expected interest and other operating income, while keeping FY22e revenue unchanged. However, we cut our FY23e revenue growth forecasts by ~5% due to macroeconomic uncertainty and pullback in spending by tech companies. We maintain a BUY recommendation with a reduced DCF target price of US$15.50 (prev. US$16.39), a WACC of 10.4%, and a terminal growth rate of 3.0%.

PropertyGuru Group Ltd. – Cooling measures to affect growth

Recommendation: ACCUMULATE (Downgraded); TP: US$5.30, Last Close: US$4.99

Analyst: Maximilian Koeswoyo

– Revenue in line with expectation while earnings missed. 9M22 revenue at 66% of FY22e forecast. 9M22 Adj. EBITDA/net loss came in at 30%/125% of forecasts due to higher than expected employee compensation and other expenses.

– Vietnam revenue spiked 161% YoY while Malaysia grew 49%. Singapore remains the largest market, growing 28%. ARPA/ARPL increased by 24%/2.5% and achieved ~87% renewal rate. Government cooling measures are expected to pose headwinds in 4Q22.

– We cut our FY22e revenue by 6% and PATMI by 24% to account following management guidance of macroeconomic headwinds and increased cost assumptions. Downgrade to ACCUMULATE with a lowered DCF target price of US$5.30 (prev. US$5.73), with a WACC of 10.1% and g of 3%.

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