Daily Morning Note – 28 Oct 2020

PHILLIP SUMMARY

Wall Street stocks finished mostly lower on Tuesday amid worries over the economy and Covid-19 as well as lackluster consumer data and mixed earnings. The Dow Jones Industrial Average shed 0.8 per cent to 27,463.19. The broad-based S&P 500 declined 0.3 per cent to 3,390.68, while the tech-rich Nasdaq Composite Index gained 0.6 per cent to 11,431.35.

President Donald Trump said Congress will approve a pandemic rescue package for the US economy after the November 3 election, seeming to concede defeat on efforts to reach a deal before voters decide whether to give him a second term.

Meanwhile, the Conference Board reported that US consumer confidence in October lagged analyst expectations. “Consumers’ assessment of current conditions improved while expectations declined, driven primarily by a softening in the short-term outlook for jobs,” The Conference Board’s senior director of economic indicators Lynn Franco said.

BREAKING NEWS

The distribution per unit (DPU) of Mapletree Industrial Trust (MIT) , fell to 3.10 Singapore cents for the second quarter ended Sept 30, from 3.13 cents a year ago. This is despite distributable income rising 14.8 per cent to S$72.9 million on the back of higher net property income and distributions declared by joint ventures; distributable income was, however, partially offset by higher manager’s management fees.

Malaysia’s Supermax (EH-Reit) , China’s largest insurer by market value, said third-quarter profit rose 8 per cent as its businesses recovered from the coronavirus pandemic and a stock-market rally bolstered investment returns. Net income climbed to 34.4 billion yuan (S$6.97 billion) in the three months ended Sept 30, from 31.9 billion yuan a year earlier.

Ping An Insurance said it has seen a twofold increase in the number of construction firms obtaining loans under value chain financing (VCF) in the first six months of the year, as compared with the end of 2019. The growth was driven by the increase in sub-contractors and suppliers obtaining loans under VCF, as part of tie-ups between their main contractors or project owners and the bank to help ease financing challenges brought about by Covid-19, UOB said in a statement.

Ascendas Reit’s, manager announced in a business update that although a challenging economic outlook could affect its future performance, its well-diversified portfolio and tenant base should help mitigate potential problems. For its third quarter ended Sept 30, 2020, its portfolio occupancy had edged up to 91.9 per cent quarter on quarter, mainly attributable to a higher occupancy rate of 88.8 per cent in the Singapore portfolio.

HSBC Holdings posted a 35 per cent drop in quarterly profit, better than expected, as higher loan loss provisions on the economic fallout from the coronavirus pandemic were cushioned by the reining in of expenses. Reported pretax profit for Europe’s biggest bank by assets came in at US$3.1 billion for the quarter ended Sept 30, down from US$4.8 billion in the same period a year earlier.

Home-rental startup Airbnb said on Tuesday it plans to list its shares on the Nasdaq, setting the stage for yet another blockbuster tech listing on US stock exchanges. Airbnb, which did not give a timeline for when it may complete its IPO, has seen demand for its services recover from the nosedive caused by the Covid-19 pandemic.

Advanced Micro Devices agreed to buy Xilinx for US$35 billion in stock, taking the chipmaker into more diverse and profitable markets and adding to its data centre offerings. Xilinx investors will get 1.7234 AMD shares for each Xilinx stock they own. That values Xilinx at about US$143 a share, 25 per cent more than the closing price on Monday and 35 per cent above the price before news of a possible deal was reported earlier in October.

Microsoft on Tuesday said its profit in the recently ended quarter continued to soar as the pandemic boosted a trend toward business being taken care of in the internet cloud. The US technology titan’s profit rose to US$13.9 billion, up 30 per cent from the same quarter last year, according to earnings figures. Revenue in the quarter climbed 12 per cent to US$37.2 billion.

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

TECHNICAL REPORTS

DBS Group Holdings Ltd

Recommended Action: Technical BUY

Analyst: Chua Wei Ren

DBS Group Holdings (SGX: D05) ranging corrective action is still pressing on despite prices reached its highest peak during the June trading period. Based on the technical, prices will set to attempt a new high again.

Meituan Dianping

Recommended Action: Technical BUY

Analyst: Chua Wei Ren

Meituan Dianping (HKEX: 3690) Strong upside is set to continue once more despite the wave analysis indicating a risk of a corrective expanded/running flat ongoing. All technical and price actions are pointing towards another round of upside.

>> Read more Technical reports

RESEARCH REPORTS

First Sponsor Group Limited – Property development, the growth driver

Recommendation: BUY (Maintained), Last Done: S$1.28

Target Price: S$1.56, Analyst: Tan Jie Hui

– 80.4% YoY growth in 3Q20 gross profit largely attributable to 246% YoY growth in property development revenue. 9M20 PATMI up 33.4% YoY.

– Unrecognised development revenue of S$599mn. S$1.93bn of gross development value (GDV) for unlocking, equivalent to six years of sales.

– Enlarged share base from 1:4 bonus issue. Maintain BUY with revised target price of S$1.56, from S$1.65 previously; Valuation is based on a 90% diluted basis (previously 100%).

U.S. Elections – Battleground states suggest trouble for Trump

Analyst: Yeap Jun Rong

– We think Biden is in a better position to win the presidency than Clinton in 2016. Biden has consistently maintained a lead in national polls of over three points more than Clinton back in 2016. He also has better poll ratings in five out of the six key battleground states

– Florida has been a bellwether of U.S. elections. In the past 14 elections, the candidate who won in this state won the presidential seat 93% of the time. We expect Florida to be a strong predictor again in this election.

– Trump would need to secure at least 3-4 out of the six key battleground states to win the election. If he loses Florida, he has to win all five remaining battleground states to eke out a marginal win. Therefore, we expect Trump to lose the presidency if he loses Florida.

>> Read more research reports

HK Reports – Read up on our Hong Kong reports here

RESEARCH VIDEOS

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Market Outlook: (PSR) US Election (Healthcare), Bond Model Portfolio Review, Nanofilm Tech IPO & more

Date: 26 October 2020

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