Daily Morning Note – 29 April 2020
The Dow closed 32.23 points higher, or 0.13%, to 24,101.55. The S&P 500 climbed 0.52% to 2,863.39. The Nasdaq Composite dipped 1.40% to 8,607.73. The Dow snapped a four-day winning streak as a decline in tech shares pressured the broader market, offsetting the enthusiasm about the prospects of reopening the economy. Meanwhile, sharp losses from some of the major tech stocks — including Facebook, Amazon, Apple, Alphabet and Netflix — dented market sentiment.
Treasury Secretary Steven Mnuchin said all loans of more than US$2 million in a government relief programme for small businesses will be audited to ensure they were justified after large public companies and big chains sparked outrage by taking funds.
Merck & Co said on Tuesday it expects the coronavirus pandemic to reduce 2020 sales by more than US$2 billion, and the US drugmaker lowered its profit forecast as a big drop in doctors’ office visits during the outbreak will take a hefty toll, sending its shares down more than 3 per cent.
PepsiCo reported a rise in first-quarter revenue, but ditched its full-year forecast on Tuesday, citing uncertainty around the globe due to the novel coronavirus pandemic. The company’s net revenue rose 7.7 per cent to US$13.9 billion in the quarter ended March 21, helped by massive advertising campaigns during the Super Bowl.
Parkway Life Reit’s manager announced late on Tuesday that Palmary Inn Shin Kobe, one of its nursing home properties in Kobe City, Japan, has three confirmed cases of Covid-19. Two are staff of the operator, KK Asset, and the third, a resident of the property.
SPH Reit’s manager announced after trading hours on Tuesday that it has elected to receive the base fee component of the management fee for the period from Dec 1, 2019 to Feb 29, 2020 in the form of units in SPH Reit. A total of about 2.5 million units in SPH Reit were issued on Tuesday at the average price of S$1.0438 per unit for the purpose of payment of the base fee.
Starhill Global Reit’s revenue for the third quarter ended March 31 fell 8.9 per cent to S$46.7 million, while its net property income fell 11.1 per cent to S$35.2 million. The decrease in net property income was largely due to lower contributions from Starhill Gallery, in relation to its planned asset enhancement, rental assistance extended to eligible tenants in Singapore, Malaysia and China to cushion the impact of Covid-19 pandemic, as well as the depreciation of A$ against S$.
Prime US Reit on Tuesday announced that its first-quarter net property income stood at US$23.5 million, exceeding IPO projections by 6.7 per cent. Its gross revenue exceeded projections as well, by 4.1 per cent to hit US$35.1 million; its distributable income stood at US$17.6 million for the first quarter, exceeding the IPO projection by 12.9 per cent.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Recommended Action: Technical SELL
Nike (US: NKE) bullish rebound is short-lived as the wave theory suggests that the B corrective wave has a high chance of terminating at the 90.00 psychological level and based on the technical, the stock is entering into a bearish reversal.
Recommended Action: Technical SELL
Nvidia (US: NVDA) showed signs of recovery with a rebound on 18th March. While the uptrend seems unstoppable, there were signs of a slowdown in buying momentum from the 3rd of April onwards. As such, based on technical, Nvidia may correct downward and test the support level of 230.00.
Asian Pay Television Trust – Another DPU cut but operations stable
Recommendation: BUY (Upgraded); Last close: S$0.129
Target Price: S$0.15, Analyst: Paul Chew
– 1Q20 revenue and EBITDA beat our expectations. Results beat our estimates in part due to the appreciation of the Taiwan dollar by 4.7% during the quarter.
– APTT announced a 1 for 4 rights issue with an issue price of S$0.128 per share. Upon completion of the rights issue, DPU will be cut from quarterly 0.3 cents to 0.25 cents. Amount raised is S$46mn and will effectively be underwritten by the Trustee-Manager owners.
– We were disappointed with the 16.7% cut in DPU accompanying the rights issue. The effective dividend yield drops by around 1.5% points post announcement of the rights issue. Nevertheless, we are upgrading our recommendation from NEUTRAL to BUY. Firstly, the share price has corrected by 23% since our last report despite the limited impact of the outbreak on the company; Secondly, the business operations have turned more stable; Thirdly, dividends are much more sustainable at the current levels. Our target price will peg APTT at around 10x EV/EBITDA. We upgrade to BUY but lower our target price to S$0.15.
HK Reports – Read up on our Hong Kong reports here
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Date: 27 April 2020
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