Daily Morning Note – 29 August 2018
WEEKLY MARKET OUTLOOK WEBINAR
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YOUR PHILLIP SUMMARY
U.S. stocks raised to new highs on Tuesday, while Treasury yields climbed as investors assessed the latest developments from the Trump administration’s trade policies. The U.S. and Mexico agreed on Monday to overhaul NAFTA, putting pressure on Canada to agree to new terms on auto trade and dispute settlement rules to remain part of a three-nation pact. But a previously unreported side agreement between the two countries would allow the United States to impose “national security” tariffs on annual Mexican car and SUV imports of over 2.4 million vehicles. The rally in emerging markets lost momentum, with the lira tumbling after Moody’s downgraded several Turkish banks.
RESEARCH REPORT
Micro-Mechanics (Holdings) Ltd – Consumables provide resiliency
Recommendation: BUY (Maintained), Last Done Price: S$1.83
Target Price: S$2.30, Analyst: Paul Chew
– 4Q18 revenue and PATMI were 3% and 6% below our full-year expectations.
We are trimming our FY19e earnings by 14%.
– Margins hurt by higher depreciation (as capex more than doubled in FY18)
and weaker sales in Singapore and Malaysia.
– Despite lowering our earnings, we maintain our target price at S$2.30. We
believe Micro-Mechanics has the most resilient product line and a front-end
business could surprise on the upside.
CapitaLand Mall Trust Limited – Entrenching presence in the Jurong Lake District
Recommendation: NEUTRAL (Maintained), Last Done Price: S$2.15
Target Price: S$2.05, Analyst: Tan Dehong
– CMT to acquire remaining 70% stake in Westgate for S$790mn.
– Acquisition based on agreed market value of Westgate at S$1,128mn
($2,746psf).
– Recycling of capital from Sembawang Shopping Centre sale into newer asset
as 4.3% entry yield.
– Latest committed occupancy at 98% with a 99y lease tenure from 2011.
– Maintain NEUTRAL with unchanged target price of S$2.05.
TECHNICAL PULSE
SATS Ltd – Daily timeframe – Bullish
– The bullish rejection off the 5.04 support area succeeded in closing price back
above the 20 and 60 day moving average on 28/08/18 signals the bullish
momentum has returned.
– Expect price to head higher next to test the 5.30 resistance area followed by
5.60.
For more information and additional disclosures, refer to the link here.
BREAKING NEWS
With US-South Korean military drills back on the table and the cancelation of a top-level summit in Pyongyang, Washington is toughening its stance as it negotiates with North Korea.
The United States this week blocked the reappointment of a judge at the World Trade Organization, increasing the risk that the global body could soon find itself unable to fulfil its key role in arbitrating trade disputes.
Ghana and Britain on Tuesday signed a £20 million (S$35.5 million) trade and investment agreement to create jobs and promote economic development in the west African nation, the Ghanaian presidency said.
mm2 Asia’s 51-per cent-owned subsidiary Vividthree Holdings (VVH) has entered into a restructuring agreement with mm2 Entertainment and four individual shareholders of Vividthree Productions (VVP) for the acquisition of the entire capital of VVP for S$50,000.
Capitaland’s group chief investment officer Lee Chee Koon will helm the property giant starting Sept 15, taking over from current president group chief executive Lim Ming Yan who gave notice to retire earlier this year in June.
Singapore and Hong Kong buyers have scooped up more than 20 out of 250 units at “well over S$3,000 per square foot” at 8 St Thomas in a private preview over the weekend, developer Bukit Sembawang Estates said in a statement on Tuesday.
Source: SGX Masnet, Bloomberg, Reuters, The Business Times, Channel NewsAsia, Phillip Securities Research
Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research
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