DAILY MORNING NOTE | 29 November 2023
**Do note that the last day of Morning Note Issuance will be on 14 December 2023. Morning Note will resume in January 2024**
Summary of Trades Initiated in Past Week
Singapore shares fell on Tuesday (Nov 28) amid mixed trading in the region. Singapore stocks fell 0.7 per cent or 20.48 points to 3,065.94. Across the broader market, losers outnumbered gainers 335 to 244, after 881.1 million securities worth S$840.7 million changed hands. The Nikkei 225 lost 0.1 per cent, the Hang Seng Index fell 1 per cent, and the FTSE Bursa Malaysia KLCI closed flat. Meanwhile, the Kospi Composite Index gained 1.1 per cent.
Wall Street stocks climbed modestly on Tuesday following solid consumer data and Federal Reserve comments seen as fairly dovish. Data from the Conference Board showed US consumer confidence rose more than expected in November, while the National Retail Federation reported higher sales over the critical five-day shopping weekend that includes “Black Friday.” The Dow Jones Industrial Average ended 0.2 per cent up at 35,416.98. The broad-based S&P 500 gained 0.1 per cent to 4,554.89, while the tech-rich Nasdaq Composite advanced 0.3 per cent to 14,281.76.
Restaurant operator Jumbo Group on Tuesday (Nov 28) reported earnings of S$6.7 million for the second half of the fiscal year ended September, up 52 per cent from its net profit of S$4.4 million in the year-ago period. The stronger showing in H2 pushed the group’s full-year earnings to S$14.6 million, a turnaround from its net loss of S$91,000 in the previous year. The board of directors has recommended a final dividend of S$0.01 per share, subject to shareholder approval at the upcoming annual general meeting. No final dividend was paid out in FY2022. The pay-out date for the dividend will be announced later. Revenue for H2 was up 40.7 per cent to S$92.8 million, from S$66 million. The group attributed its stronger top line figures for the six-month and full-year periods chiefly to the increase in revenue from its local operations on the back of the easing of pandemic-related measures.
Restaurant operator No Signboard on Tuesday (Nov 28) posted a net loss of S$423,205 for the third fiscal quarter ended June, significantly narrower than the net loss of about S$1.3 million in the corresponding year-ago period. This took the company’s losses for the nine-month period to about S$1.2 million, versus S$2.2 million in the year ago. The latest financial update comes just days after the group announced its financial results for the first half of the year on Nov 23. Revenue for the quarter was down 36.9 per cent to S$625,308 from S$991,106. For the nine months so far this fiscal year, the group said it had no sales contributions from certain seafood restaurants due to the closure of its Vivocity and Esplanade outlets in November 2021 and March 2022.
Demand for the latest tranche of Singapore Savings Bonds (SSBs) has hit a year-to-date high, allotment results released on Tuesday (Nov 28) indicated. The December issuance received a total of S$1.9 billion in applications, exceeding the S$1 billion on offer. A total of S$1.8 billion was applied within individual allotment limits. This comes as the 10-year average return for the December issuance is the highest offered for issuances in 2023. The latest tranche is offering a first-year interest rate of 3.3 per cent and a 10-year average return of 3.4 per cent. The rise in demand tracks the climb in yields offered by the SSBs.
Nanofilm Technologies International has partnered Nanyang Technological University (NTU) to launch a corporate laboratory to develop nanotechnology products. The S$66 million joint investment lab hopes to develop non-toxic coatings for medical implants; and protecting coatings to make hydrogen fuel cells more efficient, reliable and affordable. Singapore-listed Nanofilm sells nanotechnology solutions such as special coatings for engine parts and consumer electronics. The new 19,000 square foot lab will allow Nanofilm to combine its expertise with that of NTU’s faculty in smart electronics, clean energy and materials science.
Oil prices jumped on Tuesday, settling up about 2 per cent on the possibility Opec+ will extend or deepen supply cuts, a storm-related drop in Kazakh oil output and a weaker US dollar. Brent crude futures settled up US$1.70, or 2.1 per cent, at US$81.68 a barrel. US West Texas Intermediate (WTI) crude gained US$1.55, or 2.1 per cent, to settle at US$76.41. Opec+, the Organization of the Petroleum Exporting Countries (Opec) and allies including Russia, is due to hold an online ministerial meeting on Thursday to discuss 2024 production targets.
Amazon on Tuesday released its own AI chatbot intended for businesses, about one year after ChatGPT took the world by storm. “Q” will be available only to Amazon’s AWS cloud computing customers and will be in direct competition with OpenAI’s ChatGPT as well as Google’s Bard and Microsoft’s copilots that also run on OpenAI’s technology. Costing US$20 monthly per user, Amazon Q will perform a variety of tasks including summarising uploaded documents and answering questions about specific data sitting on a company’s servers.
Workday stock gained more than 6% after third-quarter results surpassed Wall Street estimates. Workday notched adjusted earnings of $1.53 per share on $1.87 billion in revenue, while analysts surveyed by LSEG, formerly known as Refinitiv, expected $1.41 in earnings per share and $1.85 billion in revenue.
NetApp stock climbed nearly 10% after a beat on the top and bottom lines in the fiscal second quarter. The company reported adjusted earnings of $1.58 per share on $1.56 billion in revenue, while analysts polled by LSEG forecast earnings of $1.39 per share and $1.53 billion in revenue. NetApp also issued higher-than-expected third-quarter earnings guidance.
Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR
Recommendation: BUY (Maintained), Last Done: S$6.15
Target price: S$8.22, Analyst: Darren Chan
– No financials were provided for the 3Q23 operational update. The group’s net gearing ratio (after factoring fair value on investment properties) now stands at 58% following the completion of various acquisitions in 2023.
– In Nov 2023, the group announced a proposal to buy back up to 10% of its preference shares through an off-market equal access scheme at S$0.78 in cash for each preference share.
– We maintain BUY with an unchanged TP of $8.22, a 45% discount to RNAV of S$14.94. No change in our forecasts. We view CDL as a proxy for the Singapore residential market and hospitality recovery. Asset monetisation, unlocking value through AEIs and redevelopments, establishing a fund management franchise, and faster-than-expected recovery in the hospitality portfolio are potential catalysts for CDL, which could help narrow the discount between CDL’s share price and RNAV.
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