Daily Morning Note – 3 Febraury 2021
PHILLIP SUMMARY
Asian stocks looked set to extend a global rally amid a slew of corporate earnings and a crumbling of the retail trading frenzy that fueled swings in heavily shorted shares. The dollar slipped. Futures in Japan pointed higher and Australian shares rose, though contracts dipped in Hong Kong. Nasdaq 100 futures climbed after Alphabet Inc. and Amazon.com Inc. reported better-than-estimated revenue, with the online-retail giant saying Chief Executive Officer Jeff Bezos will step down from his post. U.S. stocks climbed earlier for a second session. Treasury yields edged higher amid a move to fast track a U.S. stimulus plan. Elsewhere, oil climbed to its highest in over a year on tightening global supplies and signs of strength in physical markets. The New Zealand dollar climbed after a decrease in the unemployment rate.
BREAKING NEWS
Ascendas Real Estate Investment Trust (Ascendas Reit) distribution per unit (DPU) for its second half ended Dec 31, 2020, fell 0.9 per cent to 7.418 Singapore cents, from 7.485 Singapore cents in the year before, the Reit said in an exchange filing on Tuesday. It reported a 12.5 per cent increase in gross revenue for its second half of S$528.2 million, up from S$469.4 million in the year ago period. Net property income rose 7.8 per cent to S$388.2 million in H2 2020, from S$360.2 million previously.
Environmental solutions company Sunpower Group said on Tuesday that it has won a 141 million yuan (S$29.1 million) manufacturing and services contract from an existing customer in the polycrystalline silicon industry. It will supply core equipment for its customer’s project. Delivery is expected to be completed in 2021. The new contract is expected to have a positive impact on the group’s performance for FY2021.
Alphabet Inc. reported quarterly sales that beat Wall Street estimates, buoyed by heavy digital advertising spending during the holiday shopping quarter. The shares jumped about 8% in extended trading. Fourth-quarter revenue, excluding payments to distribution partners, came in at $46.43 billion, the Mountain View, California-based company said in a statement. Analysts, on average, expected $44.2 billion, according to data compiled by Bloomberg.
Gamestop Corp.‘s rally came to a screeching halt this week as the shares had their biggest one-day loss on record, erasing more than $27 billion in market value from their high. The stock, which has been the poster child for Redditors looking to squeeze short sellers, fell 60% Tuesday, closing below $100 for the first time in a week. Several other Reddit favorites — including movie-theater chain AMC Entertainment Holdings Inc. and clothing retailer Express Inc. — also tumbled. GameStop fluctuated around its $90 a share closing level in after-hours trading.
Chipotle Mexican Grill Inc on Tuesday missed Wall Street estimates for quarterly profit, hurt by costs related to keeping its business running during the COVID-19 pandemic, and the fast-casual chain’s shares fell as much as 4% after the closing bell. The burrito chain’s strong digital operations have helped the company ride out the worst of the pandemic, even as its expenses have climbed as it bolsters its delivery network. Digital sales rose nearly three-fold and drove a 5.7% rise in comparable sales, helped by a surge in online orders in some parts of the United States. Total revenue increased 11.6% to $1.6 billion for the fourth quarter ended Dec. 31, the company said.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
TECHNICAL REPORTS
Wilmar International Ltd
Analyst: Chua Wei Ren
Recommended Action: Technical BUY
Wilmar International (SGX: F34) upside has exceeded our target price 2 based on our report on 6th November 2020. Despite a strong run up, we expect Wilmar to continue its rally based on the technical price action and the wave analysis.
>> Read more Technical reports
RESEARCH REPORTS
Tesla Inc: 3 Takeaways from 4Q20 Earnings Call
Analyst: Yeap Jun Rong, Chua Wei Ren
– Tesla expects vehicle delivery growth to average 50% for multi-years. While sales in the US seemed to have stagnated in the past three years, we believe recent price cuts for Model Y may have improved Tesla’s competitive positioning vis-à-vis peers in the U.S.
– Tesla reiterated that the idea behind making its own cells is to help it tackle shortfalls in cell output, not disintermediate its cell suppliers. Instead, it is urging its suppliers to increase production. This points to expectations of strong demand.
– Operating margin was 5.4% in 4Q20, with increased expenses in R&D. Tesla expects margins to expand in the next few quarters. Consensus for Tesla’s operating margins are 8.5% in 1Q21 and 9.5% in 2Q21.
– We expect revenue to accelerate in 2021 with its capacity ramp-up and a potential easing of its battery-cell constraints. We have a TECHNICAL BUY rating for TSLA with buy limit at US$872.79.
HK Reports – Read up on our Hong Kong reports here
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