Daily Morning Note – 3 June 2019
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YOUR PHILLIP SUMMARY
China’s government says it’s willing to work with the U.S. to end an escalating trade war, but blames President Donald Trump’s administration for the collapse in talks and won’t be pressured into concessions.
Asian stocks were poised to start the week on the back foot after the feud between the world’s two-largest economies grew over the weekend. The yen held near a six-month high.
President Donald Trump opened another potential front in his trade war on Friday, terminating India’s designation as a developing nation and thereby eliminating an exception that allowed the country to export nearly 2,000 products to the U.S.
TECHNICAL PULSE
Jardine Cycle and Carriage
Current Sentiment: BULLISH
Jardine C&C had an unexpected turn last Friday. It swiftly broke off the bearish flag and reversed immediately at the demand zone. This is the key indicator that the stock will continue its rally thereafter.
RESEARCH REPORT
Singapore Telecom Sector – Restructuring and recovering
Recommendation: OVERWEIGHT (Maintained), Analyst: Alvin Chia
– Mobile and Pay-Tv revenues expected to be weak in 2019 and stabilise in 2020.
– Enterprise revenue to surge 20% in 2019 on the back of smart nation initiatives,
cyber-security and managed services.
– TPG achieved nationwide outdoor coverage in Singapore. Commercial launch is
expected to be in late 2019. ACCC opposes the merger of TPG and Vodafone.
– Singtel and NetLink remain our top picks in the sector. We like Singtel for its
recovering regional associates and NetLink for its stable 6% distribution yield.
– Maintain OVERWEIGHT on the Singapore Telecom sector.
Singapore Coal Monthly – Cooling down
Recommendation: HOLD, Analyst: Chen Guangzhi
– Room for 180mn tonnes of capacity cut in China during 2019-2020
– Indonesia and China coal associations collaborate in the coal mining sector
– Indonesia government rejects calls for DMO reduction
Real Estate Agencies (Sector Initiation) – Can have pie and eat it, too
BUY (Initiation), Analyst: Tara Wong
– Both PropNex and APAC Realty (operating under the ERA brand) have close to
half the number of real estate agents in Singapore and handled an average
c.85% of all property transactions (by no. of units) in 2018.
– High unleveraged return on capital, due to asset-light nature of business and
variable pay structure of most of the salesforce.
– Resilient even in industry downturns, matching or beating the movements of
the property market.
– Initiate coverage on APAC Realty Limited (BUY; TP S$0.65) and PropNex Limited
(BUY; TP S$0.63)
BREAKING NEWS
China decries US tariff ‘coercion’ as trade rhetoric heats up. Beijing defends drawing up blacklist and FedEx probe as defence minister joins dispute
Too many unknowns leave China traders with no clue on stocks. How to put a price on a full-blown trade war has emerged as the key challenge for China’s stock investors.
US stock-index futures slid after China’s government blamed the US for the latest collapse in trade talks.
Pick your poison: For Fed, it’s higher inflation or an inevitable return to QE. The Great Recession ended a decade ago this month, but for the US Federal Reserve, the fallout has posed an era-defining choice: Either jolt Americans to expect higher inflation, or keep the printing press ready for the next economic slide.
The Federal Reserve is convening experts to discuss overhauling how the world’s most powerful central bank manages the US economy.
INDOFOOD Sukses Makmur has raised its buyout offer price for Indofood Agri Resources (IndoAgri) to 32.75 Singapore cents per share from 27.75 Singapore cents previously, the mainboard-listed company announced in a bourse filing on Sunday.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
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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