Daily Morning Note – 3 Sep 2019


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Asian stocks are set to follow U.S. futures lower as Chinese and American officials struggle to schedule a planned meeting this month to continue trade talks — futures slipped in Tokyo, Sydney and Hong Kong. Cash markets for both U.S. stocks and bonds were closed for the Labor Day holiday, but 10-year Treasury futures erased a decline while the dollar strengthened for the sixth consecutive day to its highest in more than two years. The pound slumped to a two-year low with the U.K. facing a showdown in Parliament over delaying Brexit (again). Elsewhere, crude oil slipped below $55 a barrel amid concerns a hurricane battering the U.S. east coast and an economic slowdown from the trade war may dent demand.


Hoe Leong Corporation on Monday said it has received a statutory demand under the Companies Act from the law firm acting on behalf of United Overseas Bank (UOB) which is seeking payment of about S$5.7 million from the company within 21 days from Aug 29, 2019, the date of receipt of the statutory demand.

KOON Holdings auditor Ernst and Young LLP has issued a disclaimer of conclusion over the construction and precast firm’s interim financial results for the six months ended June 30.

SINGAPORE’S hotels appear to have garnered robust bookings for July and August, with expectations for a healthy performance in the second half of the year.

China said Monday it had lodged a complaint against the US with the World Trade Organisation (WTO), one day after new tariffs imposed by Washington on billions of dollars of Chinese goods came into force.

Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR


Starhub Ltd

Recommended Action: Technical BUY

Although Starhub Ltd (SGX: CC3) is still on a downward trend, we believe Starhub will be heading for an upward corrective move.

Read more technical pulse


Micro-Mechanics (Holdings) Ltd – Getting paid to wait

Recommendation: NEUTRAL (Maintained), Last Done: S$1.60

Target Price: S$1.60 Analyst: Paul Chew

– 4Q19 revenue and PATMI were below our expectations. Gross margins suffered from weaker volumes and the higher fixed operating cost than a year ago.

– Final dividends were maintained at 6 cents in 4Q19. FY19 DPU is S$0.10. Free-cash flow at a record high despite the decline in earnings

– We marginally lowered our target price to S$1.60 (previously S$1.63). Our FY20e earnings have been reduced by 5%. We peg our valuations to 15x FY20e PE, in-line with back-end semiconductor supply chain valuations. The downturn in back-end semiconductor volumes is at the late stage. Based on the past cycles, a rebound should be materialising from the December quarter onwards. Investors are paid a 6% yield as they wait for the recovery. Our NEUTRAL recommendation is unchanged.

Walmart Inc – Positive comps and international expansion

Recommendation: TECHNICAL BUY, Analyst: Edmund Xue

– Ramp-up of delivery services to boost volume sales growth.

– Solid results in international markets.

– Tariffs unlikely to pose significant headwind.

Read more research reports

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Market Outlook: : (PSR) Golden Energy and Resources Ltd, CapitaLand Limited, Singapore REITs Monthly, Phillip US/China Weekly, Phillip Singapore Weekly & Technical Outlook

Date: 26 August 2019

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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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