Daily Morning Note – 30 APRIL 2019

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YOUR PHILLIP SUMMARY

The main U.S. stock indexes closed slightly higher, with the Dow gaining 11 points. The S&P 500 and Nasdaq Composite moved further into record territory, rising 0.1% and 0.2%, respectively. Markets were buoyed by new figures showing core inflation weakened, while consumer spending jumped in March. Spotify stock slipped after the company released its earnings. Earnings will be the market’s main focus this week, even as U.S.- China trade talks resume, and the Federal Reserve is due to release a statement on monetary policy.

Alphabet Inc. revenue growth cooled off at the start of 2019, according to an earnings report Monday afternoon that sent shares down in after-hours trading.

Google’s parent company came up short of expectations as all of its major sales categories performed slightly worse than projected in the first quarter, and yet another big fine out of Europe dinged the company’s earnings. Alphabet GOOGL, +1.47% GOOG, +1.21% reported first-quarter earnings of $6.66 billion, or $9.50 a share, on revenue of $29.48 billion, after removing traffic-acquisition costs; a year ago in the same period, Alphabet posted profit of $13.33 a share on ex-TAC sales of $24.86 billion a year ago.



RESEARCH REPORT

DBS Group Holdings Ltd – Record Earnings and ROE

Recommendation: ACCUMULATE (Downgraded), Last Done price: S$28.40

Target Price: S$29.0, Analyst: Tin Min Ying

– 1Q19 Revenue and PATMI were in line with our estimates (excluding write-back). ROE rose to 14.0%, the highest in a decade.

– 1Q19 NIM expanded 5 bps YoY and 1 bps QoQ to 1.88% due to higher interest rates in Singapore and Hong Kong.

– Loans grew 5.7% YoY, driven by non-trade corporate loans.

– Allowances declined 53.7% YoY due to a write-back of S$100mn and improvements in the credit environment.

– Dividend payment frequency has been changed to four times a year. 1Q19’s proposed dividend of 30 cents per share consistent with FY18 full year pay-out S$1.20 per share.

– Downgrade to ACCUMULATE at an unchanged target price of S$29.00. Our rating has been downgraded to Accumulate due to the share price performance.



BREAKING NEWS

Oil climbs, shaking off Trump calls for Opec to offset Iran sanctions.. Oil prices edged higher on Monday, as the market attempted to resume a weeks-long rally that was halted on Friday when US President Donald Trump demanded that producer club Opec raise output to soften the impact of US sanctions against Iran. Brent crude futures fell 11 cents, or 0.2 per cent, to settle at US$72.04 a barrel while US West Texas Intermediate (WTI) crude futures climbed 20 cents, or 0.3 per cent, to end the session at US$63.50.

US consumer spending posts biggest gain since 2009.. The Commerce Department said on Monday consumer spending, which accounts for more than two-thirds of US economic activity, surged 0.9 per cent as households stepped up purchases of motor vehicles and spent more on healthcare.

CDL Hospitality Trusts posts 3.7% lower Q1 DPS at 2.09 Singapore cents. Total distribution per stapled security (DPS) for CDL Hospitality Trusts (CDLHT) declined 3.7 per cent to 2.09 Singapore cents for the first quarter to March 31, from 2.17 Singapore cents a year ago. Revenue shrank 10.6 per cent to S$46.3 million for the first quarter, while net property income (NPI) also fell 10.7 per cent to S$33.8 million, the group reported on Monday before the market opened.

Keppel Corp to raise S$500m via two note issues. Conglomerate Keppel Corporation has priced the issue of its S$150 million 3 per cent notes due 2024 and S$350 million 3.66 per cent notes due 2029, it said on Monday night after the market closed.

China Sunsine posts 26% drop in Q1 net profit to 110.2m yuan. Specialty rubber chemicals producer China Sunsine Chemical Holdings on Monday posted a 26 per cent fall in net profit to 110.2 million yuan (S$22.3 million) for the first quarter ended March 31. Revenue for the quarter shrank 20 per cent to 686.6 million yuan due to a decrease in average selling price (ASP). ASP slid 24 per cent in Q1, mainly on the back of a decrease in raw material prices.

Sunpower Group wins 242m yuan manufacturing, services contract. Sunpower will provide services including design, engineering, procurement and construction of a high salt crystalliser for the Yulin Recycling Economy Coal Comprehensive Utilisation Project. This is the third such contract Sunpower has undertaken for the Yulin Project, which it says is one of the world’s largest coal and chemical projects.

Ascendas Reit posts 6.1% rise in Q4 DPU. Ascendas Reit on Monday reported a 6.1 per cent rise in distribution per unit (DPU) to 4.148 Singapore cents for the fourth quarter ended March 30, from 3.910 cents last year. This was on the back of contributions from 38 newly acquired properties in the UK, four new acquisitions in Australia and two redeveloped properties in Singapore. The contributions were partially offset by non-renewals and downsizing in some of the Reit’s Singapore properties.

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

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