Daily Morning Note – 30 January 2019

WEEKLY MARKET OUTLOOK WEBINAR

Register HERE for MONDAY’s 11.15am webinar.

Archived webinars available.

YOUR PHILLIP SUMMARY

Please note that there is no webinar on 4 Feb 2019 due to eve of Lunar New Year.



RESEARCH REPORT

M1 Limited – ARPU Pressure offset by subscriber growth

Recommendation: NEUTRAL (Maintained), Last Done: S$2.06

Target Price: S$2.06, Analyst: Alvin Chia

– Overall results are in line with our expectations

– Full year dividend of 11.2 cents, a mild 2% contraction from a year ago

– ARPU contracted 4.3% YoY in 4Q18 but was offset by subscriber growth of 7.1%. Post-paid subscribers
rose a record 92k.

– We maintain our NEUTRAL recommendation with an unchanged TP of S$2.06. Shareholders should accept
the VGO

Micro-Mechanics (Holdings) Ltd – 2018 a difficult comp

Recommendation: ACCUMULATE (Downgraded), Last Done: S$1.67

Target Price: S1.70, Analyst: Paul Chew

– We maintain our NEUTRAL recommendation with an unchanged TP of S$2.06. Shareholders should accept
the VGO Revenue and PATMI were below our expectations. We are lowering our FY19e revenue and
PATMI by 5% and 12% respectively.

– Top-line has been hurt by a general slowdown in semiconductor demand, exarcebated by uncertainty over
trade talks between US and China.

– In-line with our lower earnings estimate, we have reduced our target price on MMH to S$1.70 (previously
S$2.05). We peg our valuations to 15x FY19e PE. This is in-line with back-end semiconductor supply chain
valuations. We lowered our recommendation to ACCUMULATE.

BREAKING NEWS

Oil prices up 2% following US sanctions on Venezuela. International Brent crude oil futures were up US$1.39 to settle at US$61.32 a barrel, a 2.32 per cent rise, while US West Texas Intermediate (WTI) crude futures increased US$1.32, or 2.54 per cent, to settle at US$53.31 a barrel. Venezuela is among the world’s largest heavy crude oil producers, and the United States has been its biggest client, taking about half the country’s export volumes.

Federal Reserve’s Powell works Congress as Trump stews over rate hikes. US Federal Reserve Chairman Jerome Powell has been meeting with lawmakers at a faster clip than his two predecessors, a push that appears to be earning him allies as he navigates tricky monetary policy waters and vocal White House criticism. In his first 10 months on the job, and beginning well before President Donald Trump began publicly chastising him and the US central bank for raising interest rates, Mr Powell logged more than 40 hours on the phone or in person with Republican and Democratic lawmakers, his calendars show.

Singapore Changi Airport registered a strong performance in 2018, handling a record 65.6 million passenger movements (+5.5%) for the year with 386,000 landings and take-offs (+3.4%). Airfreight throughput increased by 1.4% to reach 2.15 million tonnes for 2018.

Advance SCT acquires 40% of N&T Engineering Enterprises for up to S$3.5m. Advance SCT is a supplier of copper-related products that is diversifying into the business of mechanical and electrical (M&E) engineering for mission-critical infrastructure (MCFI) and systems. The firm said in a Singapore Exchange filing that N&T is a Singapore-based M&E company specialising in design, customisation, operation, installation and maintenance of MCFI and Smart City systems. Its clients are mainly government agencies, government linked companies, multinational corporations and higher learning institutions.

M1 takeover bid leaves Malaysian wireless giant Axiata in a bind. Axiata, M1’s biggest shareholder, has less than three weeks left to decide whether to tender its stock into a takeover offer valuing the target at S$1.9 billion. Axiata sees that there isn’t enough time left to pull together its own counteroffer, the people said. The Malaysian company also considers it unlikely a rival bidder will emerge at this point, one of the people said. Still, Axiata plans to wait until close to the Feb 18 deadline before making a final decision to accept, the person said, asking not to be identified because the information is private.

Thomson Medical shareholders recommended to accept RSP TopCo’s general offer. This is based on the opinion of the independent financial adviser, Provenance Capital, that the financial terms of the offer are “fair and reasonable”. RSP TopCo is offering S$0.006006 in cash for each RSP Holdings share.

Raffles United sells unit at Citimac Industrial Complex for S$6.1m as part of collective sale. The completion of the sale of the property, which has a freehold tenure with a land area of 436 square metres, will take place on March 6, 2019 provided that all owners comply with the execution of documents related to the collective sale by Jan 30, 2019. The fair value of the unit as at Dec 31, 2018 was about S$3.6 million. Based on the latest announced unaudited consolidated accounts of the group for the full year ended Dec 31, 2018, the sale of property will result in a net gain of about S$2.5 million after deducting related expenses.

Source: Changi Airport Group, SGXNet

Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research

Read the research report(s), available through the link(s) above, for complete information including important disclosures

Important Information

Disclaimer
The information contained in this email and/or its attachment(s) is provided to you for information only and is not intended to or nor will it create/induce the creation of any binding legal relations. The information or opinions provided in this email do not constitute an investment advice, an offer or solicitation to subscribe for, purchase or sell the e investment product(s) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise. You may wish to seek advice from an independent financial adviser before making a commitment to purchase or investing in the investment product(s) mentioned herein. In the event that you choose not to do so, you should consider whether the investment product(s) mentioned herein is suitable for you. PhillipCapital and any of its members will not, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached to this email. The information and/or materials provided “as is” without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials.
Confidentiality Note
This e-mail and its attachment(s) may contain privileged or confidential information, which is intended only for the use of the recipient(s) named above. If you have received this message in error, please notify the sender immediately and delete all copies of it. If you are not the intended recipient, you must not read, use, copy, store, disseminate and/or disclose to any person this email and any of its attachment(s). PhillipCapital and its members will not accept legal responsibility for the contents of this message. Thank you for your cooperation.

 

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you

IMPORTANT INFORMATION

This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  

 

Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com