Daily Morning Note – 30 July 2020
PHILLIP SUMMARY
US stocks closed higher on Wednesday, adding to gains after the Federal Reserve repeated a pledge to use its “full range of tools” to support the economy but cautioned that the outlook “will depend significantly on the course of the virus”.
At the end of its two-day policy meeting the Fed said it will keep its interest rate target range until it is confident the economy has weathered the coronavirus pandemic and is on track for maximum employment and price stability goals.
BREAKING NEWS
OUE and Fragrance Group – have flagged guidance of losses made in the first six months of this year. OUE said that, following a preliminary review of its unaudited financial results for the first half ended June 30, the group is expected to record a loss attributable to shareholders for the first half, reversing from a net profit of S$61.9 million recorded a year ago.
Dairy Farm International on Wednesday posted a 35-per-cent drop in net profit to US$115 million, despite a 6 per cent increase in total sales to US$14.5 million.
Property developer and investment company Hongkong Land on Wednesday announced that it made a net loss of US$1.8 billion in its first half ended June 30, compared to a net profit of US$411 million a year ago.
Lian Beng on Wednesday posted a 12.8 per cent drop in net profit to S$28.7 million in its FY20 ended May 31. This was partly due to its higher share of loss of associates of S$10.9 million (compared to S$246,000 in FY19) due to its share of fair-value loss of investment properties held by associates of S$13.8 million.
Industrial agri-food company Japfa’s net profit for its first half grew six times to US$76.8 million, thanks to better operating profit in its “other animal protein” segment, which was driven by continued high average selling prices for fattened pigs – in turn the result of a shortage of pork.
Oil prices rose on Wednesday after a steep drop in US crude inventories, but another record day for coronavirus cases worldwide kept gains in check. Brent crude futures settled at US$43.75 a barrel, up 53 US cents or 1.2 per cent. US West Texas Intermediate crude futures settled at US$41.27 a barrel, gaining 23 US cents or 0.6 per cent.
US congressional Republicans and Democrats, struggling to reach a deal to provide more aid to those hurt by the coronavirus pandemic, slid on Wednesday toward letting a US$600-per-week unemployment benefit lapse when it expires this week.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
TECHNICAL PULSE
Yangzijiang Shipbuilding Holdings Ltd
Analyst: Chua Wei Ren
Recommended Action: Technical BUY
Yangzijiang’s (SGX: BS6) corrective wave has prolonged beyond our expectation. Based on our Elliott wave count on 28th May, the bigger phase of the wave count is still valid and technicals also show confluence with the bullish action ahead.
>> Read more technical reports
RESEARCH REPORTS
Ascott Residence Trust – Slow, precarious recovery
Recommendation: BUY (Maintained), Last Done: S$0.895
Target Price: S$1.08, Analyst: Natalie Ong
– 1H20 DPU of 1.05 cents formed 19.6% of FY20e DPU, $5mn of dist. income retained.
– RevPAU down 52% YoY in 1H20 (1Q20: 23%); 1H20 Gross Profit -28% YoY with ML/MCMGI/MC contributing 59%/7%/34% respectively.
– Erosion of “stable” revenues as 4 French ML and 3 UK MCMGI leases to Sponsor were renewed on variable terms.
– Maintain BUY with lower TP of $1.08 (prev. $1.25) as we lower revenue to reflect a slower recovery of international travel, the extension of 4 French ML and 3 UK MCMGI on variable terms, and the sale of AGZ and CDMP. FY20e DPU is lowered by 21.7% and represents a DPU yield of 6.0%.
HK Reports – Read up on our Hong Kong reports here
RESEARCH VIDEOS
Webinar Of The Week
Market Outlook: Market Outlook: SG Banking Monthly, SG Bonds Weekly and SG Strategy 3Q20 (with stock picks)
Date: 06 July 2020
Phillip Research in 3 minutes: #25 – Prime US REIT; Initiation
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