DAILY MORNING NOTE | 30 May 2024

Trade of The Day

CapitaLand Investment Ltd (SGX: 9CI)

Analyst: Zane Aw

(Current Price: S$2.66) – TECHNICAL BUY
Buy price: S$2.66 Stop loss: S$2.55 (-4.14%)
Take profit 1: S$2.90 (+9.02%) Take profit 2: S$3.00 (+12.78%)

Broadcom Inc. (NASDAQ: AVGO)

Analyst: Zane Aw

(Current Price: US$1412.45) – TECHNICAL BUY
Buy price: US$1412.45 Stop loss: US$1330.00 (-5.84%)
Take profit: US$1660.00 (+17.53%)

Trades Initiated in the past week

Singapore shares ended Wednesday (May 29) down 0.2 per cent. The day’s best performer was Yangzijiang Shipbuilding which hit a 52-week intra-day high of S$2.21, and closed the day up S$0.21 or 10.6 per cent at S$2.20.

Wall Street stocks fell on Wednesday as rising Treasury bond yields prompted a wave of selling after recent records. The Dow Jones Industrial Average fell 1.1 per cent on the day to 38,441.54. The broad-based S&P 500 declined 0.7 per cent to 5,266.95, while the tech-rich Nasdaq Composite Index dropped 0.6 per cent to 16,920.58.

Top gainers & losers

Events Of The Week

SG

Demand for the latest tranche of the Singapore Savings Bonds (SSBs) has reached a year-to-date high, with its 10-year average return having hit a new peak for the year thus far, the allotment results released on Wednesday (May 29) indicated. The June issuance pulled in S$1.6 billion in applications, exceeding the S$1 billion on offer. In this tranche, the first-year interest rate stands at 3.26 per cent, and the 10-year average return, at 3.33 per cent. The latest tranche of SSBs were offered and allotted through the quantity-ceiling format. Applicants who applied for S$24,000 or lower were fully allotted. Those who applied for sums higher than this were allotted either S$24,000 or S$24,500; around 51 per cent of these applicants were picked at random and allotted the additional S$500. The SSBs, which closed on May 28, will be issued on Jun 3.

Oversea-Chinese Banking Corporation (OCBC) will spend some HK$1.5 billion (S$260 million) to upgrade its technology and facilities across Greater China by 2026, as part of an “accelerated” push to improve customer and staff experience with updated platforms, products and facilities. Of this sum, close to HK$1 billion will go towards modernising OCBC Hong Kong’s technology platform. By 2026, the bank aims to standardise 90% of its channels, services, products and infrastructure, among others. The remaining HK$500 million will go into workplace upgrading for OCBC’s third major site in Hong Kong, says Wang Ke, head of Greater China and CEO of OCBC Hong Kong.

Grand Venture Technology (GVT) has posted net profit of S$2 million for its 1QFY2024 ended March, up 34.1% y-o-y driven by continued wallet share expansion with its key customers. Revenue grew 14.4% y-o-y to S$30.8 million, while EBITDA grew 10.6% to S$6.47 million. Gross profit margin and EBITDA margin were relatively stable in the quarter, with continued ongoing absorption of expanded capacities and capabilities in preparation for future growth. Segment-wise, revenue from the semiconductor segment increased by 14.8% y-o-y to S$15.7 million, mainly due to gradual demand recovery. The life sciences segment recorded a 6.2% growth y-o-y to S$5 million. This is attributed to the commencement of mass production of certain mass spectrometers and its bolt-on instruments as well as expanded wallet share in the segment. Revenue from the electronics, aerospace, medical and others segment rose 18.4% y-o-y to S$10.1 million in 1QFY2024. This is due to robust demand from customers from the aerospace and medical industries, which was partially offset by weakness in the electronics segment.

Chasen Holdings has reported a net loss of S$6.57 million in FY2024 ended March, down from a profit of S$2.05 million in the preceding financial year due to a one-off non recurring charge. The charge arises from the demolition of 18 Jalan Besut property to make way for the development of Chasen’s new Integrated Logistics Hub. Revenue for FY2024 was down 17% y-o-y to S$95.7 million. Correspondingly, gross profit for FY2024 stood S$12.8 million, down 28% y-o-y, while gross margin for the period decreased by 2%. Separately, Chasen’s subsidiaries from two of its business segments have secured new projects amounting to S$34.2 million.

IHH Healthcare has reported a PATMI of RM768 million (S$220 million) in 1QFY2024, down 45% y-o-y due to the absence of one-off gains. The same period last year saw one-off gains of RM862 million from the sale of International Medical University. Excluding exceptional items, PATMI was up 22%. In 1QFY2024, IHH recorded its highest ever quarterly revenue at RM6 billion, up 16% y-o-y, while EBITDA grew 19% y-o-y to RM1.4 billion. This is attributed to sustained patient volume as well as the take of more acute, complex cases.

Oceanus Group has signed an investment intention worth RMB200 million to help grow its alcohol distribution business with a local authority in China. The agreement is signed with the Shaoxing Huangjiu Town (Dongpu) Development and Construction Management Committee. The committee is with the Agriculture, Rural and Water Resources Bureau of the Yuecheng district, of the town of Shaoxing, known since ancient times for producing yellow wine made such as the Nü Er Hong, popularised in martial arts novels and shows. Via this partnership, the local partner will import alcohol distributed by Oceanus, and also provide access to logistics and other services, says Sammul Lin, group COO of Oceanus. On the other hand, Oceanus will help expand the distribution and grow the demand of yellow wine produced by Shaoxing.

US

Salesforce reported weaker-than-expected revenue and issued guidance that trailed Wall Street’s expectations. Earnings per share came in at US$2.44 adjusted vs. US$2.38 expected on revenue of US$9.13 billion vs. US$9.17 billion expected. Salesforce called for adjusted earnings per share in the current quarter of US$2.34 to US$2.36 on US$9.2 billion to US$9.25 billion in revenue. Analysts had expected US$2.40 in adjusted earnings per share on US$9.37 billion in revenue. It is the first time since 2006 that Salesforce fell short on revenue. Salesforce saw budget scrutiny and longer deal cycles than usual during the quarter, president and operating chief Brian Millham told analysts on a conference call. Management implemented go-to-market changes that cut into bookings, Millham said.

HP reported quarterly revenue that topped analysts’ estimates, including the first increase in personal computer (PC) sales in two years, an optimistic signal for a long-awaited rebound in the market. Revenue from HP’s computer unit increased 3 per cent to US$8.4 billion in the fiscal second quarter, compared with the US$8.3 billion expected by analysts. The jump was due to commercial sales, which rose 6 per cent to US$6.2 billion. Consumer sales continued to decline, slipping 3 per cent to US$2.2 billion, the company said on Wednesday (May 29). In the period ended Apr 30, total sales declined less than 1 per cent to US$12.8 billion, compared with analysts’ average projection of US$12.6 billion. Profit, excluding some items, was 82 US cents a share, about in line with Wall Street estimates. For the fiscal third quarter, HP projected profit, excluding some items, of 78 US cents to 92 US cents per share. Analysts on average estimated 85 US cents.

Activist investor Nelson Peltz has sold his entire stake in Disney, according to a person familiar with the matter. Peltz sold all of his Disney stock at roughly US$120 a share, the person said, making about US$1 billion on the position. The exit comes weeks after Peltz’s Trian Partners lost a proxy battle at Disney in early April as shareholders reelected the company’s full slate of board nominees. Peltz had been seeking to elect himself and former Disney finance chief Jay Rasulo to the company’s board. Peltz had long taken issue with Disney governance.

Palantir has won a US$480 million contract from the U.S. Department of Defense for a prototype known as the Maven Smart System, the department said on Wednesday. The contract has an expected May 2029 completion date and follows the Defense Department’s solicitation of a sole bid, it said. Maven takes in data from various sources to identify military points of interest and to speed up intelligence analysts’ work, according to one brigade’s description of the system earlier this year.

Uber Technologies unveiled a raft of measures on Wednesday (May 29), including a tie-up to offer cruises on the Seine river as it looks to meet explosive demand stemming from the upcoming Olympics in Paris. The ride-hailing platform will offer its “Uber Cruises” free of charge from Jul 12 to Aug 3, and customers can also book a day trip that includes a champagne tasting through its “Uber Bubbles” launch. Uber also plans to make a “significant” investment in driver incentives and discounts for riders. The company did not disclose the amount it is investing in these initiatives. More than 15 million visitors are expected to arrive in Paris this summer – a 30 per cent increase from previous years – straining public transport networks, the company said. It expects a record 40,000 drivers to provide rides on its platform during the Olympics.

Apple plans to open its first store in Malaysia next month, the company said Wednesday, underscoring a bigger push into the Asia region beyond China. The store will be located at The Exchange TRX mall in the Malaysian capital of Kuala Lumpur. It will open on June 22 at 10 a.m. local time, Apple said. The move to open a store in Malaysia continues a push by Apple to expand Asian sales outside of China, where Apple has struggled in of late amid rising competition from local players, in particular Huawei.

ConocoPhillips agreed on Wednesday to buy Marathon Oil in an all-stock transaction worth US$17.1 billion that would bolster the company’s shale assets as the broader oil and gas industry undergoes a major wave of consolidation. The acquisition of Marathon Oil will add 2 billion barrels of resources to ConocoPhillips’ portfolio, extending the company’s reach across shale fields in Texas, New Mexico and North Dakota. ConocoPhillips expects share buybacks worth US$7 billion in the first year after the deal is completed and US$20 billion after the first three years.

Merck on Wednesday agreed to acquire privately held biotech EyeBio for as much as US$3 billion, the latest in a string of deals by the US drugmaker to bolster its future growth. It agreed to pay US$1.3 billion in cash and another US$1.7 billion in future milestone-based payments for EyeBio, and will gain access to its retinal disease drug Restoret as part of the deal. EyeBio is testing its experimental therapy Restoret in early-stage trials for retinal diseases characterized by abnormalities in blood vessels that can lead to impaired vision. The company also recently completed early-stage testing of the drug for diabetic macular edema, a type of swelling in the eye, and is expected to enter a mid-stage trial for the disease in the second half of 2024. The deal is expected to close in the third quarter of 2024.

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

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