Daily Morning Note – 31 Aug 2020
PHILLIP SUMMARY
Wall Street flexed its muscles on Friday, with the Dow erasing its losses for the year and the S&P and Nasdaq again hitting records as investors shrugged off the ongoing coronavirus crisis, while markets elsewhere saw more moderate trading.
Much of the positive sentiment can be attributed to the Federal Reserve, which made clear that US interest rates will stay ultra-low as long as needed in a major policy shift announced Thursday.
That further buoyed stocks that had already climbed following their March Covid-19 downturn, after the Fed offered trillions of dollars in liquidity to keep markets functioning normally, with tech stocks doing particularly well as consumers spent more time at home.
BREAKING NEWS
Micro-Mechanics on Friday reported a 45.5 per cent rise in its net profit to about S$3.9 million for its fourth fiscal quarter ended June 30, 2020, from S$2.7 million in the year-ago period. Strong revenue growth gave a boost to its bottom line, said the mainboard-listed company, which manufactures high-precision tools and parts used in process-critical applications for the semiconductor industry.
Natural rubber supplier Halcyon Agri Corp has proposed the issuance of guaranteed perpetual securities as its latest fundraising option, rather than the earlier proposed rights issue. In a regulatory filing, the mainboard-listed firm said this move is a “more optimal and equitable” funding option amid current market conditions.
Keppel Corporation, which owns a 40 per cent stake in upstream oil and gas company KrisEnergy, on Sunday said it is prepared to support the final restructuring proposal of the debt-hit firm. In a bourse filing, Keppel Corp said it has evaluated KrisEnergy’s debt workout plan, which it believes is a “deliverable plan”.
Mainboard-listed Wing Tai Holdings reported a net loss of S$16.8 million for the second half ended June 30, down from net profit of S$28.4 million in the year-ago period, in its results release on Friday after market close.
Neo Group is looking to make its foray into property development, investment and management. This will mean expanding its existing core business of providing end-to-end food and catering solutions, the Catalist-listed firm announced on Friday.
Property developer Oxley Holdings recorded a net loss of S$296.3 million for the second half of the financial year ended June 30, on the back of other losses incurred due to the Covid-10 pandemic, in its results release on Friday after the market close.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
TECHNICAL PULSE
Pfizer Inc
Analyst: Chua Wei Ren
Recommended Action: Technical BUY
Pfizer Inc (US: PFE) bullish sentiment remained unchanged as reported on 18th August. Despite the selling on last week, the dojis represent a series of weakening supply and demand. Based on the technicals, we are maintaining our bullish calls.
Slack Technologies
Analyst: Chua Wei Ren
Recommendation: Technical BUY
Slack Technologies (US: WORK) bullish sentiment is still intact despite the stock had a downside reversal in late May 2020. Based on the technical, the stock will continue its bullish rally after a series of correction From June to August.
Kimberly-Clark Corp
Analyst: Chua Wei Ren
Recommendation: Technical BUY
Kimberly-Clark (US: KMB) after its extended wave E of the expanded triangle in March 2020, the stock has been growing despite a long period of correction in April to June period. Based on the technicals, the stock will be resuming its bullish upside once again.
Snap Inc.
Analyst: Chua Wei Ren
Recommendation: Technical BUY
Snap Inc (US: SNAP) since its completion of the complex expanded flat in March 2020, Snap has soared 240% in growth over a span of 4 Months. Despite a correction in July after the appearance of the Head and Shoulder pattern. However, based on the technical and wave analysis, we believe that Snap Inc. will resume its upside momentum again.
Top Glove Corporation Bhd
Analyst: Chua Wei Ren
Recommendation: Technical BUY
Top Glove Corp Bhd (SGX: BVA) has been the darling of the market since COVID-19 hits the world by storm. The exponential growth is set to continue but based on the technicals, the recent momentum indicate a lack of bullish strength at the sky high prices and as such, a slight correction is unavoidable.
>> Read more technical reports
RESEARCH REPORTS
Clearbridge Health Limit – Revenue tripled in 1H20
Recommendation: BUY (Maintained), Last Done: S$0.171
Target Price: S$0.26, Analyst: Phillip Research Team
– 1H20 revenue and EBITDA were within our expectation. 1H20 more than tripled to S$21.4mn and EBITDAR was a positive S$3.6mn. Operating cash-flow was $4.5mn in 1H20, a turnaround from the negative S$3.6mn in 1H19.
– Growth in 1H20 was driven by the acquisition of nine Singapore dental clinics in August 2019 and distribution of Biolidics COVID-19 Antibody Test Kits.
– Maintain BUY with an unchanged target price of S$0.26. We expect a stronger recovery in 2H20 for CBH. Almost all business segments suffered lower patient load in 1H20 due to the lockdown. Only renal care operations in Indonesia (i.e. TMJ) fared better as the daily dialysis treatment is essential for patients. The ability of CBH to widely and rapidly distribute the new test kit across their medical network in SE Asia was a positive surprise and represents a new growth opportunity for future products.
Phillip Securities Research has received monetary compensation for the production of the report from the entity mentioned in the report. The report was previously under the ‘SGX StockFacts Research Programme’ (administered by SGX).
SG Bonds Weekly – Week 35
Credit Analyst: Timothy Ang
– Federal Reserve Chair Jerome Powell unveiled a change in its monetary policy stance to achieve “average” inflation target, effectively signalling a shift towards allowing inflation to run higher and longer periods of low interest rates. This fuelled equity markets further on its historic rally while the US Treasury yield curve steepened on higher inflation expectations.
HK Reports – Read up on our Hong Kong reports here
RESEARCH VIDEOS
Webinar Of The Week
Market Outlook: Market Outlook: (PSR) UOB, DBS, OCBC, Manulife US, Prime US, Koufu, SG Bonds, CDL, APTT, StarHub and more
Date: 17 August 2020
Phillip Research in 3 minutes: #25 – Prime US REIT; Initiation
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