Daily Morning Note – 31 July 2019
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PHILLIP SUMMARY
Stocks fell on Tuesday after President Donald Trump renewed his attacks on China, decreasing hope the two largest world economies will reach a trade deal. Investors also braced for a key announcement on U.S. monetary policy.
The Dow Jones Industrial Average closed 23.33 points lower, or 0.1% at 27,198.02 after dropping as much as 151.49 points. The S&P 500 slipped 0.3% to 3,013.18. The Nasdaq Composite dipped 0.2% to 8,273.61.
BREAKING NEWS
Aspion’s ex-directors countersue Top Glove over RM1.37b deal, breach of employment. Two individuals whom Malaysia’s Top Glove Corp has accused of a conspiracy to defraud the firm over its RM1.37 billion (S$455 million) buyout of Aspion last year have filed counter suits in Malaysia.
Sembcorp Marine’s warning that 2019 will be another loss-making year sent its shares tumbling by almost 5 per cent on Tuesday. The profit guidance also marked a reversal from president and CEO Wong Weng Sun’s comments last year that 2019 could be the year when the shipbuilder and engineering group finally turned around.
ARA H-Trust’s maiden DPS beats forecast. Lower property expenses and borrowing costs outweighed softer gross revenue at ARA US Hospitality Trust. The hospitality trust’s maiden reporting showed that between May 9 and June 30, its distribution per stapled security was 1.36 US cents.
Developer Tee Land – which sank deeper into the red in its latest fiscal year – sold apartments at upmarket The Peak@Cairnhill at a loss, as a tough market has made shifting units tougher. Net loss widened to S$23.8 million
CDL Hospitality Trusts on Tuesday posted a 3.3 per cent fall in its total distribution per stapled security to 2.07 Singapore cents for the second quarter, down from 2.14 cents in the same period last year.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
TECHNICAL PULSE
American Express Co
Recommended Action: Technical BUY
American Express’s strong bullish rise is almost a straight run up to 129.34 without any deep correction in between. Based on the technicals, the stock is likely to make newer high beyond 130.00 psychological resistance level.
RESEARCH REPORTS
DBS Group Holdings Ltd – Last NIM Rally
Recommendation: ACCUMULATE (Maintained), Last Done price: S$26.6
Target Price: S$27.6, Analyst: Tin Min Ying
– 2Q19 Revenue and PATMI grew 15.8% YoY and 20.2% YoY respectively. Exceeding our estimates by 4-5%.
– Stronger than expected 2Q19 NIM of 1.91%. NIM expanded 6bps YoY and 3bps QoQ as loans were repriced with higher interest rates in Singapore and Hong Kong.
– Loans growth slowed to 3.7% YoY, with an increase in non-trade corporate loans offset by the continued decline in housing loan growth.
– Declared a quarterly dividend of 30 cents per share. We forecast 2019 dividend of $1.20/share.
– Maintain ACCUMULATE at a lower target price of S$27.60. Our TP is based on target price-to-book of 1.4x, derived from the Gordon Growth model (long term ROE assumption: 12.5%, COE: 9.3% (Beta: 1.2x), Growth: 2.0%). We toned down terminal growth from 2.5% to 2.0%.
Raffles Medical Group Ltd – China’s gestation costs within expectations
Recommendation: NEUTRAL (Maintained), Last Done price: S$1.04
Target Price: S$1.09, Analyst: Tin Min Ying
– 2Q Revenue and PATMI were in line with our estimates.
– PATMI plunged 16.3% YoY due to gestation costs from RafflesHospital Chongqing. Excluding China net earnings would have risen 9.3% YoY.
– RafflesHospital Chongqing’s 2Q EBITDA loss of $2.3mn was within expectations.
– Interim ordinary dividend maintained at 0.5 Singapore cents per ordinary share.
– We keep our NEUTRAL recommendation with an unchanged TP of S$1.09. Earnings will be under pressure from the gestations costs for RafflesHospital Chongqing in 2019 and RafflesHospital Shanghai in 2020.
Webinar Of The Week
Date: 29 July 2019
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