Daily Morning Note – 31 July 2019

WEEKLY MARKET OUTLOOK WEBINAR

Register HERE for MONDAY’s 11.15am webinar.

Archived webinars available.

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.

Read more technical pulse

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

Market Outlook: : : (PSR) CapitaLand Mall Trust, Frasers Centrepoint Trust, JP Morgan, US Weekly, China Weekly Musings, China Brokerage Sector, Technical Outlook

Date: 29 July 2019

For more on Market Outlook

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.