Daily Morning Note – 4 March 2019
WEEKLY MARKET OUTLOOK WEBINAR
Register HERE for MONDAY’s 11.15am webinar.
Archived webinars available.
YOUR PHILLIP SUMMARY
Most or all U.S. tariffs on China are likely to be lifted as part of a trade deal between the world’s two-largest economies now in its final stages, said two people familiar with the discussions. Beijing made clear in a series of recent negotiations with the U.S. that removing the tariffs on $200 billion of Chinese goods from day one was necessary to finalize any deal, said the people, who weren’t authorized to talk publicly about the deliberations. China is offering to lower tariffs on U.S. farm, chemical, auto and other products, the Wall Street Journal reported earlier, citing people familiar.
The inflation outlook is looking dismal for the Bank of Japan as cheaper oil and falling mobile phone charges threaten to push price growth toward zero by mid-summer. The Bloomberg Inflation Barometer, which draws on eight drivers of prices, points to a sharp slowing in the months ahead as lower oil costs feed their way into electricity bills. Over the past eight years the barometer has shown a 0.84 correlation with consumer prices six months into the future. Mobile phone carriers could complicate the BOJ’s quest to revive inflation as they come under political pressure to lower charges further.
China Sunsine Chemical Holdings Ltd – Focus on volume growth
Recommendation: BUY, Last Closing Price: S$1.26
Target Price: S$1.55, Analyst: Chen Guangzhi
– Expect 50% and 28% jump in IS and TBBS sales volume in FY19 but ASP to slip.
– The 5.5 SG cents annual dividend represents a 4.3% yield.
– Valuations are still attractive at 6x PE (with 1/3 of the market cap in cash).
EC World REIT – Optimistic about the outlook
Recommendation: BUY (Maintained), Last Closing Price: S$0.760
Target Price: $0.85 (previous TP $0.82) Analyst: Phillip Research Team
– NPI and DPU were in line with our forecast. 5.3% and 5.6% YoY boost in gross revenue and
NPI, respectively, driven by the acquisitions of Wuhan Meiluote in 2Q17.
– Wuhan asset performing well after acquisition; slow rap-up of occupancy at Beigang.
– Early renewal of master lease on favourable terms, pending shareholder vote at an EGM to
– Maintain Buy with higher TP of S$0.85 (prev. S$0.82).
Sheng Siong Group – New stores will support growth
Recommendation: ACCUMULATE (Maintained), Last Closing Price: S$1.08
Target Price: $1.30 (previous TP $1.13) Analyst: Paul Chew
– 4Q18 revenue and earnings met our expectations. Headline PATMI in 4Q18 was hurt by a
S$2.3mn decline in government grants.
– Gross margin is stellar but some revenue drag from contraction in same-store sales
– Expect strong revenue momentum following the 23% jump in retail space in FY18
– We have kept our forecast unchanged. As we roll-over our target price to FY19e valuation, we
raised our target price to S$1.30 (previously S$1.13) or 25x PE. Maintain ACCUMULATE.
Singapore Banking Monthly – Mortgage growth at a 17-year low
Recommendation: Overweight (Maintained); Analyst: Tin Min Ying
– January’s domestic loan growth remained flat at 3.16% YoY, held up by building and
construction loan while mortgage growth was the slowest in seventeen years.
– January’s domestic deposits rose 4.8% YoY, boosted by fixed deposit growth of 15.1% YoY,
the fastest in eleven years.
– February’s 3-month SIBOR is still rising. It is now 1.953%, surpassing last month’s 11 yearhigh.
– Hong Kong’s January loan growth remained flat at 3.1% YoY.
– Maintain OVERWEIGHT for the Singapore Banking Sector.
First Sponsor plans to buy Concord Focus Development, which owns three land parcels in China’s Guangdong province totalling 36,405 square metres (sq m), for 738 million yuan (S$148.9 million).First Sponsor said that the property has land use rights with expiry dates of Jan 31, 2088 for residential use and Jan 31, 2058 for commercial use.
Hyflux has taken a S$916 million impairment for the nine months ended Sept 30, to adjust for a fall in carrying value of the Tuaspring water and power plant and other write-downs. This figure was released on Saturday, after Hyflux submitted its latest statement of financial position to the High Court.
Indonesia and Australia are set to ink a long-awaited trade deal on Monday, after months of diplomatic tension over Canberra’s contentious plan to move its embassy to Jerusalem. The pact will include improved access for Australian cattle and sheep farmers to Indonesia’s 260 million people, while Australian universities, health providers and miners will also benefit from easier entry to South-east Asia’s biggest economy.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research
|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.|
|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.|