DAILY MORNING NOTE | 5 July 2024

Trades Initiated in Past Week

Sinagpore stocks rose on Thursday (Jul 4), tracking gains by regional indices. Stocks rose 0.7 per cent or 24.37 points to 3,439.88. Across the broader market, gainers outweighed losers 360 to 214, after 1.4 billion securities worth S$1.3 billion changed hands.

Top gainers & losers

Events Of The Week

SG

The cut-off yield on the latest Singapore six-month Treasury bill (T-bill) fell to 3.7 per cent, according to auction results released by the Monetary Authority of Singapore on Thursday (Jul 4). This is down from the 3.74 per cent offered in the previous six-month auction, which closed on Jun 20. Demand rose slightly in the latest tranche. The auction received a total of S$15.6 billion in applications for the S$6.5 billion on offer, representing a bid-to-cover ratio of 2.4.

Shares of Yoma Strategic advanced steadily to reach its highest level in the year amid heavier-than-usual trading activity on Thursday (Jul 4) morning. As at 9.30 am, the Myanmar-focused conglomerate rose S$0.015 or 9.6 per cent to S$0.172 with 43.2 million securities transacted. The last time it traded at such levels was April 2022. Shares of Yoma later fell to S$0.156 as at 3.04 pm, down S$0.001 or 0.6 per cent.

Singapore Telecommunications (Singtel) and the National Trades Union Congress (NTUC) have signed a memorandum of understanding (MOU) to provide better connectivity to NTUC’s 1.3 million members, especially youths and professionals, managers and executives (PMEs).The five-year partnership will see Singtel investing over $5 million to provide free or subsidised connectivity to some 6,000 NTUC members who are retrenched and from lower-income families, as well as digital literacy training to help members be better prepared against scams. All NTUC members will enjoy exclusive offers and discounts across Singtel’s suite of consumer products, including mobile, broadband and TV.

Frasers Hospitality, a business unit of SGX-listed Frasers Property , says it aims to add 20 new properties to its portfolio over the next four years. This includes the nine properties that the unit already plans to open in the next two years across China and Vietnam. In its July 4 release, Frasers Hospitality said it is looking to fortify its international expansion by working with capital partners and third-party hotel operators within its extended stay segment.

US

Oil prices for Brent crude hit their highest level since April on Thursday, holding above US$87 after data the previous day showed a decline in US inventories. Brent crude futures were up 21 cents, or 0.2 per cent, at US$87.55 a barrel by 1922 GMT. US West Texas Intermediate (WTI) crude futures were up 18 cents at US$84.06 in trade thinned by the US Independence Day holiday. In the previous session, Brent gained 1.3 per cent to settle at US$87.34 for its highest close since April 30. WTI, meanwhile, had settled at an 11-week high of US$83.88.

US streaming service giants are asking a Canadian court to block Prime Minister Justin Trudeau’s new 5 per cent tax on their revenues in the country, which is supposed to help fund local news. The Motion Picture Association-Canada – which represents studios including Netflix, Paramount Global and Walt Disney – want the Federal Court of Appeal to quash new obligations forcing foreign streaming platforms to contribute to local media funds as part of the Online Streaming Act.

The pound and the euro gained against the US dollar, after weak US economic data sent the greenback lower on Wednesday (Jul 4) and as voting began in Britain and the French election neared. Sterling was last at US$1.2757, up 0.1 per cent, on Thursday after gaining 0.46 per cent the previous day and touching a three-week high, while the euro was at US$1.0801, up 0.1 per cent after a gain of 0.4 per cent on Wednesday and reaching a three-week top. The pound is now up on the year against the dollar, making it the best performing G10 currency in 2024. The dollar fell on softer-than-expected US economic data on Wednesday, including a weak services report and ADP employment report, depicting a slowing economy, after a rise in initial applications for unemployment benefits last week.

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

RESEARCH REPORTS

First REIT – Forging ahead post-restructuring

Recommendation: Buy (Initiation), Last Done: S$0.25

Target price: S$0.30, Analyst: Darren Chan

• Indonesian hospital assets enjoy a long WALE of 11 years with a minimum annual rental escalation of 4.5% or a performance-based rent. FY23 rental income from Indonesia grew 7.6% in local terms, due to strong hospital revenue and performance rents.
• Capitalising on Japan’s aging population by expanding into Japan in 1Q22 by acquiring 12 nursing homes from its sponsor OUEH and a further 2 in 3Q22 from a third party. Targeting to increase the portfolio in developed markets to more than 50% of AUM by 2027, while simultaneously reducing exposure to Indonesia as a percentage of total income.
• First REIT is trading at an attractive 20% discount to NAV and a forward FY24e distribution yield of 9.6%. We initiate coverage with a BUY recommendation on First REIT with a DDM-derived target price of S$0.30.

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