Daily Morning Note – 5 May 2020

PHILLIP SUMMARY

Asian stocks are poised for modest gains, with a few markets closed for holidays, following a late-session advance on Wall Street. Crude oil gained for a fourth consecutive day.

Equity futures were higher in Australia and Hong Kong. Trading is likely to be subdued with markets closed in Japan, China and South Korea. Equities will likely remain under pressure amid simmering U.S.-China tensions and uncertainty over the impact of some American states beginning to re-open. S&P 500 Index futures ticked higher at the open after the benchmark staged a turnaround late in the session to end higher after California sounded a note of optimism in its fight against the virus.

Hong Kong assets will be in focus after the economy contracted 8.9% in the first quarter from a year earlier, its worst quarter ever. West Texas oil extended gains. The dollar strengthened against most major peers.

BREAKING NEWS

Jumbo Group issues profit warning, expecting to report a significantly lower profit after tax year-on-year for H1 FY2020, owing to the impact of Covid-19 across its markets, it warned. In a filing to the Singapore Exchange, it said: “The pandemic had significantly impacted our China’s operations since January, before the Chinese New Year. In order to stop the spread of the Covid-19 virus, the Chinese government began imposing various measures to restrict the movement of people in January 2020. As a result, footfall in malls, and correspondingly, our outlets in China located in those malls, fell significantly.”

Keppel Corp has appointed Evercore Asia (Singapore) as independent financial adviser (IFA) on the partial offer by Temasek Holdings. In a filing to the Singapore Exchange on Monday night, Keppel said: “In view of the scale and diversity of the group’s businesses, the company has decided to appoint the IFA today, even though the pre-conditions have not been satisfied and/or waived by the offeror yet, so as to ensure the IFA would have sufficient time to carry out its review.”

The latest issue of Singapore Savings Bonds (SSB) opened on Monday with the lowest rates the fixed income instrument has ever offered since its launch in 2015. The June edition offers an interest rate of 0.57 per cent for the first year and an average rate of 1.05 per cent per annum over the 10-year holding period. This average rate that an SSB investor will get by staying invested for 10 years pales in comparison to the 1.3 per cent per annum offered by ICBC Singapore for one-year fixed deposits of at least S$500 – the same minimum amount required for SSB.

The four outlet malls under Sasseur Real Estate Investment Trust (Sasseur Reit) in China registered robust first-day sales as its annual SpringSales kicked off last month. The combined first-day sales for the four malls in Chongqing, Bishan, Hefei and Kunming were 47.2 million RMB (S$9.62 million) – up 411 per cent from the first-day reopening sales registered as they re-opened from March 11 following efforts to curb the Covid-19 pandemic.

Local developers’ sentiment has dived, with half of them likely to lower the selling prices of their new launches in the next six months. Real estate sentiment indices hit a record low in Q1 2020 amid the Covid-19 outbreak.

The current sentiment index went down to four in Q1 2020, from 4.4 in Q4 2019; the future sentiment index fell to 3.5 in Q1 2020, from 4.1 in Q4 2019. A score above five indicates improving market conditions, and a score below that, deteriorating conditions. The composite sentiment index, a derived indicator for the overall real estate market sentiments, stood at a historic low of 3.2. The last lowest score was recorded at 3.3 in Q4 2011.

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

TECHNICAL PULSE

Mapletree Logistics Trust

Recommended Action: Technical SELL

Bullish momentum came to an end on 21st February after the counter entered a 5-subwave corrective wave of ‘A’ after the rebound took place on 23rd March 2020.

>> Read more technical reports

RESEARCH REPORTS

CapitaLand Commercial Trust – Attractive valuations for a stable portfolio

Recommendation: ACCUMULATE (Upgraded), Last Done: S$1.54

Target Price: S$1.74, Analyst: Natalie Ong


– 1Q revenue was in line, DPU of 1.65cents came in lower, at 18.3% of FY20e DPU, due to retention of distributable income in prudent anticipation of cashflow disruptions from rental deferment

– Upgrade to ACCUMULATE, TP of $1.74 (prev $2.18). FY20e DPU was cut by 15% from 9.03cents to 7.67cents representing a yield of 5%. Cost of equity was increased from 6.34% to 7.25% – We raise our beta by 13bps to reflect higher market risk and lower our terminal growth assumption from 1.85% to 1.6% to factor in weaker leasing demand.

>> Read more research reports

HK Reports – Read up on our Hong Kong reports here

RESEARCH VIDEOS

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Market Outlook: (PSR) Singapore Exchange Ltd, Micro-Mechanics, Frasers Centrepoint Trust, Keppel DC REIT, SG Banking Note, SG REITs Sector Update, SG Bonds Strategy, Technicals & SG Phillip Weekly

Date: 27 April 2020

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Phillip Research in 3 minutes: #21 – Singapore REITs Sector

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Read the research report(s), available through the link(s) above, for complete information including important disclosures Important Information





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