Daily Morning Note – 5 November 2018

WEEKLY MARKET OUTLOOK WEBINAR

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YOUR PHILLIP SUMMARY

Stocks finished lower last Friday, breaking a three-day winning streak, amid reservations over prospects for a near-term resolution to the protracted U.S.-China spat.

The Dow Jones Industrial Average lost 0.4%, S&P500 fell 0.6%, while Nasdaq Composite Index declined 1%. Despite the drop on Friday, both the Dow and the S&P500 are up 2.4% and the Nasdaq advanced 2.7%, for last week.

On the data front, unemployment rate remains flat at 3.7%, while year-over-year wage gains rose to 3.1%, slightly above the consensus estimate of 3%.

Key events to look out for this week include the U.S. mid-term elections on 6 November and the federal policy meeting on 7-8 November.

RESEARCH REPORTS

China Aviation (Singapore) Oil – Under unfavourable market conditions

Recommendation: BUY, Last Done Price: S$1.34

Target Price: S$1.76, Analyst: Chen Guangzhi

– Profit margins improved. Total supply and trading volume dipped

– A moderate decrease in profits from associates due to Pudong’s
underperformance

– Crude oil supply and trading business is under review

Sheng Siong Group – Upfront drag from record store expansion

Recommendation: Accumulate (Maintained), Last Close Price: S$1.05

Target Price: S$1.13, Analyst: Paul Chew

– 3Q18 revenue met expectations but earnings disappointed

– Revenue rose from the record expansion of new stores but same-store sales
has surprisingly turned very sluggish

– Gross margins remain strong but net profit was hurt by a surge in staff costs

– Our FY18e net profit has been lowered by 7% to incorporate a higher operating
cost assumption. We keep our target price unchanged at S$1.13. We believe
this is a near-term dip in margins with a strong recovery expected in FY19.
Maintain ACCUMULATE.

BREAKING NEWS

Trump, Democrats in frenzied final push ahead of US elections. Donald Trump and his Democratic rivals made frenzied, final pushes to motivate their core voters Sunday ahead of contentious midterm elections seen as a referendum on the president’s divisive first two years in office.

DBS Q3 profit up 76% on higher loan income, lower allowances. DBS Group Holdings on Monday reported that third-quarter net profit rose 76 per cent to S$1.41 billion, compared to S$802 million for the same period a year ago, when accelerated allowances had been taken for weak oil and gas support service exposures. Indeed, allowances for credits and other losses also fell 71 per cent to S$236 million, from S$815 million a year ago.

Great Eastern says RM2b contribution to Malaysia’s new health insurance plan among options still being discussed. GREAT Eastern Holdings (GEH) on Monday said that it is in discussions with the Malaysian authorities on possible options to enable its unit, Great Eastern Life Assurance (Malaysia) Berhad (GELM), to satisfy prevailing foreign ownership requirements applicable to insurance companies in Malaysia.

Manulife US Reit DPU up 33.6% to 1.51 US cents for Q3.MANULIFE US Reit (real estate investment trust) reported on Monday morning that its distribution per unit (DPU) for its fiscal third quarter expanded 33.6 per cent to 1.51 US cents from 1.13 US cents in the preceding year. That came as Q3 income available for distribution leapt 64.9 per cent to US$19.3 million from US$11.7 million in the year-ago period.

Source: SGX Masnet, Bloomberg, Reuters, The Business Times, Channel NewsAsia, Phillip Securities Research

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

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