Daily Morning Note – 6 August 2021
Dear valued client,
Dear Investors, with effect from 9 August 2021, Stocksbnb WhatsApp will be migrating to Telegram: POEMS StocksBNB. POEMS StocksBNB telegram channel will be hosted by Phillip Securities Research, providing you with unbiased reports based on various methodology to the best of our abilities.
Join our Telegram: https://bit.ly/3iP1s6T
Disclaimer: Reports do not constitute, and should not be used as a substitute for, tax, legal or investment advice. This report should not be relied upon exclusively or as authoritative, without further being subject to the recipient’s own independent verification and exercise of judgment. Read full disclaimer here: https://bit.ly/2Wi2Ze6
The Nasdaq and S&P 500 closed at record levels on Thursday after a spate of strong corporate earnings and a further decline in US unemployment claims last week, as investors weighed concerns of the surge of the Delta variant ahead of Friday’s job’s report. Initial claims for state unemployment benefits fell by 14,000 to 385,000 in the week ended July 31, while layoffs dropped to their lowest level in more than 21 years last month as companies held on to their workers amid a labour shortage, the Labor Department’s report showed. Nine of the 11 major S&P 500 sector indices rose, with healthcare stocks in the red as Cigna slipped 10.9 per cent after predicting a bigger hit to full-year earnings from the pandemic. The focus will now shift to the jobs report for July today.
Singapore banks are on the watch for signs of asset quality deterioration in Asean, given fresh lockdowns and resurging Covid-19 cases in the region, but strong capital levels and ample provisions should be more than enough to help them tide through, analysts have said. This comes as the trio of banks ride the wave of global economic recovery, reporting strong double-digit growth in second-quarter net profits that beat street estimates, on the backs of lower allowances for bad loans and higher wealth management fee income. In the second quarter, DBS’ net profit jumped 37 per cent to S$1.7 billion; OCBC’s net profit soared 59 per cent to S$1.16 billion, and UOB’s net profit surged 43 per cent to S$1 billion.
Yangzijiang Shipbuilding posted a net profit of 1.6 billion yuan (S$339.6 million) in the first half, up 39 per cent from the same period the year before, despite a drop in vessel sales and trading revenue. Revenue in the six months ended June 30 fell 20 per cent to 6.6 billion yuan. Core shipbuilding generated revenue of 4.8 billion yuan, down from 5.3 billion yuan in 2020, as 23 vessels were delivered instead of 28.
Things are looking up at Chip Eng Seng. The property player is back in the black with a S$99,000 net profit for the half-year ended June, a turnaround from its year-ago loss of S$24.4 million. Chip Eng Seng posted a H1 revenue of S$622.4 million, more than double the previous year’s H1 topline of S$290 million. This was due to the low base in H1, when most construction activities ceased during the circuit breaker. The construction segment recorded the biggest revenue jump of 182.2 per cent to S$164.6 million, on the back of several projects, as well as new revenue contribution from CES_Salcon, which was acquired last December.
Koh Brothers Group posted a net profit of S$2 million for the six months ended June 30, reversing from a net loss of S$17.8 million in the preceding year, on the construction industry’s road to recovery. This came on the back of a 35 per cent hike in revenue to S$141.0 million, up from S$104.1 million in 2020, thanks to a pick-up in business activity for its construction and building materials division. However, the share of profit from associated companies and joint ventures declined 63 per cent to S$1.5 million in the first-half, on lower contribution from a property development project in South Korea. The project was completed in the second half of 2020.
Enviro Healthcare, a wholly-owned unit of Enviro-Hub Holdings, has entered a sale-and-purchase agreement for its planned acquisition of the remaining 75 per cent stake in an associate, Pastel Glove, for S$46.8 million. The mainboard-listed company previously disclosed on May 21 that it would pay S$23.4 million in cash for Pastel Glove, and issue 292,500,000 new shares at S$0.08 apiece. There will be a one-year moratorium for the shares. In a Thursday bourse filing, Enviro-Hub said that it will finance the consideration and other fees with internal funds and revenue. As of end-2020, it had a cash balance of S$17.3 million. The company said that the proposed deal would not adversely affect operations.
Shares of Robinhood Markets tumbled on Thursday, snapping a four-day winning streak, after the newly public online brokerage said early investors may sell nearly 98 million shares. Robinhood’s shares finished down 27.6 per cent at US$50.97 a day after they jumped more than 50 per cent. The company went public on July 29 at US$38, with its shares initially falling below the public offering price before galloping higher.
A surge in imports of industrial supplies drove the US trade deficit to a record in June, according to government data released on Thursday, a sign that global supply chains may be coming back online after the pandemic disruptions. The trade gap widened by US$4.6 billion to US$75.7 billion, a nearly 7 per cent increase compared to May, the Commerce Department reported. That was higher than analysts had expected and beat the previous all-time high set that month. Imports of goods and services jumped US$6 billion, most of which was accounted for by the rise in industrial materials and supplies such as iron, steel and chemicals, as well as a US$1.2 billion increase in non-monetary gold.
The number of Americans filing new claims for unemployment benefits declined further last week, while layoffs dropped to their lowest level in just more than 21 years in July as companies held on to their workers amid a labour shortage. Initial claims for state unemployment benefits fell 14,000 to a seasonally adjusted 385,000 for the week ended July 31, the Labor Department said on Thursday. Economists polled by Reuters had forecast 384,000 applications for the latest week. Claims largely moved sideways in July, with economists blaming California, which they said was stepping up efforts to clear its backlog of applications. That has helped to keep claims above their pre-pandemic level of 256,000, though they have dropped from a record 6.149 million in early April 2020.
Detroit’s Big Three automakers plan to announce on Thursday that they aspire to have 40 percent to 50 percent of new vehicle sales by 2030 be electric models as they call for billions in US government assistance to meet aggressive targets, sources briefed on the matter said. The White House is planning an event on electric vehicles and fuel economy standards with President Joe Biden and chief executives from General Motors, Ford Motor and Chrysler parent Stellantis NV.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
DBS Group Holdings – Emerging stronger
Recommendation: ACCUMULATE (Maintained), Last Done: S$30.80
Target price: S$32.00, Analyst: Terence Chua
– 2Q21 earnings 10.7% above our 2Q21e forecast. The outperformance came from net fee income and S$85mn reversal in GPs.
– Asset quality stable, resulting in further GP write-backs of S$85mn. Management lowered full-year total allowances to under S$0.5bn (1H21 allowances at S$89mn). FY21 credit cost likely to be under 20bps.
– Broad based loan growth of 3% in 2Q21 and 6% in 1H21.
– NIMs retreated 4bps QoQ to 145bps. Full year guidance now at lower-end of guidance.
– Maintain ACCUMULATE with higher GGM TP of S$32.00, from S$31.40. We raise FY21e earnings by 6.7% as we lower our allowances. We now assume 1.39x FY21e P/BV in our GGM valuation, up from 1.36x, as we raise ROE modestly to 10.6%. Catalysts expected from declaration of special dividend.
HK Reports – Read up on our Hong Kong reports here
Webinar Of The Week
Weekly Market Outlook: Keppel, Ascott, CapitaLand, Raffles, Sheng Siong, Far East Hospitality…..
Date: 02 Aug 2021
Updates summarised in 3 minutes
The Highlights EP01: LHN Limited – Optimisier of real-estate trends
|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 揳s 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.|