Daily Morning Note – 6 Febraury 2021


Stocks looked set for a muted start after climbing to a record high last week, with investors monitoring signs of progress on the coronavirus front and comments from Janet Yellen pushing the U.S. relief bill. Futures pointed to a mixed start for equities in Japan, Hong Kong and Australia. The S&P 500 Index hit an all-time high on Friday, closing up almost 5% on the week and 10-year Treasury yields ended around 1.16%. The Australian dollar edged lower in early Monday trading, with the greenback mixed against G-10 peers.


Mainboard-listed Yoma Strategic Holdings said on Sunday that while political developments in Myanmar “have resulted in intermittent disruption” in some of its businesses, many of its services have resumed operations, including Wave Money, KFC and Kospa.

Real estate developer and manager Frasers Property reported lower revenue per average room (RevPAR) for the first quarter across its hospitality properties globally. In a business update on Friday, it noted that in North Asia, RevPAR declined 24.9 per cent from a year earlier to S$67.4. In Asia-Pacific excluding North Asia, RevPAR fell 43.9 per cent to S$99.

Environmental solutions company Sunpower Group said on Friday that it has won two manufacturing and services contracts worth 390 million yuan (S$80.6 million) from an existing customer in the chemical industry.

Wealth management platform iFast Corporation on Friday reported a net profit of S$6.8 million for the fourth quarter ended Dec 31, 2020 up 127.5 per cent from S$3 million in the year-ago period.

Shares of Thai Beverage (ThaiBev) surged on Friday, rising 2.5 Singapore cents or 3.1 per cent to close at 82 cents, with the counter emerging as the top gainer on the Straits Times Index for the day. ThaiBev’s positive share price momentum follows the beer and liquor giant’s announcement of its plans to spin off and list its brewery unit BeerCo on the Singapore Exchange (SGX) mainboard.

GuocoLand’s half-year net profit has more than halved year-on-year to S$22.9 million, due to lower revenue and higher tax expenses on its project in Shanghai, China.

A Singapore private equity investor is interested in investing in one of mm2 Asia’s core businesses, the mainboard-listed entertainment group said in a Singapore Exchange filing on Sunday, without specifying the business area. mm2 Asia said it has received a non-binding term sheet, expressing interest in a potential acquisition involving taking a minority stake in one of the group’s core businesses.

Catalist-listed CNMC Goldmine Holdings expects to report a net loss for the year ended Dec 31, after a net profit the previous year, as Malaysia’s Covid-19 measures restricted its activities. In a regulatory filing on Saturday night, the company said it recorded lower gold output after having had to stop operations during Malaysia’s Movement Control Order (MCO) from March 18 to May 5.

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


CapitaLand Integrated Commercial Trust

Analyst: Chua Wei Ren

Recommended Action: Technical SELL

CapitaLand Integrated Commercial Trust (SGX: C38U) has reached beyond our target price 1 but fail to reach target price 2 based on our report on 8th December 2020. The reason was that there was an island reversal after prices fails to clear above $2.40. As such the whole wave structure has changed from a triple zig-zag to a 5-wave wedge/triangle formation and based on the technical, the trust will face further downside pressure.

JH Educational Technology Inc

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

JH Educational Technology (HKEX: 1935) technical is showing strong potential upside despite the stock ranging for more than 3 months starting from September 2020.

>> Read more Technical reports


Q & M Dental Group – Record earnings expected

Recommendation: BUY (Initiation), Last Done: S$0.485

Target Price: S$0.70, Analyst: Paul Chew

– 25-year dental-health brand returning to organic growth through 20% annual expansion in clinic network in Singapore and Malaysia and increased patient spending.

– New earnings drivers from laboratory testing and sale of Covid-19 PCR test kits in and beyond Singapore. Record earnings expected from clinic expansion, increased patient spend and new PCR test kit operations.

– Initiate coverage with BUY and target price of S$0.70. Healthcare service sector valuations can rise to almost 40x PE. Historical normalised PE for Q & M averages 38x, with a low of 26x. We peg Q & M at 20x FY21e PE for its core business. This gives us S$0.67. Another 3 cents has been added from the market value of Aoxin. Our TP implies a 50% discount to historical and industry PEs. We see opportunities for a narrowing of the discount if the company executes on expansion and new virus test kits take off as planned.

UG Healthcare Corporation Ltd – Another blockbuster quarter

Recommendation: BUY (Maintained), Last Done: S$0.79

Target Price: S$1.03, Analyst: Paul Chew

– 1H21 PATMI jumped 64x YoY to S$54.9mn as revenue tripled to S$159mn, beating our forecast by 22%.

– Gross margins leapt from 18% to 62% YoY as selling prices rose more than 1.5x to S$117 per 1,000 pieces. UG sells both nitrile and latex gloves.

– Maintain BUY. We raise FY21e PATMI by 28% to S$107.8mn to account for higher glove selling prices and margins. Our target price remains pegged at a 30% PE discount to the Big 4 glove makers’ FY22e valuations. As rubber glove valuations have compressed to around 10x PE, our target PE for FY22e drops from 14x to 7x. This lowers our TP from S$1.35 to S$1.03.

Micro-Mechanics (Holdings) Ltd -Outlook healthy but valuations stretched

Recommendation: NEUTRAL (Downgraded), Last Done: S$3.58

Target Price: S$3.35, Analyst: Paul Chew

– 2Q21 revenue and net profit in line, at 25%/23% of our forecasts. Revenue rose 13% YoY to a record S$18.7mn. PATMI jumped 34% YoY to S$4.8mn. Interim dividend raised by 20%.

– Outlook remains positive. Barriers to entry continue to rise as semiconductor wafer geometries shrink to below 10 nanometers. Customers are requiring MMH to prepare for a ramp on the back of an onslaught of new electronics applications.

– Our FY21e earnings are unchanged. Recent rally has lifted comparable back-end equipment makers’ valuations to 21x PE. We raise our TP to S$3.35 from S$2.93 as we increase FY21e ex-cash PE from 18x to 21x, in line with peers. As positives have been priced in, downgrade from ACCUMULATE to NEUTRAL.

Ascendas REIT – Hungry for growth

Recommendation: BUY (Maintained), Last Done: S$3.12

Target Price: S$3.73, Analyst: Natalie Ong

– FY20 DPU of 14.69 Scts (-0.9% YoY) came in below, at 91% of our estimate post-adjustment of our DPUs for its S$1.2bn equity fund-raising (EFR) in 4Q20.

– Portfolio occupancy stable at 91.7%. FY20 reversions in the green at 3.8%.

– Completed S$973mn of acquisitions, S$125mn of divestments and S$34mn of AEI in FY20.

– Reiterate BUY. Lower FY21/22e DPUs by 8.8/0.2% but raise DDM (COE: 6%) TP to S$3.73 from S$3.61 to incorporate recent acquisitions, an enlarged share base following fund-raising and updated leasing assumptions. TP climbs due to higher later-period DPUs and terminal value.

BHG Retail REIT – Harnessing the mighty Chinese consumer


Last Done: S$0.565; Analyst: Vivian Ye

– Retail sales in the five cities where BHG REIT operates – Beijing, Chengdu, Hefei, Dalian, Xining – grew by a 8.3% CAGR in the past decade, reaching RMB3,080bn in 2020.

– Substantial M&A ROFR pipeline from sponsor that could expand its portfolio by 3.2x.

>> Read more research reports

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Date: 2 February 2021

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