AFTER a week of highs and lows, the Singapore stock market ended on a slightly more upbeat note on Friday (June 3). Stock markets around the world faced a tumultuous week as traders struggled with the usual suspects – inflation, interest rates and the ongoing Ukraine conflict, as well as news about the oil market. On Thursday, the Opec+ meeting saw the countries agree to hike output in July and August by a larger-than-expected amount. The commodity has been on a tear since Russia’s invasion of Ukraine. Singapore’s benchmark Straits Times Index inched up 0.2 per cent or 5.25 points on Friday to close at 3,231.97. Daily turnover stood at about 1.5 billion securities worth a total of S$792.2 million. Advancers outpaced decliners 197 to 152.
US equities retreated again Friday (Jun 3), closing another week in the red after a brief positive respite last week, amid the ever-present concerns about inflation and a potential recession. The Dow Jones Industrial Average lost one percent to finish the session at 32,898.91. The broad-based S&P 500 dropped 1.6 per cent to 32,898.91, while the tech-rich Nasdaq Composite Index sank 2.5 per cent to 12,012.73. The Dow and S&P were each down about 1 per cent for the week, while the Nasdaq lost 1.3 per cent.
Between May 27 and Jun 1, Olam Group executive director, co-founder and group CEO Sunny Verghese acquired 1.5 million shares of the company at an average price of S$1.51 per share. With a consideration of S$2,269,300, this increased his direct interest in the group from 4.26 per cent to 4.29 per cent. Verghese noted in April that in 2021, the group had a banner year despite the continued impacts from Covid-19 and the adverse macro-economic and geopolitical environment, with its strongest reported and operational PATMI since it was founded. For 2021, the group reported that its PATMI grew by 179 per cent to S$686 million while operational PATMI grew by 42 per cent to S$961 million. Despite global geopolitical and economic challenges, Olam Group also reported its Q1 2022 Ebitda increased 54 per cent over last year.
Banking-related phishing scams are on the rise again, with bank staff impersonation calls or unsolicited SMSes claiming at least 28 victims who collectively lost S$114,000 since the start of May, the Singapore Police Force (SPF) said in a statement on Sunday (Jun 5). The update came just as the Monetary Authority of Singapore (MAS) and Association of Banks in Singapore (ABS) last Thursday announced more measures for banks to safeguard their customers from digital banking scams, on top of those relayed on Jan 19. The latest measures, which are slated to take full effect by Oct 31, would require banks to roll out additional customer confirmations to process significant changes to customer accounts and other high-risk transactions identified through fraud surveillance. Default transaction limit for online funds transfers would also have to be set at S$5,000 or lower. Banks are also expected to provide an emergency self-service “kill switch” for customers to suspend their accounts quickly if they suspect their bank accounts have been compromised.
Major cities in China have started re-opening and easing measures as the number of infections across China dropped. The city of Shanghai finally re-opened on Jun 1 while some districts of Beijing are allowed to return to work. Businesses are hopeful that the easing of measures will be a step towards gradual normalisation and have a positive impact on operations. CapitaLand China Trust (CLCT) reported 24 per cent year-on-year growth in gross revenue for Q1 2022, which in turn contributed to the 30.4 per cent growth in net property income (NPI). CLCT noted that, for its retail portfolio, January to February shopper traffic and sales increased year on year until the recent Covid-19 wave in March. All business parks remained open during the quarter and operations were not impacted. However, in line with Shanghai lockdown measures, activities at the Shanghai Fengxian and Kunshan Bacheng Logistics Parks have paused. The trust expects its logistics portfolio to be largely resilient.
Tesla chief executive Elon Musk said on Saturday (Jun 4) that the electric vehicle maker’s total headcount will increase over the next 12 months, but the number of salaried staff should be little changed, backtracking from an email just 2 days ago saying that job cuts of 10 per cent were needed. “Total headcount will increase, but salaried should be fairly flat,” Musk tweeted in a reply to an unverified Twitter account that made a “prediction” that Tesla’s headcount would increase over the next 12 months. Musk in an email to Tesla executives last Thursday, which was seen by Reuters on Friday, said he has a “super bad feeling” about the US economy and needed to cut jobs by about 10 per cent. In another email to employees on Friday, Musk said Tesla would reduce salaried headcount by 10 per cent, as it has become “overstaffed in many areas”. But “hourly headcount will increase”, he said. Tesla’s shares sank 9.2 per cent on Friday on the news.
Software makers that have been battered amid this year’s stock slump were dealt another blow last week when Microsoft Corp warned of even more headwinds coming down the pike. The world’s largest software maker cut its profit forecast for the current quarter on Thursday (Jun 2) and blamed the surging US dollar for an upcoming drag on its earnings to the tune of US$460 million. The company’s rare mid-season revision took markets by surprise and briefly sent futures on the S&P 500 Index tumbling. Microsoft and other large US software makers such as Oracle Corp and Adobe, have complex global operations and higher exposure to foreign currencies. The US Dollar Index has risen more than 7 per cent off a January low, and last month hit its highest in 2 decades. The more expensive dollar is bound to add to pressures already threatening the companies’ margins such as higher costs.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
Silverlake Axis Ltd – New cloud driver and recovery in bank spending
Recommendation: Buy (Initiation), Last done: S$0.32
TP: S$0.38, Analyst: Glenn Thum
– New growth driver from MOBIUS cloud-based banking software. Banking customers can deploy MOBIUS to launch new digital loan and deposit products in a more rapid and targeted manner. Almost RM100mn of orders is expected.
– Silverlake’s recurring maintenance revenue contributed to 72% of FY21 revenue and managed to expand at a CAGR of 4% despite the pandemic.
– Initiate coverage on Silverlake Axis Ltd with a BUY rating and a target price of S$0.38. Our target price is pegged to 20x P/E FY22e. We expect MOBIUS and the recovery in bank IT spending after two cautious pandemic years as key growth drivers for the company. In March 2022, Silverlake initiated an equal access offer at S$0.33 each.
Hyphens Pharma International – Digital healthcare catalyst emerges
Recommendation: Accumulate (Maintained); TP S$0.43 Last close: S$0.295;
Analyst Paul Chew
– Raised $6mn for a 10% stake in Hyphens Pharma digital assets – DocMed Technology.
POEMS Podcast: Let the Money Talk
– DocMed Technology owns POM (B2B digital hypermart) and WellAway (Singapore’s first and only HSA registered e-pharmacy).
– We raised FY22e earnings by 40% to S$9.2mn to incorporate earnings from the acquisition of Novem. Our DCF target price is raised from S$0.345 to S$0.43 due to higher earnings. WACC is increased from 7.3% to 9% from raising our risk-free rate assumption. We upgrade our recommendation from ACCUMULATE to BUY. Hyphens underlying growth strategy is to be a leading portfolio of proprietary skin health products and brands across Asia. Digital healthcare is a new growth and stock catalyst. We have not incorporated the new valuation of DocMed into our target price. We view the transaction as a funding event rather than crystallisation or monetization of Hyphens digital assets. The proceeds have the potential to enhance the B2B platform with more doctors, pharmaceutical companies, transactions and new sources of revenue. Such milestones could drive further rounds of financing and higher valuations.
Money Never Sleeps – Ep 10
Money Never Sleeps – Ep 9
SGX Company Insights Ep 51 – Keppel DC REIT
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