Daily Morning Note – 6 May 2019


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The yuan plunged the most since August and U.S. index futures tumbled after Trump’s tariff tweets, along with crude oil prices. His comments came after the S&P 500 Index rose the most in a month Friday as data showed the labour market can support growth without sparking inflation.

Dow Jones Industrial Average futures implied an opening decline of more than 450 points Sunday evening stateside. S&P 500 and Nasdaq-100 Index futures also pointed to declines for the two indexes at Monday’s open. China markets reopen after a holiday though Japan remains closed. Futures in Hong Kong and Australia pointed higher. The yen was stronger in early Monday trading, while the Aussie and kiwi both traded lower.


Ascott Residence Trust – A promising start to the year

Recommendation: Buy (Maintained), Last Done: S$1.21

Target Price: S$1.36, Analyst: Natalie Ong

– NPI and DPU in line with our forecast.

– Higher leisure and corporate demand in SG, UK and Philippines.

– Japan and Australia doing well despite strong competition.

– Negative reversions on France master lease reduce the income from “stable”

– Maintain Buy; target price of $1.36 unchanged.

Sembcorp Marine Ltd – A soft start in 2019

Recommendation: NEUTRAL, Last Closing Price: S$1.67

Target Price: S$1.76, Analyst: Chen Guangzhi

– S$175mn worth of new orders secured but the net order book trended down

– Higher net gearing and lower cash levels

– Continue to ride through the cycle

StarHub Limited – Awaiting further clarity on Ensign

Recommendation: NEUTRAL (Maintained), Target Price: S$1.62

Last Done: S$1.58, Analyst: Alvin Chia

– Results were within our expectations.

– The enterprise business continues to alleviate weakness in mobile and pay-tv.

– Cybersecurity business is gaining traction, revenue surged 41% YoY.

– We revised our FY19e EBITDA and NPAT upwards by 1% and 3% respectively
due to the results. Remain NEUTRAL with a higher target price of S$1.62 (prev.

United Overseas Bank Limited – Aggressive pursuit of deposits bites NIM

Recommendation: ACCUMULATE (Downgraded), Last Close Price: S$27.77

Target Price: S$30.90 (previously S$32.00), Analyst: Tin Min Ying

– 1Q19 revenue and PATMI were in line with our estimates, meeting 25% and 24% of our full-year forecasts respectively.

– NIM fell 5bps YoY and 1bps QoQ to 1.79% due to competitive loan repricing conditions and excess deposits gathered. LDR fell to 86.6% (4Q18: 88.2%).

– Robust loans growth of 12.2% YoY was led by a broad-based increase across all territories and industries.

– Trading income and gain from investment securities rose 38.9% YoY and 133.3% YoY, benefitting from a rebound in financial markets.

– Allowances for non-impaired assets rose in tandem with loan growth while asset quality remained resilient with NPL ratio at 1.5% (1Q18: 1.7%).

– Downgrade to ACCUMULATE with a lower target price of S$30.90 (previously S$32.00), due to recent share price movement. The lower target price was derived after raising our operating expense forecasts 5% higher, giving us an FY19e CIR of 44% (previously 42%).


Singapore could follow Hong Kong in handing out virtual banking licenses, according to the head of the largest local lender, in a move that would create another source of competition for the city state’s established banks.

BEST World International’s trading halt has been extended again as the company looks to release its quarterly results. Trading in shares of Best World has been halted since Apr 24, after its stock price tumbled on the back of a shortseller report that probed the accounting behind the skincare product seller’s profits and its sales practices.

US and Chinese officials say a historic deal ending their ongoing trade war could be imminent, but a key question is how can Washington be sure Beijing will live up to its end of the bargain? With up to 100 Chinese officials reportedly expected next week in Washington, with the possibility of unveiling a grand agreement after months of tensions, that question is hanging over the talks.

A surge in junk-rated bonds has made Chinese borrowers more aggressive, with select ones succeeding in cutting their costs for repaying bonds early, a change from standard practice that worries some investors and bankers.

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

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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