Daily Morning Note – 6 May 2021

PHILLIP SUMMARY

Asia stocks are set for a muted open after technology shares weighed on U.S. markets, offsetting optimism over solid corporate earnings and economic reports. Treasuries climbed. Futures were little changed in Australia and Hong Kong. Trading resumes in Japan and China after holidays. U.S. futures edged lower after the S&P 500 notched a small gain while the Nasdaq 100 ended in the red. The Dow Jones Industrial Average rose to a fresh record. Oil slipped toward $65 a barrel. The dollar was little changed. The U.S. Treasury said it will sell $126 billion of long-term debt next week in its quarterly refunding auctions. It’s the first time in more than a year that the total hasn’t increased, suggesting that the government’s financing needs may have peaked. Treasuries rallied over the session, with the benchmark 10-year yield slipping to 1.57%.


BREAKING NEWS

SG News

UOB on Thursday posted an 18 per cent rise in net profit for the first quarter that beat estimates, with the rebound driven by record fee income and smaller impairment charges. Net profit for the first three months ended March 31, 2021 stood at S$1.01 billion, compared with S$855 million in the year-ago period.

Mainboard-listed precision engineering firm UMS Holdings has reaffirmed its offer price for Catalist-listed JEP Holdings, despite a boo-boo in the original offer document. UOB Kay Hian (UOBKH), acting on behalf of UMS, said in a Wednesday update that the April 21 announcement should have listed the offeror’s dealings for the six months before the offer – and not just three months, as initially stated.

Sabana Shari’ah Compliant Reit (Sabana Reit) has lost its head of investment and asset management, less than two years after she took office. Siow Meow Cheng, 49, has resigned and will leave on June 12, said a bourse filing from the manager on Wednesday.

Mainboard-listed steel-reinforcement solutions provider BRC Asia net profit fell 15 per cent to S$19.2 million for the half-year ended March 31, 2021, due to lower operating profit margins. Revenue was up 7 per cent to S$492.7 million due to the S$38.4 million gain from the sale of a development property at Nassim Road as well as higher selling prices uplifted by increases in steel prices.

Dairy Farm International‘s overall business performance for the first quarter of this year continues to be “significantly affected” by the Covid-19 pandemic, said the group in a bourse filing on Wednesday. With buying behaviours normalising from the relative high sales base in 2020, the group’s like-for-like sales for its grocery retail businesses had dipped in the first quarter compared with the corresponding period last year. Profitability for the division also took a hit as a result of lower sales.


US News

Uber beat estimates on the top line and dramatically improved its net losses in its first quarter but missed on revenue. Shares initially gained in after-hours trading before dipping more than 4.5%. Overall, Uber’s net loss was $108 million, a tremendous improvement from a $968 million loss in its fourth quarter of 2020. But that was largely due to a $1.6 billion gain from the sale of its self-driving unit, ATG. Uber’s operating loss was still high for the quarter at more than $1.5 billion.

PayPal shares rose as much as 5.5% in extended trading on Wednesday after reporting first-quarter earnings that were stronger than analysts had expected. Revenue grew 31% year over year in the quarter that ended Mar. 31, according to a statement. In the year-ago quarter, the pandemic fomented a surge in online shopping, helping to drive record payment volume for the quarter and the full year. On the company’s earnings call, CEO Dan Schulman pointed to cryptocurrency as a key growth engine for the company.

Etsy stock dropped more than 9% in after-hours trading on Wednesday after the company reported first-quarter earnings results that surpassed analysts’ estimates, but warned that it expects the total sale of goods on its platform to slow in the second quarter as it faces tough comparisons to last year’s pandemic-boosted results.

General Motors on Wednesday reported first-quarter results that blew away Wall Street earnings expectations, saying it expects a strong first half of the year despite the global semiconductor chip shortage that has caused factory closures.

Stellantis, the world’s fourth largest carmaker, expects a bigger impact on production this quarter from a global shortage of semiconductors than in the first three months of the year, it said on Wednesday. The group, formed at the start of the year from the merger of Italian-American Fiat Chrysler and France’s PSA, said its first quarter revenues rose 14% to 37 billion euros ($44.5 billion) on a pro-forma basis, reflecting robust consumer demand and stronger sales of higher-price vehicles.



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

TECHNICAL REPORTS

Bank of Communication Co Ltd

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

Bank of Communication Co Ltd (HKEX: 3328) technical is set to rally in the short-term

Buy stop: 5.10 Stop loss: 4.75 Take profit 1: 5.80 Take profit 2: 6.00


China Merchants Bank Co Ltd

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

China Merchants Bank (HKEX: 3968) is looking to break the curse of ranging after consolidating for 3 months

Buy stop: 64.70 Stop loss: 60.75 Take profit 1: 70.32 Take profit 2: 78.94


China Railway Group Ltd

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

China Railway Group Ltd (HKEX: 390) technical is set to rally in the short-term, breaking the curse of the downtrend

Buy stop: 4.30 Stop loss: 3.75 Take profit 1: 4.62 Take profit 2: 4.93


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