Daily Morning Note – 7 June 2021

PHILLIP SUMMARY

Asian stocks look set to rise on Monday after U.S. peers climbed toward a record, bolstered by American jobs report that eased some fears about economic growth running too hot and stoking troublesome inflation. Futures pointed higher in Japan and Hong Kong and were steady in Australia. The S&P 500 closed up Friday and the dollar fell with Treasury yields, after a report showed U.S. job growth picked up in May but missed estimates. The greenback was steady in early trading.


BREAKING NEWS

SG News

Troubled oil and gas group KrisEnergy announced in a regulatory update late on Friday that it has submitted a winding-up petition to the Grand Court of the Cayman Islands. The firm said that based on actual and contingent liabilities, it is unable to pay its debts and will proceed with liquidation. The decision comes as the company’s liabilities have exceeded the value of assets. There is also a lack of acceptable alternative restructuring options and little possibility of near-term infusion of fresh funds.

Aspen (Group) Holdings’ glove-making unit has been in “active discussion” with other potential buyers for the off-take of its entire Phase 1(b) production capacity, part of which was originally meant to be supplied to Honeywell International. Aspen was responding to queries from the Singapore Exchange Regulation (SGX RegCo) on Friday evening. SGX RegCo had asked the firm provide an update on the deal with Honeywell, given that no further disclosures had been made since the announcement that the US$210 million supply agreement with Honeywell has not been “consummated”.

Just two days after Hyflux Group’s judicial managers filed an application to wind up the water treatment company, chief executive officer of Middle Eastern utility firm Utico Richard Menezes is making an attempt to offer the crisis-hit company a rescue deal. Mr Menezes told The Business Times (BT) that he has reached out to Hyflux’s judicial managers with a deal, though he declined to share the exact details.

US News

Amazon Care is expected to expand to its own employees in all 50 states this summer. It has been adding workers faster than any company in history, more than 500,000 in 2020. It also has had a deal with employer health provider Crossover Health for in-person employee health clinics that continues to expand across states with a goal of putting these clinics within a few miles of all Amazon employees, especially in light of the attention its workplace injury rates have received.

A group of private equity firms, including Blackstone Group, Carlyle Group and Hellman & Friedman, agreed to buy a majority stake in medical supply manufacturer and distributor Medline Industries, the company announced Saturday. Medline, which had $17.5 billion in revenue last year, said it would use the investment to expand its product offerings and its business internationally. It did not disclose the financial terms of the deal, which is expected to be completed in late 2021.

U.S. cellphone carriers are offering their most generous discounts in years, handing some customers brand-new devices for no money down or small monthly payments stretched over many months. The discounts from AT&T Inc., Verizon Communications Inc. and T-Mobile US Inc. require customers to make long-term commitments that give carriers the stability they need to reassure investors as they increase spending on 5G network upgrades.

Production for Tesla Inc’s longest-range Model S Plaid+ is cancelled, CEO Elon Musk said in a tweet here on Sunday. “Plaid+ is cancelled. No need, as Plaid is just so good.” Musk tweeted. Model S Plaid+, which would have been Tesla’s highest-end model with a driving range of 520 miles, was unveiled at a battery event last year and Musk said it would adopt its next generation 4680 battery cells. But production was pushed back to 2022 from the end of 2021. Musk on Sunday called the Model S Plaid the “quickest production car ever made of any kind.”

U.S. Treasury Secretary Janet Yellen said that President Joe Biden’s $4 trillion spending plan would be good for the U.S., even if it contributes to rising inflation and results in higher interest rates, Bloomberg News reported. “If we ended up with a slightly higher interest rate environment it would actually be a plus for society’s point of view and the Fed’s point of view,” Yellen said in an interview with the outlet on Sunday.

President Joe Biden and Republicans entered the weekend sharply at odds over how to craft an infrastructure deal that could satisfy their camps, imperiling the odds of a bipartisan deal. Democrat Biden shot down a new proposal from the main Republican negotiator on infrastructure, Senator Shelley Moore Capito, that increased spending by about $50 billion over their last offer, the White House said. Biden rejected the offer, saying it “did not meet his objectives to grow the economy, tackle the climate crisis, and create new jobs.” Republicans had previously offered roughly $257 billion in new spending, short of the $2.25 trillion Biden initially offered and suggested he might bring down to as low as $1 trillion.


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

RESEARCH REPORTS

LHN Limited – Optimiser of real-estate trends

Recommendation: BUY (Initiation); TP: S$0.54

Last Done: S$0.295; Analyst: Vivian Ye

– Work Plus Stores’ industrial space riding on the boom in e-commerce spending. Earnings growth expected to be supported by high occupancy, higher rentals and net lettable area (NLA) CAGR of 12% for next two years.

– Demand for co-living space under Coliwoo rising, thanks to flexible lease terms, affordable rents and attractive locations. Occupancy in mid-90s. We expect LHN to add 210 residential keys by end-FY22e, at CAGR of 13%.

– Initiate coverage with BUY and TP of S$0.54. Few direct comparables, given LHN’s diverse exposure to hospitality, industrial and logistics. Industry is trading at 19x FY21e PE. We apply a 50% discount owing to a lack of comparables and large volatility in historical PE. Historical adjusted PE averaged 32x, with a low of 4x. We peg LHN at 9.5x FY21e PE.

Singapore Banking Monthly – All eyes on economic recovery following Phase 2 (Heightened Alert)

Recommendation: Overweight (Maintained)

Analyst: Terence Chua

– Singapore loans growth was flat at 0.4% YoY in April.

– Business loans contracted for the eighth straight month by 1.4% YoY. Consumer loans up for ninth straight month by 0.3% YoY, aided by loan demand recovery in the housing segment.

– NIMs stabilised in 1Q21 with overall GPs easing. With sufficient buffers built up, GP reversions expected for rest of 2021.

– Maintain OVERWEIGHT. Loans remain on path of recovery on stable interest rates. Catalysts to come from a relaxation of dividend caps on banks. We believe MAS could ease the dividend cap as Singapore banks have kept sufficient capital buffers. We prefer OCBC (OCBC SP, BUY, TP: S$14.63) for sector exposure due to its wealth-management and insurance franchise.

Technical Analysis: US market outlook
Fall in unemployment rate. Yay or Nay?

– Despite the fall in unemployment rate from 6.1% to 5.8% MoM, the Non-Farm Payroll figures miss estimation, which is reported at 559K VS 675K. The pace of jobs growth is strong enough for the Fed to consider going easy on tapering its bond buying.

– Total Labour force participation rate remain stagant, which indicate that the job market is not out of the woods yet.

– The Federal Reserve has announced its intention to liquidate its corporate bonds holding earlier this week. However, this does not rattle the market as its actual presence in the corporate sectors is limited.

>> Read more research reports

HK Reports – Read up on our Hong Kong reports here

Webinar Of The Week

Market Outlook: Weekly Market Outlook: Sembcorp, Singtel, Frasers Centrepoint Trust, SG REITs Monthly, SG Weekly

Date: 31 May 2021

For more on Market Outlook

Updates summarised in 3 minutes

Phillip Research in 3 minutes: #29 – Keppel Corporation; Initiation

For more videos on Phillip in 3 Mins

Read the research report(s), available through the link(s) above, for complete information including important disclosures Important Information





Disclaimer
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.
Confidentiality Note
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.

 

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you

IMPORTANT INFORMATION

This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  

 

Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com