Daily Morning Note – 7 March 2019


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Shares in Asia looked set for a muted start after stocks dropped on Wall Street. U.S. equities fell to a three-week low on concern about the outlook for growth after fresh data pointed to a slowing economy before a key jobs report Friday. Energy and health-care companies led losses on the S&P 500 Index, sending the gauge toward its worst week of the year after reports showed the U.S. trade deficit widened in 2018 to a 10-year high and private companies added fewer employees than analysts forecast last month. Commodities were led lower by oil after a bigger-than-expected buildup in U.S. crude stockpiles. Government bonds rallied as investors sought out defensive assets, while the Bloomberg Dollar Spot Index rallied for a sixth session.

The global economy is suffering more than expected from trade tensions and political uncertainty which are clouding prospects particularly in Europe, according to a gloomy report from the Organisation for Economic Co-operation and Development. “The global expansion continues to lose momentum,’’ the Paris-based institution said as it downgraded almost every Group of 20 nation’s economy. The OECD’s numbers are more downbeat than the IMF’s for many economies, particularly the euro region and the U.K., as the organization warns that things could get worse.


Golden Energy and Resources Ltd – Look forward to lower costs

Recommendation: BUY (Maintained), Last Closing Price: S$0.235

Target Price: S$0.300, Analyst: Chen Guangzhi

– Revenue met our expectations while PATMI missed due to higher than expected production
cash cost and operating expenses.

– Total volume exceeded FY18 production target by 13%. The production target for FY19e is
25mn tonnes (+10.6% YoY).

– FY18 cash cost jumped by 18% YoY but is expected to fall in FY19e.

– Coal price headwinds to remain due to extended coal import restriction from China.

– We lower FY19e EPS to 2.2 US cents (previously 2.9 US cents) due to a weaker projected coal
ASP. Based on unchanged peer average forward PER of 10x and the FX rate (USD/SGD) of
1.36x, we reiterate our BUY recommendation with a lower target price of S$0.30 for FY19.


One in three companies was in the red, according to data compiled by The Business Times, and overall, total earnings of almost S$40 billion were down 19 per cent. The big downers include telcos and commodities, with risk aversion amid a slowing global economy and trade war fears taking a toll on many corporates. Among the 30 Singapore Exchange heavyweights that make up the Straits Times Index, there were as many misses as there were hits.

Chip Eng Seng‘s wholly-owned subsidiary CES Treasury on Wednesday launched its S$100 million 6 per cent notes due 2022. The Series 004 notes guaranteed by Chip Eng Seng are part of its S$750 million multi-currency debt issuance programme, to be issued on March 15 2019 and mature on March 15 2022. The notes will be issued at a price of 100 per cent of their principal amount and in denominations of S$250,000, bearing interest at a fixed rate of 6 per cent per annum payable semi-annually in arrear.

Yangzijiang on Wednesday responded to queries from the Singapore Exchange (SGX) on several points in its financial results for FY18, including a 233 million yuan (S$47 million) write-off of trade and other receivables. The company explained that the provision was for advance payment to a supplier which ran into financial difficulties and had ceased operations. The company said that it plans to recover part of the advance payment via legal proceedings against the supplier, which commenced in mid-2018.

MOODY’S Investors Service has placed Frasers Centrepoint Trust ‘Baa1’ issuer rating under review for downgrade. This comes after FCT announced that it had entered into 12 conditional sale-and-purchase agreements to acquire a 17.13 per cent stake in PGIM Real Estate AsiaRetail Fund for S$342.5 million. PGIM Fund owns and manages six retail malls in Singapore, one office property in Singapore and four retail malls in Malaysia.

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

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