DAILY MORNING NOTE | 8 December 2023
**Do note that the last day of Morning Note Issuance will be on 14 December 2023. Morning Note will resume in January 2024**
Summary of Trades Initiated in Past Week
Singapore shares fell 0.4 per cent on Thursday (Dec 7), wiping out gains from a day earlier. DBS continued its streak of losses for the week. The banking stock was down nearly 1 per cent or S$0.30 to S$31.18 at the closing bell. The other two local banks also closed below their opening prices. OCBC dipped 0.8 per cent to S$12.51, while UOB slipped 0.4 per cent to S$27.19.
The Nasdaq ended sharply higher on Thursday (Dec 7) after Alphabet and Advanced Micro Devices sparked a mega cap rally on fresh optimism about artificial intelligence. The S&P 500 gained 35.66 points, or 0.8 per cent, to end at 4,585.60 points, while the Nasdaq Composite gained 193.28 points, or 1.4 per cent, to 14,339.99. The Dow Jones Industrial Average rose 62.7 points, or 0.2 per cent, to 36,117.13.
The latest Singapore six-month Treasury bill (T-bill) is offering a cut-off yield of 3.74 per cent, according to auction results released on Thursday (Dec 7). This is down from the cut-off yield of 3.8 per cent offered in the previous six-month tranche of the T-bills, issued on Nov 28. Demand for the T-bills has remained strong in recent issuances. A total of S$13.3 billion in applications was received for the S$5.9 billion on offer in the latest tranche, representing a bid-to-cover ratio of 2.25. This is up from the previous tranche, which received S$13 billion in applications for the S$6 billion on offer. Some 95 per cent of non-competitive applications, amounting to S$2.4 billion, were allotted in the latest auction. Meanwhile, around 21 per cent of competitive applications at the cut-off yield were allotted.
A Sasseur Real Estate Investment Trust’s (Reit) wholly-owned subsidiary has extended an unsecured interest-bearing loan of 308 million yuan (S$58.1 million) from its sponsor by a year, the Reit’s manager announced on Thursday (Dec 7). In a filing to the Singapore Exchange, Sasseur Asset Management said that the loan from a wholly-owned subsidiary of sponsor Sasseur Cayman Holding has been extended by another year from March 2024 to March 2025. In February 2023, the parties entered into a one-year loan agreement with extension for up to another year with mutual agreement. The terms and conditions of the sponsor loan agreement remain unchanged under the extension, but were not disclosed in the bourse filings.
ValueMax has launched the ninth series of its three-month commercial paper (CP) and the second series of its 4-month CP, both in digital securities and on the ADDX Exchange. The company expects to raise between S$10 million and S$50 million for the three-month digital securities and between S$5 million and S$20 million for the four-month digital securities from accredited and institutional investors. The three-month digital securities are priced at 5.0% per annum and mature three months from the date of issuance while the four-month variant is also priced at 5.0% per annum, maturing four months from the date of issuance.
Thomson Medical Group has announced that Singapore Exchange Securities Trading (SGX-ST) has granted the company an additional period of one month until Jan 10, 2024 to explore options to restore its public float on Dec 7. SGX-ST has also granted the continued trading of its shares during this period. The company had previously announced that it had been granted a period of three months until Dec 10 to restore its public float after the percentage of its shares held by public shareholders fell to 9.98% on Sept 12. This percentage of shares held by the public fell below SGX-ST’s requisite of 10% of the total number of issued shares excluding treasury shares.
Singapore Post (SingPost) will be introducing a S$0.05 rate hike for most international airmail letters, printed papers, aerogrammes and postcards from Jan 1, 2024. Exceptions include rates for aerogrammes to Malaysia and Brunei, which will remain at S$0.80 per piece, as well as mail charges for additional weightage. The new rate for aerogrammes to all countries except Malaysia and Brunei will be S$0.85, up from S$0.80 currently. On Thursday (Nov 7), the postal services provider said that its upcoming rate hike was the result of annual fee revisions made by the Universal Postal Union, which in turn led to a progressive increase of international postal settlement rates over the years. This settlement fee is payable to postal organisations of destination countries for mail delivery. SingPost’s S$0.05 rate increase applies to zone 1 (Malaysia and Brunei), zone 2 (countries in Asia and The Pacific except Australia, Japan, and New Zealand) and zone 3 (Australia, Japan, New Zealand and the rest of the world).
Chipmaker Broadcom forecast annual revenue below Wall Street estimates on Thursday, hurt by weak enterprise spending and stiff competition in the networking chips space. In fiscal 2024, the company expects revenue of about US$50.0 billion including contribution from VMware. This compares to analysts’ average estimate of US$52.50 billion. The company also forecast annual adjusted EBITDA of about 60% of projected revenue, which comes out to be around US$30 billion, an expected increase of nearly US$7 billion from its 2023 EBITDA. Broadcom’s original goal was to improve VMware’s EBITDA contribution to US$8.5 billion within three years of closing. Broadcom finance chief Kirsten Spears had said in September that generative artificial spending was coming from large cloud service providers, and not from enterprises yet. Broadcom’s revenue in the fourth quarter was US$9.30 billion, below estimates of US$9.41 billion. However, on an adjusted basis, the company’s profit of US$11.06 per share beat estimates of US$10.98.
Lululemon on Thursday said it saw strong third-quarter demand and a positive start to the holiday shopping season, but the retailer gave a tepid fourth-quarter outlook. In its third fiscal quarter, earnings per share was US$2.53 adjusted while revenue came in at US$2.20 billion vs. US$2.19 billion expected. The company’s reported net income for the three-month period that ended October 29 was US$249 million, or US$1.96 per share, compared with US$255 million, or US$2 per share, a year earlier. Sales rose to US$2.2 billion, up about 19% from US$1.86 billion a year earlier. During the quarter, sales jumped 12% in North America and 49% internationally but the retailer’s holiday guidance came in light of expectations. Lululemon said it’s expecting sales to be between US$3.14 billion and US$3.17 billion for the fourth quarter, which is shy of the US$3.18 billion analysts had expected. It expects earnings to be between US$4.85 and US$4.93 per share, compared to estimates of US$4.80 to US$5.19. For the full year, Lululemon expects sales to be between US$9.55 billion and US$9.58 billion, compared to estimates of US$8.11 and US$9.90 billion.
Amazon notified users late Wednesday it will soon stop accepting Venmo as a payment method. The company said it will no longer let users pay using Venmo beginning Jan. 10, according to a notice sent out to Amazon customers. Amazon will still accept Venmo debit and credit cards, the notice states. Venmo announced the move in a separate notice posted to its website. The move is an abrupt reversal. Amazon announced last October it would add Venmo as a payment method at checkout, giving shoppers more options to pay for their purchases. Venmo is a popular payment service that lets users instantly send money to one another.
Boeing has signalled to suppliers that plans to ramp up production of its bestselling 737 narrowbody jetliner will move about two months more slowly than originally anticipated, according to two people with knowledge of the matter. The US planemaker now expects it will produce 42 of its 737s per month starting in February 2024, according to a new master schedule that Boeing briefed to its suppliers over the past week, the sources said. The new schedule pushes subsequent rate increases as well, shifting Boeing’s plan for 47.2 jets a month from June to August 2024, while its target to increase 737 production to 52.5 jets a month was moved from December 2024 to February 2025. Boeing now expects to hit its pre-pandemic goal of 57.7 aircraft per month in October 2025, a delay of three months from the original July 2025.
Unprofitable Chinese electric carmaker Nio Inc. may undertake further job cuts to reduce costs and improve efficiency, people familiar with the matter said, just weeks after the company announced plans to eliminate 10% of its workforce. Some departments were asked to prepare reserve lay-off lists, which may widen the original dismissals to 20% to 30% within the unit, some of the people said, asking not to be identified because the deliberations are ongoing and aren’t public. Any cuts would mainly apply to non-core businesses or those requiring heavy investment that won’t generate quick returns, the people said, adding that other more central parts of Nio’s business, like sales, are still hiring. In addition to EVs, its businesses include battery and semiconductor manufacturing, and mobile phones. Some international expansion plans, including entering the US market, have also been delayed or suspended, one of the people said, noting those changes took place earlier this year.
Dollar General posted a smaller-than-expected drop in quarterly sales on Thursday, as more shoppers turned to its stores for cheaper groceries and household essentials. Discount store operators are seeing more cost-conscious customers browsing through the aisles of their outlets for affordable alternatives and value deals as higher food prices, borrowing costs as well as rising credit card debt squeeze household budgets. Dollar General has also been taking measures to keep prices low on its everyday staples, while offering discounts and promotions as it tries to clear excess stock. The company’s total merchandise inventories in the third quarter declined 1.8% year-on-year. The discount retailer’s same-store sales fell 1.3% for the third quarter, compared with analysts’ average estimate of a 2.08% drop. The company reaffirmed its full-year sales and profit forecasts.
Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR
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