Daily Morning Note – 8 November 2018

WEEKLY MARKET OUTLOOK WEBINAR

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YOUR PHILLIP SUMMARY

U.S. stocks ended sharply higher Wednesday, following closely watched midterm elections that saw Democrats take control of the House, delivering a divided Congress, and news that Attorney General Jeff Sessions was resigning at the request of the president.

The Dow Jones Industrial Average rose 2.13%, while the S&P 500 index climbed 2.12%. The Nasdaq Composite Index jumped 2.64%. All three indexes ended the day just shy of their intraday highs. Wednesday’s performance marks the Dow’s and the Nasdaq’s biggest one-day climb since Oct. 16th, while the S&P 500 had it’s best day since Oct. 25.

Materials, industrials and energy stocks rose as both Democrats and Republicans have been supportive of infrastructure reform. Tech stocks were also lifted as investors wager that both parties will be unable to agree on a path forward toward stricter regulation on Silicon Valley’s highest flying firms.

The key event to look out for on Thursday will be the Federal Reserve releasing an update to its policy statement at 2 p.m. Eastern Time, a factor that could provide insights about the pace of rate hikes next month and in the coming year.

Source: MarketWatch, CNBC

RESEARCH REPORTS

DBS Group Holdings – Strong and Sustainable Performance

Recommendation: BUY (Maintained), Last Close Price: S$24.00

Target Price: S$29.02, Analyst: Tin Min Ying

– 3Q18 PATMI of S$1.41bn missed our estimate by 8%; Revenue is in line with
our expectations, underpinned by strong trading income. Expenses came in
higher than expected.

– NIM expanded 13 bps YoY to 1.86% (3Q17: 1.73%) and +1 bps QoQ (2Q18:
1.85%).

– Loans maintained high single-digit growth at 8.2% YoY, driven by non-trade
corporate loans and consumer loans.

– Allowances declined 71% YoY due to accelerated O&G provisions last year. NPL
ratio remained stable at 1.6% (3Q17: 1.7%).

– Maintain BUY at a lower target price of S$29.00 (previously S$33.32). We rolled
over our valuation to 2019e and modelled in a more volatile and lower growth
environment. We also trimmed our FY18/19 earnings by 3-5%.


Sembcorp Industries Ltd – Surprised losses from SGPL

Recommendation: BUY (Maintained), Last Done Price: S$2.69

Target Price: S$3.60, Analyst: Chen Guangzhi

– Utilities China performed well while utilities Singapore suffered from thin spark
spread

– Utilities India was less profitable QoQ due to widened losses from SGPL again

– Marine segment continued to weigh on the group’s performance


BREAKING NEWS

Oil slips after US output hits record, crude stocks rise. Crude output hit 11.6 million
bpd, a weekly record, though weekly figures can be volatile. Most recent monthly data
for August showed overall production at more than 11.3 million bpd. US crude futures
fell 54 cents to settle at US$61.67 a barrel, nearly 20 per cent below a peak close of
US$76.41 a barrel in early October.

EC World Reit Q3 DPU up 9%. EC World Reit has posted a distribution per unit (DPU) of
1.57 Singapore cents in the third quarter. Gross revenue in the three months ended Sept
30 rose 0.1 per cent to S$23.9 million. Net property income rose 0.5 per cent to S$22.2
million, due mainly to contributions from the newly-acquired Wuhan Meiluote and
partially offset by a weaker yuan.

Hi-P International Q3 net profit down 11.9% on hit from trade war. Net profit slid 11.9
per cent year-on-year to S$33.8 million for the quarter to Sept 30, according to
unaudited results released on Wednesday, while revenue was down 8.3 per cent to
S$377.1 million.

Jardine C&C Q3 earnings down 3%. JARDINE Cycle & Carriage (Jardine C&C) on
Wednesday posted a 3 per cent dip in net profit to US$200.9 million for the third quarter
ended Sept 30.

TalkMed Q3 net profit up 7%. TalkMed has posted a net profit of S$7.6 million in the
third quarter. Earnings per share was 0.58 Singapore cent, up from 0.54 cent in the third
quarter last year.

YZJ Shipbuilding Q3 net profit down 10%. It has posted a net profit of 778.6 million
yuan (S$154 million) in the third quarter. The group also booked an impairment loss of
333 million yuan on financial assets, higher than the impairment loss of seven million
yuan in the third quarter last year.

Source: SGX Masnet, Bloomberg, Reuters, The Business Times, Channel NewsAsia, Phillip Securities Research

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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