Daily Morning Note – 9 December 2020


Asian equities looked poised for modest gains after a fresh record in their U.S. counterparts, as stimulus hopes tempered concern about a surge in coronavirus cases. The dollar was steady.

Futures rose in Japan, Hong Kong and Australia rose. S&P 500 contracts ticked higher after the benchmark closed at an all-time high. Senate Majority Leader Mitch McConnell suggested setting aside some issues that have been roadblocks to a relief package — a strategic retreat aimed at striking a deal. The Nasdaq 100 advanced for a 10th straight day, the longest rally in about a year. Pfizer Inc. jumped as U.S. regulators gave early indications they may grant emergency-use authorization to its vaccine. Benchmark Treasury yields dipped back below 0.92%.

Elsewhere, the pound pared declines after the U.K. dropped controversial parts of an internal bill that would have given it the power to unilaterally override the Brexit divorce treaty. Oil fluctuated.


The manager of Keppel Infrastructure Trust (KIT) , and its Philippine partner Metro Pacific Investments Corporation (MPIC) have entered a conditional agreement to fully acquire an entity that owns the largest petroleum products import storage facility in the Philippines. The target entity is the Philippine Tank Storage International (Holdings) Inc (PTSI), which owns the storage facility, the Philippine Coastal Storage & Pipeline Corporation (PCSPC). Upon completion of the deal, KIT will indirectly hold 80 per cent of the shares in PTSI, while MPIC will indirectly hold the remainder. KIT’s purchase consideration, proportionate to its shareholding, is estimated at US$267 million. This is subject to adjustments post-deal.

A subsidiary of CapitaLand Integrated Commercial Trust (CICT) , has issued S$250 million of 12-year notes with a 2.15 per cent coupon rate. Its wholly-owned unit CMT MTN issued the notes, which will mature on Dec 7, 2032, to institutional and/or sophisticated investors. Proceeds from the deal will be used to refinance the CICT group’s existing borrowings; finance investments; on-lend to any trust, fund or entity in which the Reit has an interest; finance asset enhancement works; and for general corporate and working capital purposes.

The trustee of Suntec Real Estate Investment Trust (Suntec Reit) has entered into a S$900 million facility agreement with various banks. The facility will be used to finance or refinance acquisitions and/or investments, refinance existing borrowings, and/or for general working capital purposes, Suntec Reit’s manager said late Monday night.

STET Homeland Security Services, a dormant subsidiary of ST Engineering, has been placed under members’ voluntary liquidation, the mainboard-listed defence and engineering group announced in a Tuesday bourse filing. “This exercise is part of ST Engineering’s ongoing review to streamline its legal entity structure,” the firm said. It does not expect any impact on its earnings or net tangible assets for the current financial year.

Moody’s Investors Service has upgraded the corporate family rating of Geo Energy Resources to Caa1, from Caa3 previously. The credit rating agency also upgraded the senior unsecured guaranteed notes issued by Geo Coal International (GCI), a wholly-owned subsidiary of Geo Energy, to Caa1 from Caa3.

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


Ascott Residence Trust

Analyst: Chua Wei Ren

Recommended Action: Technical SELL

Ascott Residence Trust (SGX: HMN) has been on a roller coaster recovery phase with strong bullish upside on May 2020 and early November 2020. Based on the wave and technical analysis, Ascott is heading for one more round of downside correction before an upside rally to form wave ((C))

>> Read more Technical reports


Airbnb’s IPO – Riding the recovery

Analyst: Yeap Jun Rong

– Airbnb is set to list its shares on NASDAQ on 10 December 2020. It plans to sell 51.9mn shares at US$56-60 apiece. Assuming next year’s sales grow 60-70% for Airbnb, its valuation at the top end of its listing price is 8.1x price-to-sales. This valuation is comparable to that of online travel market leader, Booking Holdings.

– Its asset-light business confers greater flexibility in managing costs for adapting to a challenging environment. Lower fixed costs from its recent job cuts and marketing budget cuts also allow for margin expansion when things eventually normalise.

– Domestic gross booking value (GBV) between June and September grew 42% YoY. This cushioned an estimated 62% average decline in international bookings. The growing preferences for domestic travel are expected to continue in the near term

– Airbnb is a platform with network effects. The value of Airbnb’s platform grows from each additional guest as it can attract more hosts in a virtuous cycle which raises barriers to entry
– Investors may attribute a premium for its dominance in the home-sharing space, asset-light business and better geographical diversification than its rivals. A 10x price-to-sales for Airbnb will command an expected share price of US$74.

>> Read more research reports

HK Reports – Read up on our Hong Kong reports here


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Market Outlook: (PSR) Keppel (Int.), Dasin, Yoma, SG Banking Monthly, Airbnb IPO & SG Weekly

Date: 07 December 2020

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