Daily Morning Note – 9 November 2018

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YOUR PHILLIP SUMMARY

U.S. stocks closed mostly lower Thursday as the Federal Reserve kept interest rates unchanged at range of 2.00-2.25% in an unanimous decision and signaled that it would continue to tighten monetary policy at a gradual pace.

The Dow Jones Industrial Average gained 10.92 points to 26,191.22, while the S&P 500 index 0.3%, and the Nasdaq Composite fell 0.5%.

Oil futures slipped Thursday, as stronger output from Saudi Arabia, Russia and the U.S.—also related to the timing of the Iranian sanctions—weighed on demand. On Thursday, the U.S. crude benchmark fell into bear-market territory with a decline of more than 20% from a nearly four-year high set on Oct. 3.

China on Thursday reported exports and imports for the month of October that exceeded forecasts. China recorded a trade surplus of $31.78 billion with the U.S. in October — down from a record $34.13 billion in September. Many economists say the phenomenon is mostly due to exporters benefiting from increased orders before the tariffs hit, but the figures are likely to show stress in the months ahead.

Source: MarketWatch, CNBC

RESEARCH REPORTS

SATS Ltd – Hits and misses

Recommendation: Accumulate (Maintained), Last Close Price: $5.11

Target Price: $5.47 (previous $5.58), Analyst: Richard Leow

– 2Q revenue 3.8% higher than our estimate; PATMI in line

– 1H revenue and PATMI met 52% and 51% respectively of our FY19 estimate

– Currency weakness at emerging market associates/JVs

– 6 cents interim dividend declared, same as last year

– Maintain Accumulate; lower target price of $5.47 (previous $5.58) as we lower
our estimates for associates/JVs


China Sunsine Chemical Holdings Ltd – Still healthy performance

Recommendation: BUY (Maintained), Last Done Price: S$1.08

Target Price: S$1.68, Analyst: Chen Guangzhi

– Both GPM and NPM remain at record levels

– ASP corrected since 2Q18

– New capacity delayed and approval still pending


BREAKING NEWS

Oil prices drop as ‘trifecta of trouble’ may cause glut. Oil prices fell nearly 2 per cent on Thursday as investors focused on swelling global crude supply, which is increasing more quickly than many had expected. The market focused on record US crude production and signals from Iraq, Abu Dhabi and Indonesia that output will grow more quickly than expected in 2019. Fears of the potential supply glut dampened a rally early in the session driven by Chinese data that showed record oil imports.

Geo Energy inks coal off take, equity investment with Australia’s Macquarie Bank. Geo Energy Resources has scored a three-in-one with Australia’s Macquarie Bank that will see the Singapore-listed firm secure more than US$75 million in fresh funds by way of a pre-payment for a coal offtake deal for its mine and proposed equity investment alongside a trade finance facility for which the sum was not disclosed.

BHG Retail Reit reports 5.7% drop in DPU for Q3. BHG Retail Real Estate Investment Trust (BHG Retail Reit) has reported a distribution per unit (DPU) of 1.33 Singapore cents for the third quarter ended Sept 30, 2018, down 5.7 per cent from the 1.41 Singapore cents reported the year before. Its gross revenue was up 5.1 per cent to S$17.3 million, from S$16.5 million. Its net property income was 3.5 per cent higher at $10.9 million, compared to $10.5 million a year ago.

Best World earnings surge 145% in Q3; declares 1.2 S cent dividend. BEST World International has posted a net profit of S$29.9 million in the third quarter, up 145.3 per cent from the same period a year earlier, boosted by new revenue from its franchise business in China.

City Developments’ Q3 net profit rises 10.4% to S$162m. City Developments Ltd (CDL) posted a 10.4 per cent rise in third-quarter net profit to S$161.8 million from the previous year, the group said in a Singapore Exchange filing on Thursday evening. For the three months ended Sept 30, revenue increased 17.7 per cent to S$1.02 billion from the year-ago period.

Mapletree Logistics Trust to acquire Gyeonggi-do logistics property for 37.85b won. Mapletree Logistics Trust (MLT) plans to acquire Wonjin Logistics Centre in South Korea from Wonjin Logistics for 37.85 billion won (S$46.4 million). The acquisition is expected to be accretive, with an initial net property income yield of about 6.5 per cent based on the purchase price of 37.85 billion won, MLT said on Thursday evening.

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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