SGX
Phillip Capital Market Reports:
Phillip Daily Morning Note :
US Market (By Phillip Global Markets Night Desk)
27 October 2023
Fed's Favorite Inflation Indicator Out Today
The Fed's favorite inflation indicator, the PCE Price Index, will be released by the BEA this morning. The index differs from the better-known Consumer Price Index in that its composition is changed more frequently and is quicker to reflect real-time pricing fluctuations. In the August report, PCE inflation was reported at 3.3% (the latest CPI report, from September, had inflation at 3.7%). Core PCE, which removes volatile food and energy prices, was 3.9% in the latest month, down from 4.3% in the prior month. Our forecasts call for relative stability on both rates: 3.5% for the headline number and 3.7% for the core reading. Inflation appears to have peaked in summer 2022 and is on a downward trek, though the rate of decline is stalling a bit. We track 20 inflation measures on a monthly basis. On average, they indicate that prices are rising at a 3.1% rate-year-over year, up from 2.8% two months ago. The numbers are distorted somewhat by a sharp decline in Producer Price Intermediate Goods, which are falling at a 21% rate and likely point to easing prices across the inflation spectrum. Focusing on core inflation, our reading is 2.98%, down 40 basis points month-over-month. That's lower largely because, at long last, sticky prices like shelter and transportation are starting to ease (the Sticky Price Core CPI Index reading is 5.1%, down from 5.6% two months ago). Investors are expecting that the Federal Reserve's series of rate hikes ultimately will tame inflation, with the five-year forward expectation rate at 2.4%.
Market Wrap
Stock futures remained higher after inflation data did little to alter bets on a Federal Reserve pause next week.
S&P 500 contracts signaled a rebound in the benchmark gauge from the lowest since May. Treasury two-year yields, which are more sensitive to imminent policy moves, were little changed.
Today's Big News
- Dimon Plans to Sell $141 Million Worth of JPMorgan Shares (2)
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- Israel Latest: Hamas Won’t Get Fuel for More Hostage Releases
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- Huawei’s Profit Doubles With Made-in-China Chip Breakthrough
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- Evergrande Creditors Who Opposed Liquidation Are Now Wavering
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- Rithm Wins Och’s Support With Sculptor Bid at $720 Million (1)
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- Apple Set to Unveil New iMacs and MacBook Pros at Oct. 30 Event
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OCBC
DBS
Market News
US’ 3Q GDP grew by 4.9%, beats estimates
Intel’s 3Q EPS of US$0.41 beats estimates, sees sales growth in 4Q
Amazon’s 3Q EPS of US$0.94 beats estimates, touts Generative AI as growth driver for its AWS business
AEM Holdings (AEM SP)
Read through of Intel’s 3Q23 earnings
Key customer beat consensus forecasts on top and bottom lines in 3Q23; delivers upbeat guidance for 4Q23 above consensus forecasts
Brighter outlook of key customer paints a more positive picture for AEM, though handler sales could be constrained by adequacy of Intel’s existing installed base
Why do we see many moving parts with bright spots but no strong catalyst in place?
Click here to read our views
Mapletree Industrial Trust (MINT SP)
Strengthening defences as interest rates bite
1HFY24F DPU of 6.71 Scts (-2.0%) tracking ahead of estimates
Financial metrics are stable amid controlled cost increases; minimal debt expiries in the interim period offer visibility
AT&T lease in focus with phased expiries in the coming year
Why we believe the company remain a good buy despite the AT&T lease expiry headwind?
Click here to read our views
Capitaland India Trust (CLINT SP)
Jumping start the acquisition journey
Operating performance in INR terms was robust but weakness in INR-SGD exchange rate crimped growth rates
Healthy balance sheet post recap, growing pipeline of opportunities
What growth opportunities do we see for the company?
Click here to read our views
ESR-Logos REIT (EREIT SP)
Well positioned for tomorrow
S$440m in divestments in FY23 will significantly bolster EREIT’s balance sheet
Portfolio recalibration still ongoing; drag in earnings from income void expected over the next two years
What are the implications of the divestments on gearing and dividend payout?
Click here to read our views
Cafe De Coral Holdings Ltd (341 HK)
Regaining momentum
Positive profit alert exceeds expectations on faster margin recovery from HK operations
Expect 2H23 to sustain margin improvement, with store expansion picking up in GBA to meet its target of 20-24 new stores
Do we believe the recovery in the company’s Hong Kong business is sustainable?
Click here to read our views
DBS Group Research | Equity Picks
Singapore Equity Picks: Read more
Hong Kong Equity Picks: Read more
UOB
UOBKH: Retail Market Monitor: Friday, October 27, 2023
UOBKH: Regional Morning Meeting Notes: Friday, October 27, 2023 [601888 CH, 1199 HK, 2238 HK, 600809 CH, BBRI IJ, TAPG IJ, MAL Aviation, NESZ MK, PREIT MK, IFAST SP, UOB SP, WIL SP, SCC TB]
UOBKH: Country Dailies: Friday, October 27, 2023
Click on the link for Greater China Daily.
Click on the link for Indonesia Daily.
Click on the link for Malaysia Daily.
Click on the link for Singapore Daily.
Click on the link for Thailand Daily.
KGI
Top Stories, 27 Oct 2023
1. Asia markets poised for a rebound after heavy sell-off
2. SGX FTSE China A50 Index Futures is the world’s only USD-denominated futures offering investors an efficient way to access the China A-share market.
Find out more: https://www.kgieworld.sg/futures/sgx-a50
3. China FM calls for 'stable' US ties on visit to weigh Xi summit
4. Markets down as earnings roll in; investors assess economic data
5. Oil falls more than US$2 on easing Middle East fears
6. US Core PCE expected to rise 0.3% on a monthly basis; Bitcoin price could drop to $31,500
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TRADING IDEAS: 🇸🇬 SINGAPORE
27 October 2023
🏙 Geo Energy Resources Limited (GERL SP): Profit off from seasonality
BUY Entry 0.285 – Target – 0.325 Stop Loss – 0.265
🏢 Genting Singapore Ltd (GENS SP): Bottoming out
BUY Entry 0.86 – Target – 0.92 Stop Loss – 0.83
➡️ Read More: https://www.kgieworld.sg/research/oct27sg23
Technical Analysis: 27 October 2023
🇸🇬 SG
iFAST Corp Ltd (IFAST SP)
Nanofilm Technologies International Ltd (NANO SP)
🇭🇰 HK
Huaneng Power International Inc (902 HK)
China Resources Power Holdings Co Ltd (836 HK)
Read More: https://www.kgieworld.sg/research/oct27ta23
CIMB
MAL: CGS-CIMB Daybreak - 27 October 2023
SIN: Wilmar International - Signs of mending profitability (ADD - Maintained)
SIN: Mapletree Industrial Trust - Solid rental reversions (ADD - Maintained)
SIN: United Overseas Bank - Going defensive (ADD - Maintained)
SIN: Mapletree Pan Asia Commercial Trust - Valuations turning attractive (ADD - Upgrade)
SIN: iFAST Corporation Ltd - ePension contributions commencing (HOLD - Maintained)
ASEAN: CGS-CIMB ASEAN Daily - 27 October 2023
Equity Research Reports....
▌ TARGET PRICE CHANGES
SIN: Frasers Centrepoint Trust (ADD, tp:SGD2.52▼) - Suburban retail demand holding strong (26/10)
THB: PTT Oil and Retail Business (REDUCE, tp:THB18.00▼) - Seeing threats from government’s populist policies (26/10)
THB: Siam Cement (HOLD, tp:THB298.00▼) - Weak net profit across all core businesses (26/10)
▌ ECONOMIC & STRATEGY NOTES
IND: Strategy Flash Note - A surprise stimulus to combat slowing growth (26/10)
▌ SECTOR & COMPANY NOTES
ASEAN: Internet Services (NEUTRAL) - Refocusing on topline growth (26/10)
IND: AKR Corporindo (ADD, tp:IDR1,650.00) - Margin recovery aided 3Q23 results (26/10)
MAL: CapitaLand Malaysia Trust (HOLD, tp:MYR0.51) - Penang malls drove 3QFY23 earnings (26/10)
MAL: Malaysia Airports Holdings (ADD, tp:MYR7.76) - Monetising the Hyderabad airport (26/10)
SIN: Far East Hospitality Trust (ADD, tp:SGD0.77) - Hotel RevPAR still in recovery (26/10)
SIN: Mapletree Industrial Trust (ADD, tp:SGD2.61) - Solid rental reversions (26/10)
SIN: Mapletree Logistics Trust (ADD, tp:SGD1.88) - Lifted by organic and acquisition growth (26/10)
SIN: United Overseas Bank (ADD, tp:SGD33.30) (HC) - 3Q23: Softer NIM offset by fees (26/10)
SIN: United Overseas Bank (ADD, tp:SGD33.30) (HC) - Going defensive (27/10)
▌ RECENT 'IDEAs OF THE DAY'...
MAL: Strategy Note - Budget 2024: policy continuity (14/10)
MAL: Economic Focus - Budget 2024: Raise revenue, cut spending (14/10)
THB: Hana Microelectronics (ADD▲, tp:THB80.00▲) (ESG) - Multiple tailwinds to drive OP growth (10/10)
MAL: Strategy Note - One step at a time (4/10)
MAL: Economic Focus - Budget 2024 Preview: Tightening purses (2/10)
APAC: ASIA Pacific Daily - 27 October 2023
Equity Research Reports....
▌ RECOMMENDATION CHANGES & INITIATIONS...
HKG: Vinda International Holdings (REDUCE▼, tp:HKD15.40▼) - Potential fluctuation in pulp prices (26/10)
KR: LG Household & Health Care Ltd (HOLD▼, tp:KRW400,000.00▼) - Disappointing results and guidance (26/10)
▌ TARGET PRICE CHANGES...
CHN: Songcheng Performance (ADD, tp:CNY21.00▲) - More resilient domestic tourism market recovery (26/10)
HKG: Li Ning Company (ADD, tp:HKD62.00▼) - Weak wholesale and e-commerce growth in 3Q23 (26/10)
HKG: New Oriental Education (ADD, tp:HKD65.50▲) - Encouraging results for 1QFY5/24 (26/10)
KR: Samsung SDI (ADD, tp:KRW590,000.00▼) (HC) - Valuation has almost bottomed (26/10)
SIN: Frasers Centrepoint Trust (ADD, tp:SGD2.52▼) - Suburban retail demand holding strong (26/10)
THB: PTT Oil and Retail Business (REDUCE, tp:THB18.00▼) - Seeing threats from government’s populist policies (26/10)
THB: Siam Cement (HOLD, tp:THB298.00▼) - Weak net profit across all core businesses (26/10)
▌ STRATEGY & ECONOMIC NOTES...
IND: Strategy Flash Note - A surprise stimulus to combat slowing growth (26/10)
▌ SECTOR & COMPANY NOTES...
ASEAN: Internet Services (NEUTRAL) - Refocusing on topline growth (26/10)
IND: AKR Corporindo (ADD, tp:IDR1,650.00) - Margin recovery aided 3Q23 results (26/10)
KR: Hyundai Motor Company (ADD, tp:KRW290,000.00) (HC) - Organic growth to offset concerns (26/10)
KR: SK Hynix (ADD, tp:KRW170,000.00) (HC) - We expect operational breakeven in 4Q23F (27/10)
MAL: CapitaLand Malaysia Trust (HOLD, tp:MYR0.51) - Penang malls drove 3QFY23 earnings (26/10)
MAL: Malaysia Airports Holdings (ADD, tp:MYR7.76) - Monetising the Hyderabad airport (26/10)
SIN: Far East Hospitality Trust (ADD, tp:SGD0.77) - Hotel RevPAR still in recovery (26/10)
SIN: Mapletree Industrial Trust (ADD, tp:SGD2.61) - Solid rental reversions (26/10)
SIN: Mapletree Logistics Trust (ADD, tp:SGD1.88) - Lifted by organic and acquisition growth (26/10)
SIN: United Overseas Bank (ADD, tp:SGD33.30) (HC) - 3Q23: Softer NIM offset by fees (26/10)
SIN: United Overseas Bank (ADD, tp:SGD33.30) (HC) - Going defensive (27/10)
▌ RECENT 'IDEAs OF THE DAY'...
MAL: Strategy Note - Budget 2024: policy continuity (14/10)
MAL: Economic Focus - Budget 2024: Raise revenue, cut spending (14/10)
THB: Hana Microelectronics (ADD▲, tp:THB80.00▲) (ESG) - Multiple tailwinds to drive OP growth (10/10)
MAL: Strategy Note - One step at a time (4/10)
MAL: Economic Focus - Budget 2024 Preview: Tightening purses (2/10)
CGS-CIMB SG/MY Preview - CICT, SSG; MAHB, CMMT
SINGAPORE
DOW -252pts (-0.8%) NDQ -226pts (-1.8%) SPX -50pts (-1.2%) WTI (-2.6%) GOLD (-0.1%)
Wall Street finished Thurday in the red, with NDX in the official correction territory, - >10% from its high in Jul. GOOGL extended losses and suffered a biggest drop since Mar 2020 due to disappointing earnings release. Although META beat top and bottom est. but there are concerns wrt Reality Labs division recorded a US3.7B loss. US Q3 GDP grew 4.9% (vs 4.7% est). Weekly jobless claim came in at 210k (vs 207k est). Oil prices slid due to waning demand and concerns about the economic outlook. US 10 Yr Yields settled at 4.85%.
CGS-CIMB Highlights
* UOB (UOB SP) turning defensive to protect its liquidity (at the expense of margins) and credit quality (via proactive collateral and impairment management). It aims to keep NIMs steady in FY24F by turning to longer-dated assets and managing funding costs. Wealth management fees may take time to grow. Reiterate Add with an unchanged GGM-based TP. UOB’s defensive stance bodes well for capital preservation. Its c.7% dividend yield is attractive.
* Wilmar (WIL SP) 3Q23 EBITDA of US$1.0bn brought 9M23 EBITDA to US$2.7bn, in line at 78.9% of our FY23F estimates, but core net profit of US$900.9m is a lower quality beat (73.9% of our FY23F estimates), likely due to higher finance costs amidst the high interest rate environment. Notably, the 35.3% and 40.2% qoq growth in sales volume of consumer products and sugar milling are likely to be the chief reason behind the improvement in its profitability. Last call Add, TP S$4.05
* Thai Bev (THBEV SP) THBEV's Vietnam subsidiary SABECO reported 3Q revenue/PATMI declines of -14%/-22% yoy respectively, reflecting continued weakness in Vietnam consumption. 9M23. 3Q23 revenue decline of -14% yoy was weaker vs. 1H23's -11% yoy, but PATMI contracted at a slower pace of -22% yoy in 3Q23 vs. 1H23's -26%. Notably, peer Heineken reported its net revenue in Vietnam declined in the low-teens during the quarter, an improvement relative to its 1H23, suggesting underperformance by SABECO during the quarter, despite its mass positioning which should have been more defensive. Last call on THBEV was Add, TP: S$0.75
* Mapletree Log Tr (MLT SP) 2Q/1HFY24 DPU of 2.268/4.539 Scts was broadly in line at 26.4%/52.8% ofour FY24F forecast. Excluding China, rental reversion was healthy at +9.1% in 2QFY3/24, although management expects continued rental pressure in China. Reiterate Add, with a DDM-based TP of S$1.88.
* Mapletree Ind Tr (MINT SP) 2Q/1HFY3/24 DPU of 3.32/6.71 Scts was within expectations, at 24.2%/48.9% of our FY24F forecast. MINT enjoyed positive rental reversions across all segments even as portfolio occupancy slipped marginally to 93.2% in 2Q. Reiterate Add, with an unchanged DDM-based TP of S$2.61
* Frasers Centrepoint (FCT SP) FY9/23 DPU of 12.15 Scts (-0.6% yoy) was in line at 99.9% of our FY23F. FY23 reversions positive at 4.7% (FY22: 4.2%). 15.6% occupancy cost. tracking below pre-Covid levels, indicating room for rental growth, in our view. Reiterate Add on organic growth and demand for suburban retail space. ADD with TP S$2.52
* Sheng Siong (SSG SP) 3Q23 net profit of S$34.7m (+6% yoy) in line with expectations, with 9M23 forming 75%/74% of our/BBG consensus forecasts respectively. 3Q23 GPM of 30.3% reflects 0.9% pts yoy expansion, which should ease concerns over margin pressure due to industry competition. OPM was largely flattish (-0.1% pts yoy) in 3Q23F, also improving vs. 1H23 (-1.1% pts yoy) which was largely due to higher utilities and staff costs. Store opening in Singapore still slow at 2 stores YTD, HDB have released 3 more shops for tendering in 3Q23 but have yet to announce results.
* Far East H Tr (FEHT SP) 9M23 distributable income of S$69.3m (+36.7% yoy) was in line at 78.6% of our FY23F estimate. All properties performed above fixed rent levels. 3Q hotel/serviced residence (SR) revenue per available room (RevPAR) came in at 99%/122% of 3Q19 levels on higher room rates. Reiterate Add on FEHT as a hospitality recovery and re-rating play, TP: 0.77
OTHER NEWS
* Fragrance Group (FRAG SP) acquired two ageing freehold Singapore industrial buildings for a total of nearly S$101 million.
* Mapletree Log Tr (MLT SP) DBS Bank acquired shares in MLT for a consideration of S$1.13M, bringing DBS’s stake to 0.8596%
* Digital Core Reit (DCREIT SP) Distributable Income -8.5% y/y to US$31.5M due to higher finance expenses. Revenue for data centre -1.2%y/y to US$79.7M, while NPI slipped 3.7% y/y to US$51M. WALE is 3.6years
MALAYSIA
Most Asian stock markets fell due to rising US Treasury yields. The FBMKLCI dropped 0.13% to 1,440.60. Construction, utilities, and transportation sectors gained, while telecommunications, technology, and consumer products lagged.Trading volume increased to 3.23bn, and trading value rose to RM1.99bn. Bulls are trying to keep prices above 1,430-1,438 support, aiming for a breakout to test 1,450. A strong breakout may lead to 1,460-1,465 levels, while dropping below 1,430 suggests a deeper consolidation with support at 1,412-1,416. CGS-CIMB Highlights * Malaysia Airports Holdings (MAHB MK) - Monetising the Hyderabad airport (Maintain Add with a TP of RM7.76) https://bit.ly/3Qwi8SK *CapitaLand Malaysia Trust (CMMT MK)- Penang malls drove 3QFY23 earnings (Maintain Hold with a TP of RM0.51) https://bit.ly/3SfSiDx *PLYTEC Holding (PTEC MK) - Diversified construction solutions provider (Trading Lens- Non-rated) https://bit.ly/497oW0k COMPANY NEWS *Vitrox Bhd (VITRO MK) net profit for the third quarter ended Sept 30, 2023 (3QFY2023) dropped by 34.6% to RM33.25 million compared with RM50.84 million in the corresponding quarter the year before (3QFY2022) due to softer customer demand and unfavourable product mix. *DRB-Hicom Bhd (DRB MK) wholly-owned subsidiary, Edaran Otomobil Nasional Bhd (EON), has made an investment in Genie Malaysia, a subsidiary of Carro, Southeast Asia’s largest online used-car platform. *Pavilion Real Estate Investment Trust's (PREIT MK)* net property income (NPI) for the third quarter ended Sept 30, 2023 (3QFY2023) rose 34.5% to RM121.35 million from RM90.22 million a year earlier, following the inclusion of income from newly-acquired Pavilion Bukit Jalil. *Lotte Chemical Titan Holding Bhd (TTNP MK)* narrowed its net loss to RM55.58 million or 2.44 sen per share for the third quarter ended Sept 30, 2023 (3QFY2023) due to reversal of inventory write-down as well as improved margin spreads resulting from lower feedstock costs. *Cypark Resources Bhd*'s (CYP MK) Datuk Daud Ahmad has retired and will not continue as a member of the board of directors, after shareholders voted not to re-elect him at the company's 18th AGM. *Nestle (M) Bhd (NESZ MK) net profit in the third quarter ended Sept 30, 2023 rose 18.7% to RM133.7 million from RM112.65 million on the back of a 5.3% increase in revenue to RM1.77 billion from RM1.68 billion.
Lim&Tan
MayBank
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