Ada Tam Ying Ying

Oct 10, 202310 min read

4 Oct2023 Reports

SGX

Economic Calendar :

https://x.edm.sgx.com/ats/msg.aspx?sg1=922377ccc77441fec24cada3cca67d0b

10 in 10 – Alpina Holdings (SGX Code: ZXY) :

https://api2.sgx.com/sites/default/files/market-dialogues/migration/10%20in%2010%20with%20Alpina%20Holdings%20-%20Leading%20Singapore%27s%20Smart%20City%20Transition.pdf

Phillip OCBC DBS UOB KGI CIMB Lim&Tan MayBank

https://www.zawya.com/en/mena

Phillip Capital Market Reports:

Stock Research

Phillip Daily Morning Note :

https://mailchi.mp/phillip/phillip-morning-note-256555?e=ffecca3682

US Market (By Phillip Global Markets Night Desk)

04 October 2023

Insiders Pivot to Bullish

Over the past month, we have monitored an unflinchingly neutral stance from corporate executives, directors, and beneficial owners. During that time, the S&P 500 fell from around 4530 to 4288 at the close last week. The good news was that insiders did not panic and start selling shares in the declining market. The bad news is that those same insiders apparently didn't find value, and were not buying into the declining market (which is what we'd hope to see). But this week, insider-sentiment data from Vickers Stock Research offers a pivot. Vickers' benchmark NYSE/ASE One-Week Sell/Buy Ratio is now 1.43, comfortably in the bullish zone below 2.00. Taking all exchanges in account, Vickers' Total ratio is 1.77, also clearly bullish. On an exchange basis, the NYSE one-week ratio is a bullish 1.45, while the Nasdaq ratio comes in at 2.02, which is neutral but very close to the 2.00 needed to be bullish. One week does not a trend make, but insiders may be starting to tell us that stocks are oversold. The next important event will be if the one-week sentiment data from Vickers can bring the longer-term (eight-week) sentiment data into bullish alignment. That hasn't happened yet, and our knowledge of this data tells us that such an alignment is needed for these signals to be fully actionable.

Market Wrap

Global financial markets got a respite Wednesday after a weak reading of private payrolls spurred bets that the US central bank can refrain from tightening policy.

S&P 500 futures pointed to a bounce after the gauge plumbed a four-month low Tuesday. Ten-year Treasury yields slipped four basis points to below 4.8%, after jumping 30 basis points this week.

Today's Big News

- US Firms Added 89,000 Jobs, Fewest Since Early 2021 in ADP Data

- US 30-Year Mortgage Rate Tops 7.5% for First Time Since 2000

- Millennium in Talks to Invest Billions With Rival Schonfeld (2)

- Oil Extends Slump to Three-Week Low on Fragile Economic Outlook

- Civitas to Buy Texas Shale Assets from Vitol for $2.15 Billion

- Five Charts Showing How 5% US Yield Would Roil Global Markets

OCBC

DBS

US 10-year Treasury yield climbs to 4.8%, highest level since 2007; US 30-year mortgage rate reaches 7.7%
US currency falls sharply against the yen after rising above the psychological 150-per dollar level
Intel plans to spin out programmable chip unit in January 2024 and IPO in next two to three years

Singapore Hospitality REITs

Luxury and upscale hotels could book in stronger gains in 3Q

Key operational metrics are pointing to a robust 3Q
We see stronger recovery in upscale and luxury hotels vs midtier hotels
REITS with higher exposure to luxury and upscale hotels could outperform the industry with deep pocketed travellers back in the mix
Which stocks do we prefer?
Click here to read our views

China E-commerce Sector

Is growth momentum sustainable into 2H23 amid macro uncertainty?

Consumption downgrade in fact benefits e-commerce platforms given their low-price strategy; expect leading e-commerce to outperform overall retail growth
Competition remains rational, as reflected by steady margin
Online penetration rate stood at only 27% if excluding product returns, representing further room to grow
What are our top picks in the sector?
Click here to read our views

China Gas Sector

Stronger earnings growth from non-gas operations in 2024

Uptrend in dollar margin to continue, thanks to government policies and low LNG prices
Integrated energy and value-added services as stronger growth drivers with better resilience
Sector valuation attractive at 1SD to 2SD below 2-year historical average PE
Which counter do we favour currently?
Click here to read our views

China Modern Dairy (1117 HK)

Investor day takeaways: Leading the way with integrated operations

Margins to rebound in 2H23 on softer feed costs while strong execution will beef up efficiency gains
Digital platform and feed businesses to be longer term growth drivers
Do we see ongoing efficiency gains and easing cost pressure ahead?
Click here to read our views

New World Development (17 HK)

Deleveraging on the radar

FY23 underlying profit fell 14% to HK$6.1bn, dragged by higher interest expenses
Final distribution per share (DPS) tumbled 80% to HK$0.30
No equity financing is being considered; all refinancing of borrowings due in FY24 has been taken care of
What catalysts do we see?
Click here to read our views

DBS Group Research | Equity Picks

Singapore Equity Picks: Read more

Hong Kong Equity Picks: Read more

UOB

UOBKH: Country Dailies: Wednesday, October 04, 2023

Click on the link for Greater China Daily. https://research.uobkayhian.com/content_download.jsp?id=75419&h=518d2022730ac96f3ab587a756275b0e Click on the link for Indonesia Daily. https://research.uobkayhian.com/content_download.jsp?id=75422&h=c7f7887d16e914f653133202a621a32c Click on the link for Malaysia Daily. https://research.uobkayhian.com/content_download.jsp?id=75433&h=8b4c814cb60fc624e25729c9701130ce Click on the link for Singapore Daily. https://research.uobkayhian.com/content_download.jsp?id=75405&h=4f89c17475aa85cb632814f13f76c9ff Click on the link for Thailand Daily. https://research.uobkayhian.com/content_download.jsp?id=75436&h=a4b2593ad2f1f40a988faca3e4ea8791.

SP: Monthly Review and Outlook

Click on the link for details.

https://research.uobkayhian.com/content_download.jsp?id=75435&h=f7979b1d3d1a4271f2d0b9e62b6b3e78

UOBKH: Regional Morning Meeting Notes: Wednesday, October 04, 2023 [GC Alpha Picks, GC Strategy, ID Alpha Picks, FREN IJ, MAL Alpha Picks, PECCA MK, CD SP, TH Electronics]

Click on the link for details.

https://research.uobkayhian.com/content_download.jsp?id=75403&h=18b78356b83fea588b4e64ffa412a835

KGI

Top Stories, 4 Oct 2023

1. Hong Kong leads Asia-Pacific markets lower; Australia’s central bank keeps interest rate unchanged

https://www.kgieworld.sg/research/tdtn

2. HKEX MSCI China A 50 Connect Index Futures is HKEX's first A-share derivatives product is based on the MSCI China A 50 Connect Index, a sector-balanced index that selects 50 names from among the largest stocks listed Stock Connect, and targets at least two stocks from each sector.

Find out more: https://www.kgieworld.sg/research/s53v

3. Oil rebounds from 3-week low, settles up despite stronger dollar

https://www.kgieworld.sg/research/7j3i

4. IMF warns fragmented commodities markets imperils food security, green transition

https://www.kgieworld.sg/research/uubz

5. US job openings unexpectedly rise in August

https://www.kgieworld.sg/research/qb6t

6. Gold Price Analysis: XAU/USD trying to hit the brakes, down into $1,824 for Tuesday

https://www.kgieworld.sg/research/pk65

TRADING IDEAS: 🇸🇬 SINGAPORE

4 October 2023

🏙 ST Engineering Ltd. (STE SP): Expanding services

BUY Entry 3.86 – Target – 4.06 Stop Loss – 3.76

🏢 China Aviation Oil Singapore Corp. Ltd. (CAO SP): Tourism outshines amidst gloomy economic recovery

BUY Entry 0.87 – Target – 0.95 Stop Loss – 0.84

Technical Analysis: 4 October 2023

🇸🇬 SG

iFast Corp. Ltd. (IFAST SP)

ST Engineering Ltd. (STE SP)

🇭🇰 HK

Samsonite International S.A. (1910 HK)

Vinda International Holdings Ltd. (3331 HK)

CIMB

Food Empire Holdings Ltd

https://rfs.cgs-cimb.com/api/download?file=d8386b91-57b0-43df-b0ec-c31c3dc38d0f

MAL: CGS-CIMB Daybreak - 04 October 2023

▍ News of the Day....

Trendspotter – MY- Genetec Technology (0104) (Technical Buy, 2.51): Short-term uptrend?

• Malaysia maintains 2023 GDP growth forecast of 4% to 5%

• BNM overtakes Malaysian government as Malaysia’s top bond issuer in 3Q23

• MAHB saw 11.2 million total passengers movement in Aug for its airports

• HLB, HLIB and Cagamas completes RM300m green assets transaction

• Acquisition of Boustead Plantations by KLK still pending final decision

MAL: Strategy Note - One step at a time

Strategy | PDF

One step at a time

Author(s): Chehan PERERA, CFA (60) 326359299

■ One of two key catalysts we highlighted in June is taking shape while the expected capitulation in the US dollar has unfortunately not yet materialised.

■ In this note, we discuss market implications of policy clarity and continuity, something that has been notably absent since 2018.

■ We make three upgrades and one downgrade to our sector recommendations and four changes to our top picks list of 20 stocks.

Inexpensive with decent adjusted growth With one of two key market catalysts taking shape, we remain constructive on equities. However, also taking into account changes to our estimates (especially for the KLCI), we reduce our YE KLCI targets from 1,610 to 1,550 for 2023 and from 1,800 to 1,755 for 2024. We see greater upside for the broader FBM100 index. We maintain that a reversal in the strong US dollar trend is necessary for a sustained breakout from the relatively depressed present price levels. The FBM100 Index trades at 13.1x one-year forward P/E, more than one standard deviation below mean. If we adjust for distortions caused by falling average selling prices for gloves, plantations and petrochemicals, overall earnings growth is not bad at 16% for 2023 and 11% for 2024. It was up 21% yoy in 1H23. Policy clarity and continuity Retaining status quo at the six state elections provides real hope for policy clarity and continuity over the next few years, a key catalyst we have been waiting for. The Ekonomi Madani announced in July provided high-level insights into the Anwar administration’s policy framework, with further granularity coming from the NETR, NIMP 2030 and mid-term review of 12MP. There now needs to be proactive implementation in areas such as fiscal consolidation and broadening of growth drivers, which could have positive implications on the equity market, in our view. A fairly detailed simulation through to 2025 shows that it is not too difficult to reach a fiscal deficit of 3.5% of GDP (from a target of 5% in 2023) while NIMP 2030 covers initiatives that could lift the pace of economic expansion. Dollar defying all obstacles The other catalyst was for a breakdown in the DXY, reversing the depreciation trend seen across the Emerging Market (EM) currency complex since 2010. Unfortunately, this has not yet happened (underpinned by a hawkish Fed), with the DXY recovering to 106 from below 100 in Jul 23. A turn in the US dollar, we believe, is important as it affects flows into EM risk assets, including Malaysia. A clear example of this is the brief period in Jul 23 when the DXY broke below 100 and foreign inflows into Bursa were RM1.4bn for the month, reversing 10 consecutive months of outflows. Among ten EM currency cross rates we looked at, most have had a high inverse correlation to the DXY since 2010, depreciating by an average 64% (the ringgit is down 37%). Nevertheless, we find it unsustainable that interest rate differentials alone can have such a profound impact on an exchange rate and believe it is a matter of time before markets focus on the mounting US government debt, ballooning debt costs/fiscal deficit, and sizeable US money creation in the past 13 years. Changes to key recommendations but remain domestic focused Potential improvements in policy initiatives should provide further support to the local economy. Hence, we remain heavily weighted on domestic-driven sectors and companies. We upgrade consumer discretionary, telecoms and utilities from Neutral to Overweight and downgrade REITs to Neutral. We stay positive on, among others, real estate, construction, conglomerates and banks but Underweight on plantations, industrial goods (gloves) and technology. Our sector insights are covered in the final section of this report (page 11). We have made 4 changes to our list of 20 top picks and updated the list of 10 underperformers. The revised list of 20 trades at 11.8x 2024F P/E and offers 4.5% net yield and 14% 2-year normalised profit CAGR. However, there is limited valuation support for the list of 10 as seen by its 21.8x CY24F P/E and 2.8% yield amidst a declining earnings trend.