CAPITALAND LIMITED (SGX:C31)
BOUSTEAD SINGAPORE LIMITED (SGX:F9D)
CSE GLOBAL LTD (SGX:544)
November 2019 Wrap-Up - Singapore In 5 Mins
- FSSTI was down 1.1% in Nov; US-China trade relations dominate.
- Overall, 3Q19 results were good while M&A activity picked up.
- FSSTI target for end-2020 is 3,275, based on 12.5x CY21F P/E.
- Top picks are CAPITALAND (SGX:C31), SIA ENGINEERING (SGX:S59), YANGZIJIANG SHIPBUILDING (SGX:BS6), AEM HOLDINGS (SGX:AWX), BOUSTEAD SINGAPORE (SGX:F9D), JAPFA (SGX:UD2), FRASERS CENTREPOINT TRUST (SGX:J69U), ST ENGINEERING (SGX:S63), THAI BEVERAGE (SGX:Y92), CSE GLOBAL (SGX:544).
US-China trade relations dominate, 2019 GDP forecast floor raised
- The FSSTI fell 35.96pts, down 1.1%, to close Nov at 3,193.92pts. See Performance of Straits Times Index (STI) Constituents in November 2019.
- Global markets continue to be roiled by US-China trade relations. The recent signing of the Hong Kong Human Rights Bill, adding to the other accusations of human rights abuses by China, is likely to complicate the trade discussions.
- Singapore’s Ministry of Trade and Industry has revised its official full-year growth forecast for 2019 from 0.5% to 1%, up from 0.0% to 1% in 2Q19 (we forecast GDP growth of 0.5% in 2019) Singapore’s NODX continued to decline (-12.3% y-o-y in Oct vs. -8.1% y-o-y in Sep), dragged down by persistent weakness in electronics and a downturn in the non-electronics segment.
- There was a bright spark in the form of an unexpected 4% y-o-y rise in manufacturing output for Oct, boosted by the Biomed, General and Precision engineering segments.
- According to Urban Redevelopment Authority (URA) data, developers sold 928 private homes in Oct, (-27% m-o-m, but +85% y-o-y). Data from the Singapore Real Estate Exchange (SRX) showed an increase in the resale prices of condos (0.8% m-o-m, 2% y-o-y), with all regions experiencing rises; led by the core central region (CCR) at 1%, followed by the outside central region (OCR) and city fringes at 0.8% and 0.7% respectively.
Market
- A more positive 3Q earnings season (covered in report: Singapore 3Q19 Results Trend - Healthier Tone) did not prevent a dip in Nov. Amidst the slight correction in Nov, defensives such as Consumer Goods and Telcos outperformed, although there were no major sell-downs in a particular sector.
- Index outperformers were WILMAR INTERNATIONAL (SGX:F34) (strong results, upcoming listing of China assets) and YANGZIJIANG SHIPBUILDING (SGX:BS6) (good results, strong order book, discount to SG yards), while poorer results bogged JARDINE CYCLE & CARRIAGE (SGX:C07) (decline in associates’ revenue), and SEMBCORP INDUSTRIES (SGX:U96) (higher finance cost of O&G and Energy, drag from SEMBCORP MARINE (SGX:S51)), a big acquisition and subsequent fundraising pushed ASCENDAS REIT (SGX:A17U) down.
- In the large cap space, other outperformers were CITIC ENVIROTECH (SGX:CEE) (privatisation bid by parent), ACCORDIA GOLF TRUST (SGX:ADQU) (non-binding offer for assets), and surprisingly BUMITAMA AGRI (SGX:P8Z) (expected beneficiary of CPO price recovery, despite 3Q19 profit down 30%). Underperformers were: SEMBCORP MARINE (SGX:S51) (poor results), MAPLETREE NORTH ASIA COMMERCIAL TRUST (SGX:RW0U) (damaged assets in HK), and SPH REIT (SGX:SK6U) (acquisition and fundraising).
- Institutional investors were sellers for the whole of Nov, with Industrials, REITs, and Telcos having the most outflows. Retail investors were also sellers for most of the month, barring a small uptick at end-Nov, moving out of Financials, Industrials and Telcos, into REITs, and to a much lesser extent, into Healthcare and Utilities.
Key corporate news
- CAPITALAND (SGX:C31) (ADD, Target Price: S$4.15) to sell The Star Vista to Rock Productions for S$296m; also to redevelop Liang Court with ASCOTT RESIDENCE TRUST (SGX:A68U) (HOLD, Target Price: S$1.34), and CITY DEVELOPMENTS (SGX:C09) (ADD: Target Price S$12.09).
- SPH REIT (SGX:SK6U) (HOLD, Target Price: S$1.16) takes A$670m stake in a South Australia mall (Westfield Marion shopping Centre), and raises S$164.5m in a private placement.
- SEMBCORP MARINE (SGX:S51) (HOLD, Target Price: S$1.26) bagged Shell's floating production unit contract.
Technical perspective
- With a rather weak performance in November, the confluence of resistance at 61.8% Fibonacci Retracement level and 3,285 resistance area reaffirmed the downtrend remains intact. The failure to break above the mentioned resistance suggests the bears have regained control.
- More importantly, the bearish price action on the week ended 29 Nov formed a significant pattern, Bearish Engulfing Bar, which suggests the resumption of the downtrend.
- Moreover, the STI also closed below the 20-week moving average, showing further sign of weakness. Therefore, we expect bearish momentum to pick up to target the 3,050 support, followed by 3,000.
- See also
LIM Siew Khee
CGS-CIMB Research
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https://www.cgs-cimb.com
2019-12-02
SGX Stock
Analyst Report
4.150
SAME
4.150
1.000
SAME
1.000
0.730
SAME
0.730
