RIVERSTONE HOLDINGS LIMITED (SGX:AP4)
Singapore Market Jan 2020 Wrap Up - Singapore In 5
- FSSTI down 2.2% in Jan. Downside risk from coronavirus outbreak especially after Singapore widens travel restrictions for Chinese visitors.
- We believe SIA (SGX:C6L), SATS (SGX:S58), Far East Hospitality Trust (SGX:Q5T), CDL Hospitality Trusts (SGX:J85), Starhill Global REIT (SGX:P40U), Dairy Farm International (SGX:D01), CapitaLand (SGX:C31), Sasseur REIT (SGX:CRPU), Mapletree Logistics Trust (SGX:M44U), Keppel Corporation (SGX:BN4) will be vulnerable due to their large China exposures.
- Stocks that could withstand downside: Raffles Medical Group (SGX:BSL), SingTel (SGX:Z74), StarHub (SGX:CC3), SPH (SGX:T39), ST Engineering (SGX:S63), Venture Corp (SGX:V03), City Developments (SGX:C09), UOL Group (SGX:U14), Wilmar International (SGX:F34), Frasers Centrepoint Trust (SGX:J69U), ComfortDelGro (SGX:C52), SGX (SGX:S68), Riverstone (SGX:AP4).
Briefer respite than expected: new storm clouds gather
- The FSSTI had initially picked up following the conclusion of the Phase 1 deal between the US and China, culminating in its signing on 15 Jan. But the improved sentiment did not last, with negative newsflow on the severity of the novel coronavirus (2019-nCoV) causing global stocks to plummet again. The FSSTI subsequently closed Jan down 70.8 pts, at 3,152.07 pts.
- NODX rebounded to 2.4% y-o-y in Dec 19 (-5.9% y-o-y Nov), while the decline in industrial production index (IPI) moderated to -0.7% y-o-y in Dec 19 (-8.9% y-o-y in Nov).
- Full-year property data has been released for private homes, +2.7% y-o-y, but below 2018’s figure of +7.9% y-o-y, as the impact of 2018’s property cooling measures took effect.
- Prices of landed homes +5.7% y-o-y while non-landed properties +1.9% y-o-y. Rentals of private homes +1.4% y-o-y, compared to a +0.6% y-o-y in non-landed properties.
Market: stocks with large China exposure fall; healthcare plays rise
- Index gainers were Ascendas REIT (SGX:A17U), ST Engineering (SGX:S63) (robust contract wins) and CapitaLand Commercial Trust (SGX:C61U) (M&A); while top losers were Yangzijiang Shipbuilding (SGX:BS6) (China exposure), Thai Beverage (SGX:Y92) (tighter VN alcohol regulations) and Golden Agri-Resources (SGX:E5H) (selldown in CPO futures).
- Mid-large cap gainers were Riverstone (SGX:AP4) (glovemaker), Keppel DC REIT (SGX:AJBU) (good earnings release), and Parkway Life REIT (SGX:C2PU) (healthcare REIT); while Bumitama Agri (SGX:P8Z) (selldown in CPO futures), and Hi-P International (SGX:H17) led the losers.
- The 4Q19 results season has started, with mainly REITs reporting. There have been no major earnings surprises, expect for Mapletree North Asia Commercial Trust (SGX:RW0U) (weaker portfolio, including HK Festival Walk).
- Institutional investors were net buyers in Jan, moving out of consumer non-cyclicals and industrials, and into financial services, telcos, REITs and tech. Retail were sellers for the whole Jan, and seemed to be taking the opposite side of institutional flows i.e. selling financial services, REITs, telcos, and tech, and moving into consumer non-cyclicals and industrials.
- Expect market sentiment in the near-term to be weak, as we feel the fear of 2019-nCoV spread has yet to peak. Singapore government widens its efforts today to minimise the risk of community spread by restricting new visitors with recent travel history to mainland China from entering the country. These visitors will also not be allowed to transit in Singapore. This is in addition to a 14-day leave of absence for returning residents. For fuller coverage of stocks likely affected by pandemic, see Singapore Strategy - Market may catch a flu if China sneezes.
Key corporate news
- CapitaLand (SGX:C31) has announced that CapitaLand Commercial Trust (SGX:C61U) and CapitaLand Mall Trust (SGX:C38U) will merge in a S$8.27bn cash and stock deal, forming CICT which will be the third-largest Asia-Pac REIT, with a market cap of around $16.8bn. See report: REIT - Big Getting Bigger.
- Sasseur REIT (SGX:CRPU) has temporarily closed the trust’s eleven malls in China, while CapitaLand has closed six malls and reduced operating hours of the remainder of its Chinese malls due to 2019-nCoV.
- Mapletree Logistics Trust (SGX:M44U) plans to acquire assets in Kobe, Japan, for S$272.5m and in Yongin-Icheon, Korea for S$41m.
- Frasers Property (SGX:TQ5) plans to buy a London business park for S$238m.
Technical perspective
- As the FSSTI rallied to the 3,285 resistance area in the first half of Jan, the failure to break above the ceiling revealed some early signs of weakness. The sharp selloff from the 3,285 resistance area since 17 Jan 2020 suggests the downtrend has resumed. The bearish break below the uptrend line and 200-day moving average on 28 Jan further validates the ongoing weakness.
- From a long-term perspective, the STI is showing a bearish formation, double top rejection off the 3,285 resistance area signals further downside.
- We expect the bearish momentum to sustain with 3,050 support. Bear in mind that if the 3,050 support fails to hold, the next support would be around the 2,960 area. See chart in attached PDF report.
LIM Siew Khee
CGS-CIMB Research
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https://www.cgs-cimb.com
2020-01-31
SGX Stock
Analyst Report
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