Singapore Market May 2020 Wrap Up - CGS-CIMB Research 2020-05-29: Singapore In 5

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MAPLETREE LOGISTICS TRUST (SGX:M44U)

Singapore Market May 2020 Wrap Up - Singapore In 5

• FSSTI closed May at 2,510.75 pts, down 4.32%, as the government unveiled a fourth package (S$33bn) to preserve jobs and support the economy.
• MSCI Singapore rebalancing:
  • Added Mapletree Logistics Trust (SGX:M44U).
  • Dropped ComfortDelGro (SGX:C52), SATS (SGX:S58), Sembcorp Industries (SGX:U96), and SPH (SGX:T39).
• We keep our end-2020F FSSTI target at 2,495 pts, still based on 12x CY21F P/E.
• Our top picks:
  • CapitaLand Mall Trust (SGX:C38U),
  • Frasers Centrepoint Trust (SGX:J69U),
  • Sheng Siong (SGX:OV8),
  • SingTel (SGX:Z74),
  • Wilmar (SGX:F34),
  • Venture Corp (SGX:V03),
  • AEM Holdings (SGX:AWX),
  • CSE Global (SGX:544),
  • Japfa (SGX:UD2), and
  • Riverstone (SGX:AP4).

More money to ease the pain

• The FSSTI closed May at 2,510.75 pts, down 113.48 pts m-o-m (-4.32%), giving back much of last month’s rebound.
• The government unveiled a fourth package (S$33bn) to preserve jobs and support the economy, bringing the total economic stimulus to S$92.9bn. See Singapore Strategy - CGS-CIMB Research 2020-05-27: #4 Help Package ~ More Cushioning.
• Singapore’s Apr 20 NODX grew 9.7% y-o-y, due to a sharp increase in biomed manufacturing output, offsetting a decline in electronics. FY20 NODX is still expected to decline with official forecasts from Enterprise Singapore downgraded to between -1% and -4%, from -0.5% to 1.5% previously.
• Revised 1Q20 GDP came in at - 0.7% y-o-y, vs. advance estimates of -2.2% y-o-y. Our economist has revised our end-2020 GDP forecast to -4.9% (from -6.8% previously) on the back of stronger biomed performance.
• According to Urban Redevelopment Agency (URA) data, Apr 20 home sales were down 58% m-o-m and 62% y-o-y as circuit breaker measures hit viewings. The URA price index for 1Q20 was down 1% q-o-q; the core central area (CCR) experienced the biggest decline, down 2.3% vs. a 0.4% decline in the rest of central region (RCR) and a 0.5% fall in outside central region (OCR).

Poor 1Q20 earnings season; MSCI Singapore Index rebalancing

• Unsurprisingly, the 1Q20 earnings season was a bust, with many sectors, especially retail, hospitality and capital goods, impacted by Covid-19. The few bright spots were
  • consumer staples (Sheng Siong (SGX:OV8), Japfa (SGX:UD2)),
  • glove maker (Riverstone (SGX:AP4)), and
  • tech manufacturing (AEM Holdings (SGX:AWX), Frencken Group (SGX:E28), UMS Holdings (SGX:558)).
• See more in report: Singapore Strategy - CGS-CIMB Research 2020-05-19: Market Versus Economy.
• Sector-wise, Healthcare, REITs and Tech outperformed while Consumer Services, Industrials and Telcos brought up the rear.
• Top index movers were Wilmar (SGX:F34) (China recovery from Covid-19), Jardine Cycle & Carriage (SGX:C07), and CapitaLand Commercial Trust (SGX:C61U) (merger arbitrage), while Riverstone (SGX:AP4), Perennial Real Estate Holdings (SGX:40S) and AEM Holdings (SGX:AWX) led among the mid-large caps.
  • See STI Constituents Share Price Performance.
• The MSCI Singapore will be rebalanced from 29 May, adding Mapletree Logistics Trust (SGX:M44U), while removing ComfortDelGro (SGX:C52), SATS (SGX:S58), Sembcorp Industries (SGX:U96), and SPH (SGX:T39) (these four were among the five worst performers of the month for both FSSTI stocks, and in the mid-large cap space).
• Institutional investors continued their sell-off; the biggest outflows came from Financials and Industrials, and to a lesser extent, REITs and Telcos. Retail investors bought into the above sectors, while paring down on Consumer Cyclicals.
  • See SGX Market Fund Flow Overview, SGX Weekly Fund Flow By Sector.

Key Corporate News

• SGX RegCo is to drop the minimum trading price rule from Jun. See news release.
• SGX (SGX:S68) will discontinue MSCI equity index futures and options contracts, excluding MSCI Singapore, upon licence expiry. See report: Singapore Exchange - MSCI Licence Agreement Expires Feb 2021, Downgrade to REDUCE.
• Alibaba acquired a 50% stake in AXA Tower (valued at S$1.7bn) from a consortium led by Perennial Real Estate Holdings (SGX:40S). See Perennial Real Estate Holdings Announcements.
• Boustead Project (SGX:AVM)’s subsidiary has landed a significant design-and-build contract to deliver an advanced high-tech industrial facility in Penang. See Boustead Project Announcements.
• Lum Chang (SGX:L19) won a tender from Temasek Holdings subsidiary Mandai Parks to build a resort and indoor attraction for the Mandai rejuvenation project. See Lum Chang Announcements.

FSSTI - Technical Perspective

• The FSSTI edged lower in May, falling 4.3% as the bears gain momentum. Since the FSSTI formed a Lower High (LH) in Apr at 2,671 pts, each rally along the way failed to breach a new high. Instead, the FSSTI has been forming a series of Lower Highs (LH) in May, which suggests the bearish momentum is accelerating.
• Moreover, the FSSTI has closed below the 20-day moving average over the past seven trading days, which is a further sign of weakness. Thus, expect further downside to the 2,380 pts support area, followed by the 2,200 level when the FSSTI breaks below the current floor at 2,500 pts.
• The downtrend should remain capped by the downtrend line and 2,670 resistance area.
• See STI chart in PDF report attached below.

LOCK Mun Yee CGS-CIMB Research | EING Kar Mei CFA CGS-CIMB Research | https://www.cgs-cimb.com 2020-05-29

SGX Stock Analyst Report HOLD MAINTAIN HOLD 1.630 SAME 1.630