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CapitaLand Limited

Ascendas REIT

Ascott Residence Trust

DBS Group Holdings Ltd

Raffles Medical Group

Singapore Banking Monthly

StarHub Ltd

6 May 19, 8.15am/11.15am Morning Call/Webinar

China Aviation (Singapore) Oil

China Sunsine Chemical Holdings Ltd

Sembcorp Marine Ltd

US Weekly

Micro-Mechanics (Holdings) Ltd

Sheng Siong Group

Phillip Singapore Weekly



2

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CapitaLand LimitedA temporal blip in the grand scheme of things

Tara Wong

Research Analyst

Phillip Securities Research Pte Ltd

6 May 2019



CapitaLand LtdACUUMULATE (Maintained), TP: $4.00 (unchanged), Last: $3.53

+ The Positives

CapitaLand Lodging was the sole segment that reported YoY growth for both revenue (+14.4%) and EBIT (+328%). Excluding the one-time gain from divestment of Ascott Raffles Place, EBIT from this segment would still have risen c.31%.

Solid sell-through rate for China projects. >5k units ready to be launched for rest of 2019.

- The Negatives

Lower handover of units this quarter due to timing differences. The Management communicated that bulk of the units handover will be back-ended into 2H19.

Results at a glance

(SGD mn) 1Q19 1Q18 YoY (%) Comments (1Q18 vs 1Q17)

Gross Revenue 1,048 1,376 -23.8% Lower revenue from residential projects in Singapore and

China, partially mitigated by higher handover of units in

Vietnam and higher rental revenue from portfolio of

properties in USA and Europe acquired in FY18.

EBIT 699 605 15.5% Higher portfolio and revaluation gains.

Finance costs (182) (149) 22.6% Increase in borrowings and average cost of borrowings at

3.2% (1Q18: 3.1%).

Total PATMI 296 319 -7.4% Lower operating PATMI and writeback of impairments,

partially mitigated by gains realised from assets recycling

and revaluation of a property in China.

Operating PATMI 182 229 -20.5%

Source: Company, PSR



CapitaLand LtdACUUMULATE (Maintained), TP: $4.00 (unchanged), Last: $3.53

Outlook

Recent easing of residency requirements in China (also known as the hukousystem) expected to flow through for a gradual relaxation of the price caps, albeit in a gradual and controlled manner.

Launching former Pearl Bank Apartments development in 2Q19 and the Sengkang Central mixed-use development in 3Q19.

Vietnam residential launches to see a slowdown; demand still strong.

Maintain ACCUMULATE with unchanged TP of S$4.00

Our target price translates to a FY19e P/NAV ratio of 0.78x.

CapitaLand's upcoming project launches in Singapore and Malaysia

Region DevelopmentNo. of

unitsLaunch

Former Pearl

Bank

Apartments

7742Q

2019

Sengkang

Central mixed-

use

development

6803Q

2019

Malaysia

(Kuala

Lumpur)

Freehold

Condominium

in Desa

5052Q

2019

Singapore


RNAV Table

(S$mn) (S$)

Development properties

Singapore residential surplus 117 0.03

China residential surplus 3,103 0.73

Other Overseas residential surplus 6 0.00

Development properties 5,129 1.20

8,355 1.95

Investment properties

Singapore 2,282 0.53

China (Includes HK) 15,333 3.59

Japan 1,654 0.39

Other Asia 694 0.16

Europe, U.S. and Australia 1,828 0.43

21,791 5.10

Listed / unlisted entities

CMT 2,520 0.59

CCT 2,112 0.49

CRCT 430 0.10

ART 1,078 0.25

Others 254 0.06

6,395 1.50

Fund Management Platform

PER: 12 2,984 0.70

GAV 39,525 9.25

Less: FY19E cash (net debt and committed CAPEX) (18,153) (4.25)

RNAV 21,372

RNAV/share (S$) 5.00

Premium/(discount) to RNAV -20%

Fair value (S$) 4.00

Source: PSR

*Our RNAV figures do not include components that would arise

from the proposed acquisition of Ascendas-Singbridge (ASB)



Ascendas REITRich valuations limit upside

Natalie Ong

Research Analyst


6 May 2019



Results at a glance

(SGD mn) 4Q19 4Q18 YoY FY19 FY18 YoY Comments

Gross revenue 225 216 +4.3% 886 862 +2.8% Acquisition of two logistics UK portfolios in Aug 18

and Oct 18 and four Australian properties in Jun 18

and Sep 18 and contributions from redeveloped SG

asset, 20 Tuas Ave 1 in Apr 18, partially offset by

tenant non-renewals and downsizing in SG

properties.

Net property

income

163 158 +3.5% 650 629 +3.2% Mainly due to new acquis i tions and net

property tax savings due to retrospective

downward revaluations in va luation of

properties , partia l ly offset by higher

operating expenses .

Dis tributable

income

129 115 +12.7% 486 468 +3.8% Aided by S$7.8mn in rol lover adjustments on

prior year's non-tax deductibi l i ty of finance

costs

DPU (cents) 4.15 3.91 +6.1% 16.04 15.99 +0.3% Rollover adjustments lifted DPU by 0.25cts (FY18

S$5.9mn; 0.20cts)


Ascendas REIT NEUTRAL (Downgraded), TP: $2.88, Last: $3.01

+ The Positives

Positive rental reversions across all segments in Singapore - rental reversions for the Singapore portfolio was +6.6%/+3.7% for 4Q19/FY19.

Portfolio occupancy increased 40bps YoY from 91.5% to 91.9% despite pre-terminations and non-renewals.

- The Negatives

Flattish rents guided for Singapore renewals as passing rents are close to market rents

Outlook

Repositioning of 25 and 27 Ubi Road 4 will allow AREIT to double rents while avoiding competing with future supply.

8% of the Australia portfolio’s GRI will be up for renewal in FY20, with 74% of lease expiries coming from Sydney –

strong rental market with 4% rental reversions for the past 12 consecutive quarters.



Ascendas REIT NEUTRAL (Downgraded), TP: $2.88, Last: $3.01

Downgrade to NEUTRAL; unchanged target price of $2.88

Rich valuation of P/NAV of 1.41x not as well supported - 4Q12/1Q19 occupancy rate and rental index for the industrial sector 93.7%/88% and 100/93.5 indicating a stronger market propping up valuations.

Figure 1. 12M-forward P/NAV (x)

Source: Bloomberg, PSR estimates

0.9

1.0

1.1

1.2

1.3

1.4

1.5

2011 2012 2013 2014 2015 2016 2017 2018 2019

+2 std. dev.

-2 std. dev.

Average

0.9

1.0

1.1

1.2

1.3

1.4

1.5

2011 2012 2013 2014 2015 2016 2017 2018 2019

+2 std. dev.

-2 std. dev.

Average

Figure 2. Singapore: Industrial rental index and factory occupancy

Source: PSR, CEIC

87

88

89

90

91

92

93

94

80

85

90

95

100

105

110

12/2012 12/2013 12/2014 12/2015 12/2016 12/2017 12/2018

Property Rental Index: Industrial Factory Space Occupancy Rate

%



Ascott Residence TrustA promising start to the year

Natalie Ong

Research Analyst


6 May 2019



Results at a glance

(SGD mn) 1Q19 1Q18 YoY Comments

Gross revenue 115.9 112.8 2.8% Revenue grew in Singapore(+17%) and UK(+13%)

due to stronger demand, and in Phillippines(+24%)

due to higher ADRs post-AEI

Gross Profi t 54.6 48.7 12.2% Excluding accounting impact of adopting IFRS

116, gross profi t increased 2%

Distributable income 31.5 29.2 7.9% Due to S$2.6mn in interest saving and FX

ga ins on the repayment of foreign currency

loans paid out of divestment proceeds (1Q18

+S$1.6mn)

DPS (cents) 1.45 1.35 7.4% Excluding interest savings and FX gains, DPU grew

4% (1.33/1.28 in 1Q19/1Q18)


Ascott Residence TrustBUY (Maintained), TP: $1.36, Last: $1.21

+ The Positives

Higher leisure and corporate demand in SG, UK and Philippines.

SG international tourist arrivals (IVA) in 1Q19 increased 1% YoY and seems on track to surpassing the projected 3% growth for the year (2018 IVA growth +6%).

Holding steady in Japan and Australia despite strong competition - RevPAUs and gross profit increasing 8%/4% and 4%/3% for Japan and Australia

- The Negatives

Negative reversions on France master lease and sale of Ascott RP reduce the income from “stable” sources

Outlook

Better performance expected from US and Indonesia in due to higher post-AEI RevPAUs

Possible of merger with Ascendas Hospitality Trust still hangs in the air.

Maintain BUY with unchanged TP of S$1.36

Reiterate BUY favouring geographical diversification and upside exposure. Total return 18.3% and FY19e P/NAV of 0.88.



DBS Group Holdings LtdRecord earnings and ROE

Tin Min Ying

Research Analyst


6 May 2019



DBS Group Holdings Ltd– Accumulate (Downgraded) TP: $29.0 (unchanged)

The Positives

+ NIM expanded 5 bps YoY and 1 bps QoQ to 1.88%, the highest since 2Q10.

• Boosted by higher interest rates in SG & HK.

• Fixed deposits grew 16.7% YoY, faster than CASA deposits which contracted 2.2% YoY.

• Lag effect in repricing: 40-45% of loans book reprices almost immediately, remaining fixed rate loans repriced over next 2-3years.

• Expect a couple more quarters of margin expansion.

• By blending in both effects, guidance maintained at 5bps above FY18’s average NIM of 1.85%.

• We pen in our estimate for FY19e NIM at 1.91%.

Results at a glance

(SGD mn) 1Q19 1Q18 YoY (%) 4Q18 QoQ (%) Comments

NII 2,310 2,128 8.6% 2,330 -0.9% NIM expanded 5 bps YoY. Loans grew 5.7% YoY.

Net Fees & Comm 730 744 -1.9% 635 15.0% Lower WM, brokerage and IB fee income was offset by rise

in card fees, transaction service fees and loan-related fees.

Other Non-II 511 488 4.7% 280 82.5% Rise in trading income and net gain on investment

securities more than offset a property gain of SGD 86mn a

year ago.

Total Income 3,551 3,360 5.7% 3,245 9.4%

Expenses 1,481 1,278 15.9% 1,422 4.1% CIR remains stable YoY at 42%.

Allowance 236 815 -71.0% 105 124.8%Allowances fell 53.7% YoY due to a General Provision write

back of S$100mn and improvements in credit

PATMI 1,413 802 76.2% 1,334 5.9%





The Positives

+ Allowances declined 53.7% YoY

• Write-back of S$100mn

• Improvements in credit environment: Stabilisation of interest rates & receding trade war fears, DBS adjusted its ECL model accordingly on a monthly basis.

+ Non-interest income recovered with the 4.7% YoY rise in other non-interest income offsetting the fall of 1.9% YoY in fee income.

• Fee income fell YoY this quarter due to more buoyant market sentiments in 1Q18.

• Higher trading gains (from interest rates & credit activities) & higher gains from investment securities.

• Gains were more than sufficient to offset a S$84mn one-off property gain last year.

Results at a glance







year ago.

Total Income 3,551 3,360 5.7% 3,245 9.4%




PATMI 1,413 802 76.2% 1,334 5.9%





The Negatives

- Housing loans contracted (-0.76% QoQ) for the first time in more than a decade.

• Due to property cooling measures and high-interest rates.

• DBS’s market share of Singapore housing loan remained unchanged at 31%.

• We believe that the slowdown in mortgage loans will persist. Hence we tone down our FY19e loans growth estimates from 6.0% to 5.4% YoY.

Results at a glance







year ago.

Total Income 3,551 3,360 5.7% 3,245 9.4%




PATMI 1,413 802 76.2% 1,334 5.9%





Update

Change in dividend policy:

Dividend payment frequency has been changed to four times a year instead of two.

• 1Q19 proposed dividend of 30 cents per share, consistent with FY18 full year pay-out of S$1.20 per share.

• To provide shareholders with more regular income stream as well as some consistency in DBS’ Capital Adequacy Ratio.

Investment Actions

We downgrade to Accumulate at an unchanged target price of S$29.00. Our rating has been downgraded to Accumulate due to the share price performance.

• Despite the softer expectation of loans growth due to market headwinds, we expect a couple more quarters of NIM expansion due to loan repricing.

• Looking forward, asset quality is expected to be stable, and greater cost efficiencies will provide upside to earnings.

• DBS remains attractive with FY19e dividend yield of 4.2%.



Raffles Medical Group LtdNew Chongqing hospital costs start to bite

Tin Min Ying

Research Analyst


6 May 2019



Raffles Medical Group Ltd– Neutral (Maintained) TP: $1.09 (unchanged)

The Positives

+ Healthcare services (e.g. GP clinics) underpinned revenue growth.

• Revenue growth of 8.9% YoY for Healthcare services was boosted by the higher patient load from the Primary Healthcare Network (PCN) scheme and new contracts.

• Local patients drove volume while foreign patient load growth remained flat.

+ Hospital services gaining momentum with expanded facilities (+ 3.2% YoY).

• Higher utilisation of inpatient capacities.

• Hospital services revenue turned around after contracting marginally by 0.8% YoY in FY18 due torefurbishments of current inpatient facilities at the older Raffles Hospital in Singapore.

Results at a glance

SGD mn 1Q19 1Q18 YoY (%) 4Q18 QoQ(%) Comments

Revenue 128.3 120.2 6.7 127.7 0.5 Higher contribution from clinics (+8.9%) and hospital

services (+3.2%).

EBITDA 23.6 23.3 1.6 25.7 (8.2) Staff costs contracted 1.2pp to 51.5% of revenue

(1Q18: 52.7% of revenue). EBITDA margin fell 1pp to

18.4% due to RafflesHospital Chongqing's EBITDA

loss of $1.8mn.

EBITDA (Excl

China)

25.4 23.3 9.3 25.7 (1.2) Excluding RafflesHospital Chongqing's gestation

costs, EBITDA margin rose 0.4pp to 19.8%.

Operating profits 17.1 18.9 (9.4) 21.3 (19.5) Operating margin fell to 13.3% (1Q18: 15.7%)

PBT 17.0 18.9 (9.7) 25.2 (32.3)

PATMI 13.6 15.8 (13.7) 17.3 (21.3) Gestation costs from RafflesHospital Chongqing was

within expectations.

PATMI (Excl China) 16.1 15.8 2.1 17.3 (6.9)





The Negatives

- Margins to remain under pressure.

• Excluding RafflesHospital Chongqing’s EBITDA loss of $1.8mn, EBITDA margin would have risen 0.4pp to 19.8 instead of decreasing 1pp to 18.4%.

• However, gestation costs were well within the guidance of EBITDA loss of S$8-10mn in the first year.

- Staff costs rose 4.2% YoY due to hospital expansion.

• However, costs remained well contained, making up 51.5% of revenue as compared to 52.7% in 1Q18.

• We expect it to be above 50% of the Group’s revenue in the coming quarters until patient volume picks up.

Results at a glance

SGD mn 1Q19 1Q18 YoY (%) 4Q18 QoQ(%) Comments

Revenue 128.3 120.2 6.7 127.7 0.5 Higher contribution from clinics (+8.9%) and hospital

services (+3.2%).

EBITDA 23.6 23.3 1.6 25.7 (8.2) Staff costs contracted 1.2pp to 51.5% of revenue

(1Q18: 52.7% of revenue). EBITDA margin fell 1pp to

18.4% due to RafflesHospital Chongqing's EBITDA

loss of $1.8mn.

EBITDA (Excl

China)

25.4 23.3 9.3 25.7 (1.2) Excluding RafflesHospital Chongqing's gestation

costs, EBITDA margin rose 0.4pp to 19.8%.

Operating profits 17.1 18.9 (9.4) 21.3 (19.5) Operating margin fell to 13.3% (1Q18: 15.7%)

PBT 17.0 18.9 (9.7) 25.2 (32.3)

PATMI 13.6 15.8 (13.7) 17.3 (21.3) Gestation costs from RafflesHospital Chongqing was

within expectations.

PATMI (Excl China) 16.1 15.8 2.1 17.3 (6.9)





Updates

China – Chongqing and Shanghai hospitals:

• Management maintained EBITDA loss guidance for both hospitals of S$8-10mn in the first year and S$4-5mn in the second year before breaking even in the third year of operation.

• RafflesHospital Chongqing:

• Open since January 2019.

• Will be a 700-bed hospital located in the New North District of the Liangjiang New Area.

• RafflesHospital Shanghai:

• Expected to open in 4Q19.

• Will be a 400-bed tertiary hospital located between Shanghai Pudong International Airport and Shanghai Hongqiao International Airport in the heart of Pudong New Bund, a free trade zone.

Maintain Neutral with an unchanged TP of S$1.09



Singapore Banking Monthly

Tin Min Ying

Research Analyst


6 May 2019



Singapore Banking Monthly – Overweight (Maintained)

Loans

Building and Construction (B&C)

• Made up 33.2% of total business loans,

• Robust at 11.5% YoY, (monthly average of 4.9% YoY in 2018).

• These are drawdowns of loans from existing projects in the pipeline.

• B&C loans growth to decelerate around end 2019 due to property cooling effects.

Mortgage loans

• Slowed to 0.9% YoY due to property cooling measures and rising interest rates.

• Red flag: mortgage loans made up 30% of total domestic loans in Singapore.

• Mortgage loans as a proportion of total loans for DBS, UOB and OCBC stand at 21%, 26% and 25% respectively.




Interest Rates

April’s 3-month SIBOR and SOR rose slightly by 0.12bp and 4.0bps to 1.946% and 1.973% respectively

While SIBOR and SOR have been rising steadily since 2016, they appear to be consolidating near the 2% mark

Hence, interest rate pressures on mortgage loans may be capped at this level.

Due to a challenging business environment, we expect loans growth for the Singapore banks to slow to 4-6% for FY2019e as compared to 7-11% in FY2018.

Expect the banks to deliver NIM improvements due to the lagged effect of loan repricing.




CASA Deposits

CASA deposits growth contracted 1.4% YoY, the slowest in 3 years

Fixed deposits surged 20.0% YoY in comparison to FY18’s monthly average of 1.6% YoY.

With a higher proportion of fixed deposits in the deposits mix, the cost of fund rises, making it a constant challenge for banks to manage costs well enough to achieve NIM expansion.

However, competition for fixed deposits should taper off in the 2H19 since no more rate hikes are expected in 2019.



StarHub LtdAwaiting further clarity on Ensign

Alvin Chia

Research Analyst


6 May 2019



StarHub Ltd NEUTRAL(Maintained), TP S$1.62,Last S$1.58

Results at a glance

SGD 'mn 1Q19 1Q18 YoY Comments

Revenue 597 563 6% Improvement due to higher contributions from enterprise & sale

of equipment alleviating weakness in mobile & pay-tv.

Broadband revenue was flat

EBITDA 162 154 5% Increase due to impact from SFRS (I) 16 where operating leases

are capitalised as right of use assets and ammortised over asset

l ife

Free cash flow 21 10 110% Attributed to lower CAPEX payments

Net profit 49 64 -23% Excluding losses from Ensign net profit would have been S$61mn


+ Positives

• Growth in enterprise remains in play. Network solutions

grew 9% YoY. Cybersecurity expanded 41% YoY.

• Rebranding materialising. (“Hello Change”) exercise led

post-paid subscribers to grow 73,000 YoY more than 5

year high. Pre-paid grew 1,000 subscribers breaking 4

quarters decline streak

- Negatives

• ARPU to trend lower before

stabilising. ARPU declined 5%

QoQ to S$39 expect this trend to

continue. Stabilise end FY19 as

SIM-only/MVNO effects reached its

peak

Outlook

• Future savings from pay-tv content

cost with one major renegotiation

coming up.

• Ensign may be a re-rating catalyst

for StarHub as it achieves scale.



China Aviation (Singapore) OilFlattish performance

Chen Guangzhi

Research Analyst


6 May 2019



China Aviation (Singapore) OilBUY (Maintained), TP: $1.67 (prev S$1.67), Last: $1.30

Positives

Mild growth of middle distillates supply and trading volume

Negatives

Flat overall supply and trading margin

Nosedive of other oil product volume

Moderate decrease in profit contribution from Pudong

Outlook

The supply and trading business is expected to be stable

The fifth runway has been operating but yet to be well utilised due to the domestic control of aircraft landings

Results at a glance

(US$ mn) 1Q19 1Q18 YoY (%) Comments

Revenue 3,717.9 4,102.5 (9.4) Decrease in oil prices and total supply and trading volume of

middle distillates and other oil products (1Q19: 6.78mn tonnes

vs 1Q18: 7.6mn tonnes)

Gross profit 11.6 13.2 (12.0) Lower profits from trading and optimisation activities

Operating profit 8.3 7.5 11.1 Higher bank interest income partially offsetting higher foreign

exchange loss

Associates and JVs 19.1 21.0 (8.8) Lower profit contributions from Pudong

Net profit 26.3 26.9 (2.1) Lower deferred tax liabilities and lower provision for income tax

expenses

Source: Company , PSR

(mn tonnes) 1Q19 1Q18 YoY (%)Middle distillates 4.6 4.3 8.7

Jet fuel 3.5 3.3 6.0

Other oil products 2.1 3.3 (35.5)

Total 6.8 7.6 (10.7)Source: Company , PSR



China Sunsine Chemical Holdings LtdSoft sunshine

Chen Guangzhi

Research Analyst


6 May 2019



China Sunsine Chemical Holdings LtdBUY (Maintained), TP: $1.43 (prev S$1.55), Last: $1.17

Positives

Maintain high margins amid volume growth

Negatives

ASP fell to a 7-quarter low

Outlook

Intense peer competition which results from the resumption of operation

Yancheng explosion is expected to support the raw material prices from dropping further

The recovering crude oil prices will also support the chemical raw material prices

Expect CSSC to continue to enjoy the 30%+ GPM for FY19e

The catalyst is still the ramp-up of capacity

Results at a glance

(RMB mn) 1Q19 1Q18 YoY (%) Comments

Revenue 687 857 (20) Decrease in overall ASP, offsetting the

slight increase in sales volumes

Gross profit 236 299 (21) Lower ASP

PBT 132 182 (27) In line with the above

PAT 110 150 (26) In line with the aboveSource: Company, PSR

Sales volume

(mn tonnes) 1Q19 1Q18 YoY (%) 4Q18 QoQ (%)

Accelerators 20,207 19,907 1.5 20,961 -3.6

Insoluble Sulphur 7,353 6,212 18.4 6,725 9.3

Anti-oxidant 10,684 10,353 3.2 11,850 -9.8

Average selling price

(RMB/tonne) 1Q19 1Q18 YoY (%) 4Q18 QoQ (%)

Accelerators 23,027 29,387 -21.6 24,693 -6.7

Insoluble Sulphur 9,602 11,719 -18.1 10,721 -10.4

Anti-oxidant 12,907 17,995 -28.3 13,932 -7.4Source: Company PSR



Sembcorp Marine LtdA soft start in 2019

Chen Guangzhi

Research Analyst


6 May 2019



Sembcorp Marine LtdNEUTRAL (Maintained), TP: $1.76 (prev S$1.76), Last: $1.67

Positives

S$175mn of new contracts secured in Feb-19

Negatives

Increasing gearing and declining cash

Net gearing was 1.47, compared to 1.44 by the end of Dec-18

Cash in hand fell sharply to S$524.0mn (FY18: S$837.7mn)

Dwindling net order book

1Q19: S$5.8bn vs FY18: S$6.2bnOutlook

Exploration and development spending from the major integrated oil companies is estimated to be US$221bn with an 18.8% YoY growth in 2019.

SMM will continue to ride through the cycle with the improving market conditions

Could face the tightened liquidity issues in the near term due to the drawdown of cash

Results at a glance

(SGD mn) 1Q19 1Q18 YoY (%) Comments

Revenue 810.6 1,180.3 (31.3) Lower revenue recognition from rigs and floaters and offshore platform

projects, mitigated by higher repair and upgrade revenue. Excluding the

effects of the delivery of 1 jackup rig to Borr Drilling in 1Q19, and delivery of

2 jack-up rigs to Borr Drilling and 1 jack-up rig to BOTL in 1Q18, revenue

would have been $608 million, an increase of 27% compared with $480

million in 1Q18

Gross profit 21.8 43.1 (49.5) Continued low overall business volume which impacted the absorption of

overhead costs, offset by margin recognition from newly secured production

floater projects and delivery of rig

Operating proft 7.1 19.5 (63.7) Lower foreign exchange loss was mainly due to the revaluation of assets and

liabilities denominated in USD to SGD

PATMI 1.7 5.3 (67.8) Higher average interest rates compared to the corresponding

period in 2018 and higher interest expense on lease liabilities upon the

adoption of SFRS(I)16 Leases on 1 January 2019

Source: Company , PSR



US Weekly

Edmund Xue

Research Analyst


6 May 2019



US Weekly

33

Macro Last Week

The headline ISM Manufacturing index slumped to a two-year low. It declined from 55.3 to 52.8. New orders and production

indices declined markedly. Markit manufacturing PMI also hit a near 2-year low in April.

FOMC left the interest rates unchanged, but made a 5bps cut in the excess reserve (IOER) rate. GDP growth is “solid” but

core inflation (1.6% in March) is now “running below” the 2% target.

The 263,000 surge in payroll employment in April kept the six-month trend above 200,000, points to signs that domestic

demand growth has bounced back after a weak start to the year. Manufacturing payrolls rose by a subdued 4,000, after no

change in March

Week(s) Ahead – Key Indicators to be released

Consumer Inflation Expectations – 13 May

NFIB Business Optimism Index – 14 May

Retail Sales – 15 May

Industrial Production – 15 May

Housing Starts 16 May

Michigan Consumer Sentiment Index – 17 May



Earnings Result Date

34

NameEarnings

Result DateExpected EPS

Expected

Revenue

Current Earnings

Result Date

Consensus Target Price

($USD)

Prior Period

Actual EPS

Prior Period

Expected EPSSurprise Amount

Prior Period

Actual Revenue

Prior Period

Expected RevenueSurprise Amount

American International Group I 06-May-19 1.01 12229 13-Feb-19 52.00 -0.63 0.42 -250.7% #N/A N/A 11950 #VALUE!

Sempra Energy 07-May-19 1.68 3131 26-Feb-19 131.00 1.56 1.46 7.1% 3221 3044 5.8%

Electronic Arts Inc 07-May-19 0.52 1209 5-Feb-19 106.00 1.93 1.94 -0.6% 1609 1753 -8.2%

CBRE Group Inc 08-May-19 0.54 5075 13-Feb-19 56.00 1.21 1.13 7.6% 6294 5959 5.6%

Walt Disney Co/The 08-May-19 1.58 14525 5-Feb-19 140.00 1.84 1.54 19.3% 15303 15153 1.0%

Kraft Heinz Co/The 09-May-19 0.61 6069 21-Feb-19 36.00 0.84 0.94 -10.5% 6891 6936 -0.6%

Duke Energy Corp 09-May-19 0.98 6312 14-Feb-19 93.00 0.84 0.89 -5.7% 6115 5855 4.4%

Booking Holdings Inc 10-May-19 10.28 2934 27-Feb-19 2000.00 22.49 19.39 16.0% 3213 3219 -0.2%

Cisco Systems Inc 15-May-19 0.66 12874 13-Feb-19 55.50 0.73 0.72 0.8% 12446 12424 0.2%

NVIDIA Corp 16-May-19 0.56 2197 14-Feb-19 190.00 0.80 0.78 2.6% 2205 2202 0.1%

Walmart Inc 16-May-19 1.01 124955 19-Feb-19 111.00 1.41 1.34 5.5% 138793 138743 0.0%

Home Depot Inc/The 21-May-19 2.19 26500 26-Feb-19 206.50 2.27 2.16 4.7% 26491 26576 -0.3%

Costco Wholesale Corp 31-May-19 1.82 34642 7-Mar-19 252.50 2.01 1.69 18.8% 35396 35679 -0.8%

Phillip Securities Research - Earnings Estimates



Micro-Mechanics (Holdings) LtdAnother miss

Paul Chew (+65 6212 1851)

Head Of Research

[email protected]

The report is produced by Phillip Securities Research under the ‘SGX StockFacts Research Programme’

(administered by SGX) and has received monetary compensation for the production of the report from the

entity mentioned in the report.

Paul Chew

Head of Research


6 May 2019



PositivesU.S. operations resilient with 8% growth. Leading the penetration into front-end semiconductor equipment parts.

Micro-Mechanics (Holdings) (Neutral (Downgraded), TP: S$1.63, Last: S$1.63)

36

Negatives

• Gross margins the lowest in 6-years; hurt by additional

headcount and machine capacity.

• Revenue at 3 consecutive quarter of decline and back to 2017

levels

Downgrade to Neutral: Earnings below expectations and we cut 11% PATMI. Lowered target price. Industry

logest contraction is 13 months and average 9 months. Already in 8th month of contraction. Dividend yield

of 6% as we wait for industry recovery.



Industry stats – Back-end volumes

37



Sheng Siong GroupStill grabbing market share

Paul Chew (+65 6212 1851)

Head Of Research

[email protected]

Paul Chew

Head of Research


6 May 2019



PositivesSales growth healthy due to new stores

Secured 3 more new stores so far this year (+3% sft)

Sheng Siong Group(Buy (Upgraded), TP: S$1.30, Last: S$1.03)

39

Upgrade to BUY: Raise target price to S$1.30. Still a 25% ROE and $87mn net cash company.

Negatives

• Same-store sales a worry

• Operating expenses trended higher

OutlookRevenue was a beat but earnings below. Supermarket sales in Singapore contracted almost 2% YTDFeb19, Sheng Siong would have

captured market share with their 10% jump; 11% growth in retail space for 2019 will help support growth.



Week 19 - Phillip Singapore Weekly

Paul Chew

Head of Research


6 May 2019



Week 19 – Short-term Views

Macro Last Week

SG macro: PMI fell back to lowest in 29-months; tourist arrivals in March experienced first

contraction in more than 2-years

US macro: Powell comments – 1) Inflation is transient (push USD and rate); 2) Allow higher

inflation by target interpretation (symmetric and average); unemployment at 3.6% the lowest

level since December 1969; no sign of inflation;

China macro: Weakness in PMI data

Corporate/Sector Last Week

Tactical

Interest rates may be lower for longer: Easy monetary policy will stay on longer and positive for equities

Week(s) Ahead

8 May: China trade officials in U.S; 23/26May: EU Parliament elections;



Week 19 – Still decelerating

50

51

52

53

54

55

Markit Global Manufacturing PMI



Week 19 – Goldilock back for the U.S.



44

Analysts


Siti Nursyazwina, Research Admin

Paul Chew, Head of Research

Tara Wong, REITs (Commercial, Retail, Healthcare) | Property

Natalie Ong, REITs (Hospitality)

Chen Guangzhi, Oil and Gas | Energy

Tin Min Ying, Banking & Finance

Alvin Chia, Telco | Technology

Mike Zheng Jieyuan, China/HK Markets

Edmund Xu, US Equity

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