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CapitaLand Commercial Trust - Gallileo Acquisition A Done Deal

Shared By Stock Fanatic on Friday, June 22, 2018 | 22.6.18

The acquisition of 94.9% of Gallileo Property has been completed, extending CCT’s footprint to the Frankfurt prime CBD area (5% exposure to Germany). Management has guided for acquisitions of core commercial assets in key gateway cities, targeting an allocation of 10-20% of its deposited property overseas. At home, CCT’s CapitaSpring has secured JP Morgan as anchor office tenant, and is well-positioned to ride on the cyclical recovery in the Singapore office segment. Maintain BUY with a higher target price of S$2.11, factoring in the Gallileo Property acquisition.

Brent crude could break technical support if OPEC increases production

OPEC meeting today could see production increase ranging from 300k to 600k bpd, which is negative for oil price ceteris paribus.

STI Technical Update - Possible July recovery but cap at 3355 or 3417

Singapore stocks victims of escalating US-China trade war. Possible STI July rebound but cap at 3355 or 3417

Current situation
Trump directed the US Trade Representative office to draw up a list of USD200bil worth of Chinese imports to subject to an additional 10% tariff. This would be on top of the initial 25% tariff on USD50bil worth of Chinese imports.

• China vows retaliation but may have limited ‘firepower’ because it imports USD130bil and exports much higher at USD505bil to the US.

• Asian equities fell on escalating trade war fear. Singapore stocks not spared given the country’s status as a small-open economy much dependent on global trade flows.

• This unexpected negative turn of events led to a decline below our previous stated support level of 3385.

The Oil Manual - OPEC: Willingness vs Ability

Historically, OPEC has rarely increased its quota unless production was already ahead. Also, the current quota is high enough to accommodate a large output increase. Hence, a quota increase seems unlikely. Still, production is likely to creep higher but only modestly as Iran and Venezuela weigh.

Delfi - Sweeter By The Day

Shared By Stock Fanatic on Wednesday, June 20, 2018 | 20.6.18

Upgrade to BUY from Neutral, with a new SGD1.47 TP from SGD1.54, 11% upside, as we see value emerging from the retracement in share price. We remain optimistic for the full-year result, as consumer confidence in Indonesia picks up. Meanwhile, Delfi’s efforts to focus on core brands have shown positive results in sales since 1Q18. We believe the uptick in volume could more than offset the negatives from IDR depreciation.

Silverlake Axis - Riding On Banks’ Spending Recovery

Maintain BUY and SGD0.65 TP, 25% upside. Silverlake’s poor FY17-18 financial performances have been on regional banks cutting/pulling back on major IT spending over the last two years. However, we understand these banks are now open to large IT capex again, with some needing to upgrade core banking systems. This trend is justified by Silverlake’s contract wins over the last few months and orderbook at near record highs. Hence, we think earnings will surge strongly over the next two years, especially in FY19, and maintain our call on this counter.

CITIC Envirotech - Minimal Trade War Impact Amid Rosy Outlook

With Trump announcing new tariff measures on China, China’s swift counter looks like the beginning of a trade war. While Chinese export-oriented firms may suffer, CEL is a different story with its defensive environmental business and government contracts with new order wins pushing to Rmb2.7b ytd. Its share buyback is a vote of confidence as its low PE and high dividend yield make it an attractive play on China’s war on pollution. Maintain BUY and target price of S$1.06.

China Aviation Oil - Streamlining its associate portfolio

■ China Aviation Oil (CAO) announced the intention to dispose of its entire 39% equity interest in China Aviation Oil Xinyuan Petrochemicals Co Ltd (Xinyuan).

■ Xinyuan is a minor contributor to CAO’s share of associates profit; hence sale will have negligible impact on CAO’s profitability, in our view.

Maintain Add and TP, based on 12.5x CY19F P/E (c.20% discount to peer average).
 
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