Singapore’s stocks were headed to the open on Monday with a lackluster lead, with Wall Street essentially flat on Friday. But DBS’ higher-than-expected earnings were set to offer a fillip, potentially boosting its banking peers as well.
An additional market worry came from U.S. President Trump, who reportedly threatened over the weekend to shut down the federal government in September if he doesn’t get funding from Congress to build the extremely expensive, deeply controversial and feasibility-challenged wall he wants on the border with Mexico.
“Volatility in share markets is likely to remain high as U.S. inflation and interest rates move up and as issues around President Trump, trade, Mueller inquiry, etc., continue to impact ahead of the U.S. mid-term elections in November,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, said in a note over the weekend.
The Dow Jones Industrial Average ended down 0.05 percent, the S&P 500 eked out a 0.11 percent gain and the Nasdaq nudged up just 0.02 percent. The U.S. 10-year Treasury yield slipped below the closely watched technical and psychological level of 3.0 percent, which had set off market jitters; the yield was at 2.96 percent on Friday.
U.S. futures were only nosing into the green around 7:30 A.M. SGT on Monday; Nikkei 225 futures were a tad positive, up 15 points at 22,480 at 7:36 A.M. SGT, according to CME, compared with the index’s close on Friday at 22,467.87.
On Friday, U.S. gross domestic product (GDP) for the first quarter came in higher than expected, rising 2.3 percent annualized, but that was below the 2.9 percent growth in the previous quarter.
But at least one analyst pointed to some caution over the figures.
“A slight beat on headline growth was dented by soft quality given a significant contribution from a backing up of inventoried stockpiles,” Derek Holt, head of capital markets economics at Scotiabank, said in a note on Friday. He added that stockpile burn could be a modest growth headwind in the second quarter.
Overall, however, he said the data wasn’t likely to change the Federal Reserve’s interest rate trajectory.
DBS reported first quarter net profit surged 26 percent to a record S$1.52 billion. Its net interest income rose 16 percent on-year to S$2.13 billion on higher loan volumes and its net interest margin increased by 9 basis points to 1.83 percent on higher interest rates, the bank said in a filing to SGX before the market open.
Nomura had forecast net profit of S$1.43 billion, net interest income of S$2.083 billion and a net interest margin of 1.80 percent. Daiwa had forecast net profit of S$1.372 billion, net interest income of S$2.118 billion and a net interest margin of 1.81 percent. CGS-CIMB had forecast net profit of S$1.443 billion, net interest income of S$2.20 billion and net interest margin of around 1.8 percent.
Sheng Siong reported its first-quarter net profit rose 6.6 percent on-year to S$18.3 million, while revenue rose 5.1 percent to S$228.3 million; it attributed the profit rise to higher revenue and an improved gross margin,, partly offset by higher operating expenses.
Net profit for the quarter appeared to track at around 25 percent of analysts’ full-year forecasts: Daiwa forecast full-year net profit of S$71 million and full-year revenue of S$863 million; Maybank KimEng forecast full-year net profit at S$72.17 million on revenue of S$862.37 million; RHB forecast full-year net profit of S$73.4 million on revenue of S$881 million; OCBC forecast full-year net profit of S$71.6 million on revenue of S$863.1 million.
The gross profit margin rose to 26.2 percent in the quarter, up from 25.2 percent in the year-earlier quarter, the supermarket operator said in a filing to SGX on Friday after the market close. That was mainly on a higher sales mix of fresh products, which have higher margins, and on suppliers’ rebates, the company said. But it noted the gross margin slipped from 26.5 percent in the fourth quarter, which it attributed to the industry’s practice of pushing for higher volume during the Lunar New Year holiday period, which falls in the first quarter.
“We will continue with our efforts in expanding the network of outlets in Singapore, especially in areas where our potential customers reside and build our brand in China,” Lim Hock Chee, the group’s CEO, said in the statement. “We remain committed to work towards a sales mix with a higher proportion of fresh produce and reducing the input costs by increasing direct purchasing and bulk handling.”
He noted that Sheng Siong has increased its store count excluding China to 48, and that it successfully bid for two new store sites.
SIA Engineering said it entered a non-binding letter of intent with Cebu Air to expand their collaboration on maintenance, repair and overhaul services in the Philippines. Under the LOI, the two companies will explore growth opportunities for their two existing joint venture companies, including through expanding line maintenance operations, growing hangar facilities and expanding training academy services, SIA Engineering said in a statement to SGX on Sunday.
The two companies currently have two existing joint ventures in the Philippines: Aviation Partnership (Philippines) Corp. (APPC), which provides line maintenance services in four international airports and other secondary airports, and SIA Engineering (Philippines) Corp. (SIAEP), which has three hangars in Clark and provides heavy maintenance aircraft checks.
The fixed battle between troubled commodity trader Noble and one of its major shareholders took a sharp turn on Friday, spilling into another war of words on Sunday.
Singapore’s High Court on Friday ruled at least partially in Goldilocks’ favor and granted an injunction to delay Noble’s annual general meeting, which had been set for April 30, until the court case was resolved. Goldilocks, which holds an around 8 percent stake in Noble, had sought legal action after Noble had invalidated its proposed slate of alternative directors to be voted on at the AGM.
Noble requested a trading halt mid-session on Friday afternoon, without additional comment until Sunday afternoon, when Noble noted that the court had ruled that Goldilocks would need register as a depositor of its shares by May 3; Noble had claimed Goldilocks’ shares weren’t properly registered to meet Bermuda law.
Additionally, Noble’s statement said it thanked the shareholders who submitted proxy forms ahead of the AGM, adding that those proxies, including Goldilocks’, indicated all of the company’s resolutions would have been approved. It was therefore planning to submit to SGX a draft shareholder circular for the restructuring special general meeting.
In a press release late Sunday evening, Goldilocks’ blasted Noble’s statement, noting it was counting votes for something that hadn’t been voted on yet.
Noble requested the trading halt be lifted on Monday morning.
Mapletree Industrial Trust and Mapletree Logistics Trust
Mapletree Industrial Trust said it executed a “novation” agreement on an option to purchase an industrial property at 7 Tai Seng Drive with its sponsor Mapletree Investments and the property vendor Mapletree Logistics Trust, according to a filing to SGX after the market close on Friday. MLT was originally granted the option to purchase the property for S$68.0 million in August and MIT will acquire it from MLT at the same price. MIT will also reimburse its sponsor for the S$680,000 option fee it paid MLT in August.
MIT also signed an agreement to lease with an information and communication technology company and it will be upgrading the property into a high-specification building.
The deal is subject to approval from JTC Corp. and regulators, the statement said.
Raffles Medical reported its profit attributable to the owners of the company for the first quarter was up 1.7 percent on-year at S$15.8 million, while revenue was up 4.6 percent at S$120.2 million. That was from an SGX filing before the market open on Monday.
Indofood Agri Resources
Indofood Agri Resources reported first-quarter net profit after tax dropped 84 percent on-year to 53 billion rupiah, while revenue was down 27.1 percent at 3.19 trillion rupiah. In an SGX filing before market open on Monday, the company said the results were “soft” amid lower sales volume of palm oil products and on lower commodity prices.
Keppel Corp. signed a non-binding memorandum of understanding (MOU) with Filinvest Development to explore cooperation on sustainable urbanisation services in the Philippines, the Singapore company said in a filing to SGX on Sunday. The efforts will include developing urban services for Filinvest’s projects Filinvest City in Alabang, south of metro Manila and Filinvest New Clark City in Central Luzon, the statement said.
It added that the MOU wasn’t expected to have a material impact on earnings per share for the current financial year.
Manulife US REIT
Manulife US REIT reported its first quarter net property income rose 54 percent on-year to US$19.65 million, while its unadjusted distribution per unit (DPU) was down 8.5 percent at 1.51 U.S. cents; adjusted for a rights issue, the DPU was down 0.7 percent at 1.51 U.S. cents.
In a filing to SGX before market open on Monday, the REIT said the rise in net property income was mainly on a higher contribution from the 500 Plaza Drive and 10 Exchange Place properties in New Jersey.
“Market conditions continue to be generally favourable in the five locations that Manulife US REIT has invested in, with minimal new supply and rising market rents,” the REIT said in its outlook statement.
Ascendas Hospitality Trust
Ascendas Hospitality Trust agreed to buy 98.7 percent of KY-Heritage Hotel Dongdaemun in Seoul, South Korea, for KRW72.1 billion, or around S$89.0 million, the trust’s manager said in a filing to the exchange on Friday after the market close.
The deal is expected to be completed by June, pending South Korean regulatory approval, and will be funded entirely with debt, the statement said, adding this is the trusts’ first foray into the South Korean market. It estimated a pro forma net property income yield of 4.1 percent.
This article was originally published at 7:48 A.M. SGT on Monday, April 30, 2018; it has since been updated.