Market Overview

Singapore

Straits Times Index (STI) is a market capitalisation weighted index that tracks the performance of the top 30 companies listed on SGX.

At the end of 2024 Q1, the STI had managed to claw its way into a slight gain as the STI continues to lag other major indexes.

Urban Redevelopment Authority (URA) reported that the prices of private homes rose 1.5 per cent in the first three months of 2024, following 2.8% growth in 2023 Q4.

Rising private home prices usually coincides with rising inflations expectations.

Singapore’s economy is expected to grow at 2.4% in 2024, while its headline inflation is forecast to come in at 3.1%. This is higher compared with the 2.3% growth forecast in the December survey. The current inflation forecast is also lower than the previous survey’s forecast of 3.4%.

With prices inching close to the 3,250 resistance where it was kept under since 2023 Q4, the index had been range bound for Q1 2024, with the key support of 3,100 continuing to hold and the 20d MA crossing over the 100d MA. Near term strength could be expected around the resistance where a break above could send prices higher toward the 3,300 first.

Longer term target can be revised to 3,400 if the 3 MAs start to slope up.

Hot News (Click to read):

• DBS bank confident of 15-17% ROE in next 3 to 5 years, CEO says (The Business Times)

• Swift Tour Prompts Economists to Upgrade Singapore GDP Forecast (Bloomberg)

United States

Dow Jones Industrial Average (DJIA) tracks the daily price movements of 30 large, public-owned blue-chip American companies.

Approaching the 40,000 level, the DJI remains in an uptrend closing out the 1st quarter of 2024 with new highs. Consolidation could happen under this key level before the index continue to push higher with the 3 MAs continuing to slope upwards.

S&P 500 Index is a market-capitalization weighted index of the 500 leading companies in the US which is widely considered as one of the best gauge of the US economy.

Continuing its momentum, the S&P 500 successfully broke above the 5,000 key resistance, now turned support with near term target at 5,300, as long as the newly formed support continues to hold.

However as markets continue to rally, longer term MAs are playing catch up where it would be healthy to see some sideways consolidation before prices continue to break higher.

With expectations of rate cuts materializing as early as June, potentially there could be over optimism with a risk on mentality.

Hot News (Click to read):

• Gold pares gains as higher US dollar, bond yields weigh

  (Reuters)

• Don’t sweat the prospect of no Fed rate cuts, economist says

  — markets will still march higher (CNBC)

Singapore Stocks Spotlight

YZJ SHIPBLDG SGD (BS6.SI)
Target Price: S$2.00

About YZJ Shipbldg SGD

• YZJ Shipbuilding is one of the largest and most reputable shipbuilding companies globally, with a strong track record in constructing various types of vessels, including bulk carriers, containerships, and offshore vessels

• It operates across multiple segments, including shipbuilding, investments, shipping, and trading

Fundamental

• YZJ Shipbldg's P/E ratio at S$9.30 suggests a value opportunity, as it's below the Singapore market average

• The company reported CN¥24b in revenue, meeting analyst forecasts. However, its statutory EPS of CN¥1.04 surpassed expectations by 8.4%

• It is expected to grow faster in the future, with revenues projected to display a 12% annualized growth rate until the end of 2024

Technical

• New higher support around 1.80 is still holding firmly with price heading towards the psychological resistance around 2.00, where selling pressure could return first

• Uptrend is still intact with short-term trend (20d MA) aligning with longer-term trend (100d and 200d MA)

DBS (D05.SI)
Target Price: S$37.00

About DBS

• DBS Group Holdings Ltd engages in retail, small and medium-sized enterprise, corporate, and investment banking services

• Operates through the following business segments: Consumer Banking, Wealth Management, Institutional Banking, Treasury Markets

Fundamental

• Full year profits rose 26% from the previous year to a record 10.3b

• Return on Equity (ROE) climbed from 15% to 18%

• Total income exceeded S$20b for the first time

• Overall financial performance reflects robust growth in net profit, bolstered by higher net interest margin, fee income, and treasury customer sales

• DBS continues to maintain a robust capital and liquidity positions

Technical

• 20d MA has surged up during end Feb indicating strong short-term strength

• Price has broke above the previous resistance of 34.50 now turned support, where prices have just adjusted for Dividend Ex-date after breaching the 36.00 resistance previously

• If price can continue holding above support, potential upside target towards 37.00 first where some selling pressure can return

SEATRIUM (S51.SI)
Target Price: S$0.065

About Seatrium

• Seatrium Ltd operates in several segments: Rigs and Floaters, Repairs and Upgrades, Offshore Platforms, Specialized Shipbuilding, Ship Chartering, and Others

• This includes bulk trading in marine engineering products, harbour tug services, collection and treatment of used copper slag, and processing and distributing copper slag for blast cleaning

Fundamental

• Management guided for positive revenue targets of S$10-12b by 2028, suggesting a 5-year CAGR of 7-10%

• It has achieved significant balance sheet restructuring in 2H23, securing S$3.5b in new loans and trade financing

• By replacing short-term loans, Seatrium increased undrawn facilities to S$2b and lengthened average loan maturity to 2026 and beyond

Technical

• Our target of S$0.08 stated in Feb newsletter was hit in mid March

• Downtrend remains firmly intact for this counter with no signs of reversal yet

• To be cautious for any long position until price is able to break and hold above the key psychological level of 0.100

GLD US$ (O87.SI)
Target Price: US$216.00

About GLD US$

• ETF managed and marketed by State Street Global Advisors

• Designed to initially track the price of a tenth of a troy ounce of gold

Fundamental

• Gold provides a natural hedge against inflation and is regarded as a safe-haven investment during downturns in the economy

• Trading GLD shares in the secondary market or via

• a Trust may be lower than the costs associated with buying, storing and insuring physical gold in a traditional allocated gold bullion account

• Inverse relationship between gold prices and US dollar

Technical

• Price has reached our previously stated target of US$200 in Jan newsletter

• Short-term strength remains strong with 20d MA showing a steep upward trend with price trading above it, while longer term still looks good with 100d and 200d MA showing a gentle upward slope

• Immediate support is around 204-206, where price has gapped up significantly

• As long as support holds, would not rule out more upside towards 216

United States Stocks Spotlight

ALPHABET INC (GOOGL.NQ)
Target Price: US$170.00

About Alphabet Inc

• American multinational technology company focusing on artificial intelligence, online advertising, search engine technology, cloud computing, computer software, quantum computing, e-commerce, and consumer electronics

Fundamental

• GOOGL revenue increased by 13% to $86.3b, surpassing analyst estimates by $1.04b

• EPS of $1.64 exceeded consensus by $0.04

• Operating income surged by 30% to $23.7b compared to the same quarter last year

• Its advertising revenues grew by 11% year-over-year to $65.5b and their annual subscription revenue quintupled over the last five years, reaching $15b

• Introduced new AI offerings, including the Gemini Advanced subscription service, and is investing in AI startups to counter rivals

Technical

• GOOGL has reached our Nov newsletter target of US$152, whereby long-term uptrend is still intact

• Price has retracted from Feb to Mar but buyers returned around 130, still holding above the support of 128

• A bullish Marubozu candlestick appeared on 1 Apr (covering the range of multiple trading session) indicates buyer’s domination

GRANITE CONSTRUCTION (GVA.NY)
Target Price: US$60.00

About Granite Construction

• Granite Construction operates as an infrastructure contractor and a construction materials company in the United States

• Involved in the construction and rehabilitation of roads, pavement preservation, bridges, rail lines, airports, marine ports, dams, reservoirs, aqueducts, infrastructure, and site development for use by the public

Fundamental

• Long dividend paying history

• Additional growth drivers include state transportation budgets, normalized margins, and selective project bidding

• Economic tailwinds, such as potential lower interest rates and infrastructure spending, further support the company's growth prospects

Technical

• Uptrend is intact for this counter with all 3 MAs sloping upwards

• Immediate support is around 52 where we saw price failed to break out in Dec 2023 but eventually did so in Mar 2024

• If support holds, potential upside towards psychological resistance around 60 where some sellers could return first

BERKSHIRE HATHAWAY INC (BRK.B.NY)
Target Price: US$440.00

About Berkshire Hathaway Inc

• Globally involved in insurance, freight rail transportation, and utilities

• Offers a range of insurance services and operates rail systems in North America

• Established in 1998, headquartered in Omaha, Nebraska

Fundamental

• Insurance underwriting earnings rebounded significantly, contributing to record earnings for the fiscal year

• Berkshire Hathaway's significant holdings, including Apple, Chevron, and Occidental Petroleum, are poised to benefit from macroeconomic tailwinds, particularly in the energy sector

• Berkshire Hathaway's valuation is considered attractive compared to major tech companies, with a lower forward P/E ratio

Technical

• Uptrend still remains strong since our coverage in Jan newsletter where target price of US$390 has been achieved in Feb

• A new higher psychological support can be found around 400

• Price is attempting to break the immediate resistance around 420

• If resistance gives way and 3 MAs are still heading up, potential upside target towards 440 first

APPLED MATERTIALS (AMAT.NQ)
Target Price: US$235.00

About Applied Materials

• Applied Materials, Inc. provides manufacturing equipment, services and software to the semiconductor, display and related industries. Operating through the following segments: Semiconductor Systems, Applied Global Services, and Display & Adjacent Markets

Fundamental

• Positive outlook for revenue growth in the US and Europe, driven by expansions from major customers like TSMC, Samsung, and Intel

• These regions are anticipated to counterbalance any potential weaknesses in China, with forecasted growth rates of 15.9% by 2024 and 19.9% by 2026

• Continued growth relies on maintaining margins above 25%, with a focus on enhancing product portfolio and semiconductor market

Technical

• Long term uptrend remains intact but could potentially see some short-term consolidation as 20d MA is flattening out

• Immediate support is around 195-197 where buying interest return during Mar 2024, while resistance remains to be around 215-216

• If price can break and hold above resistance, would not rule out more upside towards 235

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