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.

Mixed earning results and headwinds continue in the Singapore market as data shows that economy grew 2.2% Y-o-Y in Q4 2023, falling short of the government’s estimates of a 2.8% growth as manufacturing activity shrank.

Last year, the manufacturing sector, a key driver of the economy shrank by 4.3%, compared to the 2.7% growth in 2022.

For 2024, the GDP growth forecast comes in around 1% to 3% according to the Ministry of Trade and Industry, with moderate growth during H1 2024, and gradual recovery in line with easing of key monetary policy if inflation pressures come down in H2 2024.

The index continues to approach the 3,100 level, with signs of weakness continue to show up as lower highs persists.

20d MA was unable to break above the 200d MA where we saw it started to point down after selling pressure returning near 3,250 key level.

Continuation of price fluctuating between 3,100 - 3,250 likely to push on as the longer term MAs are flattening. A firm break above the 3,250 level before potentially seeing upside toward the 3,300 level first.

Hot News (Click to read):

• Cut-off yield on latest Singapore 6-Month T-Bill rises to 3.8% (The Business Times)

• Singapore trims 2023 economic growth to 1.1% as

  manufacturing sector contracts (CNBC)

United States

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

New highs can be spotted with prices continuing to push higher from the 37,000, and breaking above the 38,000 level to form a new support. With the MAs still pointing up, potentially would be able to see upside toward 40,000 psychological level if momentum continues.

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.

Currently at its record highest levels, the index had managed to break and hold above the 5,000 key psychological level right now. If this support does not hold and momentum dampens, may see some weakness returning to the next support around 4,800.

The Fear & Greed Index is a measure of the market sentiment and it is currently in the “Extreme Greed” Zone, where it ranges from 0-100, where 0 represents maximum fear and 100 represents maximum greediness.

With a current reading of 78.7, index remained in the "Extreme Greed" zone on Wednesday, vs a prior reading of 78.9 based on CNBC.

Hot News (Click to read):

• Fed’s Waller wants more evidence inflation is cooling before cutting interest rates (CNBC)

• Gold rises above $2,100 to highest level as traders bet on interest rate cuts (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

• Posted a 65% increase in its profit attributable to equity holders to 2.38b yuan in the second half of 2023, compared with 1.44b yuan in the year-ago period

• 17% increase in its revenue for H2 2023 to 12.80b yuan, compared with 10.96b yuan a year earlier, topping the 11.78b yuan consensus forecast

• Surge in revenue was attributed to favorable foreign exchange rate and new build vessel prices

Technical

• Uptrend still intact as all 3 MAs are heading up with price holding above 1.65 support level

• 20d MA has also crossed above 100d MA in Jan indicating short-term strength

• Price has broke above 1.80, forming a new support level

• If price can continue holding above new support, may potentially see more bullish price action towards 2.00, where some selling pressure can return

FRENCKEN (E28.SI)
Target Price: S$1.80

About Frencken

• Frencken provides design and manufacturing solutions across diverse sectors such as analytical sciences, automotive, healthcare, industrial, and semiconductors

• Its operations are divided into two segments: Mechatronics, focusing on precision-engineered systems, and Integrated Manufacturing Services (IMS), offering contract design and manufacturing primarily for automotive and office automation industries

Fundamental

• Attributable profit registered at S$20.4m, or S$0.0477 per share, compared with the S$25.7m, or S$0.0602 per share, recorded a year earlier

• The company will pay a cash dividend of S$0.0228 per share on May 15 to shareholders

Technical

• 100d MA crossed above 200d MA in Nov 2023 provided further confirmation for the uptrend formation

• Uptrend remains intact as long as price is able to hold above the key support level of around 1.45

• A new higher Immediate support is around 1.60, which can be monitored for a potential pullback entry

• Selling pressure could return first around 1.80 resistance level where prices was kept below since 2022

ST ENGINEERING (S63.SI)
Target Price: S$4.10

About ST Engineering

• Singapore Technologies Engineering Ltd provides solutions and services in the aerospace, electronics, land systems, and marine sectors

• Operates through the following business segments: Commercial Aerospace, Urban Solutions and Satcom and Defence and Public Security

Fundamental

• FY23 net profit was in line with general consensus. Net profit was affected by several one offs amounting to S$66m

• Aerospace MRO revenue rose 41%, as demand surged in tandem with recovery in air travel

• Defense and public security posted EBIT growth of 40%

• Net debt was marginally lower at S$5.8b vs Dec 22 (S$5.9b)

Technical

• Price has finally broke above the target of around $3.90 stated in our Nov 23 newsletter, which is now the immediate support to note

• 20d MA is heading up indicating short-term strength, however 100d and 200d MA are still going sideway, where we could potentially see some sideway consolidation

• If price breaks below the 3.90 support, may see selling pressure return towards 3.75

CITYDEV (C09.SI)
Target Price: S$5.00

About CityDev

• CityDev is a prominent global real estate company with a network spanning 112 locations in 29 countries and regions

• Its portfolio includes income-stable and geographically-diverse assets such as residences, offices, hotels, serviced apartments, shopping malls, and integrated developments, which global land bank total up to 3.5m square feet of land area

Fundamental

• Posted an attributable profit to owners for the second half of 2023 of S$250.8m, up from S$165.8m in the year ago period

• Revenue for six months ended 31 Dec 2023 stood at S$2.23b from S$1.82b in the year-ago period, boosted by the sale of executive condominium project Piermont Grand

Technical

• Price broken below 5.80, which was the low that has been tested twice in 2020

• Downtrend is firmly intact for the counter as all 3 MAs are still heading down

• Prices have also been forming lower highs since Feb 2023 with no signs of reversal yet

• The next psychological support is around 5.00 where some buying pressure could return

• To be cautious for any long position until there are more signs of a trend reversal

United States Stocks Spotlight

ELI LILLY AND COMPANY (LLY.NY)
Target Price: US$880.00

About Eli Lilly and Company

• Eli Lilly and Company discovers, develops, and markets human pharmaceuticals worldwide

• Company overtook the market leader last year and is currently one of the most valuable drug producers in the world

Fundamental

• Eli Lilly and Co. has delivered top and bottom line beats in the 4Q23 earnings call, while delivering impressive FY2024 guidance and reporting promising updates to its pipeline

• Robust demand for its diabetes/weight loss therapies and the slight easing in supply availability, with 2025 likely to bring forth expanded manufacturing capacity

Technical

• Price has broken and holding well above our target of 680.00 as set out in Jan 24 newsletter

• Uptrend is still intact as all 3 MAs are heading higher

• Immediate psychological resistance is around 800.00 where we see some selling pressure returning as price neared it over the past trading sessions

• If price can break and hold above 800.00, potential upside target to be revised to 880.00

NVIDIA CORP (NVDA.NQ)
Target Price: US$1000.00

About Nvidia Corp

• NVIDIA Corp. engages in the design and manufacture of computer graphics processors, chipsets and related multimedia software

• Operating through the following segments; Graphics Processing Unit(GPU), Tegra Processors

Fundamental

• Most superior AI chip on the market, with data center revenue more than tripling over the past year to reach $47.5b in FY 2024

• Total revenue growing by 265% Y-o-Y, and the company guiding $24b in revenue for Q1 FY 2025, which would imply a Y-o-Y growth rate of 234%

• Strong pricing power for Nvidia’s market-leading GPUs has translated into incredible profit margins, with gross margins expanding to 76% over the past year

Technical

• Price has broken and holding well above our target of 600.00 as set out in Dec 23 newsletter

• Uptrend remains intact as prices is trading above all 3 MAs heading higher

• Price has gapped up on 22 Feb 24 due to good earning results, which would be the rising gap window support zone

• Would not rule out more upside towards 1000.00 if new new higher support zone holds

CARDINAL HEALTH (CAH.NY)
Target Price: US$125.00

About Cardinal Health

• Cardinal Health, a global healthcare company, operates in 40+ countries, specializing in pharmaceutical distribution, medical products, and manufacturing. Revenue is generated through the sale of these products and related services

Fundamental

• Major competitive edge that Cardinal Health brings to the table is that it has a major business in surgical consumables

• Revenue grew to $57.4b, vs $51.46b in Dec 2022, an 11.5% Y-o-Y growth

• Net income grew to $353m, vs a net loss of $130m in Dec 2022, which is a significant earnings turnaround

Technical

• Price has consolidated sideway above the psychological support of 100.00 since Dec, which has finally been broken above in Mar, where it is heading to our target of 116.00 as set in Jan 24 newsletter

• Uptrend remains intact with all 3 MAs heading higher

• New higher support being found around 107.00 - 108.00 which was tested multiple times since Nov 23

• If price can break and hold above 116, would not rule our more upside towards 124.00 - 125.00

INTERNATIONAL BUS MACH CORP (IBM.NY)
Target Price: US$220.00

About International Bus Mach

• IBM is a renowned information technology company known for providing integrated solutions leveraging IT and business process knowledge

• The company operates across multiple segments, including Software, Consulting, Infrastructure, Financing, and Others, offering a wide range of services to clients

Fundamental

• IBM's cutting-edge AI platform (Watson) could potentially boost IBM’s growth

• IBM's balance sheet is well capitalized, with $14.28 of cash per share. While the company holds $59.93b in debt, the majority is long-term and fixed

• Competitive advantage in the strategic partnerships it has built through decades of business

Technical

• Price has gapped up on 25 Jan 24 due to excellent earning results

• However, see profit-taking returning near the 200.00, where buyers came in to defend at around 180.00

• Uptrend remains intact as long as the new higher support around 180.00 holds

• 20d MA has also started to flatten out which could potentially indicate some short-term consolidation

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