Retail Market Monitor 20210908

R e t a i l M a r k e t M o n i t o r Wednesday , 08 Se p tembe r 2021

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S I N G A P O R E

MARKET NEWS US stocks were mixed after the close on Tuesday, as gains in the communication services, consumer discretionary and technology sectors led shares higher and losses in industrials, utilities and real estate sectors led shares lower. At the close of the NYSE, the DJIA fell 0.76% while the S&P 500 index was down 0.34%, and the NASDAQ Composite index advanced 0.07%. Falling stocks outnumbered advancing ones on the NYSE by 2,305 to 1,023 and 135 ended unchanged; on the Nasdaq Stock Exchange, 2,762 declined and 1,663 advanced, while 166 ended unchanged. (Source: WSJ, CNBC)

Yesterday, the FSSTI index ended 7.45pt higher at 3,108.53, taking the ytd performance to +9.3%. Among the top active stocks were Sembcorp Marine (-2.3%), Yangzijiang Shipbuilding (+0.6%), Thai Beverage (-0.7%), ISDN (+1.5%) and Japfa (+2.1%). The FTSE ST Mid Cap Index fell 0.38%, while the FTSE ST Small Cap Index was down 0.01%. The broader market saw 249 gainers and 215 losers with total trading value of S$898.8m.

WHAT’S IN THE PACK Singapore Company Update: InnoTek - Gaining traction in the EV, healthcare and consumer industries. (INNOT SP/BUY/S$0.845/Target: S$1.20)

We are confident that Innotek can achieve 28% yoy earnings growth for 2021, on the back of robust revenue growth in the auto segment of 45% yoy for 1H21. Also, winning of new business in the EV, healthcare equipment and gaming consoles should boost growth. Innotek’s solid 1H21 earnings of S$7.2m (+94% yoy) was in line with our expectation, meeting 41% of our full-year estimate. Innotek currently only trades at 5x ex-cash 2022 PE. Maintain BUY and target price of S$1.20 (12x 2022 EPS)…

HK/ China Economy Update: Trade – August trade figures surprise on the upside. China’s export rose at a faster pace of 25.6% yoy in August, beating market expectations, while imports also increased solidly by 33.1% yoy, amid disruptions to global supply chains. While there have been gentle signs of relief, export growth could continue to moderate in 4Q21 with weaker new export orders and a higher base for comparison…

Monthly Technical Regional Indices Watch In this report, we provide the outlook of regional indices on a monthly basis. We also include a list of tradable Exchange Traded Funds (ETF) for each of the said indices.

The said indices under our coverage are:

• Hang Seng Index (HSI IND)

• FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBMKLCI IND)

• Jakarta Stock Exchange Composite Index (JCI IND)

• Stock Exchange Of Thailand Index (SET IND)

• FTSE Straits Times Index (STI IND)

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P R I C E C H A R T

KEY INDICES Prev Close 1D % YTD %

DJIA 35369.1 (0.2) 15.6 S&P 500 4535.4 (0.0) 20.7 FTSE 100 7163.3 (0.3) 10.9 AS30 7826.4 0.0 14.2 CSI 300 4992.8 1.2 (4.2)FSSTI 3108.5 0.2 9.3 HSCEI 9468.2 1.0 (11.8)HSI 26353.6 0.7 (3.2)JCI 6112.4 (0.2) 2.2 KLCI 1583.5 0.1 (2.7)KOSPI 3187.4 (0.5) 10.9 Nikkei 225 29916.1 0.9 9.0 SET 1636.5 (0.7) 12.9 TWSE 17428.9 (0.4) 18.3

BDI 3822 (3.1) 179.8 CPO (RM/mt) 4558 0.5 20.3 Brent Crude (US$/bbl) 72 0.0 39.5

Source: Bloomberg

TOP VOLUME

Company Price (S$)

Chg (%)

Volume ('000s)

Sembcorp Marine 0.09 (2.3) 174,550Genting Singapore 0.79 0.0 28,346Esr-Reit 0.47 (1.1) 24,828Suntec Reit 1.44 (0.7) 19,329Thai Beverage 0.68 (0.7) 17,510

TOP GAINERS

Company Price (S$)

Chg (%)

Volume ('000s)

Hongkong Land Holdings 4.73 12.6 9,242Hour Glass 1.66 7.1 1,470Ifast Corp 9.10 2.4 2,502Oxley Holdings 0.23 2.3 2,210Japfa 0.72 2.1 4,416

TOP LOSERS

Company Price (S$)

Chg (%)

Volume ('000s)

Hutchison Port Holdings Trust 0.21 (2.4) 4,596Sembcorp Marine 0.09 (2.3) 174,550UMS Holdings 1.71 (2.3) 3,932OUE 1.39 (2.1) 231Frasers Hospitality Trust 0.50 (2.0) 383

http://www.utrade.com.sg/page/site/public/english/utradeSG_edu.jsp



S I N G A P O R E

MONTHLY TECHNICAL REGIONAL INDICES WATCH – INDICES OUTLOOK In this report, we provide the monthly outlook for regional indices, namely the Hang Seng Index, the FTSE Bursa Malaysia Kuala Lumpur Composite, the Jakarta Stock Exchange Composite Index, the Stock Exchange Of Thailand Index and the FTSE Straits Times Index. We also include a list of tradable Exchange Traded Funds (ETF) for each of the said indices.

Hang Seng Index (HSI IND) Continuation of range: Expects to move sideways between 24,581 and 27,300

Source: Bloomberg Tradable ETF(s) listed in Hong Kong: Tracker Fund Of Hong Kong (2800 HK), Hang Seng Index ETF (SEHK: 2833 HK) Tradable ETF(s) listed in Singapore: Lyxor HSI US$ by Societe Generale (A9B)

Last close: 26,353.63 Outlook: The index has broken below the bullish channel (orange lines; formed since Mar 20), which becomes a resistance now. The index is rebounding from its horizontal support near 24,581. The daily RSI is turning up. The MACD is also turning up, while the MACD histogram is narrowing up, indicating that a continuation of the rebound is likely. However, the former bullish channel (orange lines), bearish trendline (pink line), 250-week (purple line) moving average and horizontal resistance at 27,300 (also near the former bullish channel resistance) are all playing key resistance roles on the upside, which should limit the upside potential. In this case, we expect the index to move in the range between 24,581 (previous low) and 27,300 (horizontal resistance) for the coming weeks. If the index is able to break above the 250-week (purple line) moving average and the horizontal resistance at 27,300, it would call for a further advance towards 28,300. On the other hand, a break below 24,581 would resume its lower lows and lower highs, which would call for a further drop towards 23,124. Strategy: Investors are recommended to wait for consolidation and buy in deep. Then look for a technical rebound towards 27,300. At the same time, they can use 24,581 as a stop to control risk. Support: 24,581 (previous low), 23,124 (Sep 20 low) Resistance: Bearish trendline (~26,350, pink line), 250-week moving average (~27,059, purple line), 27,300 (horizontal resistance + around former bullish channel) Analyst Joyce Chan, CMT +852 2236 6716 [email protected]

FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBMKLCI IND) Switch to sideway mode

Source: Bloomberg Tradable ETF(s) in Malaysia: FTSE Bursa Malaysia KLCI ETF (FBMKLCI-EA 0820EA)

Last close: 1,583.48 Outlook: Despite the upward movement over the last few weeks, the FBMKLCI was unable to continue rising any further and closed lower at 1,589.19 last Friday, suggesting investors remain cautious on the uncertain market. Currently, the FBMKLCI has formed a bearish signal pattern of “Evening Star pattern” on last week’s movement, which would place the index in a bearish reversal pattern afterwards. Despite the current negative connotation, the short-term trend is still seeing a sideway bias, thus we expect the FBMKLCI to hover in the range of 1,550-1,600 for the time being and violation of either limit would spark a follow-through. Strategy: Since the index may go into sideways mode in the short to medium term, investors and position traders may wish to stay on the side lines to wait for confirmation. If a new higher high is formed, investors may go long. If the uptrend line is broken, investors may turn short. As such, we ask investors to approach the market cautiously for the time being. Support: 1,530 / 1,500 Resistance: 1,600 / 1,640 Analyst Mohd Fakhrul Asyraq Bin Mohd Aluwi, MSTA, CFTe +603 21471997 [email protected]



S I N G A P O R E

MONTHLY TECHNICAL REGIONAL INDICES WATCH – INDICES OUTLOOK

Jakarta Stock Exchange Composite Index (JCI IND) Mixed sentiment

Source: Bloomberg Tradable ETF(s) listed in Indonesia: Reksa Dana Premier ETF LQ-45 (ETF LQ45), Reksa Dana Premier ETF IDX30 (ETF IDX 30)

Last close: 6,112.40 Outlook: The overall trend is looking more positive and is improving, but the JCI’s seasonality in September is showing a negative pattern with 7x losses and 3x gains in the last 10 years. Sentiment is expected to be mixed as well in September with positive sentiment coming from a recent plunge in the number of domestic COVID-19 cases, which could speed up an economic recovery. Negative sentiment is coming from the global market as the Fed is signalling that they are going to stop their asset purchase or tapering off, which could trigger a rise in bond yield. The technical outlook on the weekly chart shows the RSI sloping upwards and above its centre line while the MACD is looking somewhat flattish. Looking forward, we see a more neutral or sideways trend, but there is potential for the JCI to go slightly higher as the trend is improving slowly. Resistance would likely be at 6,265 and support at 5,935. Strategy: Mixed sentiment could prolong the neutral trend but the trend is improving. Focus on sector indices that remain bullish, such as the mining, basic industry and miscellaneous industries. Support: 5,935 / 5,735 Resistance: 6,265 / 6,350 Analyst Maskun Ramli, CFTe +6221 2993 3915 [email protected]

Stock Exchange Of Thailand Index (SET IND) Approaching key resistance zone at 1,678-1,687

Source: Bloomberg Tradable ETF(s) in Thailand: ThaiDEX SET50 ETF (TDEX), ThaiDEX SET100 ETF (TH100), KTAM SET50 ETF Tracker (ESET50) Tradable ETF(s) in Singapore: Lyxor UCITS ETF by Societe Generale (P2P)

Last close: 1,636.45 Outlook: In the last three months, the SET Index moved downwards and sideways to form a base at around 1,510 pts, which is a 200-day simple moving average (SMA) support. After that, the index made a strong recovery and hit a higher high over the recent peak in early June. The current movement forms a rising wedge pattern which has a potential top and next resistance in the zone of 1,678-1,687 pts. In our view, the trading momentum would remain positive if the index could remain above 1,643 pts and make no reversal sign. Strategy: We recommend a trading buy in the range of 1,650-1,680 pts as the index is approaching key resistance which may be followed by a correction from profit-taking. For investors who want to buy on weakness, we view 1,575-1,595 as a better low-risk entry level. Investors should apply 1,550, a wedge support line, as a stop-loss level. Support: 1,615 / 1,595 Resistance: 1,660 / 1,680 Analyst Sittiporn Jennaimuang +66 2659 8026 [email protected]



S I N G A P O R E

MONTHLY TECHNICAL REGIONAL INDICES WATCH – INDICES OUTLOOK

FTSE Straits Times Index (STI IND) Sideway manner continues

Source: Bloomberg

Tradable ETF(s) in Singapore: Singapore STI ETF by Nikko AM (G3B), Straits Times Index ETF by SPDR (ES3)

Last close: 3,108.53 Outlook: The outlook of the FSSTI index remains positive as the price is trading above the cloud. It is now consolidating within a rectangle pattern, ranging between 3,237 and the gap support zone of 3,020. The MACD is still bullish at the moment with both of its lines above the zero line. We expect the gap support zone to hold the price decline and the price could continue its sideway manner until it breaks above its upper boundary of 3,237 to continue its upward movement. Strategy: Investors could accumulate when the price is trading near to the gap support zone of 3,020, which is the lower boundary of the rectangle pattern. Stop-loss can be placed below 3,020 to minimise risk. Support: 3,020 / 2,890 Resistance: 3,237 / 3,390 Analyst Wong Shueh Ting, CFTe +65 6590 6616 [email protected]

OUR PREVIOUS WRITE UP…

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S I N G A P O R E

FROM THE REGIONAL MORNING NOTES.. .

InnoTek (INNOT SP) Gaining Traction In The EV, Healthcare And Consumer Industries We are confident Innotek can achieve 28% yoy earnings growth for 2021, on the back of robust revenue growth in the auto segment of 45% yoy for 1H21. Also, winning new business in EV, healthcare equipment and gaming consoles should boost growth. Innotek’s solid 1H21 earnings of S$7.2m (+94% yoy) was in line with our expectation, meeting 41% of our full-year estimate. Innotek currently trades at only 5x ex-cash 2022F PE. Maintain BUY and target price of S$1.20 (12x 2022 EPS).

1H21 RESULTS Year to 31 Dec (S$m) 1H21 1H20 yoy % chgRevenue 84.3 79.7 5.8Gross Profit 17.7 17.1 3.8Gross margin (%) 21.0 21.4 (0.4ppt)PBT 5.3 4.9 8.0PATMI 7.2 3.7 93.8

Source: Innotek, UOB Kay Hian

WHAT’S NEW • Won new business in the attractive EV, healthcare equipment and consumer

industries. We are positive on the recent company update post 1H21 results as Innotek revealed that it has secured new businesses in three sectors that have higher growth potential and margin. Firstly, Innotek’s EV-related customer is growing at a quick pace and is now contributing around 5% of the group’s revenue. Secondly, Innotek has also secured new customers for healthcare imaging equipment. Finally, Innotek has also won a new contract in the manufacturing of gaming consoles.

• New Vietnam plant, expected to start in 2022, could drive further growth. On 18 Aug 21, Innotek announced that it will be venturing into Vietnam via the incorporation of a new subsidiary, Mansfield Vietnam. Innotek is confident that it will achieve profitability in the first year of operations as it has already secured several customers when the plant commenced operations. This will be the second overseas plant for Innotek after expanding into Thailand in late-18.

• Results in line, robust revenue growth for auto segment. 1H21 earnings of S$7.2m (+94% yoy) were in line, meeting 41% of our full-year estimate. 1H21 revenue increased 6% yoy, reflecting business recovery from a year ago when the group shut down its factories for two weeks from 27 Jan 20 in compliance with lockdown measures in China. Revenue for the auto segment increased significantly yoy, with a 45% yoy growth in 1H21 and is now its largest revenue contributor (44% of total revenue in 1H21 vs 32% in 1H20). On the other hand, office automation (OA) revenue increased yoy and revenue for TV and display products declined. Gross margin remained stable at around 21%.

KEY FINANCIALS Year to 31 Dec (S$m) 2019 2020F 2021F 2022F 2023FNet turnover 187 183 198 216 235EBITDA 19 25 19 24 26Operating profit 13 15 15 20 22Net profit (rep./act.) 17 14 18 23 25Net profit (adj.) 17 14 18 23 25EPS (S$ cent) 7.4 6.1 7.9 10.1 11.1PE (x) 11.5 13.8 10.7 8.4 7.6P/B (x) 1.2 1.1 1.0 0.9 0.9EV/EBITDA (x) 6.2 4.6 6.1 4.8 4.5Dividend yield (%) 1.8 2.4 3.0 3.6 4.1Net margin (%) 8.9 7.6 9.0 10.5 10.6Net debt/(cash) to equity (%) (27.2) (40.2) (40.6) (45.8) (49.3)Interest cover (x) n.a. 21.7 n.a. n.a. n.a.ROE (%) 10.7 8.2 9.7 11.5 11.7Consensus net profit - - 18 20 22UOBKH/Consensus (x) - - 0.99 1.12 1.15Source: InnoTek, Bloomberg, UOB Kay Hian



S I N G A P O R E

STOCK IMPACT • Strong cash generating ability and high net cash balance underappreciated. InnoTek

has a net cash position of S$90m as of 1H21, up from S$35.0m (+157%) as of end-15, forming around 50% of its current market cap. InnoTek has been paying out a DPS of 0.5 S cents since 2016, and gradually increased this to 2.0 S cents in 2020.

EARNINGS REVISION/RISK • We maintain our earnings forecast.

VALUATION/RECOMMENDATION • Maintain BUY and PE-based target price of S$1.20, based on a 12x 2022F PE, pegged to

the average peers’ PE.

• InnoTek is trading at 9x 2022F PE (ex-cash PE of 5x), which is unjustified based on its resilient business model, high net cash position and high margins as compared with its peers. Thus, we believe InnoTek should trade nearer to its peers’ multiple of 12x 2022F PE. Risks include demand disruption from COVID-19, competition and adverse regulatory changes.

SHARE PRICE CATALYST • Better-than-expected demand from automobile segments and winning of more EV

customers.

• Potential takeover target given its attractive ex-cash PE multiple.

• Better-than-expected dividend.

PEER COMPARISON Trading Price @ Market --------- PE --------- --------- P/B --------- --- EV/EBITDA --- ROE Yield Net

Company Ticker Curr 7-Sep-21 Cap 2021 2022 2021 2022 2021 2022 2021 2021 Gearing (lcy) (lcy) (US$m) (x) (x) (x) (x) (x) (x) (%) (%) (%)

AEM AEM SP SGD 4.13 865 12.3 10.4 4.0 3.1 8.3 7.1 37.7 2.0 (58.4) Frencken FRKN SP SGD 2.33 739 16.5 14.8 2.6 2.3 8.7 8.0 16.8 1.8 (18.0) Fu Yu FUYU SP SGD 0.295 165 11.9 11.2 1.2 1.2 4.3 4.2 10.6 5.4 (48.3) UMS UMSH SP SGD 1.71 678 14.8 12.5 3.1 2.6 10.9 9.3 22.6 2.3 (16.0) Valuetronics VALUE SP SGD 0.60 194 10.9 10.1 1.0 1.0 2.2 2.0 9.9 3.7 (87.1) Venture Corp VMS SP SGD 18.91 4,080 17.3 15.7 2.0 1.9 11.5 10.5 12.0 4.0 (35.1) Average 13.9 12.4 2.3 2.0 7.5 6.7 18.3 3.2 (43.8) Innotek INNOT SP SGD 0.845 144 10.7 8.4 1.0 0.9 6.1 4.8 9.7 3.0 (30.4)

Source: Bloomberg, UOB Kay Hian

REVENUE BREAKDOWN BY SEGMENT – AUTO IS GROWING RAPIDLY

Source: Inootek



S I N G A P O R E

FROM THE REGIONAL MORNING NOTES.. .

Trade - China August Trade Figures Surprises On The Upside China’s exports rose at a faster pace of 25.6% yoy in August, beating market expectations, while imports also increased solidly by 33.1% yoy, amid disruptions to global supply chains. While there have been gentle sighs of relief, export growth could continue to moderate in 4Q21 with weaker new export orders and a higher base for comparison.

WHAT’S NEW • August trade data were much stronger than anticipated compared with the previous

month thanks to buoyant demand, and a lower base for comparison. Exports spiked 25.6% yoy (Bloomberg consensus 17.3%), totalling US$294.3b after July’s subdued performance of a 19.3% yoy growth. However, trade data largely remained volatile due to COVID-19-related restrictions. Ironing out some of these kinks, on a 3-month moving average annual growth basis, exports and imports peaked in early-2Q21 and have trended down since, hitting 25.0% yoy and 33.4% yoy respectively (25.8% yoy and 38.7% yoy respectively in July).

• For August, items that benefitted from work-from-home and online schooling demand such as computers and LCD panels gained momentum. The former increased to 26.4% yoy from 23.0% yoy in July, and the latter grew to 16.2% yoy from 12.3% yoy. China-US trade volume also rose 15.5% yoy, accelerating from July’s 13.4% growth despite US tariff hikes imposed over Beijing’s technology ambitions.

• Imports also grew at a strong pace, beating consensus (Bloomberg consensus 26.9% yoy) and expanding 33.1% yoy, which is 5ppt higher than July’s 28.1% yoy rise. Among key commodities, coal imports remain high, spiking 165.3% yoy despite China’s pledge to achieve net-zero carbon emissions by 2060. Whereas for key products, mechanical and electrical products’ growth edged up 4.9ppt to 23.0% yoy, while high-tech products and agricultural products grew 19.2% yoy and 46.6 yoy, respectively. Imports of cars weakened, plunging 29.9% yoy in August compared with a 16.6% yoy fall in July. The overall high growth rates were however, largely boosted by a favourable base effect, with imports falling to 2.1% in August last year.

• Uncertainty remains. While the pace of export and import growths managed to beat market expectations in Aug 21, the flurry of soft Chinese data since last month points to a slowdown in the Chinese economy in the latter part of the year. Elevated raw material prices, supply-chain bottlenecks, weaker new export orders, as well as sporadic COVID-19 cases reinforce our view for more near-term support measures to revitalise the flagging economic recovery.

KEY EXPORT AND IMPORT DATA ------------------(US$b)------------------- ------------------- yoy % chg----------------- Aug 21 Jul 21 Aug 21 Jul 21Exports 294.3 282.7 25.6 19.3Imports 236.0 226.1 33.1 28.1Trade Surplus 58.3 56.6 Exports to Key Markets US 51.7 49.6 15.5 13.4EU 46.2 43.3 29.4 17.2Japan 13.9 13.3 19.5 12.6Hong Kong 28.5 28.9 24.2 17.7ASEAN 39.8 40.4 14.5 33.1Import of Key Commodities Iron Ores 20.2 17.9 68.3 72.6Crude Oil 23.8 21.7 49.6 45.6Copper Ores 4.7 4.9 32.0 93.5Coal 3.1 2.9 165.3 111.2Imports of Key Products Agricultural Products 20.0 19.3 46.6 30.1Hi-tech Products 80.0 80.1 19.2 15.5Mechanical & Electrical Products 169.6 163.8 23.0 18.1

Source: Wind, Customs, UOB Kay Hian



S I N G A P O R E

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Retail Market Monitor 20210908

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