Date: November 25, 2024
- The Straits Times Index added 2 points at 3,746.02
- Caution early in the week following Putin’s nuclear move
- US Treasuries enjoyed a flight to safety
- Nvidia’s strong Q3 earnings helped push Wall Street’s indices higher
- ST Engineering’s Q3 revenue up 14%, declares S$0.04 dividend
- Keppel DC REIT to buy 2 data centres from sponsor Keppel for S$1.4b
- Nio’s Q3 net loss widens to 5.1b yuan (S$945.5 million)
- October’s NODX disappointed with 4.6% fall
The STI managed to hold firm above 3,700
The post-US election rally appeared to run a little of out steam last week, with the Straits Times Index adding only two points over the five days at 3,746.02. Average daily volume traded was also down at S$1.18b versus S$1.3b the week before.
Investors grappled with a host of considerations, starting early in the week when US Treasuries were quickly bought as safe havens after Russia’s Vladimir Putin officially signed a decree to lower Russia’s threshold for nuclear weapon use.
As a result, 10-year yield declined by over 5 basis points to as low as 4.34%.
Nvidia’s earnings beat estimates
Later in the week, Nvidia reported October quarter adjusted earnings per share of 81 US cents, compared to Wall Street’s consensus estimate of 75 US cents. Revenue came in at US$35.1 billion, which was ahead the analyst expectations of $33.2 billion.
The outlook was slightly above estimates. For the current quarter, Nvidia provided a revenue forecast range with a midpoint of US$37.5 billion. That’s above analysts’ consensus of US$37.1 billion.
In response the Dow Jones Industrial Average surged over 570 points on the heels of NVIDIA’s strong Q3 2025 earnings and fuelled by robust gains in sectors tied to broader economic growth; the USD weakened as the Fed hinted at inflation cooling and rate reduction.
For the week, the S&P 500 climbed 1.7%, while the Nasdaq Composite also added 1.7%. The Dow gained 2.0%.
ST Engineering’s Q3 revenue up 14%, declares S$0.04 dividend
In a 3Q Market Update, ST Engineering said revenue for the third quarter ended September rose 14% to S$2.8 billion and that has proposed a third-quarter interim dividend of S$0.04 per share, unchanged from the previous year.
For the nine months ended September, ST Engineering’s revenue was 14% higher at S$8.3 billion. This was attributed to “strong growth in all sub-segments”, as well as new contracts in the first nine months of FY2024.
As at end-September 2024, the group’s order book stood at S$26.9 billion, of which S$8.3 billion are new contracts for the nine-month period, with Q1 contributing S$3 billion, Q2 $3.1 billion and Q3 S$2.2 billion.
In downgrading the stock to a “hold’’ Maybank said while STE continues to execute well, order book growth has slowed down.
“Unless reversed, this will weigh on EBIT (earnings before interest and tax) margins. Further, the turnaround in the USS (urban solutions and satellite communications) business is taking time. As such, we lower our estimates and DCF-based target price to S$4.70 and downgrade the stock to HOLD. Following a 14% rise year-to-date, yields have compressed, and risks are to the downside for earnings growth as the order book tapers off’’ said Maybank.
On Monday after the business update, ST Eng’s shares fell S$0.26 or 5.5% to S$4.45 on volume of 15 million. However they rebounded S$0.13 on Tuesday to S$4.58 and finished the week at S$4.68.
Keppel DC REIT to buy 2 data centres from sponsor Keppel for S$1.4b
THE manager of Keppel DC Real Estate Investment Trust (Keppel DC Reit) has proposed to acquire interests in two artificial intelligence-ready hyperscale data centres from a joint venture (JV) led by sponsor Keppel for S$1.4 billion.
The JV owns the Keppel Data Centre Campus in Genting Lane in Singapore, which comprises the two data centres and a vacant land plot earmarked for a third data centre, which has been excluded from the deal.
Keppel DC Reit will purchase a 49% interest in the JV, as well as subscribe for two new classes of securities issued by the JV for up to S$1.03 billion.
This will entitle Keppel DC Reit to 99.49%h of the economic interest from the two data centres – KDC SGP 7 and KDC SGP 8.
Keppel DC Reit will also be granted a call option, which the manager expects to exercise in the second half of 2025, to acquire the remaining 51% stake in the JV from Keppel, which holds the remaining 0.51% economic interest.
As part of the proposed transaction, Keppel DC Reit shall pay an additional S$350 million should a 10-year land tenure lease extension to 2050 be approved for the Keppel Data Centre Campus by the relevant authorities. This will be paid to the JV’s shareholders, Keppel’s private fund Alpha Data Centre Fund and its parallel fund (collectively known as ADCF), and co-investors.
Funds for the deal will come from a private placement, a non-renounceable preferential offering and an issuance of sponsor subscription units.
Later in the week Keppel DC REIT said it closed its private placement at S$2.09 apiece with 334.9 million new units issued. This was 3.4 times subscribed and raised gross proceeds of about S$700 million after it was upsized.
The issue price of the preferential offering has been fixed at S$2.03 per new unit. The allotment ratio is fixed on the basis of 86 new units for every 1,000 existing units.
Some S$301.3 million is expected to be raised from the preferential offering, while about S$85 million will be raised from the issuance of sponsor subscription units.
Nio’s Q3 net loss widens to 5.1b yuan (S$945.5 million)
Chinese electric vehicle (EV) maker Nio, whose shares are listed in the US, Hong Kong and Singapore reported a net loss of 5.1 billion yuan (S$945.5 million) for its third quarter ended Sep 30, 2024, from 4.6 billion yuan in the corresponding period a year ago.
The company’s loss per share stood at 2.50 yuan for the quarter, down from 2.67 yuan the previous year.
Revenue for Q3 fell 2.1% to 18.7 billion yuan, as vehicle sales fell 4.1% to 16.7 billion yuan. Nio attributed the poorer vehicle sales to the lower average selling price as a result of “changes in (the) product mix”, which was partially offset by an increase in delivery volume.
October’s NODX disappointed with 4.6% fall
Singapore’s key exports fell by 4.6% year on year in October, disappointing both the market and the authorities, as non-electronic shipments decreased sharply.
October’s non-oil domestic exports (NODX) dashed the hopes of private-sector economists, who were anticipating a 4% year-on-year growth. Meanwhile, September’s NODX was revised by a fairly large extent to just 0.9% year-on-year growth.
EnterpriseSG said October’s performance was “weaker than expected”. It noted that it was expecting NODX to come in below the “4 to 5% forecast range” for the year, owing to a “weaker-than-expected recovery” in the second half of 2024.
Non-electronic exports declined by 6.7% year on year last month, undoing the 1.4% increase in September. Specialised machinery, pharmaceuticals and petrochemicals contributed the most to this decline, said EnterpriseSG.
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