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MARKET NEWS

US stocks were higher after the close on Friday, as gains in the energy, communication services and materials sectors led shares higher. At the close of the NYSE, the DJIA rose 1.43% while the S&P 500 index gained 1.15%, and the NASDAQ Composite index advanced 0.82%. Advancing stocks outnumbered falling ones on the NYSE by 2,340 to 1,001 and 118 ended unchanged; on the Nasdaq Stock Exchange, 2,762 stocks advanced and 1,697 declined, while 242 ended unchanged. (Source: WSJ, CNBC)

During the last trading session, the FSSTI index slid 35.59pt to 3,051.11. Among the top active stocks were Sembcorp Marine (-1.2%), Yangzijiang Shipbuilding (-0.7%), Genting Singapore (-1.4%), Jiutian Chemical (-1.2%) and ISDN (-1.6%). The FTSE ST Mid Cap index was down 0.7% while the FTSE ST Small Cap Index fell 1.1%. The broader market saw 137 gainers and 248 losers with a total trading value of S$1.07b.

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SingTel – Positive monetisation of Optus towers. Recycling the capital towards 5G and other growth opportunities.
(ST SP/BUY/S$2.43/Target: S$2.75)

Optus is divesting a 70% stake in its tower assets for A$1.9b. This values the assets at 38x EV/EBITDA as Optus losses controlling stake in the infraco. The proceeds will be ‘recycled’ back into Singapore and Australia’s 5G infrastructure and other growth opportunities. Separately, Singtel announced the creation of a regional data…

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ST Engineering – US$2.7b M&A will provide access to the US toll road pricing market, but at a cost.
(STE SP/BUY/S$3.78/Target: S$4.05)

STE believes that its US$2.7b acquisition of TransCore would be complementary to its smart, integrated mobility solutions and will provide access to the North American toll collection and intelligent transportation systems market which is expected to grow from US$2.5b in 2021 to more than US$4b in 2030. However, TransCore’s acquisition price translates into a trailing ROIC of nearly 6%, which would be below STE’s 2019 ROIC of 16.7%. Hence, we lower our sustainable ROIC multiple by 50bp and lower our target price to S$4.05 from S$4.25…

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Golden Agri-Resources (GGR SP) – Trading BUY

Price managed to stay above the cloud, keeping the bullish trend intact. The RSI is rising above its neutral level as well, suggesting an increased upward momentum…

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SIA Engineering Co (SIE SP) – Trading BUY

The price correction was supported by the middle Bollinger band, which is also the 20-day moving average. The RSI is rising above its neutral level…