Weekly | Why Top Glove Lead the Market this Week?
As of the close on Friday, $Straits Times Index(STI.SI)$ closed at 3,410.81 points, up 2.34% points last week.
During the last 5 trading days, $Top Glove(BVA.SI)$, $NIO Inc.(NIO.SI)$, $Shangri-La HKD(S07.SI)$, $DBS Group Holdings(D05.SI)$ and $Seatrium Ltd(5E2.SI)$ are the top 5 weekly gainers, up 9.68%, 7.69%, 4.71%, 4.55% and 4.35% respectively.
$Emperador Inc.(EMI.SI)$, $Genting Sing(G13.SI)$, $DFIRG USD(D01.SI)$, $Sri Trang Agro(NC2.SI)$ and $Man Oriental USD(M04.SI)$ are top 5 decliners of SGX stocks which market capital above S$1 Bln.
Below are key analyses of the TOP 5 gainers:
1. $Top Glove(BVA.SI)$
Last week, several newly released U.S. data points indicated that the labor market is cooling faster than expected, and signs of a slowdown in economic growth are emerging. This has fueled expectations of a rate cut. According to the CME FedWatch Tool, the probability of a 25 basis point rate cut in September increased from 63% to 66.5%.
Boosted by the prospect of a more accommodative environment, analysts believe the rubber glove industry is poised for recovery. Malaysian glove stocks were in demand last week, with all stock prices rising. Top Glove saw a cumulative weekly gain of over 9% on the Singapore stock market.
Around 25 June, Top Glove announced that the company would issue 589,800 shares under its Employees' Stock Option Scheme, according to a filing on the Singapore bourse.
Earlier in June, Kenanga, which has an "underperform" rating on Top Glove, said the glovemaker’s 9MFY2024 (9 months of fiscal year 2024) results met expectations. "Its 9MFY24 losses narrowed as it shook off high-cost inventory coupled with savings from the decommissioning of inefficient plants."
2. $NIO Inc.(NIO.SI)$
Last Monday, Nio reported record-breaking delivery data for June, a total of 21,209 vehicle deliveries, up 98.1% YoY.
Last week, Nio responded to the European Union's announcement of additional tariffs on battery electric vehicles (BEVs) imported from China starting 5. July According to CnEVPost, a Nio spokesperson stated that the company is closely monitoring and following up on the developments and measures related to the EU's anti-subsidy investigation.
Morgan Stanley commented on NIO's Friday announcement that Chief Financial Officer Steven Wei Feng has resigned for personal reasons, with Senior Vice President Stanley Yu Qu set to replace him. Analyst Tim Hsiao acknowledged that changes at the C-level are seldom positive news. However, he noted that NIO's recent strong performance should help mitigate market concerns and prevent any panic-induced reactions. The firm maintained its Overweight rating on NIO.
3. $Shangri-La HKD(S07.SI)$
As an owner-developer-operator, Shangri-La Asia Limited boasts a diverse asset portfolio that includes hotels, offices, retail spaces, residential properties for sale, and mixed-use developments.
With the arrival of summer and the peak travel season, hotel demand is on the rise. Consequently, Shangri-La Asia Limited’s stock price closed up nearly 5% last week. Additionally, it has been reported that Shangri-La Asia Limited maintained its authorized/registered share capital at HK$ 5 billion for June 2024, with no changes from the previous month.
According to Simply Wall St, if we review the last year of revenue growth, the company posted an impressive increase of 46%. The latest three-year period has also seen an exceptional 107% overall rise in revenue, driven by its strong short-term performance. Therefore, it's fair to say that the recent revenue growth for the company has been outstanding.
4. $DBS Group Holdings(D05.SI)$
According to a report by WSJ, Singapore bank stocks have been rising recently as markets factor in the increased possibility of a Trump presidency following the recent U.S. presidential debate, IG market strategist Yeap Jun Rong noted in an email. He explained that Trump's economic policies, which could lead to higher deficits and include measures such as immigration control and tariffs, are expected to be inflationary.
"This has triggered a steepening of the bond yield curves, as market participants bet on higher long-term bond yields, which in turn have a positive impact on the banks' margins," Yeap said. Additionally, there are expectations for Singapore banks' net interest income to remain resilient, coupled with a recovery in their non-interest income, which has driven some optimism into their share prices, he added.
However, Simply Wall St has issued a cautionary note. They observed that insiders have been net sellers of DBS Group Holdings Ltd. over the past 12 months, meaning that insiders sold more shares than they bought during this period.
5. $Seatrium Ltd(5E2.SI)$
After experiencing a dramatic drop of over 21% in June, Seatrium began to rebound in July. During the first week of July, Seatrium's stock price rose by more than 4%.
On 5 July, Singapore’s shipbuilding group secured a two-year contract with Angelicoussis Group, the largest shipping group in Greece. The contract includes the refit of ten to fifteen vessels per year, comprising liquefied natural gas (LNG) carriers, tankers, and bulk carriers. The "favoured customer contract," signed this week in Greece, includes an option to renew for an additional twelve months.
Regarding target prices, at the end of June, UOB Kay Hian lowered Seatrium's target price to S$2.35 from S$3.23.
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