SG Bonds Weekly – Week 36 August 31, 2020 295

Outlook for the week

Key economic releases for the week

  • Thursday, 3 September 2020: SG Purchasing Managers Index (9:00PM), US Markit Composite PMI (9:45PM)
  • Friday, 4 September 2020: SG Retail Sales YoY (1:00PM), US Change in Nonfarm Payrolls (8:30PM), US Unemployment Rate (8:30PM)


Past week: Key events

  • Federal Reserve Chair Jerome Powell unveiled a change in its monetary policy stance to achieve “average” inflation target, effectively signaling a shift towards allowing inflation to run higher and longer periods of low interest rates. This fueled equity markets further on its historic rally while the US Treasury yield curve steepened.
  • Oxley Holdings Limited (OHLSP) 2H20 revenues increased 299% YoY to S$638mn due to contributions from projects in Cambodia, the United Kingdom, Singapore, and Australia. However, property fair value losses, investment losses and FX losses totaling S$283mn pushed bottom line to a loss before tax of S$281mn and increased gearing to 2.48x. Progressive billings will be recognized as restrictions ease and construction activities resume.
  • Thomson Medical Group (TMGSP) suffered weaker revenues from lower patient loads due to COVID-19 restrictions. EBIT came at a loss of S$90mn due to one-off impairment losses of S$93mn on Iskandar Land. Consequently, gearing increased from 0.91x to 1.20x with net debt issuance of S$71mn. Liquidity is strong with cash/short term borrowings of 29x. Gradual lifting of restrictions is expected to lift operating performance.
  • Heavy in the logistics sector, ESR Cayman Limited (ESRCAY) benefited from growing e-commerce demand, posting resilient 1H20 results. Revenues grew 26.9% YoY and EBIT margins increased from 26.1% in 1H19 to 48.2% in 1H20. Gearing remained stable, increasing from 42.4% to 43.1%, while liquidity remained high with cash/short term borrowings at 1.64x.

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About the author

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Timothy Ang
Research Analyst
Phillip Securities Research

Timothy covers credit analysis of local and foreign bonds. Previously an equity dealer, he handled equity trade execution and portfolio management. He has presented seminars for organisations such as SIAS, SPH and IRAS, commentated live market updates for 93.8FM, and authored investment articles for the Business Times newspaper. He graduated with a Bachelor of Commerce in Accounting & Finance from the University of Western Australia.

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