SG Bonds Weekly – Week 36 August 31, 2020 522

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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