Berkshire Hathaway Invests $4 billion in Taiwan Semi | 15 November 2022 | Daily Morning Note

The Daily Morning Note is a round-up of local and global business headlines that you need to know to get ahead of your day.

Berkshire Hathaway Inc said it had bought stock in Taiwan Semiconductor Manufacturing Co worth more than $4.1 billion. The company owns 60.1 million American depositary shares in the world's largest contract chipmaker, which posted an 80 percent profit increase in its third quarter due to demand from Apple Inc.


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Key takeaways

Summary

The Straits Times Index climbed 1 per cent or 32.47 points to close at3,260.80 on Monday, while regional markets were mixed. In the broader Singapore market, gainers beat losers 358 to 251, with 2.05 billion securities worth$1.79 billion traded.

Wall Street stocks ended lower on Monday, stumbling after last week’s rally fuelled by hopes the Federal Reserve would ease its interest rate hikes, and as fresh policymaker comments failed to reassure markets. The Dow Jones Industrial Average dipped 0.6 percent to close at 33,536.70. The broad-based S&P 500 dropped 0.9 per cent to3,957.25, and the tech-rich Nasdaq Composite Index fell 1.1 per cent to11,196.22.

Singapore News

China-focused real estate investment trust Dasin Retail Trust on Monday (Nov 14) reported a 7.8 per cent drop in revenue to S$70.7 million for the nine months ended September (9M2022), from S$76.7 million the year before. Net property income for 9M2022 slipped 8.3 per cent to S$55.2 million, from S$60.3 million in the corresponding period last year.

Mainboard-listed Asian Pay Television Trust(APTT) has declared a distribution per unit (DPU) of 0.25 Singapore cent for the third quarter ended Sep 30, unchanged from the DPU declared in the corresponding year-ago period. The company has also reaffirmed a distribution guidance of 0.25 Singapore cent per unit for the fourth quarter of 2022, the trustee-manager said in a bourse filing on Monday.

Golden Agri-Resources on Monday reported a 148 per cent increase in earnings to US$285 million for the third quarter ended September, from US$115million in the corresponding period last year. This brought earnings for the first nine months of FY2022 up 151 per cent year on year to US$675 million.

US News

OPEC on Monday cut its forecast for 2022 global oil demand growth for a fifth time since April and also trimmed next year’s figure, citing mounting economic challenges including high inflation and rising interest rates. Oil demand in 2022 will increase by 2.55 million barrels per day (bpd), or 2.6 per cent, the Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report, down 100,000 bpd from the previous forecast.

Boeing Co got a glimmer of hope after US President Joe Biden and his Chinese counterpart Xi Jinping called for a cooling of tensions at a face-to-face meeting on Monday (Nov 14). After a three-hour meeting in Bali, Indonesia, Biden committed to send US Secretary of State Antony Blinken to China for a visit, and the countries pledged to continue talks on a range of issues.

The world’s biggest cryptocurrency platform Binance on Monday pledged to establish a liquidity fund to curb sector fallout from the collapse of rival FTX, boosting the value of bitcoin. Cash-strapped FTX filed for bankruptcy Friday after Binance scrapped a takeover bid, sending chills across the cryptocurrency world.

In our recommendation section...


We upgrade our recommendation on Sembcorp Industries to Buy.

• The target price is S$3.68, and it was last done at S$3.02.

Our analyst Terence Chua says:  The acquisition of BEI Energy and Vector Green will be accretive to earnings upon completion in 1Q23 as it will be funded by debt and internal cash. China and Indian assets are supported by mid- to long- term power purchase agreements that will ensure stability in earnings and cash flows. We upgrade to BUY due to the recent pullback in its share price.”

Sembcorp Industries – Acquisition of another 1.38GW of renewable assets

Recommendation: BUY (Upgraded), Last Done: S$3.02

Target price: S$3.68

Analyst: Terence Chua

• Sembcorp Industries (SCI) announced the acquisition of 1.38GW of renewable assets in China and India.

• The acquisition of BEI Energy and Vector Green will be accretive to earnings upon completion in 1Q23 as it will be funded by debt and internal cash.

• China and Indian assets supported by mid- to long- term power purchase agreements (PPAs) that will ensure stability in earnings and cash flows.

• We upgrade to BUY from ACCUMULATE with unchanged target price of $3.68. Our earnings is unchanged and our target price are maintained at $3.68, still based on 1.2x P/BV, the average of its peers. But we upgrade to BUY due to the recent pull back in its share price.

     
     

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