Throughout the current week, there have been marginal upticks observed in several asset classes. Significant highlights encompass the disclosure of financial results by DBS and Singapore Airlines. Our report for this week comprehensively delves into the earnings reports of these noteworthy companies, offering actionable insights for investors.
On Top of Our Mind This Week: DBS and SIA release their earnings
Comparison of DBS and SIA Comparison Chart (Source: Google Finance)
Key Details from DBS’s Earnings Announcement
DBS reported net profit of S$2.59 billion for the third quarter ended September, an 18% increase year-on-year, beating the $2.54 billion forecast by analysts in a Bloomberg poll. Besides that, the board declared a dividend of 48 cents a share for the third quarter, unchanged from the previous quarter. This brings the dividend for the nine months to $1.38 a share.
However, there still exist some negative factors when evaluating DBS’s whole performance. Firstly, compared with the record earnings in the previous quarter, net profit margin was 2 percent lower as the higher income was offset by increased expenses and higher allowances taken for exposure linked to a recent money laundering case. The second key negative factor is from the DBS’s lower current account savings account (CASA) ratio, which stood at 52% as at Sept 30, down from 56% before. Earnings upgrades are likely from higher non-interest income but offset by higher operating expenses.
Action Point for Investors: Keep an eye on DBS’s dividend payouts and its current account savings account ratio to evaluate its stability of net interest margin (NIM) – a key gauge of a lender’s profitability.
Key Details from Singapore Airline’s Earnings Announcement
Boosted by strong travel demand, SIA booked a record $1.44 billion net profit for the half year, an 55% increase year-on-year. Revenue came in at a record $9.16 billion, a 9 percent increase. The company also declared an interim dividend of 10 cents, amounting to $297 million in total payout. The higher net profit came amid a 15.3 percent year-on-year fall in net fuel costs to S$2.3 billion for the half-year period.
Passenger traffic saw a 38% year-over-year increase and passenger load factor (PLF) increased by 5.8 percent pointing to a record half-yearly figure of 88.8 percent. The SIA group anticipates restoring 92% of pre-pandemic capacity by next month and full capacity by late next year. The only discernible “soft” area for SIA was cargo. Its cargo load factor fell 8.4 percentage points to 52.7 percent year on year.
Action Point for Investors: Despite SIA’s improving profits, watch out for excess inventories, geopolitical tensions, high fuel prices due to supply risks in the oil market and inflationary pressures SIA is faced with.
Market Recap This Week
After experiencing significant gains last week, equity indexes showed more stable performance this week. The S&P 500 rose by 1.3%, and the NASDAQ increased by 2.4%. However, the Hang Seng Index fell by 2.6%. After last week’s decline of about 30 bps, 10-year treasury yields saw a rebound this week, rising by 7 bps. In commodity markets, the movements were less pronounced. Oil prices saw a modest increase of 0.5%, while gold prices remained steady, showing no significant change. Meanwhile, Bitcoin continued its upward trend, closing 6.6% higher.
Source: Google Finance, Syfe Research, 11 November 2023
What is on the Radar for This Week?
In the upcoming week, investors should pay attention to US October CPI (Tue, 14 November). Moderate decreases in both headline and core CPI are widely expected, and these figures could influence Fed’s policy decisions. Additionally, investors will closely watch for the release of initial jobless claims data which will influence US’s interest rates.
Source: Yahoo Finance, Bloomberg, Google Finance