MARKET OVERVIEW
- The market may struggle as China's intent to bolster economic growth through a looser fiscal policy failed to lift sentiment amid the rumbling trade row, with recent corporate earnings showing little surprises thus far.
- Technically, the STI faces immediate resistance at 3,300 and 3,340 at the next level, while underlying support remains intact at 3,190-3,200.
CORPORATE RESULTS
*Mapletree Industrial Trust
- 1QFY19 DPU rose 2.7% to 3¢, largely within expectations, making up 24% of full-year consensus estimate.
- Gross revenue and NPI grew 3% and 1.9% to $91.5m and $69.5m respectively, driven by the contributions from Phase 2 of its build-to-suit project for HP Singapore, 14 US data centres (40% interest) as well as compensation from early termination of leases.
- Portfolio occupancy slipped 1.7ppt q/q to 88.3%, dragged by its Singapore assets (-1.8ppts) and lower occupancies across most segments. Overall WALE was 3.7 years with 13%/20.7% of leases expiring in FY19/20.
- Aggregate leverage climbed 1.9ppt q/q to 35% with all-in average funding cost of 3% and debt tenor of 3 years.
- Besides heightened geopolitical risks, the continuing supply of industrial space is exerting pressure on both occupancy and rental rates.
- Trades at annualised 1QFY19 yield of 5.9% yield and 1.36x P/B
*Frasers Centrepoint Trust
- 3QFY18 DPU of 3.053¢ (+1.8%) brought 9M18 payout of 9.153¢ (+2.5%), meeting 76% of full-year consensus estimate.
- For the quarter, gross revenue and NPI rose 10.9% and 13.7% to $48.3m and $35m on the back of positive rental reversions, higher occupancy and shopper traffic at its three larger malls, particularly Northpoint City North Wing.
- 47 leases comprising 4% of total NLA were renewed with positive rental reversion of 5%.
- Portfolio occupancy remained stable q/q at 94%.
- Aggregate leverage edged up 0.1ppt to 29.3% q/q with average debt maturity of 2.2 years and all-in borrowing cost of 2.5%.
- Trades at annualised 3QFY18 yield of 5.4% and 1.1x P/B.
- MKE maintains Buy with TP of $2.55.
*Suntec REIT
- 2Q18 DPU dipped 0.8% to 2.474¢, mainly due to the enlarged unit base and brought 1H18 payout to 4.907¢, representing 49% of full-year consensus estimate.
- For the quarter, gross revenue and NPI grew 3.7% and 2.2% to $90.5m and $60.7m respectively on higher contributions from Suntec Singapore and Suntec City mall but office turned in weaker performance due to transitory downtime from replacement leases.
- Achieved committed occupancy of 99% for its office portfolio (SG: 99.8%, Aust: 96.7%) and 98.2% for its retail portfolio (SG: 98.6%, Aust: 90.4%).
- Signed 187,000 sf of office leases (65% new) and 179,000 sf of retail leases (45% new) with 5.1% and 8.4% of office and retail leases expiring in FY18.
- Office WALE stood at 3.66 years, while retail WALE was 2.31 years at at Jun '18.
- Aggregate leverage was 36.5% with all-in financing cost of 2.74%.
- Trades at annualised 2Q18 yield of 5.2% and 0.9x P/B
NEUTRAL NEWS
*Banyan Tree
- Disposing its entire asset portfolio in Seychelles, which comprises the Banyan Tree Resort as well as land plots for US$70m.
- The group will continue to manage Banyan Tree Resort Seychelles under a hotel management agreement.
- The move is part of the group's strategy on rebalancing its assets and unlock the value of its mature assets to create greater value from other markets.
- Upon completion, the group's EPS and NTA per share will increase by 23.3% and 0.8% to 2.96¢ and 70.66¢ respectively.
- Trades at 0.76x P/B
*Sembcorp Industries
- 92.6%-owned Singapore Wuxi Investment Holdings is selling its entire 49% stake in Wuxi Singapore Property Investment Co (WSPI) to Golden Concord and Shanghai Sunac Real Estate Development Co for Rmb323m.
- WSPI holds the ongoing residential development Hongshan Mansion in Wuxi.
- The sale is expected to result a net gain of $12m and is slated to complete by end 2018.
*China Everbright Water
- Received multiple subsidies amounting to Rmb16.3m in 1H18 from various government authorities at central, provincial, county and district levels.
- Trades at 8.9x fowrard P/E.
NEUTRAL NEWS
*Excelpoint Technology
- Invested $0.3m in Singapore-based semiconductor chip design company CLOPTech in the form of convertible loan.
- The spin-off company from A*STAR was established in 2015 and has global partnerships with foundries, equipment manufacturers and technology providers.
- Its IP protected commercial chipset product is used in long-range wireless infrastructure products, and it has secured lead customer orders for product design integration.
- The investment is part of the group’s strategy to diversify into IoT applications.
- The group has an investment commitment of $5m to invest in IoT innovators and start-up activities.
- Trades at 6.7x trailing P/E.
*Hanwell
- Acquiring a property located at Higashiyama-ku, Gion Machikitagawa 305, Kyoto City, Japan, for ¥240m ($2.9m), below its valuation amount of ¥270m ($3.3m).
- The site has a land area of 90.5 sqm, with total buildable area of 72 sqm and an allowable building area of 360 sqm for construction a 5-storey commercial building.
- Property is close to well established shopping malls, restaurants and the Yasaka Shrine (Gion Shrine), one of the famous shrines in Kyoto that tourists visit.
- The acquisition will be used as a stepping stone to expand the group’s food business in Japan.
- Trades at 9.8x trailing P/E.
*Interra Resources
- Commenced drilling development well CHK 1211 in the Chauk oil field in Myanmar, which represents the 11th well to be drilled in the Chauk oil field for Goldpetrol.
- Results of the drilling and completion is expected to release within six weeks from now.
- Group has a 60% interest in the Improved Petroleum Recovery Contract of the Chauk field and 60% ownership in Goldpetrol which will be operating the field.
- Drilling costs are expected to be relatively low since it will be carried out using the Goldpetrol’s ZJ 450 rig and will be footed by existing funds on hand.
- Trades at 0.87x P/B.
*Trendlines
- Terminated term sheet and JV agreement with Shoushan Wealth Holdings signed on 16 Dec ’16 and 21 Aug ’17 respectively.
- Moving forward, the group intends to continue to seek similar and/or other business opportunities in China.
- Trades at 0.58x P/B.
*IEV
- Signed a MOU with EXT Co. of Korea to cooperate to commercialise and market EXT’s proprietary geotechnical engineering technologies in Malaysia, Indonesia and India and other markets
- They will jointly conduct a feasibility study to explore introducing EXT technology including EXT pile, Screw Anchor Pile, Point Foundation Method and Modular Pile into selected regional markets.
- If commercially feasible, the parties will then negotiate to establish a JV or other business arrangement between the parties. The MOA is effective for a term of nine months and may be extended as mutually agreed between the parties.
- This MOA is central to the group's strategy to commercialise disruptive technologies through a global distribution network and diversify its engineering business beyond the O&G and marine industry.
- Trades at 8.3x P/B.
Wednesday, July 25, 2018
Monday, July 23, 2018
SG Market (23 Jul 18)
MARKET OVERVIEW
-The market looked set for a nervous start as trade conflict returned to the fore after US President Trump expanded his tariff threats on all US$500b of Chinese imports and accused both China and EU of currency manipulation.
- Technically, the STI could face some resistance at 3,300 with next upside objective at 3,340, while underlying support remains at 3,190-3,200.
CORPORATE RESULTS
*Sembcorp Marine
- Dismal 2Q18 net loss of $55.6m (2Q17: $5.1m profit) blew estimates out of the water due to lower work volume and loss on sale of a semi-submersible rig.
- Revenue surged 151% to $1.63b, boosted by delivery of two Borr Drilling jack-ups and sale of West Rigel semi-submersible but excluding these rig sales, revenue would have sunk 12% to $572m.
- Dived into operating loss of $52.6m, reversing from $25.2m profit in 2Q17 as weak volumes in rigs & floaters and offshore platforms was unable to cover overheads and the yard took a $27m hit from the US$500m sale of West Rigel.
- Despite securing $254m of new contracts, its net order book (excluding Sete Basil drillships) shrank 9.6% q/q to $4.15b.
- While global E&P spending is picking up, order flow recovery is slow, competition is intense and margins are compressed.
- No interim dividend declared (1H17: 1¢).
- Trades at 1.75x P/B.
POSITIVE NEWS
*Keppel Corp
- Bagged two contracts with a combined value of $70m.
- In Brazil, Keppel Fels Brasil won a contract from Modec to fabricate and integrate topside module for FPSO Carioca MV30.
- In Singapore, Keppel Shipyard will convert a LNG carrier to a floating storage and re-gasification u for a leading global operator of oil and gas production vessels.
- Trades at 13x forward P/E
*ST Engineering
- Its electronics division secured $764m worth of contracts in 2Q18, mainly for smart city solutions in mobility, satellite communications, IoT, public safety & security and cybersecurity, as well as defence solutions.
- These projects will be completed progressively till 2026.
- Trades at 18.2x forward P/E.
*Avarga
- Proposed disposal of 35 Tuas View Crescent to Beni Warehousing for $18.6m
- The sale price of the 16,000 vacant property, with 30-year lease till Dec 2029, represents a 140% premium to its book value of $7.7m.
- Net proceeds will be to used to pay a special dividend, repay bank borrowings and/or strengthen its working capital.
- Trades at 9.5x trailing P/E.
NEUTRAL NEWS
*ComfortDelGro
- Entered into a 60:30:10 JV agreement with Nanjing Qixia and Nanjing Dajian to form a JVco known as Nanjing ComfortDelGro Qixia Driver Training Co (CDG Qixia).
- CDG Qixia will operate an initial fleet of 35 vehicles in Nanjing.
- Trades at 15.9x forward P/E.
*Chip Eng Seng
- Entered into an agreement with Navis Capital to acquire 70% of White Lodge Group Services for $13.3m.
- White Lodge operates a chain of pre-school centres in Singapore (7) and Malaysia (2).
- The deal gives the group with a ready platform to expand its footprint in the pre-school education segment and is expected to be completed in 3Q18.
- Trades at 13.6x P/B.
*China Everbright Water
- Signed a supplementary agreement with Ji'nan Urban and Rural Water Authority of Shandong Province to invest and construct Ji'nan Waste Water Treatment Project (Plant 1 & 2) Expansion, with total investment of Rmb1.043b.
- The project will expand the designed capacity of both plants by 200,000 m3.
- Upon completion of expansion work, the daily treatment capacity of Plant 1 will increase from 350,000 m3 to 450,000 m3, while that for Plant 2 will increase from 200,000 m3 to 300,000 m3.
- Trades at 9.3x forward P/E
NEGATIVE NEWS
*Profit warnings
- Courage Investment
- Asiaphos
- Soon Lian
-The market looked set for a nervous start as trade conflict returned to the fore after US President Trump expanded his tariff threats on all US$500b of Chinese imports and accused both China and EU of currency manipulation.
- Technically, the STI could face some resistance at 3,300 with next upside objective at 3,340, while underlying support remains at 3,190-3,200.
CORPORATE RESULTS
*Sembcorp Marine
- Dismal 2Q18 net loss of $55.6m (2Q17: $5.1m profit) blew estimates out of the water due to lower work volume and loss on sale of a semi-submersible rig.
- Revenue surged 151% to $1.63b, boosted by delivery of two Borr Drilling jack-ups and sale of West Rigel semi-submersible but excluding these rig sales, revenue would have sunk 12% to $572m.
- Dived into operating loss of $52.6m, reversing from $25.2m profit in 2Q17 as weak volumes in rigs & floaters and offshore platforms was unable to cover overheads and the yard took a $27m hit from the US$500m sale of West Rigel.
- Despite securing $254m of new contracts, its net order book (excluding Sete Basil drillships) shrank 9.6% q/q to $4.15b.
- While global E&P spending is picking up, order flow recovery is slow, competition is intense and margins are compressed.
- No interim dividend declared (1H17: 1¢).
- Trades at 1.75x P/B.
POSITIVE NEWS
*Keppel Corp
- Bagged two contracts with a combined value of $70m.
- In Brazil, Keppel Fels Brasil won a contract from Modec to fabricate and integrate topside module for FPSO Carioca MV30.
- In Singapore, Keppel Shipyard will convert a LNG carrier to a floating storage and re-gasification u for a leading global operator of oil and gas production vessels.
- Trades at 13x forward P/E
*ST Engineering
- Its electronics division secured $764m worth of contracts in 2Q18, mainly for smart city solutions in mobility, satellite communications, IoT, public safety & security and cybersecurity, as well as defence solutions.
- These projects will be completed progressively till 2026.
- Trades at 18.2x forward P/E.
*Avarga
- Proposed disposal of 35 Tuas View Crescent to Beni Warehousing for $18.6m
- The sale price of the 16,000 vacant property, with 30-year lease till Dec 2029, represents a 140% premium to its book value of $7.7m.
- Net proceeds will be to used to pay a special dividend, repay bank borrowings and/or strengthen its working capital.
- Trades at 9.5x trailing P/E.
NEUTRAL NEWS
*ComfortDelGro
- Entered into a 60:30:10 JV agreement with Nanjing Qixia and Nanjing Dajian to form a JVco known as Nanjing ComfortDelGro Qixia Driver Training Co (CDG Qixia).
- CDG Qixia will operate an initial fleet of 35 vehicles in Nanjing.
- Trades at 15.9x forward P/E.
*Chip Eng Seng
- Entered into an agreement with Navis Capital to acquire 70% of White Lodge Group Services for $13.3m.
- White Lodge operates a chain of pre-school centres in Singapore (7) and Malaysia (2).
- The deal gives the group with a ready platform to expand its footprint in the pre-school education segment and is expected to be completed in 3Q18.
- Trades at 13.6x P/B.
*China Everbright Water
- Signed a supplementary agreement with Ji'nan Urban and Rural Water Authority of Shandong Province to invest and construct Ji'nan Waste Water Treatment Project (Plant 1 & 2) Expansion, with total investment of Rmb1.043b.
- The project will expand the designed capacity of both plants by 200,000 m3.
- Upon completion of expansion work, the daily treatment capacity of Plant 1 will increase from 350,000 m3 to 450,000 m3, while that for Plant 2 will increase from 200,000 m3 to 300,000 m3.
- Trades at 9.3x forward P/E
NEGATIVE NEWS
*Profit warnings
- Courage Investment
- Asiaphos
- Soon Lian
Friday, July 20, 2018
SG Market (20 Jul 18)
MARKET OVERVIEW
- The market may slip, tracking losses on Wall Street as financial shares lagged after US President Trump criticised the Fed for raising interest rates and countering efforts to grow the economy.
- Commodities entered a correction on Thu with copper dipping below US$6,000/MT, while crude fell below US$68/barrel before rebounding.
- Technically, the STI will face some resistance at 3,300 with next level at 3.340, while underlying support is at 3,200.
CORPORATE RESULTS
*Keppel Corp
- 2Q18 net profit jumped 44.4% to $246.2m, bringing 1H18 earnings to $583.6m (+38%), which forms 58% of full-year consensus estimate.
- Revenue for the quarter dipped 2% to $1.52b as higher O&M takings (+35%) and gas & power sales (+24%) were eroded by weaker property business (-55%) in China and Singapore.
- O&M swung into $17m loss (2Q17: $11m profit) due to lower work volume and absence of gain from divestment of Keppel Verolme.
- Property reaped $225m earnings (2Q17: $97m) from en-bloc sales of Shenyang and Vietnam development projects and a $48.3m fair value gain on Nassim Woods.
- Infrastructure reaped earnings of $40m (2Q17: $25m) on the back of revaluation gain from 29.4% owned Keppel DC REIT and higher contributions from environmental and infrastructure contracts.
- Management expects O&M business to continue to its gradual recovery as it clinched $680m worth of contracts, bumping the order book to $4.6b (+7% q/q).
- Declared interim DPS of 10¢ (2Q17: 8¢) and a special DPS of 5¢ to mark its 50th anniversary.
- Trades at 10.7x forward P/E.
*SATS
- 1QFY19 net profit climbed 11.5% to $63.9m, coming in above market expectations.
- Revenue rose 3% to $439.4m on improved turnover for food solutions (+2.7%) and gateway services (+3.4%) despite the deconsolidation of SATS HK in Jul '17.
- Operating margin expanded 2.2ppt to 14.8% on slower pace of cost expansion (+0.4%) amid reduced staff costs.
- Looking ahead, the group expects Asian passenger volume and food, cruise traffic to grow despite the threat of global uncertainties potentially affecting cargo volumes.
- However, the termination of its MOA with Turkish Airlines for the provision of in-flight catering services at Istanbul New Airport is a major disappointment.
- Trades at 22.4x forward P/E.
* SIA Engineering
- 1QFY19 net profit grew 10.4% to $40.5m, in line with estimates
- Revenue fell 5.5% to $257.7m due to lower airframe and fleet management turnover.
- Operating margin contracted 2.9ppt to 4% as operating expenses declined at a slower pace.
- Bottom line was underpinned by contributions from associates/JVs of $32.4m (+53.6%) driven by higher takings from engine and component centres.
- Management notes that the aviation MRO environment remains challenging but expects its performance to benefit from strategic partnerships and various productivity initiatives.
- Trades at 19.7x forward P/E.
*CapitaLand Mall Trust
- 2Q18 DPU grew 2.2% to 2.81¢ on distributable income of $100m (+2.9%) This took 1H18 payout to 5.59¢ (+2%), on track with estimates.
- For the quarter, gross revenue and NPI rose 1.6% and 2.8% to $171.4m and $120.8m respectively due to stronger performance at Plaza Singapura (+4.0%) and Clarke Quay (+3.5%), which offset weakness at by Westgate (-2.1%) and Bedok Mall (-1.5%).
- Portfolio occupancy dipped 0.9ppt q/q to 98%.
- Shopper traffic and tenant sales were down 2.4% and 0.2% respectively while rental reversion stayed at +0.8%.
- CMT's average cost of debt and aggregate leverage were 3.1% and 31.5%
- AUM has risen by 0.8% HoH at the annual half-year revaluation, as cap rates assumptions were lowered by about 15bp across each property.
- Trades at 5.2% yield and 1.1x P/B
NEUTRAL NEWS
*Olam
- Its wholly-owned subsidiary, Olam Americas Inc (OAI) has successfully priced a US$100m issuance of 5-year fixed rate notes via a private placement.
- The Notes were placed to four investors in the US at a spread of 160 basis points over the 5-year US treasury rate, which translates to a fixed coupon of 4.35% for 5 years.
- Proceeds from the issue of the Notes will be used by OAI and its US affiliates for repayment of existing debt and general corporate purposes.
- Trades at 13.8x forward P/E
NEGATIVE NEWS
*OUE Lippo Healthcare
- Warned that it is expected to report a net loss for the 2Q18, attributable mainly to higher operating costs.
- Trades at 2.4x P/B.
- The market may slip, tracking losses on Wall Street as financial shares lagged after US President Trump criticised the Fed for raising interest rates and countering efforts to grow the economy.
- Commodities entered a correction on Thu with copper dipping below US$6,000/MT, while crude fell below US$68/barrel before rebounding.
- Technically, the STI will face some resistance at 3,300 with next level at 3.340, while underlying support is at 3,200.
CORPORATE RESULTS
*Keppel Corp
- 2Q18 net profit jumped 44.4% to $246.2m, bringing 1H18 earnings to $583.6m (+38%), which forms 58% of full-year consensus estimate.
- Revenue for the quarter dipped 2% to $1.52b as higher O&M takings (+35%) and gas & power sales (+24%) were eroded by weaker property business (-55%) in China and Singapore.
- O&M swung into $17m loss (2Q17: $11m profit) due to lower work volume and absence of gain from divestment of Keppel Verolme.
- Property reaped $225m earnings (2Q17: $97m) from en-bloc sales of Shenyang and Vietnam development projects and a $48.3m fair value gain on Nassim Woods.
- Infrastructure reaped earnings of $40m (2Q17: $25m) on the back of revaluation gain from 29.4% owned Keppel DC REIT and higher contributions from environmental and infrastructure contracts.
- Management expects O&M business to continue to its gradual recovery as it clinched $680m worth of contracts, bumping the order book to $4.6b (+7% q/q).
- Declared interim DPS of 10¢ (2Q17: 8¢) and a special DPS of 5¢ to mark its 50th anniversary.
- Trades at 10.7x forward P/E.
*SATS
- 1QFY19 net profit climbed 11.5% to $63.9m, coming in above market expectations.
- Revenue rose 3% to $439.4m on improved turnover for food solutions (+2.7%) and gateway services (+3.4%) despite the deconsolidation of SATS HK in Jul '17.
- Operating margin expanded 2.2ppt to 14.8% on slower pace of cost expansion (+0.4%) amid reduced staff costs.
- Looking ahead, the group expects Asian passenger volume and food, cruise traffic to grow despite the threat of global uncertainties potentially affecting cargo volumes.
- However, the termination of its MOA with Turkish Airlines for the provision of in-flight catering services at Istanbul New Airport is a major disappointment.
- Trades at 22.4x forward P/E.
* SIA Engineering
- 1QFY19 net profit grew 10.4% to $40.5m, in line with estimates
- Revenue fell 5.5% to $257.7m due to lower airframe and fleet management turnover.
- Operating margin contracted 2.9ppt to 4% as operating expenses declined at a slower pace.
- Bottom line was underpinned by contributions from associates/JVs of $32.4m (+53.6%) driven by higher takings from engine and component centres.
- Management notes that the aviation MRO environment remains challenging but expects its performance to benefit from strategic partnerships and various productivity initiatives.
- Trades at 19.7x forward P/E.
*CapitaLand Mall Trust
- 2Q18 DPU grew 2.2% to 2.81¢ on distributable income of $100m (+2.9%) This took 1H18 payout to 5.59¢ (+2%), on track with estimates.
- For the quarter, gross revenue and NPI rose 1.6% and 2.8% to $171.4m and $120.8m respectively due to stronger performance at Plaza Singapura (+4.0%) and Clarke Quay (+3.5%), which offset weakness at by Westgate (-2.1%) and Bedok Mall (-1.5%).
- Portfolio occupancy dipped 0.9ppt q/q to 98%.
- Shopper traffic and tenant sales were down 2.4% and 0.2% respectively while rental reversion stayed at +0.8%.
- CMT's average cost of debt and aggregate leverage were 3.1% and 31.5%
- AUM has risen by 0.8% HoH at the annual half-year revaluation, as cap rates assumptions were lowered by about 15bp across each property.
- Trades at 5.2% yield and 1.1x P/B
NEUTRAL NEWS
*Olam
- Its wholly-owned subsidiary, Olam Americas Inc (OAI) has successfully priced a US$100m issuance of 5-year fixed rate notes via a private placement.
- The Notes were placed to four investors in the US at a spread of 160 basis points over the 5-year US treasury rate, which translates to a fixed coupon of 4.35% for 5 years.
- Proceeds from the issue of the Notes will be used by OAI and its US affiliates for repayment of existing debt and general corporate purposes.
- Trades at 13.8x forward P/E
NEGATIVE NEWS
*OUE Lippo Healthcare
- Warned that it is expected to report a net loss for the 2Q18, attributable mainly to higher operating costs.
- Trades at 2.4x P/B.
Thursday, July 19, 2018
SG Market (19 Jul 18)
MARKET OVERVIEW
- The market is expected to grind higher amid the lack of direction and drivers as most of the early corporate results generally fall within expectations.
- Privatisation offer for Wheelock Properties could trigger interest in other deeply discounted developers such as Wing Tai (0.47x P/B) and Ho Bee Land (0.52x P/B).
- Technically, the STI appears to be entrapped by its 20-dma at 3,253 with further upside resistance at 3,300, while underlying support lies at around 3,190-200.
CORPORATE RESULTS
*Keppel T&T
- 2Q18 net profit surged 138% to $26m, boosted by a $19.6m revaluation gain on Keppel DC REIT, which lifted 1H18 earnings to $35.4m (+59.5%).
- Excluding the one-off gain core 1H18 profit of $15.8m (-28.8%) would have missed the sole full-year street estimate of $45.7m.
- Revenue for the quarter fell 4.9% to $45.3m, mainly due to lower container throughput in China.
- Operating profit jumped more than sixfold to $16m on a $19.6m dilution gain following Keppel DC REIT's private placement exercise, partially offset by higher operating costs to support new developments in the data centre and logistics businesses.
- Bottom line was lifted by lower interest expense (-14.3%) partially offset by marginally lower share of profits from associates and JVs (-1.4%).
- Trading at 17.6x forward P/E.
*CapitaLand Commercial Trust
- 2Q18 DPU dipped 1.6% to 2.16¢ on distributable income of $79.4m (+14.3%) due to higher unit base, missing estimates.
- For the quarter, gross revenue of $98m (+12%) and NPI of $77.7m (+12.5%) were bolstered by contributions from Asia Square tower 2 (acquired in Nov '17) and CapitaGreen, partially offset the absence of income from the divestment of One George Street, Wilkie Edge and Golden Shoe Car Park.
- Overall portfolio occupancy edged up 0.5ppt q/q to 97.8%, while aggregate leverage stood at 37.9%.
- Trades at 1x P/B and offers an annualised 2Q yield of 4.9%.
POSITIVE NEWS
*Wheelock
- Received privatisation offer fom its parent, Wheelock and Company (which currently owns 76.21%) at $2.10 in cash, valuing the Company at over $2.5b.
- As the Offer will be unconditional in all respects, Shareholders who accept the Offer will receive payment of the Offer Price within 7 business days of the date of receipt of their valid acceptances by the Offeror.
- The offer price translates to a price-to-NAV multiple of 0.8x that exceeds the historical averages over the past 1, 3, 5 and 10 years on both a cum and ex-cash basis
- This represents an attractive opportunity for Shareholders to realise their entire investment in the Company, which may otherwise be difficult due to the low trading liquidity of the Shares.
- The offeror intends to delist the Company if the free float requirement is not satisfied.
*Manufacturing Integration Technology
- Divesting its entire interest in MIT Semiconductor to Ningbo MIT Semiconductor for $84.5m (at 10.6x P/E), subject to any agreed adjustments to be made.
- Mr Kwong Kim Mone, the group's Chairman and Managing Director and his management team may acquire or subscribe up to 10% stake in Ningbo MIT Semiconductor upon completion.
- The deal will give rise to an estimated net gain of S$61.75m (after deducting applicable taxation and expenses), thus translating into about 27¢/share.
- The sale will help to unlock shareholders' value while the group will focus and grow its new core segment i.e. contract equipment manufacturing business going forward.
- Management intends to return the entire net proceeds from the proposed disposal to shareholders by way of a special dividend or capital reduction.
- It is anticipated that a first distribution of 24¢/share based on the first payment received by the group (80% of the actual sale price).
- Trades at 12.4x trailing P/E
*Vard
- Secured a contract worth NOK200m for the construction of one vessel for an undisclosed Norwegian customer.
- The vessel is scheduled for delivery from one of VARD's shipyards in Norway in 4Q 2019.
- Trades at 0.88x P/B.
*Mermaid Maritime
- Its Middle East business unit has been awarded a subsea services contract in a Gulf Cooperation Council Country for US$16m.
- Contract will involve the use of the DP2 Dive Support Vessel to carry out the overhauling and dry docking of the calm buoys, installation and disconnection of certain Single Point Moorings (SPMs) for an international Oil & Gas company
- The contract comes with further options for the removal and reinstallation of the additional SPMs
- Work will commence in the Arabian Gulf during the course of Aug 18 until Mar 19.
- Counter is loss-making and trades at 0.37x P/B.
NEUTRAL NEWS
*SIIC Environment
- Intends to further subscribe 23.2m new shares (out of 40m) in Longjiang Environmental Protection group Rmb8 each.
- Post-subscription, the group will maintain its 57.9687% stake in Longjiang Environmental Protection.
- Trades at 0.66x P/B.
*Imperium Crown
- Fei County Wonder Stone Characteristic Town Development Co., a subsidiary of the group, signed a license agreement with the Frontier Group for its hotel in Wonder Stone Park to operate under the "Days" brand.
- Frontier Group holds the Days Inn China master franchise and will manage the hotel which is expected to commence operations in Oct '18.
- Trades at 0.5x P/B.
*SIA
- SIA-CAE pilot training JV in Singapore to commence operations next month.
- The JV will provide simulator and classroom training, supporting SIA Group airlines and other operators' pilot training needs in the region.
- The 50/50 JV will operate out of the Singapore Airlines Training Centre located near Changi Airport.
- Trades at 14.3x forward P/E.
- The market is expected to grind higher amid the lack of direction and drivers as most of the early corporate results generally fall within expectations.
- Privatisation offer for Wheelock Properties could trigger interest in other deeply discounted developers such as Wing Tai (0.47x P/B) and Ho Bee Land (0.52x P/B).
- Technically, the STI appears to be entrapped by its 20-dma at 3,253 with further upside resistance at 3,300, while underlying support lies at around 3,190-200.
CORPORATE RESULTS
*Keppel T&T
- 2Q18 net profit surged 138% to $26m, boosted by a $19.6m revaluation gain on Keppel DC REIT, which lifted 1H18 earnings to $35.4m (+59.5%).
- Excluding the one-off gain core 1H18 profit of $15.8m (-28.8%) would have missed the sole full-year street estimate of $45.7m.
- Revenue for the quarter fell 4.9% to $45.3m, mainly due to lower container throughput in China.
- Operating profit jumped more than sixfold to $16m on a $19.6m dilution gain following Keppel DC REIT's private placement exercise, partially offset by higher operating costs to support new developments in the data centre and logistics businesses.
- Bottom line was lifted by lower interest expense (-14.3%) partially offset by marginally lower share of profits from associates and JVs (-1.4%).
- Trading at 17.6x forward P/E.
*CapitaLand Commercial Trust
- 2Q18 DPU dipped 1.6% to 2.16¢ on distributable income of $79.4m (+14.3%) due to higher unit base, missing estimates.
- For the quarter, gross revenue of $98m (+12%) and NPI of $77.7m (+12.5%) were bolstered by contributions from Asia Square tower 2 (acquired in Nov '17) and CapitaGreen, partially offset the absence of income from the divestment of One George Street, Wilkie Edge and Golden Shoe Car Park.
- Overall portfolio occupancy edged up 0.5ppt q/q to 97.8%, while aggregate leverage stood at 37.9%.
- Trades at 1x P/B and offers an annualised 2Q yield of 4.9%.
POSITIVE NEWS
*Wheelock
- Received privatisation offer fom its parent, Wheelock and Company (which currently owns 76.21%) at $2.10 in cash, valuing the Company at over $2.5b.
- As the Offer will be unconditional in all respects, Shareholders who accept the Offer will receive payment of the Offer Price within 7 business days of the date of receipt of their valid acceptances by the Offeror.
- The offer price translates to a price-to-NAV multiple of 0.8x that exceeds the historical averages over the past 1, 3, 5 and 10 years on both a cum and ex-cash basis
- This represents an attractive opportunity for Shareholders to realise their entire investment in the Company, which may otherwise be difficult due to the low trading liquidity of the Shares.
- The offeror intends to delist the Company if the free float requirement is not satisfied.
*Manufacturing Integration Technology
- Divesting its entire interest in MIT Semiconductor to Ningbo MIT Semiconductor for $84.5m (at 10.6x P/E), subject to any agreed adjustments to be made.
- Mr Kwong Kim Mone, the group's Chairman and Managing Director and his management team may acquire or subscribe up to 10% stake in Ningbo MIT Semiconductor upon completion.
- The deal will give rise to an estimated net gain of S$61.75m (after deducting applicable taxation and expenses), thus translating into about 27¢/share.
- The sale will help to unlock shareholders' value while the group will focus and grow its new core segment i.e. contract equipment manufacturing business going forward.
- Management intends to return the entire net proceeds from the proposed disposal to shareholders by way of a special dividend or capital reduction.
- It is anticipated that a first distribution of 24¢/share based on the first payment received by the group (80% of the actual sale price).
- Trades at 12.4x trailing P/E
*Vard
- Secured a contract worth NOK200m for the construction of one vessel for an undisclosed Norwegian customer.
- The vessel is scheduled for delivery from one of VARD's shipyards in Norway in 4Q 2019.
- Trades at 0.88x P/B.
*Mermaid Maritime
- Its Middle East business unit has been awarded a subsea services contract in a Gulf Cooperation Council Country for US$16m.
- Contract will involve the use of the DP2 Dive Support Vessel to carry out the overhauling and dry docking of the calm buoys, installation and disconnection of certain Single Point Moorings (SPMs) for an international Oil & Gas company
- The contract comes with further options for the removal and reinstallation of the additional SPMs
- Work will commence in the Arabian Gulf during the course of Aug 18 until Mar 19.
- Counter is loss-making and trades at 0.37x P/B.
NEUTRAL NEWS
*SIIC Environment
- Intends to further subscribe 23.2m new shares (out of 40m) in Longjiang Environmental Protection group Rmb8 each.
- Post-subscription, the group will maintain its 57.9687% stake in Longjiang Environmental Protection.
- Trades at 0.66x P/B.
*Imperium Crown
- Fei County Wonder Stone Characteristic Town Development Co., a subsidiary of the group, signed a license agreement with the Frontier Group for its hotel in Wonder Stone Park to operate under the "Days" brand.
- Frontier Group holds the Days Inn China master franchise and will manage the hotel which is expected to commence operations in Oct '18.
- Trades at 0.5x P/B.
*SIA
- SIA-CAE pilot training JV in Singapore to commence operations next month.
- The JV will provide simulator and classroom training, supporting SIA Group airlines and other operators' pilot training needs in the region.
- The 50/50 JV will operate out of the Singapore Airlines Training Centre located near Changi Airport.
- Trades at 14.3x forward P/E.
Wednesday, July 18, 2018
SG Market (18 Jul 18)
MARKET OVERVIEW
- The market may track Wall Street higher after Fed chief Jerome Powell gave an upbeat assessment of the economy and signalled no change in gradual policy tightening although trade remains an uncertain dynamic.
- Technically, immediate resistance for the STI is at 3,300 with underlying support at 3,190-3,200.
CORPORATE RESULTS
*Keppel DC REIT
- 2Q18 DPU rose 4.6% to 1.82¢, bringing 1H18 payout to 3.62¢ within expectations at 47% of full year forecasts.
- For the quarter, revenue and NPI jumped to $41.9m (+21.5%) and $38.1m (+21.4%) mainly driven by acquisitions of Keppel DC Singapore 5, maincubes DC and Keppel DC Dublin 2.
- Portfolio occupancy eased 1.7ppt q/q to 92%, while aggregate leverage decreased 5.7ppt q/q to 31.7%.
- Trades at an annualised 1H18 yield of 5.4% and 1.34x P/B.
*Keppel-KBS US REIT
- 2Q18 DPU of US$0.015 beat IPO forecast marginally by 0.7%, in-line with expectations.
- Gross income of US$22.6m (forecast: US$23.1m) was worse than expected largely due to drop in rental from a tenant at Westmoor Centre which vacated ahead of lease expiry.
- NPI of US$13.8m (forecast: US$13.6m) was better than expected due to lower-than-forecast property expenses of US$8.8m (-7.2%).
- Portfolio committed occupancy improved 0.5ppt to 90.3%, while aggregate leverage eased 0.5ppt q/q to 33.1%.
- Trades at an annualised yield of 6.9% and 1.0x P/B.
*Keppel Infrastructure Trust
- Flat 2Q18 DPU of 0.93¢ on stable distributable cashflow of $36.2m (unch), within expectations.
- For the quarter, revenue fell 10% to $142.9m weakness in Basslink (-81.1%), Keppel Merlimau Cogen (-2.7%) and concessions (-2.1%) overshadowed growth in City Gas (+7.1%).
- Gearing ticked 0.4ppt q/q higher to 40.5%.
- NAV/share fell 2.7% q/q to 28.8¢ due to distributions, partially offset by marked-to-market valuation of derivative financial instruments and recognised profit.
- Trades at 7.1% yield and 1.8x P/B.
*First REIT
- 2Q18 DPU ticked up 0.5% to 2.15¢, bringing 1H18 DPU to 4.3¢ in line with estimates.
- For the quarter, gross revenue and NPI climbed to $28.9m (+5.3%) and $28.5m (+5%) on addition contribution from Buton Property, Siloam Hospitals Yogjakarta and existing properties.
- Aggregate leverage rose 0.6ppt q/q to 34.2%.
- Trades at annualised 2Q yield of 6.5% and 1.3x P/B.
IPO WATCH
*Koufu
- The food courts and coffee shops operator will make its trading debut today after receiving strong support for its IPO of 97m shares at $0.63 each with the public offer of 6.33m shares were about 17x oversubscribed.
- Separately, institutional investors such as Maxi-Harvest Group, One Hill Investments and Qilin Asset Management have also subscribed for an aggregate of 21m Cornerstone Shares.
- Out of the $70.5m in total proceeds raised, about $43m will be due to Koufu for the expansion of its retail network of F&B Outlets in Singapore and overseas; establishing a proposed integrated facility as well as expanding the provision of online food ordering and delivery services.
- Given its cashflow-generative business, the group has a robust balance sheet in a net cash position which will enable it to explore potential JVs and M&As in complementary business segments/markets.
- Although it has no fixed dividend policy, management intends to distribute dividends of at least 50% of net profit generated in FY18/19 to shareholders.
- The post-offering market cap is expected to be $349.8m, thus valuing the stock at 13x P/E, a discount to its closest peer, Kimly of 17x.
POSITIVE NEWS
*Jumbo
- Entered into franchise agreement with Ho Sing Food Co. for the establishment and operation of Ng Ah Sio Bak Kut Teh outlets in Taiwan.
- The deal has an initial term of 10 years and may be renewed for a further 10 years subject to certain terms to be determined by the group.
- Ho Sing has also committed to open at least 20 of such outlets with the first one expected to open this month at the Shin Kong Mitsukoshi (Xin Yi) Mall, Taipei City.
- Trades at 26x forward P/E.
*Nordic
- Secured several contracts with new and repeat customers, comprising MNCs and companies in the O&G and petrochemical industries for a total value of $13.0m.
- Trades at 12.5x trailing P/E
*Hyflux
- Awarded by AVIC-INTL Project Engineering Company and CPI Power Engineering to supply 2 units of desalination system for Rmb 40.3m.
- The systems are expected to provide 7,320 m3 of desalinated water per day to 2x660 MW ultra-supercritical units of Turkey Hunutlu Thermal Power Plant Project for industrial use.
- Contract is slated to be fulfilled over next 1.5 years and is not expected to contribute to FY18 results.
- The counter remains suspended.
NEUTRAL NEWS
*Singtel
- Its subsidiary, Amobee has emerged as the winner in the court supervised auction to acquire certain assets from Videology, a software provider for advanced TV and video advertising for US$101m, subject to adjustments for accounts receivable at closing, estimated to be US$20.9m.
- The acquisition, following Videology's voluntary Chapter 11 restructuring proceedings, includes Videology's technology platform, intellectual property and certain other assets of estimated net book value of US$5.3m.
- Videology has emerged as a leading provider of software that empowers advertisers and publishers to use data to optimise campaigns and spend across digital platforms and television.
- The addition of Videology's capabilities will be a further boost to Amobee's omni-channel platform and help marketers meet growing consumer demand for premium video and connected TV content.
- Trades at 15.6x forward P/E
- The market may track Wall Street higher after Fed chief Jerome Powell gave an upbeat assessment of the economy and signalled no change in gradual policy tightening although trade remains an uncertain dynamic.
- Technically, immediate resistance for the STI is at 3,300 with underlying support at 3,190-3,200.
CORPORATE RESULTS
*Keppel DC REIT
- 2Q18 DPU rose 4.6% to 1.82¢, bringing 1H18 payout to 3.62¢ within expectations at 47% of full year forecasts.
- For the quarter, revenue and NPI jumped to $41.9m (+21.5%) and $38.1m (+21.4%) mainly driven by acquisitions of Keppel DC Singapore 5, maincubes DC and Keppel DC Dublin 2.
- Portfolio occupancy eased 1.7ppt q/q to 92%, while aggregate leverage decreased 5.7ppt q/q to 31.7%.
- Trades at an annualised 1H18 yield of 5.4% and 1.34x P/B.
*Keppel-KBS US REIT
- 2Q18 DPU of US$0.015 beat IPO forecast marginally by 0.7%, in-line with expectations.
- Gross income of US$22.6m (forecast: US$23.1m) was worse than expected largely due to drop in rental from a tenant at Westmoor Centre which vacated ahead of lease expiry.
- NPI of US$13.8m (forecast: US$13.6m) was better than expected due to lower-than-forecast property expenses of US$8.8m (-7.2%).
- Portfolio committed occupancy improved 0.5ppt to 90.3%, while aggregate leverage eased 0.5ppt q/q to 33.1%.
- Trades at an annualised yield of 6.9% and 1.0x P/B.
*Keppel Infrastructure Trust
- Flat 2Q18 DPU of 0.93¢ on stable distributable cashflow of $36.2m (unch), within expectations.
- For the quarter, revenue fell 10% to $142.9m weakness in Basslink (-81.1%), Keppel Merlimau Cogen (-2.7%) and concessions (-2.1%) overshadowed growth in City Gas (+7.1%).
- Gearing ticked 0.4ppt q/q higher to 40.5%.
- NAV/share fell 2.7% q/q to 28.8¢ due to distributions, partially offset by marked-to-market valuation of derivative financial instruments and recognised profit.
- Trades at 7.1% yield and 1.8x P/B.
*First REIT
- 2Q18 DPU ticked up 0.5% to 2.15¢, bringing 1H18 DPU to 4.3¢ in line with estimates.
- For the quarter, gross revenue and NPI climbed to $28.9m (+5.3%) and $28.5m (+5%) on addition contribution from Buton Property, Siloam Hospitals Yogjakarta and existing properties.
- Aggregate leverage rose 0.6ppt q/q to 34.2%.
- Trades at annualised 2Q yield of 6.5% and 1.3x P/B.
IPO WATCH
*Koufu
- The food courts and coffee shops operator will make its trading debut today after receiving strong support for its IPO of 97m shares at $0.63 each with the public offer of 6.33m shares were about 17x oversubscribed.
- Separately, institutional investors such as Maxi-Harvest Group, One Hill Investments and Qilin Asset Management have also subscribed for an aggregate of 21m Cornerstone Shares.
- Out of the $70.5m in total proceeds raised, about $43m will be due to Koufu for the expansion of its retail network of F&B Outlets in Singapore and overseas; establishing a proposed integrated facility as well as expanding the provision of online food ordering and delivery services.
- Given its cashflow-generative business, the group has a robust balance sheet in a net cash position which will enable it to explore potential JVs and M&As in complementary business segments/markets.
- Although it has no fixed dividend policy, management intends to distribute dividends of at least 50% of net profit generated in FY18/19 to shareholders.
- The post-offering market cap is expected to be $349.8m, thus valuing the stock at 13x P/E, a discount to its closest peer, Kimly of 17x.
POSITIVE NEWS
*Jumbo
- Entered into franchise agreement with Ho Sing Food Co. for the establishment and operation of Ng Ah Sio Bak Kut Teh outlets in Taiwan.
- The deal has an initial term of 10 years and may be renewed for a further 10 years subject to certain terms to be determined by the group.
- Ho Sing has also committed to open at least 20 of such outlets with the first one expected to open this month at the Shin Kong Mitsukoshi (Xin Yi) Mall, Taipei City.
- Trades at 26x forward P/E.
*Nordic
- Secured several contracts with new and repeat customers, comprising MNCs and companies in the O&G and petrochemical industries for a total value of $13.0m.
- Trades at 12.5x trailing P/E
*Hyflux
- Awarded by AVIC-INTL Project Engineering Company and CPI Power Engineering to supply 2 units of desalination system for Rmb 40.3m.
- The systems are expected to provide 7,320 m3 of desalinated water per day to 2x660 MW ultra-supercritical units of Turkey Hunutlu Thermal Power Plant Project for industrial use.
- Contract is slated to be fulfilled over next 1.5 years and is not expected to contribute to FY18 results.
- The counter remains suspended.
NEUTRAL NEWS
*Singtel
- Its subsidiary, Amobee has emerged as the winner in the court supervised auction to acquire certain assets from Videology, a software provider for advanced TV and video advertising for US$101m, subject to adjustments for accounts receivable at closing, estimated to be US$20.9m.
- The acquisition, following Videology's voluntary Chapter 11 restructuring proceedings, includes Videology's technology platform, intellectual property and certain other assets of estimated net book value of US$5.3m.
- Videology has emerged as a leading provider of software that empowers advertisers and publishers to use data to optimise campaigns and spend across digital platforms and television.
- The addition of Videology's capabilities will be a further boost to Amobee's omni-channel platform and help marketers meet growing consumer demand for premium video and connected TV content.
- Trades at 15.6x forward P/E
Tuesday, July 17, 2018
SG Market (17 Jul 18)
MARKET OVERVIEW
- The market looked set for a weaker open as tech stocks led US stocks lower and oil skidded more than 4% on resumption of Libyan production and talk of possible supply increases by Saudi Arabia and Russia.
- Technically, underlying support for STI lies at at 3,190-3,200 with immediate resistance seen at 3,300.
CORPORATE RESULTS
*Keppel REIT
- 2Q18 DPU remained flat at 1.42¢ on marginally higher distributable income offset by increased number of units.
- Gross revenue and NPI grew to $51.7m (+29.6%) and $43.2m (+35.5%) respectively, mainly due to increase in one-off income, and higher contribution from Bugis Junction Towers and Ocean Financial Centre partially offset by weaker contribution from 275 George Street.
- Average signing rent for Singapore office leases was approx. $10.74 psf in 1H18 (1Q18: $10.05 psf).
- Committed occupancy further eased 0.1ppt q/q to 99.3%, while aggregate leverage remained at 38.6%.
- Trades at 5.5% dividend yield and 0.8x P/B.
- MKE has a Hold with TP of $1.19.
*Soilbuild REIT
- 2Q18 DPU declined 13.8% to 1.264¢, bringing 1H18 DPU to 2.588¢ (-12.4%), in line with estimates.
- Gross revenue and NPI fell 13.1% and 13.2% respectively mainly due to lower contribution from 72 Loyang Way, a property known as KTL Offshore and West Park BizCentral.
- Portfolio occupancy rate rose modestly to 87.6% q/q while WALE stands at 2.9years.
- Negative rental reversions of 8.3% and 14.6% were recorded for renewals (including forward renewals) and new leases in 1H18 respectively.
- Aggregate leverage stood at 37.6%, which allows debt headroom of $45.9m
- Trades at 7.7% yield and 1.0x P/B
*Qian Hu
- 2Q19 net profit jumped almost six fold to $146k from $25k, driven by stronger sales of Dragon Fish, new aquaculture business in China, and higher-margin accessories.
- Revenue for the quarter inched up 1% to $21.9m, dragged by a 4.8% and 0.6% decline in Accessories and Plastics sales respectively.
- Gross margin expanded 1.0 ppt to 30.1% due to changes in sales mix.
- Bottomline was negatively impacted by higher finance costs of $131k (+33.7%) due to higher interest rates charged and increased bank borrowings.
- Trades at 47.5x trailing P/E.
POSITIVE NEWS
*Neratel
- Secured a total of $11.7m worth of new contracts for both Network Infrastructure (NI) and Wireless Infrastructure (WIN) business segments.
- The deals consists of an $8.5m NI contract to provide internet service infrastructure for a leading service provider in Southeast Asia and $3.2m WIN contract to supply microwave links to a Government entity in the Middle East.
- Both contracts were awarded by repeat customers.
- Trades at 15.6x trailing P/E.
*ST Engineering
- Aerospace sector secured $510m worth of new contracts for services ranging from heavy maintenance to engine wash and aircraft interior reconfiguration.
- In addition, the group expanded its composite panel manufacturing capacity by 50% with the opening of its second plant in Kodersdorf, Saxony, Germany.
- The plant has a production capacity of 200,000 panels per annum.
- Trades at 18.1x forward P/E.
*UOL
- Acquiring 180 apartments and ancillary facilities at Thamrin Nine's Tower 2 for US$56.3m ($76.3m) from PT Putragaya Wahana, which will be developed into a 180-key PARKROYAL Serviced Suites.
- Meanwhile, the group's hotel subsidiary, Pan Pacific Hotels also signed a management contract with PT Putragaya Wahana to operate a 200-key PARKROYAL Jakarta within Tower 2 of the same development.
- This will strengthen the group's hospitality footprint in Jakarta, bringing the total number of owned/managed hotels and serviced suites in the city to three and further strengthen its recurring income streams.
- Trades at 0.6x P/B.
NEUTRAL NEWS
*Datapulse / ICP
- Entered into a non-binding LOI with ICP for the proposed acquisition of MHI MY 1.
- MHI MY 1 owns a midscale hotel in Kuala Lumpur, currently operating under the "Geo Hotel Kuala Lumpur" brand.
- Upon the completion of a refurbishment programme, the hotel will debut as Travelodge Central Market, KL.
- This is part of Datapulse's plan to diversify into the hospitality industry, which has strong growth potential.
- For ICP, the proposed disposal is in line with its asset-light strategy, focusing on hotel management and franchising across Asia to expand and strengthen the Travelodge brand presence.
- Trades at 0.72x P/B and 0.9x P/B respectively.
*Raffles Medical Group
- Raffles Health insurance (RHI) launched Raffles Shield, an Integrated Shield Plan (IP) developed in partnership with a Medisave-approved IP providing coverage for hospital and surgical expenses.
- This plan comprises MediShield Life and additional private insurance coverage administered by RHI, which enhances the basic coverage of the former.
- Raffles Shield will be made available to the pubic from 1 Aug '18.
- Trades at 28.2x forward P/E.
- The market looked set for a weaker open as tech stocks led US stocks lower and oil skidded more than 4% on resumption of Libyan production and talk of possible supply increases by Saudi Arabia and Russia.
- Technically, underlying support for STI lies at at 3,190-3,200 with immediate resistance seen at 3,300.
CORPORATE RESULTS
*Keppel REIT
- 2Q18 DPU remained flat at 1.42¢ on marginally higher distributable income offset by increased number of units.
- Gross revenue and NPI grew to $51.7m (+29.6%) and $43.2m (+35.5%) respectively, mainly due to increase in one-off income, and higher contribution from Bugis Junction Towers and Ocean Financial Centre partially offset by weaker contribution from 275 George Street.
- Average signing rent for Singapore office leases was approx. $10.74 psf in 1H18 (1Q18: $10.05 psf).
- Committed occupancy further eased 0.1ppt q/q to 99.3%, while aggregate leverage remained at 38.6%.
- Trades at 5.5% dividend yield and 0.8x P/B.
- MKE has a Hold with TP of $1.19.
*Soilbuild REIT
- 2Q18 DPU declined 13.8% to 1.264¢, bringing 1H18 DPU to 2.588¢ (-12.4%), in line with estimates.
- Gross revenue and NPI fell 13.1% and 13.2% respectively mainly due to lower contribution from 72 Loyang Way, a property known as KTL Offshore and West Park BizCentral.
- Portfolio occupancy rate rose modestly to 87.6% q/q while WALE stands at 2.9years.
- Negative rental reversions of 8.3% and 14.6% were recorded for renewals (including forward renewals) and new leases in 1H18 respectively.
- Aggregate leverage stood at 37.6%, which allows debt headroom of $45.9m
- Trades at 7.7% yield and 1.0x P/B
*Qian Hu
- 2Q19 net profit jumped almost six fold to $146k from $25k, driven by stronger sales of Dragon Fish, new aquaculture business in China, and higher-margin accessories.
- Revenue for the quarter inched up 1% to $21.9m, dragged by a 4.8% and 0.6% decline in Accessories and Plastics sales respectively.
- Gross margin expanded 1.0 ppt to 30.1% due to changes in sales mix.
- Bottomline was negatively impacted by higher finance costs of $131k (+33.7%) due to higher interest rates charged and increased bank borrowings.
- Trades at 47.5x trailing P/E.
POSITIVE NEWS
*Neratel
- Secured a total of $11.7m worth of new contracts for both Network Infrastructure (NI) and Wireless Infrastructure (WIN) business segments.
- The deals consists of an $8.5m NI contract to provide internet service infrastructure for a leading service provider in Southeast Asia and $3.2m WIN contract to supply microwave links to a Government entity in the Middle East.
- Both contracts were awarded by repeat customers.
- Trades at 15.6x trailing P/E.
*ST Engineering
- Aerospace sector secured $510m worth of new contracts for services ranging from heavy maintenance to engine wash and aircraft interior reconfiguration.
- In addition, the group expanded its composite panel manufacturing capacity by 50% with the opening of its second plant in Kodersdorf, Saxony, Germany.
- The plant has a production capacity of 200,000 panels per annum.
- Trades at 18.1x forward P/E.
*UOL
- Acquiring 180 apartments and ancillary facilities at Thamrin Nine's Tower 2 for US$56.3m ($76.3m) from PT Putragaya Wahana, which will be developed into a 180-key PARKROYAL Serviced Suites.
- Meanwhile, the group's hotel subsidiary, Pan Pacific Hotels also signed a management contract with PT Putragaya Wahana to operate a 200-key PARKROYAL Jakarta within Tower 2 of the same development.
- This will strengthen the group's hospitality footprint in Jakarta, bringing the total number of owned/managed hotels and serviced suites in the city to three and further strengthen its recurring income streams.
- Trades at 0.6x P/B.
NEUTRAL NEWS
*Datapulse / ICP
- Entered into a non-binding LOI with ICP for the proposed acquisition of MHI MY 1.
- MHI MY 1 owns a midscale hotel in Kuala Lumpur, currently operating under the "Geo Hotel Kuala Lumpur" brand.
- Upon the completion of a refurbishment programme, the hotel will debut as Travelodge Central Market, KL.
- This is part of Datapulse's plan to diversify into the hospitality industry, which has strong growth potential.
- For ICP, the proposed disposal is in line with its asset-light strategy, focusing on hotel management and franchising across Asia to expand and strengthen the Travelodge brand presence.
- Trades at 0.72x P/B and 0.9x P/B respectively.
*Raffles Medical Group
- Raffles Health insurance (RHI) launched Raffles Shield, an Integrated Shield Plan (IP) developed in partnership with a Medisave-approved IP providing coverage for hospital and surgical expenses.
- This plan comprises MediShield Life and additional private insurance coverage administered by RHI, which enhances the basic coverage of the former.
- Raffles Shield will be made available to the pubic from 1 Aug '18.
- Trades at 28.2x forward P/E.
Monday, July 16, 2018
SG Market (16 Jul 18)
MARKET OVERVIEW
- The market is likely to start the week with a slight positive bias as China appeared to back off from retaliatory tariff threats ahead of a slew of economic data, including GDP, industrial production and retail sales,
- Investors will also turn their attention to Fed's semi-annual testimony to Congress, which could lay the groundwork for further tightening, and the start of the 2Q18 earnings season.
- Technically, immediate resistance for STI is at 3,300, while crucial support level at 3,190-3,200 remains intact in the near-term.
POSITIVE NEWS
**Boardroom
- Acquiring Symphony Corporatehouse Sdn Bhd for RM164.14m ($55.64m) via combination of cash (75%) and shares (25%).
- The enlarged entity will command an industry-leading market share in the share registry, corporate secretarial, and outsourced corporate services sector in Malaysia, paving the way for more growth opportunities in the Asia-Pacific.
- Upon completion, Symphony House will become the second largest shareholder in Boardroom with a 7.63% stake.
- Trades at 9.1x trailing P/E
NEUTRAL NEWS
*SATS
- Setting up 60/40 JV with Wilmar to build a central kitchen in Langfang, Hebei, China that will engage in food manufacturing, processing and sale of food products.
- The JVCo will be incorporated with a registered capital of Rmb120m ($24.53m)
- Trades at 22.6x forward P/E.
*Mapletree Industrial Trust
- Obtained TOP for its build-to-suit (BTS) data centre development, Mapletree Sunview 1.
- The 6-storey purpose-built data centre with gfa of 242,000 sf will be fully leased to an established data centre operator for an initial lease term of >10 years with staggered rental escalations as well as renewal options.
- This will be its third BTS data centre after the successful completion of Tata Communications Exchange at Paya Lebar iPark in 2010 and 26A Ayer Rajah Crescent for Equinix Singapore at one-north in 2015.
- MIT's portfolio includes four data centres in Singapore and another 14 in US inder a 40:60 JV with its parent.
- Hi-tech buildings is its largest property segment, representing 37.7% of portfolio valuation.
- Trades at 6.0% yield and 1.3x P/B
*Rex Int'l
- Divesting its 25.72% stake in Steeldrum Oil in return for 23.9m new AIM-listed Columbus Energy Resources shares, (3.2% stake) valued at US$1.5m, with further deferred issue of additional shares if certain events materialise.
- This is part of the group's plans to rationalise its asset base to focus on its two key discovery assets: GA South #1 in Block 50 in Oman and Rolvsnes in PL338C in Norway.
- Subject to regulatory, JV partner and third-party approvals, the proposed sale is expected to complete in 4Q18 and will not have any material impact on the group's FY18 financials.
- Trades at 0.35x P/B
*Mercurius Capital Investment
- Signs licensing agreement to granted Clover Lifestyle the right to use its proprietary brands namely Friven, Allegoria, DS, and Relax at home for the sale of bedding, bed linen and bath products exclusively in Singapore and Malaysia for one year.
- Licence fee payable to the group is $0.05m and Clover aims to distribute its various brands of bedding and bed linen through online and media channels.
- The market is likely to start the week with a slight positive bias as China appeared to back off from retaliatory tariff threats ahead of a slew of economic data, including GDP, industrial production and retail sales,
- Investors will also turn their attention to Fed's semi-annual testimony to Congress, which could lay the groundwork for further tightening, and the start of the 2Q18 earnings season.
- Technically, immediate resistance for STI is at 3,300, while crucial support level at 3,190-3,200 remains intact in the near-term.
POSITIVE NEWS
**Boardroom
- Acquiring Symphony Corporatehouse Sdn Bhd for RM164.14m ($55.64m) via combination of cash (75%) and shares (25%).
- The enlarged entity will command an industry-leading market share in the share registry, corporate secretarial, and outsourced corporate services sector in Malaysia, paving the way for more growth opportunities in the Asia-Pacific.
- Upon completion, Symphony House will become the second largest shareholder in Boardroom with a 7.63% stake.
- Trades at 9.1x trailing P/E
NEUTRAL NEWS
*SATS
- Setting up 60/40 JV with Wilmar to build a central kitchen in Langfang, Hebei, China that will engage in food manufacturing, processing and sale of food products.
- The JVCo will be incorporated with a registered capital of Rmb120m ($24.53m)
- Trades at 22.6x forward P/E.
*Mapletree Industrial Trust
- Obtained TOP for its build-to-suit (BTS) data centre development, Mapletree Sunview 1.
- The 6-storey purpose-built data centre with gfa of 242,000 sf will be fully leased to an established data centre operator for an initial lease term of >10 years with staggered rental escalations as well as renewal options.
- This will be its third BTS data centre after the successful completion of Tata Communications Exchange at Paya Lebar iPark in 2010 and 26A Ayer Rajah Crescent for Equinix Singapore at one-north in 2015.
- MIT's portfolio includes four data centres in Singapore and another 14 in US inder a 40:60 JV with its parent.
- Hi-tech buildings is its largest property segment, representing 37.7% of portfolio valuation.
- Trades at 6.0% yield and 1.3x P/B
*Rex Int'l
- Divesting its 25.72% stake in Steeldrum Oil in return for 23.9m new AIM-listed Columbus Energy Resources shares, (3.2% stake) valued at US$1.5m, with further deferred issue of additional shares if certain events materialise.
- This is part of the group's plans to rationalise its asset base to focus on its two key discovery assets: GA South #1 in Block 50 in Oman and Rolvsnes in PL338C in Norway.
- Subject to regulatory, JV partner and third-party approvals, the proposed sale is expected to complete in 4Q18 and will not have any material impact on the group's FY18 financials.
- Trades at 0.35x P/B
*Mercurius Capital Investment
- Signs licensing agreement to granted Clover Lifestyle the right to use its proprietary brands namely Friven, Allegoria, DS, and Relax at home for the sale of bedding, bed linen and bath products exclusively in Singapore and Malaysia for one year.
- Licence fee payable to the group is $0.05m and Clover aims to distribute its various brands of bedding and bed linen through online and media channels.
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