Monday, February 27, 2017

SG Market (27 Feb 17)

Market sentiment will be driven by whether Wall Street can sustain its red hot rally as the local corporate results season drawing to close, with attention turning to US President Trump's first address to Congress tomorrow for more details on his fiscal plans, and China's manufacturing data mid-week.

Regional bourses opened lower in Tokyo (-0.7%), Seoul (-0.3%) and Sydney (-0.2%).Technically, the STI is still trading within its upward trending channel bounded between 3,150 and 3,080 despite being overbought for an extended period.

Stocks to watch:
*Venture: 4Q16 net profit jumped 20.6% to $54.1m, taking full year earnings to $180.7m (+17.3%), surpassing estimates; Quarter revenue rose 23.1% to $854.6m from new products/programmes, and growth from existing products. Pretax margin was maintained at 7.6%, while bottom line was partially weighed by a $22.6m legal settlement cost. First and final DPS of $0.50 was maintained. MKE maintains buy with TP of $11.50.

*UOL: FY16 net profit declined 27% to $287m, missing estimates. Revenue climbed 13% to $1.44b, lifted by strong property development sales (+27%) on higher progressive recognition of Riverbank@Fernvale, Botanique at Bartley and Principal Garden. Hospitality operations (+2%) benefitted from better performance at Australian hotels. But bottom line was weighed by lower share of profits from JVs of $4.3m (FY15: $29.1m) and a $9.7m fair value loss on investment properties (FY15: $60.9m gain). Maintained first and final DPS of $0.15. Trading at 0.66x P/B. MKE last had a Buy with TP of $7.39.

*Golden Agri: 4Q16 net profit of US$46.3m (+136.7%) brought FY16 earnings to US$399.6m (FY15: US$10.4m), within expectations. For the quarter, revenue grew 37.8% to US$2.1b on the back of a 37% jump in CPO prices and 7% increase in output. But earnings were hit oilseeds losses and a US$34.3m impairment in China. Bottom line was buttressed by a US$62m deferred tax income arising from tax-based asset revaluations. First and final DPS raised to 0.635¢ (FY15: 0.502¢).

*CWT: FY16 net profit tumbled 32% to $73.6m, below estimates. Revenue slipped 7% to $9.3b, as commodity marketing (-7.2%) was impacted by lower ASPs and volumes, while logistics (-4.2%) suffered from slower trade flow. Excluding exceptional items, largely comprising expenses accrued to an ongoing project and a $6.7m withholding tax, operating profit was $110.1m. Slashed first and final DPS to 3¢ (FY15 total payout: 9¢). Trading at 43% premium to its NAV/share of $1.456.

*Pacific Radiance: 4Q16 net loss deepened to US$36.2m (4Q15: US$2.6m loss) on impairments (US$12m), FX loss (US$2.2m) and disposal loss (US$6.8m). This pulled FY16 net loss down to US$118.6m (FY15: US$3.8m profit), below estimates. Revenue for the quarter sank 44% to US$12.1m amid lower utilisation and reduced charter rates for OSVs, while bottom line was further dragged by a spike in finance costs (+69%) on higher borrowings. Net gearing leapt to 1.6x (FY15: 0.86x). No DPS declared (FY15: 1¢). NAV/share fell 28.8% to US$0.408..

*QAF: FY16 net profit surged 129% to $120.4m, bolstered by a $59.4m gain from a partial 20% stake sale in Gardenia Bakeries KL (GBKL). Revenue fell 11% to $889.5m from the deconsolidation of GBKL, but all other segments saw healthy sales. Final DPS of 4¢ maintained, bringing full year payout to 5¢ (unch). NAV/share at 93.8¢.

*Sinarmas Land: Swung into 4Q16 net profit of $46.5m (4Q15: $7.8m net loss), bringing full year earnings to $114.9m (-19.7%). FY16 revenue fell 8.2% to $878.4m from lower sales of land for commercial and industrial purposes, offset by higher residential unit handovers. Gross margin fell 2.2ppt to 66.5% from decreased sales of higher margin land parcels. First and final DPS of 0.19¢ maintained. NAV/share at $0.47.

*Asian Pay TV: 4Q16 DPU slumped 27.8% to 1.625¢, bringing FY16 payout to 6.5¢ (-21.2%). Quarter revenue slipped 2% to $83.9m, dragged by lower contribution in all three segments consisting basic cable TV (-2.1%), premium digital cable TV (-3.3%) and broadband (-1.1%), on the back of lower ARPU and reduced churn rate, despite a 2.2% increase in overall subscribers. Accordingly, EBITDA margin narrowed 2.3ppts to 59.5%. Guided for FY17 DPU of 6.5¢, implying an attractive indicative yield of 13.8%. NAV/unit at $0.85.

*Sunningdale Tech: 4Q16 net profit spiked 63.3% to $21.5m, bringing FY16 earnings to $39.1m (-7.2%). For the quarter, revenue inched 3.4% higher to $184.1m, as higher sales from automotive (+10%) and consumer/IT (+9.6%) was offset by lower contribution from healthcare (-3.4%) and mould fabrication (-16.7%). Gross margin was stable at 13.6% (+0.3ppt), while the bottom line was boosted by one-off gains for FX ($8.4m) and disposal ($5.1m). Raised first and final DPS to 6¢ (5¢). NAV/share at $1.87.

*Sarine: 4Q16 spiked to US$5.0m (+238.5%), lifting FY16 earnings of US$18.0m (+401%) to come in line with consensus estimate. In the quarter, revenue jumped 52.6% to US$18.9m, primarily due to increased diamond manufacturing equipment, Galaxy family systems, in India, as well as higher recurring income. MKE last had a Buy with TP of $1.97.

*SingMedical: Turned in FY16 net profit of $2.4m (FY15: $0.1m loss), lifted by a re-measurement gain of $1.6m. Revenue rose 34.3% to $41.6m from new acquisitions Novena Radiology and Lifescan Imaging, acquired in Apr '16 and Sep '16, while gross margin expanded 4.6ppts to 35.8%.*Tiong Seng: FY16 net profit jumped 49% to $15.3m, on higher revenue of $774.3m (+37%) from increased construction contracts (+31%) and sales of development properties (+92%). Bottom line impact from the absence in disposal gains from car park lots and fixed asset were mitigated by a turnaround in JV contribution to $0.9m (Fy15: -$3.1m). Construction order book shrank to $1b (FY15: $1.3b). Raised first and final DPS to 0.8¢ (FY15: 0.5¢). NAV/share at $0.5731..

*Cosco Corp: 4Q16 net loss narrowed 35% to $313m, bringing full year loss to $466.5m (+18%). Quarter revenue of $409.8m (-43.5%) was dragged by reduced income from shipyard (-44%) and shipping (-3.3%). Gross loss worsened to $467.5m from $336.1m, on inventory writedowns. Bottom line saw a $65.4m net writeback of trade receivables (4Q15 impairment: $304.6m), but was partly offset by a 443% surge in taxes to $155.5m from de-recognition of deferred tax assets. NAV/share at $0.1501.

*Soo Kee: 4Q16 net profit growth of 38.4% to $3.1m was partially pared by FX loss of $0.8m. This brought FY16 earnings to $6.5m (-22.6%). Quarter revenue soared 50.2% to $54.7m from contribution of gold and silver dealer SK Bullion, acquired in Apr '16. While pretax margin was stable around 7%, bottom line was drag by higher taxes (+199%). Maintained first and final DPS of 0.5¢. NAV/share at $0.095.

*Money Max: 4Q16 net profit surged 42.1% to $1.5m, doubling FY16 earnings to $6.2m. For the quarter, revenue of $34.7m (+34%) was led by stronger pawnbroking business and retailing of pre-owned items. Maintained first and final DPS of 0.5¢. NAV/share at $0.1816.

*SUTL: 4Q16 net profit rose 49% to $2.0m, as revenue climbed 9% to $8.1m on increased F&B sales and berthing income, but partly offset by lower membership transfers, entrance fees and subscription base. Expenses (+2%) rose at a slower pace on increased operating leverage. First and final DPS of 2¢ declared (FY15: nil).

*Raffles Medical: MOU signed to explore cooperation between Chongqing Liangjiang New Area Administrative Committee and the Company on healthcare-related projects.*Duty Free Int'l: Proposed placement of 15.6m shares at $0.38 each, to raise net proceeds of $5.7m. The bulk (90%) will be for M&A and/ or potential business opportunities, with the remaining for working capital.

*Koh Brothers Eco Engineering: Awarded a subcontract by Keppel Seghers for civil, structural, piping, marine and architectural landscaping works for Singapore's fourth desalination plant at Marina East. The contract is scheduled to complete by Jan '20, and will lift group's order book to $576.8m from $569.5m.

*Hong Leong Asia: 40.2% owned China Yuchai announced that Saudi Arabia has ordered 321 Xiamen Kinglong buses, which are powered by Yuchai's heavy-duty engines.

*Yoma: 15:85 JV with Metro Group Wholesale & Food Specialist, to establish a one-stop food distribution platform in Myanmar.

*KS Energy: 80.09% owned KS Drilling was awarded a US$5m contract, utilising the KS Discoverer 6 land drilling rig in Indonesia for eight months.

*Profit warnings:
- Progen
- PSL Holdings
- Midas
- Resources Prima

Friday, February 24, 2017

SG Market (24 Feb 17)

*China Aviation Oil: 4Q16 net profit surged 57% to US$17.9m, bringing full year net profit to US$88.9m (+45.1%), beating street estimates. For the quarter, revenue grew 65.2% to US$3.3b from the increase in volume traded, while gross profit rose at a slower clip to US$10.6m (+32.3%). Further, bottom line was lifted by lower other operating expenses of $0.8m (-57%), as well as a spike in associate contribution (+36.7%) led by Shanghai Pudong International Airport Aviation Fuel Supply Company. Hiked first and final DPS to 4.5¢ (FY15: 3¢).

*Hyflux: FY16 net profit crashed 91% to $4.8m, despite revenue more than doubling to $987m (+121.7%), from contributions by TuasOne waste-to-energy project, Qurayyat Independent Water Project and Oman Tuaspring power plant. However, profits generated by the higher EPC projects were substantially wiped out by losses from the weak Singapore power market and electricity prices. Slashed final DPS to 0.25¢, bringing full year DPS to 0.45¢ (FY15: 1.7¢). NAV/share at $0.451.

*Far East Orchard: FY16 net profit surged to $65m (+123%), boosted by the development completion for commercial property project, SBF Center, as well as increased JV contribution. However, revenue fell 31.7% to $184.9m, on lower takings in both property development and hospitality. Gross margin widened 6ppts to 32.1% on a shift in mix, while the bottom line was also supported by the absence of a $4.9m goodwill impairment and positive FX swing of $11.1m. Maintained first and final DPS of 6¢. NAV/share at $2.91.

*ISEC: 4Q16 net profit spiked from a low base to $1.5m (4Q15: $0.1m), bringing FY16 earnings to $6.5m (+136%), slightly below forecast. For the year, revenue jumped 15% to $30.8m, from contribution of recently-acquired Southern Specialist Eye Centre and increased patient visits in Malaysia, but mitigated by the closure of loss-making International Specialist Eye Centre in Singapore. Accordingly, gross margin expanded 3.3ppts to 47.9%. Final DPS of 0.11¢ declared, bringing FY16 payout to 0.99¢ (FY15: 0.44¢). MKE last had a Buy with TP of $0.42.

*Memtech: 4Q16 net profit climbed 5.9% to US$4m, as revenue rose 25.5% to US$47.9m, led by improvements from consumer electronics and automotive segments, which outweighed weakness from telecommunication. Pretax margin narrowed 2ppt to 8.6% on higher staff and goods transportation costs, as well as an absence of a write-back of doubtful trade receivables. Healthy net cash of US$24m accounts for 39% of market cap. However, group cut its first and final DPS to 2.5¢ (FY15: 3.3¢).

*Frencken: 4Q16 net profit surged 5x to $4.4m, lifted mainly from the absence of an impairment loss. Revenue climbed 7.8% to $111.2m on stronger sales in mechatronics (+15%), but partially weighed by lower contribution from IMS (-2.3%). However, a 2.5ppt dip in gross margin to 14.6% negated the sales uplift. Higher first and final DPS of 1.2¢/share declared (FY15: 0.75¢). NAV/share at 0.5229.

*Q&M: Undertaking an independent strategic review and has appointed Religare Capital Markets as financial adviser. MKE last had a Buy with TP of $1.00.

*Global Premium Hotels: Received conditional privatisation offer at a final price of $0.365/share, representing 14% premium to last traded price, from Chairman Dr. Koh Wee Meng, who has secured undertakings for 71% of shares. The offer values the group at 0.53x P/B.

*Tritech: Awarded a Rmb10.5m contract to design, install and construct a waste water treatment plant in Hebei, China, with a capacity of 2,500 cubic meters per day.

Thursday, February 23, 2017

SG Market (23 Feb 17)

The market is likely to stay on its upward path following headline earnings beat from City Dev, Genting S'pore and Sembcorp Marine.Regional bourses are in the red in Tokyo (-0.2%), Seoul (-0.1%) and Sydney (-0.4%).Technically, the STI is trading within its uptrend channel bounded by topside resistance at 3,130 and support at 3,080.

Stocks to watch:
*City Dev: 4Q16 net profit slumped 40.6% to $243.8m due to absence of sales under its profit participation scheme and lower JV contribution following the completion of residential development projects. However, FY16 earnings of $653.2m (-15.5%) still beat consensus estimate. Quarter revenue rose to $1.17b (+36.5%), underpinned by a surge in property development sales (+147%) arising from the handover of units at Phase 1 of Suzhou Hong Leong City Center. Declared higher final and special DPS totalling $0.12, bringing FY16 payout to $0.16 (FY15: $0.12). NAV/share at $10.22. MKE last had a Hold with TP of $9.42.

*Sembcorp Marine: Headline 4Q16 net profit staged a turnaround to $34.3m (4Q15: $536.9m loss), bringing FY16 earnings to $78.8m, (FY15: $289.7m loss), beating estimates, but underlying results were weak. Quarter revenue fell 37.5% to $829.9m on rig delivery deferment and drop in repair business. Bottom line was mainly lifted by a FX gain $63.7m, and absence of writedowns. Net order book, excluding Sete Brasil drillships, shrank to $4.7b (3Q16: $5.2b). Final DPS of 1¢ brought FY16 payout to 2.5¢ (FY15: 6¢). MKE last had a Sell with TP of $1.00.

*Genting Singapore: Swung into 4Q16 net profit of $159.2m (4Q15 net loss: $7.75m), lifting FY16 earnings to $266.3m (+254%), above street estimates. Quarter revenue rose 2% to $557.7m on the back of improved gaming revenue (+7%) from higher rolling win rate and a revised strategy to focus on better margin businesses, but offset by an 8% dip in non-gaming revenue to $158.5m. EBITDA margin expanded to 41.9% (+8.8ppt) from improved cost control and lower bad debt provisions. Final DPS of $0.015 took full year DPS to $0.03 (FY15: $0.015). MKE upgrades to Buy with raised TP of $1.10 (+38%).

*Best World: 4Q16 net profit soared 231% to $12.3m, on higher revenue of $61.8m (+51%) from continued strength in direct selling (+34%) and impressive growth in exports (+197%) to China. This brought FY16 earnings to $34.6m (+242%) surpassing street estimate of $30.3m. Final DPS raised to 3¢, bringing adjusted FY16 payout to 4.6¢ (FY15: 1.6¢). Proposed a 2-for-1 share split. MKE maintains Buy with higher TP of $2.34 (+8%).

*Ezion: Remained in 4Q16 net loss of US$66.6m (4Q15: US$63.5m loss), dragging FY16 into a loss of US$33.6m (FY15: US$36.8m profit). For the quarter, revenue dropped 14.3% to US$72.6m due to a reduction in charter rates and an unexpected delay in completion of modification and upgrade for its service rigs. Accordingly, gross margin crumbled by almost half to 12.1% (-11.7ppts). NAV/share at US$0.6343..

*Breadtalk: FY16 net profit jumped 50.4% to $11.4m, lifted by divestment gains of investment securities, higher government grant and JV contribution. However, revenue edged lower to $615m (-1.5%) on weaker turnover for Food Atrium due to several premature outlet closures in China, as well as reduced contribution from the restaurant division. EBITDA margin widened 1.2ppt to 13.6% on tighter cost controls and productivity gains from bakery due to the rising proportion of franchise outlets. Raised final DPS to 2¢ (4Q15: 1¢), lifting FY16 payout to 3.85¢ including a special DPS of 1.35¢ paid earlier (FY15: 1.5¢).

*Riverstone: 4Q16 net profit fell 3.2% to RM36m, bringing FY16 earnings to RM120.4m (-4.9%), coming in at the higher end of estimates. Although quarter revenue jumped 19.3% to RM183m on increased volume of gloves sold, the effects were largely negated by reduced gross margin of 26.3% (-5ppt) arising from lower ASPs and a shift in sales to lower-margin healthcare gloves. Final DPS of RM0.0519 brings FY16 DPS to RM0.0649 (FY15: RM0.0645). NAV/share at RM0.7482.

*Cityneon: FY16 net profit made a significant jump to $6.7m (FY15: $0.9m), but still missing street estimates. Revenue inched 0.3% to $96.8m, as increased shows led to higher income from exhibition services (+11.1%), but was offset by reduced contributions from experiential environment (-15.8%) and event management (-70.8%). Gross margin expanded to 34.4% (+10.3ppts), resulting from increased profitability of the new intellectual property rights business, Victory Hill Exhibitions, acquired in Sep '15.

*Soilbuild Construction: 4Q16 net profit narrowed 37.6% to $3.5m dragged by higher tax expenses and weaker revenue of $89.4m (-8.8%). Gross margin narrowed 2.2ppt to 6% amid lower profitability from on-going HDB projects and higher construction costs. Orderbook depleted to $385.7m (FY15: $639m). Maintained final DPS of 0.5¢, but trimmed special DPS to 0.75¢ (4Q15: 1¢), resulting in lower full-year payout of 1.75¢ (FY15: 2¢). NAV/share at $0.1465.

*Rotary Engineering: FY16 net profit plummeted 73% to $11.4m from lower FX gains and absences of disposal gains and write-back on impairment. Revenue fell 29% to $233.9m as major projects has been completed, while gross margin remained steady at 24%. First and final DPS slashed to 0.5¢ (FY15: 1.5¢). NAV/share at $0.283..

*Delfi: 4Q16 net profit surged 357% from a low base to US$3.6m, on firmer revenue of US$105.6m (+5.6%) driven by sales from its own brands (+9.1%), although agency brands (-1.1%) slipped. Additionally, key Indonesian market benefited from a 6% appreciation in the Rupiah. Accordingly, gross margin expanded 7.6ppt to 38.4% on the shift in mix, as well as increased selling prices and cost control efforts. Hiked final DPS to 1.35¢, resulting in a full-year payout of 3.18¢ (FY15: 2.86¢).

*Fu Yu: 4Q16 net profit jumped 44.4% to $5.6m, mainly boosted by a positive FX swing of $5.2m. However, revenue contracted 3.5% to $48.5m on a general slowdown in customer demand. Gross margin narrowed 2.4ppt to 17.3%, while the bottom line was weighed by increased admin expenses from staff and IT system upgrades, as well as an absence of tax credit. Cash pile remained high at $105.6m, or 63.7% of current market cap. Maintained final DPS of 1¢ and full-year payout of 1.5¢. NAV/share at $0.2305.

*Kim Heng O&M: 4Q16 net loss worsened to $12.9m (4Q15: $1.5m loss), dragged by an $8.3m impairment of fixed asset. From the industry downturn, revenue tumbled 45% to $7.5m on low demand for rig maintenance and absence of sales on vessels and newbuild. Hence, first and final DPS slashed to 0.07¢ (FY15: 0.3¢). NAV/share at $0.129.

*Fragrance Group: FY16 net profit plunged 89% to $7.5m, weighed by a $26m drop in fair value gain on investment properties and a spike in finance costs (+40%). Revenue sank 58.4% to $118.7m due to a lower number of property development projects and reduced rental income due to higher vacancy. NAV/share at $0.155.

*Cache Logistics Trust: Acquiring freehold warehouse in Laverton North, Australia for A$22.3m, or a NPI yield of 7.4%. The property has a gross lettable area of 20,723 sqm and is master leased to Spotlight for a remaining term of 4.5 years, with two 6+6 renewal options. The deal is expected to complete by Mar '17.

*Vallianz: Agreed with trade creditors to settle $7.6m in payables via the issue of ordinary shares in Vallianz. A total of 13 trade creditors will subscribe for 380.6m new ordinary shares at $0.02/share, representing 8.8% of enlarged share base.

Wednesday, February 22, 2017

SG Market (22 Feb 17)

The market could track record-breaking Wall Street and crude oil prices higher but upside may be capped by a dearth of any inspiring 4Q earnings thus far.

Regional bourses opened flattish in Tokyo (-0.03%), Seoul (+0.04%) and Sydney (-0.1%).Technically, the STI is trading at the lower end of its upward channel bounded by topside resistance at 3,130 and support at 3,080.

Stocks to watch:
*PACC Offshore: 4QFY17 net loss deepened to a whopping US$345.4m (4QFY: US$149.7m) on the back of charges for impairments of fixed assets (US$111.2m) and goodwill (US$111.2m), sending its full year loss to US$371.4m (FY16: US$131m loss). Excluding one-offs, 4QFY17 operational net loss was US$35.3m against US$1.2m the previous year. Revenue sank 49% to US$36.7m from lower usage and charter rates cross all major segments. Net gearing rose to 1x, while NAV/share slumped to US$0.38 from USD0.585.

*CNMC Goldmine: Swung to 4Q16 net loss of US$1.9m (4Q15: US$3.3m profit) on lower revenue of US$5.2m (-44.2%) due to reduced gold production (-52.5%) from lower quality ore despite a 17.4% increase in realised price of US$1,283/oz. Bottom line was dragged by a US$3m swing to FX loss of US$2.3m stemming from the weakening MYR against the USD. This took FY16 earnings to US$9.1m (-14.8%), below US$14.7m street estimate. Final plus special DPS of 0.734¢ was declared, bringing full year DPS to 1.134¢ (FY15: 0.945¢) NAV/share at US9.73¢. Trades at 2.8x P/B.

*ValueMax: FY16 net profit surged 54.9% to $15.6m, despite a 6.2% drop in revenue to $253.3m on lower trading of pre-owned jewellery and gold, although pawnbroking and moneylending saw healthy growth. Gross margin widened 3.9ppts to 14.2%, and bottom line was further bolstered by increased income from moneylending facility fees, government grant and rental income. Raised first and final DPS to 1.08¢ (FY15: 0.95¢). NAV/share at $0.3108.

*Far East Hospitality Trust: 4Q16 DPU of 1.12¢ (-4.3%) brought FY16 payout to 4.33¢ (-5.9%) or 3% above estimate. Quarter gross revenue and NPI fell to $27.5m (-4.6%) and $24.9m (-5.4%), mainly from a drop in RevPAR to $136 (-7.3%) stemming from the weak operating environment. However, occupancy improved 1.2ppts to 86.5%. Aggregate leverage contracted slightly to 32.1% (-0.7ppts q/q) with average debt cost and tenor at 2.5% and 2.3 years. NAV/unit at $0.9090.

*TalkMed: 4Q16 net profit climbed 6.6% to $10.2m, on firmer revenue of $18.4m (+2.4%) from increased patient takings. Bottom line was buttressed by lower loss from associate Hong Kong Integrated Oncology Centre. Trimmed final DPS to 2.283¢ (4Q15: 2.305¢), but maintained full-year payout at 4.563¢. Proposed a 1-for-1 bonus issue. Trading at ex-cash FY16 P/E of 20x. NAV/share at $0.0967..

*Ramba Energy: 4Q16 net loss narrowed to $8.2m (4Q15: $21.7m loss), shored by lower impairment of O&G assets, a positive FX swing and absence of provisions. However, revenue declined 8.3% to $14.5m as weakness in logistics overshadowed the commencement of oil production from Lemang in mid-Nov. NAV/share shrank 32.5% to $0.0967.

*Trendlines: FY16 net loss almost doubled to US$6.6m (FY15: US$3.6m loss), as total income shrank to US$0.1m (FY15: US$9.9m), mainly from a US$9.8m write-off of nine portfolio companies as a result of funding shortage. However, core expenses continued to rise 26.1%, due to the recruitment of new high level employees as part of the group's expansion. NAV/share at US$0.15.

*NeraTel: 4Q16 net profit from continuing operations plunged to $0.9m (-76.8%) due to higher payrolls, former CEO's remuneration and dispute claims from former staffs. On the flip side, revenue jumped 25.9% to $49.6m on higher turnover of network infocomm equipment (+54%), which offset weakness in telecom (-4%). Gross margin narrowed 8.4ppts to 25.3% on lower writebacks from project closures, and a shift in mix. Cut final DPS to 0.5¢ (4Q15: 1¢), bringing full-year payout to 16.5¢ (FY15: 3.5¢), which included a special payout of 15¢ earlier. NAV/share at $0.1831.

*Mapletree Logistics Trust: Proposed to divest a vacant warehouse at 20 Old Toh Tuck Road, for $14.25m, and potentially realising a book gain of $1.2m.

*DiSa (formerly Equation Summit): A recent study by US Loss Prevention Research Council of DiSa's anti-theft system within designated Wal-Mart stores has concluded that 1) it appears scalable, 2) drives sales and 3) reduces product return rates.

*Profit warning:
- United Food
- Yongnam
- Abterra
- China Environmental Resources
- Delong

Tuesday, February 21, 2017

SG Market (21 Feb 17)

The market is unlikely to be stirred by a largely conservative Budget 2017, which did not offer any sweeping tax changes or incentives for businesses or individuals. Hence, focus will shift back to 4Q earnings, where a slew of mid and large caps will release results starting on Wed, notably Sembcorp Marine, Genting Sp, best World on 22 Feb, City Dev, SCI, zion, CAO on 23 Feb and UOL, Golden Agri, Cosco on 24 Feb.

Regional bourses opened mixed in Tokyo (+0.2%), Seoul (+0.4%) and Sydney (-0.2%).Technically, the STI is trading within an upward channel bounded by topside resistance at 3,130 and support at 3,065.

Stocks to watch:
*Economy: This Budget is more conservative than we expected. There is some targeted help for marine & process industries as well as SMEs, but not broadly for most other sectors (services or manufacturing). A modest amount ($2.4b over 4 years) is set aside to support CFE strategies, of which $1.5bn is for topping-up of research and productivity funds. We see limited impact to growth, structurally or cyclically, and maintain our GDP forecast at 2.5% for 2017.

*Construction: From Budget 2017, the sector will benefit from the $700m of public sector infrastructure projects brought forward to 2017 & 2018. However, there was no deferment of foreign worker levy rates, which will be increased from Jul '17, and the 30% hike in water prices from this Jul could raise operating expenses for the construction sector, one of the largest users of water by industry.

*Land transport: Restructured diesel taxes to be implemented in Aug '17 would be volume-based with a duty of $0.10/litre, compared to the previous lump sum tax. While this would incrementally raise fuel costs, particularly for public buses and companies such as ComfortDelGro and SBS Transit, the impact on diesel taxis would be partially mitigated by a $850 reduction in the annual tax to $4,250.

*O&M: Foreign worker levy increases in the industry will be deferred by one more year.

*Wilmar: 4Q16 core net profit of US$589.5m (+70%), brought FY16 earnings to US$976.6m (-14.1%) but still beating US$813.4m estimate. Quarter revenue jumped 26.7% to US$11.9b, underpinned by higher commodity prices and increased sales volume, while EBITDA margin widened 0.6ppts to 7.1%. Bottom line was lifted by higher pretax profits from tropical oil (+94%), sugar (+68%) and oilseed & grains (+8%), as well as a tax benefit of US$23.3m arising from tax incentive for its Indonesian operations. However, final DPS was shaved to $0.04, bringing full-year payout to $0.065 (FY15: $0.08). NAV/share at US$2.285.

*Maxi-Cash: FY16 net profit surged 193% to $11.3m as revenue jumped 35% to $163.2m from higher interest income from the pawnbroking (+15.5%) and increased contribution from retail and trading of jewellery, watches and branded bags (+40.7%). Bottom line benefitted from operating leverage, and a relatively slower uptick in expenses. Final DPS of 1¢ brought FY16 DPS to 1.5¢ (FY15: 0.5¢). NAV/share at $0.1317. Operating environment remains challenging amid keen competition, volatile gold prices and weak retail sentiment but the group will continue to work on building its market leadership on store network, branding, innovation and operational efficiencies.

*Auric Pacific: 4Q16 net loss narrowed to $0.3m (4Q15: $19.2m loss), mainly due to a 57% reduction in other operating expenses to $18.2m (4Q15: $42.2m). Revenue slipped 1.4% to $106.4m on lower contribution from downstream operations due to closure of loss-making food outlets, although upstream operations maintained its growth momentum. Gross margin held steady at 42.1%. NAV/share at $1.34..

*OKP: 4Q16 net profit soared 315% to $8m on sharply higher revenue of $34.4m (+40.6%), driven by increased projects for both construction (+33%) and maintenance (+72%) segments. Gross margin widened 15.6ppts to 31.3% on improved project implementation and lower raw material costs. Bottom line was further boosted by its JV Lakehomes, which handed over units of LakeLife executive condos in 4Q16. Maintained final DPS of 0.7¢, but raised special DPS by 0.5¢ to 0.8¢, bringing full-year payout to 2¢ (FY15: 1.1¢). NTA/share at $0.3654.

*GLP: Acquired Shanghai Jingxi Business Consulting for Rmb350m (US$51m), implying a 1x P/B valution for the business. Through Shanghai Jingxi, GLP now owns 45.6% in Beijing Capital Farm. No specific details were released on these two companies.

*TriTech: Awarded a Rmb14.9m contract to design and install a wastewater treatment system for a plant with a capacity of 8,000 tpd in Wuhan, China.

*Profit warning:
- Debao Property Development
- A-Sonic Aerospace
- Natural Cool

Monday, February 20, 2017

SG Market (20 Feb 17)

The main event this week is Budget 2017, which will be unveiled today at 3.30pm today. Investors expect pro-growth incentives to support the recommendations of the Committee for Future Economy. However, there is likely going to be more progressive personal as well as higher consumption taxes, including a new carbon tax, to balance the fiscal position.

Regional bourses opened lower in Tokyo (-0.4%), Seoul (-0.1%) and Sydney (-0.3%).Technically, the STI is trading within an upward channel bounded by topside resistance at 3,130 and support at 3,065.

Stocks to watch:
*Raffles Medical: FY16 net profit of $70.2m (+1.3%) met lower end of estimates. Revenue rose 15.4% to $473.6m on higher patient load from the expanding clinic network, and incremental sales contribution from more specialist consultants. However, operating margin contracted 2.3ppts to 17.3% on increased staff costs and 40th anniversary celebration expenses. Final DPS of 1.5¢ was maintained, bringing FY16 payout to 2¢ (unch). MKE last had a Buy with TP of $1.85.

*OUE: FY16 net profit slid 7.7% to $144.4m as lower share of negative goodwill and reduced contributions from OUEHT, a spike in marketing costs (+95%) arising from the sale of OUE Twin Peaks and higher taxes (+58%) ate into a doubling in revenue to $884.2m, which was boosted by consolidation of One Raffles Place and sales of Crown Plaza Changi Airport (SGD205m) and OUE Twin Peaks (SGD196.9m). Final DPS of 2¢ brought FY16 payout to 5¢ (unch). NAV/share at $4.45.

*UIC: FY16 net profit climbed 10% to $286m on firmer revenue of $1.04b (+28%), thanks to higher recognition of residential property sales. However, gross margin contracted 3.3ppts to 34.1%, while the bottom line was partially dragged by weaker JV contribution due to completion of several residential projects, as well as reduced fair value gain from investment properties. Maintained first and final DPS of 3¢. NAV/share at $4.39.

*Parkway Life REIT: Acquiring two nursing homes and a group home in Chiba prefecture, as well as two nursing homes in Yamaguchi prefecture, Japan, for a total of ¥4.76b ($59.5m), giving a 6.9% NPI yield. The properties are secured with long-term leases ranging 20-30 years, and would increase its WALE to 9.81 years from 8.44 years. Post-acquisition, aggregate leverage will inch up 1.2ppts to 37.5%.

*Hong Leong Asia: 40.2% owned China Yuchai has entered into a strategic partnership with HK-listed construction equipment manufacturer, Zoomlion Heavy Industry Science & Technology, to develop and produce six-cylinder medium and heavy-duty engines for Zoomlion’s agricultural equipment.

*Swing Media: Proposed acquisition of Grace Health Group (GHG) for A$115m via $90m cash payment, $10m in convertible bonds and $15m one year after completion of deal. There will also be an earn-out consideration of up to $45m based on GHG's FY3/18 and FY3/19 net profits. GHG is a producer and exporter of wagyu beef in Australia to China, and owns a total area of ~200 sq km with ~7,000 top quality wagyu cattle in Queensland, Australia. The acquisition will be funded by capital raising (>A$50m), bank loans and internal resources.*Noble: Secured a US$1b revolving facility supported by six banks led by Société Générale and ING Bank, to be used as working capital at Noble Clean Fuels.

*Oxley: Terminated its $50m convertible loan facility to IHC, following the mandatory unconditional cash offer for the latter by the OUE group.

Profit warning:
- Baker Tech
- Ezion
- Charisma Energy
- Rowsley

Friday, February 17, 2017

SG Market (17 Feb 17)

The market is likely to maintain its upward climb on the back of another takeover news by Indonesia's Riady family and better-than-expected 4Q GDP growth as well as UOB results.

Regional bourses opened lower in Tokyo (-0.7%), Seoul (-0.4%) and Sydney (-0.2%).Technically, the STI is trading within an upward channel bounded by topside resistance at 3,110 and support at 3,065.

Stocks to watch:
*Economy: 4Q GDP of 2.9% beat expectations (est: +2.5%, prior: 1.8%) propped up by a strong manufacturing output. This lifted 2016 GDP growth to 2.0% (2015: +1.9%), higher than MTI's forecast range of 1-1.5%. For 2017, MTI has maintained a GDP growth estimate of 1-3%.

*UOB: 4Q16 net profit slipped to $739m (-6.2% y/y, -6.6% q/q) but FY16 earnings of $3.1b (-3.5%) beat street forecast of $3.05b on higher fee income and surprise drop in bad debt charges. For the quarter, net interest income of $1.28b (-0.1% y/y, +3.7% q/q) was pressured by NIM of 1.69% (4Q15: 1.79%, 3Q16: 1.69%) but offset by strong loan growth (+8.9% y/y, 3.9% q/q). However, non-interest income of $753m (-6.2% y/y, -7% q/q) was weighed by reduced trading and investment income, overshadowing higher credit card and wealth management fees. Notably, provisions contracted to $131m (-31.4% y/y, 29.5% q/q) on a release in general allowance. NPL ratio held steady at 1.5% (4Q15: 1.4%, 3Q16: 1.6%), with Tier-1 CAR at 13% (4Q15: 13%, 3Q16: 13.4%). Maintained final DPS of $0.35, bringing FY16 payout to $0.70 (FY15: $0.90 including special DPS of $0.20). NAV/share at $18.82.

*OUE/IHC: OUE has launched an unconditional cash offer for IHC at $0.106/share, after sealing a deal to acquire 35.77% of IHC from Oxley executives Ching Chiat Kwong, Low See Ching and two related parties, taking its stake to 57.6%. OUE intends to maintain the listing status of IHC but may take it private if it gets control of >90% of the medical group.

*CapitaLand: Acquiring an accretive operating portfolio of office and retail assets in Tokyo, Japan, for ¥49.7b ($620.1m). The purchase of three offices and one retail property is estimated to contribute an additional $25m or 2.9% of FY16 earnings. This will enlarge its total asset size in Japan by 39% to $2.5b. MKE last had a Hold with TP of $3.66.

*SIIC Environment: 4Q16 net profit of Rmb170.3m (+42.3%) brought FY16 earnings to Rmb454.9m (+26.2%), topping full year street estimate of Rmb446.7m. For the quarter, revenue surged 122% to Rmb1.13b on increased construction activities (+266%) and higher operating and maintenance income (+79%). Gross margin contracted 13.9ppts to 23.2% on the shift in sales mix, while bottom line was lifted by a fair value gain from associate Longjiang Group of Rmb155.4m. Declared a first and final DPS of $0.01 (FY15: nil). NAV/share at Rmb2.6462.

*Chip Eng Seng: 4Q16 net profit surged 52.5% to $14.9m. Revenue of $250m (+62.5%) was lifted mainly by development business (+97.6%) from the progressive recognition of High Park Residence, while construction (+31.4%) benefitted from more HDB projects. However, gross margin compressed 9.3ppts to 18.3% on a shift in mix, but bottom line was bolstered by a $5.4m fair value gain, lower impairment loss and the absence of fair value loss on investment properties. Maintained its first and final DPS of 4¢. NAV/share at $1.23.

*Singapore O&G: FY16 net profit leapt 64.8% to $8.8m, as revenue soared 74.7% to $28.7m on the new dermatology segment and increased patients for O&G and cancer-related segments. Bottom line was further lifted by a $0.3m grant from the government (FY15: $0.2m). NAV/share at $0.1747..

*Rickmers Maritime: Booked a 4Q16 net loss of US$48.4m (4Q15: US$129.6m), mainly from a vessel impairment of US$48.1m (4Q15: US$126.3m). Revenue plunged to US$14.3m (-41%) amid a persistently depressed chartering market. Notably, the group is struggling to repay US$197.7m loans due 31 Mar '17 to HSH Nordbank and DBS, as well as its $100m MTN expiring on 15 May '17. Rickmers still remains in talks with its lenders and note holders on a debt restructuring. NAV/unit halved to US$0.21, but a further impairment may wipe out the entire book of financing is not obtained.

*Overseas Education: FY16 net profit tanked 64.8% to $5.3m, while revenue slipped 5.4% to $91.8m as a result of lower student enrolments. Bottom line exacerbated by a 1.4% increase in total expenses (excl. depreciation), while depreciation costs jumped 51.7% stemming from the new campus. Final DPS of 2.06¢ brings full year DPS to 2.75¢ (unch). NAV/share at $0.365.

*Singapore Medical Group (SMG): Entered into a strategic collaboration with Korean healthcare provider CHA Healthcare, on joint participation in future development and investment opportunities, projects and regional operational support in North Asiaand South East Asia. In relation, CHA will take up a 8.8% stake in SMG via the placement of 30m new shares at $0.50 apiece.

*Stratech: Proposed renounceable 2-for-1 non-underwritten rights issue at $0.10 each, intended to repay debt and strengthen its financial position.

*Zico Holdings: Launched an online legal services platform through its newly acquired subsidiary ShakeUp Online. Services include providing SMEs with high quality legal documents that are easy to understand and use.

*Profit warnings:
- SMJ International
- China Medical
- Kim Heng
- Anchor Resources
- Top Global