Thursday, July 27, 2017

SG Market (27 Jul 17)

- Banks will come into focus following the stellar 2Q results from OCBC. Currently, DBS has the cheapest valuation with 1.21x P/B, followed by UOB (1.26x) and OCBC (1.29x).
- Technically, the STI could break upwards to test its next resistance at 3,360. Underlying support is at 3,275.

- 2Q17 net profit of $1.08b (+22%) trumped estimates as non-interest income surged 34% to $1.05b, driven by life assurance (+123%), wealth management (+45%), investment banking (+72%) as well as other income (+34%) .
- Net interest income climbed 7% to $1.35b on 11% loan growth but NIM was compressed by 3bps to 1.65% (1Q17: 1.62%).
- Provisioning jumped 93% to $169m with NPL ratio at 1.3% (2Q16: 1.1%, 1Q17: 1.3%) and Tier 1 CAR at 1.3%.
- Interim DPS unchanged at $0.18.
- NAV/share of $8.73 translates to 1.29x P/B.

- 2Q17 DPU crept 0.4% higher to 2.62¢, in line with estimates, as distributable income of $23.3m (+4.3%) was diluted by an enlarged unit base.
- Revenue jumped 14.5% to Rmb59m mainly on contribution from recently-acquired CapitaMall Xinnan in Sep '16, while NPI rose at a slower pace to Rmb40m (+12.6%) due to additional property tax arising from the change in tax basis in China.
- Occupancy rate was stable at 96.2%, while aggregate leverage narrowed to 35.3% (-1.1ppt q/q).
- NAV/unit of $1.58.

*China Aviation Oil
- 2Q17 as net profit rose 4.1% to US$24.6m, taking H17 earnings to $49.9m (+4.4%) or 50.5% of full year consensus estimate,
- Revenue jumped 21.5% to US$3.67b primarily due to higher oil prices as total supply and volume traded fell 4% to 8.39m tonnes.
- Volume for middle distillates rose 2.1% to 4.98m, of which jet fuel accounted for 3.99m tonnes (+7.3%) but that for other oil products ditched 11.7% to 3.41m tonnes.
- Gross margin dipped to 0.29% (2Q16: 0.33%) on lower optimisation gains from jet fuel trading but other income soared 276% to US$1.2m from higher bank interest income.
- Share of profits from associates declined 5.5% to US$18.3m due to lower contributions from Pudong (US$16.1m), which was attributable to a weaker CNY to the USD.
- NAV/share at US$0.788.

*Lian Beng
- 4QFY17 net profit climbed 5.3% to $31.9m, bringing full-year earnings to $53.2m (-48.3%).
- FY17 revenue tumbled 36.8% to $281.7m, mainly dragged by construction (-70.3% to $103.5m) and ready-mixed concrete (-21.1% to $56.2m), but was shored by property development ($87.8m, FY16: $0.2m) and investment ($10.2m, FY16: $1.1m).
- Gross margin expanded 14ppt to 26.6% on profit recognition upon TOP of 65% owned Mandai Foodlink industrial development project.
- Bottom line was hurt by a significant drop in income from associate (-83.6% to $10.2m) and JV (-85.2% to $5.6m) following completion of development projects in FY16.
- Final DPS was raised to 1.25¢ (FY16: 1¢) but there was no special dividend (FY16: 1¢), bringing FY17 payout to 2.25¢ (FY16: 3¢).
- NAV/share at $1.172.

*Samudera Shipping
- 2Q17 net profit rose 7.9% to US$2m in tandem with higher revenue of US$71.2m (+7.4%).
- Top line saw improvement in container shipping (+9.9%) from increased volume, but outweighed by weakness in bulk & tanker division (-10.6%).
- Gross margin was relatively stable at 7.4% (-0.1ppt).
- Bottom line was lifted by lower marketing (-15.5%) and admin (-9.6%) expenses.
- NAV/share at US$0.4461.

*Oxley/Lian Beng/KSH Holdings
- 40:20:20:20 consortium with Apricot Capital will acquire HUDB site Serangoon Ville for $499m in a collective sale.
- The consortium intends to apply for leasehold extension for the 27,583.9 sqm site to 99 years for redevelopment.

*Noble Group
- Flags a whopping 2Q17 net loss of US$1.7-1.8b on reduced risk positions amid credit constraints.
- This would cut its NAV/share by almost half to $2.13, still putting it on distressed P/B of 0.27x.
- Fire sale of its assets continues with the group selling Noble Americas Gas & Power for US$248m and seeking buyers for its oil liquids business to pare down debt over the next two years.
- Hard-pressed to turn profitable by 2019.

*ST Engineering
- 50:50 JVCo with Marubeni has set up two new SPVs in Ireland and the UK.
- The JVCo will support its engine leasing business.

*CDL Hospitality Trust
- Disclosed that its 20-for-100 rights issue was 2.2x oversubscribed.
- The new units are expected to be credited and commence trading on 2 Aug '17.

Wednesday, July 26, 2017

SG Market (26 Jul 17)

*Frasers Centrepoint
- North Point Shopping Centre is scheduled to complete the AEI by Sep '17, and is on track to achieve 90% occupancy when it opens in 4Q17.
- It will be renamed as North Wing, and be integrated into Northpoint City, a 1.33m sf integrated development.
- Development of the remaining retail space South Wing at Northpoint City is scheduled to be ready by 4Q17.
- 920-unit North Park Residences is 87% sold to date, and is expected to be ready for occupation in 4Q18.
- Community club and bus interchange and Northpoint City scheduled to be operational by 2018 and 2019.

*Vibrant Group
- 80% owned Fervent Industrial Development Suzhou achieved 92% occupancy for six blocks of factories at its Phase 1 Fervent High Tech Industrial Park.
- Fervent is in advance discussion with a potential tenant to lease the remaining units out of the total 58,024sqm factory space.
- Majority of committed leases are from MNCs with tenor of 5 to 10 years.
- Fervent also secured a 10-year lease contract to design and build a customised BTS factory with lease area of 13,122sqm on an adjacent 50-year leasehold land with 76,533sqm, which it acquired earlier this year.

- Acquiring In-Line Group, which is headquartered in UK, and offers design,engineering, assembly and testing services for flow control valves for upstream O&G industry.
- Total consideration is up to £3m, implying a P/B of 10.3x.
- The deal is expected to increase the scale and scope of the group's core oilfield operations.

*SP Corp
- Divesting certain assets, stocks, receivables, business contracts and operating leases of its tyre distribution unit for $2.2m, or 1.57x P/B.
- The purchaser GTI Holdings is an associate co. of Michelle Liem and William Liem. Michelle Liem has substantial deemed interest in the group through her stake in group's major shareholder Tuan Sing.
- The disposal came after the tyre distribution unit incurred losses for the last three years.

- Disclosed that the controlling shareholder has been approached by third parties on a possible transaction.

- To record a substantial loss in 2Q17 of US$3-4m (1Q17: US$2.1m profit, 2Q16: US$44.6m profit) due to sharply lower swine ASPs in Vietnam which has since fallen below operating costs.
- However, core net profit excluding FX is expected to remain positive (1Q17: US$7.3m, 2Q16: US$51.9m).
- Results slated to be released after market on 27 Jul.

- Expects significantly lower net profit for 2Q17, due to drop in revenue from lower ore grade.
- Results slated to be released on or before 14 Aug.

- Cancelled the Justin Bieber Purpose World Tour concert in Singapore.
- The group will need to process refund for tickets purchased.

- Set up a US$150m venture capital (VC) unit to invest in promising technology start-ups and early stage companies.
- Areas of interest for the VC include robotics, autonomous tech, data analytics and cyber security.
- Additionally, STE will set up an Open Innovation Lab in Singapore which will offer a collaborative platform, supported by a dedicated applied engineering team and advanced equipment.

- Formed a 30:60:10 JV with Yokomori Mfg and Marubeni-Itochu Steel to produce and sell steel staircases in Singapore.

Tuesday, July 25, 2017

SG Market (25 Jul 17)

- The market will remain range-bound ahead of a slew of results from several blue-chips in later part of the week.
- Oil-related counters may get a lift from firmer oil prices after oil producers called for stricter adherence to output cuts, which included Nigeria, at a Russian meeting.
- Technically, the STI is overbought and could pull back to underlying support at 3,275. Topside resistance is at 3,360.

*Mapletree Logistics Trust
- 1QFY18 DPU grew 2% to 1.887¢, meeting expectations.
- Revenue and NPI rose 7% and 7.5% to $95.8m and $80.8m from stronger performance of its Singapore and HK portfolios and accretive acquisitions completed last year.
- Out of 157,900 sqm of leases due for expiry, 93% were successfully renewed during the quarter.
- Occupancy stood at 95.5% (-0.8ppts q/q) with WALE of 3.9 years, while aggregate leverage inched up 0.5ppt q/q to 39%.
- Trades at 1Q annualised yield of 6.2% and 1.2x P/B.

*Frasers Centrepoint Trust
- 3QFY17 DPU fell 1.3% to 3¢ (-1.3%), in line with estimates.
- The 3.3% drop in revenue to $43.6m was dragged by ongoing refurbishment work at Northpoint mall and challenging retail environment, while NPI slipped 1.3% to $30.8m on lower property expenses (-7.8%).
- Occupancy was flat at 87.1% (-0.1ppt q/q), while aggregate leverage stood at 30% (+0.6ppts q/q).
- Trades at 3Q annualised yield of 5.6% and 1.1x P/B.

*Frasers Commercial Trust
- Flat 3QFY17 DPU of 2.4¢ was in line with estimates.
- Both revenue and NPI dipped 0.6% and 0.8% to $38.3m and $27.9m, respectively, owing to lower occupancy at Alexandra Technopark (under renovation) and China Square Central in Singapore but its three Australian properties put up a better showing from the stronger AUD.
- Portfolio occupancy improved to 92.6% (+0.8ppt q/q), while aggregate leverage held steady at 35.9%.
- Trades at 3Q annualised yield of 6.7% and 0.94x P/B.

*Parkway Life REIT
- 2Q17 DPU of 3.32¢ (+10.3%) included a 0.22¢ capital distribution on divestment gains and was in line with estimates.
- Gross revenue and NPI improved to $27.7m (+1.1%) and $25.9m (+1.4%) on higher rentals from its Singapore properties, although income from its Japanese portfolio was eroded JPY depreciation.
- Aggregate leverage rose 1.1ppt to 37.4%.
- Trades at 2Q annualised yield of 5% and 1.55x P/B.

- 2Q17 net loss widened to NOK69m (2Q16: NOK53m) dragging 1H17 loss to $94m (+488%), forming 70% of full year estimate.
- Revenue slipped 4% to NOK2.13b on reduced activity, especially at the Norwegian yards, as well as cessation of operations in Vard NiterĂ³i in 3Q16.
- EBITDA margin improved to 2.8% from 0.5% last year.
- Order book stood at NOK12.88b (1Q17: NOK12.98b).
- NAV/share at $0.31.

*Great Eastern
- 2Q17 net profit surged 173% to $279.5m, boosted by profit from life assurance of $240.4m (+123%). This brought 1H17 earnings to $497.4m or 69% of full year estimate.
- In the quarter, total weighted new sales rose 6% to $255.7m, underpinned by continued growth in SG and MY.
- New business embedded value grew 17% to $121.1m with higher margin of 47.4% (2Q16: 42.7%, 1Q17: 36.5%).
- NAV/share at $14.80

*Frasers Centrepoint
- Developing $190m new commercial facilities in The Key Industrial Park in the South East and West Park Industrial Estate in Melbourne.
- Six tenants have committed 10-year leases at the two properties.

*First Resources
- 2Q17 FFB harvest improved 15% to 613,597 tonnes, with yield rising 0.1ppt to 3.5 tonnes/ha.
- CPO production rose 13.6% to 143,777 tonnes, despite a dip in extraction rate to 22.2% (-0.3ppt).
- MKE last had a Hold with TP of $1.97.

*Lian Beng/KSH
- 80:20 JVCo Goldprime Realty is divesting 596 St Kilda Road in Melbourne for A$34m.
- The freehold property with 19 housing units sits on land area of 1,803.6 sqm.

- Appointed by IMC Live Group China to co-promote Angela Chang's world tour between Sep '17 and Jan '18.
- This will take it to 10 cities in Beijing, Xian, Dalian, Guiyang, Suzhou, Kunming, Nanchang, Xiamen, Shenzhen and Kuala Lumpur.

- Management expects higher 2Q17 revenue and net profit due to higher sales volume and ASP of phosphorus, following resumption of full production in the quarter.
- 2Q17 results slated to be released on or before 14 Aug '17.

- Secured three new infrastructure contracts worth Rmb308m in China, lifting order book to Rmb2.6b.
- The contracts are mainly expected to be fulfilled over the next 36 months, with the exception of one that is due by end '21.

*Alliance Mineral
- Obtained all environmental approvals required to construct and operate a 1.2mtpa dense media separation plant at Bald Hill Mine in Western Australia.
- The approvals also allow for mining and processing of lithium and tantalum to commence at Bald Hill.

Monday, July 24, 2017

SG Market (24 Jul 17)

- Market may head into some volatility ahead of FOMC policy decision and key corporate results in later half of the week from SIA, Sembcorp Marine, AREIT, OCBC and UOB.
- Technically, the STI is overbought and could pull back to underlying support at 3,275. Topside resistance is at 3,360.

- New executive condominium Hundred Palm Residences met an overwhelming response over the weekend with all 531 units sold out within seven hours of launch, fetching an average price of $826 psf..
- This raises hopes that the property market has regained its footing and reinforces MKE's view of a potential rebound in home prices.
- Positive on developers with UOL (Buy, TP $9.05) and City Dev (Buy, TP $12.05) as the best proxy plays.

- 1QFY18 results missed expectations despite turning in higher core net profit of $57.3m (+3.2%) from increased associate/JV income (+27%).
- Revenue crept up 0.5% to $426.5m as improved gateway services (+5.1%) was offset by weakness in food solutions (-2.9%).
- Operating margin narrowed 0.3ppt to 12.5% on higher licensing fees (+24.9%) and others (+6.3%) comprising fuel, marketing and equipment maintenance.
- MKE last had a Hold with TP of $4.90.

*Cache Logistics Trust
- 2Q17 DPU fell 9.5% to 1.8¢ as distributable income dropped 8.8% to $16.3m owing to lower income from operations and legal fees arising from ongoing proceedings at 51 Alps Ave.
- Gross revenue dipped 0.7% to $27.9m following divestment of Cache Changi Districentre 3 in Jan and conversion of 40 Alps Ave from master lease to multi-tenancy as well as lower income from 51 Alps Ave due to legal issues. This was partially mitigated by better contribution from DHL Supply Chain ARC and Cache Cold Centre, both of which enjoyed higher occupancies.
- NPI declined 4% to $21.6m on higher property expenses.
- Portfolio occupancy rose 1.1ppt q/q to 98.3%, while aggregate leverage ticked 0.3ppt higher to 43.4%.
- Trading at 2Q annualised yield of 7.6% and 1.22x P/B.

- Swung to 2Q17 net profit of $1.2m from $5.3m loss a year ago, mainly due to a $4.2m remeasurement gain.
- Revenue inched 1% higher to $22.5m amid a challenging real estate market in Singapore but supported by overseas markets as well as maiden sales from Squire Mech, which became a wholly-owned subsidiary in Aug 2016.
- Contributions from RSP India and Malaysia also turned around from a loss last year.
- NAV/share was almost flat at 8.63¢.

- Acquiring an 80% stake in leading US accommodation provider Synergy Global Housing for US$33.7m ($46.7m) or 7.2x P/B.
- The deal will triple Ascott's US serviced residence portfolio to 3,000 and expand its global footprint to 70,000 units.

*Jasper Investments
- Appointed as the project manager for logistics and transportation of quarry dust for the Hong Kong International Airport Third Runway System.
- The one year contract, with the option for extension of an additional year, is expected to commence in Aug/ Sep.

*Mermaid Maritime
- Awarded two subsea contracts worth US$4.6m.
- One contract is from a new customer in the Middle East and is expected to commence in 3Q17, while the other came from an existing Indonesian client, and will commence in 4Q17.

*SUTL Enterprise
- 60:40 JV with UEM Land to construct, develop and manage a marina, marina club, hotel, recreation centre and other ancillary facilities.

- Credit ratings agency Moody's downgraded its senior unsecured ratings to A1 from Aa3, due to rising absolute debt levels.
- Outlook remains stable.

*mm2 Asia
- Proposed deal to acquire 50% stake in Golden Village Cinemas Singapore for $184.3m failed to obtain one of the conditions.
- The follows after Golden Screen, the owner of the other 50% stake rejected the deal.

*CSE Global
- Will pay US$12m as settlement for a potential civil liability to U.S. Department of the Treasury's Office of Foreign Assets Control.
- The alleged violations arose from payment in USD for rendering non-US goods to Iran.
- Consequently, CSE Global is expected to recognise a 2Q17 net loss arising from the one-off charge.

*Hatten Land
- Launched SATORI, a wellness-themed mixed development in Malacca, Malaysia, with estimated GDV of RM300m.
- The development has gfa of 570,400 sf, consisting 192 serviced suites, retail mall (85,250 sf), 336-room hotel and 50 other facilities.

- Among 49 companies that were awarded the standing offer agreement for quality professional services 4.
- The award allows Azeus to tender for various Hong Kong government IT professional services contracts of up to HK$15m in two years up till Jul '18.
- Group secured the offer agreement for the fifth consecutive term.

Friday, July 21, 2017

SG Market (21 Jul 17)

- Market may give way to light profit-taking to take stock of the recent rally and mixed set of 2Q results so far.
- Technically, STI could see further downside following the bearish engulfing candlestick yesterday, with next support level at 3,275. Topside resistance is at 3,360.

*Union Gas
- IPO of 60m shares at $0.25 each, comprising 30m new shares and 30m vendor shares (2% public, 98% private), was 7.1x subscribed.
- Net proceeds of $5.7m intended for acquisition of LPG dealers (70%), diversification into the supply and retail of piped natural gas (17.5%) and working capital (12.5%).
- Trading debut for the fuel products supplier at 9am today.

*Darco Water
- Formed 51:49 JV with Northern Ecological Environment Municipal Engineering Technology to develop environmental protection related projects.
- JVCo will undertake public-private-partnership and BOT projects in Xiongan New Area, Hebei, China.
- Separately, the group clinched a 15,000m3 BOT water treatment project in Ben Tre, Vietnam, with 50-year concession period.
- The project is estimated to cost US$11.7m and construction is expected to complete within 18 months.

*Jiutian Chemical
- Issued positive profit alert for 1H17 results.
- Expect to report a jump in revenue and net profit due to higher sales volume and ASP.

*Keppel Corp
- 2Q17 net profit sank 22.1% to $160.3m as offshore & marine barely broke even for the second consecutive quarter. This brought 1H17 earnings to 48% of full-year consensus estimate.
- 2Q revenue of $1.55b (-4.4%) was propped by property (+16%) and infrastructure (+29%), which replaced O&M (-38%) as the top revenue generator as its yards suffered from lower workload and project deferments.
- Bottom line was weighed by fair value loss of $48.4m arising from KrisEnergy warrants, albeit pared by $31.2m increase in associate contribution from investments.
- Only $300m of new orders were secured in 1H17, with order book shrinking further to $3.4b.
- Interim DPS maintained at 8¢.

- Dived into 3QFY17 net loss of US$63.3m (3QFY16: US$4.1m profit) due to a massive US$45.1m provision amid the depressed O&G services sector.
- Revenue plunged 62% to US$30.9m in absence of contribution from construction of seven self-elevating units that have been completed.
- Recorded gross loss from project cost overruns and lower margins in a competitive market environment.
- NAV/share slumped 28.9% to US$0.478.

- Expects 2Q17 net loss due to the weak Singapore power market.
- Results slated to be released on or before 14 Aug.

- Bank of America is joining Citigroup and Morgan Stanley in steering away from HNA and its deals on growing concerns about the group's debt levels and ownership structure.
- The move could jeopardise HNA's pre-conditional offer for the company at $2.33/share, which has a long-stop date of 9 Sep.
- Stock is currently trading at $2.13.

- Profit warning for 2Q17 due to:
1) Losses from newly acquired German subsidiary Almex
2) Lower revenue from ATM safes due to trend towards e-payment
3) Rising costs of steel and argon weilding gas

*CapitaLand Mall Trust
- 2Q17 DPU inched 0.4% higher to 2.75¢, meeting expectations.
- Revenue slipped 1.3% to $168.6m on cessation of operations at Funan, while NPI rose 1.2% to $117.5m (+1.2%) on lower utilities and maintenance expenses.
- 1H shopper traffic crept up 0.4%, while tenant sales held steady.
- Portfolio occupancy improved 0.9ppt q/q to 98.6%, while aggregate leverage narrowed to 34.7% (-0.6ppt q/q).
- Trades at 1H annualised yield of 5.5% and 1.03x P/B.

*HC Surgical Specialists
- FY17 net profit plunged 52.2% to $1.3m mainly due to IPO expenses of $1.3m.
- Excluding IPO expenses and other one-offs, core earnings declined 14.9% to $2.8m on higher opex from business expansion.
- Revenue climbed 19.8% to $9.5m following recent acquisitions of CTK Tan Surgery (Sep '16), Lai Bei (Nov '16) and Julian Ong Endoscopy and Surgery (Apr '17).
- Declared final DPS of 0.7¢, bringing FY17 dividend payout to 2.5¢ (FY16: nil).

Thursday, July 20, 2017

SG Market (20 Jul 17)

- Market may push higher on the back of record close on Wall Street and resurgence in tech stocks although technical indicators are approaching overbought levels following the recent run-up.
- Topside resistance for STI is now seen at 3,360 with downside support at 3,275.

*ST Engineering
- Electronics arm secured $490m worth of contracts in 2Q17 (1Q17: $464m).
- These comprise work in rail electronics & intelligent transportation ($131m), satelite & broadband communications ($57m) and advanced electronics and ICT solutions ($302m).
- Trading at 21.9x forward P/E, at the upper end of its 13-24x historical range.

*Soo Kee
- Proposed 55:45 JV with major Chinese gold jewellery firm Global Crown Group.
- JVCo to sell gold and diamond products under Soo Kee's "Love & Co." trademark in HK and China.
- Targets to establish 550 points-of-sales and achieve revenue of Rmb2b by the end of its fifth year of operation.
- Initial investment for the JVCo will be Rmb50m ($10.2m).

*Addvalue Tech
- Wideye iFleetONE terminal approved by the Thai authorities for vessel tracking and management to combat illegal fishing.
- The group will commence delivery of the terminals in batches to support its partners' plan to deploy 200 terminals by end-2017.

*Hutchison Port Holdings Trust
- 2Q17 results came in below estimates as net profit slid 21.5% to HK$269.1m, weighed by associate loss of HK$24.9m (mainly at newly acquired Huizhou Int'l Container Terminals), higher finance costs (+18%) and taxes (+16%).
- Revenue rose 2.2% to HK$2.89b on higher container throughput in HK terminals (+3.9%) and Yantian port (+10%), but was pared by lower average revenue per TEU.
- Interim DPS slashed to HK$0.095 (1H16: HK$0.14).
- NAV/unit at HK$4.62.

*Keppel T&T
- 2Q17 net profit tumbled 45.3% to $10.3m, missing expectations on higher operating expenses (+4%) and lower M1 earnings.
- Revenue slipped 5.1% to $47.6m following stake disposals in Keppel DC Singapore 3 and Keppel DC REIT Management, as well as weaker logistics contribution.
- Management remains bearish on the logistics business as volumes and margins continue to be pressured.
- Going forward, it is pursuing more data centre development and acquisitions in collaboration with Alpha Data Centre Fund.

*Nam Cheong
- Temporarily cease debt repayments as the group undertakes a proposed restructuring.
- Accordingly, it will not be making next coupon payment due on 23 Jul wrt the $75m 6.5% notes due 2018.
- Appointed PWC to as financial advisor on restructuring options.
- Has outstanding debt, comprising bank loans and notes, of RM1.84b as of Mar '17, elevating its net gearing to 1.2x
- Trades at liquidation P/B of 0.11x

*Ascott REIT
- 2Q17 results in line even as DPU fell 14% to 1.84¢ on an enlarged unit base (+26%) following a placement in Mar '16.
- Revenue rose 4% to $123.6m, from new acquisitions, Sheraton Tribeca New York Hotel and two serviced residence properties in Germany.
- On same store basis, RevPAU improved 2% on recovery in Belgium, Philippines and Vietnam.
- Aggregate leverage reduced to 32.4% (-8.7ppt q/q) post-rights issue.
- Trading at 1H17 annualised yield of 5.7% and 0.96x P/B.

*Keppel T&T
- 70% owned Keppel Data Centres Holding signed two MOUs to explore innovative space usage for data centres.
- First MOU with JTC to assess feasibility of deploying data centres underground.
- Second with IMDA and Huawei to explore feasibility of deploying a high-rise green data centre with energy efficient technologies.

Wednesday, July 19, 2017

SG Market (19 Jul 17)

- Market may take a breather to consolidate its big move after recent corporate buyouts with attention now focused on 2Q earnings releases.
- Topside resistance for STI is now seen at 3,360 with downside support at 3,275.

*ST Engineering
- Aerospace arm clinched new contracts worth about $650m in 2Q17 (1Q17: $1.11b).
- Scope of work includes heavy airframe & engine maintenance, component repair & overhaul, freighter conversion.
- Trading at 21.7x forward P/E, above its 7-year historical average of 19.1x.

*Manufacturing Integration Tech
- Issued positive profit guidance for 1H17, after the group returned to profitability from its loss position in FY16.
- 1H17 sales expected to match FY16 turnover, buoyed by upturn in global semiconductor industry and impending new mobile handset introductions by industry leaders.
- 1H17 results scheduled for release on or around 4 Aug.

- Entered non-binding term sheet with controlling shareholder Peter Lim (45.4% stake) to purchase healthcare firm Sasteria for up to $1.9b in all share deal.
- The proposed acquisition will be financed via issue 25.33b shares at 7.5¢ each. Sasteria owns and operates Thomson Medical Centre and has a 51.93% stake in KLSE-listed TMC Life Sciences.
- Prior to completion of the acquisition, Sasteria will acquire an additional 18.43% stake in TMC Life Sciences and is evaluating a possible acquisition of one or more medical practices to expand its offerings.
- Upon completion, the group will undertake a 2-for-1 bonus warrants issue with exercise price of 9¢, plus 1 piggyback warrant (exercise price: 12¢) for every bonus warrant exercised.

*mm2 Asia
- Proposed issue of up to $93m 3-year convertible debt securities at 2% per annum by wholly-owned MM Connect.
- MM Connect intends to use proceeds to fund its $184.3m acquisition of the 50% stake in Golden Village Cinema business in Singapore.
- The notes may be converted into shares, if an IPO is launched, at a 15% discount to listing price.

*Netlink NBN Trust
- IPO of 2.898b units was twice subscribed.
- Debut trading for the fibre broadband infrastructure provider at 3pm today.
- At IPO price of $0.81, Netlink offers FY18/19 yield of 5.43%/5.73%.

- 2Q17 DPU of 2.27¢ (+3.2%) was in line with estimates.
- Post-acquisition of the remaining 60% stake in CapitaGreen in Sep '16, gross revenue surged 29.5% to $87.5m, while NPI rose at a slower pace to $69.1m (+14.1%) due to consolidation of CapitaGreen's expenses.
- Portfolio occupancy dipped slightly to 97.6% (-0.2ppt q/q), while aggregate leverage narrowed to 35.2% (-2.9ppt q/q).
- Management guided that pressure on rental revenue is expected to continue in 2018 given relatively high expiring rent base.
- NAV/unit rose 5.7% q/q to $1.85.

- Introducing three adjustments to equities market structure as below:
1) Equities market will break from 12pm to 1pm.
2) Minimum bid size for securities priced between $1.00 and $1.99 will be increased to $0.01 from $0.005.
3) Forced order range will be widened to +/- 30 ticks from +/- 20 ticks.
- The adjustments will be effective from 13 Nov '17.

*Keppel T&T
- Proposed transfer of Keppel DC Singapore 4 (KDC4) at $170m to 70:30 JVCo Thorium DC, held between Alpha Investment Partners and Keppel Data Centres.
- Keppel Data Centres is a 70:30 JV between Keppel T&T and Keppel Land.
- Post-transaction, Keppel T&T's stake in KDC4 will decrease from 70% to 40.7%.
- Pro forma FY16 NTA/share will remain unchanged at $1.43, while EPS increased 2.1% to $0.193.

- Expect negative reaction after major shareholders abandoned the strategic review of their stakes and weak 2Q results.
- While 2Q17 results came in line, net profit plunged 20.8% to $32.5m on higher opex (+9.9%) due to higher handset (+19.7%) and wholesale costs of fixed services (+14.4%).
- Although service revenue was stable at $204.7m (+0.4%), ARPU slumped across the board and customer acquisition cost jumped 15.2%.
- Consequently, EBITDA margin compressed to 35.9% (2Q16: 40.3%, 1Q17: 39.2%).
- Interim DPS was cut further to 5.2¢ from 7¢.
- Management forecast lower FY17 earnings as competition heats up with the impending entry of another mobile player.

*Keppel REIT
- 2Q17 results met the low end of expectations, as DPU slid to 1.42¢ (-11.8%) on absence of 0.15¢ distribution of other gains.
- 2Q17 distributable income fell to $47.4m (-9.7%), partially due to lower rental support (-16.4%), interest income (-24.4%) and JV contributions (-9.4%).
- Both revenue and NPI slipped 1.7% to $39.8m and $31.9m respectively, weighed by weakness in Bugis Junction Towers.
- Portfolio committed occupancy edged up 0.4ppt q/q to 99.8%, with WALE of 6 years.
- Trading at FY17e yield of 5.3% and 0.83x P/B.
- Maybank KE downgrades to Hold from Buy, with unchanged TP of $1.18, after a 18% rally YTD.