Friday, April 20, 2018

SG Market (20 Apr 18)

- The market could take a breather from sharp rally but banking and oil-linked stocks could continue o be supported by upbeat results expectations and firm crude prices.
- Technically, the STI is running into overhead resistances at last peak at 3,570 with momentum indcators in overbought territory. Downside support is at 3,510.

*SLB Development
- Listing on the Catalist board at IPO price $0.23, representing 1.46x P/B.
- The group's portfolio comprise both ongoing development properties and pipeline projects with total gross development value of $892m . Development profits from these property development projects and the unsold completed properties held by the Group are estimated to be S$136m.
- Anchor investors include Super Group founder, David Teo, United Envirotech founder, Lin Yucheng, Oxley Holdings deputy CEO, Eric Low, SC Global Simon Cheong, Toe Teow Heng of ICH as well as former stockbroker Han Seng Juan

*Keppel Corp
- 1Q18 headline net profit jumped 33.7% to $337.5m, partly boosted by $298m gain from divestment of Keppel Cove, a marina residential project in China.
- Stripping out non-core items, core operating profit and pre-tax earnings would have been $167.9m (+52%) and $130m (-39.5%), missing estimates.
- Revenue rose 17.8% to $1.47b, lifted by stronger property (+107%) business in China and Singapore, as well as infrastructure (+21%) division, which outweighed the continued decline in O&M (-31%).
- Pre-tax earnings was eroded by a $26m loss (1Q17: $115.7m profit) from O&M and associates.
- Net gearing edged lower to 0.42x from 0.46x in Dec '17.
- Year-to-date new O&M contracts of $580m lifted order book to $4.3b (Dec' 17: $3.9b).
- Trades at 15x forward P/E.

*Frasers Commercial Trust
- 2Q18 DPU of 2.4 cents (-4.4% yoy) was in line with estimates but stable compared with the preceding quarter.
- Gross revenue of $33m (-18%) and Net property income of $22.4 (-25.3%) due to the lower occupancy rates for the properties in Singapore, Central Park, 357 Collins Street, the absence of one-off payment in relation to a termination of lease in Central Park and the effects of the average weaker AUD.
- 2QFY18 total distributable income of S$20.6m included the maiden contribution from FCOT's 50% indirect interest in Farnborough Business Park, UK following the completion of the acquisition on 29 Jan 20183.
- Trades at 1.0x P/B with annualised yield of 6.5%

- After adjusting for the enlarged unitholder base, 1Q18 DPU was up slightly by 0.4% yoy to 1.008 cents.
- Gross Revenue rose 21.2% yoy to S$33.6m, Net Property Income increased 20.8% yoy to S$23.8m due to full quarter contriubtions from the two recent acquisitiond completed in Dec 2017.
- Proceeds from S$141.9m Preferential Offering on 28 March 2018 used to pay down debt and as a result, aggregate leverage was reduced from 39.6% to 30.0%
- Trades at 0.9x P/B with annualized yield of 7.7%

*Silverlake Axis
- Secured a new contract to implement its cloud-based retail automation solution, QR Cloud for Metro's Singapore retail operations.
- Contract is QR Cloud's maiden win and will be made available to Metro's supply chain partners.
- While the contract is expected to contribute positively to its results over the next two years, no specific financial disclosures were made.
- Trades at 8.2x trailing P/E.

*China Sunsine
- Issued a positive profit alert for 1Q18 in light of short supply in the market, which enabled it to achieve higher sales volumes at a higher ASP.
- To announce results on 25 Apr.
- Last traded at 9x forward P/E.

*Singapore O&G
- Signed a service agreement with SATA CommHealth to provide on-site medical services through its specialist medical practitioners for an initial 12 months.
- SATA will be responsible for all equipment and supplies related to these services.
- The deal will help the group increase its patient reach, particularly in the heartland areas.
- Trades at 19x forward P/E.

*Frasers Property
- Divesting its entire shareholding interest in 21 properties in Germany and the Netherlands for an aggregate consideration of €316.2m (approximately S$515.4m)
- The deal is in line with the group's strategy to optimise capital productivity by recycling capital from stabilised investment properties via its REIT platforms.
- Trades at 0.7x P/B and yield of 4.4%

*ComfortDelGro Corporation
- Further expanding its operations in the UK through a £1.2m (about S$2.2m) acquisition of the business and assets of Dial-a-Cab Ltd, which is a taxi circuit operator in London.
- The deal will enable the Group to grow and strengthen its position as the leading taxi circuit operator in London through an expansion of the customer base.
- It will also help CD achieve cost synergies through the consolidation of back-end processes and functions. - When completed, the acquisition will add another 1,100 Black Cab drivers to the combined circuit, bringing the total fleet to 3,000.
- MKE has a Buy with TP of $2.35

*UnUsal Entertainment
- Will bring Taiwanese singer, Rainie Yang's "Youth Lies Within" World Tour concerts to eight cities in China together with Sun Entertainment

- Entering into a 45:54:1:1 JV with Panthera and two individuals to acquire a plot of land at 31B Ngu Hanh Son, in the prime district of Danang, Vietnam.
- The group will provide advance payment of VND50.7b ($2.9m) to Panthera and one individual in exchange for the 45% stake in the JV.
- The 3,825 sqm land will be developed into a residential apartment, with minor retail spaces, swimming pool, gym, BBQ and other facilities.
- The JV allows the group to develop cash generating projects which have shorter turnaround time as compared to hotel development projects.
- Last traded at 0.76x P/B.

Thursday, April 19, 2018

SG Market (19 Apr 18)

- The market could be buoyed by the influx of fund flows arising from the stronger SGD following the tightening of monetary policy last Fri.
- Oil-linked counters could benefit as crude soared to a 3-year high as US stockpiles drop.
- Technically, the STI has broken above its downward trend channel since 24 Jan 2018 and could retest overhead resistances at 3,570 and 3,610.

*Keppel REIT
- 1Q18 results in line, even though DPU slipped 2.1% to 1.42¢.
- Gross revenue and NPI eased to $39.7m (-0.3%) and $31.2m (-0.6%), respectively, amid weaker contribution from 275 George Street.
- Portfolio committed occupancy dipped 0.3ppt q/q to 99.4%, while aggregate leverage ticked lower by 0.1ppt q/q to 38.6%.
- Offers annualised 1Q yield of 4.7%, and trades at 0.86x P/B.
- MKE has a Hold with TP of $1.19.

*CapitaLand Mall Trust (CT)/ Lian Beng
- CT will be divesting Sembawang Shopping Centre for $248m.
- The buyer is a 50:50 JV consisting Lian Beng and Apricot Capital, and the sale price for the 99% occupied, 206,087 sf, mall translates to $1,203 psf.
- Net sale proceeds for CT of $245.6m will be used to repay debt, finance capex or enhancement works and working capital.
- CT offers an indicative 5.5% yield and trades at 1.08x P/B.

*Courts Asia
- Issued a negative profit guidance for 4QFY18, due to a drop in sales for the group's Malaysia business.
- The slump followed the commencement of the consumer protection (credit sale) regulations in 2018, which capped interest rates at 15% per annum in Malaysia.
- Trades at 6.9x forward P/E.

*Noble Group
- Chairman Paul Brough wrote a letter to explain why the Board believes that the proposed restructuring is fair and reasonable, in order for the company to continue as a going concern.
- As the company is currently in default on about US$3.4b in debt obligations, it has entered into the restructuring agreement with an Ad Hoc Group of its creditors to contemplate a write down of US$1.8b of senior debt.
- In return, it was agreed with the Ad Hoc Group that shareholders will receive 15% of the common equity in the group post-restructuring.
- If approval is not obtained on the restructuring, the group is likely to enter into a formal insolvency or bankruptcy process, which is likely to result in negligible returns for both shareholders and perpetual securities holders.

Wednesday, April 18, 2018

SG Market (18 Apr 18)

- Stocks could follow Wall Street higher as technology stocks remain in play ahead of 1Q18 earnings releases although growth momentum could ease from the high base last year.
- Technically, the STI is facing some resistance near the topside of downtrend channel at 3,520, with support at 3,375.

*Ascott Residence Trust
- 1Q18 DPU missed estimates despite rising rights-adjusted 15.4% to 1.35¢.
- Excluding one-off FX gains, DPU would be up 9.4% to 1.28¢.
- Revenue (+1%) and gross profit (+3%) was shored by a New York hotel and two German serviced residences, acquired in 2017.
- Portfolio RevPAU improved 1% to $129 on better operational performances in Belgium, China, UK and Indonesia.
- Aggregate leverage rose to 36.1% (+1.6ppt q/q).
- Trading at an annualised 1Q yield of 4.8% and 0.93x P/B.

*First REIT
- 1Q18 DPU ticked up 0.5% to 2.15¢, meeting estimates.
- Gross revenue of $28.7m (+5.8%) and NPI of $28.4m (+5.8%) was lifted by full contribution from Buton and Siloam Hospitals Yogjakarta acquired in 4Q17, as well as higher rental income from existing properties in Indonesia and Singapore.
- Aggregate leverage narrowed marginally to 33.5% (-0.1ppt q/q).
- Trades at annualised 1Q17 yield of 6.3% and 1.35x P/B.

*Keppel T&T
- 1Q18 net profit tumbled 16.3% to $9.4m, making up 18% of full year estimate.
- Revenue climbed 5.1% to $42.8m, as stronger contribution from data centre division was outweighed by weakness in logistics.
- Operating loss doubled to $3.4m (1Q17: $1.7m loss) amid higher overheads and manpower employed to support new developments.
- Bottom line was buttressed by $16m (-3.6%) of profits from associates and JVs.
- Trading at 16.9x forward P/E.

- 1Q18 (9 Nov '17 - 31 Mar '18) DPU of US$0.0232 beat IPO forecast marginally by 0.4% while distributable income of US$14.6m came in line.
- Gross income of US$36.1m (forecast: US$35.5m) was higher than expected due to higher rental income attributable to a one-off compensation of US$1m from a tenant at Westmoor Centre.
- NPI of US$22.3m (forecast: US$21.2m) also came ahead of expectations, bolstered by lower-than-anticipated property expenses.
- Portfolio committed occupancy stood at 89.8% (Jun '17: 88.1%), while aggregate leverage was at 33.6% (Post-IPO: 36%).
- Trades at annualised yield of 6.7% and 1x P/B.

*Spackman Entertainment
- Wholly-owned subsidiary, Frame Pictures, won contracts to supply camera systems and equipment for three upcoming major Korean drama series, SUITS, MISTRESS and LIFE.
- The total contract value for the three sets is tentatively at 580m won (US$0.5m), subject to changes in the filming schedule.
- Frame Pictures continues to secure top-quality projects to its healthy pipeline and is expected to contribute positively to the group's FY2018.
- Trades at 6.25x P/E and 1.56x P/B.

- Informed by the Jilin Province branch of both China Development Bank and The Export-Import Bank of China that Midas' former chairman Chen Wei Ping was suspected by Chinese police to be involved in fraudulent loans.
- Chen Wei Ping, who resigned on 2 Apr '18, did not disclose to Midas board that he was assisting in police investigation.
- Counter remains suspended.

- 50.01% owned subsidiary, vCargo Cloud (VCC), will acquire a 60% stake in the enlarged share capital in Indonesian integrated logistics player PT Gatotkaca Trans Systemindo (GTS) for US$0.9m.
- The group intends to accelerate its efforts to automate customs declaration in Indonesia via GTS, which provides a suite of logistics services including trucking and freight and forwarding.
- Indonesia marks the third point of presence that VCC has established since the start of the year, enlarging its footprint to 14 countries globally, including three in ASEAN.
- Trades at 0.67x P/B.

Tuesday, April 17, 2018

SG Market (17 Apr 18)

- The market could consolidate its recent gains as geopolitical and trade tensaions recede and investors look to upcoming 1Q18 for further direction.
- Technically, the STI is facing some resistance near the topside of downtrend channel at 3,520, with support at 3,375.

- Rang in flat 1Q18 net profit of $34.8m, slightly ahead of muted expectations.
- Revenue inched up 0.5% to $254.1m on higher service revenue of $184.7m (+3%) from increased data usage and better fixed services sales (+13.9%) but was pared by weaker handset sales (-5.6%) and IDD (-14.8%).
- ARPU continues to decline across postpaid mobile (-2%), prepaid mobile (-9.4%) and data (-17.6%), except fibre broadband (+5.2%). Mobile data contribution climbed to 61.3% (1Q17: 54%, 4Q17: 58.2%).
- EBITDA margin narrowed to 40.8% (-2.2ppt) on higher wholesale costs of fixed services and staff costs.
- Net debt/EBITDA held steady at 1.2x.
- Expects intensifying competition from new entrants and OTT service providers.
- Offers an indicative dividend yield of 6.4%
- MKE has a Hold with TP of $1.59.

*Keppel DC REIT
- 1Q18 results came in within expectations as DPU of 1.8¢ rose 3.4% after adjusting for one-off 0.15¢ capital distribution last year.
- Revenue and NPI jumped to $38m (+18%) and $34.1m (+18.2%) on full quarter contribution from Keppel DC Dublin 2 and Keppel DC Singapore 3, as well as higher variable income from Keppel DC Singapore 1.
- Portfolio occupancy strengthened 1.1ppt q/q to 93.7%, while aggregate leverage climbed 5.3ppt q/q to 37.4%
- Trades at annualised 1Q18 yield of 4.9% and 1.52x P/B.

*Keppel Infrastructure Trust
- Flat 1Q18 DPU of 0.93¢, met expectations.
- Revenue rose 3.2% to $160.3m on stronger takings from City Gas (+6%) and Basslink (+7.5%), concessions (+0.6%) and Keppel Merlimau Cogen (+0.6%).
- Aggregate leverage held relatively steady at 40.1% (+0.2ppt q/q).
- NAV/share fell 1% to $0.296 due to distributions as well as marked-to-market valuation of derivative financial instruments.
- Trades at 6.95% FY18e yield and 1.79x P/B.

*Soilbuild Business Space REIT
- 1Q18 DPU slid 11% to 1.324¢ on weaker distributable income of $13.9m (-10.4%), but still came within expectations.
- Revenue and NPI declined to $19.4m (-11.5%) and $16.9m (-11.6%) on lower contribution from 72 Loyang Way, West Park BizCentral, Eightrium, as well as the divestment of KTL Offshore.
- Portfolio occupancy tumbled 5.2ppt q/q to 87.5%, while aggregate leverage eased 0.4ppt q/q to 40.2%.
- Trades at an annualised 1Q18 yield of 8% and 1.03x P/B.

- Mar passenger load factor rose 3.2ppt to 82.9%, as traffic growth of 8.4% outpaced a 4.2% increase in capacity.
- However, cargo load factor declined 2.8ppt to 64.7%, as freight carried slipped 0.8% on higher capacity of 3.5%.
- Parent airline load factor improved 2.1ppt to 82.2%, with improved utilisation on routes to Americas (+4.2ppt), South West Pacific (+3.7ppt), East Asia (+1.6ppt), West Asia and Africa (+3ppt), except for Europe (-0.2ppt).
- Load factors for subsidiary carriers, Scoot and SilkAir, also improved to 89.2% (+7.5ppt) and 72.8% (+3.6ppt), respectively.
- Trades at 0.91x P/B.

*mm2 Asia
- Sold $25.8m worth of shares in UnUsUaL at $0.465 apiece to His Royal Highness Prince Abdul Qawi of Brunei (4.76% share capital) and R3 Asian Gems (0.63%).
- The share sales allows UnUsUaL access to strategic business relationships in the region and is a testament to the group's long-term growth prospects.
- Upon completion, UnUsUaL Management remains the largest shareholder with a 76.79% stake, with mm2 Asia being the controlling shareholder of UnUsUaL Management (51%). The remaining 49% is owned by founders Leslie Ong and Johnny Ong.

*Tiong Seng
- Partnering Arcstone to co-develop TS Connect, an advanced manufacturing execution system, which would enable a data-driven ecosystem via IoT.
- The system would allow construction companies to track and analyse operations real-time, thereby reducing overall construction costs and enhancing operational efficiency.
- It targets to launch TS Connect in Singapore and overseas markets.
- Trades at 5.6x trailing P/E and 0.6x P/B.

*Raffles Education
- Entered into a non-binding agreement with Propertylink for the proposed sale of a freehold property in Australia for A$82m.
- Part of the 9,782 sqm (105,000 sf) NLA property is being used by the group to conduct business operations under Raffles College.
- The group will provide a 12-month income support arrangement to the purchaser for a vacant space in the property, which will cease upon commencement of any lease.

*Kim Heng Offshore & Marine
- Awarded a spot charter contract for a AHTS to perform towage of tender rig from Singapore to Brunei for a leading oil major.
- Trades at 0.86x P/B.

- Awarded a $3.3m contract by Land Transport Authority.
- The contract involves the provision of site investigation services on specific terrain in Singapore.
- Project started on 16 Apr and is scheduled to complete on 15 Apr '20.
- Trades at 0.6x P/B.

*Metro Holdings
- PT Metro Property Investment, a 90:10 JV with Lee Kim Tah Group, has agreed to invest Rp1.33t (~$127m) for the development, marketing and sales of two residential towers in Bintaro, Jakarta, Indonesia.
- The two residential towers comprise ~1,400 apartment units and 170 SOHO units.
- Trades 0.65x P/B.

- Found that subsidiary Jilin Midas Light Alloy (JMLA) had a Rmb334m cash shortfall in its cash balances.
- JMLA only had Rmb0.01m ($2,400) in its cash balance at end Dec '17, despite auditors receiving bank confirmation indicating that it had a balance of Rmb334.4m for that period.
- Discovered that discrepancies in JMLA's accounts were dated as far as Dec '16, when shortfall between actual statements and earlier supposed bank confirmation amounted to more than Rmb352m.
- The board had since made a police report in China, but highlighted that the police could not acknowledge receipt of the report.
- The statements obtained showed that Rmb23m was transferred to unrelated firm Chongqing Huicheng Aluminium, which is controlled by the nephew of Midas' ex-executive chairman Chen Wei Ping.
- Separately, it also noted that JMLA has a previously undisclosed bank account with Bank of Jilin, which was opened by Chen Wei Ping.

- To resume trading today following the successful completion of its debt restructuring exercise.
- Apart from refinancing US$1.5b of debt, swapping existing $575m bonds and perps with cheaper convertible and non-convertible bonds and revised perps, shareholders were offered 3-for-5 warrants, which would enable them to retain 56% of the enlarged equity base.
- Ezion also raised up to $65m in new equity at $0.208/share from two strategic investors, Pavilion Capital ($50m) and Asdew Acquisitions ($15m), which will be be used for business expansion and new business opportunities, JVs or partnerships with various industry partners, and for working capital purposes.
- Separately, group clarified that it is in discussions with strategic partners and investors, not limited to China Merchants & Great Wall Ocean Strategy & Technology Fund, to strengthen its own position, and grow its core liftboat business.
- In view of the new lease of life given to Ezion following its debt revamp, we expect the counter to trade between $0.194 (post restructuring NAV/share) and $0.276 (post-60 day bond/warrants conversion price), which implies a P/B of 1.0-1.4x. As comparison, closest peer POSH currently trades at 1.0x P/B.

*Keppel T&T
- Partnering with DE-CIX, a leading Internet Exchange operator, to boost interconnectivity at Keppel DC Frankfurt 1 (KDC FRA 1).
- KDC FRA 1 will be qualified as a DE-CIX enabled site, and will offer the premium interconnection services such as peering and dedicated cloud connections.
- Customers at KDC FRA 1 can benefit from the robust and resilient connectivity, as well as lower IP Transit and network costs from the tie-up.
- The offering is significant on the back of Frankfurt's growing popularity as a data centre hub and evolving enterprise requirements.
- Trades at 14.5x trailing P/E and 1.25x P/B.

*Neo Group
- Acquiring a 51%-stake in Lavish Dine Catering for $1.8m from five individuals through cash ($1.4m) and 0.6m in new shares at $0.63 apiece..
- Lavish Dine provides high-end catering services and owns an 8% stake in La Bonnie Pastries and was operating at break-even in FY17.
- Issuance of shares would dilute FY17 EPS by 0.4% to $0.0223.
- Trades at pro forma FY17 PE of 27.8x.

Monday, April 16, 2018

SG Market (16 Apr 18)

- Stocks could creep higher over a softening in US-China trade war rhetoric, while traders remain relatively sanguine that a wider fall-out from the allied strike on Syria can be contained.
- Focus this week will be on China's 1Q GDP growth, retail sales and industrial production data as well as Singapore's NODX for Mar.
- Technically, the STI is approaching the topside of downtrend channel at 3,520, with support at 3,375.

*Hutchison Port Holdings Trust
- 1Q18 net profit slid 12.9% to HK$145.4m, accounting for 18% of full year consensus estimate.
- Revenue inched 3.5% higher to HK$2.67b on stronger container throughput at Yantian (+8.7%) and Kwai Tsing (+1%) terminals, but average revenue per TEU at its China terminals fell due to negative tariff revisions as well as unfavourable transhipment mix.
- Bottom line was eroded by higher finance costs and minority interests.
- Guides that cargo volumes would be hit by 2% if US slaps tariffs on China exports.
- Offers indicative 8.6% yield.

- 3QFY18 net profit slumped 81.7% to $1m, bringing 9MFY18 net profit to just $0.2m (-97.2%).
- Revenue jumped 51.2% to $18.4m from higher sales of goods (+116% to $7.2m) as well as increased installation, connection, delivery and usage of natural gas (+26.9% to $11.2m).
- But, bottom line was dragged by a $6.6m negative swing to FX loss of $0.7m, as well as higher raw materials and consumables used (+49.1% to $12.1m).
- NAV/share at $0.02.

- Group's proposed 1-for-10 bonus issue has been granted the approval in-principle by SGX.
- Books will close on 17 Apr for the bonus issue.
- Trades at 1.4x P/B.

*Kingsmen Creatives
- Awarded two contracts worth $22m, comprising of National Day Parade 2018 ($3m) and the National History Event ($19m).
- The contract for National Day Parade 2018 involves the building and fabrication of the temporary stage set infrastructure and supporting structures at The Float @ Marina Bay and is expected to complete by 2018.
- The work for National History Event is a project in 2019 which will showcase the history of Singapore.
- Offers an indicative 4.3% yield and trades at 12x trailing P/E.

*Hong Leong Asia
- Divesting consumer products unit, Xinfei, to undisclosed Chinese third-parties as part of the group's restructuring efforts.
- Xinfei has been loss-making since 2011 with FY17 loss of $120.7m, compared to group's net loss of $66.5m.

- Setting up a 49:51 JVCo with controlling shareholder and ED, Christian Kwok, to undertake the trading of luxury goods for retail.
- The JV will help provide the group with a new revenue stream and believed to improve its prospects.

*AnAn Intl
- The group has yet to receive the first instalment payment of US$14.4m from Shanghai Huaxin Group (Hong Kong), which was due on 11 Apr.
- To recap, Shanghai Huaxin Group (Hong Kong) has proposed an instalment payment plan for its outstanding trade payables of US$142.9m to the group on 1 Mar.

- Public float has been restored to 10.09% after the vendor sold 300m of his existing shares in the company (representing c. 6.33% stake).
- Hence, there will no longer be any trading suspension in the shares as previously expected.

*Metech International
- Mutually agreed to terminate its proposed $1m loan agreement with controlling shareholder, Simon Eng, after the group's short-term cash flow improved.

- Entered into a non-binding MOU (with 6-mth exclusivity period) for the prosposed acquisition of Liaoning Meal Plus Technology for Rmb4m.
- The target develops software and machinery for the F&B industry.
- The move is in line with the group's intention to expand its corporate accretion services and to broaden its revenue stream.

Friday, April 13, 2018

SG Market (13 Apr 18)

- The market could get an uplift today, spurred by positive spillover from Wall Street after President Trump softer rhetoric against Syria and softer stance towards the TPP deal.
- Technically, the STI has closed the breakdown gap at 3,485 but remains trapped within the broad downtrend channel between 3,375 and 3,520.

*Lian Beng
- 3QFY18 net profit jumped 63% on a low base to $4.7m, but 9MFY18 earnings fell 20.6% to $16.9m.
- For 9MFY18, revenue slipped 6.2% to $146.5m, as increased contribution from investment holding and ready-mixed concrete segments were offset by the weakness in the construction segment.
- Gross margin narrowed 0.5ppt to 24.7%, weighed by lower profitability from construction, although partially offset by higher profit from investment holding.
- Bottom line was dragged by increased finance costs (+58.3%), tax expenses (+148.1%), as well as reduced income from associates/JVs (-28.1%), but was helped by a $7.7m disposal gain from its Melbourne investment property and reduced other operating expenses (-39.9%).
- Construction order book slipped to $924m (2QFY18: $972m), providing sales visibility through FY22.
- Last traded at 6.5x trailing P/E and 0.53x P/B.

- 1Q18 net profit turned around to $0.5m (1Q17: $0.2m loss).
- Revenue grew 8.8% to $10.4m on increased contributions from security guarding (+26.4%) from more contracts secured and higher ASP, but partially weighed by security printing (-13%), cyber security (-43.3%) and homeland security and system integration (-10.6%).
- Gross margin contracted to 18.7% (-0.7ppt) on higher cost of sales (+9.8%).
- Last traded at 0.67x P/B.

*GKE Corp
- 3QFY18 net loss narrowed to 0.8m (3QFY17: $0.9m loss), bringing 9MFY18 net loss to $9.8m (9MFY17: $1.4m loss).
- For the quarter, revenue of $17.3m (+8.3%) was led by higher contributions from freight forwarding and sale of ready-mix concrete, but partially offset by weakness from TNS Ocean Lines.
- Gross margin contracted to 18.6% (-1.8ppt) due to a shift in revenue mix.
- Bottom line was partially shored up by lower admin expenses (-17.2%) as well as reduced share of minority interests (-41.2%), which helped offset taxes of $0.3m (3QFY17: $20,000 credit).
- Last traded at 0.77x P/B.

*Yanlord Land
- Successfully co-tendered with Hongkong Land for the collective sale of freehold Tulip Garden, near Holland Village, for $906.9m, 50% above reserve price, or $1,790 psf ppr.
- Based on 1.6 plot ratio, the 316,708 sf site could yield 670 new homes and marks the group's maiden entry into Singapore's prime residential property market.
- Trades at 0.71x P/B.

- Acquiring Tullamarine Bus Lines (TBL) for A$32.2m, or 9.9x EBITDA, to strengthen its bus footprint in Victoria, Australia.
- TBL operates seven bus routes in north-west Melbourne with a fleet of 34 buses as well as contracted school services and a small taxi management business.
- The deal is expected to enhance FY19e EBITDA by 0.4%.
- MKE last had a Buy with TP of $2.35.

*Silverlake Axis
- Secured a contract to implement a core banking solution for MBSB Bank, the second largest full-fledged Islamic Bank in Malaysia.
- The contract is scheduled to be implemented within 12 months with no further financial disclosures provided.
- Separately, group intends to sell up to 14.6m of its shares in Global InfoTech (current holdings: 37.1m shares) within the six-month period from 8 May.
- Last traded at 8.3x trailing P/E.

*Noble Group
- Received more than 75% approval among senior creditors for its proposed financial restructuring.
- Management is confident that more creditors under the restructuring support agreement will continue to rise ahead of the scheme meeting.

*First REIT
- Clarified that the new Indonesian income tax regulations on service charges and utilities recovery charges are not expected to have any material impact on the REIT.
- This is because its properties are subject to master leases and the lessees do not pay service charges and utilities recovery charges.
- Last traded at 1.34x P/B and offers an indicative yield of 6.3%.

*Ley Choon
- Secured contracts worth $11m for road and pipe installation works.
- Last traded at 6.9x trailing P/E.

*Pan Asian Holdings
- Set up its manufacturing operations unit for valves products in Wuxi, China.
- The set up will help it grow its manufacturing business and expand sales internationally.
- The unit will rent all relevant machinery, equipment and factory premises from its existing supplier, Duvalco Wuxi, to minimise capital commitments.
- Last traded at 0.4x P/B.

*Jardine Cycle & Carriage
- Increased its stake in Refrigeration Electrical Engineering to 24.65% (prior: 24.46%) through the acquisition of 599,150 shares for an aggregate US$1.1m.

Thursday, April 12, 2018

SG Market (12 Apr 18)

- Expect some profit-taking and risk aversion amid escalating global geopolitical tensions after US President Trump threatened missile strikes against Syria
- Oil-linked stocks could gain as crude surged 2% to a 3-year high of US$66.82/bbl.
- Technically, the STI has closed the breakdown gap at 3,485 but remains trapped within the broad downtrend channel between 3,375 and 3,520.

*SIA Engineering
- Signed an In-flight entertainment and connectivity maintenance agreement with Thales for an undisclosed sum, to support SIA's fleet of A350 XWB aircraft for an initial 10 years.
- Trades at 21.4x forward P/E with 4.1% dividend yield.
- MKE has a Hold with TP of $3.50.

*Kim Heng Offshore & Marine
- Secured a one-year charter contract for two anchor handling tug/supply vessels from a leading oil major in Malaysia for an undisclosed amount.
- Loss-making and trades at 0.84x P/B.

*Grand Banks Yachts
- Eastbay 44 luxury boat will make its debut at the 2018 Singapore Yacht Show on Apr 12-15.
- Since its European debut in Jan, it has sold 12 units of the latest Eastbay model.
- Trades at 47x trailing P/E and 1.21x P/B.

*ST Engineering
- Its aerospace arm secured $510m new contracts in 1Q18, ranging from heavy maintenance to engine wash.
- This is 54% lower than the orders won in 1Q17.
- Trades at 20.7x forward P/E with 4.1% dividend yield.
- MKE has a Buy with TP of $4.15.

*Silverlake Axis
- Sold 0.3m Global Infotech (GIT) shares for Rmb3.8m (RM2.3m) or Rmb11.20 each.
- To recap, the group intended to monetise up to 19.2m GIT shares after it ceased to be an associate.
- The transaction is estimated to book a net disposal loss of RM0.68m.
- Trades at 0.53x P/E.

*Lippo Malls Retail Trust
- New tax regulations are expected to negatively affect future DPU as service and utilities recovery charges will now be subject to 10% withholding tax.
- On a proforma basis, the new regulations would cut FY17 distributable income by 7% to $90.2m, while DPU would fall to 3.19¢ (-7.3%).
- This implies a pro forma yield of 8.4%. Last traded at 1.18x P/B.

- Received a letter of demand from Advanced Manufacturing Industry Investment Fund for the early redemption of a Rmb400m loan extended to subsidiary Jilin Midas Aluminium Industries.
- The loan was guaranteed by Midas, its former chairman Chen Wei Ping and third party North East Industries.
- If loan is not repiad within 90 working days, an additional penalty will be imposed. The group claims that it was previously unaware of the loan guarantee.
- Trading in the counter has been suspended since Feb 8.

*Lian Beng
- Spinning off the property development unit, SLB Development on Catalist board.
- SLB is offering 238m shares at $0.23 apiece, comprising 8m public shares and 230m placement shares.
- Post-IPO, the group will retain 73.9% interest in SLB.
- Net proceeds of $51.4m will go towards replenishing its land bank (32.9%), funding development projects and working capital purposes (33.6%), and the remaining will be used for loan repayment.
- SLB has 9 ongoing residential, mixed-use, industrial projects and 6 pipeline developments (Singapore: 5, China: 1) totalling 4.6m sf with gross development value of $892m and estimated development profit of $136m.
- IPO will close on 18 Apr and trading is slated to begin on 20 Apr.
- Lian Beng trades at 6.6x trailing P/E and 0.52x P/B.

- Daughter of co-founder and former finance director Ng Bie Tjin has proposed a cash distribution of 32¢ per share. This compares to a 1¢ special dividend declared by the company. Ng and her family vehicle Uniseraya Holdings own 16% of the group.
- The group is embroiled in high profile feud over its controversial business diversification and acquisition of Malaysian haircare products maker Wayco Manufacturing.
- An EGM has been requisitioned on Apr 20 to oust four directors appointed following the entry of new 29% shareholder, Ng Siew Hong last year.
- SGX has also questioned the board appointments, its hiring of an independent reviewer and corporate governance related to the Wayco acquisition.

*Tiong Seng
- Raised its effective interest in Tiong Seng (Tianjin) Project Management and Consultancy to 100% (prior: 99%) for Rmb1.4m.
- Additionally, the company formed a 26:30:22:22 JVCo with three other China-based partners to undertake prefabrication business in China.
- Trades at 5.5x trailing P/E.