Thursday, September 21, 2017

SG Market (21 Sep 17)

- Banking and oil-linked stocks may recover some lost ground after the Fed kept alive a Dec rate hike and planned to gradually unwind its US$4.5t balance sheet from next month, while crude pushed above US$50 a barrel ahead of Fri's OPEC meeting.
- Technically, the STI is hovering just under its 3.220 support with next level at 3,190 and overhead resistance at 3,275.

*Sysma Holdings
- FY7/17 net profit surged 392% to $8.3m on a $4.2m write-back of loss provision and lower effective tax rate.
- However, revenue slid 23% to $97.2m mainly as property development projects (-56% to $32m) were substantially sold, but was cushioned by higher contribution from construction projects (+21% to $65.2m).
- Gross margin expanded 11.3ppt to 18.4%.
- Proposed first and final DPS of 0.5¢ (FY16: nil).
- NAV/share rose 19.5% to $0.1954.

- 51% owned EH Property and Investments has been approached in connection with a potential sale of its entire interest in F2S1 Investment Pte Ltd.
- F2S1 owns PoMo, a shopping mall cum office building in Selegie Road, with 65 years lease left.
- No definitive agreement has been signed yet.

*OCBC/Great Eastern
- 87.8% owned Great Eastern is exploring a 30% stake sale of its Malaysian operations for as much as US$1b against a Jun 2018 deadline to comply with Bank Negara rule that capped foreign ownership of local insurance companies at 70%.
- Last year, GE Malaysia contributed ~6% to OCBC's pretax profit.
- Assuming GE fetches the touted sale price, OCBC could net a potential $943m gain on sale (22% of FY17E earnings est), and improve BVPS by $0.19 to $9.24.
- OCBC trades at 1.24x P/B.

*Genting Singapore
- Established a Tokyo branch office to develop and manage leisure and hospitality businesses, possibly in support of its bid for a gaming license in Japan.
- Trading at 10.1x forward EV/EBITDA, underpinned by improved operating conditions.
- MKE has a Buy with TP of $1.35.

*ABR Holdings
- Associate ABR CCH Land acquired a 1,180 sqm land plot at 155 Seksyen 88A, Kuala Lumpur for RM3.56m.
- The tenure of the 99-year leasehold land will expire on 3 Feb 2069.
- ABR CCH has appointed its 51% controlling shareholder, Cheng Chin Heng, to provide property consultancy services for a fee of RM0.13m.

Wednesday, September 20, 2017

SG Market (20 Sep 17)

- Investors will likely stay cautious as the Fed opened a 2-day policy meeting that might seek to taper its monetary stimulus.
- Technically, the bearish engulfing candlestick formed yesterday suggests the STI could lean towards its support at 3,190. Overhead resistance is at 3,275, near its 50-dma.

*Keppel Corp
- Acquiring a prime 83,000 sf site along Jalan Jeneral Sudirman (next to International Financial Centre) in Jakarta's CBD for Rp586b ($59.5m).
- Plans to develop a high-rise tower of ~390,000 sf gfa that could yield 400 luxury apartments on the plot at estimated development cost of $170m.
- Last traded at 14.1x forward P/E.

*ASTI Holdings
- Signed non-binding term sheet with China Fortune-Tech Capital for the proposed disposal of its key subsidiaries, which designs, builds, and markets semiconductor manufacturing equipment.
- While negotiation is ongoing, management guided an indicative price range of $105-110m (1.67-1.8x P/B), surpassing group's market cap of $54.5m.
- The potential buyer is an investment platform, with a focus on the semiconductor industry, and has more than Rmb3b of funds under management.
- At $0.08/share, loss-making ASTI is valued at 0.88x P/B.

*ST Engineering
- New venture capital arm made it first investment, taking a US$5.8m minority stake in California-based cyber security provider Janus Technologies.
- This is part of the group's strategic push into cyber security, robotics, autonomous technology and data analytics.
- Trades at 21.9x forward P/E, near upper range of 13-24x historical range and offers 4.2% dividend yield.

- Received regulatory approval for the expansion of its Shantou City cogeneration public-private-partnership plant project in Guangdong, China.
- Capacity of the current 25MW electricity generator with centralised steam boilers will be upgraded to 100MW.
- The Shantou project is expected to replace the existing 270 small coal-fired boilers that serve the electricity demands of 132 companies to be relocated in the region.

*JEP Holdings
- Entered 50:50 JV in China with Kun Shan Hang Fu Investment with both committing to a total initial capital of Rmb30m.
- The JVCo will provide precision machining and engineering services for the aerospace industry.

*Yanlord/Perennial/United Engineers
- The mandatory conditional takeover offer for United Engineers at $2.60/share by the Yanlord-led consortium has closed.
- Following the lapse of the offer, the consortium's stake in UE will remain at 33.44% and acceptances amounting to 1.36% will be returned as the 50% condition was not met.

- Appointed Credit Suisse as its financial adviser for its proposed $1.9b acquisition of healthcare firm Sasteria from controlling shareholder Peter Lim.
- Sasteria owns and operates the 190-bed Thomson Medical Centre and has a 51.93% stake in KLSE-listed TMC Life Sciences, which it intends to raise to 70.4% prior to the deal completion.
- Separately, Rowsley appointed Tan Wee Tuck (nephew of Peter Lim) as its new CEO and interim CFO to lead the group's portfolio of real estate business.
- Tan previously held executive positions at CNBC Asia Pacific, NBC Universal and GE Healthcare.
- The loss-making group currently trades at 1.55x P/B.

*Spackman Entertainment
- Acquiring a 10% stake in NSY Group, which owns Nunsongyee, a Korean dessert cafe chain in Singapore, for $0.14m (5x P/B).
- The dessert chain has seven branches across Singapore, and is profitable in FY16/17.

Tuesday, September 19, 2017

SG Market (19 Sep 17)

- Investors will be looking for potential catalysts from PM Lee's official visit to China today through to Thu (21 Sep), well-timed before the twice-a-decade CCP Congress meeting to be held on 18 Oct.
- Technically, the STI looks poised break above its mmediate resistance at 3,245 (20-dma), with the next upside objective at 3,275 (50-dma). Underlying support is at 3,190.

- Owners of former HUDC estate Braddell View plan to hop onto the en-bloc bandwagon.
- The sprawling 918-unit development sits on 1.124m sf of land with a 2.1 plot ratio, and is reportedly seeking a $2b asking price.
- If successful, the sale could trump Pine Grove's $1.65b en bloc bid, potentially making it the largest collective sale since Farrer Court's $1.34b deal in '07.

*Sembcorp Marine
- Signed LOI with Texas-based SeaOne Caribbean to design and construct at least two large compressed gas liquid carriers, for an estimated cost of US$500m each.
- The 366m 2bcf neo-panamax carriers will incorporate SMM's proprietary ship component inputs and will be deployed for SeaOne's Caribbean Fuels Supply Project.
- This could mark the start of a pick-up in non-drilling solutions contract wins after securing a meagre $270m of orders ytd.
- Trades at a hefty 41.8x forward P/E.

- Launched SGX Iron Ore Futures Indices, a suite of inverse and leveraged indices based on the SGX TSI Iron Ore China Index Futures.
- This comprises two total return indices that offer both long and short exposure to the seaborne iron ore market.
- Last traded at 21.7x forward P/E.

- Disclosed that recently-acquired Jurassic World: The Exhibition has just surpassed its one-millionth visitor, after operating for 12 months in Australia and US.
- Trades at 17x forward P/E.

*Aoxin Q&M
- Entered into definitive agreement to acquire Shenyang Qingaomei Oral Restoration Technology for Rmb16.9m (16.9x FY16 P/E) by end-2017.
- Separately, the group is also acquiring Zhuanghe City Chengguan Street Jiadawei Dental Clinic for Rmb8.4m (13.5x FY16 P/E) by end-2017.

- Secured two projects worth more than Rmb500m to build and operate a power plant in Shanxi and to supply equipment to a petrochemical complex in Zhoushan, China>
cogeneration facility in the Xinjiang Circular Economy Demonstration Park in Shanxi Province, China, with investment sum of Rmb490m.
- The first project will involve the phased construction of two 90tph boilers and one 9MW electricity generator, one 150 tph boiler and one 18MW electricity generator, as well as steam distribution pipelines, in the Xinjiang Circular Economy Demonstration Park, Shanxi province, with investment cost of Rmb490m.
- The second contract, worth Rmb53m contract, is to supply heat exchangers and coolers for Zhejiang Petrochemical's refinery and chemical integration project.

*TEE Land
- Entered six call options to buy 2,236.1 sqm of freehold land at Seraya Crescent for $25.7m.
- The group plans to build a block of residential apartments, with the deal expected to complete by Jan '18.
- Last traded at 0.53x P/B.

*Spackman Entertainment
- Newly acquired unit Frame Pictures has secured a 320m won (US$0.28m) contract to supply camera systems and equipment for Netflix's first Korean original drama series, Love Alarm.
- According to its CEO, Frame Pictures has a strong pipeline of projects for 2H17.
- Trades at 9x forward P/E.

*The Trendlines Group
- Signed MOU with China-based Haier Group to explore ways for collaboration in developing new technologies, solutions and products, deal flow, and investments.
- This is aimed at supporting Trendlines' portfolio companies in China, and Haier's entrepreneurs in Israel.
- At end-2016, Haier has 1,333 venture capital investments totalling US$1.8b.

*Soilbuild REIT
- Called upon an insurance guarantee of $5.1m from its tenant, NK Ingredients, for rental arrears amounting to $3.4m.
- The remaining $1.7m of the insurance guarantee to be claimed is equivalent to four months of rent.
- Assuming the lease was terminated on 1 Jan '17, pro forma 1H17 DPU would contract 10.6% to 2.64¢.

*IPC Corp
- Entered non-binding agreement with Xinyuan Real Estate to acquire a 51% stake in Beijing iJourney Technology Development (BiTD) for an indicative US$5.1m.
- Funding for the intended acquisition will be via new IPC shares at $0.40 apiece.
- BiTD is an artificial intelligence business that focuses on R&D and marketing of robots which serve the needs of families.
- The group also entered a separate non-binding agreement for the proposed disposal of Grand nest HOTEL zhuhai to Xinyuan for Rmb200m.

Monday, September 18, 2017

SG Maket (18 Sep 17)

- Investors are likely to switch focus to the 2-day FOMC meeting starting tomorrow for a gauge of US interest rate path.
- Technically, the STI has breached its 3,220 support and looks to test the next level at 3,190. Overhead resistance remains at 3,275.

- Singapore non-oil exports jumped 17% in Aug (Jul: +8.5%), expanding for the fourth straight month and exceeding the 11.8% growth estimate.
- Electronics shipments surged 21.7% (Jul: +15.3%), boosted by ICs (+36.8%), while non-electronic exports (+15%) was lifted by petrochemicals (+31.9%).
- Top five markets were China (+43.2%), EU (+23%), HK (+41.9%), US (+3.9%) and Malaysia (+12.4%).

*Low Keng Huat
- 2QFY17 net profit plummeted to $0.5m (2QFY16: $43.1m) in absence of $48.4m gain from sale of Duxton Hotel Saigon last year.
- Revenue jumped 59% to $13.6m on increased development sales, but partly offset by lower hotel bookings.
- Gross margin contracted 7.1ppt to 15% on a shift in sales mix.
- Bottom line was buttressed by a turnaround in JV contributions to $0.8m (2QFY16: $0.9m loss), mainly due to sale of office units at AXA Tower.

- Recorded higher group passenger load factor of 80.9% (+1.2ppt) in Aug, as traffic (+5.1%) outpaced capacity growth (+3.5%).
- Cargo load factor also crept 2.9ppt higher to 63.4%.
- Parent load factor was supported by improvement across routes to Americas (+1.1ppt), Europe (+3.1ppt), and East Asia (+1.6ppt), but South West Pacific (-4.6ppt), West Asia and Africa (-0.2ppt) deteriorated.
- Load factors also improved at SilkAir (+4.8ppt to 75.8%) and Scoot (+3.6ppt to 84.8%).
- Trades at 25.5x forward P/E and 0.9x P/B.

*Mandarin Oriental
- Confirmed it has received proposals from potential buyers for its 848-room The Excelsior in Hong Kong, touted to be ~HK$30b, or 36% above the hotel group's current market cap.
- This implies that its other 29 hotels and 8 service residences could come for free.
- At US$2.56, counter trades at a 17% discount to its adjusted NAV/share of US$3.10 but above book value of US$0.93.

*SIIC Environment
- 60% owned Ranhill Water Hong Kong was awarded the Hefei Circular Economy Demonstration Park Water Treatment Plant Transformation project.
- The project has a design capacity of 30,000 tpd and a concessionary period of 19 years.
- Tariff is set at Rmb6.43/ton for the first six months from the commencement of operations and will be reviewed going forward.
- Trading at 12.8x forward P/E.

*Lian Beng
- Secured a $162m contract for the proposed development of residential project Martin Modern.
- The contract is expected to commence this month and be completed within 32 months.
- This lifted its order book to $699m.
- Last traded at 5.8x trailing P/E and 0.53x P/B.

- 50% owned RH Guillemard is acquiring two freehold sites at 12 & 14 Guillemard Lane for $22.5m.
- The sites have a total land area of 12,138 sf with plot ratio of 2.8, and zoned for residential development.
- Last traded at 15.5x trailing P/E and 1.26x P/B.

*Heatec Jietong
- Secured three new contracts worth a total of $4m for its heat exchanger business.
- The contracts are expected to contribute positively to FY17 results.

- Lost bid to operate the upcoming Thomson East Coast Line from 2019 to 2028 to SMRT.
- 74.6% owned SBS Transit currently runs the North-East, Downtown lines and Sengkang-Ponggol LRT, while its bigger rival operates the older North-South, East-West and Circle lines as well as Bukit Panjang LRT.
- This award will relegate SBS Transit to a minor rail player with 20% market share.
- Separately, media reports that 2,000 taxi drivers, representing 5.4% of its drivers, have expressed interest in joining private car operator Grab.
- To retain its drivers, CDG has offered rental rebates of $3,600 over six months but this is much lower than Grab's montly rebates of $1,500-1,688 monthly over a similar period.
- Maybank KE last had a Hold with TP of $2.25.

*Nam Cheong
- Disposing a non-core freehold property at 146B Paya Lebar Road with gfa of 545 sqm for $4.5m.
- Counter remains suspended since 21 Jul '17.

*GKE Corp
- Updated that discussions between the potential investor and substantial shareholders on a possible deal are still on-going.
- The group has not received any formal proposal at this point and will provide more updates upon material developments.

Friday, September 15, 2017

SG Market (15 Sep 17)

- Investors may face more market jitters after North Korea fired another missile over Japan, further ratcheting up geopolitical tensions and sending the greenback lower against safe haven assets.
- Technically, the STI is sitting right on the 3,220, support. If this is broken, the next level would be 3,190. Overhead resistance remains at 3,275.

- Owners of 660-unit Pine Grove in Holland Road area are planning to launch Singapore's largest enbloc sale with an asking price of $1.65b.
- If it succeeds, it will beat the previous record of $1.34b set by the 618-unit Farrer Court's collective sale back in 2007.
- The 893,227 sf former HUDC estate has a 2.1 plot ratio (existing: 1.56) and can accommodate up to 2,000 new homes.
- So far ths year, there has been nine collective sales worth $3.5b with another six deals totalling $2.7b put up for tender.

*Keppel Corp
- Confirmed media reports that it is looking to list a US commercial REIT on SGX, with an initial portfolio of 11 office assets injected by a fund managed by KBS Capital Advisors.
- Listing applications have been submitted and are currently under review and details and terms of the IPO are still being finalszed.
- Trading at 13.8x forward P/E.

*Mermaid Maritime
- Awarded a long-term cable survey contract in the Middle East worth US$7m.
- The contract will commence in 3Q17 and last for 21 months.
- Last traded at 11.6x forward P/E and 0.38x P/B.

- Agtech-portfolio company EdenShield raised US$2m from strategic and financial investors.
- Funds raised will be used to accelerate sales and expand farming operations.

*HLH Group
- Terminated the proposed issue of $16m 5% convertible bonds due 2020 to Bridge Roots Capital, due to the non-performance of certain conditions.
- The group is considering the disposal of investment properties and other financing options to support its property development division.

*Keppel T&T
- Invested US$10m for a 24.1% stake in a US-based start-up that is engaged in developing water-cooled data centres.
- Trades at 15.8x forward P/E and 1.1x P/B.

*Silverlake Axis
- Disclosed intention to sell up to 19.2m shares in 9.25% owned Global InfoTech within a six-month period from 13 Oct.
- This is to comply with Chinese securities regulation that substantial shareholders of publicly listed companies state their intentions regarding disposal of shares,
- Trades at 19.6x forward P/E.

*Tuan Sing
- Received regulatory approval for the asset enhancement initiative of Hyatt Centre and development of one of two vacant land plots in Perth, Australia.
- The 2.5-ha site comprises the 367-room Hyatt Regency hotel, the adjoining office/retail Hyatt Centre and two vacant plots.
- The AEI will offer 20,000 sqm of retail space upon completion in 2019.
- Last traded at 16.4x trailing P/E and 0.45x P/B.

- Secured a contract with Colomno Dockyard for the design of a cable lay vessel for Kokusai Cable Ship Co in Japan for an undisclosed sum.
- Construction will be done at Vard's Colombo Dockyard in Sri Lanka with expected delivery in 2019.
- Trading at 0.75x P/B.

*KTL Global
- Proposed allotment and issue of 26.1m new shares (10.8% of share capital) to Executive Chairman and controlling shareholder, Tan Tock Han, at 3.825¢ each.
- The new share subscription is to set off a $1m debt owed by the company to Tan.

*Global Yellow Pages
- Acquiring a 21.85-ha vacant plot of land in Papakura, New Zealand for NZ$38m.
- It intends to develop the land and subdivide it for sale as well as explore developing part of the land into residential and commercial units.

- Signed a three-year agreement to use Vinculum's Vin eRetail for multi-channel retailing.
- The platform will enable it to tap on a global network of merchants, brands, suppliers and marketplaces.

*China Kangda
- Entered into a framework agreement with undisclosed vendors to acquire a target company that is engaged in retail pharmaceutical business and owns pharmacies in Qingdao, China for about Rmb30m.

Thursday, September 14, 2017

SG Market (14 Sep 17)

- Market is consolidating within a narrow trading range but oil-linked plays could see some rotational interest after an IEA report showed global oil market could be returning to balance with inventories nearing a five-year average.
- Technically, the immediate support for the STI remains at 3,220, with overhead resistance at 3,275.

- Maybank KE is initiating coverage on Singapore telcos with a Negative view, putting a Sell on Starhub (TP: $2.17) and M1 (TP: $1.59), and a Hold on SingTel (TP: $3.83).
- The house believes that the sector has not fully priced in the impending entry of new competition into the market.
- Its baseline assumption of competition and new smartphone launches leading to higher retention costs, partly through recontracting, and modest ARPU pressure results in soft FY18/FY19 core profit expectations.

*Vibrant Group
- 1QFY7/18 net profit soared to $122.6m (1QFY17: $0.4m), mainly lifted by $123.9m of negative goodwill arising from the acquisition Blackgold Int'l in Jul '17.
- Revenue surged 89% to $86.8m following the acquisition, but gross margin was compressed to 19.6% (-13.2ppt) as Blackgold commanded thinner margin of 6.3%.
- Bottom line was eroded by higher other expense of $6.5m (+236%) due to unfavourable FX movements.
- NAV/share at $0.7728.

- Defaulting on the redemption and upcoming coupon payment for its Rmb450m 7.75% notes, part of its $1b multicurrency debt programme.
- Trading in the stock is currently suspended.

*Mapletree Logistics Trust
- Proposed a non-renounceable 10-for-1 preferential offering at $1.145 apiece and private placement at $1.175 each to raise $640m to part-finance the acquisition of Mapletree Logistics Hub Tsing Yi in Hong Kong and repay debt.
- Last traded at 1QFY18 annualised yield of 6.3%.

- Invested US$150m in animal feedmills and poultry farms in Nigeria to boost its agribusiness in Africa.
- These include bird and fish feedmills to support annual production of 8b eggs and 100m kg of poultry and a hatchery to produce 1.6m day-old chicks per week.
- Last traded at 14.8x forward P/E.

*OLS Enterprise
- Acquiring BSDCN, an investment holding company, for $6m or 4.18x P/B, to be paid in two tranches.
- BSDCN holds a 9.98% interest in Korean-based Pine Asia Asset Management, which has AUM of US$3.5b and an ascribed valuation of US$44.3m.
- The deal its part of its strategic expansion into asset management, following the 51% stake acquisition of Advance Capital Partners Asset Management.
- Post acquisition pro forma FY3/17 NTA/share will fall to -0.12¢ from 0.13¢, while loss per share will widen to 0.117¢ from 0.113¢.

Wednesday, September 13, 2017

SG Market (13 Sep 17)

- The market could creep higher on improving sentiment in Asia as fears over North Korea and US hurricanes ebbed, and positive overspill from Wall Street after Treasury Sec Steven Mnuchin hinted of a tax overhaul by the end of the year.
- Technology plays are likely to stay in focus with the launch of iPhone X.
- Technically, immediate support for the STI lies at 3,220, with overhead resistance at 3,275.

- Jul retail sales nudged up 1.8% (est: 2.1%, prior: 1.9%) in Jun as higher spending at petrol stations, medical goods and department stores was eroded by weakness in F&B and furniture/household equipment.

*Keppel DC REIT
- Acquiring a data centre in Dublin, Ireland, for €66.0m.
- The 999-year leasehold property has 25,200 sf of space and commenced operations in 2013.
- Post-deal, pro forma FY16 DPU is expected to rise 6% to 6.51¢, translating to 5% yield.

- Proposed spin-off of its Australian pork business and Australian properties (grain storage facility, feedmill, warehouse) on ASX.
- It intends to retain a controlling interest in the Australian Listco, which generated revenue of $398m and net profit of $36.7m in 2016, and accounted for 17% of Australia's pork production.
- In connection to the listing, the group expects to receive A$52m repayment of unsecured loans extended to the Australian Listco.
- Trades at 7x trailing P/E.

*Aspen Group
- JV partner and IKEA franchisee Ikano has commenced construction of the 4th Malaysian IKEA store in Aspen Vision City, Penang.
- The IKEA store will be the anchor tenant for the group's 245-acre mixed development Aspen Vision City, with a 1m sf regional integrated shopping centre.
- Ikano is expected to invest RM600m to develop the 433,000 sf IKEA store, slated to open in 1Q19.

- Secured a Rmb276m rail engineering contract for the second phase of the Beijing Metro's Changing Line.
- The contract is scheduled for completion by 31 Dec '20.
- This brings its order book to about Rmb2.8b.
- It is also in the midst of evaluating a potential consultancy contract for a metro rail project in Bangladesh.

*United Engineers
- Market watchers believe that the Yanlord-led consortium cash offer of $2.60 apiece could lapse after the second extension of its offer to 19 Sep from 12 Sep.
- Consortium will have to attain a remaining 15.2% stake in the company to cross the 50% threshold for the offer to become unconditional.
- Notably, Oxley and its chairman Ching Chiat Kwong have accumulated a 14.86% stake at prices between $2.67 and $2.74.

*SUTL Enterprise
- Signed a MOU with Hainan Cruise & Yacht Association to be its strategic partner in the development and expansion of Hainan's yachting, cruising and maritime industry.
- The group will see provide advisory services in marina development and management to improve the hardware and software on Hainan Island, including hosting hosting international yachting events and regattas at the island.
- It will also assist in establishing the framework for training local personnel with the relevant skillsets and service aptitude.
- Counter trades at 16.9x forward P/E.

*Heeton/KSH/Ryobi Kiso
- 50:25:25 JV acquired the Dry Bar, an iconic entertainment venue in Manchester, UK.
- The consortium intends to convert the upper floors of the 4-storey terraced buildingwith gfa of 20,713 sf, into a hotel which will be managed by Heeton's hospitality division.
- No financial details were disclosed.

*Asia-Pacific Strategic Investments
- Proposed partial-underwritten 2-for-1 rights issue at 0.3¢ each.
- Shareholders who subscribe for two rights share will be issued a warrant with exercise price of 0.3¢.
- Maximum subscription proceeds of $42.7m is intended to fund the group's proposed new business into real estate development.