Friday, January 19, 2018

SG Market (19 Jan 18)

MARKET OVERVIEW
- The market could pull back further on profit-taking as sentiment turned wary after the STI index touched a new 10-year high in yesterday's session.
- Investors will look towards a slew of corporate results from REITs and Keppel group of companies next week before taking further bets.
- Technically, the STI exhibited a bearish engulfing pattern yesterday, suggesting that a short term correction may be underway. Downside support lies at 3,470 with topside resistance at 3,560.

CORPORATE RESULTS
*Cache Logistics Trust
- 4Q17 DPU slid 9.8% y/y but was up 3.6% q/q to 1.597¢ on a post-rights unit base (+19%). This brought FY17 DPU to 6.583¢ (-10.9%), in line with estimates.
- For the quarter, revenue and NPI rose to $29.6m (+8.5%) and $23.5m (+10.2%), respectively, lifted by the rental top-up for 51 Alps Ave following settlement of the legal suit in Oct '17, as well as higher contribution from the Australian portfolio.
- Portfolio occupancy slipped 0.6ppt q/q to 96.6%, with WALE of 3.4 years.
- Aggregate leverage fell 7.3ppt q/q to 36.3%, while average debt cost of 3.56% (+0.1% q/q) and tenor of 2 years held steady.
- Trades at annualised 4Q yield of 7.3% and 1.2x P/B.
- MKE has a Hold with TP of $0.90.

*Oxley
- 2QFY18 net profit slumped 45% to $68m, dragged by lower recognition of development sales.
- This brought 1HFY18 earnings to $116.8m (-11%), making up 66% of the street's sole full year forecast.
- For the quarter, revenue of $406.1m (-33%) was derived from ongoing development of Royal Wharf in London, as well as The Rise @ Oxley-Residences in Singapore, rental income from investment properties and contributions from hotel operations.
- Gross margin shrank to 17% from 33.3% in 2Q16 due to the mismatch between sales recognition and costs incurred.
- Bottom line was shored by a turnaround in associate/JV profit of $60.6m (2QFY17: $4.5m loss).
- Total unbilled contract value amounted to $1.78b, comprising mainly of projects overseas (92%.
- Raised interim DPS to 0.72¢ (2QFY17: 0.5¢) and proposed a 1-for-5 bonus share issue.
- Trades at 20% discount to street RNAV/share of $0.84.

POSITIVE NEWS
*CapitaLand
- Signed MOU with the district government of Wuchang in China, for a joint development of a prime site in the city.
- The potential scale of the integrated development is expected to surpass all its existing properties in central China and will deepen its presence in core city clusters in the mainland.
- MKE has a Hold with TP of $3.75.

*SATS
- 47.1%-owned HK JVCo, Pan Asia Pacific Aviation Services, is issuing new shares constituting a 15% stake to Hong Kong Airlines for HK$45.2-HK$55.2m ($7.7m-$9.4m).
- Upon completion, SATS' stake will be pared to 40%.
- Hong Kong Airlines is expected to help strengthen the JVCo's growth path with its fleet of 35 aircraft.

*Cache Logistics Trust
- Divesting Hi-Speed Logistics Centre at 40 Alps Avenue for $73.8m, 7% above market valuation.
- The 309,000 sf gfa property is multi-tenanted with occupancy of 74% and has a remaining land lease of 47.6 years.
- The sale will yield a gain of $2.3m but is expected to shave off pro forma FY17 DPU by 0.8% to 6.683¢.
- Proceeds will be used to reduce debt and reinvest in better performing assets.

*BreadTalk
- Assigned a master franchise to Som Datt Group (SDG) to establish the BreadTalk bakery chain in Delhi and National Capital Region in India.
- SDG is an Indian infrastructure and construction conglomerate.
- The flagship store in Delhi is expected to open in 3Q18.
- Last traded at 30.7x forward P/E.

*Sunpower
- Secured a supply contract worth Rmb40.4m from Xinjiang Tianye Hyuihe New Materials to provide hydrogenation reactors for a syngas-to-ethylene glycol project.
- The supply contract is expected to contribute to FY18 results on product delivery.
- Trades at 6.8x trailing P/E.

*Katrina Group
- Intends to open two new outlets at Marina One (So Pho) and West Mall (Streats) by the end-Jan.
- Also signed letters of offer to open two more outlets in Jewel Changi Airport (So Pho) and Tampines One (Streats).
- The outlet expansion builds on three previously opened restaurants in Singapore and one in Shanghai, China.

*Rex International
- 87.84%-owned Lime Petroleum AS (LPA) has been awarded a new offshore E&P licence (PL818B) in Norway.
- It is an extension of its existing licence (PL818) and both are held by operator Aker BP (40%), LPA (30%) and Statoil (30%).
- The two North Sea licenses have exploration potential, with principal prospect Orkja area between them.
- PL818B is also near Johan Sverdrup, one of the five largest oil fields on Norwegian continental shelf and adjacent to producing fields.
- Drilling decisions is expected in summer 2018 with possible drilling to commence in 2019.

POSITIVE NEWS
*Alliance Mineral
- Substantial shareholder Living Waters Mining Australia (LWMA), owned by CEO Tjandra Pramoko and his wife, has agreed to sell 19m shares (3.42% stake) to a private investor.
- Post-sale, LWMA will hold 67.1m shares or 12.08% stake, just under Burwill (13.47%).
- The group updated that LWMA has fully repaid all debts owed to Jonathan Lim and Grande Pacific, and the injunction order on 46.1m frozen shares has been discharged.

NEUTRAL NEWS
*Venture Corp
- Acquiring a freehold property on 9.64 acres of land at 481 Cottonwood Drive, US, for US$29.37m.
- The industrial building has a built-up area of ~182,405 sf, which will be refurbished as the group's cluster of excellence, to develop an ecosystem that can foster innovation and collaboration with its business partners.
- The deal is expected to complete by 9 Feb '18.
- Trades at 20.1x forward P/E.

*Full Apex
- Plans to expand into upstream industries through its US$3b investment in a petrochemical & chemical fibre integrated project in the Jazan Economic City, Saudi Arabia.
- The initial stage of the project, costing US$1.04b, will produce a PET upstream product, purified terephthalic acid as well as PET.
- Group is currently considering various financing methods for the project including a loan from a Saudi development fund, as well as strategic partners.
- Expects to commence construction in 2018 with production in 2020.

*Golden Energy and Resources
- 70%-owned Indo-listed PT Golden Energy Mines (GEMS) recorded 5.5mt coal output in 4Q17, bringing full-year output of 15.6mt to 8.3% above its target.
- However, trading in GEMS may be suspended before Feb '18 as its free float is below the regulatory requirement.
- The group is in the midst of exploring opportunities to meet the requirement.

*FSL Trust
- Sold its older 1,221 TEU containership vessel FSL Busan for US$6.2m.
- Net proceeds will be used to repay its outstanding loan, reducing its debt under syndicated loan facility to US$132m.
- Post disposal, the group will record a disposal gain of US$0.75m in 1Q18.

Thursday, January 18, 2018

SG Market (18 Jan 18)

MARKET OVERVIEW
- The market is likely to to be swept up by bullish sentiment after Wall Street continued to break new records with the rally sustained by a confluence of positive factors.
- Technically, STI could test its upside resistance is at 3,550, while downside support remains at 3,470.

CORPORATE RESULTS
*Soilbuild REIT
- 4Q17 DPU fell 11.9% to 1.383¢, bringing FY17 DPU of 5.712¢ (-6.2%) in line with estimates.
- For the quarter, revenue declined 4.3% to $20.7m due to lower contribution from 72 Loyang Way, but partially mitigated by higher takings from NK Ingredients, KTL, Solaris and West Park BizCentral.
- NPI slid 6% to $17.6m on higher property expenses incurred at 72 Loyang Way.
- Completed 120,000 sf of renewals and secured 90,000 sf of new leases in 4Q17 despite soft leasing environment but suffered negative rental reversions of 15.7% for new and renewal leases.
- Occupancy rate weakened to 92.7% (-1.4ppt), while aggregate leverage stayed at 40.6% (3Q17: 37.9%).
- Trades at 8.1% FY17 yield and 1.1x P/B.

*First REIT
- 4Q17 DPU inched up 0.9% to 2.15¢, bringing FY17 distribution to 8.57¢ (+1.2%), meeting estimates.
- Gross revenue of $28.6m (+5.8%) and NPI of $28m (+4.9%) was lifted by full contribution from three recently acquired hospitals in Buton, Yogjakarta and Labuan Bajo, as well as from existing properties.
- Aggregate leverage stood at 33.6% (+1ppt q/q) with interest cover of 5.5x.
- Trades at annualised 4Q17 yield of 6.1% and 1.38x P/B.

POSITIVE NEWS
*ST Engineering
- Aerospace unit clinched new contracts worth $510m in 4Q17 (3Q17: $530m).
- New contracts involve services ranging from airframe maintenance and landing gears repair to pilot training.
- This brought FY17 aerospace orders to $2.8b (FY16: $2.57b).
- Trading at 21.2x forward P/E and 4.5% dividend yield.

*UMS/ JEP
- Bought another 22% stake in SGX-listed precision machining firm JEP Holdings after earlier purchase of 7.5% stake to bring its overall shareholding to 29.5% for $28.2m or 6.55¢ each.
- The move is aimed at diversifying beyond semiconductors into the aerospace industry.
- UMS trades at 11.7x forward P/E and 4.9% yield.

*Vibropower
- Updated that its suspended coal-mine methane power plant in Shanxi, China, has resumed its operations to supply electricity to the power grid in Jan '18.
- Trades at 8.7x trailing P/E.

*Creative
- Group's Super X-Fi technology was awarded the "Best of CES 2018 Award" at the world's largest consumer electronics show.
- Many audiophiles were blown away by the game-changing product, which brings audio from a high-end multi-speaker system to a headphone.

NEGATIVE NEWS
*Vashion Group
- Group's HK subsidiary received three arbitration orders pertaining to guarantee agreements it allegedly entered with two private individuals.
- The guarantees were made, unknown to management, on Rmb25m worth of loans.

*InnoPac
- Disposing its entire 35% stake in Malaysia-based Trackplus for $1m, or 35% below book value as at 31 Dec '16.
- Trackplus engages in commercial and residential property development for a 7,863 sqm land plot in Shah Alam, Selangor.
- Post disposal, FY16 pro forma loss per share is expected to widen 12.5% to 0.09¢.

NEUTRAL NEWS
*OCBC
- Acquired an additional 18.51% interest in Maxwealth Fund Management Company for Rmb61.5m.
- The deal was priced at book value and lifted OCBC's stake from 10% to 28.51%.
- The remaining 71.49% interest is held by Bank of Ningbo, which is also an associate of OCBC.
- Trades at 1.48x P/B.

*Food Empire
- Spending US$41.3m to expand its coffee manufacturing facility in India.
- Funds comprise internal resources (27%) and debt (73%).

*Soo Kee
- Terminated the MOU to set up a 55:45 JV with major Chinese gold jewellery manufacturer and distributor Global Crown, to make inroads into the HK and China market.
- Instead, Soo Kee is acquiring 100% interest in Diamond Avenue, a dormant entity from Global Crown, for HK$0.105m, representing 0.08x P/B.
- Group believes the new acquisition will still help to pave way into the growing bridal jewellery market in China.
- Last traded at 13.3x trailing P/E.

Wednesday, January 17, 2018

SG Market (17 Jan 18)

MARKET OVERVIEW
- Some profit-taking activity could occur after Wall Street indices retreated from a record intra-day high, while the STI has hit its immediate resistance level at 3,550.
- Downside support for STI remains at 3,470, while the next upside resistance is at 3,570.

CORPORATE RESULTS
*ESR-REIT (former Cambridge REIT)
- 4Q17 DPU slumped 6.7% to 0.929¢, partially dragged by an enlarged unitbase.
- This took FY17 DPU to 3.853¢ (-7.7%), in line with estimates.
- For the quarter, gross revenue slipped 2.2% to $27.2m amid income loss from a lease expiry at 3 Pioneer Sector 3 as well as the impact from two divested properties.
- NPI, however, inched 1.2% higher to $19.9m on reduced property expenses.
- Portfolio occupancy improved 1.9ppt q/q to 93%, while aggregate leverage rose to 39.6% (+2.9ppt q/q).
- Offers 6.7% yield and trades at 0.97x P/B.

POSITIVE NEWS
*Mapletree Greater China Commercial Trust
- Expanded its investment mandate to include Japan, beyond its current region in Greater China.
- The expansion is aimed at improving unitholder distributions and better diversify its portfolio returns.
- Offers an indicative yield of 5.9% and trades at 1x P/B.

*Sysma
- Awarded a $5m contract to build a house for the group's Deputy CEO and an immediate family member of the controlling shareholder.
- The project shall be completed 16 months following issuance of the BCA approval.
- Trades at 5.4x trailing P/E and 0.88x P/B.

*Hyflux
- SEPCOIII Electric was ordered to pay Hyflux US$2.7m in interest and US$4.2m in arbitration costs following settlement of a dispute.
- To recap, the dispute arose out of a contract involving EPC work for a desalination facility in Salalah, Oman.
- This brought total payment to US$23m, of which US$16.1m had been paid under the interim award in Sep '17.

NEGATIVE NEWS
*First Ship lease Trust
- Disposed a 20,938 DWT chemical tanker, FSL Tokyo, for US$13.8m.
- An impairment charge of US$9m in 4Q17 will be recorded post-disposal.
- Proceeds from the sale will be used to reduce outstanding debt.

*LCT Holdings
- Guided for a 2Q18 loss due to increased maintenance cost for an investment property in Xi'an, China.
- Results slated to be released on or before 14 Feb.

NEUTRAL NEWS
*UMS/ JEP
- Acquired 109m shares (7.48% share capital) in JEP via the market at $5.7m, or 5.23¢ apiece.
- Separately, JEP saw four married trades totalling 320m shares at 7¢ each.

*Top Global
- Aborting its proposed acquisition of the property at 273 & 275 South Bridge Road, as the proposed change of use of the 2nd to 4th floor into a hotel or hostel could not be fulfilled.
- As such, the group has received a deposit refund of $0.3m.

*First REIT
- Secured up to $400m in syndicated secured financing facilities from OCBC.
- The facilities consist of 3/4/5-year SGD term loan facilities and a 3-year dual currency revolving credit facility in SGD or USD, for up to $100m each.
- Loans facilities will be used to partially refinance outstanding bank loans, fund property investments and working capital.
- Offers indicative yield of 6.1% and trades at 1.4x P/B.

Tuesday, January 16, 2018

SG Market (16 Jan 18)

MARKET OVERVIEW
- The broader market may enter a consolidation phase after a heady start to the year as investors await 4Q17 results season kicking off with REITs this week.
- Technically, underlying support for the STI lies at 3,470 with topside resistance at 3,550.

SECTOR WATCH
*Property
- Developers sold 10,700 private homes in 2017 (+23%), its highest since 2013.
- MKE sees more upside in 2018 as households displaced by enbloc sales seek out replacement homes.
- While recent uptick in mortgage rates may be a slight dampener, affordability remains healthy.
- Potential catalysts would come from new launches and price hikes.
- Positive on developer stocks as Singapore's property market continues its cyclical upturn.
- Best large cap picks - UOL (TP: $9.85), City Dev (TP: $13.80); preferred mid-caps - GuocoLand (TP: $2.95), Bukit Sembawang (TP: $8.25).

POSITIVE NEWS
*SIA
- Dec group passenger load factor climbed to 84.7% (+1.8ppt) as traffic growth (+5.1%) outpaced capacity expansion (+2.9%).
- Cargo load factor also improved 1.9ppt to 66.8% as increase in traffic (+4.3%) outstripped capacity (+1.5%).
- Subsidiary carriers SilkAir (+1.1ppt to 76.6%) and Scoot (+1ppt to 88.7%) notched higher load factors.
- Parent airline load factor rose 2ppt to 84.4% across routes to East Asia (+0.2ppt), Americas (+1.6ppt), Europe (+3.7ppt), South West Pacific (+3.3ppt), West Asia and Africa (+0.3ppt).
- Last traded at 0.97x P/B.

*Starhub/SPH
- Extended their strategic partnership for another two years, and will explore new collaboration in healthcare, retail and education.
- Both companies will continue to work alongside on advertising sales, content creation and distribution, as well as data analytics and marketing.
- Further, they will jointly create services in sectors other than the media industry.
- Under the renewed agreement, both parties will explore working together on the Internet of Things, including connected buildings and smart retail.

*Frasers Centrepoint
- Secured over 70% pre-commitments for 663,000 sf office building, Frasers Tower in CBD.
- Two anchor tenants, Microsoft Singapore and French O&G major Total Oil, will occupy a combined 232,000 sf of space. Other tenants include Sumitomo, Fonterra, Pcific Life and serviced office provider The Executive Centre.
- Additionally, close to 50% of its retail podium has also been successfully leased.
- The development is slated to be completed in 2Q18.

*AIMS AMP REIT
- Divesting its property at 10 Soon Lee Road for $8.2m, or 28% above its last valuation.
- The property has NLA of 7,224.2 sqm with land lease tenure of less than 24 years, and contributes 0.8% of FY17's gross rental income.
- Post-divestment and recent private placement, pro-forma FY17 aggregate leverage will fall 4ppt to 33.3%.
- Trades at indicative yield of 5.6% and P/B of 1.0x.

NEUTRAL NEWS
*iFAST
- Raised its stake in Pecuniam from 21.42% to 24.98% following a rights issue for $0.8m.
- Pecuniam has an effective 74.99% stake in iFAST Financial India, which is engaged in the distribution of investment products including mutual funds in India.
- Net proceeds for will be used for working capital and business growth.
- Trades at 27.9x forward P/E.

*HG Metal
- Renewed lease for the amalgamated site at 28 Jalan Buroh Road.
- Granted a three-year development period by JTC, starting from 2 Jan, to further invest in the construction and installation of plant and machinery at the property.
- Upon fulfilment of capex spending, JTC will grant renewal for a further 20-year term commencing from Aug '19.
- Trades at 0.47x P/B.

*Silverlake
- Sold 2m shares in Global Infotech (GIT) via secondary market on Shenzhen Stock Exchange for Rmb23.6m.
- To recap, the group is selling up to 19m shares in the China-based company to monetise its investment progressively.
- The estimated loss on disposal is Rmb4.1m and net proceeds will be used for working capital purposes, special dividend, reduction of borrowings and other opportunities.
- Trades at 17.2x forward P/E.

Monday, January 15, 2018

SG Market (15 Jan 18)

MARKET OVERVIEW
- The market could push higher, powered by Wall Street's record showing last Fri as well as prospect of rosy global growth. Key data to look out for this week include S'pore's NODX for Dec and China's 4Q GDP.
- Technically, the STI sees support at 3,470 and topside resistance at 3,550.

CORPORATE RESULTS
*SPH
- 1QFY18 operating results met estimates, with net profit of $60.4m (+32%) boosted by divestment gains.
- Revenue of $258.8m (-7%) was weighed by weak core media business (-13.9%) amid falling takings from ads and circulation, although cushioned by property (+1.2%) and other businesses (+48.2%).
- This was mitigated by slightly improved operating margin of 26.2% (+0.8ppt) from lower expenses including newsprint, staff bonuses, depreciation, retrenchment costs, as well as gains from an associate's IPO.
- Bottom line was also helped by lower taxes, helped by prior over-provision.
- Trades at 19.9x forward P/E.

*Lian Beng
- 2QFY18 net profit slumped 43.2% to $3.2m, bringing 1HFY18 earnings lower to $12.2m (-33.7%).
- This came on the back of reduced 1HFY18 revenue of $87.6m (-27%), as increased contribution from investment holdings was offset by the weakness in the construction segment.
- Gross margin contracted 2.2ppt to 22.3% on a shift in sales mix.
- Bottom line was dragged by higher distribution expenses (+74.5%) and finance costs (+70.7%), as well as income from associates/ JVs (-31.6%).
- Construction order book surged to $972m (1QFY18: $661m), providing sales visibility through FY2022.
- Last traded at 8.1x trailing P/E and 0.64x P/B.

*GKE
- 2QFY18 net loss sank deeper to $7.9m (2QFY17: $0.6m loss), mainly hurt by a $6.2m impairment loss of a JV-owned liquefied gas carrier vessel.
- Revenue surged 51.8% to $18.1m on new takings at port operations from recently-acquired TNS Ocean Lines and higher contribution from freight forwarding business and sale of ready-mix concrete.
- Gross margin widened 1.3ppt to 16.3%.
- Loss-making and trades at 0.98x P/B.

POSITIVE NEWS
*Sunpower
- Clinched a Rmb107m contract to provide EPC services for a flare gas recovery system to Zhejiang Petrochemical.
- Work is expected to complete by end FY18.
- Trades at 7.1x trailing P/E.

*800 Super
- Awarded a public waste collection contract worth $193.5m by NEA.
- Work involves the collection of refuse from domestic and trade premises in Pasir Ris-Bedok precinct.
- The contract will take effect from 1 Jul '18 to 31 Oct '25.
- Last traded at 13.8x trailing P/E.

*Hong Leong Asia
- 40.2% owned China Yuchai launched 14 new engines compliant with China's more stringent National VI emission standards.
- The move is in line with its key strategy for the group to create a technological edge and market leadership for commercial vehicle engines in China.
- Last traded at 0.67x P/B.

NEUTRAL NEWS
*RHT Health Trust
- Extended the exclusivity period for talks with controlling unitholder, Fortis Healthcare, in relation to the proposed disposal of its entire asset portfolio, by 60 days.
- The proposed Rs46.5b sale would translate to at least $0.90/unit (post-debt), subject to completion of fund-raising by Fortis and regulatory approval.

*Nordic
- Disposed property at 42 Tech Park Crescent for $3.4m.
- The non-core property sits on a land area of 926.4 sqm.
- Proceeds from the disposal will be used to repay bank borrowings and improve overall cash position.
- Trades at 15.4x trailing P/E.

*Tiong Seng
- Raised its effective stake in Tianjin Zizhulin Guangang Property by 5.5ppts to 69.5% for Rmb38.4m, representing 1.76x P/B.
- Last traded at 7.1x trailing P/E.

*k1 Ventures
- Proposed voluntary liquidation and subsequent delisting, following the disposal of substantially all its assets and property.
- The liquidation will require 75% shareholders' approval at an EGM.

*Olam
- Issued 665,490 new shares in relation to a warrant exercise at US$1.09 each.
- 29.1m outstanding warrants remains, which expires on 29 Jan 2018.

Friday, January 12, 2018

SG Market (12 Jan 18)

MARKET OVERVIEW
- Tech names and oil-related counters could resume their upward momentum following yet another record run on Wall Street as crude prices surge to 3-year highs.
- Any profit-taking would be cushioned by optimism over the global economic recovery.
- Technically, the STI is likely to enter a consolidation phase with near-term support at 3,470 and topside resistance at 3,550.

SECTOR WATCH
*Construction
- BCA is projecting total value of construction contracts to pick up to $26b-31b this year after dipping to $24.5b in 2017, 13% short of forecast.
- 60% or $16b-19b will come from public projects (2017: $15.5b) and the rest will be from the private sector, fuelled by en bloc projects.
- Still, many construction firms expect the sector to remain lacklustre and would take time for job volume and demand to recover to sustainable levels.

CORPORATE RESULT
*k1 Ventures
- Fell into a 2QFY18 net loss of $3.1m (2QFY17: $6.6m profit) following the disposal of Guggenheim in Nov '17.
- Revenue slumped 56.9% to $1.5m on reduced investment income.
- Bottom line was dragged by a negative $5.6m swing into FX loss of $0.5m, but partly shored by a FX translation gain of $1.6m arising from liquidation of subsidiaries.
- NAV/share shrank 51.3% to $0.37.

POSITIVE NEWS
*Tat Hong
- Received a pre-conditional privatisation offer of $0.50/share from THSC Investments, jointly owned by Tat Hong's controlling Ng family (68.8%) and StanChart Private Equity (31.2%).
- THSC has obtained an irrevocable undertaking for 59.74% of the total shares.
- Cash offer values the loss-making crane supplier at 0.64x P/B.

*HRnetGroup
- Buying 51% into REForce (Shanghai) Human Resources Management Consulting at a yet-to-be-disclosed sum.
- Additionally, HRnetGroup will extend a Rmb3m shareholders' loan to REForce for operation and expansion purposes.
- The acquisition will take place in tranches across FY17-19, with the consideration based on a tiered multiple on REForce's future net profit.

*SingHaiyi
- A 50:50 JV with a private vehicle of controlling shareholder Gordon Tang was awarded the tender for residential property Park West for $840.9m.
- The JVCo intends to apply for a lease top-up for the site at a differential premium of $146m.
- Accordingly, the collective sale for the 99-year leasehold estate is priced at $850 psf ppr.

NEUTRAL NEWS
*SGX
- Seeking feedback on whether to retain its quarterly reporting requirement for companies above $75m market cap.
- Currently, 70% of ListCos are above the market cap threshold, and the bourse is suggesting to lift the threshold to the $150m mark.

*AGV
- Entered into a MOU with Myanmar-based construction company Myat Mi Ba (MMB) to incorporate an 80:20 JVCo to provide hot dip galvanising services in Myanmar.
- The agreement includes the option for MMB to acquire 25% stake of JVCo from the group after two years.
- Both parties will attempt to negotiate and execute the agreement by 31 Mar.

*Y Ventures
- Placing out 5m shares (2.4% of enlarged share capital) at $0.24 each to strategic investor R3 Asset Management.
- The placement price translates to a 14.3% discount from the last closing price.
- Net proceed of $1.2m will be used for working capital.
- Both parties also signed a non-binding MOU in which R3 will introduce new retail brand, strategic alliances and possible acquisition targets that synergise with the group's analytics and e-commerce distribution network.

Thursday, January 11, 2018

SG Market (11 Jan 18)

MARKET OVERVIEW
- Investor fervour will likely be tempered today after US stocks retreated for the first time in 2018 over worries that China would halt its US Treasury purchases, driving bond yields sharply higher, and the uncertain future of NAFTA.
- But rising interest rates would widen interest spreads for banks, thus sustaining the rally in bank shares.
- Technically, the STI is overdue for a correction after an impressive start to the year. Near-term support is at 3,470 with topside resistance at 3,550.

CORPORATE RESULTS
*DFI Int'l
- 3QFY18 net profit slumped 84.7% to RM3.3m on a RM17.1m swing to FX loss of RM7.5m due to the stronger ringgit.
- This brought 9MFY18 net profit to RM32.4m (-41%) or 51% of consensus forecast.
- Revenue was almost flat at RM133.5m (+0.4%) on change in sales mix despite some improvement in certain products.
- Declared third interim DPS of 1¢, bringing 9MFY18 payout to 1.85¢ (9MFY17: 2.5¢).
- Trades at 16.5x forward P/E.

POSITIVE NEWS
*OUE Lippo Healthcare
- Placing out 562.5m new shares at $0.14 apiece to Tokyo-listed Itochu Corp, giving it a 25.3% stake.
- Intends to leverage on Itochu's brand name and strategic partnerships as well as business network and investments in healthcare-related businesses.
- Net proceeds of $77.5m will be used for development of its healthcare business and general working capital purposes.
- Trades at 2.2x P/B.

*Sanli Environmental
- Secured $10m worth of contracts from both the public and private sectors, comprising EPC and operations & maintenance works.
- This would bring its order book to $114.3m.
- Trades at trailing P/E of 11.5x.

*LHN
- Obtained the lease to manage its second overseas car park in Tsim Sha Tsui, Kowloon, HK. The 2-year lease for the 30 car park lots will commence from 4 Jan.
- It also secured a contract to license 10 car parks from JTC totalling 4,802 lots in Bedok, Kampong Ubi and Kaki Bukit industrial areas. The 3-year contract commenced from 1 Jan with an option to renew annually for another three years.
- The contracts bring its total car park portfolio to 54 (prior: 43).

NEGATIVE
*Noble
- Reportedly exiting the oil trading business after shuttering its London and Singapore oil trading desks due to heavy losses and debt load of US$3.5b as at Dec '17.
- The closures follow the sale of its larger US oil trading business to Vitol for US$580m.
- Currently trades at 0.3x P/B but balance sheet may be overstated.

*IEV
- Received a letter from Pertamina to terminate the operations cooperation agreement in Pabuaran operation area (KSO) and to disburse US$2.3m of bank guarantees.
- Termination was due to the group's inability to fulfil certain conditions, such as failure to complete a US$18.6m work programme by 11 Dec '17.
- The group intends to exit the Exploration & Production sector due to prolonged low oil prices, and focus on offshore engineering sector.
- Warned of significant FY17 impairment losses on assets related to KSO.
- Separately, it is disposing its corporate HQ at PJX-HM Shah Tower in Malaysia for RM9.2m, and is expected to incur a disposal loss of RM0.66m.
- The property is being divested for cost savings, as it has excess office space beyond the group's needs.
- RM6.7m from proceeds will be used to repay debt for interest savings, while remaining will be to strengthen working capital.

NEUTRAL NEWS
*Yangzijiang Shipbuilding
- Established a JVCo with several strategic partners to lease and charter vessels.
- It will own a 49.45% stake in the JVCo with the remaining held by its partners.

*Libra
- Entered supplement agreement with vendors in relation to its acquisition of YC Capital Consolidated.
- Agreement includes the revision of acquisition price to $12m from $15m via an issuance of the new shares at $0.128 each.
- The group will also pay up to $2m worth of shares if YC Capital's FY18 net profit is at least RM8m.