Thursday, March 23, 2017

SG Market (23 Mar 17)

The market could lose further ground as the US Congress heads for a key healthcare vote that is seen as a proxy to President Trump's ability to keep his big promises to business.

Regional markets opened slightly higher in Tokyo (+0.03%), Seoul (+0.2%), and Sydney (+0.1%).Notably, STI has broken below the lower bound of its 2-month uptrend channel at 3,140, with the next near-term support at 3,090.

Stocks to watch:
*ST Engineering: Awarded a contract by MINDEF for the production and supply of the Next Generation Armoured Fighting Vehicle (AFV) for an undisclosed amount. The AFV will replace the ageing Ultra M113 fleet, which has been in service since early-70s. SAF currently has ~1,000 M113A2s, some of which have been replaced by the Bionix IFV. Delivery of the new AFVs will begin in 2019. MKE last had a Hold with TP of $3.17.

*YuuZoo: Acquired an exclusive option to buy Cinram Europe, a European logistics and distribution company with five distribution centres totalling 1m sf, from US-based 46 State Street via issue of 7.5m shares ($0.9m based on last closing price). The deal is subject to due diligence and expires on 30 Jun '17. Cinram recorded FY16 revenue and EBITDA of $261m and $7.4m respectively.

*Kingboard Copper: Appointed Religare Capital Markets Corporate Finance to act as the financial adviser for its voluntary unconditional privatisation offer of $0.40 each. The offer circular is expected to be sent out within 14 days from 20 Mar.

*Loyz Energy: Disclosed that it does not have any business and financial dealings with Ezra. However, it highlighted that Ezra's CEO, Lionel Lee, is a substantial shareholder with a 9.9% stake, and is the corporate guarantor for loans totalling US$22.6m.

*AIMS AMP REIT: Issued $50m 3.6% fixed rate notes due 2022.

Wednesday, March 22, 2017

SG Market (22 Mar 17)

The market could extend its pullback after Wall Street suffered its steepest drop this year on waning risk appetite and worries over President Trump's policy execution amid expensive valuations.


Regional markets in Tokyo (-1.6%), Seoul (-0.5%), and Sydney (-1.3%) opened lower.Technically, momentum indicators are exhibiting signs of weakness, and the STI could ease toward the lower bound of its uptrend channel at 3,140.

Stocks to watch:
*Keppel Corp: BlackRock sold 10.9m Keppel shares on 17 Mar at average price of $6.87, paring its deemed interest to 4.63% from 5.23%, thereby ceasing to be a substantial shareholder.

*Triyards: Disclosed that parent Ezra and sister company Emas Chiyoda Subsea, which have both filed for bankruptcy, owes it a combined US$3m in intercompany receivables and payables. Together with Ezra, the group has also guaranteed up to US$38.5m of joint bank facilities, which are liable in the event of a default.

*Libra: Secured contracts of $22.4m, which include the air-conditioning, electrical installation, as well as addition and alteration works.

*Neo Group: Subscribing for 416,327 new shares or 51% of enlarged share capital of Hi-Q Plastic Industries, a privately owned plastic and plastic product manufacturer, for RM1.6m, valuing Hi-Q at 13.2x FY15 trailing P/E.

*Rickmers Maritime: Senior lender HSH Nordbank has given the trust until 15 Apr to present a plan to restructure its debt. Rickmers is trying to restructure its $100m unsecured MTN maturing May ’17 and US$270.8m of secured bank debt. HSH may consider a material forgiveness of the debt if certain preconditions are in place.

*Auric Pacific: Valid acceptances for the privatisation offer at $1.65/share by Stephen Riady and CEO Andy Adhiwana has reached 94.04%. The company will be delisted after the close of the offer on 7 Apr.

*QT Vascular: Secured $10m of capital commitment from GEM Global Yield Fund, which can be drawn down over a 30-month term in exchange for shares. QT can opt for an additional $10m under the same terms within the next six month.

*KS Energy: Extending the maturity date of its $45m 6% convertible bonds due 2016 from 21 Mar ’17 to 21 Jun ’17.

*First Ship Lease Trust: Auditor Moore Stephens has flagged going concern issues in light of the trust’s FY16 net loss of US$31m as well as its current liabilities exceeding its current asset by US$179.4m.

Tuesday, March 21, 2017

SG Market (21 Mar 17)

The market could continue to retrace as Ezra’s Chapter 11 filing, Triyard's trading halt and Nam Cheong financial troubles reignite worries about more bankruptcies in the O&M sector and banks' bad loans.

Regional bourses opened mixed, with Tokyo (-0.6%) and Sydney (-0.2%) trading lower, and Seoul (+0.3%) higher.Technically, the STI is still remains range-bound within its uptrend channel with upside resistance at 3,200 and support at 3,140.

Stocks to watch:
*Keppel Corp: Entered heads of agreement with Borr Drilling, which will make a down-payment of US$275m and take over five jackup rigs totalling US$1.1b currently under construction for Transocean, as well as undertake the remaining instalments. MKE has Sell with TP of $4.57. Separately, the group has named Chris Ong acting CEO of Keppel Offshore to replace Chow Yew Yuen wef Apr 1.

*SIA: May incur a financial provision of $111.8m in FY18 after the European Commission slapped a €776m administrative fine on it and several other carriers for colluding in an air cargo cartel more than 10 years ago. MKE has Hold with TP of $9.70.

*SGX: Given 24 months to improve its recovery processes and systems in the wake of a major trading disruption last year and will contribute $1.5m to co-fund the costs that may be incurred by brokerage firms to implement these measures.

*OCBC: Hong Kong subsidiary Wing Hang has agreed to sell its 33.33% stake in Hong Kong Life Insurance for HK$2.4b, and will book an estimated gain of HK$2.1b, based on the HK Life NAV of HKD793m at end FY16. MKE has Sell with TP of SGD8.05.

*GLP: Acquired the remaining 50% interest in GLP-MC Tianjin Logistics Property Development from JV partner for Rmb35.1m, or 1x P/B. The transaction was funded via internal resources.*Jumbo: Entered into a 51:49 JV with Beijing Hualian Group to open its first JUMBO seafood restaurant in Beijing, China. The restaurant is targeted to be operational by 3Q17 and will be its fourth in China. MKE last had Hold with TP of $0.78.

*EMAS Offshore: Disclosed that it might be negatively impacted by parent Ezra’s Chapter 11 filing. As at 30 Nov, EMAS has US$566m loans owing to banks, of which US$242m/US$193m are fully/jointly guaranteed or secured by Ezra. Aside, EMAS also has US$177m of charter-party agreements that are either fully or jointly guaranteed by Ezra. In turn, EMAS owes US$170m to Ezra, of which US$125m was subject to deferred payment over a period of three years.

*mm2 Asia: Lodged the preliminary offer document for the proposed spin-off and listing of event management company, UnUsUaL Group.

*UnUsUaL: Reported 9M16 net profit of $3.8m (+40.4%) although revenue slipped 28.1% to $16m after SG50 celebrations in 9M15. Earnings were supported by expansion in gross margin to 37.6% (+10.1ppts) as it utilised internal resources for more of its projects instead of outsourcing. Intends to use proceeds from its IPO to expand its operations both locally and regionally as well as expand its access to event and concert venues.

*KSH Holdings: Clinched a $145.7m contract to construct a research building comprising 16 floors and a basement for NUS. The project will lift its order book to over $360m, and is expected to begin in Apr '17, and be completed within two years.

*Perennial Real Estate: Filed appeals against the High Court’s decision to dismiss the winding up application of three associated companies. The associates are Capital Investment Holdings, Capitol Retail Management, and Capital Hotel Management.

*C&G Environmental: Declared a special DPS of $0.103 after it received remaining payments for the sale of its main operating subsidiary C&G Enviromental Protection Thailand to New Sky Energy Thailand in a Rmb500m (received remaining Rmb320.1m) deal, as well as all other entities to Ahead Auto for HK$600m (received remaining HK$344.7m)..

*Civmec: MOU with ASC Shipbuilding to jointly bid for the construction of 12 offshore patrol vessels for the Royal Australian Navy. If tender is successful, a 50:50 JV will be set up.

*Cosco Corp: 51% owned Cosco Shipyard delivered an oil tanker (Babylon) to its Singaporean buyer.

*Sincap: Received a letter for demand claiming the payment of Rmb6.8m from Shangdong Luneng Taishan Mining.

*IEV: Received a patent in China for its self-cleaning apparatus for prevention of marine growth.

Monday, March 20, 2017

SG Market (20 Mar 17)

The market could react negatively to renewed fears of rising US protectionist rhetoric, after G20 finance ministers dropped the decade-long tradition of endorsing free trade at the key summit in Germany over the weekend. Regional markets opened lower in Seoul (-0.4%) and Sydney (-0.3%). Japan is closed for public holiday.Technically, the STI sees downside support within the uptrend channel at 3,140, with resistance at 3,200.

Stocks to watch:
*Banks: Key lenders DBS and OCBC could be weighed by further loan provisions/ write-downs from latest O&G casualties Ezra and Nam Cheong, due to the prolonged slump in the industry. Ezra has filed for US Chapter 11 bankruptcy over the weekend, while auditors of Nam Cheong cast on the group's ability to continue as a going concern.

*M1: Controlling shareholders Axiata Group (28.5%), Keppel T&T (19.2%) and SPH (13.4%) have appointed Morgan Stanley as the financial adviser for a strategic review. Based on a control premium of 15-20%, MKE believes that the market could price M1 at $2.12-$2.22 per share. MKE last had a Sell rating on the counter with TP of $1.85.

*Keppel Corp: Raised its stake in Saigon Centre in Ho Chi Minh City, Vietnam, for $53.5m. The integrated development sits on a two-hectare prime site in CBD and is currently undergoing development works for Phase Two, which is expected for completion in end-2017.

*SATS: Divesting a 51% and 4% stake in SATS HK and Asia Airfreight Terminal (AAT) for HK$76.5m ($13.8m) and HK$100m ($18.1m), respectively, to Hong Kong Airlines (HKA). The new partnership will be able to tap on HKA's large base load to improve utilisation of ramp and cargo services.

*Keppel T&T: Divesting a 10% stake in Asia Airfreight Terminal to Hong Kong Airlines for HK$250m ($45.1m), and expects to recognise a divestment gain of $19m upon completion.

*Ezra: Requested for trading suspension after it filed for reorganization under Chapter 11 of the US bankruptcy code, to facilitate the financial restructuring of the group.

*Kimly: Draws strong support for its IPO of 173.8m new shares at $0.25, with subscription being 8.3x subscribed. Trading for the coffee shop operator will commence today at 9am.

*Auric Pacific: The $1.65/share unconditional offer by Silver Creek Capital has attained valid acceptances of 90.15%. Hence, trading in the stock has been suspended and the closing date for the offer will be extended to 7 Apr, 5.30pm.

*CNMC: Proposed acquisition of its third mining asset in Malaysia for RM2.5m. KelGold Mining has exploration rights for iron ore, gold and/or other minerals in an area of 1,550 hectares in Kelantan till 2019, and is in the midst of renewing its rights in an area of 870 hectares. Upon production, CNMC will provide a tribute payment of 2.5% gross on the sale of gold extracted, on top of the prevailing 10% royalty fee and additional tribute payment of 6% to government body Yayasan Kelantan Darulnaim.

*CWG: Launched a US$20m fund (with a US$24m ceiling) to invest in the group's overseas real estate development projects in Australia and the US. It currently manages eight funds with AUM of US$100m. *Rex: 85.2% owned unit has commenced drilling for new exploration well Karamah#1, located in Block 50 Oman.

*EMAS Offshore: Served charter termination notices for Lewek Toucan and Lewek Pelican, following various events of default and breaches of the charter agreements.

*Regal: MOU with Sarawak-based Twin Revenue to jointly collaborate and venture into development projects, land investments and/or other projects.

Friday, March 17, 2017

M1

(Bloomberg) -- M1 Ltd.’s owners are exploring optionsincluding a sale of Singapore’s smallest mobile operator as thecity state gears up for a new entrant into the wireless market,according to people with knowledge of the matter. Keppel Corp., Axiata Group Bhd. and Singapore PressHoldings Ltd. are working with an adviser to conduct a strategicreview of their combined 61 percent interest in M1, the peoplesaid, asking not to be identified because the discussions areconfidential. The carrier, which offers fixed-line and mobileservices to more than 2 million customers, has a $1.3 billionmarket value. The potential sale of Singapore’s third-largest carriercomes as the city state prepares for the roll-out of a fourthmobile operator with TPG Telecom Ltd. slated to begin wirelessservices in 2018. The regulator has said it wants to introducemore competition in the city state to bring down phone bills andimprove services. Temasek Holdings Pte has studied ways for Keppel, aportfolio company, to divest non-core assets including its stakein M1, as part of a regular review of investments, peoplefamiliar with the matter said in January last year. Executivesat the state investment company had also discussed thepossibility of Keppel paring its stake in office landlord KeppelREIT. Malaysian wireless carrier Axiata has a 29 percent stake inM1, while Keppel has a 19 percent holding and Singapore Pressowns 13 percent, according to data compiled by Bloomberg. Arepresentative for Axiata didn’t immediately respond to an emailseeking comment. Representatives for M1, Keppel and SingaporePress didn’t immediately respond to Bloomberg queries. Plans to sell Singaporean telecom stakes have made littleprogress. Shareholders in the second-largest operator StarhubLtd. were weighing a sale in July, with Qatar’s Ooredoo QSCseeking to sell its indirect stake in the carrier, peoplefamiliar with the matter said at the time. The city state’s current telecom operators includingSingapore Telecommunications Ltd. and StarHub are likely to seeaverage revenue per user decline by as much as 16 percent in thenext five years, according to OCBC. TPG Telecom may gain mobilerevenue market share of about 6 percent by 2021, the researchfirm said Friday.

M1 is now trading at 7.3x EV/Trailing EBITDA, compared to Starhub at 8.15x and Singtel at 15.4x.

SG Market (17 Mar 17)

The market is likely to pare some gains as the oil price rally fizzled out but the STI remains firmly within the uptrend channel bounded between by 3,140 and 3,200.

Regional markets opened mixed in Tokyo (-0.5%), Seoul (+0.1%) and Sydney (+0.3%).Currently, the index is sitting atop the 61.8% fibonacci retracement of the Apr '15 - Jan '16 decline at 3,160.

Stocks to watch:
*Economy: Singapore's non-oil domestic exports jumped 21.5% in Feb, beating the 12.5% estimate and surpassing growth in the preceding months (Jan '17: +8.6%, Dec '16: +9.1%, Nov '16: +15.6%), spurred by increases in both electronic (+17.2%) and non-electronic shipments (+23.3%).\

*Genting HK: Sank into FY16 net loss of US$502.3m from US$2.11b profit a year ago, mainly due to the absence of accounting gain from partial sale and reclassification of ex-associate Norwegian Cruise Lines. While revenue jumped 47.4% to US$1.02bm on full contribution of Crystal Cruises (acquired in May '15) and the launch of Dream Cruises' Genting Dream in Oct '16, expenses surged 57.8% on the consolidation of expenses from the new business and start-up costs arising from shipyard operations and newbuilding activities. Declared final DPS of US$0.01 (FY15: nil).

*CapitaLand: Reportedly in exclusive talks with BlackRock to acquire Asia Square Tower 2. Price tag for the 784,000 sf office building is said to be more than $2,700 psf, which is higher than the $2,704 psf that Qatar Investment Authority paid for Asia Square Tower 1 last year.

*Sembcorp Industries: Raised its stake in its India renewable energy business, Sembcorp Green Infra, from 68.7% to 70.4% after subscribing in a rights issue, including the 31.3% share not taken up by its partner IDFC PE Fund III. Gross proceeds of 1.25b rupees ($26.5m) will be used to fund its growth in the sector.

*Delfi: Divesting the entire 50% stake in PT Ceres Meiji Indotama to Meiji and Meiji Seika for US$8.3m. Estimated disposal gain of US$4.9m is intended to strengthen its financial position.

*Auric Pacific: Voluntary offer of $1.65/share has turned unconditional after the Riady group obtained valid acceptances of 90.15%. Note that there will not be a compulsory acquisition for the remaining shares not tendered, after the closing date on 7 Apr.

*IHC: Mandatory unconditional offer at $0.106/share from OUE has been extended to 13 Apr.

*Rex Int’l: An independent qualified person’s report unveiled that the Edvard Grieg South (Rolvsnes) discovery attributed to 87.84% owned Lime Petroleum Norway, has 3.1m stock tank barrels per bscf of 1C contingent resources of oil as well as natural gas.

*KS Energy: Awarded a US$4.8m contract for its 80.1% owned KS Discoverer 7 land drilling rig in Indonesia, with work commencing from 2Q17 onwards for nine months.

*Singapore eDevelopment: 53% owned dietary supplement network marketing platform, iGalen Int’l, achieved 1,500 sales orders worth $1m across its network of 4,400 distributors in the first 30 days of operations.

*Khong Guan: Turned around to 1HFY17 net profit of $0.1m (1HFY16: $0.5m loss) due to the absence of a $1.1m fair value loss. Revenue slipped 1.7% to $28.7m on weak contribution in wheat flour and trading in other consumer products (-6.5%), although partially mitigated by gains from its investing trading arm (+239.1%) on disposal of short-term investments. NAV/share at $2.36.

Thursday, March 16, 2017

SG Market (16 Mar 17)

Expect positive sentiment to spill over to the Singapore market after Fed raised its benchmark rate as expected and on a rebound in oil prices as well as strength in the underlying domestic economy.

Regional bourses opened mostly higher in Tokyo (-0.2%), Seoul (+1%) and Sydney (+0.4%).Topside resistance for the STI is seen at 3,150, with downside support at 3,120.

Stocks to watch:
*Economy: Economists have raised Singapore's 2017 GDP growth estimate to 2.3% (previous: 1.5%), nearer MKE's 2.5% forecast. This was spurred by anticipated improvement in the manufacturing (est: +4.5%, previous: +1.5%) and finance & insurance (est: +2%, previous: +1.8%) sectors.

*SIA: Feb group pax load factor improved 2.4ppts to 80.7%, as passenger traffic growth (+4.1%) outpaced capacity expansion (+0.9%). Load factors rose on promotions across East Asia (+3.5ppts), Americas (+5.6ppts), Europe (+5ppts) and Mid-East/Africa (+6.7ppts), with the exception of SW Pacific (-3.3ppts). Subsidiary carriers’ load factors were mixed with Tigerair (+1.4ppts to 83%) climbing, while Silkair (-0.9ppts to 73.1%) and Scoot (-1.7ppts to 85.1%) slipped. Cargo load factor rose 2.4ppts to 61.4% as capacity contraction (-5.9%) overshadowed decline in carriage (-2.1%). MKE last had a Hold with TP of $9.70.

*Noble: Proposed 10-into-1 share consolidation in a bid to reduce volatility and improve liquidity by narrowing the bid/ask spread, and concurrently soften the impact of speculative orders on the stock.

*Soilbuild Construction: Awarded $149.4m contract by the HDB to build a high rise multi-user food factory at Bedok North Avenue 4. The contract would raise its contract order book to $562.2m. Construction is expected to commence in 1Q17 and will take about 32 months to complete.

*HMI: Received strong interest for its 11-for 200 rights issue, with 145.7% subscription rate. This will raise gross proceeds of $18.5m which will be used to increase its ownership stake in Mahkota Medical Centre and Regency Specialist Hospital to 100% (prior: 48.9% and 60.8% respectively).

*Sarine Tech: Commenced operations at its new 55,000 sf facility in Surat, India, consolidating all of its Surat-based activities for the Indian diamond market under one roof.

*HL Global: Extended the long stop date for proposed disposal of LKN Investment by one month to 15 Apr.