Friday, October 21, 2016

SG Market (21 Oct 16)

Investor sentiment is likely to be dampened by the pullback in oil prices on profit-taking and poor 3Q results from bellwether Keppel Corp, which could be the precursor for the O&M sector.

Regional bourses opened mixed today in Tokyo (+0.3%), Seoul (-0.5%) and Sydney (-0.4%).STI remains largely range bound between its topside resistance at 2,850 (50-dma) and support at 2,800 (200-dma).

Stocks to watch:
*Keppel Corp: 3Q16 net profit slumped to $224.5m (-38.1%) despite being shored up by property divestment gains, jobs and pay cuts. The results brought 9M16 core earnings to just 55% of lowered FY16 estimates. Revenue of $1.46b (-56%) was mainly weighed by reduced O&M activity from project deferments and suspension of Sete Brasil contracts, which squeezed operating O&M margin to 9.5% (3Q15: 12.3%). The property division (+3.7%) is now the group's largest earnings contributor, with better showing in Singapore but lower sales from China. No O&M orders secured in 3Q and order book contracted to $4.1b (2Q16: $4.3b). MKE maintains Sell with TP of $4.57.

*Suntec REIT: 3Q16 results in line with DPU of 2.535¢ (+0.5%) on stronger income contribution from JVs (Marina Bay Financial Centre and One Raffles Quay). Gross revenue and NPI of $82.4m (-4.3%) and $57.2m (-2.1%), slipped on absence of contribution from Park Mall (divested in Dec ’15), partly offset by takings from new property 177 Pacific Highway (acquired in Aug ’16). Office portfolio occupancy inched up to 99.4% (+0.6ppt q/q), while its retail portfolio slipped to 97.3% (-0.4ppt q/q). Aggregate leverage expanded to 37.8% (+3.1 ppt q/q), while cost of debt lowered to 2.28% (-0.49ppt q/q). NAV/unit at $2.128.

*Ascendas REIT: 2QFY17 results in line with DPU of 4.03¢ (-3.1%) on an enlarged unit base. Gross revenue and NPI rose to $205.4m (+12.5%) and $152.4m (+23.1%), respectively, mainly boosted by the acquisition of its Australian portfolio and ONE@Changi City, as well as lower property taxes (-37.2%). Portfolio occupancy inched up to 89% (+0.8 ppt q/q), while aggregate leverage was reduced to 34.2% (-2.8ppt q/q), with average debt cost steady at 3.02%. NAV/unit at $2.05.

*Frasers Centrepoint Trust: 4QFY16 DPU of 2.815¢ (-1.5%) brought FY16 DPU to 11.764¢ (+1.3%), in line with expectations. Gross revenue slipped 6% to $44.6m on lower contribution from Northpoint arising from ongoing AEI works and a changeover in anchor tenant at Changi City Point. NPI slipped a slower 0.9% to $31.5m on lower utilities tariff rates. Occupancy contracted to 89.4% (-1.4ppt), with WALE of 1.38 years. NAV/unit at $1.93.

*Viva Industrial Trust: In line 3Q16; DPU jumped 9.9% to 1.81¢, led by higher gross revenue and NPI of $24.3m (+31.9%) and $17.4m (+39.2%), respectively, on additional rental income from two newly acquired light industrial properties and higher rental income from Viva Business Park. Portfolio occupancy remained stable at 88.6% (+0.7ppt q/q), with WALE of 3.3 years. Aggregate leverage remained at 39.8% (-0.2ppt q/q), with average debt cost of 3.9% and tenor of 3.5 years. NAV/unit at $0.803.

*Ascott REIT: 3Q16 DPU of 2.35¢ (+14%) was a slight beat, lifted by FX gains of $3.3m. Revenue of $123.9m (+9%) and gross profit of $57.5m (+4%) were buoyed by seven new properties acquired between Jul ’15 and Mar ’16. RevPAU rose 2% to $144 from the new acquisitions, but excluding that, same-store-RevPAU tumbled 11% on weaker performance from the China, Singapore, Philippines (arising from renovation) and UK (on GBP/SGD depreciation). Aggregate leverage remained steady, but high at 41%, while group remains on the lookout for accretive M&A opportunities in key gateway cities of Australia, Japan, Europe and the US. NAV/unit at $1.30..

*City Dev: To sell Nouvel 18 through a profit participation securities scheme and unlock $977.6m, representing an implied ASP of $2,750 psf, above MKE's current assumptions of $2,500 psf. Last call was a Hold with TP of $9.43.

*Kim Heng Offshore & Marine: Reallocating $5m out of $20 of IPO proceeds initially designated for yard facility enhancement and fleet expansion, to general working capital due to the depressed oil & gas market sentiment.

*Natural Cool: Proposed private placement of 27m new shares (12.1% share capital) at 6.5¢ (7.1% discount on last close) apiece to strategic investor Ng Quek Peng, who has >30 years of corporate finance experience. Net proceeds of $1.7m will be used to fund growth and expansion of the group’s aircon and paint businesses.

*Advanced Integrated Manufacturing: Disposed a freehold bungalow in Penang for RM11m, and is expecting to book a gain of RM2.7m.

Profit warning:
- United Food
- MMP Resources

Thursday, October 20, 2016

Genting SP

Genting SP:
- 3Q16 results to be announced on Thu 3 Nov expected to not be any better than 2Q16's record low.
- High margin mass market GGR is under a lot of negative pressure due to the poor macro environment in Singapore. VIP volumes are also believed to remain poor.
- Maybank KE last had a Sell with TP of $0.71 on GENS.

Frasers Commerical Trust

- 4QFY16 DPU slipped to 2.45¢ (-3%) due to an enlarged unit base, bringing FY16 DPU of 9.82¢ (+1%) in line with street estimates.
- 4Q gross revenue climbed 6% while NPI gained 7%, lifted by new contribution from 357 Collins Street acquired in Aug '15, and higher rental rates and lower utilities expenses at Alexandra Technopark.
- Occupancy inched up to 93% (-0.3ppt q/q).- Aggregate leverage remained at 36% (-0.3ppt q/q), with average interest cost steady at 3%.
- Redevelopment works at China Square Central are on track, and construction for the 16-storey hotel and commercial project is expected to be completed by mid-2019.
- At the current price, FCOT trades at 7% annualised yield and 0.92x P/B.

SG Market (20 Oct 16)

Expect some positive spillover activity from steadily rising oil prices, although lacklustre 3Q results from local companies could cap upside gains.Regional bourses opened positive in early trading in Tokyo (+0.3%), Seoul (+0.2%) and Sydney (+0.2%).Technically, STI could test its immediate resistance at 2,850 (50-dma), with next objective at 2,890. Underlying support is at 2,800 (200-dma).

Stocks to watch:
*SGX: 1QFY17 results missed with a 16% drop in net profit to $83.1m as revenue slid 13.1% on lower volume of market activity in both securities trading (-16%) and derivatives (-22%). Securities daily average turnover shrank 19% to $1b despite 8 new IPOs that raised $647m (1QFY16: $103.9m from 7 new listings), while derivatives volume dived 24%, mostly dragged by China A50 and Nikkei 225 futures. Operating margin shrank to 50.9% (-2.5ppts) on higher maintenance for new systems launched. But ongoing acquisition of Baltic Exchange and efforts to draw new listings remain the bright spots. Interim DPS of $0.05 was maintained.

*Keppel T&T: 3Q16 net profit leapt 357% to $69.9m, boosted by a disposal gain of $55.8m from the sale of its 50% stake in Keppel DC REIT Management. Revenue fell 8.7% to $46.5m on lower logistics sales, partly offset by higher contribution from the data centre division, stemming from increased co-location service income. NAV/share at $1.41. Separately, the group is acquiring a 59.6% stake in Courex for $4.6m, a third-party logistics company that uses a crowdsourcing model to tap on a large network of delivery personnel in Singapore. The acquisition is in line with its e-commerce growth plans.

*Frasers Commercial Trust: 4QFY16 results in line. Distributable income rose 4% to $19.5m but DPU slipped to 2.45¢ (-3%) on an enlarged unit base. Gross revenue and NPI climbed to $39.3m (+6%) and $29.3m (+7%) respectively, lifted by newly acquired 357 Collins Street and higher rental rates at Alexandra Technopark. Portfolio occupancy inched up to 93% (-0.3ppt q/q) with WALE of 3 years. Aggregate leverage held steady at 36% (-0.3ppt q/q) with average interest cost maintained at 3%. NAV/share at $1.52.

*First REIT: 3Q16 distributable income rose to $16.3m (+4.7%), but DPU lagged at 2.12¢ (+1.9%) due to an enlarged unit base. Gross revenue and NPI rose in tandem to $26.9m (+6.5%) and $26.6m (+6.3%), respectively, underpinned by new contributions from Siloam Hospitals Kupang and Lippo Plaza Kupang that were acquired in Dec '15. Aggregate leverage reduced to 30% (-4.4ppt q/q). NAV/unit $1.0293.

*mm2 Asia: Acquiring the exclusive rights to produce and broadcast “The Voice”, for Singapore and Malaysia. The global franchise is scheduled to air in 2017.

*Ezra/Emas Offshore: Associate Perisai Petroleum received a notice from noteholders seeking full immediate repayment of its $125m 6.875% notes.

*Acromec: Clinched a $7m contract for fitting out a biosafety level 3 lab for National Centre for Infectious Diseases by 1Q18. The deal also has a $1.8m option for maintenance services within a year from completion. This brings order book to $49m.

*SHS: To supply electric energy to the Bangladeshi government with its future solar power plant, at a tariff of US$0.17/kWh for a 20-year period.

*Global Invacom: Received approval to supply its new generation Low Noise Block products to its largest customer, a leading satellite equipment provider in the US.

*China Taisan Technology: Group's Taiwan Depository Receipts will be delisted from the Taiwan Stock Exchange on 29 Nov.

*China Environment: Receive letter of demand from one of its major shareholders seeking overdue rental of Rmb3.2m to be paid by 20 Oct.

Wednesday, October 19, 2016


- 3Q16 DPU of 2.3¢ (+7.5%) matched expectations, bringing 9M16 DPU to 6.69¢ (+3.7%), representing 76% of street FY16 estimate.
- Revenue and NPI rose to $74.4m (+8.9%) and $57m (+8.3%), respectively, thanks to full contribution from CapitaGreen which was fully acquired at end-Aug (previously: 40% stake).
- Rental rates for office space could come under pressure going forward.
- However, Maybank KE believes the oversupply issue has been well flagged and has turned positive on office REITs early last month, citing that REIT prices could react ahead of a bottom to rents.
- Separately, CCT has applied to authorities to rezone its prime asset Golden Shoe Car Park to commercial use.
- At the current price, CCT is trading at 5.8% 3Q annualised yield and 0.9x P/B.

SG Market (19 Oct 16)

Trading is likely to be tepid ahead of the release of China 3Q GDP growth (est: 6.7%) at 10am.Regional bourses opened mixed in early trading in Tokyo (+0.1%), Seoul (-0.2%) and Sydney (+0.3%).Technically, STI remains range-bound between its immediate support at 2,800 (200-dma) and resistance at 2,852 (50-dma) within a larger downward trend channel.

Stocks to watch:
*M1: 3Q16 net profit of $34.4m (-23.4%) missed estimates as revenue slumped 10.3% to $249.1m on lower handset sales (-28.9%) and service revenue (-3.6%). While overall customer base rose 6.7%, ARPU deteriorated across the board, which compressed EBITDA margin to 29.9% (-1.3ppt q/q). Management guided FY16 earnings contraction to be in the low-teens (2Q16: single-digit decline). MKE maintains Sell and cuts TP to $1.90 from $2.04.

*CCT: 3Q16 DPU of 2.3¢ (+7.5%) matched expectations on higher revenue of $74.4m (+8.9%) and NPI of $57m (+8.3%), thanks to full contribution from CapitaGreen, which was fully acquired in Aug (prior: 40%). Consequently, aggregate leverage spiked 8ppt q/q to 37.8%. Portfolio occupancy inched up 0.2ppt to 97.4%, with WALE at 6.8 years. NAV/unit at $1.75. Separately, CCT has applied to redevelop prime asset Golden Shoe Car Park into a landmark commercial development, which could add a significant 25% to current NLA.

*Keppel REIT: 3Q16 DPU of 1.6¢ (-5.9%) was at the lower bound of street estimates, as revenue and NPI slipped to $39.5m (-6.3%) and $31.6m (-5.4%), respectively, following the divestment of Sydney office, 77 King Street, in 1Q16. Portfolio occupancy stood at 99.5% (-0.2ppt q/q) with longer WALE of 8.5 years (2Q16: 6 years). Aggregate leverage held steady at 39% with average cost of capital at 2.53%. NAV/unit at $1.42.

*ST Engineering: Warned that it will take a $61m impairment charge in 3Q16, likely stemming from the cessation of production at 75.3% owned loss-making Chinese construction business Jiangsu Huaran Kinetics. This hit accounts for 12% of MKE/consensus net profit forecast of $499m/$497m for FY16. STE will announce its 3Q16 results on 10 Nov. MKE last had a Hold and TP of $3.17.

*City Dev: Acquiring 20% stake in a freehold prime residential project in Tokyo, Japan, for an undisclosed sum. The 163-apartment project, Park Court Aoyama The Tower, has an estimated gross development value of ¥50b ($668m).*SIIC Environment: Acquiring an additional 32.7% stake in Longjiang Environmental Protection Group for Rmb836m. With 58% stake now, pro forma FY15 EPS is expected to rise by 11% to Rmb0.1871.

*MoneyMax/AP Oil: To go into a 12.5:12.5:70 JV with Chinese motorcycle manufacturer Zhongshen, to undertake financial leasing business in Chongqing, China.

*Equation: Its DiSa point-of-sale activation asset protection solution has been proven by the Loss Prevention Research Council to be a scalable solution that will help retailers drive sales, while enhancing in-store consumer experience.

*Venture: Substantial shareholder Silchester International Investors disposed 250,000 shares at an average $9.36 on 14 Oct, paring its stake from 5.06% to 4.97%.

Tuesday, October 18, 2016

SG Market (18 Oct 16)

Singapore stocks are likely to thread water as investors adopt wait-and-see mode ahead of local company results.

Regional bourses opened mixed in early trading in Tokyo (-0.2%), Seoul (+0.3%) and Sydney (0.3%).Immediate support for STI is at 2,800 (200-dma), with topside resistance at 2,852 (50-dma).

Stocks to watch:
*Keppel DC REIT: 3Q16 results in line with DPU of 1.9¢ (+15.9%), bolstered by derivative gains and finance income. Revenue tumbled to $22.7m (-12%) on lower rental from overseas assets and weaker variable income at local properties, but NPI was lifted back to $22.7m (+6.2%) on a one-off property tax refund and lower costs. Portfolio occupancy edged up 0.4ppt q/q to 92.7% with WALE of 8.6 years. Aggregate leverage was steady at 29.4%, but will increase to 36.1% upon completion of asset acquisitions in Cardiff and Dublin, while average debt cost was 2.4% and tenor at 2.5 years. NAV/unit at $0.889.

*Keppel DC REIT: Acquiring a 90% stake in a fully-committed data centre (Keppel DC Singapore 3) for $202.5m from a 70:30 JV between Keppel T&T and Keppel Land. The deal will be funded by a fully underwritten 274-for1,000 preferential offering of 242m shares at $1.155 apiece. The proposed acquisition will expand its portfolio assets to $1.35b from $1.14b, comprising 11 data centres globally. FY15 pro forma DPU is estimated to increase to 6.88¢ (+5.7%), while aggregate leverage will fall to 27.7% (-8.4ppt).

*Keppel Corp/Keppel T&T: Divestment of Keppel DC Singapore 3 (formerly T27) held by a 30:70 JV between Keppel Corp and Keppel T&T is expected to unlock ~$141m in cash, which will be used to fund investments in logistics/ data centres, with the remaining for general corporate and working capital purposes.

*Keppel Corp: Divesting an effective 44.05% share in Chengdu Century Development (CCD) for Rmb150.7m ($30.8m), in a bid to recycle capital. CCD owns and develops the Botanica, a township project in Jinjiang District, Chengdu. MKE estimates that the sale would net a gain of $9m and support its argument that the O&M segment could no longer be relied upon to fund other businesses. MKE last had a Sell with TP of $4.54.

*Keppel Infra Trust: Flat 3Q16 DPU of 0.93¢ came in line. Revenue dipped to $160.3m (-0.2%) on lower tariffs at City Gas (-10.5%) and reduced concessions (-4.7%) at the SingSpring Desalination plant, partially offset by increased contributions from Basslink (+79.5%). NAV/share at $0.316.

*Sabana REIT: 3QFY16 DPU tumbled 32.2% to 1.2¢, as revenue ($23m,-9.7%) and NPI ($13.9m, -24%) were dragged by negative rental reversions at certain master leases, lower occupancies and higher expenses arising from multi-tenanted lease conversions. Portfolio occupancy improved to 89.2% (+0.4ppt q/q) with WALE of 2.5 years, while aggregate leverage inched up to 41.2% (+0.3ppt q/q). NAV/unit at $0.81.

*SIA: Group pax load factor slipped 2.3ppts to 77.9% in Sep as traffic (+1.7%) lagged capacity increase (+3.1%), while cargo load factor eased to 62.4% (-0.5 ppts) on similar carriage (+5.3%) and capacity (+5.2%) growth. Load factors declined across all its regions except East Asia (flat) for its parent airline, and across subsidiary carriers Scoot (-4.9ppts to 78.6%), TigerAir (-2.7ppts to 79%) and SilkAir (-1ppt to 65.7%). MKE last had a Hold with TP of $10.00.

*ST Engineering: Electronics arm secured contracts worth $480m (+29.8% y/y, -26.2% q/q) in 3Q16, comprising work in rail electronics & intelligent transportation, satellite & broadband communications, as well as advanced electronics & ICT solutions sectors..

*GLP: Signed 218,000 sqm of e-commerce related leases in China (153,000 sqm), US (55,000 sqm) and Japan (10,000 sqm).

*SMRT: Privatisation offer at $1.68/share from parent Temasek Holdings has been sanctioned by the High Court. Last day of trading will be on 18 Oct.

*Ascendas Hospitality Trust: Appointed ONYX Hospitality Group as the operator of the serviced apartments component at Aurora Melbourne Central.

*SPH: Merging My Paper and The New Paper to a revamped product, which will be distributed for free from Dec. Consequently, SPH expects to cut up to 10% of its staff force over the next two years.

*mm2 Asia: Entered MOU to acquire 30% stake in Rings.TV for $4.5m. The group intends to tap on the interactive live-streaming broadcasting platform to broadcast exclusive material from its movie productions and unlock new revenue streams from concert producer/ organiser UnUsUaL. Subsequently if Rings.TV successfully lists in five years, it will grant mm2 with a guaranteed investment buyback plus coupon of 5% per annum on the deal.

*Lian Beng: Acquired Khong Guan Industrial Building for $31m, or $544 psf. The freehold light industrial building sits on a fully maxed-out gfa of 57,019 sf, and will be held for rental income.

*Yongnam: CEO Seow Soon Yong exercised a call option to acquire 10m shares in the company from CIMB Securities Singapore for $2.1m, or $0.21/share, lifting his stake from 20.31% to 22.41%.

*Cosco Corp: Deferring delivery again for the Sevan 650 drilling unit by six months to 15 Apr ’17, and the final payment of the contract will be reduced to US$499.7m (original price: US$526m). A US$26.3m refund will be made to the client in 4Q16 as part of the deferment agreement.

*China New Town: Proposed voluntary delisting via a selective share buyback scheme of 7¢/share, for shareholders who do not wish to continue holding their shares and trade on the primary listing in Hong Kong.

*Asia Fashion: 60-day MOU with Xamax Development to negotiate on the development and production of a theatrical movie project. If firmed up, production is expected to run throughout 2017, with the premiere anticipated in early 2018.

*Sing Holdings: Acquiring its first hotel property in Melbourne, Australia, for A$107m. The freehold, 291-room asset is intended to boost recurring income.

*Ley Choon: Secured a $3m contract from PUB for the supply and laying of water mains in the east from 2016 to 2019.*Asian Micro: Embarking on LNG and related businesses from Jan ’17 onwards, after it was appointed as the authorised importer, installer and distributor for three companies specialising in LNG storage systems, LNG vaporisers, LNG engines and power generators.