Friday, August 18, 2017

SG Market (18 Aug 17)

MARKET OVERVIEW
- Stocks could come under pressure after the STI breached its 50-dma support yesterday, while sentiment could be further rattled by the US selloff on Trump policy worries.
- Technically, next support for STI is at at 3,190, with former support-turned-resistance at 3,275.

CORPORATE RESULTS
*Croesus Retail Trust
- 4QFY17 DPU of 2.01¢ (+18.2%) brought FY17 payout to 7.66¢ (+12.2%), above expectations.
- Gross revenue jumped 11.9% to ¥2,993m, bolstered by three acquisitions, as well as higher variable rent from better tenant sales in Mallage Shobu and a strong performance by the cinema in Torius.
- But NPI was relatively flat at ¥1,441m (+0.1%) from higher expenses in new acquisitions and refurbishment works.
- Distributable income of ¥1,272m (+19%) was boosted by cost savings from the internalisation of the trustee-manager, lower finance cost and disposal gain of units.
- Portfolio occupancy slipped 0.6ppt q/q to 97.1%, while aggregate leverage contracted 1.5ppt q/q to 44.6%.
- Offers 6.7% yield with NAV/unit at $0.98.

POSITIVE NEWS
*SGX
- Formed a committee with Singapore Institute of Surveyors and Valuers, to review valuation practices and reporting carried out by real estate valuers.
- This is to better serve investor interest, particularly in REITs and business trusts following some questionable transactions.
- SGX trades at 21.8x forward P/E.

*China Everbright Water
- Clinched two waste water treatment upgrading projects in Shandong, China, worth Rmb41m.
- The first project is a Rmb27m treatment project in the Binzhou Development Zone, while the second is for CNY14m upgrading works at Ju County Chengbei.
- Counter is trading at 12.5x forward P/E.

*GCCP Resources
- Secured RM16m worth of contracts to supply crushed calcium carbonate stones to a MNC in Malaysia and Indonesia.
- The contracts will run till end-2017 and expected to contribute positively to FY17 financials.
- This brought new contracts secured-to-date to more than RM31m.

*Aspen
- The group awarded a RM442m contract to Kerjaya Prospek to construct Vertu Resort in Aspen Vision City, Batu Kawan, Penang, Malaysia.
- Vertu Resort comprises five condominium blocks with a total of 1,246 units, which will be built on top of an eight-storey car park podium.
- The project is expected to commence on 4 Sep '17 and be completed within 38 months.

NEUTRAL NEWS
*Sembcorp Industries
- Subscribed to rights issue by subsidiary Sembcorp Green Infra, including excess rights of partner IDFC Private Fund III, for Rp1b ($21.4m), thereby raising its stake from 68.74% to 72%.
- Proceeds will be used to fund its growth in the renewable sector in India.

*OCBC
- Acquired 0.68m shares in Great Eastern for $24.90 apiece on 17 Aug.
- This raised its stake in its insurance arm to 87.9% from 87.75%.

*Best World
- Controlling shareholders Dora Tan and Doreen Tan both acquired 200,000 shares each at an average $1.195 and $1.18875, respectively, on 17 Aug.
- This lifted direct interests for both shareholders from 5.6113% to 5.6476%, and total interest between the two shareholders from 40.6887% to 40.725%.

NEGATIVE NEWS
*Profit warnings
- Tiong Woon
- CFM Holdings
- Boldtek

Thursday, August 17, 2017

SG Market (17 Aug 17)

MARKET OVERVIEW
- The market could see some respite after FOMC policy makers hinted of a slower pace of interest rate hikes amid weak inflation. But this is not favourable for banks, which are also embroiled in a widening debt crisis besetting several O&G service providers.
- Technically, the STI closed near its support at 3,275 following the formation of a bearish engulfing candle on Mon. A move below this level would take it to the next support at 3,190. Topside resistance remains at 3,360.

STOCK COVERAGE
*GuocoLand
- MKE initiated with a Buy and TP of $2.75, based on a 22% discount to its RNAV/share of $3.55.
- The under-researched mid-cap property developer, backed by Malaysian tycoon Quek Leng Chan, is seeing structural improvements to its financials, with scope for stronger recurring income, lower gearing and higher DPS post completion of its Tanjong Pagar Centre mixed development.
- With four residential project worth a combined gross development value of $5b, the group is a beneficiary of a Singapore property price rebound. Singapore accounts for 70% of its valuation.
- Trades at 44% discount to RNAV and 0.67x P/B.

CORPORATE RESULTS
*Avi-Tech
- 4QFY17 net profit surged 61.5% albeit from a low base to $2.2m, supported by a $0.6m swing to $0.1m tax credit.
- This brought FY17 earnings to $7m (+13%), meeting street estimates.
- Revenue grew 29.2% to $12m on growth across burn-in board manufacturing & PCBA services (+44.2%), burn-in services (+8.7%) and engineering services (22.2%).
- Gross margin contracted 2.2ppt to 27.4% on the change in sales mix.
- Net cash position improved to $23m (3QFY16: $19m) or $0.134/share.
- Declared 0.8¢ special DPS on top of an unchanged final DPS of 1¢.
- Trades at 9.8x forward P/E.

*Hatten Land
- 4QFY17 net profit tripled to RM59.7m as revenue rose 24% to RM130m on higher progressive sales recognised from Hatten City Phase 2 and Harbour City projects.
- Gross margin expanded to 56.2% (+18.7ppt) on reduced development costs stemming from the local government's assistance scheme.
- Bottom line was further boosted by a RM5.6m write-back of RTO professional fees and lower tax expense (-66.5%) due to over provision last year.
- Declared maiden interim DPS of 0.05¢.
- NAV/share at RM0.1654.

POSITIVE NEWS
*Keppel Corp
- Disposing its entire 100% stake in China residential development project Waterfront Residences, in Nantong, China, for Rmb1.43b ($292m).
- The divestment is in line with the group's strategy to recycle assets to seek higher returns to focus on high-growth cities in China.
- Post-sale, the group expects to recognise a $75m gain, which will lift pro forma FY16 NTA/share to $6.39 (+0.8%).

*Yanlord
- Moody's has reaffirmed the developer's Ba2 credit rating with stable outlook.
- The ratings agency cited Yanlord's better-than-average profitability and interest coverage, as well as its strong liquidity profile.
- Stock trades at 0.82x P/B.

*Spackman
- Secured 220m won (US$0.2m) contract to supply camera systems and equipment for upcoming crime thriller movie Deceptive Murder.
- Trades at 7.1x forward P/E.

*Creative Technology
- Awarded $36m in damages against China's Huawei for breach of contract over a failed nationwide wireless broadband project in 2012.
- The award will be recognised in 1QFY18 results if Huawei does not appeal against the judgement, which could raise its NAV/share by 33% from US$1.14 to US$1.516.
- The group has previously won a US$100m settlement with Apple in 2005 over patent infringements and another claim in 2015 involving its unit ZiiLabs' patents.
- Currently trades at 0.68x P/B.

*Sarine Tech
- South Korea's jewellery retail chain, Golden Dew, has launched the Sarine Profile in-store diamond display platform in all its 72 stores.
- The retailer will also adopt the Sarine Connect diamond jewellery search and display app.
- Trades at 17.3x forward P/E.

NEUTRAL NEWS
*Best World
- Conducted share buy-back of 114,000 shares at an average $1.365 apiece over 15-16 Aug.
- Stock trades at 14.1x FY18e P/E.

*Far East Group
- Selling a 60-year leasehold property at 5 Third Lok Yang Road for $3.9m, subject to regulatory approval.
- If completed, the sale will reap a disposal gain of $2.7m and proceeds will be used for the acquisition of a property at 51 Ubi Ave 3 and/or repay outstanding debt.
- Trades at 0.37x P/B.

*ISDN
- Formed 30:70 JV with HK-listed Comtec Solar Systems to set up and operate a 1MW distributed generation solar power station at ISDN's Suzhou industrial park in China.
- The industrial park will purchase power from the JVCo at market price for 20 years.
- Total investment into the JVCo will not exceed Rmb8m.

Wednesday, August 16, 2017

SG Market (16 Aug 17)

MARKET OVERVIEW
- The market may succumb to profit-taking as 2Q results season winds to an end and investors await FOMC minutes for clues on the Fed's interest rate path.
- Of the >100 companies tracked, 22% surpassed 2Q earnings estimates, while 32% missed, down from 28% and 36% respectively in 1Q17.
- Technically, STI exhibited a bearish engulfing candlestick yesterday, which point to near term weakness. Support for the index is at 3,275, with topside resistance is at 3,360.

CORPORATE RESULTS
*Healthway Medical
- Dipped into 1QFY18 net loss of $0.5m (1QFY17: $0.5m profit), weighed by a surge in finance costs (+163.1%) and income tax (+134.5%).
- Revenue slid 6.2% to $23.2m on declines across primary healthcare (-$1.1m) and specialist & wellness healthcare (-$0.4m) segments.
- Gross margin held steady at 81% (1QFY17: 79.6%) but operating cash flow deteriorated to negative $4.2m.
- While the operating environment continues to be challenging, the group is well-capitalised following the $60m issuance of convertible notes in Apr.
- SGX has requested it to appoint an independent reviewer to look into loan extensions to related parties.
- Trades at 0.7x P/B.

POSITIVE NEWS
*SIA
- Jul operating statistics showed higher group passenger load factor of 83.6% (+1.5ppt) as traffic (+4.1%) outpaced capacity growth (+2.2%).
- Cargo load factor rose 2.5ppt to 63.2%.
- Parent load factor improved for routes to Americas (+3ppt), Europe (+4.5ppt), West Asia and Africa (+2.4ppt), although South West Pacific (-2ppt) deteriorated, while East Asia was muted (+0.5ppt).
- Load factor for SilkAir (+4.5ppt to 76.6%) was also better but that budget carrier (-0.2ppt to 84.7%) weakened slightly.
- Trades at 0.94x P/B.

*Oxley
- Maiden hotel development at Stevens Road has received TOP on 3 Aug and will likely open end 2017.
- The $900m project will have two hotels - 254-room Novotel and 518-room Mercure and includes some commercial space.
- Trades at 1.73x P/B.

*Libra Group
- Secured three projects worth $42m.
- Works include the erection of a 5-storey residential building with scheduled completion in 2018, a sub-contract for architectural works at Lentor Station (completion: 2020) and a sub-contract for architectural works at Stevens Station (completion: 2020).
- Trades at 21.8x trailing P/E.

*Miyoshi
- Entered a joint marketing agreement with NEC Asia Pacific for sale of a high-performance face-recognition surveillance related product in Singapore, Malaysia and other Asia Pacific region.
- NEC's NeoFace® Watch with real-time facial recognition will be integrated with Miyoshi's wireless audio/video wearable solution.
- The upcoming product will offer on-ground security officers with instant analysis of what they see and enable them to provide actionable intelligence to commanders.
- Trades at 18.1x trailing P/E.

NEGATIVE NEWS
*Best World
- Explained that it has yet to convert its business to direct selling in China after its shares and other similar MLM firms slumped amid a government crackdown against pyramid schemes.
- All its products are currently sold at outlets and workshops under the export model and the clampdown will have little impact on its China business.
- For now, MKE is keeping its Buy rating and TP of $1.88.

*Parkson Retail Asia
- Expected to report FY17 net loss of $62m (FY16: $30m profit) due to retail headwinds and asset write-downs following a comprehensive review.

NEUTRAL NEWS
*United Engineers
- Independent financial adviser SAC Capital views a takeover bid led by Perennial Real Estate and Yanlord Land as fair and reasonable.
- The consortium triggered the mandatory takeover offer at $2.60/share after buying over the 33.5% stake from OCBC, Great Eastern and other vendors for $729.7m.
- Trades at 1.03x offer price and 0.89x P/B.

*XMH
- Entered into a 50:25:25 JV with Myanmar MarcoPolo and Bulox Power to manufacture and/or assemble transformers, generator sets and power solution products in Myanmar.
- It will invest an initial US$0.5m in the JVCo.

*GKE
- Disclosed that discussions with a potential investor are still ongoing.

*Singapore eDevelopment
- Collaborating with US-based Chemia Corp to develop specialised fragrances to counter mosquito-borne diseases and stress and anxiety, as well as anti-viral medical applications.

Tuesday, August 15, 2017

SG Market (15 Aug 17)

MARKET OVERVIEW
- The market could regain some footing as US-North Korea tensions ease but news flow could dry up as the 2Q results season draws to an end.
- Technically, STI faces topside resistance is at 3,360, with support at 3,275.

CORPORATE RESULTS
*Golden Agri
- Headline 2Q17 net profit tumbled 45% to US$21.9m due to recognition of deferred tax last year but core earnings turned around to US$53.4m from US$6.4m loss previously, beating estimates.
- Revenue edged up 0.8% to US$1.76b, supported by stronger palm production of 639,000 tonnes (+41%), although average CPO price slipped 1% to US$670/MT.
- EBITDA margin expanded 3.3ppt to 8.2% on better operational efficiencies across all segments.
- NAV/share at US$0.32.

*Yanlord Land
- 2Q17 net profit surged 43% to Rmb462.5m, lifting 1H17 earnings to Rmb1.4b (+139%), meeting expectations.
- This was despite a 42.2% drop in revenue to Rmb4.28b on lower gfa delivered (-50.9%) to customers, in line with its delivery schedule.
- Bottom line was shored by increase in car park sales, lower FX loss and higher share of associate contributions from projects with better profit margins.
- NAV/share at Rmb10.66.

*Bumitama Agri
- 2Q17 net profit surged 165% to Rp285.04b, bringing 1H17 earnings to Rp563.5m (+67.2%) or 47% of full year consensus estimate.
- Revenue jumped 39.5% to Rp1.92t, which was attributable to higher sales volume of CPO (+44.9%) and palm kernel (+33.8%), underpinned by a 3.6% rise in CPO ASP.
- Gross margin expanded 11.6ppt to 29.3%.
- Bottom line was further bolstered by a Rp4.27b swing to FX gain and absence of a Rp5.01b associate loss.
- Declared interim DPS of 0.75¢ (2Q16: nil).
- NAV/share at Rp4,036.

*Accordia Golf Trust
- 1QFY18 DPU grew 9.8% to 2¢, exceeding expectations on distributable income of ¥1.79b (+17.6%).
- Revenue ticked up 1.1% to ¥14.57b on a 4.1% increase in visitors due to lower pricing promotions held during non-peak days.
- Operating margin expanded to 22% (+1.4ppt) on lower opex (-0.6%).
- Course utilisation rate rose 3.2ppt to 84.2%, while loan-to-value stood at 29% (+0.1ppt).
- Trades at 11.4% annualised yield and 0.79x P/B.

*HRnetGroup
- 2Q17 net profit declined 10.3% to $7.3m, dragged by one-off listing expenses. Otherwise, core earnings improved 22%.
- Revenue of $97.4m (+6.4%) hit a record, driven by the increase in flexible staffing in Singapore.
- Gross margin slipped 2.1ppt to 34.9% on a shift in sales mix.
- Expansion plan through M&A is gaining good traction and the group disclosed it has been receiving enquiries and approaches on potential acquisition and collaboration opportunities.
- NAV/share at $0.2858.

*Q&M Dental
- 2Q17 hadline earnings spiked 269% to $13.6m, boosted by a one-time gain of $9.4m from the spin-off of Aoxin.
but underlying net profit rose 29% to $4.3m, meeting estimates.
- Revenue slumped 22.7% to $29.6m on deconsolidation of Aidite to an associate, while takings from dental and medical clinic (-7%) and equipment & supplies (-42%) were both lower.
- Five dental outlets were added, taking its total to 73, while medical outlets and aesthetic centre remained at four and one, respectively.
- Interim DPS raised to 0.7¢ (1H16: 0.42¢).
- Trades at 33.4x forward P/E.

*Aoxin Q&M
- 1H17 underlying net profit jumped 43% to Rmb6.5m, as revenue rose 22% to Rmb47.6m.
- Improved sales was driven by a 64% spike in dental equipment and supplies distribution due to more contracts secured, while primary healthcare saw relatively stable growth with 9% higher takings.
- Headline earnings of Rmb1.4m (-84%) was dragged by listing expenses amounting to Rmb5.2m.
- NAV/share at Rmb0.629.

*Nam Cheong
- Dived to 2Q17 net loss of RM2.02b (2Q16: RM3m profit), ditched by an asset impairment of RM1.88b.
- Revenue rose 29% to RM151.2m on sale and delivery of two vessels and the addition of three vessels in the chartering fleet.
- Gross margin narrowed 5.4ppt to 8% on lower profitability of the shipbuilding segment.
- Bottom line was also impacted by FX loss of RM17.4m.
- Negative equity/share at RM0.334.

Monday, August 14, 2017

SG Market (14 Aug 17)

MARKET OVERVIEW
- Traders will mull over the simmering global tensions in North Korea and Venezuela although an outbreak of military hostilities is highly unlikely, as well as FOMC minutes this week.
- At home, Singapore's Jul export data will show if 2Q economic momentum can be sustained.
- Technically, downward momentum for the STI expected to persist, with immediate support at 3,275 likely to be tested, followed by 3,250. Topside resistance is at 3,320.

CORPORATE RESULTS
*ComfortDelGro
- 2Q17 net profit reversed 6.8% to $79.4m, sending 1H17 earnings to $161.9m (+2.1%), missing estimates.
- Revenue slipped 3.4% to $987.2m, mainly dragged by its taxi business (-10.7%), which suffered in Singapore (smaller operating fleet), Britain (weak sterling) and China (lower double-shift rates), while bus and rail services (+1.3%) benefitted from increased ridership.
- Operating margin narrowed 0.7ppt to 11.3% on increased staff costs (+1.3%) and depreciation (+5.4%).
- Interim DPS raised to 4.35¢ (1H16: 4.25¢), representing a higher dividend payout ratio.
- Management expects revenue for most business segments, expect public transport services in S'pore and Australia, to decline in FY17.
- Trades at 15.8x forward P/E.

*Thai Beverage
- 3QFY17 net profit surged 2.6x to Bt15.2b, with the bulk (Bt8.5b) stemming from fair value gain arising from its stake in Vinamilk. Otherwise, core net profit grew 15.4% to Bt6.8b.
- Revenue dipped 0.4% to Bt45.28b on slower sales in beer (-7.1%) and non-alcoholic beverages (-4.2%), partly mitigated by stronger sales in spirits (+4.6%).
- Core EBTIDA margin expanded to 20.4% (+1.9ppt) on stronger associate income (+155%) from F&N and Frasers Centrepoint.
- Near term risk from excise tax hike on 12 Sep.
- Trades at 21.7x forward P/E

*Ezion
- Dived to 2Q17 net loss of US$2.6m (2Q16: US$8.1m profit), widening 1H17 loss to US$15.3m.
- Revenue slumped 19.5% to US$67.4m on lower charter rates and a drop in utilisation of both jack-up rigs and offshore support vessels.
- Gross margin compressed to 9.9% (2Q16: 21.3%, 1Q17: 12.8%).
- Net gearing remained elevated at 1.04x (1Q17: 1.0x).
- Trading at 0.23x P/B.
- Called for trading suspension to facilitate discussions over its financing and capitalization structure.

*Olam
- 2Q17 core net profit jumped 34.1% to $154m, bringing 1H17 core earnings to $297.8m (+23.6%), beating estimates.
- For the quarter, revenue climbed 30.9% to $6.52b, buoyed by higher overall trading volume (+28.6%).
- However, EBITDA margin slipped to 5.7% (-0.6ppt) on unrealised FX losses.
- Adjusted gearing inched slightly higher to 0.81x (1Q17: 0.79x).
- Declared higher interim DPS of 3.5¢ (1H16: 3¢).
- NAV/share at $1.983.

*Asian Pay TV
- Flat 2Q17 DPU of 1.625¢ was in line with estimates.
- Revenue rose 6.2% to $83.1m on positive FX effects. In constant TWD terms, contribution from all three segments declined on lower ARPUs across basic cable TV (-3.2%), broadband (-4.6%) and premium digital cable TV (-0.2%).
- EBITDA margin inched up 0.5ppt to 60.2%.
- Reaffirmed guidance for FY17 DPU of 6.5¢, implying 11.3% yield.
- NAV/unit at $0.85.

*Valuetronics
- 1QFY18 beat as net profit surged 64.8% to HK$48.7m on improved operational leverage.
- Revenue jumped 45.7% to HK$695.7m, lifted by consumer electronics (+91.8%) arising from the introduction of new products with Internet of Things features, and underpinned by higher demand in industrial & commercial electronics (+21.3%).
- Gross margin dipped 1ppt to 15% on the shift in sales mix.
- Healthy net cash pile of HK$719.3m, or $0.30/share.
- NAV/share at HK$2.40.

*First Resources
- 2Q17 net profit declined 11.4% to US$23.2m, dragged by higher tax expenses (+46.2%).
- This brought 1H17 earnings to US$71.6m (+127.5%) or 45% of FY17 street estimate.
- Revenue dipped 0.6% to US$134.6m, but EBITDA rose 8.4% to US$57.2m due to higher ASPs of processed palm based products.
- Operating margin expanded 1.7ppt to 31.2%, on higher write-back of accruals for employee related expenses.
- Bottom line was weighed by a swing to fair value loss of US$0.8m (2Q16: US$1.9m gain) on derivative financial instruments.
- Interim DPS hiked to 1.25¢ (1H16: 0.625¢).
- Management expects yield to strengthen in 2H17 as a result of continued recovery from the effects of El Nino.

*Bukit Sembawang
- 1QFY18 net profit tumbled 78.3% to $6m, reaching just 17% of the street's sole FY18 forecast.
- Revenue slumped 64.7% to $15.8m on lower sales and profit recognition from development projects Skyline Residences and Watercove.
- Operating margin contracted to 42.4% (-8.1ppt) on the absence of booking fee forfeitures.
- NAV/share at $4.95.

*Dasin Retail Trust
- 2Q17 DPU of 1.53¢ beat its IPO forecast by 7% on stronger-than-expected distributable income of $3.8m (+12%).
- Revenue and NPI of $11.3m and $9.3m was 21% and 22% higher than IPO forecast due to higher takings and the earlier-than-expected completion of the acquisition for Shiqi Metro Mall.
- Portfolio remains fully occupied, while aggregate leverage remained at 31.8%.
- Trades at annualised yield of 7.4% and 0.55x P/B.

*Hotung
- 2Q17 net profit surged 187% to NT$74.7m, as revenue leapt 2.2x to NT$193m, boosted by proceeds from sale of investments (+113%).
- However, bottom line was weighed by a jump in impairment losses of NT$64.8m (2Q16: NT$3.7m).
- NAV/share at $3.01.

*Metro
- 1QFY18 net profit leapt more than 2.6x to $25.4m, lifted by a disposal gain of $8.3m at the associate level.
- Revenue edged 1.7% higher to $32.4m on higher sales from the retail division.
- However, gross margin contracted to 3.4% (-1.4ppt).
- Bottom line was further shored up by another disposal gain of $0.8m arising from its Shanghai investment property, as well as distribution from investments ($1.3m).
- NAV/share at $1.66.

*Zhongmin Baihui
- 2Q17 net profit slumped 63.9% to Rmb19.3m in the absence of write-back of free-rent incentives (-91.2%).
- Revenue grew 16.5% to Rmb234m on strength in direct sales (+25.4%) and commissions (+10.6%), but partially offset by declines in rentals (-30.6%) and managed rental (-46.3%).
- Gross margin contracted to 30.4% (-5.8ppt) on weaker profitability from direct sales activities.
- Cut second interim DPS to 0.5¢ (2Q17: 1¢).

*Hong Leong Asia
- 2Q17 net loss of $18.2m stayed flat (2Q16: $18.3m loss) as reduced attribution to minorities were wiped out by a contraction in gross margin to 17.6% (-2ppt).
- Revenue grew 3.5% to $1.03b on stronger performance from diesel engine unit China Yuchai (+8.3%), but offset by declines at the building materials unit (-24.7%) and consumer products division (-2.6%).
- NAV/share at $1.7383.

*Jadason Enterprises
- Turned around to 2Q17 net profit of $0.7m (2Q16: $1.2m loss), bringing 1H17 earnings to $1m (1H16: $0.9m loss).
- Revenue jumped 42% to $15.4m, attributed to growth in both equipment & supplies (37.8%) and manufacturing & support services (+44.3%) segments.
- Gross margin expanded to 21% (+6.2ppt), which gave rise to improved operational leverage.
- NAV/share at 6.9¢.

*Katrina
- 1H17 net profit crashed 77% to $0.3m, as revenue dipped 1.6% to $27.7m on slow sales, despite an increase in the number of outlets.
- Gross margin contracted 6.3ppt to 9.3%, while pretax margin was shaved to 1.5% (-4.7%) due to stubborn fixed overheads.
- Notably, operating cash flow were almost nil (1H16: $2.1m).
- NAV/share at $0.0583.

*Dyna-Mac
- Swung into 2Q17 net loss of $12.8m (2Q16: $6.4m profit).
- Revenue crashed 84.2% to $5.4m on lower number of projects, which resulted in a gross loss of $6.2m (2Q16: $14.4m profit).
- Bottom line was further impacted by an adversed swing into FX loss of $0.9m from $3.1m gain last year.
- NAV/share at $0.1349.

*Mermaid Maritime
- 2Q17 net profit slumped 53.3% to US$3.6m, dragged by reduced associate income from Asia Offshore Drilling due to lower day rates.
- Revenue declined 10.8% to US$44.9m on reduced subsea income (-10.4%) following a finished cable lay project and day rate reduction in IRM activities and lower utilisation of vessels.
- Consequently, pretax margin almost halved to 8% (2Q16: 15.7%).
- NAV/share at US$0.24.

*Overseas Education
- 2Q17 net profit slid 31.5% to $1.5m, as stubborn operating expenses failed to decline in tandem with sales.
- Revenue slid 7.6% to $22.6m, on lower student enrolments which led to reduced tuition (-7.2%) and registration (-15.7%) fees.

Friday, August 11, 2017

SG Market (11 Aug 17)

MARKET OVERVIEW
- Batch of downbeat results and escalating geopolitical tensions in North Korea are expected to weigh on sentiment.
- Technically, MACD for the STI is exhibiting a bearish crossover. Underlying support for the index lies at 3,275 with topside resistance at 3,360.

CORPORATE RESULTS
*SingTel
- 1QFY18 headline net profit of $891.6m (-5.6%) trailed estimates.
- Revenue rose 8.3% to $4.23b as stronger Australia (+6%) operations were met with stable Singapore business (+2%).
- However, EBITDA margin contracted 1.6ppt to 30% (4QFY17: 30.4%) on higher equipment sales and increased content and programming costs.
- Contribution from regional associates slipped 2.5%, as Airtel continued to face aggressive price war in India.
- FY18 revenue guidance tweaked from mid single digit to low single digit growth, while EBITDA is expected to be flat.
- Trades at 14.9x forward P/E with dividend yield of 4.9%.

*City Dev
- 2Q17 net profit fell 17.9% to $109.9m, bringing 1H17 earnings of $195.3m (-18.3%) to 33% of full year consensus estimate.
- Revenue slumped 21.8% to $854.1m following the TOP of Lush Acres EC and Jewel@Buangkok in 2Q16, although partly offset by healthy sales at Gramercy Park, Coco Palms and The Venue Residences, as well as handover of units in China for Hongqiao Royal Lake and Hong Leong City Center.
- Hotel operations improved from addition of Grand Millennium Auckland and M Social Hotel to its portfolio and better performances from is NY and London hotels.
- Rental properties suffered from disposal of Exchange Tower in Oct '16 and closure of Le Grove Service Apartments for a major revamp plus FX loss booked by CDLHT.
- Bottom line was impacted by absence of one-off gains of $12.7m and JV loss of $4.8m (2Q16: $9.8m profit) after the completion of JV projects, namely Bartley Ridge and Echelon.
- On outlook, management sees stronger activity in the Singapore residential market.
- Maintained special interim DPS of 4¢.
- Trades at 13% discount to its RNAV/share of $13.48 and 1.14x P/B.

*Wilmar
- Turned around to 2Q17 core net profit of US$37.3m against US$220.3m loss a year ago and US$361.6m profit in 1Q17.
- This brought 1H17 core earnings of US$349.9m to 28% of full-year consensus estimate.
- Revenue rose 13.2% to US$10.6b on back of higher commodity prices and stronger sales in oilseeds and grains as well as sugar businesses
- EBITDA margin expanded 2.5ppt to 2.9% from higher soybean volume and positive crush margins.
- Headline earnings of US$60.2m (2Q16: US$220.1m loss) were lifted non-operating investment gain of US$24.1m (2Q16: US$1.2m).
- Interim DPS raised to 3¢ (1H16: 2¢).
- Trading at 13x forward P/E.

*Noble Group
- Blew out a 2Q17 net loss of US$1.75b after taking a massive US$1.26b writedown on the value of its commodity contracts and derivative instruments.
- Revenue fell 19% to US$10.05b on a 20% slump in sales volume, while supply chain income plunged to a US$266.9m loss, hurt by significant credit constraints.
- Notably, operating cash outflow of US$763m (1Q17: US$278m outflow) translated to a sizeable expansion in adjusted net debt-to-capital to 55.2% (1Q17: 29.6%).
- Debt reduction remains a priority.
- NAV/share almost haved to US$1.60/share.

*ST Engineering
- 2Q17 net profit slipped 12.3% to $111.5m, weighed by a swing into operating loss for the marine segment.
- This brought 1H17 earnings to $215m (-9.5%), or 40% of FY17 street forecast.
- Quarter revenue improved 8.2% to $1.76b led by strong growth in electronics (+40%) which outweighed the slump in marine (-34%), while other core segments aerospace (+3%) and land systems (+1%) were stable.
- Operating margin slipped 1ppt to 7.4% on poor performance in marine due to weak industry conditions and US shipyard, as well as an unfavourable sales mix in electronics.
- Order book remained strong at $13.5b (1Q17: $13.3b).
- Management tweaked FY18 pretax profit guidance lower from higher to now comparable, while revenue guidance remains comparable.
- Interim DPS maintained at 5¢.

*IREIT Global
- 2Q17 DPU slid 9.4% to 1.45¢, as €0.6m was retained from distributable income of €6.4m (+0.6%).
- 2Q17 gross revenue and NPI rose to €8.8m (+4%) and €7.8m (+2.7%), due to inflation-linked rental adjustment and one-off compensation from a tenant.
- Portfolio occupancy slipped 1.1ppt q/q to 98.7%, while aggregate leverage fell 0.8ppt q/q to 41.3%.
- Last traded at 2Q annualised yield of 7.3% and 1.18x P/B.

*SBS Transit
- 2Q17 net profit surged 77.7% to $15m thanks to a 30% slide in other operating costs within its public transport services segment.
- Revenue grew 7% to $287.8m on increased ridership across DTL (+14.1%), NEL (+1.4%) and LRT (+6.1%), although partially pared by reduced contribution from other commercial services (-15.3%).
- Bottom line was bolstered by reduced fuel and electricity cost (-10.4%).
- Hiked interim DPS to 3.65¢ (2Q16: 2.35¢).
- NAV/share at $1.40.

Thursday, August 10, 2017

SG Market (10 Aug 17)

MARKET OVERVIEW
- The market is expected to turn risk-off on renewed geopolitical worries.
- Technically, MACD or the STI has exhibited a bearish crossover. Underlying support for the index lies at 3,275 with topside resistance at 3,360.

CORPORATE RESULTS
*F&N
- 3QFY17 net profit surged 59.9% to $60.7m mainly from increased associate income arising from its 18.74% stake in Vinamilk.
- This brought 9MFY17 net profit to $87m (+15.8%) or 76% of the FY17 consensus estimate.
- However, revenue in the quarter slipped 8.6% to $483.1m on weaker contributions across beverages (-17.1%) and dairies (-3.3%) on competitive pricing pressures, as well as reduced contribution from printing & publishing (-9.2%).
- Bottom line was weighed by increased FX loss of $4.6m (3QFY16: $0.9m loss) although mitigated by higher investment income of $33.4m (+107.3%).
- NAV/share at $1.98.

*Jumbo
- 3QFY17 results missed estimates on a 1.1% slip in net profit to $3.4m, as operating expenses rose at a faster pace from business expansion.
- Revenue grew 6.4% to $34.8m on increased contributions across Singapore and China outlets.
- Gross margin held at 62.7% (-0.2ppts).
- Opened its fourth China outlet in Beijing last month and first franchised restaurant in Ho Chi Minh City in May.
- Trades at trailing P/E of 24.6x.

*ISEC Healthcare
- 2Q17 net profit of $1.9m (+12%) came in at the low end of estimates.
- Revenue climbed 12% to $9.2m, bolstered by new contributions from four recently-acquired general clinics in Singapore.
- Gross margin held relatively steady at 47.3% (-0.2ppt).
- Interim DPS raised to 0.5¢ (2Q16: 0.22¢).
- Last traded at 20x FY17e P/E.

*Hong Leong Finance
- 2Q17 net profit soared 89% to $20.9m, mainly helped by lower interest expense (-30.2%) and reduced staff costs (-6.4%).
- However, on the back of a smaller loan base of $9.56b (-4.8%), net interest income declined 10.1% to $54.8m.
- Proposed higher interim DPS of 4¢ (2Q16: 3¢).
- NAV/share at $3.85.

*QAF
- 2Q17 net profit slumped 72% to $8.1m in absence of a $9.7m disposal gain booked last year from sale of its 20% stake in the KL business.
- Revenue edged 1% higher to $209.8m from rise in bakery operations (+5%) on strength in Philippines, but was pared by weakness in primary production (-2%) on lower ASPs.
- Bottom line was hit by higher distribution costs due to higher fuel prices.
- Maintained interim DPS at $0.01.
- NAV/share at $0.934.

*BHG Retail REIT
- 2Q17 DPU was flat at 1.35¢ despite a larger unit base (+4.7%).
- Revenue rose 3.2% to $15.8m on positive rental reversion and improved occupancy, although pared by a weaker yuan, while NPI rose at a faster clip to $10.9m (+5.7%) from favourable tax in China.
- Portfolio occupancy edged up 0.3ppt q/q to 98.9%, while aggregate leverage ticked 0.1ppt lower to 32.4%.
- Trades at 2Q annualised yield of 7.3% and 0.88x P/B.

*Fragrance Group
- 2Q17 net profit climbed 3.1% to $3.8m, on 14% rise in revenue to $34.9m.
- Top line benefitted from higher property development contribution from City Gate project, improved occupancy in investment properties, and newly acquired The Imperial Hotel in UK.
- Gross margin expanded 5.9ppt to 41.6%, bolstered by its new UK hotel.
- Bottom line was dragged by an absence of tax credit.
- NAV/share at $0.157.

*Boustead Projects
- 1QFY18 net profit slipped 5% to $5.8m as revenue dropped 25% to $45.7m.
- The decline in sales was due to weakness in the design-and-build segment (-28%) on reduced work progress and less contracts secured, while leasing (-7%) was impacted by AusGroup's early lease termination of the 36 Tuas Road property.
- Gross margin expanded to 32% (+10ppts) from improved productivity and cost savings from projects.
- NAV/share at $0.736.

*MoneyMax
- 2Q17 net profit jumped 20% to $1.7m on lower taxes.
- Revenue leapt 37% to $41.1m on stronger pawnbroking business, as well as retail and trading of pre-owned items.
- However, gross margin of 26.4% (-3.6ppt) was squeezed by higher material costs.
- Bottom line was alsoy weighed by increased operation costs due to the business expansion in Singapore and Malaysia, as well as higher finance costs.
- NAV/share at $0.1844.

*Rotary Engineering
- 2Q17 net profit tumbled 43% to $1.2m, from contraction in gross margin to 22% (-7.1ppts) and FX loss of $0.3m (2Q16: $0.3m gain).
- Revenue grew 21% to $62.8m on newly secured projects.
- NAV/share at $0.285.

*QT Vascular
- Swung to 2Q17 net loss of US$5.6m (2Q16: US$15.2m profit) in absence of a US$24.1m write-back for legal liability.
- Revenue jumped 47.8% from a low base to US$3.5m on increased sales of chocolate® PTA Balloon Catheter to Medtronic.
- However, gross margin compressed 19.5ppt to 26.6% following the termination of distribution agreement with Cordis.
- Net liability value at US$0.01/share.