Wednesday, September 30, 2015


Biosensors: Following a regulatory approval obtained in Aug-15, Biosensors announced that they will commercialize its BMX-J drug eluting stent (DES) system in Japan from 1 Oct 15.

The BMX-J is an OEM version of the Nobori DES, which includes a biodegradable polymer and Biosensors' proprietary drug, Biolimus A9.

OCBC understands that the technology is already well accepted by cardiologists in Japan. Keeping in mind that the contractual agreement between Biosensors and Terumo is slated to end in 2016, Biosensors has been expanding its distribution reach across Japan, and they will continue to expand their channels to increase coverage.

House maintains HOLD with TP of $0.63.


SMRT: A major market concern over SMRT is now finally out of the way. LTA announced last week that a financial penalty of $5.4m will be imposed on SMRT for the 7 Jul system-wide disruption on North-South and East-West Lines (NSEWL). After thorough investigations, LTA concluded that the disruption could have been prevented if not for SMRT’s maintenance lapses.

Coupled with the fine, OCBC believes SMRT has learned its lesson and expects it to ramp up maintenance processes to prevent future lapses. Also, with a common interest of ensuring minimal rail services disruption going forward, rail reform will free up SMRT’s free cash flow by removing SMRT’s capex obligation and allows it to focus on ramping up maintenance processes.

House believes with Singapore’s GE15 over and the new transport minister appointed, it does not rule out the possibility that the rail reform could potentially be accelerated. Keeping forecasts unchanged, OCBC reiterates BUY with TP of $1.45.


Memtech: CIMB visited Memtech’s Dongguan factory, one of its three manufacturing facilities in China, where the breakdown of sales for consumer electronics, telco equipment and automomative is 50/30/20, and utilisation about 80%/

Going forward, Memtech could see meaningful contribution to FY16 topline, as it is currently the only supplier of silicone rubber parts for Beats new model. Beats is market leader in premium headphones and was acquired by Apple in 2014.

Nearer term, consumer electronics sales could also pick up, especially if Amazon’s orders strengthen in anticipation of the year-end gift season. Nevertheless, there could be some offset from automotive, given a slower outlook in China.

The house maintains its Add call, with TP of $0.17. Share buybacks should provide support in share price.

SG Bank

Banks: Daiwa initiated on the sector positively, citing that earnings growth is underpinned by margin expansion in the banks' core lending businesses.

House expects Singapore banks to be the major beneficiaries of the imminent decoupling of asset (and non-interest income) growth rates, which are set to slow, and interest rates, which are set to rise in response to the US Fed’s actions.

Rising interest rates are a positive for these banks and would widen their net-interest margins (NIMs), with asset yields rising more than their core deposit costs.

At current forward P/E and P/B valuations, all banks are trading below their 10-12 year mean levels and, with the exception of OCBC, have not reached 1SD below these mean levels.

Pecking order: DBS (Buy, TP $23.60), OCBC (Buy, TP $11.80) and UOB (Outperform, TP $21.30).

SG Market (30 Sep 15)

Singapore shares may see a slight respite today, after Wall Street ended higher after a volatile session, on stronger-than-expected consumer confidence and rising house prices.

Mining giant Glencore rebounded sharply (+17%) in London last evening, after the company retorted it was operationally and financially robust, despite critics' fears that the low commodity prices could negatively impact earnings.

Regional bourses are generally higher this morning in Tokyo (+1.9%) and Sydney (+1.5%), but lower in Seoul (-0.5%).

From a chart perspective, STI may see a slight rebound in the near-term supported by the rising indicators. Topside resistance is at 2,850 (14-dma), while support for the index is at 2,670.

Stocks to watch:

*SinoCloud (former Armarda): Post acquisition of a 63% stake in a Tier-4 data centre in Guiyang, SinoCloud has formed a management unit, SinoCloud Asset Management, to manage the centre. The unit will be spearheaded by industry veteran Zhang Dai, who previously served as a management team member responsible for China Telecom's data centres.

*Khong Guan Flour Milling: FY7/15 net profit slid 6.8% y/y to $1.2m as revenue remained flat at $62m, mainly supported by higher sales from its Malaysian subsidiaries, but negated by lower short-term trading income. Bottom-line was dragged by higher FX loss due to a weakening ringgit, partially offset by stronger performance of associates. A first and final DPS of $0.03 was maintained.

*Serrano: Disclosed that 122.4m (81.6%) of rights shares were subscribed, of which 67.6m rights shares were accepted by its undertaking lenders. The remaining 34m shares will be allotted and issued to satisfy excess applications. The corporate action helped raised $8.2m in net proceeds.

*Biosensors: Will commence sales of its BMX-J drug-eluting stent system in Japan starting from Oct ‘15. Group has already established a distribution channel across Japan and hopes to expand these channels to increase coverage and sales going forward.

*CNMC Goldmine: Produced a record 3,771.2oz (+28.1% from previous high) of gold in a single gold pour, highest output since the start of its gold production in Jul ‘10.

Tuesday, September 29, 2015


O&G: Morgan Stanley is calling it quits on its Overweight call on the energy sector, after upgrading it at the start of 2015, on grounds that the oil supply glut will be here to stay.

Lowering the sector to Market Weight, the house opines that the supply situation in oil will not improve for at least another 12 months and that investors would be able to find better entry points in the next six to nine months instead.

The downgrade was in part due to the realisation that the US shale revolution had meant that US shale drillers can continue to make decent margins even at US$60/bbl. This is evident in US crude oil production, which has not wavered even though prices have fallen drastically.

In fact, the house posits that crude oil is not much different from natural gas, implying that low prices are here to stay. The futures curve for WTI crude supports this claim, with contracts for 2023 delivery priced below US$60/bbl.

With oil prices set to be stuck in the doldrums, the offshore sector looks set to continue to be buffeted by headwinds including concerns over high debt levels as well as contract cancellations.

At a recently concluded stress test, Maybank-KE notes that the offshore sector could face a far worse shakeout should oil prices lead to a 10% cut in revenue.

Overall, the stress test revealed most at risk counters include Vard (Sell; TP: $0.39), Cosco (Sell; TP: $0.40) and Swiber (Hold; TP: $0.30), while Ezion (Buy; TP: $1.40) should be able to weather the storm better with its more secure liftboat charter contracts.

Sembcorp Industries

Sembcorp Industries (SCI): Is developing a 426MW natural gas-powered power plant in northwestern Bangladesh under a public-private partnership, marking its maiden foray in this emerging South Asian market.

Wholly owned Sembcorp Utilities will take a 71% stake in the US$390m build-own-operate project, while North-West Power Generation Company, a subsidiary of the Bangladesh energy board will own the remaining 29%. SCI's portion of the investment will amount to US$68m, implying a 75/25 debt equity structure.

The greenfield plant is expected to be completed by 2018 and will be backed by a 22.5 year power purchase agreement with the government.

Maybank KE views this award as a long term positive given the lack of domestic opportunities for its utilities arm. The landmark project will go a long way to meet the growing energy needs of Bangladesh as the current generation capacity is insufficient to cope with demand.

Plans are afoot to add another 10GW of capacity over the next decade and as the first foreign investor to enter such a deal in the Bangladesh power sector, SCI is in good stead to capitalise on the growth opportunities in the country.

Project cost of US$0.9m/MW appears favourable compared to the global benchmark of ~US$1.2m/MW. Maiden contributions are expected to come in only from 2018 onwards, adding ~$10-15m to SCI’s earnings. As with its India power projects, the Bangladeshi plant would probably not operate at full capacity at the onset due to potential teething problems.

Nevertheless, near term catalysts for SCI are lacking with concerns about its offshore outlook. But with the proposed divestment of SembSita possibly raking in about $482m in cash, its dividend yield of 4.2% is likely to be sustained. This could help provide some support to the counter.

The house maintains a Hold rating on SCI with a TP of $3.67.

SG Market (29 Sept 15)

Singapore shares likely to face further downside risks today following the sell-off overnight in Wall Street, on risk-off sentiment ahead of several key economic indicators due later this week.

STI is now in bear market territory after losing 21% from its peak at 3,539 in Apr '15.

Commodity traders Noble, Olam and Wilmar may come into negative limelight, after commodities and mining giant Glencore plunged 30% overnight, on concerns that it is not doing enough to cut its debt to withstand a prolonged fall in global metals prices.

Regional bourses opened poorly this morning in Tokyo (-2.3) and Sydney (-2.8%). Seoul is closed today for Harvest moon Festival.

From a chart perspective, the STI look to trend lower towards the next support level at 2,700, underpinned by falling technical indicators and a bearish MACD crossover. Near-term resistance level is at 2,850.

Stocks to watch:
*Strategy: Fund manager Samsung Asset Management cited little value in Singapore shares even as the market is trading at the widest discount to global equities in more than a decade. The faltering growth in China and the prospect of higher US interest rates leave shares vulnerable to more losses.

*Sembcorp Industries: Marked its maiden foray into Bangladesh with the development of a 71%-owned 426MW power plant, which will cost ~US$390m and is expected to be completed by 2018. Power will be supplied to the national grid under a 22.5-year power purchase agreement with the government.

*Croesus Retail Trust: Acquiring Torius Property, a completed retail property in Fukuoka comprising 36 buildings for ¥7,997m ($95.2m), at a 3.7% discount to market value. To finance the acquisition, Croesus is proposing a renounceable rights issue of 114.2m new units on a basis of 22-for-100 at an issue price of $0.61 apiece.

*Olam: Intends to expand its African coffee farmland to 5,000 hectares from the current 2,200 hectares, without providing a timeframe. Olam's farms are in early phases of development and production has been limited so far.

*Huationg: Secured four earthwork contracts worth an aggregate $81.3m, expected for delivery over the next three years.

*Ezra: Norway's DNB Bank acquired a substantial stake in Ezra via off-market purchase of 207m shares at $0.12 apiece on 25 Sep, bringing its stake from zero to 7.04%.

*Travelite: Non-binding MOU with Dato’ Dr Tan Hian Tsin to purchase a 50% stake in apparel wholesaler and retailer, Singapore Crocodile (1968).

*Weiye: Proposed spin-off and listing of clean room and HVAC equipment business on Catalist.

*Ryobi Kiso: Secured $32.4m worth of contracts for foundation and geoservices, bringing the total new contracts secured since Jan 2015 to $88.3m.

*iX Biopharma: Granted Japanese patent for its WaferiX drug delivery technology, expiring in Oct ‘30. The grant follows its successful Phase 2 clinical trials for its Wafermine product.

Monday, September 28, 2015


Oil: A Bloomberg feature talks about oil traders may now look to the sea for storing oil for future use amid the ongoing glut. Traditionally oil has been stored on land.

Oil laden vessels have been parked offshore from Singapore to Gulf of Mexico, amid expectations for the contango to widen enough for those who own storage to lock in profit.

Although the contango is not wide enough yet, it could become so if OPEC to overproduce.

Link to story here:

GLP/ Wingtai

Property: OCBC notes that developers have spent $242m in 3Q15 to repurchase their shares; this is the highest quarterly figure seen since 2013 and more than eight times the previous high in 4Q13.

The house notes GLP begun repurchasing its shares on 3 Aug 2015 and have since went into the market 35 times to purchase approximately 96m shares worth S$213m, and thinks it is a good use of capital given its current 34% discount to RNAV and 15% discount to book.

Meanwhile, Wing Tai has entered four times to repurchase $1m of shares, and the house sees solid long term value in current share price at 58% discount to book and 57% discount to RNAV

The house has Buys on GLP (TP $3.07) and Wing Tai (TP: $2.58)


Vard: Clinched new contracts worth over US$100m (NOK852.4m) from a new customer, Dubai-based Topaz Energy and Marine, for two offshore subsea construction vessels.

The two vessels will be designed by Vard Design in Ålesund, Norway, while the hulls will be constructed at Vard Tulcea in Romania, with delivery by Vard Brattvaag in Norway in 3Q17 and 4Q17, respectively.

This is the second contract that the embattled shipbuilder has secured since the release of its disappointing 2Q results in Jul, which was plagued by operational issues amid the waning oil price.

Although its share price seems to have found a bottom at $0.28, which translates to 0.46x P/B), investors are still awaiting the outcome of Vard's appeal to the Brazilian tax authority, on its outstanding tax liability of NOK200m.

Vard has not made any provision for this huge tax liability, and rejection of its appeal could tip the yard into an untenable financial position, given its current net gearing of 222%.

Previously, management guided the utilisation rates at its yards to deteriorate further in 2H15 and into 2016. Hence, investors could take any bounce in share price as an opportunity to exit.

At the current price, Vard is trading at a 27% discount to its book value of $0.61.

Brunei's DST Communications/ MyRepublic

Telecoms: Brunei's DST Communications backs potential 4th entrant MyRepublic
The telecom sector took a hit today on news that Brunei's largest telco, Malaysian-owned DST Communications invested in potential fourth entrant MyRepublic.

Incumbents SingTel dropped 4.1%, M1 1.4% and StarHub lost 2.0%.

Over the weekend, MyRepublic, which is gunning to be the fourth mobile operator in Singapore, secured a US$16m ($23m) investment from the Bruneian telco to fund its upcoming Mobility Trial service next month.

This has brought the total amount of funding to US$43.6m. Other investors backing MyRepublic include Indonesia’s giant conglomerate Sinar Mas and French billionaire Xavier Niel, who founded mobile and internet services provider Free in France.

The company is exploring small cell LTE technology, which uses small units that allow for better coverage in enclosed spaces and moving vehicles. Owing to its shorter reach compared to traditional base towers, the capex requirements are significant in order to provide nation-wide coverage.

Maybank-KE believes the risk-reward profile in the sector is not appealing currently, weighed by several factors that will impact its performance going forward. These include:

1) The timing of the Fed raising interest rates and the spread between telco’s dividend yields and long-term government bond yields
2) Global macro concerns like the Greece bailout programme
3) China stock market rout and the strength of the US economy

The house has maintained a Neutral call on the local telco sector and keeps StarHub (TP: $5) as its sole Buy in the sector, with M1 (TP: $3.65) and Singtel (TP: $4.50) on Hold.


Telcos: SingTel, together with its peers (M1 and Starhub), share prices for the three telco companies have taken a hit today, perhaps due to the completion of fund raising by potential new entrant, MyRepublic.

Over the weekend, MyRepublic secured funding of US$16m ($23m), mainly from Brunei telco DST Communications.

MyRepublic is gunning to be the fourth telecommunications provider in Singapore, after SingTel, Starhub, and M1.

DST’s investment into MyRepublic is expected to help the upstart telco to push its Mobility Trial this Oct. The company is exploring small cell LTE technology, which doesn’t require the use of large base towers to work. Instead, it uses small LTE units that allow for better coverage in enclosed spaces and moving vehicles.

Insider trades

Insider trades: Asia Insider notes that buying picked up strongly though insider selling remained low for the week ending 25 Sep.

Purchases: 20 companies recorded 47 purchases worth $10.63m, vs.19 firms, 40 transactions worth $4.3m the week prior.

Selling: One disposal worth $0.09m, vs. nil sales the previous week.

Buybacks: 30 companies made 117 repurchases worth $77.6m, vs. 32 corporates, 106 repurchases worth $182.4m.

Notable transactions:

Mencast: First buyback since Dec ’14, with 50,000 shares transacted at an average of $0.20, on the back of a 44% drop in share price since Jul. CEO Glenndle Sim had previously acquired 69,000 shares in Jun at $0.32 each.

Technics Oil & Gas: Co-founder and executive director David Tay bought for a first since Feb ’13, with 1.5m shares purchased at 64¢ each, on the back of a 14% drop in share price since Jun. His previous acquisitions included 0.5m shares at 38¢ in Feb ’13 and 1.59m shares at $0.89 between May-Dec ’11, and a net disposal of 62,000 shares in 2008 at 38¢.

Hong Fok: Joint chairman and joint managing director Cheong Sim Eng continued buying with 98,000 shares purchased at $0.68, lower than the previous acquisition of 456,000 shares from Jan to Mar this year at an average of $0.84, and Sep to Dec ’14 at average of $0.96.

Sunningdale Tech: Executive chairman Koh Boon Hwee made continued from his purchase in 8 Sep of 467,000 shares (maiden on-market trade), further picking up another 270,000 shares at average of 15.9¢. The trades were made on the back of a 31% drop in share price since May.


SIIC: Deutsche reiterates its Buy on valuation grounds, being over 10% discount to peers.

The house cited positive catalysts, which include 50% yoy 2H15E earnings growth, upside from new project acquisitions, asset injection and Hong Kong dual-listing possibly early next year.

However, it cited that the progress and timetable of the injection and listing will be dependent on any developments in major M&A deals under negotiation and the overall market conditions.

The house has a TP of $1.40.

Capitaland Mall Trust

Capitaland Mall Trust (CMT): Nomura upgraded the counter to Buy despite a lower TP of $2.18, citing that it is trading at the highest yield of 6.1% since 1H09.

Potential catalysts for re-rating include:
1) A relative lower cost of debt from the number of options available to it;
2) Better operating leverage;
3) Potential accretion from divestment or acquisition options.


Property: Over the weekend, the first EC project was launched since the qualifying income ceiling was raised from $12k to $14k at the National Day Rally.

However, sales at Signature at Yishun were lukewarm, with just ~20% of its 525 units released sold, despite the lower-than-average price tag of ~$750 psf compared to ~$800 psf for other ECs.

Market observers cite that the application rate of just under one buyer per unit is a clear indication that the market is weak, perhaps further exacerbated by the fragile global environment and stock market.

In addition, some buyers may be concerned about the expected rise in interest rates and their employment security.

Overall, Maybank-KE believes that prices for the mass-market segment still remain elevated and any anticipated policy easing may only come later.

The house top property picks are Wing Tai (Buy: TP $2.37), Ho Bee (Buy: TP $2.75) and City Dev (Buy: TP: $11.40).

SG Market (28 Sept 15)

Singapore shares are likely to remain tepid this week, following the volatile session in Wall Street on Fri, with no clear signals on the global economy.

Jittery investors may take a risk-off stance after Singapore’s manufacturing output plunged 7% in Aug, raising fears of a technical recession in the 3Q and regional economies are faring no better with China’s manufacturing PMI hitting the lowest level in over six years and Japan’s core inflation dropping for the first time in two years.

It is a short trading week in Hong Kong with the market closed today and Thursday. Hence, catalysts may be limited until the later part of the week when several key economic indicators will be released in China and US on Thurs and Fri.

Regional bourses are generally mixed this morning in Tokyo (-1.5%), Seoul (-0.2%) and Sydney (+0.4%), with Hng Kong closed today and on Thu. Foucs will be on the US spending bill which lawmakers have to pass before 1 Oct and several key economic indicators to be released in China and US in the later part of the week.

From a chart perspective, the STI may re-test the Aug low of 2,808, with near-term resistance at 2,850.

Stocks to watch:
*Property: Signature at Yishun, the first EC project launched since the qualifying income ceiling was raised from $12k to $14k, sold about 20% of its 525 units at ~$750 psf, below the average ~$800 psf for other ECs.

*Vard: Secured new contracts worth over US$100m from new customer, Topaz Energy and Marine, to design and construct two offshore subsea construction vessels. Delivery is scheduled for 3Q17 and 4Q17.

*CMC Infocomm: Awarded two contracts worth $4m from the Singapore telco companies to carry out in-building coverage projects and network migration. This brings its outstanding order book to $21m.

*Oxley: 49%-owned JV Oxley Worldbridge officially launched its second development project in Phnom Penh known as The Peak, a mixed development comprising two residential towers, one commercial tower and a retail podium. More than 30% of the 507 units in one of the residential towers have been sold. Construction for the project is expected to start in early 2016, with completion scheduled by 2020.

*HLH: Launched proprietary real estate brand, CAMHOMES, to build the first Singapore style public housing homes in Cambodia. In conjunction, group unveiled its first housing project D'Seaview, a mixed-development project similar to an executive condominium model, in the port city of Sihanoukville. The freehold seafront development will have 735 residential units with prices starting from US$33,000 per unit and a commercial space for retail services, targeted for completion in 2018.

*Tung Lok: Received a counterclaim from China National Decoration (CND) for RMB9m (~$2m) in late payments, in relation to an initial RMB1.6m claim against CND for failure to attain proper fire safety documents for a restaurant in China.

*Sunright: FY15 earnings jumped more than 23x y/y to $3.1m, partly due to a low base effect as well as a 2.9 ppt increase in operating margins to 5.6%. Revenue was flat at $137m, from moderate growth in global demand for semiconductors, but mitigated by lower sales from distribution. Bottom line was boosted by an exchange gain of $1.2m arising from the appreciation of its USD denominated receivables as well as gains on disposal of $1.3m and lower production costs of $1.6m. NAV/share stood at $0.59.

*Declout: To acquire remaining 49%-stake in JV Epecsoft Asia for $21m, to strengthen group's position in the games and toys distribution in the APAC region. Post-completion, FY14 proforma NTA/share is expected to drop to 6.56¢ (-45%), EPS to increase to 0.55¢ (+1.9%), and gearing to rise to 99% (+60ppt).

Thursday, September 10, 2015


Sharing will resume on 28 Sept : )

Trade with caution.


Cordlife: (S$1.385) Jayhawk Capital urges CCBC's shareholders to reject offers
Yesterday, the second largest shareholder of 13.4%-owned China Cord Blood Corp (CCBC), Jayhawk Capital, sent its second open letter to CCBC urging shareholders to reject all three privatisation offers.

In the letter, the US-based private equity firm pointed to the "extremely low" privatisation offer of US$6.40/share by Golden Meditech (GM), and flagged that GM may raise its offer price to US$9-US$10/share, in response to the significantly higher offers by two other bidders.

Jayhawk reiterated its view that CCBC is worth US$20-US$25, if the company heeds its call to:
1) Pay a special dividend of US$125m
2) Implement a US$125m share repurchase programme
3) Pay out regular dividends

Further, the shareholder believes that CCBC may trade up to US$75-US$100 over the next 4-5 years, if it manages to achieve subscriber growth of 10-15%.

The "fair value" prices dwarf CCBC's last traded share price of US$6.40.

Nonetheless, Cordlife is sitting comfortably as the third largest shareholder in CCBC amid the ongoing bidding war.

Maybank-KE's SOTP-derived TP of $1.53/share comprises $0.38/share worth of cash, derived from Cordlife realizing its 13.4% stake in CCBC via the offer from GM. Any other formal counter-offer would be a bonus.


IHC: (S$0.315) Under probe for possible share rigging
SGX has advised caution against trading in shares of International Healthway Corp (IHC), after a review of trades showed that a handful of connected individuals accounted for over 60% of trades done since Apr '15.

Share price of IHC has been locked within a tight range between $0.29 and $0.32 for the past five months, seemingly unaffected by the market turbulence during the past few weeks.

The exchange working with other regulatory agencies to investigate the matter.

To recap, IHC proposed to acquire Healthway Medical Corp (HMC) in Jun through a share swap deal worth $231m.

Shareholders of HMC will receive 2 new IHC shares priced at $0.45 each, for every 9 HMC shares (valued at $0.10) held. Subsequently, HMC will be delisted, and become a fully-owned subsidiary of IHC.

The transaction is subject to court and shareholder approval and raises the question how IHC derived its $0.45 pricing, and the extent to which IHC's share price has been artificially inflated.

IHC called for a trading halt just before market opened today.


CDL HT: CDLHT is marking its maiden entry into the European hospitality sector with the acquisition of the 198-room Cambridge City Hotel in UK for £62.5m ($133.2m).

Cambridge City Hotel is a newly-refurbished upscale hotel offering a comprehensive suite of facilities, and boasts a prime location in Cambridge city centre. It is also within the vicinity of popular tourist destinations such as King’s College, Fitzwilliam Museum, and the Grand Arcade Shopping Centre.

The property comes with a 125-year lease and option for an additional 50-year lease extension. For 1H15, the hotel's RevPAR grew 28.6% y/y to £101. The pro forma annualized NPI yield of the property works out to 5.6%, which translates to a DPS accretion of 1.9%.

The acquisition will be fully funded initially by GBP-denominated debt. Upon completion of the acquisition, CDLHT’s leverage will increase from 32.0% to 35.8%.

Management believes the UK hospitality outlook continues to be buoyant with international tourist arrivals expected to hit a record 35.1m in 2015. The recent streamlining of visa process for Chinese visitors entering UK is also likely to encourage more inbound travel from the world’s largest tourism source market.

The latest acquisition is a step in the right direction, aimed at diversifying the group’s reliance on S’pore’s hospitality industry, which is beset by sluggish tourist arrivals and a stronger SGD versus regional currencies.

At the current price, CDLHT trades at 7.8% yield and 0.8x P/B.

Overall, the street has 9 Buy, 6 Hold and 3 Sell ratings with a consensus TP of $1.66 on the hospitality trust.


DBS: While the economic slowdown in China and its devalued currency could impact the region via slower growth, Nomura believes DBS’s share price correction in recent weeks is overdone, because its earnings should benefit from rising interest rates and relatively stable credit costs.

At 1.0x forward book, Nomura believes the stock offers a good entry point. House expects increasing US interest rates to propel local interest rates and this should lead to higher ROEs, a strong catalyst for re-rating.

Nomura has a Buy rating with TP of $24.30, which implies 37% upside from the current share price.


SGX: Despite policy deleveraging in China, including curbs on CFFEX trading, SGX’s A50 story is unlikely to fade in FY16, as mainland fund managers look offshore to manage risks arising from a volatile domestic equity market.

Moreover, policy-makers seem likely to delay the internationalization of CSI300 futures, implying SGX A50 growth moderation only from FY17. As the cash market shows signs of revival, with August ADT at a two-year high of S$1.5bn, Deutsche is confident that SGX could report average EPS growth of 9% over the next four years, along with dividend yield >4%.

House retains Buy on a reduced TP of $9.40.

SG Market (10 Sept 15)

Singapore shares may take a pause, tracking the slump on Wall Street as investors fretted over a potential rate hike, lower oil prices and underwhelming reception to Aplle’s upgraded products.

Regional bourses reversed gains this morning in Tokyo (-3.2%), Seoul (-0.6%) and Sydney (-2.4%).

From a chart perspective, nearterm resistance for the STI is tipped at 2,950, with support at 2,750.

Stocks to watch:
*Strategy: Renowned Technical Analyst Tom DeMark, who successfully predicted last month’s sell-off in Chinese equities, highlighted that the Shanghai Composite could rise more than 4% in the near-term before resuming its decline.

*Economy: Moody’s downgraded Singapore’s 2015 growth forecast from 3% to 1.7% due to weaker trade and financial flows from China’s slowdown.

*Economy: SBF-DP SME Index shows business sentiments of S’pore SMEs falling to a three-year low at 51.9, with all sectors expecting a decline in both turnover and profitability in 4Q15. The three largest sectors - construction/engineering, manufacturing, and commerce/trading - all reported a drop in optimism for the next two quarters.

*CDL Hospitality REIT: Marked its maiden entry into European hospitality with the acquisition of the 198 room Cambridge City Hotel in the United Kingdom for £62.5m. The property is currently on a 125-year lease with an option for an additional 50 year lease extension. The hotel's 1H15 RevPAR stood at £101, a 28.6% y/y growth. On a pro forma basis, the hotel's income yield is expected to be 5.6%, translating to a 1H15 DPS accretion of 1.9%.

*Global Logistics Properties: Signed new lease agreements totalling 90,000 sqm with five industry leaders in China, four of whom are repeat customers.

*Blumont: 10.7% owned Kidman Resources has received planning approval for production at its Burbanks gold project. Mining will commence immediately and is expected to yield 4,552 oz at 4.32g per ton. The all-in cost of mining is forecast to be about A$875/oz.

*Singapore Medical: Will divest its 49% stake in MindChamps Medical for $100,000. The group is expected to record a gain of $22,000 in FY15.

*Food Empire: A fatal accident has occurred at its manufacturing facility in India, although there are no updates as yet on the assessment of damages.

*China Kunda Technology: Terminated MOU for a strategic business cooperation with Yang Jincheng.

*China Sky Chemical: Has requested trading resumption of its shares from Thur (10 Sep), with the company highlighting that it has fulfilled the necessary conditions set by SGX to resume trading.

*IHC: SGX advised caution against trading in the shares of International Healthway (IHC) after its review of trades showed that a handful of individuals were behind over 60% of trading volume. IHC recently announced the proposed acquisition of Healthway Medical on 19 Jun.

Wednesday, September 9, 2015


Rex: There is an article published on Next Insight today, titled "US$96 m liquid assets but market cap only US$109m". Link here:


REITS: Maybank-KE remains U/w on the REITs sector, cautioning that while SREITs have since fallen 12% year-do-date, the gloomy picture has not changed and economic risks are rising, adding that globally REITs de-rate during economic/financial uncertainty,

The house examines three periods of de-rating (2007, 2011 and 2015), and find commonality in rising risks to growth and tightening credit conditions. While balance sheets were sound in all three periods, 2015 has the added pressure of rising interest cost, USD strength eating into SGD returns, and oversupply of space, none of which were present in 2007 and 2011.

There are more reasons for SREITs to de-rate now than before. SREIT yields have climbed 9% year-to-date, compared to when they climbed 18% and 19% in 2007 and 2011, implying that we are
only half way through this de-rating.

Maybank-KE remains most negative on the retail sector, on back of faltering demand and rising competition, while neutral on the office sector and less negative on industrial.

Overall, the house is downgrading Suntec REIT (TP: $1.33), Mapletree Commercial Trust (TP: $1.10) abd Frasers Centrepoint Trust (TP: $1.61) to sell, and downgrading Mapletree Industrial Trust (TP: $1.43), Starhill Global REIT (TP: $0.69), Keppel REIT (TP: $0.88) and Cache Logistics Trust (TP: $0.97) to Hold. CapitaMall Trust (TP: $1.66) remains a Sell.


O&M: Operating conditions in the O&M industry remain challenging as E&P spending is cut across the sector. Also, oil price forecast cuts suggest global oil companies/offshore drillers should remain cautious on their capex plans well into 2016, which will likely have negative implications on the downstream O&M service providers.

Deutsche has lowered its earnings forecasts for stocks under its coverage and target prices are below the Street.

The house believes Keppel Corp (Hold, TP:$7.00), Sembcorp Industries (Hold, TP:$3.65) and Sembcorp Marine (Sell, TP:$2.00) are better positioned to ride out the storm with their relatively stronger balance sheets, continued investment in capabilities and healthy brand recognition.

Smaller names like Cosco Corp (Hold, TP:$0.36) and Ezra (Hold, TP:$0.13) may face comparatively more headwinds as they juggle with gearing/liquidity issues and industry challenges.


SingTel: HSBC upgraded SingTel to Buy (TP: $4.39), citing a healthy upside from the current unfair discount to its valuations, as well as its relatively defensive business model in the event a fourth mobile player enters the Singapore market.

The house also believes that there is potential to unlock value of its Digital L!fe division eventually, through management's strategy to conduct partial stake sales and other market value discovery methods.

Currently, the stock is trading at a 14.8x PE, below its one-year average of 16.9x.

SG Market (09 Sept 15)

Singapore shares are set to gap up following the sharp snap-back on Wall Street, after signs of stability in the Chinese markets led a rally in global equities.

Regional bourses are trading higher this morning in Tokyo (+4.2%), Seoul (+1.8%) and Sydney (+1.2%).

From a chart perspective, topside resistance for the STI is tipped at 2,950, with support at 2,750.

Stocks to watch:
*Property: Business Times reported that a consortium led by property investor Stanley Quek has purchased a couple of adjacent shop houses in Duxton Hill for $19.6m. The price translates to ~$2,200 psf and has tenure of 72 years.

*Hu An Cable: Facing calls by the local government of Wuxi City in China to sell three subsidiaries to Yixing Jinxiao Copper Industry, even as the group revealed that about 2/3 of Rmb706m orders in the key power generation and transmission sector have been delayed until further notice. The consideration for the proposed disposal will be determined based on a valuation of the assets and liabilities of the group’s three subsidiaries.

*HG Metal: Suing customer Gayathri Steels for $1.8m, being the outstanding amount owed for non-payment of supplies of steel material, including interest. Gayathri has filed a defence, asserting that claim is premature and that HG Metal is not entitled to its claims; counter-claiming for $2.1m plus interest and costs over an alleged breach of contract by HG Metal.

*Challenger: Setting up a subsidiary, Challenge Ventures, to invest in complementary companies in order to expand its physical and digital retail footprint. It will inject an initial $1m into the subsidiary, with an option to invest up to $20m upon identification of suitable investments.

*Union Steel: Terminated the proposed RM41.8m ($14.4m) acquisition of eight parcels of land in Malaysia to expand its recycling business due to the invalidation by the Malaysian court.

*Spackman Entertainment: 51%-owned Novus Mediacorp commenced filming for Korean romance thriller "Life Risking Romance", expected to be released in Korean theatres in 1H16.

*Lippo Malls Trust: Established a $1b Euro medium term securities programme.

Tuesday, September 8, 2015


Yamada: The mushroom farmer surged 9.8% today, with market watchers highlighting that a block of 54.1m nil-paid rights were transacted on 3 Sep.

While no official data has been released in regards to the parties behind the rights transaction, some observers were quick to hypothesize that the 54.1m rights size matched that of Global Yellow Pages’ entitlement, given its current shareholding of 108.1m shares (1 rights for every 2 shares held).

With Yamada’s CEO, Chen Qiuhai undertaking to subscribe for his rights entitlement, this effectively rules him out to be the seller.

Meanwhile, some traders are speculating that the potential buyer of the rights shares could be substantial shareholder Sam Goi, who currently owns a 7.8% stake in Yamada via 90% owned Hydrex International, as he had underwritten to subscribe for rights not taken up by shareholders.

Valuation for Yamada is undemanding, at just 2.5x FY15 P/E and 0.24x P/B.


Cordlife: disclosed that an unsolicited offer for its 13.4% stake, comprising shares and convertible bonds, in China Cord Blood Corporation (CCBC) has been withdrawn with immediate effect.

The US$8.00/share offer from Hong Kong-based Robust Plan was pulled due to the company's change of position following a competing bid from Nanjing Xinjiekou Department Store for CCBC's China business, which will make its minority acquisition of CCBC commercially irrelevant.

Nonetheless, Cordlife remains in a favourable position given its pivotal stake in CCBC amid the ongoing bidding war.

Investors will be watching the key period between now and the upcoming EGM on 14 Sep to see if there is a formal counter-offer for CCBC before Cordlife's shareholders vote on the group’ proposed stake disposal in CCBC to Golden Meditech at US$6.40/share.

At the current price, Cordlife is valued at 30.8x FY16 earnings, compared to its five-year average of 22.5x.


SREITS: Deutsche Bank noted that SREIT have retreated substantially to yield compelling valuations, pricing in potential rate rise expectations and increasing sector volatility.

The sector is currently valued at 0.9x historical book and trades at 0.2 s.d. wider than the average yield spread over 10-year government bonds.

In addition, SREITs are trading 33bps wider than LT average spreads, pricing in a rise in interest rates slightly below the house's expectation for the 10-year yield to rise to 3.1% from 2.6%.

With a higher risk free rate at 3.1% and higher sector beta to account for greater volatility, TPs among REITs under coverage were reduced by 4-15%.

The research house thinks that medium-term fundamentals for the sector remain challenging with rising supply and declining demand, but sees limited downside to the sector, given strong yield support and undemanding valuation.

The house upgrades CCT, MCT and MLT to Buy from Hold, while top picks for the sector are MCT and CT.

Jardine C&C

Jardine C&C: CLSA has applied its new Indonesian Rupiah forecasts on its Jardine C&C model. At USDIDR 12,500 in FY15E and 14,900 FY16E, its earnings forecasts have taken a 4-8% hit over the next three years. Despite this, it maintains its Outperform rating on the stock.

The research house notes that Indonesian automobile sales continue to remain soft with Jul sales slowing 20% YoY to 585.4k units. Despite the lacklustre Indon auto sales, Singapore and Vietnam have shown considerable strength.

CLSA points out that the counter is currently trading in line with its long term average forward PE of 10.3x. However, it is also trading at a 21% and 14% discount to its long term average P/B value and long term NAV. That being said, if the Rupiah continues to decline, or if Astra’s share price falls, the NAV valuation could continue to decline.

With the uncertainty surrounding Indonesia and the Rupiah, CLSA opines that the wider than average discount is warranted. It applies 20% discount to its forward NAV to result in its $33 target price.


Strategy: Nomura has a strategy note for the asean region today. While the house remains cautious on the region, it is recommending an overweight rating for Singapore and Philippines, neutral Indonesia and underweight in Malaysia and Thailand.

For Singapore, despite lacklustre earnings performance overall, the house believes that valuation is extremely favourable. The STI is currently trading at 11.5x forward P/E, 1.4x standard deviations below its long-term average. While negative earnings revisions are a drag, the house does not expect much further downside.

Also, short selling is close to extreme highs, particularly in banks (27%-38% on a 15-day avg. basis), which is unwarranted and has in the past led to short-covering rallies. With continued upside in interbank rates, sentiment on banks should improve even as concerns about credit quality in overseas exposure persist.

The top five stock picks are DBS, OCBC, Singtel, ComfortDelgro and Raffles Medical.

SG Market (08 Sept 15)

Singapore shares may reclaim some ground, with firmer European and regional markets in Tokyo (+0.4%), Seoul (+0.03%) and Sydney (+0.9%) taking over market leadership as Wall Street was closed for Labour Day.

The focus of today’s market action will be on China’s trade figures for Aug with exports forecast to shrink 6.6% (Jul: -8.3%) and imports to contract by 7.9% (Jul: -8.1%) amid weak global demand. If the data turn out to be worse than expected, that would put further presuure on the yuan.

From a chart perspective, the STI is still tucked in an intermediate downtrend with the next support at 2,750 and capped by topside resistance at 2,950.

Stocks to watch:
*Gaming: Fitch views the gaming industry in Singapore and Malaysia as stable despite slipping tourist arrivals, shrinking VIP business and lower win rates, as both have withstood uncertain macroeconomic conditions. However, their market share in Asia Pacific will decline if the weak backdrop persists for another 12-18 months.

*GLP: Signed 1.4m sf of leases in China with Best Logistics and SF Express, which are expanding in five cities across China to cater to increasing demand for express delivery services driven by e-commerce.

*Hutchinson Port: Declined offer by parent Hutchison Port Holdings to acquire its 50% equity interest in Zhuhai International Container Terminals, as management is of the view that the investment does not meet the trust’s criteria, factoring into account volume trends of foreign cargoes, competition and synergies.

*Raffles Medical: Opening its first medical centre in Japan within a 5,400 sf facility at Herbis Osaka which offers family medicine, travel medicine, dermatology, aesthetics, chinese medicine, and health screening services.

*Tee Land: Acquiring a 24,704 sqm freehold land at Rangsit Klong 1, Patumthani Province, Greater Bankok, Thailand from Mrs Yuree Sethawan, via its associate Chewathai, for THB92.6m ($3.66m) to develop a landed housing project. The acquisition will be financed via internal funds and bank borrowings and is expected to complete by Dec '15.

*QT Vascular: Received CE mark clearance for its peripheral drug-coated balloon, Chocolate Touch from Lloyds Register Quality Assurance Notified Body Number 0088.

*Cordlife: Disclosed that the unsolicited offer from HK-based Robust Plan for its shares and convertible bonds in China Cord Blood Corporation has been withdrawn with immediate effect.

*CEFC: Framework cooperation agreement with CEFC Shanghai International Group to be its exclusive procurement and supply platform for all of CEFC Shanghai's overseas procurement and supply activities for crude oil and petroleum products.

*YuuZoo: Partnered Sweden-based Circle of Champions (CoC) to distribute and market CoC's Android and iOS mobile games developed for 11 of the world's most popular football teams. Under the agreement, YuuZoo plans to build online platforms for the football teams, which will facilitate downloading the games, as well as enabling users to purchase fan merchandise and interaction. The sales from all activities will be shared between CoC and YuuZoo.

*Fabchem China: Cautioned that 2QFY16 revenue and profit will be significantly lower y/y, amid the temporary closure of Port of Qingdao and Port of Weihai for exports of commercial explosive products following the recent explosion at Port of Tianjin. Production schedule may also be impacted due to limited warehouse capacity for export-ready products. In addition, subsidiary, Hebei Yinguang Chemical is expected to incur operating losses due to China's slowdown and challenging commodity market conditions.

Monday, September 7, 2015


Wilmar - Deutsche downgraded the stock to sell this mornign with TP of $2.00. The house highlights that RMB depreciation and rate cuts, combined with a potential rate hike in the US, will reverse Wilmar's interest abritrage profit on 2016. Note that WIL recorded net interest income of US$77mn in FY14 despite net debt of US$15b. Deutsche cuts FY16 EPS by 13% in anticipation of potential interest cost normalization. Downgrade WIL to Sell on the basis of negative FY16E earnings growth and a potential de-rating due to reduced transparency.

Insider Trade

Insider Trade: Asia Insider notes that buying fell for the first time in four weeks for the week ending 4 Sept, while selling remained weak.

Purchases: 29 companies saw 68 purchases worth $2.76m versus 50 companies with 122 purchases worth $19.4m in the prior week.

Sales: One firm had four disposals worth $0.37m, compared to one company with two transactions worth $0.83m the previous week.

Buybacks: 30 companies made 110 repurchases worth $91.3m, against 37 firms with 137 buybacks worth $126.9m the week before.

Notable transactions:
Centurion: Bought back 2m shares at average price of $0.423, following a 29% drop since May. The transactions accounted for 57% of the stock’s trading volume.

Tat Hong: Bought back 1.24m shares at average price of $0.469 after a 21% share price drop since Jul. The trades represented 48% of the stock’s trading volume. Its previous buybacks were in Oct ’14.

Trek 2000: Bought back for the first time since Jan ’08 308,000 shares at average price of $0.298, after the stock plunged 41% since May. The trades accounted for 73% of the stock’s trading volume.

ASL Marine: Chairman and managing director Ang Kok Tian recorded his maiden on-market trade of 8,000 shares at an average purchase price of $0.336. This comes after the share price sank 31% since Jan.

Lum Chang: Chairman Raymond Lum continued where he left off in Jun, purchasing 1.12m shares at average price of $0.364. The trades comprised 87% of the stock’s trading volume, and came after the stock tumbled 12% since Jul.


YuuZoo: The social e-commerce and payments company secured access to $30m in capital funds from GEM Global Yield Fund (GEM).

The agreement will allow YuuZoo to draw down the funds offered over three years by issuing shares to GEM at 10% discount to the prevailing closing price.

There is however, no obligation on its part to draw on the offered funds and it retains the ability to control the timing and maximum amount of any drawdown on condition that GEM does not hold more than a 19.9% stake of YuuZoo at any one time.

In addition, YuuZoo will issue 55m new warrants to GEM carrying an initial exercise price of $0.70 with the exercise prices reset to 110% of the share price (currently $0.142) after 12 and 24 months from 4 Sep. The warrants will have a validity of five years.

As part of the agreement, it will pay GEM’s associate, a one-off commitment fee of $450,000. The deal is also supported by a share lending agreement between YuuZoo’s chairman and CEO, Thomas Zilliacus and GEM at no cost during the period between YuuZoo making the drawdown request and the issue of shares to GEM.

YuuZoo intends to convene an EGM to seek approval after it obtains approval from SGX with regards to the listing and quotation of shares to be issued to GEM.

Overall, the agreement provides YuuZoo with an alternative funding option as it continues its expansion plans. Recently, it announced the acquisition of key assets in Camigo Media, a Chinese mobile game developer through the issue of shares. The assets include user data of over 26m users, 11 mobile games, and the Camigo brand.

YuuZoo is currently trading at 12.5x forward P/E.


Yoma: CLSA anticipates headwinds for the group amid political uncertainty from the general election in Nov '15 and a softening property market, but remains optimistic on Myanmar's long term growth.

The uncertain outcome of the Nov '15 general election has broadly weighed on the stock market, with uncertainty exacerbated by the recent termination of Shwe Mann, a possible presidency candicate and Chairman of the ruling Union Solidarity and Development Party (USDP) by Thein Sein, the current President of Myanmar.

Dragging the group further is a softening property market with average ASP lowered to US$207psf in 2Q15 from US$268psf in 1Q15, partially due to rising competition from foreign developers who entered the market over the past two years.

Internally, Yoma is transitioning to a new leadership team with Melvyn Pun , son of Serge Pun who is the largest shareholder with 37% stake taking the helm as CEO of the group. However, the house expects minimal impact from new management as strategic direction of the group is expected to remain unchanged.

Given the challenging macro environment, CLSA has revised its forecast of Yoma's ASP by 10-15% and widen its RNAV discount to 50% from 30%, but the house perceives long-term fundamentals in Myanmar remain positive. Therefore, the house lowered its rating to Outperform from Buy and TP to $0.40 from $0.60.


Telco: Intense competition for the three telcos over the weekend at Comex further reaffirms the increased competition in the industry.

The slashing of broadband rates was the headline, with the new providers- MyRepublic and ViewQwest cutting subscription rates to grab market share, which would ultimately lead to lower broadband rates going forward.

The cable TV segment is also seeing headwinds, with the two new competitors pushing with IPTV and VPN-free services such as NetFlix and Hulu, giving devices with free subscription for a minimum 12-month period.

CLSA expects the most hard-pressed telco among the three incumbents would be Starhub, given that most of its revenues are from the two highly penetrated segments.

House maintains its Underperform ratings on both Starhub (TP: $3.61), & M1 (TP: $2.93), and Outperform on SingTel (S$4.39).


Ramba: (S$0.205) MOU to farm out working interest in Lemang exploration block
Ramba entered a MOU with an undisclosed strategic investor to farm-out a 25% working interest in its Lemang production sharing contract, which 80.4%-owned PT Hexindo Gemilang Jaya holds a 51% working interest in.

The aggregate consideration for the deal is up to US$128.3m, consisting upfront cash of US$18.8m and the remaining in tranches upon achieving milestones, in exchange for oil in one of Ramba's two exploration assets.

The Lemang block is recently valued at US$193.6m based on the gross prospective recoverable resources.

An agreement is expected to be entered on or before 25 Sep.

To recap, just under five months ago, Ramba saw increasing number of interest from deep-pocketed investors, underscoring the stamp of confidence in the group's strategy to expand via acquisition and development of lower-risk, onshore assets.

The proposed deal is in line with management's previous guidance that its near term priority is to accelerate development of the Akatara-Selong cluster within the Lemang block with first production expected in late 2015 or 2016.

At the current price, Ramba is valued at 0.98x P/B, compared to its 5-year historical average of 2.4x.

SG Market (07 Sept 15)

Sentiment for Singapore stocks is likely to remain fragile following the slump on Wall Street as a mudled nonfarm payrolls report gave little clarity on Fed’s interest rate timing. Investors will also be on tenterhooks as the volatile China market re-opens after a two-day trading halt.

Regional bourses are trading lower this morning in Tokyo (-1.4%), Seoul (-0.6%) and Sydney (-1.3%).

From a chart perspective, the STI is tucked firmly in a mid-term downtrend with the next support at 2,750 and topside resistance at 2,950.

Stocks to watch:
*Property: According to Knight Frank's Global House Price Index, S’pore private home price registered the 2nd-largest drop in Asia in 2Q, behind only China, with non-landed residential prices down 3.2% y/y and 0.8% q/q, as prospective buyers remained cautious against the backdrop of existing cooling measures and in anticipation of further price correction. The firm expects overall private non-landed home price to decline by 3-4% on a yearly basis by 4Q15.

*SGX: Total securities turnover for Aug came in at $28.1b (+34% y/y; +16% m/m), with daily average traded value of $1.5b (+49% y/y; +35% m/m). Bond listing raised $7.4b with 23 new bonds listed, while there were two new Catalist listings which raised $40m. Derivatives volume was at 17m contracts (+82 y/y; -21% m/m) while commodities derivatives volume came in at 535,438 contracts (+285% y/y; -22% m/m).

*Keppel REIT: To acquire three remaining prime retail street-fronting units at 50%-owned 8 Exhibition Street in Melbourne, Australia, for A$8.6m ($8.6m). The retail units are currently 100% leased to two popular and established F&B outlets for 10 years with fixed annual rental escalations, with options for another 30 years. The DPU accretive acquisition is expected to be completed in 4Q15.

*Ezra: Announced that EMAS AMC has finalised a contract with BHP Billiton for an offshore fabrication and installation project in Trinidad and Tobago. The project is expected to be executed in mid-2016, utilising the its vessel, the Lewek Express. Recently, it invested EMAS AMC as a business into a JV with Chiyoda Corp.

*YuuZoo: Secured access to $30m in capital funds from GEM Global Yield Fund over three years. The maximum drawdown and issuance of shares will not exceed 19.9% of its shares on issue. It has also issued 55m warrants to GEM Global with a one warrant for one new share right at an initial exercise price of $0.70 (currently trades at $0.134).

*Yoma: Terminating a JV with Volcafe. The JV was intended to spearhead the company’s expansion into the planting and production of Robusta coffee beans in its Maw Tin Estate, Myanmar. Notwithstanding this, Yoma intends to continue with the project.

*Yongnam: Agreed to buy 3 pieces of adjacent freehold industrial land at Ulu Choh in Johor from Vee Sen Property for RM38.4m ($10.3m). Vee Sen is 45% owned by YNH's founder Tan Tin Nam.

*Ramba: MOU with a strategic investor to farm-out a 25% working interest in the Lemang production sharing contract, which 80.4%-owned subsidiary PT Hexindo Gemilang Jaya holds. The aggregate consideration for the proposed deal is up to US$128.3m, consisting upfront cash of US$18.8m and remaining in tranches upon achieving milestones. An agreement is expected to be entered on or before 25 Sep.

*Asian Micro: Recycling and precision cleaning services provider proposed to diversify into property, in light of pricing pressure and rising operational costs.

*A-Sonic Aerospace: Divesting all of its 710,377 shares or close to 50% in Worldwide GSA to WFC Investment for $6.3m, deriving an estimated gain of $3.2m, as part of its plan to offload non-core business.

*MMP Resources: Received a Writ of Summons and Statement of Claim from lawyers of Quintestellar Re Capital, claiming that it is entitled to the repayment of $4,7m under a loan. The company intends to defend the legal action.

*Hoe Leong: Has been sued by Chimbusco Pan Nation over a marine fuel oil sales contract for US$335,858.

*Transcorp: Obtained approval in-principle to transfer to the Catalist Board from the Mainboard.

*IPCO: Intends to transfer its listing from the main board of the SGX to the Catalist Board.

*NauticAWT: Expects to report a net loss for 1H15 due to IPO fees as well as losses suffered by recently acquired (Nov ‘14) group of subsidiaries.

Friday, September 4, 2015

Mapletree Logistics Trust

Mapletree Logistics Trust (MLT): The units of MLT, which have fallen by 18% YTD, have underperformed the FSTREI (12% YTD) and other large market-cap industrial REITs.

For a REIT with relatively resilient DPUs, Daiwa sees little reason for MLT to trade at these levels.

House upgraded its rating to Outperform (TP: $1.12) from Hold on valuations and the resiliency of MLT’s DPUs. Over the longer term, Daiwa believes the pull-back in exchange rates and growth rates in some of the regional economies could be a blessing in disguise for MLT’s ability to make accretive acquisitions.

PACC Offshore

PACC Offshore (POSH): Served a legal claim by Kensteel Engineering involving $7.1m, ~9.4% of FY14 net profit or ~23% of Maybank-KE's FY15 earnings forecast.

The dispute involves an agreement between POSH and Kensteel, where the former would purchase a property from Kensteel, subject to JTC approval.

However, the JTC application was subsequently rejected and Kensteel still believes it is entitled to forfeit the deposit of $3.8m, as well as an additional $3.3m attributed to damages resulting from the non-completion.

POSH intends to defend the claim vigorously and will make further announcement when appropriate.

Maybank-KE's last call was a Buy with TP of $0.65.

SG Market (04 Sept 15)

Singapore shares are expected to turn in an insipid opening after a mixed performance on Wall Street ahead of a crucial jobs report that could determine the timing and pace of Fed’s interest rate policy.

Regional bourses are trading lower this morning in Tokyo (-0.1%), Seoul (-0.3%) and Sydney (-0.3%).

From a chart perspective, the STI has broken below its 2,950 support-turned-resistance, with its next support tipped at 2,750, followed by 2,680.

Stocks to watch:
*STI: From 21 Sep, UOL, Yangzijiang and SATS will replace Jardine Matheson, Jardine Strategic and Olam as constituents on the STI, following a semi-annual review by SPH, SGX and FTSE Russell, in a bid to enhance liquidity requirements. Companies on the STI reserve list now include CapitaLand Commercial Trust, Singapore Post, Suntec REIT, Keppel REIT, and M1.

*Property: HDB resale prices climbed 0.3% m/m, while resale transactions fell 6.8% to 1,447 units in Aug, as some buyers withheld purchases until the Hungry Ghost Festival is over. Going forward, analysts expect to see resale volumes increase in future, especially in light of the new housing policies announced during the National Day Rally, Property consultant ERA projects HDB resale volumes to possibly hit 19,000 to 21,000 for 2015, although the house do not expect a huge increase in resale prices, as loan curbs and cooling measures are still in place, while buyers are more prudent nowadays in their price negotiations.

*Del Monte Pacific: 1QFY16 net loss narrowed 45.1% y/y to US$12.0m, despite revenue growing 6.1% to US$472.8m. Overall gross margin expanded to 19.8% from 15.9%. The net loss was attributed to US subsidiary, Del Monte Foods’ (DMFI) first quarter being seasonally the weakest, in addition to expenses from the SAP implementation. Meanwhile, The El Niño weather pattern also caused reduced pineapple supply in the group’s plantation in the Philippines leading to lower exports. NAV/share at US$0.16.

*Noble: Expands S’pore oil team to focus on growing regional demand. Hired 3 middle distillates traders from BP to join 2 existing traders for jet fuel and gasoil, and also added 3 crude traders to start trading physical cargoes in Asia. The group believes that it is uniquely positioned to capture local opportunities as various economies increasingly open up their oil industries.

*Ascott REIT: Divesting six Japanese properties to a third party for JPY4.5b ($52.6m) with an estimated net gain of JPY288.9m ($3.4m) as the properties are more than 10 years old and are located in Japanese cities with limited upside potential.

*PACC Offshore: Served by a legal claim with Kensteel Engineering involving $7.1m, ~9.4% of FY14 net profit, in relation to a sale and purchase agreement for a property in Singapore.

*Oceanus: Seeking to undertake a transfer of its listing from the SGX mainboard to the Catalist Board.

Thursday, September 3, 2015


NOL: Counter performed poorly over the last 12 months, down 20% (versus the FSSTI -13%) due mainly to the weakness in freight rates.

While Deutsche expects 2H to continue to see downward pressure on rates, house is more optimistic on 2016 where industry supply growth will materially decline, which should be positive for earnings.

The stock is trading at 0.6x 2015E P/B, which is the lowest in the sector and one standard deviation below 10-year historical mean.

Deutsche upgraded from Hold to Buy. with TP of $1.10.


UOB: Greater China has been one of UOB’s fastest-growing regions, thanks to rising trade flows between Greater China and ASEAN. During its Greater China Corporate Day, UOB voiced its belief that its competitive edge lies in:
1) Its ability to leverage non-banking relationships to drive banking business, and
2) Having one of the strongest ASEAN networks.

However, UOB’s Greater China business remains the smallest among the Singapore banks and CIMB sees limited ability to expand quickly in a crowded market. The biggest concern for UOB remains its ASEAN exposure where NPL formation has accelerated. House maintains its Reduce call and TP of $18.23 (1.03x 2015 P/B).


Economy: Market watchers downgraded GDP growth estimates
Economists lowered Singapore’s GDP growth expectations for 2015 from 2.7% down to 2.2%, and expect more downgrades ahead.

This comes on the back of the weak August PMI released yesterday which slipped to 49.3 (Jul: 49.7), just a tad lower than street expectations of 49.4.

The contraction was due to lesser new orders, production output and input prices, consistent with the recent rout in global manufacturing PMI numbers, namely in China, Taiwan, South Korea, Malaysia and Indonesia.

Market watchers believes that this raises the odds for a technical recession, should other engines of growth (namely services sector) also falter amid the ongoing pullback in consumer and business sentiments attributed to China's slowdown and US rate-hike uncertainties.

Meanwhile, the Ministry of Trade and Industry is still maintaining its broad 2-4% growth range for 2015.

Observers would be anticipating the upcoming semi-annual monetary policy statement from MAS due in Oct, for further assessment on how the government would react to the uncertain global situation.

SG Market (03 Sept 15)

Singapore shares could open higher, taking cue from the rebound on Wall Street on a positive economic report alongside some relief that China markets will be closed for the next two days to commemorate the end of World War Two.

Regional bourses are trading higher this morning in Tokyo (+1.7%), Korea (+0.6%) and Sydney (+0.8%).

From a chart perspective, the STI has broken below its 2,950 support-turned-resistance, with its next support level tipped at 2,750, followed by 2,680.

Stocks to watch:
*Economy: Economists are lowering Singapore's average GDP growth expectations for 2015 from 2.7% down to 2.2% and expect more downgrades ahead. This may raise the odds for a technical recession in 3Q15, should other engines of growth, namely services, also falter amid the on-going pullback in consumer and business sentiments due to China and FOMC-related uncertainties.

*Interest rates: S’pore interest rates continue to rise amidst on-going economic weakness from China. 3M SOR has risen now to 1.54% (last seen in Dec '08), more than tripling the 0.48% on 19 Jan. 3M Sibor unchanged at 1.07%, but higher than the 1% a week ago. Economists noted that external headwinds and heightened risk aversion continue to put upward pressure on already elevated SORs, which could result in MAS easing its policies next month.

*Office: URA data showed that 2Q office rents in Central Region fell 2.6% q/q versus +0.6% in 1Q, with some consultants highlighting that S’pore CDB office rents likely peaked in 1Q15, with further softening expected as more tenants opt for cheaper decentralised offices and financials consolidate amid an uncertain economic outlook. Key projects weighing down on office rents in Raffles Place and Marina Bay area in 2Q were Asia Square and CapitaGreen. Cushman & Wakefield projects decline of 2% in overall CBD prime office rents for each quarter in 2H15.

*Perennial Real Estate: Acquiring 13,000 shares or 10% stake in Perennial China Retail Trust Management (PCRTM) from Asdew Acquisitions for $3.9m, which will be financed via the issuance of 2.9m shares of the group at $1.3353. Upon deal completion, PCRTM will be wholly-owned by the group.

*Lasseters Int'l: Secured a 16-year extension (up to June 2031) to its exclusive casino license in Alice Springs and other areas in Northern Territory (NT), Australia plus an option to extend for another five years beyond 2031. In addition, NT state government has effectively lowered a community benefit levy of 10% on gross profit of electronic gaming machines to the group's gaming tax rate and increased the threshold of shareholding in the group from 5% to 10%.

*Otto Marine: Secured two long term charter contracts worth US$25.m, for two AHTS vessels with a large oil and gas company. The contracts are expected to contribute positively to earnings for FY15.

*Medtecs International: Placing out 81m new shares to Xia Junwei at a price of $0.07/share (49% premium to average price on 1 Sep). Net proceeds of $5.5m raised will be used to develop the group’s business in China, in particular, Hangzhou as well as to repay bank loans. The new shares represent 17.5% of issued shares and post-placement, Xia will own a 14.9% stake in Medtecs.

*MDR: Deferring further discussions on the potential acquisition of a Japan-based company, that is engaged in developing and providing mobile content, to 1Q16.

*Micro Mechanics: Adopted a dividend policy of paying no less than 40% of its consolidated net profit.

Wednesday, September 2, 2015


CapitaLand’s serviced residence arm, The Ascott, has secured four new contracts to manage over 850 units in four Asian markets. These contract wins will expand Ascott’s portfolio to 42,000 service apartments in 94 cities across 26 countries.

Of the four new properties, Citadines Han River Seoul (149 units) will be the first to open in 1Q16. The remaining three properties, Citadines Punaka Yogyakarta (308 units), Somerset Arcadia Miri (200 units), and Citadines Central Binh Duong (200 units) are expected to be ready in 2018.

The new contracts in Yogyakarta, and Miri, mark Ascott’s first foray to those cities while the other two properties are its fourth and third ventures in Vietnam and South Korea respectively.

Ascott’s recent JV with the Qatar Investment Authority to set up a US$600m fund will help provide it with ammunition for acquisitions as the Ascott moves to hit its target of 80,000 units globally by 2020.

Management is also looking to tap into growth opportunities in the technology space. In this regard, it is leading a consortium to invest over $120m in Tujia, China’s version of Airbnb.

In addition, Ascott is also partnering Samsung Asia to jointly develop Internet-of-Things-ready smart serviced residences.

CapitaLand is currently trading at about 31% discount to its Jun '15 NAV. The street has 20 Buy and 3 Hold ratings with an average TP of $3.98.


Jaya: (S$0.031) Cash shell face delisting within three months
Jaya terminated a non-binding term sheet for a proposed acquisition of Indonesian agricultural planter Izzisen Global, leaving the company one step closer to a delisting.

To recap, Jaya sold its offshore services and shipbuilding operations to Mermaid Marine Asia in Apr '14, and subsequently received an arbitration claim from Mermaid of $15.6m for an alleged warranty breach in Dec '14.

As at Jul '15, Jaya had $18.1m in net assets, equivalent to 2.35¢/share. However, with the outstanding claim of $15.6m (2¢/share) which Jaya intends to contest, it remains to be seen if shareholders can recoup any capital back should the company be delisted.

Even if Jaya wins the case and makes a capital distribution, the current share price of 3.1¢ is way above its theoretical value.

On the other hand, if Jaya loses the claim and is required to bear the costs from the legal proceedings, the company may end up with only $2m (0.26¢/share), assuming legal costs of $0.5m.

The cash shell has until 3 Dec '15 to pursue other acquisitions, or face delisting.


Chosen: (S$0.198) Attractive exit offer at $0.24, a eight-year high
Private equity fund Shaw Kwei & Partners has made a voluntary conditional cash offer for the plastics component maker at $0.24/share (21% above last close), a price not seen since Jul '07. .

The offer price values Chosen at a market cap of $67.6m, a lofty 17.4x FY6/15 earnings and 1.0x P/B.

Majority shareholders representing 50.99% of the company have made irrevocable undertakings to accept the offer, which will turn it unconditional. Subsequently, if the offeror receives more than 90% acceptance level, it intends to take the company private and de-list from SGX.

The attractive acquisition valuation may revive attention to the dozens of plastic moulders and precision manufacturers listed on SGX, which typically trade between 4-8x P/E depending on the industry cycle.

They includes Fu Yu (6.8x P/E). Sunningdale Tech (5.5x P/E), Mencast Holdings (4.1x P/E), Interplex (5.6x P/E), Innotek (loss-making) and GSS Energy (loss-making).

Suntec REIT

Suntec REIT: HSBC upgraded Suntec to Buy on valuation grounds, with TP unchanged at $1.85.

On an industry-wide basis, for the office sector, house expects a combination of structurally lower demand and increased supply to put moderate pressure on rents resulting in a decline of 10% over the next two years, noting that some of the planned supply in the pipeline can be deferred.

Suntec City office (32% of gross valuation) has been more resilient than the market during past economic downturns and HSBC expects the same this time around as well.

For the retail sector, while challenges around operating costs persist, there is no further deterioration and thus HSBC expects flattish NOI (rent growth largely offset by higher costs) and flattish capital values.

Since early-2015, Suntec REIT declined 22% and underperformed the broad market (FSSTI: -13%) and the Singapore REIT index (FSTREI: –10%).

At the current price, the implied FY16e normalized NPI yield and implied pricing for SUN’s Singapore office assets is 4.8%.

Palm oil

Palm oil: Maybank-KE highlights that while 3M CPO price has corrected by 12% year-to-date in Ringgit terms, the correction was far steeper in USD terms which was down -27% over the same
period. The correction was lesser for soyoil (-13%) and rapeseed oil (-8%), which resulted in a widening of price gap of late.

As the current El Nino has failed to live up to expectations with no immediate impact on FFB production, the market has largely ignored this weather risk and instead chose to focus on several
headwinds, namely: 1) record US soybean planting amidst ample global soybean supply; 2) relatively high palm oil stockpile; 3) low crude oil prices discouraging discretionary biodiesel demand.

The S’pore listed plantation companies will adopt FRS16 in their 2016 reporting that effectively treats the oil palm trees as property, plant and equipment, and requires companies to start depreciating the trees which was not required in the past under the fair valuation method. In Maybank-KE’s revised earnings, the house have incorporated its preliminary estimates of FRS16 impact on First Resources and Bumitama’s earnings per share from 2016 onwards.

Additionally, Maybank-KE is revising down its 2015/16/17 CPO forecasts to RM2,100/2,300,2,400/t from the current RM2,400/2,500, 2,600/t. For the house USD forecasts, the revision was steeper at -19%, -17%, - 16%, to incorporate a weaker Ringgit of 3.80-3.90 (from 3.50)

Incorporating the lower CPO ASP and FRS16, the house is cutting 2015-17 net profit forecasts of the companies under its coverage, by between 4% to 60%.

Given the near term headwinds, Maybank-KE is maintaining its Neutral call on the sector, although long term investors should look to a better 2016 as the house believes there is limited downside to CPO ASP as commodity prices in USD are near post-GFC lows.

The house recommends investors focus on companies with good long term organic growth, and take shelter in asset buffer.

Following Maybank-KE earnings revisions, the house is downgrading First Resources to Hold from Buy (TP $1.60), while its top Buys are Bumitama Agri (TP: $0.85), Genting Plantations (TP: RM10.55) and Sarawak Oil Palms (TP: RM5.23).

SG Market (02 Sept 15)

Singapore stocks are likely to be weak, after Wall Street entered a risk-off mode with key indices tumbling close to 3%, following China’s negative PMI figures which stoked concerns about slowing global growth.

Regional bourses are trading lower this morning in Tokyo (-1.1%), Seoul (-0.7%) and Sydney (-1.0%).

From a chart perspective, the STI has broken below its 2,950 support-turned-resistance and appears headed towards the next objective at 2,750 and 2,680.

Stocks to watch:
*Bonds: S’pore Savings Bond maiden issue has been officially launched, with applications opening on Tue (1 Sep) at 6 pm, and will close on 25 Sep at 9 pm. Interest rate steps up are gradually in line with holding period, starting from 0.96% at the end of first year. The effective return per year on a five year compounded basis will be 2.01% and 2.63% on a 10 year compounded basis. The issuance size is $1.2b. Interest payments will be made every six months. MAS guides that a new savings bond will be issued every month over the next five years, as such investors need not rush-in for the first issue.

*Interra Resources: Announced that its 60:40 JV company, Goldpetrol has commenced drilling on a development well at the Yenangyaung oil field in Myanmar. The Yenangyaung oil field had previously been producing oil before being shut down due to the onset of war. Interra anticipates that the results of the drilling and completion will be available in six week time.

*Chosen Holdings: Voluntary conditional cash offer at $0.24/share (21% above last close) by private equity fund Shaw Kwei & Partners. Upon valid acceptances is obtained from undertaking shareholders which represent 50.99% of share capital, offer will be declared unconditional. The offeror does not intend to preserve the listing status of the company.

*China New Town Development: Entered into a strategic cooperation framework agreement with Shenzen Venture Capital Group (SVCG) to explore industrial development. The first cooperation project sees the company acquiring 13.9% of Jiangsu Hong-tu Software Venture Capital Investment, an indirect subsidiary of SVCG for $8.3m to jointly develop a land parcel in Yuhuatai District Software Valley in Nanjing.

*Jaya Holdings: Terminated the non-binding term sheet on a proposed acquisition. Company's cash shell status will expire on 3 Dec ‘15.

Tuesday, September 1, 2015

Raffles Medical

Raffles Medical: Has proposed to acquire a 55% stake in International SOS MC Holdings (MCH) for $34.3m. As a guide, MCH operates 10 clinics in countries/cities where Raffles Medical does not have a presence in - six in China, three in Vietnam and one in Cambodia.

The vendor, AEA International Holdings, is an established global service provider which offers medical assistance, security, evacuation, travel and consulting services to customers in 92 countries. It started operations in Singapore in 1985 to provide emergency medical assistance services in Southeast Asia, before acquiring International SOS assistance in 1998 and renamed the business as International SOS.

Maybank-KE highlights that this is Raffles Medical’s first major overseas acquisition since 1997, when it acquired a medical group in Hong Kong. Along with the recently finalised Shanghai Hospital Project, this further substantiates its commitment to growing beyond Singapore.

Overall, the deal is not expected to contribute meaningfully to the group’s earnings at first, but it will provide instant access to new markets, where it could scale up and establish a wider referral network for its Singapore hospital and future China hospital.

The house maintains Buy with a TP of $5.40. Catalysts will stem from further progress in China as well as more expansions.

Office REITs

Office REITs: Nomura suggested to Buy office REITs as current weak hiring outlook in the financial services industry which occupies up to 48% of office REITs portfolio, could be a leading contrarian indicator and previous trend shown upside surprises.

Based on 2H15 Hudson Report, hiring expectations among financial services firms declined, only 21.9% of the respondents intend to increase hiring in 2H15 (vs 56.3% a year ago), a level that is comparable to the troughs seen at 2Q09 and 3Q12.

However, in the following 12 months of the two bearish quarters, actual increase in employment within the industry was 69% and 364% more than the preceding 12 months, respectively. In addition, unit prices of office REITs were up on average 100.1% and 16.8% respectively.

As such, the house perceived that hiring expectations may be more reflective of prevailing sentiments and could be a leading positive signal for office REITs.

Office REITs under the house’s coverage are expect to have CY15-16F yields of above 6%.

Top pick for the sector is CapitaLand Commercial Trust which has a Buy rating and TP of $1.56, supported by higher contribution from CapitaGreen.

Transport Land

Transport Land: On the rise of chauffeured vehicles services, Nomura reckons it has the potential to create turmoil in an otherwise stable competitive landscape for Singapore's taxi industry.

The house cited that while there is limited near-term impact as private hire vehicle services are still small, when they do manage to achieve critical mass, there may be key implications which includes:
1) Potential market share erosion;
2) Lower room to raise taxi rentals and higher spend on incentives to drivers; and
3) Pressure to improve taxi availability, especially in peak periods.

With that, Nomura prefers ComfortDelgro (Buy, TP: $3.59) given its superior cash flow generation, potential for higher dividends and diversified earnings profile.

For SMRT (Neutral, TP: $1.55), key concerns include its rising operating costs on planned capacity expansion and prospect of higher asset renewal capex.

Palm Oil

Palm Oil: CLSA cut its CPO price outlook after Indonesia's delayed implementation in its biodiesel policy and a sharp collapse in crude oil prices.

Supply of CPO is expected to peak in 2015 and only see a material decline from 2017 onwards as production growth slows due to a reduction in new plantings.

That said, the stocks are offering good value now given the recent sharp sell-down, with some trading below replacement cost.

The house has BUYs on Wilmar (TP: $3.53) and First Resources (TP: $1.92).


Ezion: The stock has priced in no contract extension, deep cuts in charter rates, and other bearish assumptions against current evidence to the contrary.

At a 70% long-term utilisation rate, zero contract extension, asset disposals at a 20% discount to book value, and higher-than-actual charter and repair costs, Ezion’s cash flow to equity from the contracts in hand today and asset liquidation are worth $0.61 per share in RHB's bear case, net of all debt. The stock has traded below this amidst market depression.

In a bid to spell confidence, management repurchased 2.5m shares in the last two weeks, with directors adding another 1.5m.

RHB maintains its Buy rating and TP of $1.60 based on 9x blended FY15/16F P/E, with long-term upward revision potential.

SG Market (01 Sep 15)

Singapore stocks are likely to continue its downward slide following the overnight drop on Wall Street as investors continue to fret the impact of China’s slowdown and uncertainty over Fed interest rate hike in Sep.

Investors will be eyeing China’s PMI data scheduled to be released this morning, with estimates forecasting manufacturing activity to hit a three-year low at 49.7.

Regional bourses are trading lower in Tokyo (-1.2%), Seoul (-0.4%) and Sydney (-0.7%).

From a chart perspective, the STI broke below its 2,950 support-turned-resistance and appears headed towards the next objective at 2,750 and 2,680.

Stocks to watch:
*Banks: MAS data showed that S’pore Jul bank lending came in at $610b (+2.2% y/y, +0.6% m/m). Business loans rose 0.6% m/m to $370b versus the 2.3% rise in Jun, as construction lending had grew by a record 11.7% the previous month. Meanwhile, consumer loans rose 0.6% m/m to $240b, growing at the same pace in Jun.

*Property: S’pore government is leaving the development charge (DC) rates for commercial, landed and non-landed residential, hotel/hospital uses unchanged, but cutting industrial use rate, applicable from 1 Sep '15 to 29 Feb '16. Rates for industrial use will be cut by 3-4% for 87 out of 118 sectors. The cuts were due to weak fundamentals in the industrial segment, with rents, take-up and land bids all heading southwards.

*Sembcorp Marine: Secured EPC contract worth over US$1b from Maersk Oil, to build three topsides for a project in North Sea.

*Chasen Holdings: Secured contracts worth $44.5m for FY16, comprising of relocation projects ($28.2m), technical and engineering works for building construction projects ($14.3m) as well as transportation and warehousing business ($2m).

*ST Engineering: Terminated JV, WingStar, previously set up to acquire mid-to-end-life aircraft for lease, conversion or part out, due to differing views on strategic focus from Wings Capital Partners. Instead, STE has incorporated Keystone Holdings as a holding company for aircraft leasing investments and plans to set up more subsidiaries in different geographies to support projected purchase of aircraft leased to global airlines.

*Saizen REIT: Acquired Strasse Nanokawa, a 42-unit residential property in Minami Ward of Fukuoka, Japan from an independent party for JPY513m ($6m). With 83% occupancy, the property’s current NPI yield is 4.2%, but expected to rise till 5% on normalised occupancy of 94%.

*Libra: Awarded two sub-contracts worth an aggregate $14.4m for the supply and installation of air-conditioning and mechanical ventilation works at Selarang and Union Street, expected for completion in Oct '16 and Aug '16, respectively. Separately, group updated that a $13m contract awarded previously in Mar '15 has been terminated and has received $0.4m in compensation.

*P99: Proposing to acquire 95.95% of Barito for US$163.1m, via the issuance of 970.5m new consolidated shares at $0.2356 (post-consolidation), resulting in an RTO. Barito owns 46km of commodities hauling road in Kalimantan and a licensed public port where the road ends.

*Chinese Global Investors: Proposed to dispose its entire stake in waterproofing specialist Hitchins International at $3.3m. Completion of the disposal is expected to result in a book gain of ~$2.3m. Post-disposal, the group will cease to have any operating business and deemed as a cash company, and intends to focus on developing its financial and investment services business.
*Asiatic: MOU with Shunfeng Investments to establish a framework to pursue opportunities in Southeast Asia for solar photovoltaic power farm projects.