SG Market (20 Oct 15)

Singapore shares are likely to struggle after Wall Street ended a range bound session with slight gains and as investors remained cautious ahead of key results releases from Keppel Corp and Sembcop marine this Thu.

Regional bourses are trading mixed today, down in Sydney (-0.5%) and Seoul (-0.1%) but higher in Tokyo (+0.5%).

From a chart perspective, overbought indicators suggest that upside for the STI will be capped at 3,050 with near-term support at 2,980.

Stocks to watch:
*Strategy: BlackRock opines that Chinese property stocks are now a “Buy” following the easing of cooling measures, reduced inventory and lower funding costs. Moreover, valuations are undemanding with some property counters trading at 50-70% discount to their book values.

*M1: 3Q15 results slightly missed estimates. Net profit inched up 0.8% y/y to $44.9m on stronger revenue of $277.6m (+11%), driven by soaring handset sales (+68.8%) and higher fixed services (+20.6%), but partially weighed by the mobile (-0.8%) and international call services (-22.1%). Operationally, ARPU for postpaid (-1%), prepaid (-7%) and data (-7.7%) fell, while data usage grew to 3.3GB/month (+0.4GB). Operating margin narrowed 2.3ppt to 19.7% amid a surge in handset cost. NAV/share at $0.394.

*Mapletree Logistics Trust: 2QFY16 results in line as DPU slipped 1.1% y/y to 1.86¢ in tandem with a 0.3% dip in distributable income. Gross revenue and NPI grew 6.5% and 7.3% to $87.5m and $73m respectively on contributions from five new acquisitions as well as higher revenue from existing HK assets further boosted by a stronger HKD. Bottom-line weighed by a 30.9% surge in borrowing costs to $10.5m as well as $11.7m in FX losses (2QFY14 profit of $4.2m). Portfolio occupancy improved 0.3ppt q/q to 96.9%, with WALE of 4.8 years. Aggregate leverage stood at 38.8% with average debt tenor of 3.4 years. NAV/unit at $1.02.

*Keppel Infrastructure Trust: 2QFY16 DPU of 0.93¢ missed expectations following the merger of Crystal Trust and CitySpring despite turning up a net profit of $4.1m (2QFY15 net loss of $1.6m). Revenue jumped 20.3% y/y to $152.9m on the contributions of newly acquired assets from Crystal Trust of $16.7m and KMC of $32.6m, partially pared by a 20.8% drop in City Gas revenue to $78.3m as well as a 5% decline in Basslink’s revenue to $14.8m. Leverage was reduced to 32% (-5ppt) from equity fund raising for the KMC acquisition. NAV/unit at $0.36.

*Keppel REIT: 3Q15 results met forecasts even as DPU declined 8.1% y/y to 1.7¢ due to dilution from a share placement as distributable income grew 4.6% to $54.4m. Revenue and NPI fell 11.4% and 13.3% to $42.2m and $33.4m respectively, weighed by absence of income from the divested Prudential Tower, partially offset by higher contributions from Ocean Financial Centre and Bugis Junction Towers. Portfolio occupancy dipped slightly to 98.5% (-0.8ppt) with WALE of 6 years, while aggregate leverage was stable at 42.6% with average cost of debt of 2.5%. NAV/unit at $1.37.

*Oxley: 1QFY6 net profit spiked to $35.1m (+246% y/y), as revenue surged to $433.9m (+261%), mainly driven by full revenue recognition of industrial property Eco-tech @ Sunview after TOP was received, as well as revenue from sold units across seven mixed-residential projects in Singapore. NAV/share at $0.18.

*Triyards: 4QFY15 net profit of US$8.4m (+59% y/y) brought FY15 net profit to US$27.2m (+2%), 5% above street estimates. For the quarter, revenue surged 81% to US$88.4m due mainly to new revenue contribution from four self-elevating units, and partly from recently-acquired Strategic Marine. Meanwhile, bottom line was dragged by lower gross margin of 21.8% (-5.3ppt) due to the change in sales mix. Proposed DPS of 1¢ maintained. NAV/share at US$0.6432.

*Lian Beng: 80% subsidiary, Goldprime is acquiring a 1,803.6sqm freehold three storey residential complex, comprising 19 separately titled apartments, located at Unit 1 to 19 of 596 St Kilda Road, Melbourne, Australia. Total consideration for the 19 separate sellers sums up to A$24.35m, and will be funded via a mix of internal funds and bank borrowings.

*Soilbuild Construction: Bagged its second civil works project worth $19.9m for the construction of lift shafts to existing pedestrian overhead bridges. The project is scheduled to start in Oct '15 and completed by end Nov '17.

*Nordic Group: New orders totalling $4.1m to supply and install valve remote control systems, tank gauging systems and anti-heeling systems, as well as the provision of labour and materials to perform piping insulation work for Kraken FPSO Field Development Project. Contracted works expected to commence in Nov 15 and scheduled for completion by 2Q16.

*Tigerair: Will start operating two daily flights to Guangzhou China together with Scoot on 16 Jan ‘16.

*Croesus Retail Trust: Declined an offer from Sojitz for the acquisition of Forecast Kyoto Kawaramachi, located in Kyoto Japan, as the property is not yield accretive for the trust at the proposed consideration amount. The offer was made pursuant to an agreement which grants the trust rights of first refusal over the property.

*Guocoland: Expects to record a gain of RM116m from an associate's sale of 679.2 ha of land in Sepang, Malaysia for RM475m.

*iFAST: Awarded a qualification from Chinese authorities to run an investment funds platform in China.