SG Market (29 Oct 15)

Singapore shares may a slight lift from spillover risk-on sentiment from Wall Street after the US Fed gave a vote of confidence to the US economy by putting a Dec rate hike back on the cards.

Regional bourse are trading higher this morning in Tokyo (+0.4%) and Seoul (+1.0%) but lower in Sydney (-0.5%).

From a chart perspective, the market is technically overbought. Resistance for the STI is capped at 3,120 with downside support at 2,980.

Stocks to watch:
*Indofood Agri: 3Q15 missed by a mile after the group turned in a net loss of Rp153.9b (3Q14: +Rp124.8b) due mainly to huge FX losses stemming from the weak IDR/USD. Revenue fell 9% y/y to Rp3.3t from lower ASPs for palm products, partially offset by higher CPO sales volume. This translated to depressed gross margin of 25.1% (-0.3ppt), while bottom line was further dragged by share of losses of its Brazilian JV due to lower prices of sugar and electricity. NAV/share at Rp10,198.

*Citic Envirotech: 2QFY16 net profit fell 16.5% y/y to $13.9m on a 32.7% dive in revenue to $70.9m, missing estimates by a wide margin. The drop in revenue was largely due to a 62.9% plummet in lumpy engineering revenue to $27.7m mitigated by growth in treatment revenue (+28.9% to $32.6m) and membrane sales (+96.3% to $10.6m). Bottom line was weighed by higher depreciation (+141%) and finance expenses (+57.3%). NAV/share at $0.79.

*Wing Tai: 1QFY16 results below estimates, with net profit diving 91.6% y/y to $2m in the absence of gains on disposal of its 70% stake in PT Windas in 1QFY15. Revenue advanced 6.3% to $170.3m as it recognised sales of units across Singapore, China, and Malaysia. Gross margin slipped 3.6ppt to 35.2%. Bottom line was further pressured by a 44.9% drop in contributions from its Hong Kong associate as well as JVs in Singapore. NAV/share at $4.17.

*CDL Hospitality Trust: 3Q DPU fell 9.7% to 2.36¢, although distributable income of $23.3m (-9.0%) did not include contributions from the Japan Hotels (acquired in Dec ’14) which is only available for distribution in 4Q. Gross revenue was up 2.4% to $51.1m, led by the Japan Hotels and the newly refurbished mall, Claymore Connect, offset by weaker performances from the Singapore and Australia and New Zealand Hotels. NPI inched down 2.2% to $33.1m due to higher operating expenses. Leverage ratio rose 4.5ppt q/q to 36.5%, with average debt cost of 2.6% and tenor of 2.1 years. NAV/unit at $1.59.

*Ascott REIT: 3Q15 DPU slipped 2% y/y to 2.07¢, although revenue gained 21% to $113.2m, mainly from new acquisitions made in 4Q14 and 3Q15. Gross profit (+13%) rose at a slower pace due to lower profit contributions from master leases in Europe, as well as management contracts in UK, China, Indonesia, Malaysia, Philippines and Singapore. Aggregate leverage dropped 4.2ppt to 40% with average debt cost at 2.9%. NAV/unit at $1.38.

*Ascendas Hospitality Trust: 2QFY16 DPU rose 8.7 y/y to 1.38¢ on distributable income of $16.3m (+15.1%), which included partial proceeds from divestment of Pullman Cairns International ($0.6m). Gross revenue and NPI ceded to $54.5m (-6.1%) and $22.6m (-2.9%) respectively, mainly undermined by depreciation of AUD and JPY against the SGD. Aggregate leverage lowered to 37.5% (-0.5ppt q/q), with average debt cost of 3.3% and tenor of 2.5 years. NAV/unit at $0.72.

*AIMS AMP Ind REIT: 2QFY16 DPU inched up 1.8% to 2.8¢, while distributable income climbed 1.9% to $17.8m. Gross revenue grew 3.2% to $31.3m, while NPI expanded 2.4% to $20.7m, driven by rental contributions from newer properties. Occupancy stood at 96.5%, with WALE of 3.05 years. Aggregate leverage stood at 31.2%, with average debt cost of 4.2%. NAV/unit at $1.52.

*iFast: 3Q15 net profit was flattish at $2.9m (-0.5% y/y), while revenue fell 6.9% to $20.5m, attributed to the volatile market. Revenue declines in HK offset gains achieved in Singapore and Malaysia. Bottom line performance was shored up by increased finance income. Interim DPS of 0.68¢. NAV/share at $0.29.

*K1 Ventures: 1QFY16 net profit came in at $87.3m (1QFY15: $3m) on revenue of $89.3m (1QFY15: $2.9m), mainly due to a $85.6m investment income from Knowledge Universe Holdings, which was also distributed in cash, increasing the group’s cash hoard to $135m from $46.9m in 4QFY15. K1 will not be making any new investments, but will focus on managing current portfolio and realise the assets when it deems appropriate for value maximisation. NAV/share at $0.14.

*Keppel DC REIT: Acquiring mainCubes Data Centre from mainCubes One Immobilien Gmbh & Co KG for €84m ($130m), and to be fitted out to Tier III specifications by 2018.

*Sim Lian: Entered into SPA with Coles Group Property Developments to acquire Lara Village Shopping Centre, located at Lara, about 60km southwest of Melbourne CBD, for A$30.2m ($30m). The property is a new convenience-based neighbourhood shopping centre completed in Dec '14, and has a gross lettable area of 6,449sqm, with 65% occupied by anchor tenant, Coles Supermarket.

*AusGroup: Notified by Australian authorities that its Port Melville property would not require assessment and approval under the Environment Protection and Biodiversity Conservation Act. This helps ensure that the property is in full compliance with regulations.