Banks: Moody's lowers credit rating outlook of Singapore banks to negative from stable, citing concerns over asset quality and profitability against a backdrop of slower economic and trade growth, both domestically and in the region.
However, the credit ratings agency noted that the banks' funding and liquidity profiles remain robust and there is a high probability of government support if needed.
Moody's currently rate DBS Bank, OCBC and UOB at Aa1, with DBS Group one notch lower at Aa2.
Thursday, March 31, 2016
China Telecom
China Telecom (728 HK) is one of Maybank-KE HK/China Internet & Telcos team’s top picks. Our house is positive on China Telcos sector because we are moving on from the operationally challenged 2015 and the market now has a more clear view of 2016 even if margins and earnings growth are still a year away.
In 2015, China Telecom was the only operator to post revenue and earnings growth. However, operating profit came in below expectations due to weaker revenues from tariff cut and data roll over as well as higher network operations cost that weighed on margins. For this reason, we had maintained a cautious view throughout last year but we are more constructive now as we believe the sector’s risk reward is much more attractive with low expectations.
The Company guides for 11% lower capex and 13-15m net subscriber adds for 2016. Capex could fall even lower if network sharing with China Unicom (762 HK) could be implemented successfully. On the other hand, we estimate a 30bps decline in EBITDA margin due to the tower lease back.
We maintain BUY on China Telecom with unchanged price target of HKD4.76, based on the DCF methodology using a WACC of 8.5% and 1% terminal growth rate.
In 2015, China Telecom was the only operator to post revenue and earnings growth. However, operating profit came in below expectations due to weaker revenues from tariff cut and data roll over as well as higher network operations cost that weighed on margins. For this reason, we had maintained a cautious view throughout last year but we are more constructive now as we believe the sector’s risk reward is much more attractive with low expectations.
The Company guides for 11% lower capex and 13-15m net subscriber adds for 2016. Capex could fall even lower if network sharing with China Unicom (762 HK) could be implemented successfully. On the other hand, we estimate a 30bps decline in EBITDA margin due to the tower lease back.
We maintain BUY on China Telecom with unchanged price target of HKD4.76, based on the DCF methodology using a WACC of 8.5% and 1% terminal growth rate.
Best World
Best World: Unrated note by Financial PR; the best is yet to come
- Revenue grew to $101.7m in FY15, a CAGR of 57.3% per annum over the past two years, bolstered by the success of its marketing campaigns in Taiwan and the entry into China's retail and wholesale markets.
- EBITDA margin has also been on the uprise due to greater economies of scale.
- To improve margins going forward, Best World is planning to shift its production from third-party manufacturers to its own facilities in China.
- Awaiting the approval for a direct-selling license in China, to finally open its doors to this mammoth market.
In a previous note, Market Insight derived that the stock could trade at a fair value of $0.57, based on a conservative P/E of 10x compared with industry average of 14.2x, implying a 43% upside from the current price.
- Revenue grew to $101.7m in FY15, a CAGR of 57.3% per annum over the past two years, bolstered by the success of its marketing campaigns in Taiwan and the entry into China's retail and wholesale markets.
- EBITDA margin has also been on the uprise due to greater economies of scale.
- To improve margins going forward, Best World is planning to shift its production from third-party manufacturers to its own facilities in China.
- Awaiting the approval for a direct-selling license in China, to finally open its doors to this mammoth market.
In a previous note, Market Insight derived that the stock could trade at a fair value of $0.57, based on a conservative P/E of 10x compared with industry average of 14.2x, implying a 43% upside from the current price.
Super Group
Super Group: CIMB downgrades to Reduce, from Add, despites raising TP to 96¢ from 86¢, implying that positives have been priced in.
Recovery is based on stabilisation of the branded consumer business and improvement in margins. To expect sales growth more than 10% is a bit of a stretch, the house opines.
The house suggests there will be a better time to revisit Super
Recovery is based on stabilisation of the branded consumer business and improvement in margins. To expect sales growth more than 10% is a bit of a stretch, the house opines.
The house suggests there will be a better time to revisit Super
SG Market (31 Mar 16)
Regional bourses opened in positive territory in Tokyo (+0.6%), Seoul (+0.1%) and Sydney (+1.6%).
From a chart perspective, topside resistance for STI is pegged at 2,900 with underlying support at 2,820.
Stocks to watch:
*REITs: Rating agency Fitch expects retail and office REITs to be resilient, supported by low leverage levels, robust interest coverage, and relatively small lease contract maturities in near term, amid the rising supply environment.
*Ascendas Hospitality Trust: Will open the refurbished 698-room Hotel Sunroute Osaka Namba on 1 Apr, one of the REIT's two hotels in Japan. The hotel underwent a ¥1.14b ($13.6m) makeover in the past three months.
*YuuZoo: Secured an undisclosed multi-million USD fee contract from Alibaba to organise and manage the e-commerce giant's sport division AliSports World Electronic Sport Games, as well as its e-Sports Clubs Competition Centres across China.
*SIA: Tigerair is selling two Airbus A320 aircraft to Stellar Aircraft Holding 1 at a loss of $8m, to right-size its fleet.
*Sinarmas Land: Increased its effective stake in subsidiary PT Puradelta Lestari by 8% to 66.96% for Rp802t ($80.2m).
*Oxley: Extended the term sheet with Wyndham Hotel Asia Pacific from 31 Mar to 30 Jun, for the management of Days hotel in Batam, Indonesia.
*Mermaid Maritime: Secured a 2+1 year subsea services contract in Gulf of Thailand with a major upstream oil & gas company worth US$10m.
*Linc Energy: Requested for a trading suspension, citing that more time is required for its debt restructuring and recapitalisation talks.
*Banyan Tree: Disclosed that Malaysia's George Town, Ipoh, Melaka, and Borneo's Sabah are secondary cities that it is keen to venture into. The hotel group is already in Penang under the Angsana brand.
*Global Yellow Pages: Unable to reach an agreement on terms for a JV in relation to the redevelopment of Pakarunga Town Centre with the New Zealand Auckland Council. The group will continue to work on a revised development plan.
*Stratech: Profit warning for FY3/16 due to lower revenue resulting to the late award of several projects and increase in staff and rental costs.
From a chart perspective, topside resistance for STI is pegged at 2,900 with underlying support at 2,820.
Stocks to watch:
*REITs: Rating agency Fitch expects retail and office REITs to be resilient, supported by low leverage levels, robust interest coverage, and relatively small lease contract maturities in near term, amid the rising supply environment.
*Ascendas Hospitality Trust: Will open the refurbished 698-room Hotel Sunroute Osaka Namba on 1 Apr, one of the REIT's two hotels in Japan. The hotel underwent a ¥1.14b ($13.6m) makeover in the past three months.
*YuuZoo: Secured an undisclosed multi-million USD fee contract from Alibaba to organise and manage the e-commerce giant's sport division AliSports World Electronic Sport Games, as well as its e-Sports Clubs Competition Centres across China.
*SIA: Tigerair is selling two Airbus A320 aircraft to Stellar Aircraft Holding 1 at a loss of $8m, to right-size its fleet.
*Sinarmas Land: Increased its effective stake in subsidiary PT Puradelta Lestari by 8% to 66.96% for Rp802t ($80.2m).
*Oxley: Extended the term sheet with Wyndham Hotel Asia Pacific from 31 Mar to 30 Jun, for the management of Days hotel in Batam, Indonesia.
*Mermaid Maritime: Secured a 2+1 year subsea services contract in Gulf of Thailand with a major upstream oil & gas company worth US$10m.
*Linc Energy: Requested for a trading suspension, citing that more time is required for its debt restructuring and recapitalisation talks.
*Banyan Tree: Disclosed that Malaysia's George Town, Ipoh, Melaka, and Borneo's Sabah are secondary cities that it is keen to venture into. The hotel group is already in Penang under the Angsana brand.
*Global Yellow Pages: Unable to reach an agreement on terms for a JV in relation to the redevelopment of Pakarunga Town Centre with the New Zealand Auckland Council. The group will continue to work on a revised development plan.
*Stratech: Profit warning for FY3/16 due to lower revenue resulting to the late award of several projects and increase in staff and rental costs.
Wednesday, March 30, 2016
Cache
Cache: OCBC upgrades to Buy from Hold, although TP is shaved to $0.88 from $0.9.
-While there is uncertainty over two master leases at Schenker Megahub and Hi-Speed Logistics Centre (these being a large part of the 12% of leases expiring in 2016), OCBC thinks this has been priced in.
-OCBC lowers FY16-17 DPU by 2.8%, largely on higher financing cost assumptions.
-Despite that, Cache is trading at forward yield of 9.8% (2.2 SD over 5 year mean of 8%), and 0.95x P/B (1.8 SD below 5 year mean of 1.16x)
-While there is uncertainty over two master leases at Schenker Megahub and Hi-Speed Logistics Centre (these being a large part of the 12% of leases expiring in 2016), OCBC thinks this has been priced in.
-OCBC lowers FY16-17 DPU by 2.8%, largely on higher financing cost assumptions.
-Despite that, Cache is trading at forward yield of 9.8% (2.2 SD over 5 year mean of 8%), and 0.95x P/B (1.8 SD below 5 year mean of 1.16x)
REITS
REITS: UOBKH reiterate Overweight on the sector
-SG saw strongest tourist arrivals for the mth of Jan on record
-Jan '16 was also record breaking for Chinese tourist arrivals (+62.3% y/y), and expected to persist in Feb amid CNY holidays
-Indonesia, largest source of tourists for SG, reversed a 17-month declining trend to post a 5.4% y/y growth
-tourist arrivals from Msia, India and Australia also recorded positive growth
-strong tourist growth and resilient hotel occupancy to to drive RevPAR
*Top picks: Ascott REIT (TP: $1.39), CDL Hospitality Trust (TP: $1.64), Frasers Hospitality Trust (TP: $0.97)
-SG saw strongest tourist arrivals for the mth of Jan on record
-Jan '16 was also record breaking for Chinese tourist arrivals (+62.3% y/y), and expected to persist in Feb amid CNY holidays
-Indonesia, largest source of tourists for SG, reversed a 17-month declining trend to post a 5.4% y/y growth
-tourist arrivals from Msia, India and Australia also recorded positive growth
-strong tourist growth and resilient hotel occupancy to to drive RevPAR
*Top picks: Ascott REIT (TP: $1.39), CDL Hospitality Trust (TP: $1.64), Frasers Hospitality Trust (TP: $0.97)
Mapletree Greater China Commercial Trust
Mapletree Greater China Commercial Trust: Insurance fund AIA emerged as a substantial shareholder following the purchase of 2.3m units at $0.963 apiece on 29 Mar, lifting its stake from 4,98% to 5.06%.
- Fundamentals for Mapletree Greater China Commercial Trust (MGCCT) remains solid, reflected in its latest quarter of double-digit growth, achieved on strong upward rental reversions at Festival Walk in Hong Kong and Gateway Plaza in Beijing.
- MGCCT's valuations are inexpensive, currently offering 7.6% annualised 3QFY16 yield and 0.8x P/B.
- The counter is a constituent of the Market Insight yield portfolio.
- Fundamentals for Mapletree Greater China Commercial Trust (MGCCT) remains solid, reflected in its latest quarter of double-digit growth, achieved on strong upward rental reversions at Festival Walk in Hong Kong and Gateway Plaza in Beijing.
- MGCCT's valuations are inexpensive, currently offering 7.6% annualised 3QFY16 yield and 0.8x P/B.
- The counter is a constituent of the Market Insight yield portfolio.
Nam Cheong
Nam Cheong: Latest victim of a contract cancellation after Petra Offshore, a subsidiary of Malaysia's Perdana Petroleum, terminated its agreement for a accommodation work barge.
- Contract previously signed in Jun '14 and was worth up to US$42m (including options).
- While oil price pressures are likely to persist in the near to medium term, the O&G sector may see further downside pain.
- Although valuations look cheap, there is little reason for investors to buy in now as the earnings downgrade cycle will likely continue.
Maybank KE's last rating on Nam Cheong was a Sell with TP of $0.12.
- Contract previously signed in Jun '14 and was worth up to US$42m (including options).
- While oil price pressures are likely to persist in the near to medium term, the O&G sector may see further downside pain.
- Although valuations look cheap, there is little reason for investors to buy in now as the earnings downgrade cycle will likely continue.
Maybank KE's last rating on Nam Cheong was a Sell with TP of $0.12.
SG Market (30 Mar 16)
From a chart perspective, the STI could resume its short-term uptrend towards the upside resistance at 2,900, with underlying support remaining at 2,820.
Stocks to watch:
*SCI: Secured power purchase agreement with Myanma Electric Power Enterprise to supply 225 MW of power in Mandalay, Myanmar for 22 years. MKE's last rating was a Hold with TP of $2.35.
*Keppel Corp: MKE believes the recent rebound on pure oil price sentiment is unsustainable. Cites Transocean new build orders have been delayed and rig day rates unlikely to rise till 2019. As earnings downgrade cycle will likely continue, the house maintains its Sell rating with TP of $4.24.
*SIA: Signs codeshare agreement with Air China.
*Nam Cheong: Received notice of termination from Petra Offshore for the sale of a US$42m accommodation work barge awarded in Jun '14. MKE's last rating was a SELL with TP of $0.12.
*Tianjin Zhongxin: FY15 net profit rose 26% to Rmb449.5m, boosted mainly by disposal gains of Rmb74m. Revenue slipped 0.1% to Rmb7.08b on lower sales of western medicine, while gross margin narrowed to 29% (-1 ppt). NAV at Rmb5.10.
*Low Keng Huat: 4QFY16 net profit tumbled 58% y/y to $32.1m as revenue plunged 97% to $20.9m, largely due to the absence of significant development sales after the TOP of Parkland Residences and Paya Lebar Square, as well as reduced construction work. Bottom line was partially shored by a $7.3m disposal gain of a warehouse at Sungei Kadut Loop. Declared first and final DPS of 3¢ plus special DPS of 1¢ (FY14: 5¢). NAV/share at $0.85.
*Mapletree Greater China Commercial Trust: Insurance fund AIA emerged as a substantial shareholder following the purchase of 2.3m units at $0.963 apiece on 29 Mar, lifting its stake from 4.98% to 5.06%.
*Nera Telecoms: Won $13.8m worth of contracts to supply, install and maintain IP network equipment for a leading telco in Asia Pacific.
*Asiamedic: Disposing its entire 15.24% stake in loss-making cord blood and stem cell banking company Cryoviva Singapore for $50k. Upon completion, the disposal will net a gain of ~$48k.
*Karin Technology: Terminated the Apple authorised reseller agreement to sell Apple products effective Jun '16. The group has decided to focus on other areas and disclosed that a few new opportunities have emerged.
*United Food: Profit warning for FY15 following the temporary suspension of soybean processing business in Jul '15. Group expects a loss on sales of raw soybeans and made an impairment of soybean prepayment contracts and PPE.
Stocks to watch:
*SCI: Secured power purchase agreement with Myanma Electric Power Enterprise to supply 225 MW of power in Mandalay, Myanmar for 22 years. MKE's last rating was a Hold with TP of $2.35.
*Keppel Corp: MKE believes the recent rebound on pure oil price sentiment is unsustainable. Cites Transocean new build orders have been delayed and rig day rates unlikely to rise till 2019. As earnings downgrade cycle will likely continue, the house maintains its Sell rating with TP of $4.24.
*SIA: Signs codeshare agreement with Air China.
*Nam Cheong: Received notice of termination from Petra Offshore for the sale of a US$42m accommodation work barge awarded in Jun '14. MKE's last rating was a SELL with TP of $0.12.
*Tianjin Zhongxin: FY15 net profit rose 26% to Rmb449.5m, boosted mainly by disposal gains of Rmb74m. Revenue slipped 0.1% to Rmb7.08b on lower sales of western medicine, while gross margin narrowed to 29% (-1 ppt). NAV at Rmb5.10.
*Low Keng Huat: 4QFY16 net profit tumbled 58% y/y to $32.1m as revenue plunged 97% to $20.9m, largely due to the absence of significant development sales after the TOP of Parkland Residences and Paya Lebar Square, as well as reduced construction work. Bottom line was partially shored by a $7.3m disposal gain of a warehouse at Sungei Kadut Loop. Declared first and final DPS of 3¢ plus special DPS of 1¢ (FY14: 5¢). NAV/share at $0.85.
*Mapletree Greater China Commercial Trust: Insurance fund AIA emerged as a substantial shareholder following the purchase of 2.3m units at $0.963 apiece on 29 Mar, lifting its stake from 4.98% to 5.06%.
*Nera Telecoms: Won $13.8m worth of contracts to supply, install and maintain IP network equipment for a leading telco in Asia Pacific.
*Asiamedic: Disposing its entire 15.24% stake in loss-making cord blood and stem cell banking company Cryoviva Singapore for $50k. Upon completion, the disposal will net a gain of ~$48k.
*Karin Technology: Terminated the Apple authorised reseller agreement to sell Apple products effective Jun '16. The group has decided to focus on other areas and disclosed that a few new opportunities have emerged.
*United Food: Profit warning for FY15 following the temporary suspension of soybean processing business in Jul '15. Group expects a loss on sales of raw soybeans and made an impairment of soybean prepayment contracts and PPE.
Tuesday, March 29, 2016
SG Market (29 Mar 16)
SG Market: Lacklustre trading volumes will likely persist as investors await Fed chief Janet Yellen's speech tonight, which may shed light on possibility of an early interest rate hike in Apr.
Regional bourses opened mainly in negative territory in Tokyo (-0.8%) and Sydney (-0.6%), while Seoul (+0.5%) is holding up.
From a chart perspective, the STI remains bounded between its topside resistance at 2,900 and immediate support at 2,820, followed by 2,790.
Stocks to watch:
*Plantations: CPO price climbed to two-year high as El Nino squeezed production. MKE has buy ratings on First Resources (TP: $2.08) and Bumitama Agri (TP: $0.85).
*Cordlife: BT reports the company will hold dialogue session to address the abrupt resignation of its CEO, after speculation of a boardroom clash swirled in the market. MKE's last call was Hold with TP of $1.59.
*Frasers Centrepoint: Launched 151 units Fraser Place Setiabudi, its third serviced residence in Jakarta, Indonesia.
*Weiye: Dual primary listing in Hong Kong Stock Exchange to commence on 6 Apr by way of introduction.
*Nordic: Clinched $36.5m of contracts from repeat customers, including piping and insulation works, and a three-year maintenance contract with an oil major with renewal option for additional two years.
*Mermaid Maritime: Qatari unit Mermaid Subsea Services was awarded a US$10m contract for subsea cable installation and related diving services assignment from an existing customer.
*Terratech: Proposed 74m private placement of new shares (10.7% enlarged share capital) at $0.0405/share to raise net proceeds of $2.9m, for M&A and general working capital.
*CITIC Envirotech: Completed the acquisition of two municipal wastewater treatment plants in Fujian Province for Rmb132m. The combined capacity of both plants is 150m3/day.
*Secura: MOU for the potential acquisition of cyber security solutions services provider RedSentry and RedSentry Consultancy.
*Serrano: Received letter of demand claiming $2.5m repayment of loan. The last day to meet payment before legal proceedings commence have passed and the company is seeking professional advice on the matter.
Regional bourses opened mainly in negative territory in Tokyo (-0.8%) and Sydney (-0.6%), while Seoul (+0.5%) is holding up.
From a chart perspective, the STI remains bounded between its topside resistance at 2,900 and immediate support at 2,820, followed by 2,790.
Stocks to watch:
*Plantations: CPO price climbed to two-year high as El Nino squeezed production. MKE has buy ratings on First Resources (TP: $2.08) and Bumitama Agri (TP: $0.85).
*Cordlife: BT reports the company will hold dialogue session to address the abrupt resignation of its CEO, after speculation of a boardroom clash swirled in the market. MKE's last call was Hold with TP of $1.59.
*Frasers Centrepoint: Launched 151 units Fraser Place Setiabudi, its third serviced residence in Jakarta, Indonesia.
*Weiye: Dual primary listing in Hong Kong Stock Exchange to commence on 6 Apr by way of introduction.
*Nordic: Clinched $36.5m of contracts from repeat customers, including piping and insulation works, and a three-year maintenance contract with an oil major with renewal option for additional two years.
*Mermaid Maritime: Qatari unit Mermaid Subsea Services was awarded a US$10m contract for subsea cable installation and related diving services assignment from an existing customer.
*Terratech: Proposed 74m private placement of new shares (10.7% enlarged share capital) at $0.0405/share to raise net proceeds of $2.9m, for M&A and general working capital.
*CITIC Envirotech: Completed the acquisition of two municipal wastewater treatment plants in Fujian Province for Rmb132m. The combined capacity of both plants is 150m3/day.
*Secura: MOU for the potential acquisition of cyber security solutions services provider RedSentry and RedSentry Consultancy.
*Serrano: Received letter of demand claiming $2.5m repayment of loan. The last day to meet payment before legal proceedings commence have passed and the company is seeking professional advice on the matter.
Monday, March 28, 2016
Halcyon
Halcyon (S$0.735) M&A to create global natural rubber powerhouse
Sinochem Int’l is launching a takeover bid for Halcyon Agri and merging it with GMG Global and its natural rubber assets to create the world’s leading natural rubber supply chain manager.
The China-based chemical giant will be acquiring 30.07% interest in Halcyon at $0.75 per share, triggering a a mandatory general offer for the rest of the rubber processor. Together with undertakings by other shareholders, Sinochem will raise its stake in Halcyon to no less than 53.98%.
Upon completion of the first deal, Halcyon will make a voluntary offer for all of GMG by issuing 0.9333 new share for every one GMG share held, which controlling shareholder Sinochem (51.1% stake) has given its irrevocable undertaking.
Subsequently, Halcyon will also acquire Sinochem’s natural rubber processing assets in China and Malaysia, as well as trading businesses, for a total consideration of $210m to be funded via 280m new shares.
Following the transactions, which are expected to be completed by 3Q16, Halcyon will become the holding entity of the expanded group and remain listed on SGX.
The upstream business of the combined entity would have 153,000ha of land in Africa and SE Asia. In the midstream segment, it would operate 35 processing facilities with a total annual capacity of 1.5m tonnes, as well as boasts annual rubber and latex sales potential of more than 2m tonnes.
While the M&A will significantly expand its size and market share, Halcyon will be issuing 715m new shares (against existing share base of 600m) for GMG, whose market cap is only 5% greater than Halcyon. This implies that Halcyon shareholders will face some dilution risk.
Post M&A price of Halcyon = Halcyon market cap ($450m) + GMG market cap ($471m) + Sinochem assets ($210m) / 1.6b enlarged share base (600m Halycon + 766m GMG x 0.9333 + 280m new shares) = $0.71
On the other hand, each GMG share will end up with 0.9333 Halcyon share worth $0.66. However, the stronger parentage should bode well for Halcyon given its high leverage with net gearing of 3.1x.
Given the persistent volatility in commodity prices, investors may consider accepting the offer of $0.75 (18% premium to pre-M&A news) for Halcyon shares, and re-enter the rubber market when macro factors turn more favourable.
Sinochem Int’l is launching a takeover bid for Halcyon Agri and merging it with GMG Global and its natural rubber assets to create the world’s leading natural rubber supply chain manager.
The China-based chemical giant will be acquiring 30.07% interest in Halcyon at $0.75 per share, triggering a a mandatory general offer for the rest of the rubber processor. Together with undertakings by other shareholders, Sinochem will raise its stake in Halcyon to no less than 53.98%.
Upon completion of the first deal, Halcyon will make a voluntary offer for all of GMG by issuing 0.9333 new share for every one GMG share held, which controlling shareholder Sinochem (51.1% stake) has given its irrevocable undertaking.
Subsequently, Halcyon will also acquire Sinochem’s natural rubber processing assets in China and Malaysia, as well as trading businesses, for a total consideration of $210m to be funded via 280m new shares.
Following the transactions, which are expected to be completed by 3Q16, Halcyon will become the holding entity of the expanded group and remain listed on SGX.
The upstream business of the combined entity would have 153,000ha of land in Africa and SE Asia. In the midstream segment, it would operate 35 processing facilities with a total annual capacity of 1.5m tonnes, as well as boasts annual rubber and latex sales potential of more than 2m tonnes.
While the M&A will significantly expand its size and market share, Halcyon will be issuing 715m new shares (against existing share base of 600m) for GMG, whose market cap is only 5% greater than Halcyon. This implies that Halcyon shareholders will face some dilution risk.
Post M&A price of Halcyon = Halcyon market cap ($450m) + GMG market cap ($471m) + Sinochem assets ($210m) / 1.6b enlarged share base (600m Halycon + 766m GMG x 0.9333 + 280m new shares) = $0.71
On the other hand, each GMG share will end up with 0.9333 Halcyon share worth $0.66. However, the stronger parentage should bode well for Halcyon given its high leverage with net gearing of 3.1x.
Given the persistent volatility in commodity prices, investors may consider accepting the offer of $0.75 (18% premium to pre-M&A news) for Halcyon shares, and re-enter the rubber market when macro factors turn more favourable.
Sunningdale Tech
Sunningdale Tech: The counter has had a phenomenal run since Jan-Feb this year, underpinned by repeated purchases by non-exec & director Koh Boon Hwee, and supported by its stellar FY15 net profit of $42.1m (+52%) driven by increased revenue from more orders.
While valuations have gone up over the past two months, the plastics injection moulding and precision assembly company still trades at a relatively more attractive 4.7x trailing P/E and 0.6x P/B, compared to its closest peer Fu Yu (10.6x P/E; 0.85x P/B).
While valuations have gone up over the past two months, the plastics injection moulding and precision assembly company still trades at a relatively more attractive 4.7x trailing P/E and 0.6x P/B, compared to its closest peer Fu Yu (10.6x P/E; 0.85x P/B).
SG Market (28 Mar 16)
SG Market: Cautious trading is expected in the week ahead amid overbought conditions, with sectors considered as safe havens such as telecom and consumer, as well as yield plays, likely to return into focus as investors await Chinese PMI data and US unemployment figures on Fri.
Regional bourses opened positive in Tokyo (+0.7%) and Seoul (+0.4%). Markets in Australia and Hong Kong will be closed today for Easter Monday holiday.
From a chart perspective, technical indicators are overextended. Immediate support for the STI is capped at 2,900, with underlying support at 2,830.
Stocks to watch:
*Budget 2016: Included a $4.5b package to transform firms and industries over the next five years and some targeted short term relief for SMEs, but offered little for listed companies apart from expanded infrastructure spending of $5b (+7.3%) in health care, education, security, urban development, and deferred foreign worker levy hikes for the marine and process industries.
*Economy: Feb manufacturing output fell 4.7% (est: -1.5%), dragged mainly by the transport engineering cluster from lower rig-building activity and weaker demand for oilfield and gasfield equipment amid the low oil price environment.
*O&G: Upstream oil majors including McDermott Int'l, Technip and Subsea 7 are among companies that have recently moved to Kuala Lumpur in Malaysia from Singapore to take advantage of the lower property prices and cheaper expenses.
*Halcyon Agri/GMG Global: Sinochem launched a mandatory conditional $0.75/share cash offer for Halcyon. Upon completion, Halcyon will make a voluntary offer for GMG via a new share issue on the basis of 0.9333-for-1, of which controlling shareholder Sinochem (51.1% stake) has given its irrevocable undertaking. Subsequently, Sinochem will inject its rubber processing assets worth an aggregate $210m into Halcyon, to be funded via new shares.
*ParkwayLife REIT: Acquiring nursing home facility Silver Heights Hitsujigaoka Ichiban-kan & Niban- kan located in Sapporo City, Hokkaido prefecture in Japan, for ¥1,100m ($13.6m), by 1Q16. The 123-room property with ~94% occupancy will come with a 20-year master lease agreement with the vendor Kabushiki Kaisha Silver Heights Sapporo, and is expected to generate an annual gross rental of ¥88.8m ($1.1m), or NPI yield of 6.7%.
*Biosensors: Special general meeting on 5 Apr to seek approval for its proposed merger with CB Medical Holdings, and the subsequent voluntary delisting of the company. Last trading day for counter to be on 4 Apr and shareholders may elect to receive either $0.84/share or new shares in the amalgamated private co CBCH II.
*Sembcorp Industries: Increased stake in Indian renewable energy business Sembcorp Green Infra by 1.06ppt to 65.12%, after a rights subscription in excess of those allocated for an aggregate $12m.
*Keppel Corp: Delivered the first two of five jackup rigs to Mexican company Grupo R, which will be chartered to national oil company PEMEX for operations in the Cantarell oil field in offshore Mexico.
*Ascott REIT: Insurance firm AIA emerged as a substantial shareholder after acquiring 8m units at $1.055 apiece via a placement on 23 Mar, which lifted its stake from 4.91% to 5.11%.
*Low Keng Huat: To divest subsidiary Vinametric, which owns Duxton Hotel Saigon in Ho Chi Minh, Vietnam, to New Life Real Estate Business for Vnd1.1t (US$49m).
*KrisEnergy: Extended an existing US$111m revolving credit facility by one year to Mar '17.
*Serial System: 91% owned subsidiary Serial Microelectronics Beijing will acquire two office units with total gfa of 1,216 sqm located at Changping, Beijing, for Rmb29.6m. The offices will serve as its headquarters for North China operations.
*Creative: Filed patent infringement complaint with the US International Trade Commission seeking exclusion orders against seven major smartphone manufacturers.
*Ocean Sky: Terminated the proposed acquisition of property developer Link (THM) Holdings after conditions have not been fulfilled.
*Adventus: Terminated the proposed acquisition of the commercial benefits for a residential property development project in Ho Chi Minh City, Vietnam, after preconditions have not been reached. Separately, group incorporated a 49/51 JV in Abu Dhabi, UAE, to design and manufacture measurement and control instruments.
*Abundance International: Following an exercise of convertible bonds which triggered a mandatory takeover, Executive Chairman Shi Jiangang issued a mandatory unconditional offer for the remaining 37.95% stake at $0.05/share.
*Global Yellow Pages: Initiated legal action against Leisure Empire to seek damages of $0.4m for a counter-guarantee.
*WE Holdings: Terminated a proposed JV in Myanmar with Dragon Cement.
Regional bourses opened positive in Tokyo (+0.7%) and Seoul (+0.4%). Markets in Australia and Hong Kong will be closed today for Easter Monday holiday.
From a chart perspective, technical indicators are overextended. Immediate support for the STI is capped at 2,900, with underlying support at 2,830.
Stocks to watch:
*Budget 2016: Included a $4.5b package to transform firms and industries over the next five years and some targeted short term relief for SMEs, but offered little for listed companies apart from expanded infrastructure spending of $5b (+7.3%) in health care, education, security, urban development, and deferred foreign worker levy hikes for the marine and process industries.
*Economy: Feb manufacturing output fell 4.7% (est: -1.5%), dragged mainly by the transport engineering cluster from lower rig-building activity and weaker demand for oilfield and gasfield equipment amid the low oil price environment.
*O&G: Upstream oil majors including McDermott Int'l, Technip and Subsea 7 are among companies that have recently moved to Kuala Lumpur in Malaysia from Singapore to take advantage of the lower property prices and cheaper expenses.
*Halcyon Agri/GMG Global: Sinochem launched a mandatory conditional $0.75/share cash offer for Halcyon. Upon completion, Halcyon will make a voluntary offer for GMG via a new share issue on the basis of 0.9333-for-1, of which controlling shareholder Sinochem (51.1% stake) has given its irrevocable undertaking. Subsequently, Sinochem will inject its rubber processing assets worth an aggregate $210m into Halcyon, to be funded via new shares.
*ParkwayLife REIT: Acquiring nursing home facility Silver Heights Hitsujigaoka Ichiban-kan & Niban- kan located in Sapporo City, Hokkaido prefecture in Japan, for ¥1,100m ($13.6m), by 1Q16. The 123-room property with ~94% occupancy will come with a 20-year master lease agreement with the vendor Kabushiki Kaisha Silver Heights Sapporo, and is expected to generate an annual gross rental of ¥88.8m ($1.1m), or NPI yield of 6.7%.
*Biosensors: Special general meeting on 5 Apr to seek approval for its proposed merger with CB Medical Holdings, and the subsequent voluntary delisting of the company. Last trading day for counter to be on 4 Apr and shareholders may elect to receive either $0.84/share or new shares in the amalgamated private co CBCH II.
*Sembcorp Industries: Increased stake in Indian renewable energy business Sembcorp Green Infra by 1.06ppt to 65.12%, after a rights subscription in excess of those allocated for an aggregate $12m.
*Keppel Corp: Delivered the first two of five jackup rigs to Mexican company Grupo R, which will be chartered to national oil company PEMEX for operations in the Cantarell oil field in offshore Mexico.
*Ascott REIT: Insurance firm AIA emerged as a substantial shareholder after acquiring 8m units at $1.055 apiece via a placement on 23 Mar, which lifted its stake from 4.91% to 5.11%.
*Low Keng Huat: To divest subsidiary Vinametric, which owns Duxton Hotel Saigon in Ho Chi Minh, Vietnam, to New Life Real Estate Business for Vnd1.1t (US$49m).
*KrisEnergy: Extended an existing US$111m revolving credit facility by one year to Mar '17.
*Serial System: 91% owned subsidiary Serial Microelectronics Beijing will acquire two office units with total gfa of 1,216 sqm located at Changping, Beijing, for Rmb29.6m. The offices will serve as its headquarters for North China operations.
*Creative: Filed patent infringement complaint with the US International Trade Commission seeking exclusion orders against seven major smartphone manufacturers.
*Ocean Sky: Terminated the proposed acquisition of property developer Link (THM) Holdings after conditions have not been fulfilled.
*Adventus: Terminated the proposed acquisition of the commercial benefits for a residential property development project in Ho Chi Minh City, Vietnam, after preconditions have not been reached. Separately, group incorporated a 49/51 JV in Abu Dhabi, UAE, to design and manufacture measurement and control instruments.
*Abundance International: Following an exercise of convertible bonds which triggered a mandatory takeover, Executive Chairman Shi Jiangang issued a mandatory unconditional offer for the remaining 37.95% stake at $0.05/share.
*Global Yellow Pages: Initiated legal action against Leisure Empire to seek damages of $0.4m for a counter-guarantee.
*WE Holdings: Terminated a proposed JV in Myanmar with Dragon Cement.
Thursday, March 24, 2016
Oil
Oil: Downward pressure presents buy-on-dip opportunity?
-International Energy Agency (IEA) touted that the worst is over for crude prices
-IEA expects the Apr 17 production freeze talk will do little to help overcome the oil supply glut
-IEA sees the meeting as a mere gesture to instil confidence that there will be stability in oil prices
-IEA predicts oil will find support at mid US$30s to US$40/bbl, and recover further in 2017
-Fed officials' speeches this week sparked a strong rally in USD, which put downward pressure on oil prices
-International Energy Agency (IEA) touted that the worst is over for crude prices
-IEA expects the Apr 17 production freeze talk will do little to help overcome the oil supply glut
-IEA sees the meeting as a mere gesture to instil confidence that there will be stability in oil prices
-IEA predicts oil will find support at mid US$30s to US$40/bbl, and recover further in 2017
-Fed officials' speeches this week sparked a strong rally in USD, which put downward pressure on oil prices
SG Market (24 Mar 16)
SG Market: The overbought market may shed some gains today, taking cue from the drop in US equity and oil prices as investors keep another eye on the Singapore 2016 Budget.
Regional bourses opened weaker in Tokyo (-0.5%), Seoul (-0.6%) and Sydney (-1%).
From a chart perspective, the STI appears overextended with immediate resistance at 2,900 and downside support at 2,830.
Stocks to watch:
*Singapore Budget 2016: Expect a pro-business budget to balance economic restructuring, growth and job creation. Focus will likely be on infrastructure, rail and bus spending. Corporate goodies may come in the form of delayed foreign worker levy hikes and incentives for local companies to expand overseas.
*REITs: Cambridge Industrial Trust CEO surmises that S-REITs are set to consolidate following tightened regulations that could raise costs and lower revenue, making mergers the most viable option to thrive.
*Select Group: Privatisation offer of $0.525 per share by consortium led by Temasek's Dymon Asia Private Equity values the company at 10.5x earnings and 23.5% premium over last done price. Consortium also includes co-founders Tan Chor Khoon and Tan Choh Peng.
*Hotel Properties: 50%-owned JV VN NH Holdings is acquiring American Indochina Resorts, which owns a five-star beachfront resort in Vietnam, for US$65m.
*Perennial Real Estate: Acquiring a 20% stake in Aidigong Modern Maternal and Child Health Management for Rmb135.4m. This complements its objective of creating a new asset class to meet growing demand for medical and healthcare space in China.
*Singapore Medical Group: Acquiring 70.6% effective stake in Novena Radiology, valuing the latter at $0.55m. The target operates diagnostic imaging services through two premises, Novena Specialist Centre and Novena Medical Centre.
*Croesus Retail Trust: Private placement of up to 70m units at $0.745-$0.77 per unit to raise gross proceeds of up to $53.9m to fund potential acquisitions of retail assets in Japan.
*Koh Brothers: Looking for more hotel assets in Singapore and UK as well as M&A targets to beef up its construction business. Mid to long-term target is to have construction, building materials and property each contribute 30% of group revenue, and 10% from leisure and hospitality segment. Currently construction and building materials make up 70% of revenue, with leisure and hospitality delivering 1%.
*Ascott REIT: Issued $120m of 4% fixed rate note due 22 Mar 2024 to refinance existing borrowings and finance general corporate purposes.
Regional bourses opened weaker in Tokyo (-0.5%), Seoul (-0.6%) and Sydney (-1%).
From a chart perspective, the STI appears overextended with immediate resistance at 2,900 and downside support at 2,830.
Stocks to watch:
*Singapore Budget 2016: Expect a pro-business budget to balance economic restructuring, growth and job creation. Focus will likely be on infrastructure, rail and bus spending. Corporate goodies may come in the form of delayed foreign worker levy hikes and incentives for local companies to expand overseas.
*REITs: Cambridge Industrial Trust CEO surmises that S-REITs are set to consolidate following tightened regulations that could raise costs and lower revenue, making mergers the most viable option to thrive.
*Select Group: Privatisation offer of $0.525 per share by consortium led by Temasek's Dymon Asia Private Equity values the company at 10.5x earnings and 23.5% premium over last done price. Consortium also includes co-founders Tan Chor Khoon and Tan Choh Peng.
*Hotel Properties: 50%-owned JV VN NH Holdings is acquiring American Indochina Resorts, which owns a five-star beachfront resort in Vietnam, for US$65m.
*Perennial Real Estate: Acquiring a 20% stake in Aidigong Modern Maternal and Child Health Management for Rmb135.4m. This complements its objective of creating a new asset class to meet growing demand for medical and healthcare space in China.
*Singapore Medical Group: Acquiring 70.6% effective stake in Novena Radiology, valuing the latter at $0.55m. The target operates diagnostic imaging services through two premises, Novena Specialist Centre and Novena Medical Centre.
*Croesus Retail Trust: Private placement of up to 70m units at $0.745-$0.77 per unit to raise gross proceeds of up to $53.9m to fund potential acquisitions of retail assets in Japan.
*Koh Brothers: Looking for more hotel assets in Singapore and UK as well as M&A targets to beef up its construction business. Mid to long-term target is to have construction, building materials and property each contribute 30% of group revenue, and 10% from leisure and hospitality segment. Currently construction and building materials make up 70% of revenue, with leisure and hospitality delivering 1%.
*Ascott REIT: Issued $120m of 4% fixed rate note due 22 Mar 2024 to refinance existing borrowings and finance general corporate purposes.
Wednesday, March 23, 2016
First Res
First Res: CLSA expects stronger FY16 from clearing of inventory in a higher price environment.
Meanwhile, the impact of FRS41 is might have a smaller-than-expected depreciation impact.
All in all, these prompts CLSA to raise earnings by +9 to -1% over FY16-18%.
The house maintains O/PF on First Res with higher TP of $2.13 (prev: 2.10)
Meanwhile, the impact of FRS41 is might have a smaller-than-expected depreciation impact.
All in all, these prompts CLSA to raise earnings by +9 to -1% over FY16-18%.
The house maintains O/PF on First Res with higher TP of $2.13 (prev: 2.10)
GLP
GLP: CLSA downgrades to Sell from U/PF, highlighting that recent outperformance is unwarranted, and there is no improvement in operating environment and no significant newsflow.
The house says there is room for disappointment in China. FY17 China development starts and completions growth are expected at 2.5% and 2.0% y/y, and that the street is too optimistic, with room for further earnings downgrades.
On risks, the house cites privatisation is elusive. GLP is now trading at 0.8x P/B, assuming a 20-25% premium (recent transactions), that would imply 1x P/B. Recently, major shareholder Hillhouse Capital acquired 8% stake at 1.2x P/B less than 12 months ago, and as such, privatisation appears less likely.
The house does not rule out that it could spin off a part of the Stabilized China assets. That is a catalyst not baked into their forecasts.
The house says there is room for disappointment in China. FY17 China development starts and completions growth are expected at 2.5% and 2.0% y/y, and that the street is too optimistic, with room for further earnings downgrades.
On risks, the house cites privatisation is elusive. GLP is now trading at 0.8x P/B, assuming a 20-25% premium (recent transactions), that would imply 1x P/B. Recently, major shareholder Hillhouse Capital acquired 8% stake at 1.2x P/B less than 12 months ago, and as such, privatisation appears less likely.
The house does not rule out that it could spin off a part of the Stabilized China assets. That is a catalyst not baked into their forecasts.
SG Market (23 Mar 16)
SG Market: Singapore shares may continue to consolidate within a tight range amid overbought conditions and lack of fresh impetus.
Regional bourses opened mixed in Tokyo (+0.3%), Seoul (-0.1%) and Sydney (-0.6%).
From a chart perspective, the STI appears bounded between 2,830 and 2,900.
Stocks to watch:
*StarHub: Investing $18m or 44m new shares at $0.41 each for a 9.05% stake in mm2Asia to expand its pay-TV offerings and presence beyond Singapore. The local film and content producer has co-produced and distributed more than 50 films since 2008.
*Noble: Chairman Richard Elman surmised that the direction of the commodities market is difficult to determine, and guided that it is time to shelve grand plans, and focus on survival.
* ISDN: Proposes to seek a secondary listing in the Stock Exchange of Hong Kong by way of introduction, to enhance its profile in Hong Kong/China.
*SMRT: Launching probe into the MRT accident yesterday that cost the lives of two of its employees.
*Boardroom: Entered into a strategic agreement with Omni Market Tide to provide mobile investor relations platforms to listed companies in Singapore and Hong Kong. The agreement includes scope to work together in Taiwan, Indonesia, Malaysia, Japan and China.
*Excelpoint: Launched an e-commerce platform for two of its product lines (analog devices, microchip) totaling 50,000 products. The platform supports mobile devices, and delivery can be made within Hong Kong and China.
*EuroSports Global: Acquiring Ultimate Drive and Driven by Adrenaline, which are in the short-term rental of premium sports cars (up to two hours), for $535,000.
*Hai Leck: Unveiled eight machines that can automate processes in the process, construction and maintenance industry after an investment of more than $20m since 2009.
*Singtel: Increased its stake in HOPE Technick from 18.7% to 21.3% for $0.7m. HOPE provides engineering solutions for commercial and government customers.
*Aspial: Launched a 4-year 5.3% bond offering with a public tranche of $50m and a placement tranche of $25m.
*Soilbuild Business Space REIT: Assigned a Baa3 credit rating by Moody's, with a stable outlook to the REIT.
Regional bourses opened mixed in Tokyo (+0.3%), Seoul (-0.1%) and Sydney (-0.6%).
From a chart perspective, the STI appears bounded between 2,830 and 2,900.
Stocks to watch:
*StarHub: Investing $18m or 44m new shares at $0.41 each for a 9.05% stake in mm2Asia to expand its pay-TV offerings and presence beyond Singapore. The local film and content producer has co-produced and distributed more than 50 films since 2008.
*Noble: Chairman Richard Elman surmised that the direction of the commodities market is difficult to determine, and guided that it is time to shelve grand plans, and focus on survival.
* ISDN: Proposes to seek a secondary listing in the Stock Exchange of Hong Kong by way of introduction, to enhance its profile in Hong Kong/China.
*SMRT: Launching probe into the MRT accident yesterday that cost the lives of two of its employees.
*Boardroom: Entered into a strategic agreement with Omni Market Tide to provide mobile investor relations platforms to listed companies in Singapore and Hong Kong. The agreement includes scope to work together in Taiwan, Indonesia, Malaysia, Japan and China.
*Excelpoint: Launched an e-commerce platform for two of its product lines (analog devices, microchip) totaling 50,000 products. The platform supports mobile devices, and delivery can be made within Hong Kong and China.
*EuroSports Global: Acquiring Ultimate Drive and Driven by Adrenaline, which are in the short-term rental of premium sports cars (up to two hours), for $535,000.
*Hai Leck: Unveiled eight machines that can automate processes in the process, construction and maintenance industry after an investment of more than $20m since 2009.
*Singtel: Increased its stake in HOPE Technick from 18.7% to 21.3% for $0.7m. HOPE provides engineering solutions for commercial and government customers.
*Aspial: Launched a 4-year 5.3% bond offering with a public tranche of $50m and a placement tranche of $25m.
*Soilbuild Business Space REIT: Assigned a Baa3 credit rating by Moody's, with a stable outlook to the REIT.
Tuesday, March 22, 2016
Explosion in Brussels
Breaking news: Explosion in Brussels subway after multiple deaths in airport blasts
European markets opened weak with Euro Stoxx down 1%
European markets opened weak with Euro Stoxx down 1%
SREITS
SREITS: CLSA switching preference to mid-cap REITs.
Roadshow feedback: Investors generally O/W REITs as macro-trade. Good place to hide given:
1) undemanding valuations vs. peers/ historical mean
2) Delayed US rate hike
3) bleak global outlook.
The house now prefers Mid Cap than Large Caps. Top Picks now AREIT, MCT, MGCCT, MLT, replacing CCT with MLT.
Top Sells are CT, Suntec REIT.
Ranking of subsectors: Industrial, retail, hospitality, office. Office valuation have run up despite still challenging outlook
Roadshow feedback: Investors generally O/W REITs as macro-trade. Good place to hide given:
1) undemanding valuations vs. peers/ historical mean
2) Delayed US rate hike
3) bleak global outlook.
The house now prefers Mid Cap than Large Caps. Top Picks now AREIT, MCT, MGCCT, MLT, replacing CCT with MLT.
Top Sells are CT, Suntec REIT.
Ranking of subsectors: Industrial, retail, hospitality, office. Office valuation have run up despite still challenging outlook
OKH
OKH: (S$0.09) CEO's stake force-sold as fortunes look starkly bleak
OKH Global’s shares rebounded 26.8% in morning trade to 9¢ after it plummeted almost 80% yesterday as banks force-sold 120m shares that were pledged by CEO Bon Ween Foong.
- OKH’s liquidity position, which showed short term debt of $105.7m against a cash balance of only $37.9m as at end Dec '15 has been drawn into question with its recent commencement of talks with Zana Investor
- OKH is currently trading at 0.5x P/B. Despite the seemingly distressed valuations, investors are advised to trade with caution given the controversy surrounding its CEO.
OKH Global’s shares rebounded 26.8% in morning trade to 9¢ after it plummeted almost 80% yesterday as banks force-sold 120m shares that were pledged by CEO Bon Ween Foong.
- OKH’s liquidity position, which showed short term debt of $105.7m against a cash balance of only $37.9m as at end Dec '15 has been drawn into question with its recent commencement of talks with Zana Investor
- OKH is currently trading at 0.5x P/B. Despite the seemingly distressed valuations, investors are advised to trade with caution given the controversy surrounding its CEO.
AIMS AMP
AIMS AMP: Maybank KE upgrades to Buy, raises TP to $1.47 from $1.45; downside from 20 Gulway's possible non-renewal by master tenant CWT largely priced in.
Maybank KE's assumption is that the property will be converted into a multi-tenant property, with 90% occupancy.
Aside, the house is also factoring in 1% extra vacancies in the rest of the multi-tenanted portfolio to hedge weak demand/strong supply conditions.
DPUS are docked only 1-2.8% under these scenarios. Currently trading at FY16e yield of 8.3%
Maybank KE's assumption is that the property will be converted into a multi-tenant property, with 90% occupancy.
Aside, the house is also factoring in 1% extra vacancies in the rest of the multi-tenanted portfolio to hedge weak demand/strong supply conditions.
DPUS are docked only 1-2.8% under these scenarios. Currently trading at FY16e yield of 8.3%
SG Market (22 Mar 16)
SG Market: The overstretched market may continue to work off its overbought position, despite overnight gains on Wall Street and crude oil.
Regional bourses had a mixed opening, with Tokyo (+2.1%) and Seoul (+0.2%) firmer, but Sydney (-0.4%) weaker.
From a chart perspective, the STI appears overextended after a month-long rally, with immediate resistance now capped at 2,890, with downside support at 2,830.
Stocks to watch:
*Singapore Budget 2016 (24 Mar): Expected to be relatively neutral with pro-business bias. Focus will remain on infrastructure spending. Corporate goodies may come in the form of delayed foreign worker levy hikes or tweaks to property cooling measures.
*DBS: Reportedly leading the race to acquire Barclays’ HK and S'pore private wealth units (combined AUM of USD20b) valued as much as USD300m. The other rival bidder left is OCBC.
*StarHub: Signed MOU with China Mobile to collaborate in areas such as device, data analytics, network and innovation, etc., to give its users seamless cross border user experience.
*Ezra: Fully redeemed its $95m fixed rate notes due Mon, after securing a $100m bank loan. Separately, it proposes to establish an interest service reserve, and will make a one-time deposit into the reserve in the event its interest coverage ratio falls below stipulated limits over the next two years.
*Keppel Corp: Acquiring 20% of Quoc Loc Phat Joint Stock Company (QLP) for 329.9b dong (~$20.3m). QLP is a developer, primarily in Ho Chi Minh City.
*SGX: Admits Global Link Securities as a trading member. Global Link is also looking to set up a link for Singapore investors to trade in the Taiwan market.
*Karin: Secured two distributorships in Hong Kong and Macau for cybersecurity solutions by Nasdaq-listed Rapid7 as well as the Air Button smart device.
*Cordlife: CEO Jeremy Yee resigns after being with the company for 14 years to pursue other interests. This comes amid keen interests from three Chinese parties, which accumulated a combined 38.3% stake since late 2015.
Regional bourses had a mixed opening, with Tokyo (+2.1%) and Seoul (+0.2%) firmer, but Sydney (-0.4%) weaker.
From a chart perspective, the STI appears overextended after a month-long rally, with immediate resistance now capped at 2,890, with downside support at 2,830.
Stocks to watch:
*Singapore Budget 2016 (24 Mar): Expected to be relatively neutral with pro-business bias. Focus will remain on infrastructure spending. Corporate goodies may come in the form of delayed foreign worker levy hikes or tweaks to property cooling measures.
*DBS: Reportedly leading the race to acquire Barclays’ HK and S'pore private wealth units (combined AUM of USD20b) valued as much as USD300m. The other rival bidder left is OCBC.
*StarHub: Signed MOU with China Mobile to collaborate in areas such as device, data analytics, network and innovation, etc., to give its users seamless cross border user experience.
*Ezra: Fully redeemed its $95m fixed rate notes due Mon, after securing a $100m bank loan. Separately, it proposes to establish an interest service reserve, and will make a one-time deposit into the reserve in the event its interest coverage ratio falls below stipulated limits over the next two years.
*Keppel Corp: Acquiring 20% of Quoc Loc Phat Joint Stock Company (QLP) for 329.9b dong (~$20.3m). QLP is a developer, primarily in Ho Chi Minh City.
*SGX: Admits Global Link Securities as a trading member. Global Link is also looking to set up a link for Singapore investors to trade in the Taiwan market.
*Karin: Secured two distributorships in Hong Kong and Macau for cybersecurity solutions by Nasdaq-listed Rapid7 as well as the Air Button smart device.
*Cordlife: CEO Jeremy Yee resigns after being with the company for 14 years to pursue other interests. This comes amid keen interests from three Chinese parties, which accumulated a combined 38.3% stake since late 2015.
Monday, March 21, 2016
Insider trades
Insider trades: Asia Insider notes that director buying fell a second straight week while director selling remained low a seventh week for the week ending 18 Mar.
Insider buying: 13 companies saw 30 purchases worth $0.91m, vs. 18 companies, 29 firms, worth $6.39m the previous week.
Insider sales: A firm saw two disposals worth $130,000, vs. nil sales the week prior.
Buybacks: 24 companies saw 64 repurchases worth $21.7m, vs. 20 companies, 63 transactions worth 14.7m the previous week.
Notable transactions:
SIA Engineering: Picked up where it left off in Jan, buying 291,000 shares from 22 Feb to 14 Mar at an average of $3.52. The trades accounted for 6% of the stock’s trading volume.
SMM: Resumed buying back at higher than acquisitions price since Jan with 800,000 shares purchased from 15-18 Mar at an average of $1.71 each. The trades made up 6% of the stock’s trading volume, and were made on the back of a 30% rebound in share price since the second half of Jan.
Straco: Resumed buying back at lower than acquisition prices last year, with 260,000 purchased from 17-18 Mar at an average of $0.744 each. The trades were done on the back of a 15% drop in share price since Feb.
Insider buying: 13 companies saw 30 purchases worth $0.91m, vs. 18 companies, 29 firms, worth $6.39m the previous week.
Insider sales: A firm saw two disposals worth $130,000, vs. nil sales the week prior.
Buybacks: 24 companies saw 64 repurchases worth $21.7m, vs. 20 companies, 63 transactions worth 14.7m the previous week.
Notable transactions:
SIA Engineering: Picked up where it left off in Jan, buying 291,000 shares from 22 Feb to 14 Mar at an average of $3.52. The trades accounted for 6% of the stock’s trading volume.
SMM: Resumed buying back at higher than acquisitions price since Jan with 800,000 shares purchased from 15-18 Mar at an average of $1.71 each. The trades made up 6% of the stock’s trading volume, and were made on the back of a 30% rebound in share price since the second half of Jan.
Straco: Resumed buying back at lower than acquisition prices last year, with 260,000 purchased from 17-18 Mar at an average of $0.744 each. The trades were done on the back of a 15% drop in share price since Feb.
OKH
OKH: Counter has been added to UOBKH's restricted list today.
https://sg.uobkayhian.com/page/announcement/UOBKH_restrictedstk.pdf
https://sg.uobkayhian.com/page/announcement/UOBKH_restrictedstk.pdf
SG Market (21 Mar 16)
Singapore market: Positive momentum on the STI is likely to sustain despite overbought conditions, as investors take on risks in equities on the Fed’s slower pace of rate rises.
Regional bourses opened mixed in Seoul (+0.4%) and Sydney (-0.2%), while the Nikkei is closed for holidays.
From a chart perspective, the STI looks to test its topside resistance at 2,955, with immediate support at 2,890.
Stocks to watch:
*Property: Many developers are reportedly sanguine that they can sell out properties before the respective ABSD deadlines, without having to resort to massive price cuts.
*Yanlord: Spent Rmb1.97b on two land parcels totalling 262,100 sqm gfa in Tianjn, China. The well-connected site located in Tianjin Haihe Academic Park will be developed into a high-quality residential area.
*ST Engineering: Additional USD5.8m capital injection into its aerospace arm, bringing total capital contribution to USD18.9m, to add an aircraft to its leasing portfolio.
*Yongnam: Awarded contracts worth $49.5m for structural steel works for a mixed-use development in Singapore and a specialist civil engineering project in Hong Kong.
*Spackman Entertainment: Disclosed it is in preliminary discussions with a Chinese investor on a potential transaction. Spackman's associate Spackman Media is also currently seeking a listing in Hong Kong.
*Chip Eng Seng: Acquiring a 5,984sqm development site at Gladstone Street, Victoria, Australia for A$52m, and it comes with a town planning permit for 742 residential apartments over three towers. This will be funded via a mix of internal funds and bank borrowings.
*Duty Free Intl: Cooperation JV with Heinemann Asia Pacific in Malaysia to improve margins. Heinemann will have extensive purchase and supply rights of certain products categories and will be involved in operations and overall decision making of the business.
*Soo Kee: Non-binding MOU for the proposed acquisition of DK Bullion has been extended by 60 days to 16 May.
*Yeo Hiap Seng: Establishing a 50/50 JV with China Huiyuan with an initial investment of RM5m, to develop, manufacture, and distribute beverage products, targeting Malaysian market for a start before expanding other southeast Asia markets.
*GRP: Successfully tendered for 110,000 sqm of land for Rmb75.52m from the Bankruptcy Committee of Xinye, to participate in an integrated mixed development project in Tangshan City, China.
*AEM Holdings: Outstanding order book as at 15 Mar stood at $24.5m.
*Tianjin Zhong Xin Pharmaceutical: Obtained certification of good manufacturing practice for pharmaceutical products from authorities.
Regional bourses opened mixed in Seoul (+0.4%) and Sydney (-0.2%), while the Nikkei is closed for holidays.
From a chart perspective, the STI looks to test its topside resistance at 2,955, with immediate support at 2,890.
Stocks to watch:
*Property: Many developers are reportedly sanguine that they can sell out properties before the respective ABSD deadlines, without having to resort to massive price cuts.
*Yanlord: Spent Rmb1.97b on two land parcels totalling 262,100 sqm gfa in Tianjn, China. The well-connected site located in Tianjin Haihe Academic Park will be developed into a high-quality residential area.
*ST Engineering: Additional USD5.8m capital injection into its aerospace arm, bringing total capital contribution to USD18.9m, to add an aircraft to its leasing portfolio.
*Yongnam: Awarded contracts worth $49.5m for structural steel works for a mixed-use development in Singapore and a specialist civil engineering project in Hong Kong.
*Spackman Entertainment: Disclosed it is in preliminary discussions with a Chinese investor on a potential transaction. Spackman's associate Spackman Media is also currently seeking a listing in Hong Kong.
*Chip Eng Seng: Acquiring a 5,984sqm development site at Gladstone Street, Victoria, Australia for A$52m, and it comes with a town planning permit for 742 residential apartments over three towers. This will be funded via a mix of internal funds and bank borrowings.
*Duty Free Intl: Cooperation JV with Heinemann Asia Pacific in Malaysia to improve margins. Heinemann will have extensive purchase and supply rights of certain products categories and will be involved in operations and overall decision making of the business.
*Soo Kee: Non-binding MOU for the proposed acquisition of DK Bullion has been extended by 60 days to 16 May.
*Yeo Hiap Seng: Establishing a 50/50 JV with China Huiyuan with an initial investment of RM5m, to develop, manufacture, and distribute beverage products, targeting Malaysian market for a start before expanding other southeast Asia markets.
*GRP: Successfully tendered for 110,000 sqm of land for Rmb75.52m from the Bankruptcy Committee of Xinye, to participate in an integrated mixed development project in Tangshan City, China.
*AEM Holdings: Outstanding order book as at 15 Mar stood at $24.5m.
*Tianjin Zhong Xin Pharmaceutical: Obtained certification of good manufacturing practice for pharmaceutical products from authorities.
Friday, March 18, 2016
Strategy
Strategy: Comments from DBS CIO
Summary:
· Recent moves by the ECB, BOJ and the Fed will support the risk-asset market rally a bit longer
· The rallies may even break out of the downtrend channels they have been trading within over recent months, but no new bull market.
· The drivers of big swings in the markets are the conflicting forces of the cycle and government/central bank interventions. Currently, as market cycles mature, economies remain anaemic, and central banks’ policy cupboards are bare.
· But by the year’s end, the trend will likely be bearish
Other comments:
- “Today’s negative interest rates complicate not only the industry’s asset management strategies, but also the pricing, loss reserving, and capital management strategies for property/casualty and life/health insurers around the world,” … there are temptations to reach for yield by reducing credit quality and/or increasing duration. Both strategies increase risk.
- Fed is keeping an eye on global situation, because it does not want to push up the dollar.
- On the yen, Mr Sakakibara’s comments earlier this week was cited. “The yen’s appreciation isn’t the result of monetary policy or because Japan’s recovery is strong. It’s that the world economy has become very disorderly. The problems in the Chinese economy won’t be easy to sort out, and global growth is stagnating. In that environment, the yen will necessarily strengthen. We’re in the first phase of that now.”
Summary:
· Recent moves by the ECB, BOJ and the Fed will support the risk-asset market rally a bit longer
· The rallies may even break out of the downtrend channels they have been trading within over recent months, but no new bull market.
· The drivers of big swings in the markets are the conflicting forces of the cycle and government/central bank interventions. Currently, as market cycles mature, economies remain anaemic, and central banks’ policy cupboards are bare.
· But by the year’s end, the trend will likely be bearish
Other comments:
- “Today’s negative interest rates complicate not only the industry’s asset management strategies, but also the pricing, loss reserving, and capital management strategies for property/casualty and life/health insurers around the world,” … there are temptations to reach for yield by reducing credit quality and/or increasing duration. Both strategies increase risk.
- Fed is keeping an eye on global situation, because it does not want to push up the dollar.
- On the yen, Mr Sakakibara’s comments earlier this week was cited. “The yen’s appreciation isn’t the result of monetary policy or because Japan’s recovery is strong. It’s that the world economy has become very disorderly. The problems in the Chinese economy won’t be easy to sort out, and global growth is stagnating. In that environment, the yen will necessarily strengthen. We’re in the first phase of that now.”
SG Market (18 Mar 16)
SG Market: The market is likely to edge higher at open despite overbought conditions, amid overnight gains in crude and US equity.
Regional bourses opened mixed, with Tokyo (-0.4%) down, and Seoul (+0.2%) and Sydney (+0.5%) up in the open.
From a chart perspective, topside resistance for the STI at 2,890, with bottom support at 2,830.
Stocks to watch:
*ST Engineering: Supplying 13 TERREX 2 infantry carrier prototypes to the US Marines for testing in 2017. The prime contract for this programme was awarded to its partner NYSE-listed Science Applications International Corp.
*CITIC Envirotech: Secured two wastewater treatment projects with a total investment of Rmb147m. The first will be a 95:5 JVCo which will invest Rmb64m to acquire a 40,000m3/day wastewater treatment (WWT) plant for a concession period of 27 years. The second is to acquire of a 20,000m3/day WWT plant over two phases with an investment of Rmb83m.
*Midas: Secured contracts worth a total of Rmb247.7m from CRRC Changchun Railway Vehicles to supply aluminium alloy extrusion profiles for high-speed trains (Rmb217.3m) and the Shanghai Metro Line 17 (Rmb30.4m). Orders slated for delivery in 2016.
*Serial System: Increased its stake in Bull Will to 29% (prev: 28.4%) through the conversion of convertible bonds.
*Elektromotive: To issue 700m shares at $0.005 to private investors and reap $3.4m in net proceeds, of which it intends to use 75% for working capital and the remainder for diversification of its businesses.
*Anchor Resources: Clarified on articles in the Straits Times and Business Times, which stated that the company expects to turn profitable by end 2016, actually represents internal management performance targets, and do not represent the group’s growth or profit forecast.
*Lum Chang: Issuing $50m of medium-term notes at a fixed rate of 5.5% due 28 Mar 2019.
*Duty Free Int’l: Disposing 10% of interest in wholly-owned Malaysian-based subsidiary DFZ Capital, to Heinemann Asia Pacific for €19.7m, and also granting call options for the vendor to acquire up to 15% of additional interest at €1/share within the next 30 months following the completion of the initial disposal.
*Next-Generation Satelite Communications: Received HK$5.04m from Neo Telemedia for the remaining payment of a HK$10.08m settlement for claims relating to outstanding interest payments.
*Interplex: Offer declared unconditional after Slater obtained valid acceptances of 65.73%. Closing date for the offer is extended to 25 Apr.
Regional bourses opened mixed, with Tokyo (-0.4%) down, and Seoul (+0.2%) and Sydney (+0.5%) up in the open.
From a chart perspective, topside resistance for the STI at 2,890, with bottom support at 2,830.
Stocks to watch:
*ST Engineering: Supplying 13 TERREX 2 infantry carrier prototypes to the US Marines for testing in 2017. The prime contract for this programme was awarded to its partner NYSE-listed Science Applications International Corp.
*CITIC Envirotech: Secured two wastewater treatment projects with a total investment of Rmb147m. The first will be a 95:5 JVCo which will invest Rmb64m to acquire a 40,000m3/day wastewater treatment (WWT) plant for a concession period of 27 years. The second is to acquire of a 20,000m3/day WWT plant over two phases with an investment of Rmb83m.
*Midas: Secured contracts worth a total of Rmb247.7m from CRRC Changchun Railway Vehicles to supply aluminium alloy extrusion profiles for high-speed trains (Rmb217.3m) and the Shanghai Metro Line 17 (Rmb30.4m). Orders slated for delivery in 2016.
*Serial System: Increased its stake in Bull Will to 29% (prev: 28.4%) through the conversion of convertible bonds.
*Elektromotive: To issue 700m shares at $0.005 to private investors and reap $3.4m in net proceeds, of which it intends to use 75% for working capital and the remainder for diversification of its businesses.
*Anchor Resources: Clarified on articles in the Straits Times and Business Times, which stated that the company expects to turn profitable by end 2016, actually represents internal management performance targets, and do not represent the group’s growth or profit forecast.
*Lum Chang: Issuing $50m of medium-term notes at a fixed rate of 5.5% due 28 Mar 2019.
*Duty Free Int’l: Disposing 10% of interest in wholly-owned Malaysian-based subsidiary DFZ Capital, to Heinemann Asia Pacific for €19.7m, and also granting call options for the vendor to acquire up to 15% of additional interest at €1/share within the next 30 months following the completion of the initial disposal.
*Next-Generation Satelite Communications: Received HK$5.04m from Neo Telemedia for the remaining payment of a HK$10.08m settlement for claims relating to outstanding interest payments.
*Interplex: Offer declared unconditional after Slater obtained valid acceptances of 65.73%. Closing date for the offer is extended to 25 Apr.
Anchor Resources IPO
Anchor Resources IPO: While it rides on gold glitter, it there a better play?
- Owns concession rights two two mining leases in Trengganu, Malaysia. Total gold resources at Lubut Mandi mine estimated at 114,000oz.
- Valuation/cost at premium to larger peer, CNMC
- If Anchor spikes, investors might want to buy CNMC on the latter’s more attractive valuations.
- Owns concession rights two two mining leases in Trengganu, Malaysia. Total gold resources at Lubut Mandi mine estimated at 114,000oz.
- Valuation/cost at premium to larger peer, CNMC
- If Anchor spikes, investors might want to buy CNMC on the latter’s more attractive valuations.
Thursday, March 17, 2016
Anchor Resources
Anchor Resources (S$0.25) - Trading to commence 18/3, 9am
- Expect some fireworks on the debut of this gold miner
- Plays to the current market sentiment of low rates, cheaper USD, gold prices are expected to maintain its upward trajectory
- Gold prices have surged 18.7% YTD to US$1,259.53/oz.
- Company expects to turn profitable this year on good yield from its tailings at its Lubuk Mandi Mine (221.5 ha).
- IPO priced at $0.25/share
- Expect some fireworks on the debut of this gold miner
- Plays to the current market sentiment of low rates, cheaper USD, gold prices are expected to maintain its upward trajectory
- Gold prices have surged 18.7% YTD to US$1,259.53/oz.
- Company expects to turn profitable this year on good yield from its tailings at its Lubuk Mandi Mine (221.5 ha).
- IPO priced at $0.25/share
Fed watch
Fed watch: Dovish estimates as Fed sees global cross currents
At yesterday’s FOMC meeting, the central bank left its fed funds rate unchanged as it sees risk in the global economic and financial markets.
The guidance is now for two interest rate hikes this year, revised down from the previous expectation of four rate increases. Maybank KE expects only one rate adjustment this year, in 2H16.
Meanwhile, the markets see a 38% probability that the next rate hike will be in Jun, and this rises to 53% in Sep.
Overall, the Fed sees that the slower path of policy tightening and it has also downgraded its forecasts for 2016-18.
Real GDP growth is now projected at 2.2% (previous: 2.4%) for 2016, 2.1% (previous: 2.2%) in 2017 and 2.0% (unch) in 2018.
Revised targets for fed funds rate:
2016: 0.9% (prior: 1.4%)
2017: 1.9% (prior: 2.4%)
2018: 3.0% (prior: 3.3%)
At yesterday’s FOMC meeting, the central bank left its fed funds rate unchanged as it sees risk in the global economic and financial markets.
The guidance is now for two interest rate hikes this year, revised down from the previous expectation of four rate increases. Maybank KE expects only one rate adjustment this year, in 2H16.
Meanwhile, the markets see a 38% probability that the next rate hike will be in Jun, and this rises to 53% in Sep.
Overall, the Fed sees that the slower path of policy tightening and it has also downgraded its forecasts for 2016-18.
Real GDP growth is now projected at 2.2% (previous: 2.4%) for 2016, 2.1% (previous: 2.2%) in 2017 and 2.0% (unch) in 2018.
Revised targets for fed funds rate:
2016: 0.9% (prior: 1.4%)
2017: 1.9% (prior: 2.4%)
2018: 3.0% (prior: 3.3%)
Economy
Economy: Singapore non-oil domestic exports (NODX) grew a surprise 2.1% y/y (est: -2.6%) in Feb, reversing Jan's 10.1% contraction, as shipments in both the electronic and non-electronic clusters grew.
Notable companies which could benefit include:
Electronics cluster - Venture, UMS, Trek 2000
Non-electronics cluster - Soo Kee, Aspial
Notable companies which could benefit include:
Electronics cluster - Venture, UMS, Trek 2000
Non-electronics cluster - Soo Kee, Aspial
SG Market (17 Mar 16)
SG Market: Market sentiment is likely to get a lift from a dovish Fed rate decision and firmer oil prices, with yield plays and O&M names benefitting.
Regional bourses marched ahead in Tokyo (+1.2%), Seoul (+1%) and Sydney (+1.3%) in opening trades.
From a chart perspective, the STI could push towards topside resistance at 2,890 with further upside capped by overbought conditions, while immediate support remains at 2,770.
Stock highlight:
*Telecoms: Consistel intends to challenge MyRepublic for the licence to be S’pore’s fourth telco. Separately, regulator MDA is enhancing pay-TV consumer protection by requiring operators to provide option for 12-month or shorter contract terms and cancel termination charges for unilateral price and bundle changes. Negative for incumbents M1 and StarHub, less so for Singtel.
*Anchor Resources: The loss-making Malaysian goldminer is set for listing tomorrow at IPO price of $0.25, and hopes to swing to the black by year end, after being in the red for the past nine years.
*Cosco Corp: Cosco (Nantong) Shipyard, a 51%-owned subsidiary has secured a contract to build a self-elevating workover unit, with an option for another similar unit. Delivery is expected in 3Q17. Price is confidential.
*First Resources: Feb FFB harvest fell 7.3% y/y to 163,562 tonnes, on lower FFB yield of 1.0 tonne/ha (Feb '15: 1.2 tonnes/ha). CPO production tumbled 9.5% to 39,994 tonnes, on lower extraction rate of 22.8% (-0.3ppt).
*Hiap Hoe: Divesting its property at 380 Lonsdale Street, Melbourne, to A&J Brady for A$60m.
*GLP: Signed 161,000sf lease with baby product e-commerce retailer Akachan House in Tokyo.
*Sunpower: Secured a Rmb97.6m contract from Jiangsu Xinhua Semiconductor Metarials to supply 34 reduction furnaces for a semiconductor-grade polysilicon project, with expected delivery this year.
*Noble: COO Cronin is retiring but will remain as a part time consultant to the group in the role of Vice Chairman, Americas.
Regional bourses marched ahead in Tokyo (+1.2%), Seoul (+1%) and Sydney (+1.3%) in opening trades.
From a chart perspective, the STI could push towards topside resistance at 2,890 with further upside capped by overbought conditions, while immediate support remains at 2,770.
Stock highlight:
*Telecoms: Consistel intends to challenge MyRepublic for the licence to be S’pore’s fourth telco. Separately, regulator MDA is enhancing pay-TV consumer protection by requiring operators to provide option for 12-month or shorter contract terms and cancel termination charges for unilateral price and bundle changes. Negative for incumbents M1 and StarHub, less so for Singtel.
*Anchor Resources: The loss-making Malaysian goldminer is set for listing tomorrow at IPO price of $0.25, and hopes to swing to the black by year end, after being in the red for the past nine years.
*Cosco Corp: Cosco (Nantong) Shipyard, a 51%-owned subsidiary has secured a contract to build a self-elevating workover unit, with an option for another similar unit. Delivery is expected in 3Q17. Price is confidential.
*First Resources: Feb FFB harvest fell 7.3% y/y to 163,562 tonnes, on lower FFB yield of 1.0 tonne/ha (Feb '15: 1.2 tonnes/ha). CPO production tumbled 9.5% to 39,994 tonnes, on lower extraction rate of 22.8% (-0.3ppt).
*Hiap Hoe: Divesting its property at 380 Lonsdale Street, Melbourne, to A&J Brady for A$60m.
*GLP: Signed 161,000sf lease with baby product e-commerce retailer Akachan House in Tokyo.
*Sunpower: Secured a Rmb97.6m contract from Jiangsu Xinhua Semiconductor Metarials to supply 34 reduction furnaces for a semiconductor-grade polysilicon project, with expected delivery this year.
*Noble: COO Cronin is retiring but will remain as a part time consultant to the group in the role of Vice Chairman, Americas.
Wednesday, March 16, 2016
Retail sales
Retail sales: Singapore’s retail sales grew 7.5% y/y to $4.1b in Jan, propped up by a surge in car purchases and consumers hitting the shops before the Chinese New Year festivities.
- Department stores (+11.9%) and supermarkets (+7.9%) appeared to have done well in Jan. Notable retail counters that have exposure to these two sub-sectors include Sheng Siong, Dairy Farm and Metro
- On the other hand, restaurants (-2.4%), jewellery (-8.4%) and telecoms shops (-30.5%) continue to struggle. Affected listcos include Japan Foods, Soup Restaurant, Hour Glass, Aspial Corp, Soo Kee, Challenger Technologies
- Overall, the retail REIT subsector could continue to see rents fall.
At last update, Maybank-KE has the following ratings for retail REITs:
CMT (Sell, TP: $1.66)
MCT (Sell, TP: $1.18)
FCT (Sell, TP: $1.63)
SG REIT (Hold, TP: $0.75)
- Department stores (+11.9%) and supermarkets (+7.9%) appeared to have done well in Jan. Notable retail counters that have exposure to these two sub-sectors include Sheng Siong, Dairy Farm and Metro
- On the other hand, restaurants (-2.4%), jewellery (-8.4%) and telecoms shops (-30.5%) continue to struggle. Affected listcos include Japan Foods, Soup Restaurant, Hour Glass, Aspial Corp, Soo Kee, Challenger Technologies
- Overall, the retail REIT subsector could continue to see rents fall.
At last update, Maybank-KE has the following ratings for retail REITs:
CMT (Sell, TP: $1.66)
MCT (Sell, TP: $1.18)
FCT (Sell, TP: $1.63)
SG REIT (Hold, TP: $0.75)
DBS
DBS Said to Agree to Buy RBS Onshore India Corporate Loan Book
(Bloomberg) -- DBS agreed to acquire RBS’s onshore corporate loan portfolio in India, people with knowledge of the matter said.
• DBS will purchase ~18b rupees ($369m) of corporate loans from RBS
• Loans will be bought at face value
• Portfolio includes a loan to Vodafone India of ~10b rupees, which the company will prepay by the end of the month
• DBS plans to complete the purchase by the end of the month, after receiving regulatory approvals.
While the acquisition ties in with its plans for the Indian market, no significant impact on DBS given that the Indian portfolio only accounts for 0.13% of the group's entire loan book of $287b. DBS currently trades at 0.96x P/B.
(Bloomberg) -- DBS agreed to acquire RBS’s onshore corporate loan portfolio in India, people with knowledge of the matter said.
• DBS will purchase ~18b rupees ($369m) of corporate loans from RBS
• Loans will be bought at face value
• Portfolio includes a loan to Vodafone India of ~10b rupees, which the company will prepay by the end of the month
• DBS plans to complete the purchase by the end of the month, after receiving regulatory approvals.
While the acquisition ties in with its plans for the Indian market, no significant impact on DBS given that the Indian portfolio only accounts for 0.13% of the group's entire loan book of $287b. DBS currently trades at 0.96x P/B.
Oil
Oil: Gartman thinks oil has reached a Goldilocks period, boon for stocks and economy in general.
- US$37 oil is high enough to avert major bankruptcy, low enough to not be onerous to the consumer
- Also provides a reasonable contango. Frackers won’t be happy, but they’ll produce for that price.
- Gartman sees that equities will be free from oil’s grip, and equity drivers will be by other factors
http://www.cnbc.com/2016/03/15/were-entering-crude-nirvana-gartman.html
- US$37 oil is high enough to avert major bankruptcy, low enough to not be onerous to the consumer
- Also provides a reasonable contango. Frackers won’t be happy, but they’ll produce for that price.
- Gartman sees that equities will be free from oil’s grip, and equity drivers will be by other factors
http://www.cnbc.com/2016/03/15/were-entering-crude-nirvana-gartman.html
Property
Property: Feb home sales was a slow 430 units, or 301 units excluding EC sales. The 301 units was 5% down m/m, 23% down y/y, due to low launches and the festive period.
CIMB expects March to be better showing, and maintains its FY16 expectations of 8000 to 9000 units.
Meanwhile, private residential prices should continue slipping 5-8% in 2016 on the back of peaking housing completions.
With no policy reversal anticipated in the near term, developer stocks will likely be range bound. The house prefers stocks with strong earnings visibility and attractive valuations. The house’s top picks are City Dev, UOL, and CapitaLand.
CIMB expects March to be better showing, and maintains its FY16 expectations of 8000 to 9000 units.
Meanwhile, private residential prices should continue slipping 5-8% in 2016 on the back of peaking housing completions.
With no policy reversal anticipated in the near term, developer stocks will likely be range bound. The house prefers stocks with strong earnings visibility and attractive valuations. The house’s top picks are City Dev, UOL, and CapitaLand.
SG Market (16 Mar 16)
SG Market: Cautious trading is expected as market participants will not want to be caught on the wrong side of the FOMC meeting, with O&M names most vulnerable to a retreat in oil prices.
Regional bourses opened mixed, with Tokyo (-0.7%) and Sydney (-0.04%) down, and Seoul (+0.3%) up.
From a chart perspective, top side resistance for the STI is seen at 2,890, while bottom support at 2,770.
Stocks to watch:
*Starhill Global REIT: Extended master tenancy agreement of two Malaysian properties, Starhill Gallery and Lot 10, with YTL Corp. for a third three-year term, commencing 28 Jun ’16, which generates a total annual rent of RM84.4m, approximately 6.7% higher than the prior three-year term.
*SGX: Collaborating with the National Stock Exchange of India to launch the world’s first offshore Indian sector futures in Singapore. This includes four USD-denominated index futures, namely SGX Nifty Bank Index Futures, SGX Nifty IT Index Futures, SGX Nifty CPSE Index Futures, and SGX Nifty Midcap 50 Index Futures. Separately, SGX also plans to list contracts tracking the MSCI China Free Index, which comprises large and mid-cap Chinese companies listed outside of mainland China, subjected to regulatory approval.
*SIA: Feb passenger load factor rose 2.2ppts y/y to 78.3%, on higher passenger traffic of 8.4% against a 5.4% capacity expansion. Load factors improved across for all regions supported by promotional activities. Both SilkAir (+1.3ppt to 74%) and Tigerair (+2.7ppt to 81.6%) enjoyed better load factors, while Scoot (-2.1ppt to 86.8%) encountered slight deterioration. Overall cargo load factor fell 4.3ppt to 59% as capacity (+4.9%) expanded despite cargo traffic (-2.3%) shrunk.
*Sembcorp Industries: Increasing stake in NCC Power Projects (renamed Sembcorp Gayatri Power), which owns a 1,320MW coal-fired power plant in India, to 88% from 49% via a combination of share purchase amounting to Rs650 crores ($134m) and conversion of convertible debentures.
*IPCO: 3QFY16 earnings jumped 317% y/y to $6.1m as revenue swelled to $14.8m (+42.7%) on continued growth in semiconductor sales (+32.8%) as well as increasing gas consumption (+49.7%) in China. Bottom line was buttressed by write-back of $6.7m partially offset by FX losses of $0.4m (3QFY15: $4m gain). NAV/share at $0.02.
*Vard: Signed LOI to construct four luxury expedition cruise vessels for PONANT. The ice-class expedition cruise vessels will be delivered between the summers of 2018-19. Both are expected to enter into the contracts in 2Q16.
*Keppel T&T: Signed MOU with National Supercomputing Centre, to explore potential collaboration in areas of supercomputing and high performance computing, as well as in other technological areas.
*PSL Holdings: Acquiring 70% stake in NBN Scaffolding, a distributor and dealer of scaffolding materials and hardware, for $3.85m to complement its business in providing construction logistic services.
*Secura Group: Appointed as an authorised reseller of LogRhythm’s cyber security products in Singapore.
*GKE: Entered into a chartering contract with Sinogas Carriers for its liquefied gas carrier vessel at a gross rate of US$33,000/day for six months till mid-Sep ’16, with an option to extend for an additional six months.
*YuuZoo: Signed on 20,000 new users to its online gaming platform after successfully concluding the Electronic Sports China Cup.
Regional bourses opened mixed, with Tokyo (-0.7%) and Sydney (-0.04%) down, and Seoul (+0.3%) up.
From a chart perspective, top side resistance for the STI is seen at 2,890, while bottom support at 2,770.
Stocks to watch:
*Starhill Global REIT: Extended master tenancy agreement of two Malaysian properties, Starhill Gallery and Lot 10, with YTL Corp. for a third three-year term, commencing 28 Jun ’16, which generates a total annual rent of RM84.4m, approximately 6.7% higher than the prior three-year term.
*SGX: Collaborating with the National Stock Exchange of India to launch the world’s first offshore Indian sector futures in Singapore. This includes four USD-denominated index futures, namely SGX Nifty Bank Index Futures, SGX Nifty IT Index Futures, SGX Nifty CPSE Index Futures, and SGX Nifty Midcap 50 Index Futures. Separately, SGX also plans to list contracts tracking the MSCI China Free Index, which comprises large and mid-cap Chinese companies listed outside of mainland China, subjected to regulatory approval.
*SIA: Feb passenger load factor rose 2.2ppts y/y to 78.3%, on higher passenger traffic of 8.4% against a 5.4% capacity expansion. Load factors improved across for all regions supported by promotional activities. Both SilkAir (+1.3ppt to 74%) and Tigerair (+2.7ppt to 81.6%) enjoyed better load factors, while Scoot (-2.1ppt to 86.8%) encountered slight deterioration. Overall cargo load factor fell 4.3ppt to 59% as capacity (+4.9%) expanded despite cargo traffic (-2.3%) shrunk.
*Sembcorp Industries: Increasing stake in NCC Power Projects (renamed Sembcorp Gayatri Power), which owns a 1,320MW coal-fired power plant in India, to 88% from 49% via a combination of share purchase amounting to Rs650 crores ($134m) and conversion of convertible debentures.
*IPCO: 3QFY16 earnings jumped 317% y/y to $6.1m as revenue swelled to $14.8m (+42.7%) on continued growth in semiconductor sales (+32.8%) as well as increasing gas consumption (+49.7%) in China. Bottom line was buttressed by write-back of $6.7m partially offset by FX losses of $0.4m (3QFY15: $4m gain). NAV/share at $0.02.
*Vard: Signed LOI to construct four luxury expedition cruise vessels for PONANT. The ice-class expedition cruise vessels will be delivered between the summers of 2018-19. Both are expected to enter into the contracts in 2Q16.
*Keppel T&T: Signed MOU with National Supercomputing Centre, to explore potential collaboration in areas of supercomputing and high performance computing, as well as in other technological areas.
*PSL Holdings: Acquiring 70% stake in NBN Scaffolding, a distributor and dealer of scaffolding materials and hardware, for $3.85m to complement its business in providing construction logistic services.
*Secura Group: Appointed as an authorised reseller of LogRhythm’s cyber security products in Singapore.
*GKE: Entered into a chartering contract with Sinogas Carriers for its liquefied gas carrier vessel at a gross rate of US$33,000/day for six months till mid-Sep ’16, with an option to extend for an additional six months.
*YuuZoo: Signed on 20,000 new users to its online gaming platform after successfully concluding the Electronic Sports China Cup.
Tuesday, March 15, 2016
Sinarmas Land
Sinarmas Land ($0.485): RHB highlighted the Indonesian property developer as deeply undervalued and is poise to ride on the cyclical recovery of the Indonesian real estate market.
- Current market cap is only slightly above market value of stake in key subsidiary Bumi Serpong Damai
- Other assets including industrial estate Kota Deltamas, and recently acquired London office properties comes for free
- RHB maintains Buy with TP of $0.95 (96% upside)
- Current market cap is only slightly above market value of stake in key subsidiary Bumi Serpong Damai
- Other assets including industrial estate Kota Deltamas, and recently acquired London office properties comes for free
- RHB maintains Buy with TP of $0.95 (96% upside)
Glovemakers
Glovemakers: Top Glove's proposed secondary listing in Singapore might not do too much for boosting its own liquidity (taking cue from dual-listed IHH, which hardly trades in Singapore).
However, this could pan out well for other Singapore-listed glove makers, as they are trading at a notable discount of 30% to Malaysia-listed glove makers, due to the lack of understanding, fewer listings, as well as lesser news flows. There are only 2 glove listings in Singapore vis-Ã -vis 7 listings in Malaysia.
For now Maybank-KE maintains Buy calls on Riverstone and UG Healthcare with TPs of $1.18 and $0.52 respectively.
However, this could pan out well for other Singapore-listed glove makers, as they are trading at a notable discount of 30% to Malaysia-listed glove makers, due to the lack of understanding, fewer listings, as well as lesser news flows. There are only 2 glove listings in Singapore vis-Ã -vis 7 listings in Malaysia.
For now Maybank-KE maintains Buy calls on Riverstone and UG Healthcare with TPs of $1.18 and $0.52 respectively.
Tat Hong
Tat Hong: Approached in connection with a potential transaction which may or may not lead to an acquisition of the issued share capital of the Company.
http://infopub.sgx.com/FileOpen/Tat Hong Holdings -Announcement.ashx?App=Announcement&FileID=393869
http://infopub.sgx.com/FileOpen/Tat Hong Holdings -Announcement.ashx?App=Announcement&FileID=393869
SG Market (15 Mar 16)
SG Market: Singapore shares are likely to face some profit taking as investors take a pause ahead of the FOMC meeting on Tue/Wed.
Regional bourses opened mixed, with Tokyo (-0.2%) and Sydney (-0.5%) weaker, although Seoul (+0.3%) opened higher.
From a chart perspective, topside resistance is seen at 2,890, while bottom support at 2,770.
Stocks to watch:
*O&M: News sources warn that the Sete Brasil saga is "about to get very ugly", with mounting FX losses eroding profits of suppliers, as most contracts were locked in at BRL1.75 to USD1, which has since deteriorated to BRL3.90. Negative for Keppel Corp and Sembcorp Marine.
*Ascott Residence Trust: Acquired 369-unit Sheraton Tribeca New York Hotel for US$158m. The accretive acquisition is expected to raise its distributable income by US$6.6m (DPU: +0.12¢ to 8.11¢). To fund the acquisition, the REIT is intending to raise at least $100m through a private placement at $1.055/unit.
*Swee Hong: Issuing 300m placement shares at 1¢ to raise $3m, up to 100m top up shares, and 500m free warrants (exercise price: 1¢) to KH Foges. Upon exercise of all warrants, the subscriber would own up to 42% of the group’s enlarged capital.
*Manhattan Resources: Entered into an MOU with Energy Resource Investment to acquire an at least 51% stake in PT Kariangau Power, an Indonesian company that operates a coal-fired power plant in Kalimantan.
*Seroja Investment: Secured a five-year coal barging contract from PT Prima Multi Mineral to transport 2.5m to 3.75m tons of coal within Indonesia. The expected contract revenue is approximately US$2.3m, about 5% of FY15 revenue.
*Yoma: In response to a SGX trading query, positive reference is made to the nomination of presidential candidate of Aung San Suu Kyi’s National League for Democracy, as well as the listing of Chairman Serge Pun's company, First Myanmar Investment in Yangon Stock Exchange.
*HTL: Shareholders of offeror Yihua Yimber have approved the proposed acquisition of HTL. The remaining three pre-conditions which include sanction and approvals by Chinese authorities are required to be obtained by 31 Jul.
*Trek 2000: External auditors found documentation deficiencies in relation to certain sale transactions between a subsidiary and a customer. The customer has paid US$2.65m but the auditor raised concerns as to the source and origin of bank transfer notices.
*Innopac: Terminated a JV agreement to distribute clean gasoline and diesel in Shandong, China.
Regional bourses opened mixed, with Tokyo (-0.2%) and Sydney (-0.5%) weaker, although Seoul (+0.3%) opened higher.
From a chart perspective, topside resistance is seen at 2,890, while bottom support at 2,770.
Stocks to watch:
*O&M: News sources warn that the Sete Brasil saga is "about to get very ugly", with mounting FX losses eroding profits of suppliers, as most contracts were locked in at BRL1.75 to USD1, which has since deteriorated to BRL3.90. Negative for Keppel Corp and Sembcorp Marine.
*Ascott Residence Trust: Acquired 369-unit Sheraton Tribeca New York Hotel for US$158m. The accretive acquisition is expected to raise its distributable income by US$6.6m (DPU: +0.12¢ to 8.11¢). To fund the acquisition, the REIT is intending to raise at least $100m through a private placement at $1.055/unit.
*Swee Hong: Issuing 300m placement shares at 1¢ to raise $3m, up to 100m top up shares, and 500m free warrants (exercise price: 1¢) to KH Foges. Upon exercise of all warrants, the subscriber would own up to 42% of the group’s enlarged capital.
*Manhattan Resources: Entered into an MOU with Energy Resource Investment to acquire an at least 51% stake in PT Kariangau Power, an Indonesian company that operates a coal-fired power plant in Kalimantan.
*Seroja Investment: Secured a five-year coal barging contract from PT Prima Multi Mineral to transport 2.5m to 3.75m tons of coal within Indonesia. The expected contract revenue is approximately US$2.3m, about 5% of FY15 revenue.
*Yoma: In response to a SGX trading query, positive reference is made to the nomination of presidential candidate of Aung San Suu Kyi’s National League for Democracy, as well as the listing of Chairman Serge Pun's company, First Myanmar Investment in Yangon Stock Exchange.
*HTL: Shareholders of offeror Yihua Yimber have approved the proposed acquisition of HTL. The remaining three pre-conditions which include sanction and approvals by Chinese authorities are required to be obtained by 31 Jul.
*Trek 2000: External auditors found documentation deficiencies in relation to certain sale transactions between a subsidiary and a customer. The customer has paid US$2.65m but the auditor raised concerns as to the source and origin of bank transfer notices.
*Innopac: Terminated a JV agreement to distribute clean gasoline and diesel in Shandong, China.
Keppel Corp & Sembcorp Marine
Rigbuilders: Sete Brasil saga "about to get very ugly"
Industry insider cited that the Sete Brasil saga is "about to get very ugly", with FX losses eroding profits of Sete's vendors, whom have not receive payment in over a year.
Info from: https://sg.finance.yahoo.com/news/sete-brasil-saga-very-ugly-024000576.html
- Contract payment rates previously locked in at 1.75 USD/BRL; spot at 3.66 USD/BRL.
- Both rigbuilders' cost base in USD or EUR.
- Significant 40-50% cut in Keppel Corp & Sembcorp Marine's combined orderbook of $10-11b should Sete goes bankrupt.
Industry insider cited that the Sete Brasil saga is "about to get very ugly", with FX losses eroding profits of Sete's vendors, whom have not receive payment in over a year.
Info from: https://sg.finance.yahoo.com/news/sete-brasil-saga-very-ugly-024000576.html
- Contract payment rates previously locked in at 1.75 USD/BRL; spot at 3.66 USD/BRL.
- Both rigbuilders' cost base in USD or EUR.
- Significant 40-50% cut in Keppel Corp & Sembcorp Marine's combined orderbook of $10-11b should Sete goes bankrupt.
Monday, March 14, 2016
Keppel Corp
Keppel Corp: In relation to the re-tender proposal for BP's Mad Dog 2 field development, we note that the tender calls for Korean yards, which tend to have lower bids.
Hence, even if Keppel Corp wins the tender, it may point to lower profitability for the contract.
Hence, even if Keppel Corp wins the tender, it may point to lower profitability for the contract.
Insider trades
Insider trades: Director buying drops a first in four weeks; nil director sales last week; buyback volumes steady.
Asia Insider notes that director buying fell for the first time in the past four weeks.
Insider buying: 18 companies saw 30 purchases worth $6.77m, vs. 28 firms, 56 purchases worth $17.14m the week prior.
Insider sales: Nil vs. two companies, which saw three disposals worth $0.89m the week prior.
Buyback: 20 companies posted 60 repurchases worth $14.7m, vs. 19 firms, 55 transactions worth $14.7m the previous week.
Notable transactions:
Federal International (2000): Chairman & CEO Koh Kian Kiong resumed buying shares at higher than his acquisition price in Jan, with 210,000 shares purchased on 10 Mar at $0.23 each. This increased his direct holdings to 7.91% of issued capital.
Hong Fok: Joint chairman & joint MD Cheong Sim Eng continued buying shares after a 19% bounce in share price since 3 Feb, scooping up 165,000 shares from 4-7 Mar at average of $0.769/share. This increased his direct holdings to 11.97% of issued capital
Maxi-Cash: Non-executive chairman Koh Wee Seng resumed buying shares at higher than his acquisition prices in Feb with 98,300 shares purchased on Mar 8 at $0.14 each. The trade increased his direct holdings to 4.44% of issued capital.
Silverlake Axis: CEO and group MD Raymond Kwong Yong Sin made his first on-market trade since Aug ’15, picking up 100,000 shares on 11 Mar at $0.592 each. The acquisition was made on the back of a 12% rebound in share price since Jan.
Asia Insider notes that director buying fell for the first time in the past four weeks.
Insider buying: 18 companies saw 30 purchases worth $6.77m, vs. 28 firms, 56 purchases worth $17.14m the week prior.
Insider sales: Nil vs. two companies, which saw three disposals worth $0.89m the week prior.
Buyback: 20 companies posted 60 repurchases worth $14.7m, vs. 19 firms, 55 transactions worth $14.7m the previous week.
Notable transactions:
Federal International (2000): Chairman & CEO Koh Kian Kiong resumed buying shares at higher than his acquisition price in Jan, with 210,000 shares purchased on 10 Mar at $0.23 each. This increased his direct holdings to 7.91% of issued capital.
Hong Fok: Joint chairman & joint MD Cheong Sim Eng continued buying shares after a 19% bounce in share price since 3 Feb, scooping up 165,000 shares from 4-7 Mar at average of $0.769/share. This increased his direct holdings to 11.97% of issued capital
Maxi-Cash: Non-executive chairman Koh Wee Seng resumed buying shares at higher than his acquisition prices in Feb with 98,300 shares purchased on Mar 8 at $0.14 each. The trade increased his direct holdings to 4.44% of issued capital.
Silverlake Axis: CEO and group MD Raymond Kwong Yong Sin made his first on-market trade since Aug ’15, picking up 100,000 shares on 11 Mar at $0.592 each. The acquisition was made on the back of a 12% rebound in share price since Jan.
SG Market (14 Mar 16)
SG: Investors are likely to take risks on following solid Wall Street gains and higher crude prices.
Regional bourses opened firmer in Japan (+1.3%), Seoul (+0.2%) and Sydney (+0.8%).
From a chart perspective, topside resistance for STI is capped at 2,890 with support at 2,770.
Stocks to watch
*Macro: Market watchers expect more companies to consider divesting non-core assets to improve valuations and bolster balance sheets amid the current economic gloom.
*Del Monte. 3QFY16 beat on profit turnaround to US$0.6m (3QFY15: US$2.2m loss), largely due to FX gain and losses credited to minority interests. Revenue sagged 6.8% due to weaker US sales, partially offset by stronger APAC performance. Gross margin fattened to 18% (+0.4ppt) due to the absence of a one-time adjustment to inventory costs of US$6.2m. NAV/share at US$0.186.
*Keppel/Cosco: A new proposal for a re-tender of the anchor production structure for BP’s US$10b Mad Dog 2 field development in the US Gulf of Mexico is understood to include a call for contest to be opened up to China and Singapore yards, including Keppel Fels and Cosco Shipyard.
*CapitaLand: 268-unit residential development, Cairnhill Nine, has sold 134 of its 200 units released over the weekend
*Straits Trading: 89.5% owned Straits Real Estate is seeking to deploy the remaining one-third of its initial $950m capital commitment into real-estate opportunities in markets such as Australia, Japan, South Korea and China.
*Yongnam: Swung to FY15 net profit of $5.8m, as revenue jumped to $280.6m (+32.3%) from higher contribution of structural steelwork projects. Gross margin fattened to 10.9% compared to gross loss in FY14, while bottom line gains were pared by the absence of a disposal gain (FY14: $34.4m). NAV/share at $0.9677.
*SBI Offshore: Terminated a US$24m contract with a consortium of six Middle East-Chinese parties. The contract termination has been provided for in its FY15 financial report with no further revenue to be recognised from the contract.
*SMJ International: To receive $16,000 from De Palmco as settlement of a previous lawsuit.
*China Sky Chemical Fibre: Responded to SGX trading activity query regarding its volume movements on 11 Mar, that it had on 19 Jan '16 entered into MOU with ARC Resorts, a leisure and gaming property developer and owner, to commence negotiation for a 10% interest in the latter. No consideration and definite terms have been agreed yet.
Regional bourses opened firmer in Japan (+1.3%), Seoul (+0.2%) and Sydney (+0.8%).
From a chart perspective, topside resistance for STI is capped at 2,890 with support at 2,770.
Stocks to watch
*Macro: Market watchers expect more companies to consider divesting non-core assets to improve valuations and bolster balance sheets amid the current economic gloom.
*Del Monte. 3QFY16 beat on profit turnaround to US$0.6m (3QFY15: US$2.2m loss), largely due to FX gain and losses credited to minority interests. Revenue sagged 6.8% due to weaker US sales, partially offset by stronger APAC performance. Gross margin fattened to 18% (+0.4ppt) due to the absence of a one-time adjustment to inventory costs of US$6.2m. NAV/share at US$0.186.
*Keppel/Cosco: A new proposal for a re-tender of the anchor production structure for BP’s US$10b Mad Dog 2 field development in the US Gulf of Mexico is understood to include a call for contest to be opened up to China and Singapore yards, including Keppel Fels and Cosco Shipyard.
*CapitaLand: 268-unit residential development, Cairnhill Nine, has sold 134 of its 200 units released over the weekend
*Straits Trading: 89.5% owned Straits Real Estate is seeking to deploy the remaining one-third of its initial $950m capital commitment into real-estate opportunities in markets such as Australia, Japan, South Korea and China.
*Yongnam: Swung to FY15 net profit of $5.8m, as revenue jumped to $280.6m (+32.3%) from higher contribution of structural steelwork projects. Gross margin fattened to 10.9% compared to gross loss in FY14, while bottom line gains were pared by the absence of a disposal gain (FY14: $34.4m). NAV/share at $0.9677.
*SBI Offshore: Terminated a US$24m contract with a consortium of six Middle East-Chinese parties. The contract termination has been provided for in its FY15 financial report with no further revenue to be recognised from the contract.
*SMJ International: To receive $16,000 from De Palmco as settlement of a previous lawsuit.
*China Sky Chemical Fibre: Responded to SGX trading activity query regarding its volume movements on 11 Mar, that it had on 19 Jan '16 entered into MOU with ARC Resorts, a leisure and gaming property developer and owner, to commence negotiation for a 10% interest in the latter. No consideration and definite terms have been agreed yet.
Friday, March 11, 2016
Keppel Corp
More deferrals for Keppel Corp.
Golar [GLNG US] in its 4Q15 earnings call announced deferral for the notice to proceed on its Gimi and Gandria project start dates.
- The new start date is now "end 2016".
- Previously, Gimi was slated to start no later than Nov-15, while Gandria was slated to receive notice to start "in 2016".
To recap, Keppel secured 3 FLNG orders from Golar over 2014 and 2015, collectively worth US$2.1b. In summary:
1) Hilli (US$735m) - No change to schedule. Remains on track for 2017 delivery
2) Gimi (US$705m) - notice to proceed deferred from Nov-15 to end 2016
3) Gandria (US$684m) - notice to proceed deferred from "in 2016" to end 2016
-ve Keppel Corp
Golar [GLNG US] in its 4Q15 earnings call announced deferral for the notice to proceed on its Gimi and Gandria project start dates.
- The new start date is now "end 2016".
- Previously, Gimi was slated to start no later than Nov-15, while Gandria was slated to receive notice to start "in 2016".
To recap, Keppel secured 3 FLNG orders from Golar over 2014 and 2015, collectively worth US$2.1b. In summary:
1) Hilli (US$735m) - No change to schedule. Remains on track for 2017 delivery
2) Gimi (US$705m) - notice to proceed deferred from Nov-15 to end 2016
3) Gandria (US$684m) - notice to proceed deferred from "in 2016" to end 2016
-ve Keppel Corp
Telecom
Telecom: Dreaded price war has begun; M1 most at risk
The industry dreaded price war has emerged as Starhub and M1 pushed out new data offerings a day after MyRepublic and SingTel unveiled theirs.
- Singtel's CEO had earlier warned that a price war would make the whole industry suffer and customer experience, poorer.
- The disruption may come as a positive for consumers, but not for the bottom line of telco operators.
Maybank KE remains positive on Singtel (Buy, TP: $4.40) due to its diversified income stream.
Meanwhile, M1 (Hold, TP: $3.09) would be the most at risk given that the bulk of its earnings are derived from Singapore's mobile industry, while StarHub (Hold, TP: $4.00) would partially be sheltered with its Pay TV and other platforms.
The industry dreaded price war has emerged as Starhub and M1 pushed out new data offerings a day after MyRepublic and SingTel unveiled theirs.
- Singtel's CEO had earlier warned that a price war would make the whole industry suffer and customer experience, poorer.
- The disruption may come as a positive for consumers, but not for the bottom line of telco operators.
Maybank KE remains positive on Singtel (Buy, TP: $4.40) due to its diversified income stream.
Meanwhile, M1 (Hold, TP: $3.09) would be the most at risk given that the bulk of its earnings are derived from Singapore's mobile industry, while StarHub (Hold, TP: $4.00) would partially be sheltered with its Pay TV and other platforms.
SG Market (11 Mar 16)
S'pore market is likely to take another breather from overbought conditions, as investors assess the efficacy of central bank action and the likelihood of an oil producer pact to freeze output.
Regional bourses opened mixed in Tokyo (-1.5%), Seoul (+0.1%) and Sydney (-0.4%).
From a chart perspective, topside resistance for STI capped at 2,890 with support at 2,730.
Stocks to watch:
*Telecoms: Mobile data price war heats up with Starhub and M1 pushing out new data plan offerings a day after MyRepublic and Singtel fired off the first salvos. Singtel is in the strongest position to slug this out given its diversified income stream from the region.
*Citic Envirotech: Awarded a Rmb198m ($42m) project to upgrade an existing industrial waste water treatment plant in Hebei, China. The street remains bullish on the counter with average TP of $1.78.
*XMH. 3QFY16 net profit plunged 63.1% y/y to $1m due to increased opex post-consolidation of marine products manufacturer Z-Power Automation in 4QFY15. Revenue rose 16.8% to $3.8m from more projects, but gross margin narrowed to 26.1% (-5.6ppt) as it booked less profitable projects. NAV/share at $0.147.
*Datapulse: Sank into the red with 2QFY16 net loss of $0.6m (2QFY15: $71k profit) as revenue declined 21.5% y/y to $4.8m on weak demand for media storage and cards segments. NAV/share at $0.227.
*Sysma: 1HFY16 net profit slumped 68.6% y/y to $0.5m despite chalking higher revenue of $68m (+17.6%) on increased contribution from construction (+24.7%) and property development (+157.7%) segments. However, gross margin slid to 5.9% (-1.9ppt) on a shift in business mix, while bottom line was weighed by the absence of a tax credit. NAV/share at $0.159.
*SHS: Entered into a 50:30:20 JV with IFG Asia and Infra Land to provide technical consultancy for construction services in Myanmar.
*Singapore Myanmar Investco: Expanding its consultancy services in Myanmar to include the telecoms, F&B and advertising sectors.
*Asia-Pacific Strategic: Acquired Century 21 (AsPac) Realty, a local real estate agency with around 100 registered agents, for $0.2m.
Regional bourses opened mixed in Tokyo (-1.5%), Seoul (+0.1%) and Sydney (-0.4%).
From a chart perspective, topside resistance for STI capped at 2,890 with support at 2,730.
Stocks to watch:
*Telecoms: Mobile data price war heats up with Starhub and M1 pushing out new data plan offerings a day after MyRepublic and Singtel fired off the first salvos. Singtel is in the strongest position to slug this out given its diversified income stream from the region.
*Citic Envirotech: Awarded a Rmb198m ($42m) project to upgrade an existing industrial waste water treatment plant in Hebei, China. The street remains bullish on the counter with average TP of $1.78.
*XMH. 3QFY16 net profit plunged 63.1% y/y to $1m due to increased opex post-consolidation of marine products manufacturer Z-Power Automation in 4QFY15. Revenue rose 16.8% to $3.8m from more projects, but gross margin narrowed to 26.1% (-5.6ppt) as it booked less profitable projects. NAV/share at $0.147.
*Datapulse: Sank into the red with 2QFY16 net loss of $0.6m (2QFY15: $71k profit) as revenue declined 21.5% y/y to $4.8m on weak demand for media storage and cards segments. NAV/share at $0.227.
*Sysma: 1HFY16 net profit slumped 68.6% y/y to $0.5m despite chalking higher revenue of $68m (+17.6%) on increased contribution from construction (+24.7%) and property development (+157.7%) segments. However, gross margin slid to 5.9% (-1.9ppt) on a shift in business mix, while bottom line was weighed by the absence of a tax credit. NAV/share at $0.159.
*SHS: Entered into a 50:30:20 JV with IFG Asia and Infra Land to provide technical consultancy for construction services in Myanmar.
*Singapore Myanmar Investco: Expanding its consultancy services in Myanmar to include the telecoms, F&B and advertising sectors.
*Asia-Pacific Strategic: Acquired Century 21 (AsPac) Realty, a local real estate agency with around 100 registered agents, for $0.2m.
Thursday, March 10, 2016
SG Market (10 Mar 16)
SG Market: Singapore shares are showing relative strength despite overbought conditions as investors track oil prices and key upcoming central bank events from ECB, BOJ and Fed.
Regional bourses opened stronger in Tokyo (+0.9%), Seoul (+0.3%), Sydney (+0.02%).
From a chart perspective, topside resistance for STI is seen at 2,890 with support is at 2,730.
Stocks to watch:
*Oil: Market watchers are pessimistic towards the recent rally as structural dynamics have remained largely unchanged. While the world's largest oil exporters are scheduled to meet on Mar 20 to discuss an output freeze, the street is sceptical about the impact as production still outstrips demand.
*Telecoms: Potential new entrant MyRepublic unveiled extremely enticing proposed mobile offerings, which include a 2GB mobile data plan for as low as $6/month and an unlimited data plan at $60/month. However, Maybank KE underscores that prior to MyRepublic actually winning a licence, incumbents would be able to respond by coming up with better plans, thereby protecting their market share.
*Sembcorp Marine: Raised its stake in Gravifloat to 56% from 12% for US$38m, with the aim of eventually acquiring the remaining 44%. Gravifloat designs and holds patents for redeployable modularised LNG solutions.
*Libra: Looking to diversify into property, tourism and aviation sectors in Malaysia, amid thinning margins in its core M&E businesses in Singapore.
*Hotung Investment: Its 3.8%-owned investee, Shenghua Entertainment Communication has successfully listed on the Taipei Exchange.
*Envictus: Extended the long-stop date of its proposed acquisition of Lyndarahim Ventures to 28 Mar from 14 Mar.
*Elektromotive: Terminated a proposed issue of $20m 0% equity-linked redeemable structured convertible notes due 2018, and paid a termination fee of $0.25m to subscriber Advance Opportunities Fund.
*Pacific Healthcare: Sued for an alleged $0.5m loan and $1.8m payment for a terminated sale of two separate subsidiaries. The claims are being made by one Chan Ewe Teik and his firm Straitsworld Advisory.
Regional bourses opened stronger in Tokyo (+0.9%), Seoul (+0.3%), Sydney (+0.02%).
From a chart perspective, topside resistance for STI is seen at 2,890 with support is at 2,730.
Stocks to watch:
*Oil: Market watchers are pessimistic towards the recent rally as structural dynamics have remained largely unchanged. While the world's largest oil exporters are scheduled to meet on Mar 20 to discuss an output freeze, the street is sceptical about the impact as production still outstrips demand.
*Telecoms: Potential new entrant MyRepublic unveiled extremely enticing proposed mobile offerings, which include a 2GB mobile data plan for as low as $6/month and an unlimited data plan at $60/month. However, Maybank KE underscores that prior to MyRepublic actually winning a licence, incumbents would be able to respond by coming up with better plans, thereby protecting their market share.
*Sembcorp Marine: Raised its stake in Gravifloat to 56% from 12% for US$38m, with the aim of eventually acquiring the remaining 44%. Gravifloat designs and holds patents for redeployable modularised LNG solutions.
*Libra: Looking to diversify into property, tourism and aviation sectors in Malaysia, amid thinning margins in its core M&E businesses in Singapore.
*Hotung Investment: Its 3.8%-owned investee, Shenghua Entertainment Communication has successfully listed on the Taipei Exchange.
*Envictus: Extended the long-stop date of its proposed acquisition of Lyndarahim Ventures to 28 Mar from 14 Mar.
*Elektromotive: Terminated a proposed issue of $20m 0% equity-linked redeemable structured convertible notes due 2018, and paid a termination fee of $0.25m to subscriber Advance Opportunities Fund.
*Pacific Healthcare: Sued for an alleged $0.5m loan and $1.8m payment for a terminated sale of two separate subsidiaries. The claims are being made by one Chan Ewe Teik and his firm Straitsworld Advisory.
Iron
Iron: Previous surge was due to the China Flower Show.
http://www.ft.com/intl/cms/s/0/37fd6a16-e59b-11e5-a09b-1f8b0d268c39.html#axzz42S6wfMNX
- Supply/demand dynamics still huge negative on iron ore
- Rally to be short lived, barring a sustained pick up in demand in China
http://www.ft.com/intl/cms/s/0/37fd6a16-e59b-11e5-a09b-1f8b0d268c39.html#axzz42S6wfMNX
- Supply/demand dynamics still huge negative on iron ore
- Rally to be short lived, barring a sustained pick up in demand in China
Wednesday, March 9, 2016
M1
M1: Pushes into IoT with Singapore's first activity monitoring solution for senior citizens
http://www.businesstimes.com.sg/companies-markets/m1-unveils-remote-elderly-care-monitoring-solution
+ve for the counter but focus will still remain on possible entrant of 4th telco - stands to lose out the most amongst 3 incumbents.
http://www.businesstimes.com.sg/companies-markets/m1-unveils-remote-elderly-care-monitoring-solution
+ve for the counter but focus will still remain on possible entrant of 4th telco - stands to lose out the most amongst 3 incumbents.
O&M
O&M: Delivery deferments rising
Maybank KE reiterated its Sell rating on the rigbuilders with the rising delivery deferments.
Transocean has delayed its five jackup rigs under construction by Keppel again. The US$1.1b contract was inked in Nov '13 for initial deliveries over 1Q16-3Q17 and included options for five more units.
Following two deferments previously, the latest will push rig delivery dates from '18 to '20.
The house believes that not much work has started on the rigs and thus no significant working capital is being locked up in those rigs yet. Initial estimated impact on its FY17-18 EPS forecasts for Keppel is about -6%.
Notably, the development essentially implies that the industry may not see a meaningful recovery in rig orders until 2018, supporting Maybank KE's negative view on the rigbuilders.
Between the two names, downside risk to Maybank KE's TP is more significant for Sembcorp Marine (TP $1.00) at 40%, followed by Keppel (TP $4.24) at 23%.
Maybank KE reiterated its Sell rating on the rigbuilders with the rising delivery deferments.
Transocean has delayed its five jackup rigs under construction by Keppel again. The US$1.1b contract was inked in Nov '13 for initial deliveries over 1Q16-3Q17 and included options for five more units.
Following two deferments previously, the latest will push rig delivery dates from '18 to '20.
The house believes that not much work has started on the rigs and thus no significant working capital is being locked up in those rigs yet. Initial estimated impact on its FY17-18 EPS forecasts for Keppel is about -6%.
Notably, the development essentially implies that the industry may not see a meaningful recovery in rig orders until 2018, supporting Maybank KE's negative view on the rigbuilders.
Between the two names, downside risk to Maybank KE's TP is more significant for Sembcorp Marine (TP $1.00) at 40%, followed by Keppel (TP $4.24) at 23%.
Hyflux
Hyflux: (S$0.565) LOI for US$500m EPC contract in Egypt
Hyflux signed a letter of intent for a turnkey EPC contract for an integrated water and power project in Egypt valued at US$500m.
The project to build a desalination plant to produce 150,000 cubic metres of water per day, with on-site 457MW combined cycle gas turbine power plant.
Upon finalisation of contract terms, construction is slated to commence construction and is expected to boost Hyflux's FY16 financials.
Subsequently, the group will operate and maintain the plant for a 25-year period.
At the current price, Hyflux is valued at 1x P/B compared to its 5-year historical average of 2x. Bloomberg consensus has 2 Hold ratings with an average TP of $0.54.
Hyflux signed a letter of intent for a turnkey EPC contract for an integrated water and power project in Egypt valued at US$500m.
The project to build a desalination plant to produce 150,000 cubic metres of water per day, with on-site 457MW combined cycle gas turbine power plant.
Upon finalisation of contract terms, construction is slated to commence construction and is expected to boost Hyflux's FY16 financials.
Subsequently, the group will operate and maintain the plant for a 25-year period.
At the current price, Hyflux is valued at 1x P/B compared to its 5-year historical average of 2x. Bloomberg consensus has 2 Hold ratings with an average TP of $0.54.
SG Market (09 Mar 16)
SG Market: Investors might take some chips off the table as another round of rig delivery deferrals and weak Chinese economic data eclipse the rebound rally which has now been long in the tooth.
Regional bourses with Tokyo (-1%), Kospi (-0.02%), and Sydney (-0.1%) weaker in the open.
From a chart perspective, downside risk for STI is at 2,730 with resistance capped at 2,890.
Stocks to watch:
*Macro: Following the privatisation bid for OSIM, a Business Times speculates that more controlling shareholders may consider taking the same route if listing requirements become too onerous.
Keppel Corp. Key client Transocean has again deferred delivery for five jack-up rigs worth US$1.1b till 1Q20 from 2018. Keppel expects to receive some compensation for this second deferment of the rig contracts.
*Noble: Seeking US$2.5b one-year borrowing base revolving credit facility to refinance existing debt due later this year.
*Hiap Seng: Awarded two contracts worth about $18.3m for the provision of mechanical works that are due for completion by Jul ‘16 and Feb ’17 respectively.
*Starland/GRP: Starland is exploring a potential acquisition opportunity, and its dividend-in-specie to GRP will only be effected after the potential deal is finalised.
*China Gaoxian: Received a 1b won ($1.1m) claim by Daewoo Securities for an alleged breach of underwriting agreement provisions regarding inaccurate financial statements.
*Hyflux: Received LOI for turnkey EPC contract to build a US$500m integrated water and power project in Egypt. The 150,000 m3/day desalination plant will come with with a 25-year operation and maintenance contract.
*EMAS Offshore/Ezra: In response to a SGX trading query, management of both companies disclosed that the group is constantly reviewing options to maximise shareholder value, including possible transactions, although no definitive agreements have been entered into.
*Wilmar: Indonesian businessman Martua Sitorus sold 64m Wilmar shares to Archer-Daniels-Midland for an aggregate $199.8m.
*Multi-Chem: Exercises its option to acquire property in Tradehub 21, Boon Lay for $1m to support the operations of its cybersecurity business.
*Fabchem China: Expects to report a 4QFY16 net loss mainly due to the temporary suspension of its booster production activities as well as a challenging operating environment.
Regional bourses with Tokyo (-1%), Kospi (-0.02%), and Sydney (-0.1%) weaker in the open.
From a chart perspective, downside risk for STI is at 2,730 with resistance capped at 2,890.
Stocks to watch:
*Macro: Following the privatisation bid for OSIM, a Business Times speculates that more controlling shareholders may consider taking the same route if listing requirements become too onerous.
Keppel Corp. Key client Transocean has again deferred delivery for five jack-up rigs worth US$1.1b till 1Q20 from 2018. Keppel expects to receive some compensation for this second deferment of the rig contracts.
*Noble: Seeking US$2.5b one-year borrowing base revolving credit facility to refinance existing debt due later this year.
*Hiap Seng: Awarded two contracts worth about $18.3m for the provision of mechanical works that are due for completion by Jul ‘16 and Feb ’17 respectively.
*Starland/GRP: Starland is exploring a potential acquisition opportunity, and its dividend-in-specie to GRP will only be effected after the potential deal is finalised.
*China Gaoxian: Received a 1b won ($1.1m) claim by Daewoo Securities for an alleged breach of underwriting agreement provisions regarding inaccurate financial statements.
*Hyflux: Received LOI for turnkey EPC contract to build a US$500m integrated water and power project in Egypt. The 150,000 m3/day desalination plant will come with with a 25-year operation and maintenance contract.
*EMAS Offshore/Ezra: In response to a SGX trading query, management of both companies disclosed that the group is constantly reviewing options to maximise shareholder value, including possible transactions, although no definitive agreements have been entered into.
*Wilmar: Indonesian businessman Martua Sitorus sold 64m Wilmar shares to Archer-Daniels-Midland for an aggregate $199.8m.
*Multi-Chem: Exercises its option to acquire property in Tradehub 21, Boon Lay for $1m to support the operations of its cybersecurity business.
*Fabchem China: Expects to report a 4QFY16 net loss mainly due to the temporary suspension of its booster production activities as well as a challenging operating environment.
Tuesday, March 8, 2016
Kepcorp
ZURICH, March 8 (Reuters) - Transocean Ltd announced on Tuesday an agreement with Keppel Offshore & Marine Ltd's shipyard, Keppel FELS, to defer the delivery and related
payments of five high-specification jackups until 2020.
"The Super B 400 Bigfoot Class jackup drilling rigs are now scheduled to be delivered in two and three month intervals beginning in the first quarter of 2020," it said in a statement.
To add on:
- the deferment is expected after Transocean deferred on two drillships that were contracted to SMM. However, market sentiment could sour. Stock is now -4.9% from today's high of $6.31
- Transocean's balance sheet is now stretched and current charter rates does not justify it taking delivery
- Other high risk customers: Clearwater, Fecon
- Reiterating Sell on any rally.
MKE call: Sell, 12-mth TP: $4.24
payments of five high-specification jackups until 2020.
"The Super B 400 Bigfoot Class jackup drilling rigs are now scheduled to be delivered in two and three month intervals beginning in the first quarter of 2020," it said in a statement.
To add on:
- the deferment is expected after Transocean deferred on two drillships that were contracted to SMM. However, market sentiment could sour. Stock is now -4.9% from today's high of $6.31
- Transocean's balance sheet is now stretched and current charter rates does not justify it taking delivery
- Other high risk customers: Clearwater, Fecon
- Reiterating Sell on any rally.
MKE call: Sell, 12-mth TP: $4.24
Keppel
Keppel: CLSA reiterates its Sell with TP: $4.28
- Current share price rally unlikely to be sustained as E&P spending remains weak
- Ensco deferred delivery of its newbuild jack-up rig for 19 months
- Sector to continute to deteriorate and bottom in 2018-19
- Unlikely to maintain 40-50% dividend payout unless funded by debt or asset sales
- Current share price rally unlikely to be sustained as E&P spending remains weak
- Ensco deferred delivery of its newbuild jack-up rig for 19 months
- Sector to continute to deteriorate and bottom in 2018-19
- Unlikely to maintain 40-50% dividend payout unless funded by debt or asset sales
Golden Agri
Golden Agri: CIMB maintains Reduce with TP: $0.35
-Management guides 2016 FFB output could fall by 8-10% on El-Nino effects
-CIMB estimates costs could up by 11% to US$310/tonne
-Higher depreciation also drag on earnings.
- Management plans to improve FFB yields via replanting of old estates with superior yield seeds
-Management guides 2016 FFB output could fall by 8-10% on El-Nino effects
-CIMB estimates costs could up by 11% to US$310/tonne
-Higher depreciation also drag on earnings.
- Management plans to improve FFB yields via replanting of old estates with superior yield seeds
Raffles Medical
Raffles Medical: Deutsche Bank maintains Buy with TP: $5.39.
- Expects China private hospital industry market share could expand 4ppt to 12% by 2020.
- This would be driven favourable policies, capacity expansion, efficiency improvement and talent flow
- Thinks Raffles Med would rank highly in terms of talent, brand, scale and capital.
- Expects China private hospital industry market share could expand 4ppt to 12% by 2020.
- This would be driven favourable policies, capacity expansion, efficiency improvement and talent flow
- Thinks Raffles Med would rank highly in terms of talent, brand, scale and capital.
OSIM
OSIM: Opens at $1.395. Market appears to agree that Ron Sim's $1.32/share offer is too low.
Maybank-KE's fair price: $1.63.
Maybank-KE's fair price: $1.63.
SG Market (08 Mar 16)
Singapore shares are poised for a pullback from its relief rally as many badly beaten down stocks have rebounded in excess of 25% over the past week.
Regional bourses opened mixed in Tokyo (-0.2%), Seoul (-0.3%) and Sydney (+0.1%).
From a chart perspective, topside resistance of the STI is now seen at 2,890, while downside support at 2,730.
Stocks to watch:
*StarHub/SPH: Signs MOU to collaborate in content creation, data analytics, marketing and ad sales across multiple media platforms. First of many joint initiatives will be announced in next few months.
*OUE Hospitality Trust: Proposed 33-for-100 rights issue at $0.54 (29.4% discount to close) to raise $238.6m to fund purchase of Crowne Plaza Changi Airport hotel extension, which will add 243 rooms to existing 320-room hotel, with completion expected in 2H16. Post rights gearing would fall from 42% to 37.8%.
*TTJ Holdings: 2QFY16 net profit jumped 40% y/y to $5.4m, aided by margin expansion. Revenue climbed 4% to $28.6m, mainly contributed by the structural steel business. Gross margin expanded 2.5ppt to 26.6%. NAV/share at 31.66¢.
*Courts Asia: Issuing $75m of three-year notes at a fixed rate of 5.75% on 15 Mar ’16, under the second tranche of its $500m multicurrency debt issuance programme.
*iX BioPharma: The preliminary results of its Phase 2c human clinical trial for its Wafermine product was successful, confirming the drug’s safety and tolerability.
*KLW: Entered option to purchase two units located at CT Hub, Kallang Avenue, for $2.3m to be used for office/showroom purposes.
*Fragrance: Long stop date for its proposed acquisition of shares in LCD Global Investments has been extended to 1 Apr from 7 Mar.
Regional bourses opened mixed in Tokyo (-0.2%), Seoul (-0.3%) and Sydney (+0.1%).
From a chart perspective, topside resistance of the STI is now seen at 2,890, while downside support at 2,730.
Stocks to watch:
*StarHub/SPH: Signs MOU to collaborate in content creation, data analytics, marketing and ad sales across multiple media platforms. First of many joint initiatives will be announced in next few months.
*OUE Hospitality Trust: Proposed 33-for-100 rights issue at $0.54 (29.4% discount to close) to raise $238.6m to fund purchase of Crowne Plaza Changi Airport hotel extension, which will add 243 rooms to existing 320-room hotel, with completion expected in 2H16. Post rights gearing would fall from 42% to 37.8%.
*TTJ Holdings: 2QFY16 net profit jumped 40% y/y to $5.4m, aided by margin expansion. Revenue climbed 4% to $28.6m, mainly contributed by the structural steel business. Gross margin expanded 2.5ppt to 26.6%. NAV/share at 31.66¢.
*Courts Asia: Issuing $75m of three-year notes at a fixed rate of 5.75% on 15 Mar ’16, under the second tranche of its $500m multicurrency debt issuance programme.
*iX BioPharma: The preliminary results of its Phase 2c human clinical trial for its Wafermine product was successful, confirming the drug’s safety and tolerability.
*KLW: Entered option to purchase two units located at CT Hub, Kallang Avenue, for $2.3m to be used for office/showroom purposes.
*Fragrance: Long stop date for its proposed acquisition of shares in LCD Global Investments has been extended to 1 Apr from 7 Mar.
Monday, March 7, 2016
OSIM
OSIM: Opportunistic privatisation offer by founder too cheap to succeed?
Lifestyle products manufacturer, OSIM has received an unconditional cash offer of $1.32/share from its founder, chairman and chief executive, Ron Sim.
At $1.32, OSIM is valued at 9.1x historical EV/EBITDA, 16.3x trailing P/E and 2.6x P/B, somewhat below regional specialty retailers which on average are priced at 14.8x EV/EBITDA, 33x trailing P/E, and 4.1x P/B.
Given that the stock has been sold down so much in the last 12 months, low relative valuations and fragmented shareholdings, it may be difficult for Sim to take the cash-rich company private.
As such, investors might hold out for a better offer, particularly those who had bought into the counter during its $2/share heydays between late 2013 and 2014.
Lifestyle products manufacturer, OSIM has received an unconditional cash offer of $1.32/share from its founder, chairman and chief executive, Ron Sim.
At $1.32, OSIM is valued at 9.1x historical EV/EBITDA, 16.3x trailing P/E and 2.6x P/B, somewhat below regional specialty retailers which on average are priced at 14.8x EV/EBITDA, 33x trailing P/E, and 4.1x P/B.
Given that the stock has been sold down so much in the last 12 months, low relative valuations and fragmented shareholdings, it may be difficult for Sim to take the cash-rich company private.
As such, investors might hold out for a better offer, particularly those who had bought into the counter during its $2/share heydays between late 2013 and 2014.
SG Market (08 Mar 16)
Singapore shares may power higher despite being grossly overbought. This came after the STI capped its best week (+7.1%) since Oct amid stronger oil prices and funds rolling back extreme risk off fears especially in the most shorted stocks.
Regional bourses opened mixed, with Tokyo (-0.2%) opening lower, Seoul (+0.2%), and Sydney (+0.9%).
From a chart perspective, topside resistance of the STI is now pegged at 2,890, while downside support at 2,730.
Stocks to watch:
*OSIM: Chairman and CEO Ron Sim (69.2% stake) made an unconditional cash offer to privatise OSIM at $1.32/share, or 18.9% premium to the last available unaffected price. The deal prices the massage chair maker at 17x FY16e consensus P/E and 2.6x P/B.
*SGX: Feb total securities turnover reached $24.1b (+14% y/y, +4% m/m). Derivatives volume totalled 13.9m contracts (+43% y/y, -22% m/m), while commodities derivatives volume was 1.2m (+194% y/y, -6% m/m). 17 new bond listings raised $3.7b.
*Tigerair: SIA now controls more than 90% of total shares, resulting in less than 10% free float, which triggered a mandatory trading suspension. Dissenting shareholders will receive a letter on compulsory acquisition in due course.
*TEE Land/Lian Beng/Oxley: TEE Land is divesting its 10% stake in JVC, KAP Holdings to Oxley China and Lian Beng for $10. At the same time, the $3.9m shareholder loan granted by TEE Land to KAP will be novated and repaid in cash.
*Lian Beng/KSH/KOP: Expected to book a gain of $4.9m/$4.3m/$3.8m from the sale of a 32%/28%/25%-owned associate, Epic Land for $15.5m.
*Sakae: Proposing to acquire 51% of Cocosa Export, a Chilean frozen seafood production and trading company, for US$3m.
*Perennial Real Estate: Acquired an additional 3.68% effective interest in Chinatown Point for $5.8m, raising its stake to 5.15%.
*Falcon Energy: Acquired a 51% stake in vessel-owner, Otira for US$3m.
*Thai Beverage: Assigned a corporate credit rating of Baa3 with positive outlook by Moody’s (prior: Baa3 with stable outlook).
Regional bourses opened mixed, with Tokyo (-0.2%) opening lower, Seoul (+0.2%), and Sydney (+0.9%).
From a chart perspective, topside resistance of the STI is now pegged at 2,890, while downside support at 2,730.
Stocks to watch:
*OSIM: Chairman and CEO Ron Sim (69.2% stake) made an unconditional cash offer to privatise OSIM at $1.32/share, or 18.9% premium to the last available unaffected price. The deal prices the massage chair maker at 17x FY16e consensus P/E and 2.6x P/B.
*SGX: Feb total securities turnover reached $24.1b (+14% y/y, +4% m/m). Derivatives volume totalled 13.9m contracts (+43% y/y, -22% m/m), while commodities derivatives volume was 1.2m (+194% y/y, -6% m/m). 17 new bond listings raised $3.7b.
*Tigerair: SIA now controls more than 90% of total shares, resulting in less than 10% free float, which triggered a mandatory trading suspension. Dissenting shareholders will receive a letter on compulsory acquisition in due course.
*TEE Land/Lian Beng/Oxley: TEE Land is divesting its 10% stake in JVC, KAP Holdings to Oxley China and Lian Beng for $10. At the same time, the $3.9m shareholder loan granted by TEE Land to KAP will be novated and repaid in cash.
*Lian Beng/KSH/KOP: Expected to book a gain of $4.9m/$4.3m/$3.8m from the sale of a 32%/28%/25%-owned associate, Epic Land for $15.5m.
*Sakae: Proposing to acquire 51% of Cocosa Export, a Chilean frozen seafood production and trading company, for US$3m.
*Perennial Real Estate: Acquired an additional 3.68% effective interest in Chinatown Point for $5.8m, raising its stake to 5.15%.
*Falcon Energy: Acquired a 51% stake in vessel-owner, Otira for US$3m.
*Thai Beverage: Assigned a corporate credit rating of Baa3 with positive outlook by Moody’s (prior: Baa3 with stable outlook).
Friday, March 4, 2016
Biosensors
Biosensors: (S$0.82) Weak 3QFY16; share price held up by ongoing deal
Biosensors' 3QFY16 swung into net loss of US$1.1m (3QFY15: US$7.4m profit), taking 9MFY16 to US$12.3m (-45%), barely a third of street's FY16 earnings estimate of US$42.1m.
The drag came from pricing pressure for its products and weak licensing revenue due to a reduction in the licensee's DES sales in Japan, which resulted in a 18% drop in revenue to US$63.6m.
Subsequently, bottom line was dragged by a slip in gross margin to 70% (-2ppt), and the persistently high operating expenses of US$37.1m (-7%) despite lower sales.
Still, share price of Biosensors at $0.82/share has been held up by the ongoing proposed amalgamation with CB Medical Holdings, which allows shareholders to make an exit at $0.84/share.
The SGM to obtain shareholders' approval will be held on 5 Apr, just before the deal deadline on 10 Apr.
Biosensors is currently valued at 23.6x forward P/E, above its 5-year historical average of 17.4x.
Biosensors' 3QFY16 swung into net loss of US$1.1m (3QFY15: US$7.4m profit), taking 9MFY16 to US$12.3m (-45%), barely a third of street's FY16 earnings estimate of US$42.1m.
The drag came from pricing pressure for its products and weak licensing revenue due to a reduction in the licensee's DES sales in Japan, which resulted in a 18% drop in revenue to US$63.6m.
Subsequently, bottom line was dragged by a slip in gross margin to 70% (-2ppt), and the persistently high operating expenses of US$37.1m (-7%) despite lower sales.
Still, share price of Biosensors at $0.82/share has been held up by the ongoing proposed amalgamation with CB Medical Holdings, which allows shareholders to make an exit at $0.84/share.
The SGM to obtain shareholders' approval will be held on 5 Apr, just before the deal deadline on 10 Apr.
Biosensors is currently valued at 23.6x forward P/E, above its 5-year historical average of 17.4x.
STI review
STI review: Noble removed, CapitaLand Commercial Trust added
Following a bi-annual FTSE review, CapitaLand Commercial Trust will be added to the benchmark STI index, while Noble will be removed, effective 21 Mar.
The removal comes as no surprise given that Noble's market cap has decimated by 64% since Feb '15, compared to STI's decline of 18% over the same period.
Companies on the FTSE STI reserve list includes Suntec Reit, NOL, First Resources, Sing Post and Keppel Reit. M1 has been removed from the list.
The next STI half-yearly review will take place in Sep.
Following a bi-annual FTSE review, CapitaLand Commercial Trust will be added to the benchmark STI index, while Noble will be removed, effective 21 Mar.
The removal comes as no surprise given that Noble's market cap has decimated by 64% since Feb '15, compared to STI's decline of 18% over the same period.
Companies on the FTSE STI reserve list includes Suntec Reit, NOL, First Resources, Sing Post and Keppel Reit. M1 has been removed from the list.
The next STI half-yearly review will take place in Sep.
SG Market (04 Mar 16)
Singapore shares may take a breather from the steep 7% gains made over the past week, although O&M names could continue to track outsized energy gains in the US.
Regional bourses opened mixed, with Tokyo (-0.5%), Seoul (-0.3%) opening lower, while Sydney (+0.2) was firmer.
From a chart perspective, the STI has broken clear of its 50-dma with resistance now re-pegged at 2,800 and downside support at 2,680.
Stocks to watch:
*STI: Following a bi-annual FTSE review, CapitaLand Commercial Trust will be added to the benchmark index, while Noble will be removed, effective 21 Mar.
*Hongkong Land: FY15 underlying net profit in line, declining 3% to US$905m amid thinner margins. This excludes investment property fair value gains of around US$1b booked in the year. Revenue climbed 3% to US$1.93b on higher rental, service income, and stronger commercial property sales. Maintained final DPS of US$0.13, bringing FY15 payout to US$0.19. NAV/share at US$12.19.
*Dairy Farm: FY15 net profit missed estimates, sliding 16.6% to US$424.4m. Revenue crept 1% to US$11.1b, while operating margin narrowed 1ppt to 3.9%. Bottom line also dragged by higher net financing charges, but partially boosted by associates’ profit contribution from the newly acquired supermarkets in Yonghui (China) and San Miu (Macau). Cuts final DPS to US$0.135, lowering FY15 payout to US$0.20 from US$0.23 in FY14.
*Mandarin Oriental: FY15 net profit fell 7.9% to US$89.3m on weaker revenue of US$607.3m (-10.7%), undermined by some renovation disruptions, and softer hospitality demand in Asia and Europe, post Paris terrorist attack. Cuts final DPS to US$0.03, lowering FY15 payout to US$0.05 from US$0.07 in FY14. NAV/share at US$0.98.
*Biosensors: 3QFY16 results badly missed estimates. Net profit swung into a net loss of US$1.1m (3QFY15: US$7.4m profit), on lower revenue of US$63.6m (-18% y/y) as increased competition pressured product prices, while licensing revenue fell due to a reduction in the licensee's DES sales in Japan. Gross margin slipped 2ppt to 70%. NAV/share at US$0.5827.
*Memtech: Adopting a dividend policy of paying annual dividends not less than 30% of total net profit.
*CapitaLand: Cairnhill Nine, its prime 99 year leasehold condo project along Orchard Road saw strong interest, with a sizeable number of cheques received for its 268 units. The official launch is slated for 12 Mar.
*Ryobi Kiso: Secured $33.3m worth of contracts ytd, including contracts for foundation and geoservices work at Changi Airport T5, HDB Sembawang N1 C12, HDB Tampines N6 C2A & Park, JTC estates, and Saigon South Apartment in Vietnam.
*Food Empire: Sets up US$24m JV with an intention to invest in downstream business Caffebene, one of South Korea’s largest coffee house chain.
*Yanlord: S&P raised the developer’s long term corporate rating and issue rating on its outstanding senior unsecured loans to “BB-” from “B+”.
Regional bourses opened mixed, with Tokyo (-0.5%), Seoul (-0.3%) opening lower, while Sydney (+0.2) was firmer.
From a chart perspective, the STI has broken clear of its 50-dma with resistance now re-pegged at 2,800 and downside support at 2,680.
Stocks to watch:
*STI: Following a bi-annual FTSE review, CapitaLand Commercial Trust will be added to the benchmark index, while Noble will be removed, effective 21 Mar.
*Hongkong Land: FY15 underlying net profit in line, declining 3% to US$905m amid thinner margins. This excludes investment property fair value gains of around US$1b booked in the year. Revenue climbed 3% to US$1.93b on higher rental, service income, and stronger commercial property sales. Maintained final DPS of US$0.13, bringing FY15 payout to US$0.19. NAV/share at US$12.19.
*Dairy Farm: FY15 net profit missed estimates, sliding 16.6% to US$424.4m. Revenue crept 1% to US$11.1b, while operating margin narrowed 1ppt to 3.9%. Bottom line also dragged by higher net financing charges, but partially boosted by associates’ profit contribution from the newly acquired supermarkets in Yonghui (China) and San Miu (Macau). Cuts final DPS to US$0.135, lowering FY15 payout to US$0.20 from US$0.23 in FY14.
*Mandarin Oriental: FY15 net profit fell 7.9% to US$89.3m on weaker revenue of US$607.3m (-10.7%), undermined by some renovation disruptions, and softer hospitality demand in Asia and Europe, post Paris terrorist attack. Cuts final DPS to US$0.03, lowering FY15 payout to US$0.05 from US$0.07 in FY14. NAV/share at US$0.98.
*Biosensors: 3QFY16 results badly missed estimates. Net profit swung into a net loss of US$1.1m (3QFY15: US$7.4m profit), on lower revenue of US$63.6m (-18% y/y) as increased competition pressured product prices, while licensing revenue fell due to a reduction in the licensee's DES sales in Japan. Gross margin slipped 2ppt to 70%. NAV/share at US$0.5827.
*Memtech: Adopting a dividend policy of paying annual dividends not less than 30% of total net profit.
*CapitaLand: Cairnhill Nine, its prime 99 year leasehold condo project along Orchard Road saw strong interest, with a sizeable number of cheques received for its 268 units. The official launch is slated for 12 Mar.
*Ryobi Kiso: Secured $33.3m worth of contracts ytd, including contracts for foundation and geoservices work at Changi Airport T5, HDB Sembawang N1 C12, HDB Tampines N6 C2A & Park, JTC estates, and Saigon South Apartment in Vietnam.
*Food Empire: Sets up US$24m JV with an intention to invest in downstream business Caffebene, one of South Korea’s largest coffee house chain.
*Yanlord: S&P raised the developer’s long term corporate rating and issue rating on its outstanding senior unsecured loans to “BB-” from “B+”.
Thursday, March 3, 2016
Strategy
Strategy: "Liang hui" to spark interest in targeted s-chips
The upcoming Chinese People's Political Consultative Conference (CPPCC) and National People's Congress (NPC) meetings, termed as "liang hui", may bring some focus into specific s-chips.
The CPPCC, the country's top political advisory body, commences its annual meeting today through to 14 Mar, which sets out to contribute ideas to China's five-year development plan from 2016-2020.
Meanwhile, NPC will commence from 5 Mar to 16 Mar. This is the Chinese Parliament, where Premier Li Keqiang will present the government's growth target and budget at the opening address.
"Liang hui" is one of the key events on China's calendar, as investors look for clues on portfolio positioning to ride on policy tailwinds, especially amid a period of slowing growth and volatile markets.
Market watchers expect addresses to the increasingly desperate environmental issues, which may spark investor sentiment for the water treatment stocks such as China Everbright Water, SIIC Environment and Citic Envirotech.
Additionally, railway parts manufacturer Midas could also see expectations for a return of new orders, underpinned by the government's Rmb2.8t investment into the railway sector over the next five years.
China Everbright Water and Midas are on the Market Insight Growth Portfolio
The upcoming Chinese People's Political Consultative Conference (CPPCC) and National People's Congress (NPC) meetings, termed as "liang hui", may bring some focus into specific s-chips.
The CPPCC, the country's top political advisory body, commences its annual meeting today through to 14 Mar, which sets out to contribute ideas to China's five-year development plan from 2016-2020.
Meanwhile, NPC will commence from 5 Mar to 16 Mar. This is the Chinese Parliament, where Premier Li Keqiang will present the government's growth target and budget at the opening address.
"Liang hui" is one of the key events on China's calendar, as investors look for clues on portfolio positioning to ride on policy tailwinds, especially amid a period of slowing growth and volatile markets.
Market watchers expect addresses to the increasingly desperate environmental issues, which may spark investor sentiment for the water treatment stocks such as China Everbright Water, SIIC Environment and Citic Envirotech.
Additionally, railway parts manufacturer Midas could also see expectations for a return of new orders, underpinned by the government's Rmb2.8t investment into the railway sector over the next five years.
China Everbright Water and Midas are on the Market Insight Growth Portfolio
SG Market (03 Mar 16)
Singapore shares are likely to consolidate nearly 5% gains in the past five days on China and Europe stimulus hopes and improving oil prices as investors reassess if risk-reward justifies further purchases.
Regional bourses marched forward another day, with Tokyo (+0.6%), Seoul (+0.2%) and Sydney (+0.8%) opening stronger.
From a chart perspective, the STI could pull back to try and to close the 2,680 gap from overbought position. Overhead resistance for the index sits at 2,740.
Stocks to watch:
*Strategy: The CPPCC meeting commences today till 14 Mar. Counters which may come into focus from policy tailwinds include water treatment stocks China Everbright Water, SIIC Environment and Citic Envirotech, as well as railway parts manufacturer Midas.
*Market: SGX has placed 41 Mainboard-listed companies on Watch-list for failing to meet the minimum trading price rule.
*Keppel Corp: Investing US$93.9m in a 40% owned JV, which will develop a 14.6ha mixed-used waterfront development in Ho Chi Minh City, comprising residential apartments as well as an 86-storey integrated mixed-use tower complex.
*China Everbright Water: Partnering Zhangqiu municipal government, via a 95% owned JV, to operate two wastewater treatment plants of which a combined capacity will reach 90,000m3/day. Total investment is Rmb160m with concession of 30 years.
*Frasers Centrepoint: Acquired additional 142m shares in Thai-listed Golden Land Property Development at 6.50bt/share in the open market, increasing its stake to 35.6% (+6.1ppt).
*Sim Lian Group: Announced a $755 psf average price for its Wandervale Executive Condominium, located near the Choa Chu Kang MRT station. During the 11-day e-application period, subscription rate was 1.47x.
*Chiwayland: Appointed a fund manager to manage its collateralized debt investment program, which pays an expected 9.8%-11% per annum to third-party investors. Funds raised to-date is ~Rmb130.9m, and the group intends to use raised funds for its development projects.
*Asia Fashion: To acquire 70% stake in media and entertainment investment company Boya Lianli (Beijing) for $11.2m, or ~26x trailing P/E. In relation, UOB Kay Hian was appointed as a placement agent to raise up net proceeds up to $19.2m via an issue of 62.5m new shares (54.2% enlarged share capital) at $0.32 apiece.
*Europtronic: Received notification from SGX to delist after not meeting the requirements to exit the Watch-List. Trading in the counter will cease after 1 Apr and will remain suspended until completion of an exit offer. An exit offer proposal is to be notified to SGX no later than one month after 2 Mar.
Regional bourses marched forward another day, with Tokyo (+0.6%), Seoul (+0.2%) and Sydney (+0.8%) opening stronger.
From a chart perspective, the STI could pull back to try and to close the 2,680 gap from overbought position. Overhead resistance for the index sits at 2,740.
Stocks to watch:
*Strategy: The CPPCC meeting commences today till 14 Mar. Counters which may come into focus from policy tailwinds include water treatment stocks China Everbright Water, SIIC Environment and Citic Envirotech, as well as railway parts manufacturer Midas.
*Market: SGX has placed 41 Mainboard-listed companies on Watch-list for failing to meet the minimum trading price rule.
*Keppel Corp: Investing US$93.9m in a 40% owned JV, which will develop a 14.6ha mixed-used waterfront development in Ho Chi Minh City, comprising residential apartments as well as an 86-storey integrated mixed-use tower complex.
*China Everbright Water: Partnering Zhangqiu municipal government, via a 95% owned JV, to operate two wastewater treatment plants of which a combined capacity will reach 90,000m3/day. Total investment is Rmb160m with concession of 30 years.
*Frasers Centrepoint: Acquired additional 142m shares in Thai-listed Golden Land Property Development at 6.50bt/share in the open market, increasing its stake to 35.6% (+6.1ppt).
*Sim Lian Group: Announced a $755 psf average price for its Wandervale Executive Condominium, located near the Choa Chu Kang MRT station. During the 11-day e-application period, subscription rate was 1.47x.
*Chiwayland: Appointed a fund manager to manage its collateralized debt investment program, which pays an expected 9.8%-11% per annum to third-party investors. Funds raised to-date is ~Rmb130.9m, and the group intends to use raised funds for its development projects.
*Asia Fashion: To acquire 70% stake in media and entertainment investment company Boya Lianli (Beijing) for $11.2m, or ~26x trailing P/E. In relation, UOB Kay Hian was appointed as a placement agent to raise up net proceeds up to $19.2m via an issue of 62.5m new shares (54.2% enlarged share capital) at $0.32 apiece.
*Europtronic: Received notification from SGX to delist after not meeting the requirements to exit the Watch-List. Trading in the counter will cease after 1 Apr and will remain suspended until completion of an exit offer. An exit offer proposal is to be notified to SGX no later than one month after 2 Mar.
Wednesday, March 2, 2016
Sing Post
Sing Post: (S$1.45) Issued legal notice to Sias
SingPost has issued a legal notice to shareholder activist group Sias, in relation to its involvement in sharing a defamatory anonymous letter it received with other parties.
This is likely to cause a continued overhang for the counter, which has fallen ~12% year to date and 25% since the beginning of 2015.
To recap briefly, SingPost is in the midst of a special audit to investigate an interested party transaction conducted in 2014, after finding out that independent director Keith Tay Ah Kee’s vested interests in Stirling Coleman Capital, the arranger for the acquisition of freight forwarding company FS Mackenzie, was not disclosed.
Until questions surrounding SingPost’s corporate governance are adequately answered, share price will likely remain in an overhang. As a preemptive and prudent move, the group might also write down some of the investments it has made in the past.
As a gauge, based on SingPost's historical average yield of 5.2%, a price floor at $1.31 is derived for SingPost, 10% below the current price.
Bloomberg consensus has 5 Buy, 4 Hold and 0 Sell ratings on the counter with average TP of $1.82.
SingPost has issued a legal notice to shareholder activist group Sias, in relation to its involvement in sharing a defamatory anonymous letter it received with other parties.
This is likely to cause a continued overhang for the counter, which has fallen ~12% year to date and 25% since the beginning of 2015.
To recap briefly, SingPost is in the midst of a special audit to investigate an interested party transaction conducted in 2014, after finding out that independent director Keith Tay Ah Kee’s vested interests in Stirling Coleman Capital, the arranger for the acquisition of freight forwarding company FS Mackenzie, was not disclosed.
Until questions surrounding SingPost’s corporate governance are adequately answered, share price will likely remain in an overhang. As a preemptive and prudent move, the group might also write down some of the investments it has made in the past.
As a gauge, based on SingPost's historical average yield of 5.2%, a price floor at $1.31 is derived for SingPost, 10% below the current price.
Bloomberg consensus has 5 Buy, 4 Hold and 0 Sell ratings on the counter with average TP of $1.82.
SG Market (02 Mar 16)
Singapore shares are likely to see positive spillover form the strong rally in Wall Street overnight, with encouraging US economic data, China and ECB stimulus hopes, and firmer crude prices renewing risk appetite.
Regional bourses surged, with Tokyo (+2.5%), Seoul (+1.4%) and Sydney (+1.3%) markedly performing in the open.
From a chart perspective, STI is may test the near-term resistance at 2,740, while immediate support is at 2,680 (50-dma).
Stocks to watch:
*Macro: FY15 was a year of weaker earnings (-22.7%) based on a sample of 433 listcos. Notable drags were impairments from rigbuilders Keppel Corp and Sembcorp Marine, provisions by banks, and impairments by property developers.
*Sembcorp Marine: One of its customer Noble Corp reported that a newbuild jackup rig, currently in final stages of construction, is damaged after a shipyard crane boom collapsed near the rig. The potential impact on SMM is if it needs bear any damages if the rig cannot be delayed on time and also the additional cost to repair the damages.
*SingPost: Issued legal notice to SIAS, to ascertain whether the shareholder activist group had shared an anonymous shareholder letter with other parties. The letter is deemed defamatory.
*Otto Marine: Secured contract worth up to A$94.8m, to charter OSVs to a renowned international E&P company, for FPSO infield support in a gas field in Australia.
*KS Energy: Renewed contract with Belayim Petroleum for its jack-up rig to continue drilling in Egypt. The contract, worth US$6m, is expected to last till Jul ‘16
*Jason: Was awarded 10 contracts worth an aggregate $7.2m to-date, for the supply and installation of flooring.
*Sing Post: Held topping out ceremony for its regional e-commerce logistic hub, a three storey 553,000sf integrated facility, which has two warehousing floors, 150 loading bays, an office block, and fully automated end-to-end parcel sorting facility.
*China Fishery: Fitch Ratings downgraded the group’s issuer default rating to “restricted default” from “C”, citing the group’s non-payment of a scheduled coupon which was due 30 Jan ’16, even after a 30-day grace period.
*SIA: Receiving its first of 11 A350s to be delivered this year. The airline has 67 A350s on order, of which seven are the new A350-900ULR for its direct flights to the US beginning 2018.
*Blue Sky Power Holdings: Expects FY15 to return to black, due to gains from disposal of interest subsidiaries, and increased gas sales. Results to be announced before the end of Mar '16.
Regional bourses surged, with Tokyo (+2.5%), Seoul (+1.4%) and Sydney (+1.3%) markedly performing in the open.
From a chart perspective, STI is may test the near-term resistance at 2,740, while immediate support is at 2,680 (50-dma).
Stocks to watch:
*Macro: FY15 was a year of weaker earnings (-22.7%) based on a sample of 433 listcos. Notable drags were impairments from rigbuilders Keppel Corp and Sembcorp Marine, provisions by banks, and impairments by property developers.
*Sembcorp Marine: One of its customer Noble Corp reported that a newbuild jackup rig, currently in final stages of construction, is damaged after a shipyard crane boom collapsed near the rig. The potential impact on SMM is if it needs bear any damages if the rig cannot be delayed on time and also the additional cost to repair the damages.
*SingPost: Issued legal notice to SIAS, to ascertain whether the shareholder activist group had shared an anonymous shareholder letter with other parties. The letter is deemed defamatory.
*Otto Marine: Secured contract worth up to A$94.8m, to charter OSVs to a renowned international E&P company, for FPSO infield support in a gas field in Australia.
*KS Energy: Renewed contract with Belayim Petroleum for its jack-up rig to continue drilling in Egypt. The contract, worth US$6m, is expected to last till Jul ‘16
*Jason: Was awarded 10 contracts worth an aggregate $7.2m to-date, for the supply and installation of flooring.
*Sing Post: Held topping out ceremony for its regional e-commerce logistic hub, a three storey 553,000sf integrated facility, which has two warehousing floors, 150 loading bays, an office block, and fully automated end-to-end parcel sorting facility.
*China Fishery: Fitch Ratings downgraded the group’s issuer default rating to “restricted default” from “C”, citing the group’s non-payment of a scheduled coupon which was due 30 Jan ’16, even after a 30-day grace period.
*SIA: Receiving its first of 11 A350s to be delivered this year. The airline has 67 A350s on order, of which seven are the new A350-900ULR for its direct flights to the US beginning 2018.
*Blue Sky Power Holdings: Expects FY15 to return to black, due to gains from disposal of interest subsidiaries, and increased gas sales. Results to be announced before the end of Mar '16.
Tuesday, March 1, 2016
Thai Bev
Thai Bev: 4Q results showed evidence of an inflection in beer market share and profitability.
Marketing for the NAB segment is likely to taper off, and spirits remains stable, supporting a 10% EPS CAGR for 2015-17e. Valuation looks attractive vs. peers.
MS raised to OW with TP of $0.78.
Marketing for the NAB segment is likely to taper off, and spirits remains stable, supporting a 10% EPS CAGR for 2015-17e. Valuation looks attractive vs. peers.
MS raised to OW with TP of $0.78.
SG Market (01 Mar 16)
Trading may be buoyed by the the window dressing and China’s reserve requirement cut yesterday but key Chinese manufacturing data due this morning could keep sentiment in check.
Regional bourses opened mixed in Tokyo (-0.2%), Seoul (-0.2%) and Sydney (+0.3%).
From a chart perspective, STI is hemmed between immediate resistance at 2,670 and downside support at 2,600.
Stocks to watch:
*Golden Agri: FY15 results beat with 4Q15 core net profit of US$50.9m (+10.3% y/y), despite revenue drop to US$1.55b (-14.8% y/y) from lower CPO prices. EBITDA margin expanded to 9% (+1.6ppt) on improved business environment for oilseeds. Headline net loss of US$88.4m (4Q14: US$21.9m loss) was dragged by higher fair value loss on biological assets of $197.7m (4Q14: $133.8m) and lower FX gain of $7.2m (4Q14: $34m). First and final DPS of 0.502¢ (FY14: 0.585¢). NAV/share at US$0.68.
*Q&M: FY15 slight miss although net profit jumped 33% to $11.4m, on revenue of $124m (+23.6%) attributable to higher income from existing and new dental outlets in Singapore, increased sales from equipment and supplies, as well as full year contribution from manufacturer Aidite acquired in Aug '14. Adjusted EBIT margin expanded to 14.5% (+2.2ppt). Final DPS of 0.42¢ brought FY15 total DPS to 0.84¢ (FY14: 0.73¢).
*UMS: 4Q14 net profit soared 171% y/y to $10m, pushing FY15 net profit to $34.3m (+38%). For the quarter, revenue slipped to $21.9m (-1%) as higher consumables component sales was more than offset by reduced semiconductor integrated system sales and lower component sales. Gross margin jumped to 76% (+22ppt) on a favourable FX rate and shift towards more profitable components, while bottom line was supported by lower opex (-9%). Proposed final and special DPS of 3¢; FY15 total DPS of 6¢ maintained. NAV/share at $0.453.
*Ezion: Swung to 4Q15 net loss of US$63.5m (4Q14 net profit: US$83.7m), largely from impairment losses (US$81.1m). Revenue fell 19% y/y to US$84.8m from project delays, while gross margin fell to 23.8% (-26.8ppt). NAV/share at $0.787.
*Wheelock Properties: 4Q15 net loss narrowed to $0.9m (4Q14: $103.1m loss), buoyed by the absence of a provision (4Q14: $75m) and reduced fair value loss on investment properties of $29.3m (4Q14: -$50.7m). Revenue of $108.3 (+303% y/y) stemmed from increased units sales at its residential developments. NAV/share at $2.54.
*Yanlord: 4Q15 net profit increased 13% y/y to Rmb1.22b, as revenue climbed 37% to Rmb10.23b attributed to the increased gfa delivered. Gross margin fell 2.8ppt to 25.3% on a shift in product mix, while bottom line rose at a slower clip on higher selling expenses (+52%) and widened loss at JV. NAV/share at Rmb10.44. Higher first and final DPS of 1.52¢ (FY14:1.3¢).
*Ying Li: 4Q15 net profit tumbled 40.5% y/y to Rmb116.3m, although revenue rose to Rmb306.9m (+26%) on firmer property sales (+32%) from San Ya Wan Phase 2 project, while rental income (+1.1%) inched up. Gross margin narrowed 13ppt to 26% on lower margin projects, while bottom line was weighed by increased finance cost. Net gearing ballooned to 0.75x from 0.41x in FY14. NAV/share at Rmb1.97.
*Midas: FY15 results beat, as net profit notched up 1.5% y/y to Rmb57.2m despite revenue jump to Rmb1.51b (+14.7%), attributable to increased aluminium alloy extruded product sales. Gross margin edged higher to 26.9% (+3 bps), while bottom line was weighed by higher selling & distribution cost (+21%) and increased taxes(+614.3%) on lower deferred tax income. First and final DPS of 0.25¢; FY15 total DPS maintained at 0.5¢. NAV/share at Rmb2.50.
*Hi-P: Swung to 4Q15 net loss of $48m, while revenue climbed 18.9% to $373.9m, driven by increase in orders for both new and existing customers. Gross margin 2.2ppt to 5.2% due to the a provisioning for inventory for Yota Devices. Bottom line also dragged by provisioning for receivables, and allowance for non-cancellable purchase commitments, both in relation to Yota. NAV/share at 68.19¢. FY15 DPS of 0.6¢ (FY14:1¢).
*Japfa: FY15 core net profit rose 24% to $64m, while revenue fell 5% to US$2.79b, mainly due to the weaker IDR dampening animal protein and consumer food contributions, partially offset by animal protein segment in Vietnam and dairy operations in China. Bottom line was boosted by lower finance costs. NAV/share at US$0.38. FY15 DPS of 0.5¢ (FY14: nil).
*Yoma: Appointed as Volkswagen’s official importer and distributor for a range of passenger cars and SUVs in Myanmar.
*Hiap Hoe: Swung to 4Q15 net profit of $5.8m, while revenue increased 27.5% y/y to $24.7m, largely due to $2.3m revenue recognition for development properties, versus a $2.6m contract rescission last year. Bottom line also boosted by lower SG&A expenses. NAV/share at $1.43. FY15 DPS of 1¢ maintained.
*QT Vascular: FY15 net loss widened to US$53.1m (+55.2% y/y) on provisions of US$23.4m on legal reparations. Revenue slipped to US$12.4m (-5.5%) as the group sold few catheter units (-10.3%) as it was re-negotiating a distribution agreement with Cordis. Gross margin improted to 32.7% (+7.3 ppt) on production efficiency gains. Bottom line was squeezed by higher sales and marketing (+18.6%), and R&D (+25.3%) expenses. NAV/share at -US$0.02.
Regional bourses opened mixed in Tokyo (-0.2%), Seoul (-0.2%) and Sydney (+0.3%).
From a chart perspective, STI is hemmed between immediate resistance at 2,670 and downside support at 2,600.
Stocks to watch:
*Golden Agri: FY15 results beat with 4Q15 core net profit of US$50.9m (+10.3% y/y), despite revenue drop to US$1.55b (-14.8% y/y) from lower CPO prices. EBITDA margin expanded to 9% (+1.6ppt) on improved business environment for oilseeds. Headline net loss of US$88.4m (4Q14: US$21.9m loss) was dragged by higher fair value loss on biological assets of $197.7m (4Q14: $133.8m) and lower FX gain of $7.2m (4Q14: $34m). First and final DPS of 0.502¢ (FY14: 0.585¢). NAV/share at US$0.68.
*Q&M: FY15 slight miss although net profit jumped 33% to $11.4m, on revenue of $124m (+23.6%) attributable to higher income from existing and new dental outlets in Singapore, increased sales from equipment and supplies, as well as full year contribution from manufacturer Aidite acquired in Aug '14. Adjusted EBIT margin expanded to 14.5% (+2.2ppt). Final DPS of 0.42¢ brought FY15 total DPS to 0.84¢ (FY14: 0.73¢).
*UMS: 4Q14 net profit soared 171% y/y to $10m, pushing FY15 net profit to $34.3m (+38%). For the quarter, revenue slipped to $21.9m (-1%) as higher consumables component sales was more than offset by reduced semiconductor integrated system sales and lower component sales. Gross margin jumped to 76% (+22ppt) on a favourable FX rate and shift towards more profitable components, while bottom line was supported by lower opex (-9%). Proposed final and special DPS of 3¢; FY15 total DPS of 6¢ maintained. NAV/share at $0.453.
*Ezion: Swung to 4Q15 net loss of US$63.5m (4Q14 net profit: US$83.7m), largely from impairment losses (US$81.1m). Revenue fell 19% y/y to US$84.8m from project delays, while gross margin fell to 23.8% (-26.8ppt). NAV/share at $0.787.
*Wheelock Properties: 4Q15 net loss narrowed to $0.9m (4Q14: $103.1m loss), buoyed by the absence of a provision (4Q14: $75m) and reduced fair value loss on investment properties of $29.3m (4Q14: -$50.7m). Revenue of $108.3 (+303% y/y) stemmed from increased units sales at its residential developments. NAV/share at $2.54.
*Yanlord: 4Q15 net profit increased 13% y/y to Rmb1.22b, as revenue climbed 37% to Rmb10.23b attributed to the increased gfa delivered. Gross margin fell 2.8ppt to 25.3% on a shift in product mix, while bottom line rose at a slower clip on higher selling expenses (+52%) and widened loss at JV. NAV/share at Rmb10.44. Higher first and final DPS of 1.52¢ (FY14:1.3¢).
*Ying Li: 4Q15 net profit tumbled 40.5% y/y to Rmb116.3m, although revenue rose to Rmb306.9m (+26%) on firmer property sales (+32%) from San Ya Wan Phase 2 project, while rental income (+1.1%) inched up. Gross margin narrowed 13ppt to 26% on lower margin projects, while bottom line was weighed by increased finance cost. Net gearing ballooned to 0.75x from 0.41x in FY14. NAV/share at Rmb1.97.
*Midas: FY15 results beat, as net profit notched up 1.5% y/y to Rmb57.2m despite revenue jump to Rmb1.51b (+14.7%), attributable to increased aluminium alloy extruded product sales. Gross margin edged higher to 26.9% (+3 bps), while bottom line was weighed by higher selling & distribution cost (+21%) and increased taxes(+614.3%) on lower deferred tax income. First and final DPS of 0.25¢; FY15 total DPS maintained at 0.5¢. NAV/share at Rmb2.50.
*Hi-P: Swung to 4Q15 net loss of $48m, while revenue climbed 18.9% to $373.9m, driven by increase in orders for both new and existing customers. Gross margin 2.2ppt to 5.2% due to the a provisioning for inventory for Yota Devices. Bottom line also dragged by provisioning for receivables, and allowance for non-cancellable purchase commitments, both in relation to Yota. NAV/share at 68.19¢. FY15 DPS of 0.6¢ (FY14:1¢).
*Japfa: FY15 core net profit rose 24% to $64m, while revenue fell 5% to US$2.79b, mainly due to the weaker IDR dampening animal protein and consumer food contributions, partially offset by animal protein segment in Vietnam and dairy operations in China. Bottom line was boosted by lower finance costs. NAV/share at US$0.38. FY15 DPS of 0.5¢ (FY14: nil).
*Yoma: Appointed as Volkswagen’s official importer and distributor for a range of passenger cars and SUVs in Myanmar.
*Hiap Hoe: Swung to 4Q15 net profit of $5.8m, while revenue increased 27.5% y/y to $24.7m, largely due to $2.3m revenue recognition for development properties, versus a $2.6m contract rescission last year. Bottom line also boosted by lower SG&A expenses. NAV/share at $1.43. FY15 DPS of 1¢ maintained.
*QT Vascular: FY15 net loss widened to US$53.1m (+55.2% y/y) on provisions of US$23.4m on legal reparations. Revenue slipped to US$12.4m (-5.5%) as the group sold few catheter units (-10.3%) as it was re-negotiating a distribution agreement with Cordis. Gross margin improted to 32.7% (+7.3 ppt) on production efficiency gains. Bottom line was squeezed by higher sales and marketing (+18.6%), and R&D (+25.3%) expenses. NAV/share at -US$0.02.
Subscribe to:
Posts (Atom)