SG Market (14 Apr 16)

SG Market: Positive spillover sentiment from Wall Street could extend the rally, but caution is urged against oil-related counters ahead of a key producers’ meeting this weekend.

Regional bourses rallied sharply this morning in Tokyo (+2%), Seoul (+1.3%) and Sydney (+0.7%).

From a chart perspective, technical indicators are exhibiting bullish signals and the STI likely to test the next resistance at 2,910 (200-dma). Support at 2,790.

Stocks to watch:
*Economy: Singapore 1Q GDP grew 1.8% y/y, beating estimates. Separately, MAS made a surprise move to ease monetary policy by taking a zero appreciation stance on the currency.

*M1: 1Q16 results in line with net profit of $42.5m (-6.9% y/y), as revenue slumped to $257.6m (-12.6%) from reduced handset sales (-40.1%) and marginally lower service revenue (-0.5%). ARPU slipped for postpaid (-5.5%), prepaid (-6%), and data (-9.7%), while data usage (+3.1%) and fibre broadband grew (+3.5%). EBITDA margin held steady at 40.9% (+0.1ppt). Total customer base increased to 2.08m (+5.1%) with overall market share of 23.3% (+0.2ppt). MKE maintains its Hold with TP of $3.09.

*Keppel Infra Trust: 1Q16 distributable income surged to $40.7m (+154.4%) from the consolidation of Crystal Trust and Keppel Merlimau Cogen assets, while DPU rose at a slower pace to 0.93¢ (+19.2% y/y) on the enlarged unit base. Revenue rose to $131.2m (+14.7%) on increased contribution from concessions, but were offset by weakness from lower tariffs from City Gas and Basslink. Net gearing inched up 2 ppt q/q to 36%. NAV/unit at $0.337.

*Keppel DC REIT. 1Q16 DPU of $1.67¢ (+1.2%) came in line, although gross revenue and NPI of $24.8m (-2.8%) and $21.2m (-2.1%), respectively, came below expectations as a client downsized its requirements at Citadel 100, as well as lower contributions from properties in Australia, Europe and Malaysia arising from weaker FX against SGD. Portfolio occupancy at 92% (-2.8ppt q/q), with WALE of 8.7 years. Aggregate leverage stood at 29.6% (+0.4ppt q/q) with cost of debt of 2.4%. NAV/unit at $0.902.

*CapitaLand Retail China Trust: 1Q16 DPU of 2.71¢ (+2.7% y/y) came in line. Gross revenue grew to Rmb256.5m (+2.5%) from higher rental growth (+7.3%), while NPI rose to Rmb169.4m (+6.8%) from the absence of additional property tax for CapitaMall Wuhu. Portfolio occupancy remained healthy at 94.6% (-0.5ppt q/q) with WALE of 8.1 years, while aggregate leverage grew to 28.7% (+1ppt q/q), with average cost of debt marginally higher at 3.04% (+0.05 ppt) and tenor of 2.61 years. NAV/unit at $1.67.

*Frasers Centrepoint: Sold Australia property Satellite Corporate Centre to Stockland for A$87.6m. Separately, the group launched e-applications for its Singapore JV residential development, Parc Life, with average prices for the 628-unit executive condominium ranging from $770-800 psf.

*SIIC Environment: 92.2% owned Fudan Water entered into a 25-year concession agreement for the Suizhou City Cheng Nan Wastewater Treatment PPP Project, with an investment cost of Rmb100m. Total design capacity of the project is 50,000 tpd.

*CITIC Envirotech: Secured its first BOT sludge treatment project in Shandong Province, China, with total investment of Rmb220m ($48m). The project involves the design, construction and operation of a 700 tons/day sludge treatment plant and will have a concession period of 30 years.

*Sino Grandness: Entered into convertible loan agreement with Soleado, a wholly owned subsidiary of Thoresen Thai Agencies. The US$20m loan with interest rate of 12% per annum can be converted into 50m new shares (6.9% of enlarged share base) at the lower of $0.55 each or 20% discount to VWAP, and will be used for capex and working capital. Soleado currently owns 10.57% of Sino Grandness.

*HTL: Obtained approval from the Development and Reform Commission of Guangdong for a possible offer by suitor Yihua Timer via a scheme of arrangement, but two other pre-conditions have yet to be satisfied.

*Tuan Sing: Awarded tender for a 99-year leasehold residential land parcel in Sembawang for $51.1m, or $481 psf ppr.

*CNMC Goldmine: Restarted its 200,000 tonnes per annum vat leeching facility at Sokor Gold Field Project in Kelantan, Malaysia, following completion of upgrading works. The group now has two fully operational gold production lines.