Tuesday, May 31, 2016


Banks: Jun SSB take-up weak; still Negative banks
-Interest for the Singapore Savings Bond (SSB) appear scant, as seen in the 7.3% fall in the take-up rate for the Jun issuance.
-MKE opines SSBs are unlikely to result in major outflows from FD. 2015-16 SSB issuance is a tiny fraction of domestic banking unit deposits
-Meanwhile, weak SSB demand comes amid attractive FD rates, and declining SGS yields.
-However, MKE is still overall Negative on S’pore banks due to derating catalysts.
-The house prefers UOB (Hold, TP $16.96) for exposure, and has Sell calls on both DBS (TP $13.40) and OCBC (TP $7.20).


SATS: (S$4.21) Lofty valuation amid slowing earnings growth momentum
-MKE trims forecasts for SATS, shaving FY7-18 EPS by 2-3% to incorporate higher costs and lower contribution from associates. FY19 projections are also introduced.
-MKE is bearish SATS, citing near peak 20x P/E vs. uninspiring 3-4% growth from FY18.
-MKE maintains Sell on SATS with lower TP to $3.76 from $3.86


O&M: Swiber & Pacific Radiance look to revamp debt amidst depressed energy prices
- Swiber and Pacific Radiance are reportedly next in line for refinancing considerations
- DBS and UOB backing their proposals
- options would see the repayment tenure of bank loans extended to 15 years while interest rates are expected to be hiked by at least one to two percentage points

Industrial REITs

Industrial REITs: CLSA sees higher M&A probability amid weak organic outlook
-this can be seen in recent DPU accretive transactions
-i)Ascendas REIT selling Ascendas Z-link, China business park
-ii)Mapletree Logistic Trust buying four Australian warehouse facilities
-continue to favor industrial REITs due to:
-a)higher pre-commitment of 2016 supply
-b)government loosening policies and reducing industrial land supply
-c)M&As expected to drive value creation
-Top pick: Mapletree Industrial Trust (TP: $1.83); highest 3-year DPU CAGR & lowest gearing

SG Market (31 May 16)

SG Market (31 May): The market may open weaker as investors assess the implications of a stronger USD, while the global environment remains fragile.

Regional bourses opened mixed, with Tokyo (flat), Seoul (+0.1%) stronger, and Sydney (-0.8%) weaker.

From a chart perspective, downside support for the STI is seen at 2,760, with resistance at 2,830.

Stocks to watch:
*Property: Private resale home prices, excluding small units, edged up 0.3% MoM in Apr, from the 1.1% slide in Mar, held up by higher prices of homes in the non-central region of 0.2% (Mar: 1.4% fall).

*Economy: The labour market is expected to see rising retrenchments and unemployment rates, amid the ongoing economic transformation.

*NOL: After meeting pre-conditions, French container shipper CMA CGM has formally announced its voluntary conditional general offer to acquire NOL at $1.30/share.

*SGX: Launching four new sustainability indices, including the flagship SGX Sustainability Leaders Index, which comprise leading companies that meet environmental, social and governance standards, as well as minimum liquidity requirement.

*Singapore Shipping: 4QFY16 net profit dived 46.8% y/y to US$1.3m bringing FY16 net profit to US$9.6m (+7.8%). Revenue grew 9.1% to US$9.4m mainly boosted by delivery of three additional vessels, but partly offset by contraction in its agency & logistics business. Operating margin expanded to 22.4% (+0.3 ppt) but bottom line was hurt by costs associated with the acquisition of three vessels and a US$1m swing FX losses of US$0.4m. First and final dividend maintained at 1¢. NAV/share at US$0.163.

*KSH: FY16 net profit surged to $61.5m (+47.6%), driven by its associate's property development project Liang Jing Ming Ju Phase 4 Sequoia Mansion in China. Revenue dipped to $245.5m (-0.3%) on weaker construction business, while operating margin narrowed to 7.5% (-0.5ppt), weighed by lower interest income, and higher provision for bonuses and impairment. Proposed higher final and special DPS of 1.5¢ and 0.5¢ respectively, bringing FY16 payout to 3.55¢ (FY15: 2.75¢). NAV/share at $0.6544.

*Ley Choon: 5QFY16 net loss deepened to $13.5m (1QFY16: $3.3m), as the company slipped into gross loss of $2.4m (1QFY16: $2.4m profit). Revenue rose 6.6% to $26.7m, on increased recognition of work done for ongoing projects, while bottom line was dragged by ABSD and additional impairment for the development at 241 Pasir Panjang Road, as well as a surge in interest costs from a debt restructuring exercise.

*Stratech: Dismal FY16; Swung into net loss of $9.6m (FY15: $0.7m profit), as revenue slumped 58.8% to $6.8m due to the late award of several projects which was expected to commence earlier.

*Fragrance Group: Appointed Brookfield Multiplex Constructions to carry out the design and construction of its new mixed-used development, Premier Tower in Melbourne. The development will house a 78-floor residential tower. Construction is expected to begin in 4Q16.

*Sarine Tech: Sarine has acquired DiaMining, a developer of point of sale applications for diamonds, gemstones and jewellery for US$1.2m. This will help open new avenues to market the Sarine Profile technology.

*Secura: Exercised option to acquire a freehold six-storey industrial property with gfa of 2,100sqm at 38 Alexandra Terrace for $16.5m, a 13.2% discount to a valuation done in Oct ’15.

*Chuan Hup: Lending US$7m to property developer PSD Holdings at interest rate of 8% p.a. for two years.

*HTL: Closed two sofa plants in China as part of efforts to restructure its business.

*MMP Resources: Agreed to a reduction in monthly management fees receivable from Magnum Modular Power Generation in relation to two South Korean power plants. The reduction includes fee forfeiture (May & Jun), reduced fee of $35,000 (Jul, Aug, Sep) with a subsequent return to the original fee of $0.1m from Oct.

Monday, May 30, 2016

Insider trades

Insider trades: Director buying falls a first in three weeks
-Asia Insider notes that director buying fell for the first time in three weeks, for the week ending 20 May.
-Purchases: 20 companies saw 41 purchases worth $1.88m last week, down from 23 corporates with 56 transactions the week prior. However, last week’s value was higher at $1.88m vs. $1.47m in the previous week.
-Sales: One firm saw a disposal last week and the week before. However, last week’s value saw a sharp drop to $10,000, from $3.95m the previous week.
-Buybacks: 16 companies posted 73 buybacks worth $40.7m, up from 14 firms and 66 trades worth $34.95m in the previous week.
Notable transactions include Hotung Investment, GLP, GL, mm2 Asia, UIC


ISEC: (S$0.27) Kicking off M&A with four GPs
- Proposed to acquire four general medical clinics for $13.9m (12x P/E).
- Financing via cash ($7m) and 27.9m new shares (5.4% enlarged share capital) at $0.25 apiece
- Deal will come with a profit guarantee of $1.1m p.a. over a five year period, boosting core earnings by 18%.
- Stock trading at 20x P/E, making it one of the cheapest healthcare stocks under Maybank KE's coverage in Singapore.
- House has a Buy call with TP at $0.40.


AREIT: (S$2.32) Selling Ascendas Z-Link in Beijing
- Divesting business park property in Beijing for Rmb760m ($160m).
- Priced at an attractive 1.55x P/B, or 2.5x higher than its acquisition price in Oct 2011.
- Post-acquisition, aggregate leverage expected to be lowered to 36.4% (end Mar '16: 37.2%).
- House last had a Buy rating with TP of $2.57 on AREIT, on the basis that industrial supply in Singapore will start to brighten up from 2017 onwards.


MLT: (S$0.98) Acquiring properties in Sydney; headwinds linger
- Proposed to acquire a portfolio of warehouses in Sydneyfor A$85m ($84.4m), or NPI yield of 7.1%.
- Post-acquisition, MLT's aggregate leverage ratio is expected to be 36% (end-4QFY3/16: 39.6%).
- The street is generally neutral on the REIT, citing leasing risks and increased finance expenses.
- Trading at 0.96x P/B and forward distribution yield of 7.5%.


Noble (S$0.30) CEO resigns. What's next?
-CEO Yusuf Alireza stepped down, citing family reasons
-Alireza highlighted group is not out of the woods yet during an interview with Bloomberg last month
-He'll be replaced by two Co-CEOs
-Co-CEO William Randall, current president and executive director
-Co-CEO Jeff Frase, current president of US business
-Also announced to kick-start sale process of Noble Americas Energy solution soon for shoring up balance sheet
-trading at 0.46x P/B, 5.3x FY16e P/E

SG Market (30 May 16)

SG Market (30 May): The market is likely to carry on its momentum, taking cue from the positive close in Wall Street as US growth remains on track.

Regional bourses opened mix this morning, with Tokyo (+0.5%), Seoul (-0.5%) and Sydney (flat).

From a chart perspective, resistance for the STI is now seen at 2,830, with downside support at 2,780.

Stocks to watch:
*Noble: Disclosed that CEO Yusuf Alireza has resigned. Group appointed Jeff Frase and William Randall as Co-CEOs.

*Ascendas REIT: To sell a business park property Ascendas Z-Link in Beijing, China, for Rmb760m ($160m), or 1.55x P/B.

*Mapletree Logistics Trust: Proposed to acquire an accretive portfolio of four dry warehouse facilities in Sydney, Australia, for A$85m ($84.4m), or NPI yield of 7.1%.

*SMM: Delivered high-spec jack-up rig to Maersk, which will be deployed in the Culzean Field Development, located in the UK sector of the North Sea.

*ISEC: To acquire four general medical clinics in Singapore for $13.9m (12x P/E), paid via cash ($7m) and 27.9m new shares at $0.25 apiece. The shares will have a five year moratorium and the deal will come with a profit guarantee of $1.1m per year up to five years.

*Tat Hong: 4QFY16 net loss deepened to $39.8m (4QFY15: $17.1m loss), as gross margin narrowed to 26% (-6ppts) due to lower utilisation rates, goodwill and asset impairment charges of $32.6m (+5.8%), and $12.7m swing to FX losses of $7.7m. Revenue slipped 7% y/y to $126.7m on lower crane rental (-3%), general equipment rental (-11%), distribution (-15%) contributions, partially mitigated tower crane rental (+4%) business. NAV/share at $0.93.

*Mermaid Maritime: Deferred date to take delivery from China Merchants Industry of two performance class tender assist drilling rigs, MTR-3 and MTR-4, to 31 Dec '16, and one support vessel Mermaid Ausana, to 30 Jun '17. Separately, it secured seven subsea contracts in the Middle East worth a total of US$11m, a one-year contract extension for its support vessel in Thailand, while its associate Asia Offshore Drilling secured a three-month extension for jack-up rig AOD-1 to Jul '16 at a day rate of US$125,000.

*SoilBuild REIT: S&P’s withdrew its rating of “BBB-” long term rating with stable outlook for the REIT, at the manager’s request. The REIT continues to retain Moody’s ratings with its current rating of “Baa3” with stable outlook.

*Viva Industrial Trust (VIT’s): Viva Investment Management, the holding company of VIT’s managers, now fully owns VIT’s managers, after acquiring the remaining 10% stake from United Engineers Developments.
*Chew’s Group: Entered into an agreement with the government for a new 30-year lease site for its poultry farm following the sale of its current farm back to the government for $38.7m. The new farm will double capacity to 1m eggs/day. Relocation to be completed by Jun ‘19.

*Xpress: Investing US$1m to form a 10/60/30 JV with Sheng Shiong and Kunming LuChen, to operate supermarkets in China.

*Chew’s Group: Entered into an agreement with the government for a new 30-year lease site for its poultry farm following the sale of its current farm back to the government for $38.7m. The new farm will double capacity to 1m eggs/day. Relocation to be completed by Jun ‘19.

Noble Group

Noble Group CEO Yusuf Alireza Resigns

Friday, May 27, 2016


ComfortDelGro: UBS believes CDG can weather competition for drivers from ride-sharing apps
-Cheaper rentals for private cars over taxis are offset by insurance and fuel costs
-Taxis' diesel engines more efficient
-Taxi drivers' take home pay, excluding surge pricing and surcharges, can be 6-35% higher
-ride-sharing app drivers bear earning risk, as the apps could be more likely to adjust their fares and incentives
-UBS maintain Buy with TP of $3.57


Sarine: (S$1.60) Path to normalcy
- De Beers just concluded its fourth Sight of the year with provisional rough diamond sales showing a sequential improvement.
- Further in the polished diamond space, US CPI data for jewellery showed improvement, lifting optimism in the industry.
- The series of positive data points support Maybank KE's view that Sarine could be on its path to normalcy in 2016.
- House maintains its Buy and DCF-based TP of $1.94 for recovery growth in the short-term and the adoption of its technologies in the long-term.


SIA: CLSA initiate coverage with Outperform rating and Tp of $11.8
-Rising competition from Gulf carriers
-SIA needs to cut back on overly lavish offerings to lower cost base and compete
-Scoot, long-haul no -frills subsidiary, well-positioned to help
-Positive earnings outlook; low fuel prices, improving hedging profile, better prospects across subsidiaries


Banks: MAS eases financing for motor vehicles; positive first step

Revised rules:
OMV <= $20k: Maximum LTV lifted to 70% (prior: 60%) OMV > $20k: Maximum LTV lifted to 60% (prior: 50%)

- Loan tenure for both categories lengthened to 7 years from 5 years.
- Easing rules positive for SG banks, but impact marginal
- This move can be seen as a first step to grow loan demand
- MKE keeps its negative view on the sector with UOB (Hold, TP $16.96 ) as its preferred pick.

City Dev

City Dev: (S$8.33) Attempts third PPS worth $350m
- Involves a portfolio of 48 apartments.
- Developer said to be guaranteeing a 3% coupon for co-investors, in addition to a 7% preferred return that is not guaranteed.
- The move may be seen as a positive.
- MKE keeps its Buy rating and TP of $9.82, based on an implied 18% discount to RNAV of $11.91.

SG Market (27 May 16)

SG Market (27 May): The Singapore market may see some profit taking following the three-day rally, as investors tread cautiously ahead of Fed Chair Janet Yellen's speech this evening.

Regional bourses opened stronger in Tokyo (+0.3%), Seoul (+0.1%) and Sydney (+0.6%).

From a chart perspective, support for the STI is seen at 2,710, with topside resistance at 2,780.

Stocks to watch:
*Macro: Economists see rising oil prices and foreign worker levies possibly bringing an end to negative headline inflation in the coming months.

*Banks: Positive move by MAS to ease the maximum LTV ratios and loan tenure allowed for motor vehicle loans. While the impact should be marginal for now, MKE sees it as a first step to grow loan demand.

*City Dev: Attempts its third profit participation securities structure, involving a portfolio of prime residential units worth $350m.

*IHH Healthcare: 1Q16 core net profit of RM238.3m (+4.8% y/y) slightly missed, on higher financing costs due to the acquisition of Global Hospitals in Dec ’15. Revenue surged 24% to RM4.48b from healthy growth across all segments, while EBITDA margin remained stable at 24.9% (-0.3 ppt). NAV/share at RM2.61. MKE maintains Hold with TP of RM6.13.

*Courts Asia: 4Q net profit of SGD4.2m (-36.2%) missed expectations, dragged by weaker sales in S’pore (-3.2%) and Malaysia (-16.4%) on the challenging retail landscape. Gross margin compressed to 32.1% (-1.6ppt). Maintained first and final DPS of 1.29¢. NAV/share at 55.8¢.

*Yanlord Land: Acquired 51% stake in Nanjing Daji Real Estate Development that owns a 327,000 sqm gfa residential development site for Rmb1.26b.

*GP Batteries: 4QFY16 net loss deepened to $10.8m (4QFY15: -$2.3m) due to FX loss of $9.3m and impairment losses. Revenue slipped to $169.7m (-0.4%) on weaker sales of primary (-0.2%) and rechargeable (-1.9%) batteries, with lower contribution from Asia (-5.9%) although offset by improvements in Europe (+11.9%).

*Fu Yu: Acquired the remaining 20% of ultra-precision manufacturer NanoTechnology Manufacturing for a nominal sum.

*iX Biopharma: Exercised call option to acquire Arrow Property Trust and Kaizen Manufacturing for A$1.1m.

Thursday, May 26, 2016


Metro: (S$1.04) 4QFY16 sinks on store closures and FX
- 4QFY16 net profit dived 84.8% y/y to $1.2m mainly due to FX losses of $2.8m (4QFY15: $4.1m gain) as well as losses from its property division.
- The group declared higher first and final dividends of 7¢ (FY15: 6¢), bringing its dividend yield to 6.7%.
- Management highlighted that although China’s economic growth appears to be diminishing, residential property markets have continued to see robust demand amidst rising values particularly in Shanghai and Shenzhen.
- Back home in Singapore, it notes that sales of units at The Crest at Prince Charles Crescent have continued to remain weak.
- Metro is currently trading at 0.6x P/B.

mm2 Asia

mm2 Asia: FY16 results in line; UOB Kay Hian raised TP to $0.74 from $0.64.
- Evolved substantially through a slew of shrewd acquisitions into a true entertainment
- Management has indicated its willingness to expand deeper into North Asia. Going by the number of strategic partnerships that the group has established, UOB Kay Hian expects more strategic tie-ups with companies in China, Hong Kong
and Taiwan.
- Remains a compelling entertainment stock with an attractive forecasted 3-year EPS CAGR trajectory of 35% for FY16-19F.

SG Market (26 May 16)

SG Market (26 May): Taking cue from the global rally overnight as crude hits 2016 highs, the Singapore market may see continued upside in the near term.

Regionally, bourses in Tokyo (+1.2%), Seoul (+0.3%), and Sydney (+0.4%) marched on forward.

From a chart perspective, the STI looks to test the immediate resistance at 2,780, followed by 2,805, while downside support is seen at 2,710.

Stocks to watch:
*Macro: While MTI is keeping 2016 growth forecasts unchanged at 1-3%, economists see downside revision risk amid the softer global economy.

*SGX: In exclusive talks to buy London Baltic Exchange, which would help to diversify its income stream if completed.

*SATS: To subscribe for 897,297 Series D shares (20% of the enlarged share capital) in Indonesian in-flight catering services provider Purantara Mitra Angkasa Dua for Rp112b ($11.3m).

*mm2 Asia: Agreed to collaborate with a China-based production company, Man Mar Er, on a 35-episode TV series “My Love, Farewell”, with estimated production budget of Rmb70m.

*Accordia Golf Trust: 4QFY16 DPU slipped 1.7% to 1.76¢, bringing FY16 total DPU to 6.63¢ (+5.7%), ahead of estimates. Revenue for the quarter climbed 6.5% to ¥10.4b due to increased visitors and operating days, while operating loss narrowed to ¥622m (4QFY15: ¥1.1b loss). Golf course utilization rate at 77.9% (4QFY15: 67%; 3QFY16: 80.2%), while loan-to-value ratio held steady at 28.8%. NAV/unit at $0.89.

*Religare Health Trust: 4QFY16 DPU was flattish at 1.913¢, while distributable income climbed 1.4% to $15.3m. Revenue slipped 2% to $34.9m, but would have been 3.3% higher in rupee terms, contributed from Fortis, as well as the contractual 3% increase in base fee. Occupancy slipped 2ppt q/q to 73%. Gearing stood at 21.9% (+0.1ppt q/q). NAV/unit at $0.927.

*Metro: 4QFY16 net profit crashed 85% to $1.2m, mainly dragged by FX loss of $2.8m (4QFY15: $4.1m gain). Revenue slumped 22% to $32.6m, on absence of contribution from a disposed Japanese office property, a weaker RMB, as well as lower sales from the retail division (-21%) on store closures. NAV/share at $1.66.

*Trek 2000: Disclosed that CFO and Executive Director Gurcharan Singh is being investigated by CAD on a possible offence for fraudulent inducement in relation to an asset.

*Technics Oil & Gas/Soilbuild REIT: Failed to prevent Soilbuild’s attempt to call on its bank guarantee by UOB for $11.8m. This is with regards to 18 months worth of rentals of its premises at 72 Loyang Way.

*Foreland Fabrictech: External auditors found that the company may have breached SGX listing rules as it failed to put in place sufficient internal controls to address financial, operational, and compliance risks. It recommends the company to seek legal advice.

*GRP/Starland: Both companies applied for an extension for Starland to meet minimum free float requirements. GRP currently owns 99.5% of Starland.

*Blumont: Acquired an additional 22.3% stake in PT Rel-ion from NDI for Rp30.6b, bringing its total stake in Rel-ion to 55.4%.

Wednesday, May 25, 2016


http://infopub.sgx.com/FileOpen/MOFCOM Clearance PR.ashx?App=Announcement&FileID=406398

-With regulatory approvals from MOFCOM and the European Commission on its proposed voluntary general cash offer for NOL , CMA CGM expects to announce the Offer by June 2, 2016 (before 7 a.m.) at the latest.


Valuetronics: (S$0.495) FY16 results ahead; sanguine on automotive prospects
-FY16 net profit beat consensus; fell 19.3% to HK$120.4m on the back of weak LED sales. Revenue down 19.6%
-Gross margin expanded 1.6ppt to 15.2%, on higher share of higher margin industrial and commercial electronics revenue. However this was largely negated by FX losses from weaker Rmb.
- Net cash of HK$689.3m (~S$0.32/share)
- Valuetronics won a customer earler in the year to supply in-car connectivity modules. The group is sanguine to ride on increasing consumer demand to integrate their mobile devices with vehicles.
- Full year DPS of HK20¢ maintained, payout ratio of 63%.
-Trading at forward P/E of 8.2x, or ~3x ex-cash, and 8% FY16 yield

mm2 Asia

mm2 Asia's FY16 net profit spiked 61% to $8.2m, above street forecasts for $7.5m.

Revenue surged 58% to $38.3m, boosted by the consolidation of its newly acquired businesses in 3D animation and cinemas.

A breakdown of its segments are as follows:

Core production and distribution - Revenue: $29.8m (+23%), gross profit: $13m (+36.2%)
Continued strong growth particularly on a stronger pipeline as well as growth in key markets such as Singapore (+9.6%), China (+302%), and Taiwan (+104%). This was partially offset by contraction in its Malaysian (-25.3%) and Hong Kong (-19.4%) markets. Gross margin at 44% (+5ppt).

Post-production - Revenue: $3.6m, gross profit: $2.5m
Maiden contribution from recently acquired 51% stake in Vividthree Production, specialises in 3D animation as well as visual effects for feature films and commercials. Gross margin at 69%.

Cinema operations - Revenue: $4.9m, gross profit: 2.8m
Five-month contribution from recently acquired cinema operations following the completion of acquisition in Nov '15. The assets are in Malaysia and comprise a total of thirty screens and ~5,000 seats. Gross margin stood at 58%.

As a result of the better profitability of the two new businesses, overall gross margin fattened to 48% (+9ppt).

Going forward, management intends to expand its foothold into the Greater China region (Hong Kong, Taiwan, and China), which now accounts for ~27% of overall sales (FY15: 14%).

On its M&A spree, mm2 anticipates to complete the acquisition of three cinemas in Malaysia in 1H17, as well as a 51% stake in concert organiser UnUsUal in FY17.

However, we note that the remaining payment for both the acquisitions amount to ~$23.4m, compared to its cash stack of $4.7m, which means further fundraising is required.

Valuations for the counter is not cheap, currently trading at 34.1x forward P/E. Notwithstanding this, the street is still bullish on the counter with 2 Buy ratings and a TP of $0.66.

SG Market (25 May 16)

The Singapore market could open stronger today as investors warm up to the prospects of a Jun Fed rate hike amid stronger economic data.

Regional bourses in Tokyo (+1.3%), Seoul (1.1%) and Syndey (1.6%) opened stronger.

From a chart perspective, the STI looks to be gaining upside momentum with resistance at 2,780, and bottom side support at 2,710.

Stocks to watch:
*Keppel/SMM: US-based fund house EIG Management has added both rigbuilders into an USD221m lawsuit for damages against Petrobras. Both Keppel and SMM said they have not be served any claims.

*Valuetronics: FY16 net profit beat consensus, although it fell 19.3% to HKD120.4m. Revenue dropped 19.6% to HKD1.95b, as consumer electronics revenue (-44%), dragged by declines in LED sales, was offset by industrial and commercial electronics (+18%). Gross margin improved 1.6ppt to 15.2% on improved sales mix, but largely negated by FX losses. Final and special DPS of HK13¢ and HK7¢ brings full year DPS to HK20¢ (unchanged).

*mm2 Asia: FY16 net profit ahead of consensus forecasts, spiking 61% to SGD8.2m, on a 58% jump in revenue to SGD38.3m, mainly boosted by maiden contribution from newly acquired 3D animation and cinema businesses. Gross margin expanded to 48% (+9ppt) on a shift in sales mix. Group will continue to seek M&A to expand its business.

*GLP: Entered agreement with a new co-investor to further syndicate an additional 9.95% in the US portfolio of industrial assets for US$197m, or 0.4% below its NTA. If completed, this reduces its stake in the portfolio to 0.05%, below its initial intended 10% stake.

*Q&M: Dilution overhang removed after a two-year call option for 63m new shares with its substantial shareholder, healthcare PE fund Heritas Helios Investments, has expired. MKE upgraded its TP from $0.88 to $1.05.

*Boustead Singapore: 4QFY16 net profit dived 77% y/y to $4.1m, as gross margin compressed 14.9ppt to 27.7%. Revenue of $112.5m (-8%) was dragged by lower sales in energy-related engineering division (-44%) from heavily depressed state of O&G industries, partially offset by real estate solutions (+22%). Final DPS of 2¢ proposed, bringing full year DPS to 19.2¢ (incl. 16.2¢ dividend in specie, FY15 DPS: 4¢). NAV/share at $0.583.

*Tat Hong: To divest its training services arm for $0.4m as the arm has been facing headwinds, with no expected material financial impact.

*Hotel Grand Central: To sell its 408-room hotel in Australia for A$80m. It is expected to record a gain of $23.4m from the sale.

*CSC: 4QFY16 net loss narrowed to $6.6m (4QFY16: $8.7m loss) on a 34% y/y slide in revenue to $65.3m mainly due to several project delays. Gross margin improved slightly to 6.4% (-0.8ppt) as it disposed of old equipment and gradually reduced headcount. Bottom line was further pressured by higher interest costs (+23.2%) partially mitigated by contributions of $0.1m (4QFY15: $12k loss) from its Thai JV. NAV/share at $0.085.

*Renewable Energy Asia: Disposing the rights to develop a concession for a 100MW wind power project in Guazhou, China, for Rmb20m.

*Allied Technologies: Signed three-month non-binding MOU with Carapace Daybreak to sell subsidiaries Allied Machinery Shanghai, and Taicang Shanfeng Hardware.

Tuesday, May 24, 2016

SG Market (24 May 16)

SG Market: Taking cue from the directionless US market overnight amid a lack of catalysts, the STI could open lacklustre, although market watchers will keep tabs on oil prices amid renewed expectations of a supply glut.

Regional bourses, Tokyo (-0.7%), Seoul (-0.3%), Sydney (-0.2%) opened weaker.

From a chart perspective, the STI may test its overhead resistance at 2,805, with immediate support at 2,755.

Stocks to watch:
*Economy. Following the higher than expected Apr CPI data, majority of economists sees a trough in 2Q, while MAS stood pat on its headline 2016 forecast between -1% and 0%.

*Macro. Bloomberg data shows that STI constituents outperformed developed Asian peers in HK and Japan, on 1Q16 earnings beats.

*DBS/SGX. DBS to tie up with SGX to digitise the application process for security trading accounts, shortening the entire procedure to four days from ten.

*Sarine: A Shanghainese jeweller, Shining House, has adopted its Light Performance and Profile digital solutions for the retailer's newly launched premium cut diamond, the Shining Star.

*Ntegrator International: Lost a suit for THB20.1m ($0.8m) to Telewave Communication in Thailand. Provisions for the claim of THB25.8m ($1m) has already been made in FY15.

*KOP: 4QFY16 net loss narrowed 91% y/y to $1.8m, on the absence of a goodwill write off. Revenue surged 84% to $6.7m, mainly from the completion and handover of Montigo Resorts, Batam. Gross margin expanded to 40.9% (+15.6 ppt). NAV/share at 10.51¢.

*Blumont: 10.7%-owned Kidman Resources confirmed the presence of lithium at its Mt Holland project. Further work will be required to address the full extent of the lithium deposits at the mine.

*LionGold: Will embark on a separation agreement with regards to a 53.9% effective stake in a Konongo gold mine in Ghana, as the company is no longer able to fund the development of the project into production.

*Memstar: After a failed RTO attempt with private natural gas developer, Longmen Group, Memstar is now seeking to recover a US$5m deposit. The company was served a delisting notice by SGX recently with trading in its counters to be suspended from 18 Jun onwards, will have to provide a reasonable shareholders’ exit offer by that date.

Monday, May 23, 2016


Neratel: Announced the sale of their POS payment business for $88m and estimates a gain of $71.5m. UOBKH expects special dividends of $0.16, based on 80% payout ratio. This coupled with regular dividends of $0.03 translates to $0.19 DPS, or 27.1% yield. The balance of NeraTel’s remaining business remains bright, underpinned by a record order book. UOBKH has a Buy call on NeraTel with TP of $0.835.


CCT: (S$1.38) Proposed to acquire remaining 60% stake in CapitaGreen
- Proposed exercise of call option to acquire balance 60% of MSO Trust, which owns CapitaGreen, for $393m.
- Values CapitaGreen at $1.6b, or $2,276 psf, based on cap rate assumption of 4.15%
- On a pro forma basis, 1Q16 DPU is estimated to be higher at 2.22¢ (+1.4%); aggregate leverage would rise 7.6ppt to 37.7%.
- Maybank KE is cautious on CCT (Hold, TP $1.40)


REITs: Positioning for the imminent trough in industrials
-Global property investment fund TH Real Estate (US$96b AuM) is looking to bargain hunt for Spore warehouses against the current supply overhang
-70% of new supply in 2016-17 comprises single user developments with pre-tenant commitments.
-Government is also paring industrial land sales
-supply pressures should give way to positive rental reversion post-2017.
-Maybank KE has Buy call for Ascendas REIT (TP: $2.57), Maple Industrial Trust ($1.78), AIMS AMP ($1.55)

Insider Trades

Insider Trades: Asia Insider notes that director buying rose a second week, while selling remained low a third week for the week ending 20 May.

Purchases: 23 companies saw 56 purchases worth $1.47m, vs. 13 firms, 27 acquisitions, worth 2.47m the week before.

Sales: One firm saw a disposal worth $3.95m, vs. one firm, two disposals, worth $0.042m the week prior.

Buyback: 14 companies made 62 repurchases worth $31.5m, vs. 12 firms, 33 buybacks worth $12.6m the previous week.

Notable transactions include buybacks at SIA, Olam, , while outgoing CEO Wolfgang Baier made sales of his stake in SingPost

SG Market (23 May 16)

SG market: Positive sentiment looks to spill over to the Singapore market from stabilisation in crude prices, while concerns of a Fed rate hike sooner than later are expected to limit upside gains.

Regional bourses opened lacklustre this morning in Tokyo (-0.7%), Seoul (+0.1%) and Sydney (-0.1%).

From a chart perspective, the STI may test its overhead resistance at 2,805, with immediate support at 2,755.

Stocks to watch:
*M&A: BusinessTimes article highlighted potential privatisation names that include F&N, Keppel T&T, Genting Hong Kong, Guocoland, NSL, Chip Eng Seng and Boustead Singapore. Smaller firms touted are Challenger, Soo Kee Group, Design Studio Group, and Cheung Woh Technologies.

*SATS: 4QFY16 results in line; net profit slipped 1.7% to SGD50.7m, in tandem with a drop in revenue to $417.6m (-1.7%), due mainly to the transfer of its food distribution business to JVCo SATS BRF Food in Jun ‘15. Otherwise, revenue would have grown at a resilient 6.6%. EBIT margin widened to 11.9% (+1.4ppt), thanks to cheaper raw material costs (-25.2%), although partially offset by higher staff expenses (+9.8%). Final DPS raised to 10¢, bringing FY16 total to 15¢ (FY15: 14¢).

*CapitaLand/ CCT: CCT proposed to exercise its call option to acquire the balance 60% of MSO Trust, which owns commercial building CapitaGreen, for $393m. If completed, aggregate leverage for CCT is expected to rise 7.6ppt to 37.7%, while pro forma 1Q16 DPU would have risen 1.4% to 2.2¢. CapitaLand owns 50% of MSO.

*Boustead Projects: 4QFY16 net profit fell 31% to $5.4m, mainly dragged by lower margin projects. Revenue grew 22% to $59.4m on full contribution from a recently completed design-and-build project as well as the normalisation of leasing revenue from three properties.

*OSIM: Voluntary offer of $1.39/share has closed, with valid acceptances of 96.03% share capital. The offeror will be exercising its right of compulsory acquisition.

*STE: Writ of summon against ST Engineering, by families of passengers for an ill-fated AirAsia flight from Indonesia to Singapore on 28 Dec '14, has been dropped.

*Hafary: To purchase a shophouse in Balestier Road for $4.1m, to further establish its presence in the area.

*Yangzijiang: Acquiring the 40% remaining stake in CS Marine Technology (NAV at US$1.7m on 31 Mar '16), which specializes in marine consulting, and engineering for ship building and offshore, for US$1.

*Eindec Corp: Issuing 71.8m free warrants, each exercisable within three years for one ordinary share at $0.12, on the basis of two warrants for every three shares held. This will raise net proceeds of $8.57m upon fully exercised, and proceeds will be used for investments, repayment of debt and working capital.

*Suntec REIT/ARA Asset Management: ARA has become a substantial shareholder after purchasing 1.6m units at $1.626 apiece on 19 May, lifting its stake to 5.02% from 4.96%.

*CSC: To invest RM8m ($2.7m) in a JV 40:40:20 with two other entities to acquire and develop a plot of freehold land in Seremban, Malaysia.

*ISR Capital: Signed MOU with REO Magnetic, which holds a stake in a Madagascar rare earth concession.

*Profit warning:
- Chasen Holdings
- CFM Holdings

Friday, May 20, 2016


Memtech (S$0.68) Electrifying growth opportunity from Tesla
-Memtech supplies 4-5 plastic parts/car to Tesla
-Tesla raised US$1.46b to finance expansion plans
-Tesla targets to increase yearly production 10x by 2018, hitting 500,000 cars annually
-Memtech trading at an attractive 9X FY16e P/E, offers 4.9% indicative dividend yield


Riverstone: Solid co. to tide through headwinds - RHB
-Additional 1b gloves from expansion (3Q16) expected to be fully taken up, but at lower ASP
-Higher orders expected from existing and new cust, as product quality and cleanroom niche cushion competition pressure
-USD/MYR rate trending upwards
-RHB conservatively trimmed ASP by 10% and USD/MYR rate to 4.08 (from 4.20)
-FY16-17 earnings forecast lowered by 7.5% & 7.4%
-Maintain Buy with lower TP of $1.02 (prior: $1.18) on outperformance against peers

City Developments

City Developments: (S$8.12) Seeking out opportunistic buys with a $1.8b cash kitty
- looking to take advantage of the current price discounts in listed real estate companies
- developed a liking to residential sites, offices and hotels in London as well as luxury residential projects and hotels in Japan
- continues to be one of the best stories in the sector with the recent price consolidation presenting a good buying opportunity
- Maybank KE maintains Buy with TP of $9.82. Counter currently trading at 0.68x P/RNAV

Ascendas REIT

Ascendas REIT: Maybank KE highlighted opportunity to accumulate on weakness
-AREIT (-2.1%) took a beating along with the rest of the SREITs (down 1.6%) yesterday
-2016 remains tough on slow demand, strong supply and fed rate hike concerns
-but 2017 expected to brighten up considerably given near zero new supply of business parks
-2017/18 should see spare capacity fill up to grow FY3/18-19 DPUs by 4%/5.6%
-FY3/17-19 DPU estimates are: 15.5¢/16.1¢/17¢ = yield of 6.8%/7.1%/7.5%
-Maybank KE: Buy, TP $2.57


GLP: CLSA reiterates Sell but adjusts TP to $1.68 from $1.65
- 1Q16 earnings beat their expectations with higher dividend proposed
- However, China development starts guidance slashed to 20% contraction
- CLSA sees no recovery in FY18 and expects recovery only in FY19 onwards


UOL: Acquired a 10,900 sqm freehold, mixed-used property in London for ₤98.8m ($199m). The property houses offices and retail space with the sale expected to be completed by Jul.

Nera Telecommunications

Nera Telecommunications: To sell its parment solutions business to Igenico Group for $88m. It expects to record a disposal gain of $71.5m and intends to return a significant portion of the net proceeds to shareholders.

SG Market (20 May 16)

SG Market: Short term momentum is weak amid expectations of higher interest rates (benefit banks) and tepid corporate earnings. However, oversold conditions could limit the downside.

Regional bourses opened mixed with Tokyo (-0.5%), Seoul (+0.2%) and Sydney (+0.2%).

From a chart perspective, STI is currently sitting on the 2,740 support with the next level at 2,680, while overhead resistance is capped at 2,805.

Stocks to watch:
*City Developments: Eyeing strategic investments in discounted real estate operators under its plan to deploy $3b over the next three years. It had previously earmarked five key overseas markets in Australia, China, Japan, UK, and US for expansion.

*SGX: Introduced a bond seasoning framework that enables retail investors to buy wholesale bonds initially offered to institutions and accredited investors, in denominations as small as $1,000, six months after the bonds are listed on SGX. Last month, SGX saw 45 new bond listings which raised more than $27b in the primary market.

*NOL: CMA CGM has accumulated a 10.6% stake in NOL in the open market since the announcement of its conditional cash offer of $1.30/share. Together with Temasek's undertaking to sell its 67% stake to CMA, the latter now has a more than 77% stake in the shipping line.

*Keppel Corp: Held the topping off session for Junction City, a 40%-owned Grade A office building with NLA of 34,000sqm in Yangon CBD, and opened the 29-storey Inya Wing, an extension that adds 515 rooms to Sedona Hotel Yangon, bringing total rooms at the hotel to 797.

*GLP: Clarified that it has not obtained regulatory approval for the issue of Rmb10b panda bonds and that no final decision has been made on such an issuance, although it concedes that such a move would be consistent with its operational policy of natural hedging.

*Technics O&G: Voided a $70.5m contract awarded by a regional player based in Malaysia, to construct a liftboat, with an option for another similar unit due to non-fulfillment of a clause by the parties within the specific time line. Separately, it is being sued by a former director, for loan repayment of $4.9m. This comes on the heels of legal action from Soilbuild REIT for its default on rental and lease payments, with claims in excess of $14m.

*KSH: Entered into a term contract with NUS for addition and alteration works within the campus for 24 months with an option to extend for a further 12 months to 2019. The price for the works will be based on a fixed schedule of rates.

Thursday, May 19, 2016


Keppel: Trough in O&M could last longer than expected; CLSA high conviction Sell
-No respite from recent recovery in oil prices, as order book depletes
-Ongoing liquidity issues and weak charter rates sugest trough could last longer-than-expected
-Many drillers have weak balance sheet and seen to be preserving capital for dividend payout instead of capex
-Suply of rigs remain ample, with record 128 jack-ups due for delivery
-CLSA maintain high conviction Sell call, with TP of $4.13


Yoma (S$0.535) 4QFY16 business disrupted by polls; outlook looks rosy
-4QFY16 net profit $8.9m (+8.9%); full-year earnings $37.2m (+32.6%)
-4QFY16 revenue $45.7m (+65.8%); property (+107% to $31.1m), non-property (+16.4% to $14.6m)
-Bulk of property revenue came from the resale of 90 residential units in its Star City project, after repurchasing 117 unsold units from a third party developer.
-Non-property segment mainly lifted by its KFC stores, which opened in Jul ’15
-Gross margin collapsed 18ppts to 29.3%, due to the sale of repurchased units at Star City.
-Bottom line further dragged by higher admin expenses and losses from two new JVs.
-Mgmt expects rosy outlook following a peaceful govt transition in Apr '16


SATS: (S$4.47) After recent surge, rich valuations leave little room for upside
- Maybank KE cuts rating to Sell from Hold but adjusts TP a tad higher to $3.86 from $3.82
- Recent surge in share price a cause of concern as the market appears to be pricing in lofty expectations of future earnings growth
- At 21.3x forward P/E, the house believes that valuations are rich and near its historical peak
- Although 4QFY16 is expected to be strong, earnings growth will moderate to just 3-4% in FY17-18
- Aside to this, SATS offers a relatively decent yield of about 3.1% which is well backed by a net cash position of $308.1m as at 3QFY16.


GLP: (S$1.85) 4QFY16 earnings lifted by China asset values and US fee income
- 4QFY16 net profit US$152.7m (+45.7% y/y), core net profit US$51.7m (-21%) bringing FY16 core earnings to US$240.9m (+20%) or 103% of street estimates
- Revenue expanded 19.4% to US$199.1m
- mainly from completion and stabilisation of development projects in China, increasing rents and the inclusion of management fee income from GLP US Income Partners I and II
- Overall development starts and completions for the year amounted to US$2.8b and US$2.1b , meeting 97% and 105% of FY16 targets

SG Market (19 May 16)

SG Market: Market remains on edge with little conviction after a tepid 1Q earnings season, while hawkish Fed meeting minutes stoked interest rate fears.

Regional bourses are largely lower in Tokyo (+0.8%), Seoul (-0.4%) and Sydney (-0.2%).

From a chart perspective, STI may close the bottomside gap at 2,740, with overhead resistance at 2,805.

Stocks to watch:
*GLP: 4QFY16 net profit (ex. revaluation) fell 21% to US$51.7m bringing FY16 net profit to $240.9m (+20%, within expectations. FY16 revenue climbed to US$777.5m (+9.8%) on completion and stabilisation of development projects in China, increasing rents, and inclusion of management fee income from GLP US Income Partners I and II but was partially offset by the syndication of 60% of GLP Brazil Income Partners II portfolio and sale of Japan properties. FY16 development starts of US$2.8b met 97% of FY16 target. Raised first and final DPS to 6¢ (FY15: 5.5¢) NAV/share at US$1.87.

*Stamford Land: Reversed into a 4QFY16 net loss of $5m from $5.4m profit a year ago, due to FV loss of $21.9m (+120%) on its investment properties. Revenue slid 46% to $60.5m mainly on absence of one-off disposal gain recognised in 4QFY15 as well as a decline in its hotel owning & management (-6.6%) business. Bottom line was further hurt by net FX loss of $3.8m (1QFY15: $0.8m). Slashed first and final dividend to 0.5¢ (FY15: 3¢). NAV/share of $0.52.

*Tung Lok: FY16 net profit grew 6.4% to $0.6m on a marginal increase in revenue to $86.1m (+1.3%) on higher contributions from two rebranded outlets and a newly opened outlet, partially offset by the closure of two outlets. Gross margin inched up to 72.2% (+0.7ppt) due to better control of food costs. Bottomline was boosted by higher tax benefits (+49.6%). NAV/share at 6.11¢

*China Everbright Water: To be included as a constituent stock of the MSCI China Small Cap Index after market closes on 31 May.

*OSIM: Ron Sim has achieved 95.88% stake in the company following his unconditional privatisation offer of $1.39/share. He requires acceptances of a further 30.6m shares by 20 May (final closing date).

*Sinarmas Land: To raise Rp3t from Indonesian debt capital markets to finance land acquisition (40%), construction development (40%) and working capital (20%).

*Soilbuild REIT/Technics Oil & Gas: Suing Technics Oil & Gas in its capacity as a guarantor of a tenant at 72 Loyang Way for defaulting on rental and lease payments, with claims in excess of $14m.

*Next-Gen Satellite Communications: Won legal proceedings against two individuals over a sum of $5.6m with regards to a 2010 acquisition by its subsidiary.

*Profit warning:
-GP Batteries Int'l
-GP Industries

Wednesday, May 18, 2016


SingPost: Outgoing CEO Wolfgang cashes out
- Sold 2.5m shares in open market at average exit price of $1.577/share
- Stake has now been cut to 0.057%
- Search for replacement still ongoing


Jaya has entered into a conditional agreement with five individual vendors to acquire the entire stake in Heduru Moni for $232.2m.

The consideration will be satisfied via the issue of 726.6m new shares at $0.32/share. Should this be successful, the deal will result in the reverse takeover of the cash company.

The deal values the Papau New Guinea finance firm at 4.6x P/B based on its FY15 NAV of $50.9m and 12x FY15 P/E.

As part of the agreement, existing Jaya shareholders will be entitled to receive a cash distribution of up to $0.38/share prior to the completion of the RTO.

The proposed acquisition comes after Jaya disposed its previous marine charter operations to become a cash company. It had previously missed two deadlines to acquire a new business and has until 3 Jun to meet SGX listing requirements.

Established 1988, Heduru Moni trades under the name Moni Plus and is a market leader in personal and consumer loans business in PNG. Its competitive advantage lies in its ability to turn loan approvals within 24 hours.

Moni chalked up net profits of $11.4m, $13.9m, and $19.4m for FY13, FY14, and FY15 respectively. FY15 revenue reached $48.3m (+34%). It has low NPL ratio due to direct deductions from salaries of its borrowers to meet loan repayment.

The target company has international aspirations to expand into emerging markets in Southeast Asia.

However, investors should note that PNG is currently facing a foreign exchange liquidity problem with the country seeking aid from the IFC and other partners.

With the development of the country requiring heavy investments from overseas, the shortage of FX reserves could put a dampener to growth with the Asian Development Bank forecasting growth in 2016 to slow to 4.3% from 2015's 9.9%.

Jaya surged 54% today on barely 30 lots traded.


Jaya: $232.2m RTO deal with Papua New Guinea financial institution Heduru Moni.
- FY15 net profit of $19.4m
- Counter will resume trading at 12.30pm.


Hospitality: Opportunities in market volatility
- OCBC believes REIT yields look reasonable with the potential for value buys
- House sees macroeconomic uncertainties posing a key risk for what looks to be already a tough operating environment.
- Nonetheless, current yields are reasonable given the outlook.
- Top pick is Ascott Residence Trust (BUY, TP $1.29).


Noble: (S$0.33) Credit rating cut to Junk; major blow
- Fitch cut its long term debt rating for Noble to junk (BB+) from investment grade (BBB-).
- Downgrade as a reflection of Noble's shift in debt structure towards shorter term financing.
- Expected to be a major blow to Noble; rise in funding costs eating into razor thin margins.
- Noble trading at 0.46x P/B, just a slight discount to investment grade credit rating peer Glencore’s 0.65x.

SG Market (18 May 16)

SG Market: Market could pull back from yesterday's technical bounce after strong US economic data erased Mon’s Wall Street advance and renewed investor concerns about Fed rate hikes.

Regional bourses opened mainly in negative territory in Tokyo (flat), Seoul (-0.9%) and Sydney (-0.9%).

From a chart perspective, STI likely to close the bottomside gap at 2,740 in near term, with resistance at 2,805.

Stocks to watch:
*Noble: Fitch cut Noble’s long term debt rating to BB+ (junk) from BBB- to reflect its shift in debt structure towards shorter term financing, which will result in a weakening maturity profile.

*First Resources: Apr FFB harvest tumbled 18.4% to 172,219 tonnes, on lower yield of 1.1 tonnes/ha (Apr '15: 1.5 tonnes/ha). CPO production also slid 21.6% to 40,918 tonnes, although extraction rate was slightly higher at 23.1% (+0.2ppt).

*SIA Engineering: Signs two-year contract with Tigerair Australia to undertake heavy maintenance services, with an option to renew for an additional year.

*China Everbright Water: Secured Qingdao wastewater treatment upgrading project (Maidao Plant), with total investment of Rmb208m.

*Yanlord: Entered JV with bigwigs China Ping An Insurance, Tianjin Realty Development and Beijing Capital to acquire a land parcel in Tianjin for Rmb2.37b. The 351,338 sqm gfa site will be developed into a mixed used development.

*Q&M: Terminated the proposed acquisition of Orchard Scotts Dental and De Pacific Dental Group, after terms of the agreement have not been met.

*mm2 Asia: Signed term sheet with US producer BoulderLight Pictures, to co-produce mm2's first US film "Good Match".

*IPS Securex: Received two purchase orders for the supply of Hyperspike acoustic hailing devices for US$2.9m.

*Union Steel: Proposed acquisition of loss-making O&M engineering services provider Transvictory Holdings for $15m, or 1x P/B. Pro forma FY15 loss per share is estimated to widen to 23.9¢ from 21.4¢.

*Secura: Appointed as non-exclusive authorised reseller of CyberArk's cyber security products within Singapore for one year. The contract will be renewed automatically on an annual basis unless terminated by the parties.

*Lereno Bio-Chem: Terminated proposed acquisition of 60% stake in HTwo Education after conditions cannot be met.

*Hyflux: Retail offering of up to $300m perpetual securities at 6% p.a. in the first four years, with an option to increase to $500m. Distribution rate will be reset every four years. Part of the proceeds will be used to repay $100m outstanding notes issued under its $1.5b multicurrency debt programme as well as $175m of its perpetual securities, while the rest will go towards general corporate purposes, including repayment or refinancing of existing borrowings.

Tuesday, May 17, 2016


DeClout: (S$0.215) Stamp of approval from government for $10m in funding
- Awarded a $10m VC fund by the National Research Foundation (NRF)
- Scheme entails an investment up to $10m on a 1:1 matching basis
- Investment focus will remain on disruptive start-ups in digital economy, including big data analytics, smart logistics, cyber security and fintech.
- Declout has received approval on its proposed spin-off of 69%-owned Procurri.
- Market watchers estimate that DeClout could see a windfall of ~$48.6m, or 37% of its current market cap.
- Trading at a trailing P/E of 21.1x, with EPS projected to grow from FY15's low base of 1.08¢ to 6.54¢ in 2016.


Economy: Exports continue to slide as global backdrop dims economic prospects
- Singapore’s export slump continues relatively unabated as non-oil domestic exports (NODX) fell 7.9% in Apr, in line with the street’s expectations
- Decline follows a 15.7% plummet in Mar
- Except for the EU (+20.6%) and Hong Kong (+13.5%), shipments to the other eight major markets fell
- Sets a poor start to 2Q16 even after the MAS eased monetary policy by abandoning a steadily appreciating SGD


GLP: CLSA reiterates Sell with TP of $1.65
- GLP to report earnings this Thursday with expectations of a 5.5 cent dividend
- Investors should look out for management's guidance of China development starts and completions
- CLSA expects China operating metrics to moderate with consensus forecasts too bullish
- Upside catalysts could come from a spinoff of part of its China portfolio
- Current valuations not depressed enough, thus limiting any privatisation hopes.


Strategy: CS expects structural problems in Singapore to intensify; lowered GDP growth forecast to 1.4% for 2016 and 1.2% for 2017, firmly below consensus forecast of 1.8% and 2.2%, respectively.
- Tourist arrivals could be a bright spot.
- Favour sectors including the Property and Transport.
- SATS is its preferred proxy to a recovery in tourism.

SG Market (17 May 16)

SG Market: Singapore market may see some positive spllover action from Wall Street, with focus on oil-linked counters, following the overnight surge in crude prices, but upside would be capped by the lack of catalysts.

Regional bourses opened generally in positive territory in Tokyo (+1%), Seoul (flat) and Sydney (+0.3%).

From a chart perspective, STI is deeply oversold with topside resistance at 2,805 and underlying support at 2,710.

Stocks to watch:
*Property: Apr private home sales (excluding ECs) tumbled 11.6% m/m to 745, despite more units (900) being launched (+32%). Including ECs, sales reached 1,291 or 60% of launched units.

*Airlines: Eight Asia-Pacific budget airlines including SIA's Scoot & Tigerair, formed a low cost carrier alliance, aimed at expanding their destinations and routing options for cost savings and to provide more value for customers.

*SIA: Apr passenger load factor rose 1.8ppt to 77.1%, on higher traffic (+1.9%) against a drop in capacity (-0.5%), lifted by East Asia, while all other regions deteriorated. SilkAir (+3.7ppt to 72.9%), Scoot (+3.6ppt to 85.5%) and Tigerair (+2.4ppt to 84.9%) all enjoyed better load factors. Cargo load factor also improved to 62.7% (+1.3ppt) as traffic (+8.5%) outpaced capacity expansion (+6.3%).

*Cosco: 51%-owned subsidiary Cosco Shipyard agreed to defer delivery for one of two jack-up drilling rigs by 20 months till end 2017 to owner KS Drilling, reflecting the unfavourable market conditions besetting the industry. Separately, group delivered a 111,000 dwt oil tanker to its European buyer.

*mm2 Asia: Jointly acquired the distribution rights for 19 movies in Singapore and Malaysia with Clover Films, doubling the number of distributed titles this year from the nine in FY16.

*Singapore Myanmar Investco: Signed franchise agreement with Crystal Jade Management Vietnam to operate and manage outlets in Myanmar, with the first expected to be opened in 3Q16 at Yangon International Airport Terminal 2, and a second at Sedona Hotel Yangon later in the year.

*Hyflux: Secured a 27-year loan facility of $653m to finance the development of the TuasOne waste-to-energy plant project.

*Ntegrator: Secured five contracts worth $11m, comprising the supply of batteries to Vietnamese mobile network operator Viettel, and provision of pipeline installation and maintenance services, as well as supply of telecom equipment to Singapore-based clients.

*Charisma Energy: Acquired 80% stake in a Chinese company that won approval to develop a 20MW solar photovoltaic power plant that will supply electricity to the National Grid in China for 25 years. Projects expected to commence commercial operation in 1Q17, with first five years of revenue in the range of Rmb140m.

*Telechoice Int'l: Acquiring 25.19% stake in HK-based IPTV technology solutions provider MVI Systems for HK$11.6m.

*Hyflux: Secured a 27-year loan facility of $653m to finance the development of the TuasOne waste-to-energy plant project.

Monday, May 16, 2016


Midas (S$0.27) Yet to see light at the end of the tunnel in 1Q16; exiting Growth portfolio
-1Q net profit Rmb10m (-8.6%); 9% of full-year consensus estimate
-1Q revenue Rmb303.5m (-5.3%); lower sales of aluminimum alloy extruded products
-Bottom line also dragged by lower contribution from associates, higher staff costs, and taxes
-Failed to show strong growth in past 2.5 years despite Chinese government investment in rail sector
-Market Insight exit Midas from Growth portfolio at $0.27


Q&M: (S$0.715) 1Q16 meets on acquisition-led growth; offers best China exposure
- 1Q16 net profit of $3.7m (+28%) that met estimates on acquisition-led growth in Singapore and China.
- Revenue rose 19% to $34.4m as higher contributions from its dental and medical clinics (+28%)
- Recent completion of the acquisitions in China indicates that the group is gaining traction in the country with more acquisition on the cards
- While MKE likes both Q&M and Raffles Medical (Buy, TP: $1.73), it is recommending that investors take profit in the latter after its 15% ytd performance and go long on Q&M (+2% ytd).

Genting SP

Genting SP: (S$0.755) 1Q16 clobbered by bad debt, FX even as casino luck improves
- 1Q16 net profit of $10.8m (-83% y/y) on revenue of $608m (-4.9%)
- VIP continued to languish with volume shrinking although win rate was higher
- Mass gaming held steady, supported by slot GGR.
- Hit by record bad debt provision of $92.4m and FX loss of $41.2m
- Little visibility on bad debt charges although sequential improvement in performance on increased tourist arrivals could support

Perennial Real Estate

Perennial Real Estate (S$0.915) 1Q16 earnings shored up by revaluation gains
-1Q net profit $8.5m (+148%) - boosted by fair value gains of $7.5m
-1Q revenue $29.5m (+9%) - from stronger project mgmt business (+29%) and China operations (+19%). Singapore weakened (-5%).
-Outlook for Spore to remain stable but cautious on China
-Trading at 0.54x P/B

Fu Yu

Fu Yu: (S$0.194) Steep selloff on appalling results
- 1Q16 net profit crashed to $1m (-75.5%).
- Revenue slipped 10.4% on a significant decrease in orders.
- While net cash pile grew, management guided for a challenging outlook ahead.
- Fall in share price today resulted in a fair valuation.


Jumbo: (S$0.465) 1Q16 earnings finger licking good
- 2QFY16 net profit of $5.8m (+49.4%).
- Revenue jumped 18.5% on contributions from all three Shanghai outlets in China and increased sales at its Singapore restaurants.
- Maybank KE cited 2Q16 may be the start of a virtuous EPS upgrade cycle.
- House upped its TP from $0.58 to $0.62 and maintains its Buy rating.

SG Market (16 May 16)

SG Market: Sentiment may be spooked by poor corporate earnings, as well as disappointing Chinese economic data (loans, industrial production), which could raise doubts that the economy is stabilising.

Regional bourses are mainly positive in Tokyo (+0.8%), Seoul (-0.1%) and Sydney (+0.5%).

From a chart perspective, topside for STI remains at 2,805, with underlying support at 2,710.

Stocks to watch:
*Genting SP. Dismal 1Q16 net profit of $10.8m (-83%), crushed by a 9% fall in overall GGR, record bad debt provision and FX loss. Adjusted EBITDA fell 16% to $192.5m, but was a slight 6% improvement over 4Q15. VIP gaming business remains difficult but the mass market segment and non-gaming attractions started 2016 on an encouraging note. MKE maintains Hold with TP of $0.78.

*Golden Agri: 1Q16 core net profit of US$40.4m (+65.4%) represented 19% of FY16 street estimate. Revenue slipped to US$1.49b (-3.8%) from softer CPO prices, but EBITDA margin widened to 9.5% (+1.3ppt) on improved crushing margin. Headline net profit of US$94.1m (1Q15: US$3.2m loss) was bolstered by FX gains (US$51.9m), tax credit (US$14.5m) and JV contributions (US$3.5m). NAV/share at US$0.30.

*Q&M: 1Q16 net profit jumped 28% to $3.7m, meeting estimates, as revenue of $34.4m (+18.6%) was underpinned by existing and new dental outlets in Singapore, and contribution from dental clinics in China, partially offset by reduced dental equipment and supplies distribution sales (-5%) and Aidite (-16%) due to a shift in factory location. Gross margin expanded to 86.2% (+2.8ppt), benefitting from more profitable dental supplies manufacturing. MKE maintains Buy rating with TP of $0.88.

*Jumbo: 2QFY16 beat estimate; net profit leapt 49.4% to $5.8m (+49.4%), on higher revenue of $39.6m (+18.5%), thanks to contributions from all three Shanghai outlets in China and increased sales in Singapore restaurants on the back of more Chinese tourist arrivals. Gross margin slipped to 60.4% (-3.5ppt). MKE maintains Buy and raised TP of $0.62 (from $0.58).

*Thai Bev: 1Q16 net profit surged 30% to Bt8.6b, bolstered by lower finance costs (-35%) and increased associates' profit (+25%). Revenue jumped 21% to Bt55.2b on broad-based growth in beer (+71%), spirits (+5%), and non-alcoholic beverage (+13%) segments, while EBITDA margin widened to 19.3% (+0.5ppt) from reduced losses in non-alcoholic, a favourable product mix and lower packaging costs.

*China Everbright Water: 1Q16 net profit crept up 2% to HK$103.1m, boosted by a VAT refund of HK$29.3m. Revenue jumped 51% to HK$657.2m, on increased construction income from the expansion and upgrading of several BOT projects. Gross margin contracted to 36% (1Q15: 50%) due to the shift in business mix. NAV/share at HK$2.75.

*Midas: 1Q16 net profit of Rmb10m (-8.6%) made up just 9% of full year street estimate, as revenue slipped 5.3% to Rmb303.5m from lower sales in aluminimum alloy extruded products. Gross margin expanded to 31% (+2.2ppt) but associate contribution from NPRT plunged 72.2% to Rmb2.6m. Management remains buoyant on industry tailwinds.

*Halcyon Agri: 1Q16 swung into red with net loss of US$6.6m (1Q15: US1.2m profit), mainly dragged by FX loss of US$6.3m (1Q15: US$2.4m gain) from the strengthening SGD against USD. Revenue tumbled 12.1% to US$183.2m due to lower selling prices of natural rubber of US$1,220/tonne (-21.4%), partly offset by higher sales volume (+12%) on increased utilisation. Gross margin slipped to 6.6% (-0.2ppt). NAV/share at $0.287.

*Perennial Real Estate: 1Q16 net profit of $8.5m (+148%) was boosted by a fair value gain of $7.5m. Otherwise, earnings slumped 71.6% on a spike in admin expenses (+97%) due to a $1.9m write-off of intangible asset. Revenue grew 9% to $29.5m from increased project management fees and new contribution from Perennial Qingyang Mall in Chengdu. NAV/share at $1.688.

*Wheelock: 1Q16 net profit slipped 9.1% to $11.1m, in tandem with the 7.5% decline in revenue to $91.8m on the absence of dividend income and lower sales recognition from residential project, The Panorama and reduced rental income from Scotts Square Retail. Gross margin narrowed to 16.9% (-3.1ppt) on a shift in sales mix. NAV/share at $2.53.

*CWT: Entered exclusive negotiations with HNA Group on a potential transaction. Market watchers estimated that the deal could be valued at US$1b ($1.36b), which would imply a share price of $2.27.

*Oxley: Disclosed plans to enter the Australian market and is currently looking at Sydney’s Bays Precinct and the fish market site at Pyrmont as a potential redevelopment site. Identified Brookfield Multiplex as a potential local partner.

*Tat Hong: Updated that it is still in discussions on the potential buyout, since its initial announcement on 15 Mar.

*Civmec: 3QFY16 net profit slumped 53.9% to $4.8m, on lower revenue of $73m (-17%), as projects continued to wind down to completion and a 10% decline in the AUDSGD. Gross margin slid to 9.6% (-3.3ppt), while earnings was partially supported by a $2m JV contribution from the Sedgman Civmec (3Q15: nil). NAV/share at $0.329.

*Marco Polo Marine: Dismal 2QFY16; turned into net loss of $1.1m (2QFY15: $3.8m profit), as revenue crashed 60% to $11.9m, dragged by reduced fleet utilisation and charter rates amid weak demand for commodity shipments. Gross margin spiked to 34.4% (+11.5%) on a shift in sales mix. Guides for challenging conditions to persist. NAV/share at $0.518.

*Swiber: 1Q16 net loss deepened to US$2.6m (-2.4%) mainly on FX loss of US$2.8m, lower associate/JV contributions and higher taxes. Revenue improved to US$191.3m (+16%) from increased number of projects in South Asia, while gross margin expanded to 15.5% (+3.7ppt) on cost controls and reduced procurement and subcontract costs. NAV/share at US$1.056.

*Mermaid Maritime: 1Q16 results turned around to US$1.3m, lifted by cost cuts and a reversal of bonus accrued. Revenue slid 35% to US$39.6m due to fewer cable lay projects and zero contribution from drilling due to rigs cold stacking. NAV/share at US$0.23.

*Otto Marine: 1Q16 turned into net profit of US$0.1m (1Q15: US$13.3m loss), thanks to higher gross margin of 20.6% (1Q15: 1.3%) on a shift in sales mix. Revenue slumped to US$94.9m (-35.9%) from smaller sale of vessel and lower fabrication sales, partly offset by higher utilisation in chartering. NAV/share at US$0.9772.

*Vard: Signed LOI to design and construct two expedition cruise vessels for an international cruise company, with the intention to be entered into in 3Q16.

*Atlantic Navigation: Secured US$236m worth of charters for 10 vessels with a Middle Eastern National Oil Company for five years and a two year extension.

*Dukang Distillers: 3QFY16 results swung to net loss of Rmb2.7m (3QY15: Rmb1.8m profit), despite higher revenue of Rmb278.9m (+11%) from new products launch. Gross margin widened 4.6ppt to 33.6% on changes in product mix, but bottom line was eroded by intensified advertising and promotional activities to improve awareness of products. NAV/share at Rmb17.97.

*Sunpower: Granted a 30-year concession agreement with the Hebei Gaoyang authorities to build, operate, and transfer a centralised steam and electricity facility with low carbon emissions.

*Darco Water: Secured contracts worth $11.5m to treat complex wastewaters in China and Malaysia, expected to have a positive impact on FY16 financials.

*Profit warning:
- Tat Hong
- CSC Holdings

Friday, May 13, 2016

Bumitama Agri

Bumitama Agri: (S$0.785) 1Q16 profit enriched by FX gain; envisage flat production in 2Q
-1Q16 net profit of Rp229.4b (+26.4%) was bolstered by a huge FX swing and smaller associates' losses
-Stripping out FX gain, core profit was a weak Rp193b (-6%), only 15% of full year consensus estimate.
- Revenue climbed 11.6% to Rp1.49t on improved volumes of CPO (+30.4%) and palm kernel (+26%), offset by lower ASPs of CPO (-19.2%) and palm kernel (-3.5%).
-Gross margin contracted 7.1ppt to 27.7%.
-Currently trading at 10.7x consensus forward P/E.

First Res

First Res: 1Q16 results disappoint, marred by lower CPO ASPs and output
-1Q16 net profit of US$5.3m (-77.9%) was only 4% of full year street estimates.
- Revenue of US$113.1m (+17.5%) was boosted by improved volumes (CPO +3%, palm kernel +3.5%), offset by lower average selling prices (ASP).
-GPM fell 24.5ppt to 30.8% on weaker ASPs and increased purchases of third-party palm products
- Currently trading at 22x trailing P/E and 12.7x forward P/E. However, the latter is subject to the likelihood of broker downgrades post this set of disappointing results.


UOL: (S$5.62) 1Q16 earnings stung by thinner development margins
- 1Q16 net profit of $77.1m (+3.8%), meeting just 18% of FY16 street estimates
- Revenue surged 39% to $330.1m on property development contribution of $164.3m (+112%)
- Gross margin narrowed to 34.5% (-9.9ppt) on thinner development margins
- Management continues to guide for sluggish demand for new homes due to government cooling measures, an impending glut in both the office and retail space and competitive tourism market in Asia Pacific.
- currently trading at a discounted 0.56x P/B

Changes in constituents for the MSCI Global Small Cap Indexes - Singapore

Changes in constituents for the MSCI Global Small Cap Indexes - Singapore





Hyflux (S$0.585) 1Q16 headline earnings mask poor margins and negative cash flow
-1Q net profit $7.3m (+30%)
-1Q revenue $248.3m, up 4x
-gross margin -42ppt to 23.6%, direct cost up 7.7x
-Bottom line masked by several one-offs; Recovery of written-off receivables,reclassifying loss-making JV, and tax credit
-Trading at relatively hefty 12M-trailing P/E of 29.3x. China Everbight water (23.9x), SIIC (17.5x)

Ying Li

Ying Li: (S$0.136) Recurring income climbs to the fore 1Q16
- Turned around to net profit, as it remains on track to shift its business towards more stable rental income.
- Owing to the change, gross and pretax margin fattened.
- Trading at 11.5x trailing P/E and 0.33x P/B.


Olam: (S$1.61) 1Q16 earnings delivered by cocoa, wheat, cotton, and wood
- Headline 1Q16 net profit surged to $113.6m (+212.8% y/y) in absence of significant impairments booked in 1Q15
- Core net profit of $126.1m (-5.5%), achieved more than 30% of street FY16 estimates
- Revenue of $4.76b underpinned by a 10.5% increase in sales volume to 2.97m MT
- Overall EBITDA margin contracted to 7% (-0.9ppt)
- Currently valued at 10.7x forward P/E and 0.9x P/B

Sino Grandness

Sino Grandness (S$0.65) 1Q16 earnings largely boosted by financial engineering gains
- 1Q16 net profit surged 3.3x to Rmb360.2m, boosted by fair value gains and reduced interest expense arising from the restructuring of its convertible bonds.
- Stripping effects of financial engineering, underlying pretax profit would have shown a more subdued 7% growth to Rmb152.7m. This is on the back of a 24% growth in revenue, offset by 84.5% growth in distribution and selling expenses.


Noble: (S$0.345) 1Q16 missed amid distractions and depressed commodity dynamics
- Sorely missed street expectations as its 1Q16 net profit plummeted US$40.5m (-62%)
- Revenue of US$11.39b (-31.5%) was hit by declines across the board
- Bled cash during the quarter with operating cash outflow of US$392m
- Though it secured US$3b of credit lines, finance costs might escalate eating into its already razor thin margins
- Weak energy and metals market offers no graces to Noble
- Currently trades at 0.48x P/B vs Glencore's 0.65x


ComfortDelGro: (S$2.80) Worries on taxi and rail fester even as 1Q16 sees growth
- Net profit of $73.4m (+8.6%) on revenue of $995.6m (+3.3%), achieving 22% of full year consensus estimate.
- Led by bus (+3%), taxi (+3.7%), and rail (+27.5%)
- Moving forward, rail to improve although ridership of DTL below expectations, breakeven to be later than expected
- Bus to see weaker performance on gradual transition out of Bulim and Loyang
- Taxi to be maintained. MKE feels that hire out rate may eventually be hit as currently no queue for new taxi, disruption from new entrants
- MKE maintains Hold and TP of $2.80

ST Engineering

ST Engineering: (S$3.06) 1Q16 bolstered by new aerospace acquisition; fairly valued
- Net profit of $110.2m (-15%) trailed estimates.
- Revenue grew 8% largely from acquisition and higher value project milestone completions.
- Order book dipped slightly to $11.5b (end-FY15: $11.7b).
- Trading at 18.3x forward P/E against its historical 13-24x range and 3.3% dividend yield.

SG Market

SG Market: Market is likely to fall flat after several blue-chips missed earnings expectations.

Regional bourses opened mixed in Tokyo (+0.2%), Seoul (-0.4%) and Sydney (flat).

From a chart perspective, topside for STI remains at 2,805, with underlying support at 2,710.

Stocks to watch:
*SIA: 4QFY16 beat; net profit surged to $224.7m (4QFY15: $39.6m) as cheaper fuel costs (-28% to $924m) and strong performance at SilkAir and Scoot compensated for weaker yields (pax -7%, cargo -15.5%), as revenue declined 4.4% to $3.71b. The results brought FY16 earnings to $804.4m (+119%) but carrier continues to guide challenging outlook. Final DPS doubled to $0.35, taking full year payout to $0.45 (FY15: $0.22). NAV/share at $10.96.

*Noble: 1Q16 net profit of US$40.5m (-62%) fell behind full year forecast, as revenue slumped 32% to US$11.4b on a broad-based decline in tonnage (-13%), but operating margin improved to 2.19% from 1.07% in 4Q15. FV of commodity contracts dropped to US$2.6b from US$3.2b as at Dec '15. Operating cash flow turned negative with adjusted net debt of US$2.29b (Dec '15: US$2.26b). NAV/share at US$0.52.

*Noble: Successfully secured US$3b in funding through unsecured 364-day revolving loan facility (US$1b) and a revolving borrowing base facility (US$2b) for its US business.

*ComfortDelGro: 1Q16 net profit of $73.4m (+8.6%) fell short of expectations. Revenue rose 3.3% on better rail ridership but partially negated by negative currency translation. EBIT margin held steady at 11% (+0.3ppt) on lower fuel (-24.8%) and consumables (-24.8%), offset by increased staff (+7.9%), contract (+6.1%), and maintenance (+12.4%) costs.

*STE: 1Q16 net profit of $110.2m (-15%) missed estimates, dragged by fair value changes of FX hedges from the depreciating USD/SGD. While revenue grew 8% from higher sales in aerospace (+27%) and electronics (+28%), EBIT margin was compressed to 6% (-1.3ppt) by unfavourable product mix and poor performances in land systems and marine sectors. Order book remained healthy at $11.5b (end-FY15: $11.7b). NAV/share at $0.713.

*Olam: 1Q16 core net profit of $126.1m (-5.5% y/y) achieved 31% of full year estimates. Revenue of $4.76b (+10.2%) was led by food category (+13.2%) upon consolidation of acquisitions, elevated prices of cocoa and stronger sales volumes, pared by a slide in non-food (-8.9%). EBITDA margin contracted to 7% (-0.9ppt) on FV losses on its biological assets, while bottom line was weighed by steeper depreciation costs (+38.1%), partially mitigated by lower exceptional losses of $12.5m (1Q15: 97.2m). NAV/share at $1.787.

*UOL: 1Q16 results missed estimates as net profit grew 3.8% y/y to $77.1m on FX gains of $2m (1Q15: nil) as well as a surge in sales commissions to $2.8m (+311%). Revenue jumped to $330.1m (+39%) on greater contributions across the board in particular from its property development segment (+112% to $164.3m). Gross margin narrowed to 34.5% (-9.9ppt) on the change in revenue mix. Bottomline was crimped by a jump in marketing and distribution (+42%) expenses as well as lower contributions from its JVCos (-63%). NAV/share at $9.92.

*First Resources: 1Q16 net profit tanked 77.9% to US$5.3m, making up only 3.8% of full year estimates. Revenue (US$113.1m, +17.5%) was boosted by improved volumes, but decreased ASPs caused gross margin to tank 24.5ppt to 30.8%. Bottom line further dragged by a 168.3% surge in selling and distribution costs, mainly from the imposition of the palm oil export levy. NAV/share at US$0.49.

*Bumitama Agri: 1Q16 net profit of IDR229.4b (+26.4%) made 18.3% of full year consensus estimates, on an IDR80.7b swing to FX gain of IDR49.1b, and a 74.2% narrowing in share of associates’ losses. Revenue climbed 11.6% to IDR1.49t on improved volumes (CPO +30.4%, palm kernel +26%), but offset by lower ASPs (CPO -19.2%, palm kernel -3.5%). Consequently, gross margin fell 7.1ppt to 27.7%. NAV/share at IDR3,236.

*Sim Lian: 3QFY16 net profit plunged 82% y/y to $16.4m, as revenue crashed to $163.3m (-74%) due to absence of a property development completion, partially mitigated by an increase in percentage of work done for its construction segment. Consequently, EBIT fell in tandem (-79%), with lower margin of 13.4% (-3.1ppt). NAV/share at $1.14.

*Sino Grandness: 1Q16 net profit surged 3.3x y/y to Rmb360.2m, mainly from FV gains arising from the restructuring of its convertible bonds (Rmb91.6m). Revenue grew 24.3% to Rmb723.7m as it saw increased contributions from its canned products (overseas: +10.8%, domestic: +10.2%) and beverage (+29.5%) operations. Gross profit margin was stable at 41% (+0.2ppt). Bottomline was further supported by FX gains of Rmb14.8m (+23.9%) partially offset by increase in distribution and selling expenses (+84.5%). NAV/share at Rmb3.231.

*Ying Li: Turned around to a Rmb16.8m 1Q16 net profit (1Q15: Rmb0.5m loss) on absence of a Rmb3m admin charge. Revenue slid 8.9% y/y to Rmb91.3m on a slump in properties sales to Rmb36.7m (-25.3%) on lower value of residential units transacted. Gross margin fattened to 69.3% (+14.3ppt) on better margins from its San Ya Wen Phase 2 project. Net gearing remained elevated at 0.73x. NAV/share at Rmb1.96.

*Hyflux: 1Q16 beat; net profit grew 30% y/y to $7.3m, mainly attributed to a $2.3m tax credit. Revenue surged 4.1x to $248.3m on higher contributions from its TuasOne and Oman water project. Bottom line was eroded by higher raw materials and subcontractor costs (+671%), finance expenses (+37%) and the absence of a one-off disposal gain of $15.8m. NAV/share at $0.468.

*Aspial: 1Q16 net profit grew 33% to $3m on revenue of $125.6m (+25%) with higher contributions from its real estate (+48.9%), finance service (+30%), and jewellery (+3%) businesses. Despite this, it continued to incur operating losses of $3.4m. Bottom line was supported by FX gains of $2.9m (1Q15: $3.2m loss) as well as $1.7m in contributions from associates and JVs (1Q15: $0.3m loss) NAV/share at 17.24¢.

*Hotel Properties: 1Q16 net profit was steady at $14.3m (+0.3% y/y) even as revenue declined 9.6% to $143.7m which was due to lower contributions from Tomlinson Heights and its resorts in the Maldives. Gross margin contracted to 31% (-2.2ppt). Bottom line was held up by $3m (1Q15: $3.9m losses) in contributions from associates and JVs. NAV/share at $3.32.

*Spackman: 1Q16 net loss narrowed to US$1m from US$1.2m, from a US$2m gain from loss of film borne by external investors. Revenue soared 153% to US$3.9m from the production and distribution of MASTER. However, lackluster performance from CHASING and MUSUDAN resulted in gross loss. NAV/share at US$0.04.

*ISEC: 1Q16 net profit soared 108% to $1.6m, as gross margin expanded to 50.2% (+4.8ppt) on reduced costs post the clinic closure of ISEC Singapore. Revenue increased 7% to $6.4m, mainly boosted by Southern Specialist Eye Centre in Malaysia. NAV/share at $0.11.

*Kitchen Culture: Secured contract worth Rmb5.6m for the supply, delivery, and installation of wine refrigerators for an apartment project in Chengdu, China and is expected to be fulfilled by mid-2017. The order win boosts its order book to $45m.

*mm2 Entertainment: To partner the MDA to develop local Mandarin scriptwriters for Singapore’s film industry in an $8m three-year programme.

*Fragrance: 1Q16 net profit tanked 67.8% to $5.3m, while revenue plunged 74.1% to $22.7m, dragged by lower lesser number of ongoing development projects. Gross margin fell 2.3ppt 31.5%, mainly due to additional costs incurred for Urban Vista. Bottom line slump partially offset by $6m fair value gain on investment property. NAV/share at 15.5¢.

*BHG Retail REIT: 1Q16 DPU of 1.5¢ (+0.7% vs. IPO forecasts)was in line, while distributable income was $5.2m (+0.3%). Gross revenue ($19.7m, +0.6%) and NPI ($12.1m, +0.4%) buoyed five retail properties in China. Portfolio occupancy was 98.3% with portfolio WALE of 9.3 years. Aggregate leverage was 29.5% with average term to maturity of 3.1 years. NAV/unit at $0.8.

*KS Energy: To defer the delivery of a rig from COSCO Shipyard till 31 Dec ‘17 from 30 Apr ’16 previously.

Thursday, May 12, 2016

Pacific Radiance

Pacific Radiance (S$0.29) 1Q16 results yet to sail through the low oil tide
-1Q net loss US$6.8m (1Q15: YS$2.5m profit)
-1Q revenue US$18.4m (-42% y/y); offshore support services (-40% to US$17m), subsea (-61% to US$1m)
-bottom line further hit by higher finance costs
-Net gearing up to 1.05x from 0.86x in 4Q15 as Op. cash flow turned negative
-Mgmt expects outlook to remain tepid
-Trading at 19.3x FY16e P/E and 0.37x P/B
-Consensus: 3 Buy, 2 Hold, 3 Sell, mean TP $0.32

Silverlake Axis

Silverlake Axis: (S$0.545) 3QFY16 earnings dragged by consolidation of Symmetri overheads
- 3QFY16 net profit fell 20% y/y to RM61.5m
- Revenue rose 10%, buoyed by software project services (+87%) and software licensing (+32%), but clipped by lower maintenance and enhancement services (-6%) and product sales (-76%).
- Gross margin contracted to 57% (-11ppt) due to the consolidation of overheads from newly acquired SunGard Ambit
- Management focused on improving their market penetration through its recent acquisitions
- Third interim DPS shaved to 0.65¢ (3QFY15: 1.1¢), bringing 9M payout to 2¢ (9MFY15: 3¢).
- Trading at a forward P/E of 14.1x. Consensus 1 Buy and 2 Hold ratings with average TP of $0.66.

Nam Cheong

Nam Cheong (S$0.077) 1Q16 results barged under water by large order cancellation
-1Q net loss RM40.1m (1Q15: RM39.3m profit)
-1Q revenue negative RM93m (1Q15: positive RM326.3m)
-Top line wrecked by large AWB order cancellation and weaker vessel chartering business
-Bottom line further hit by adverse FX movement of RM36.9m
-Management not sanguine on outlook
-Trading at 0.38x P/B


Q&M: MKE expects 1Q16 core earnings to rise 21% y/y to $3.5m, in line with house’s full year street-high forecast of $17m, as four acquisitions were completed in Sep 2015 – Feb 2016. They have a profit guarantees of $3.1m a year.
The house believes a healthy 1Q16 and more acquisitions could trigger a re-rating of the stock.
MKE has a Buy call and $0.88 TP, and recommends a switch from Raffles Medical to Q&M.


YuuZoo: Auditor not able to obtain sufficient evidence in relation to its franchise business.
- Auditor don't intend to stand for re-election in the upcoming AGM.
- Counter will resume trading at 12pm.

City Dev

City Dev: (S$7.96) 1Q16 dragged by resi and hotels; share price dip buying opportunity
-1Q16 net profit fell 14.4% to $105.3m, revenue (-11.2%) weighed by resi and hotel
- Property revenue (-25%) and pre-tax profit (-22%) came off from absence of contribution form The Palatte, H20 Residences, and at JV level, The Rainforest EC.
- Hotel revenue (-4.4%) on lower occupancies and RevPar (-2.6%), on NY, London, Singapore weakness.
- Looking ahead, eye support from high-end Gramercy Park, and overseas contributions
- MKE recommends to Buy the recent correction.
- CDL is currently trading at 0.8x P/B and 0.67x P/RAV, based on MKE’s estimate.

Latest broker ratings:
Credit Suisse maintains Outperform, reduces TP to $11.70 from $12.00
Daiwa maintains Buy with TP of $11.17
Macquarie maintains Buy with TP of $11.00
UOB KayHian maintains Buy with TP of $10.86
CIMB maintains Add with TP of $10.32
Morgan Stanley maintains Overweight with TP of $10.00
JPMorgan maintains Overweight with TP of $9.90
OCBC mantains Buy with TP of $9.89
Maybank KE maintains Buy, reduces TP to $9.82 from $9.84
RHB maintains Buy with TP of $9.22

Best World

Best World: (S$0.88) Blowout 1Q16 results; signal of an explosive 2016?
- Yet another set of impressive results in 1Q16, despite being traditionally the weakest quarter.
- Net profit spiked to $6m from a low base of $0.2m a year ago.
- Revenue 161% on continued growth momentum in Taiwan (+353%), Indonesia (+200%), and China (+242%).
- Final approval for its direct-selling licence in China remains on track.
- Fair value for Best World can range from $0.99 to $1.15 (12-14x).
- Remains a key constituent in the Market Insight Growth portfolio.


Singtel: FY16 results within expectations
- Net profit improved 0.8% y/y while revenue eased 1.5% to $16.9b
- EBITDA margin improved, as well as regional mobile associates' contribution
- Final dividend of $0.107/share, bringing the total payout to S$0.175 for FY16.
- OCBC keeps BUY but place its TP of $3.96 under review.


OUE: Results below expectations.
- 1Q16 PATMI declined 89.3% y/y to $8.3m, mainly due to fair value losses and absence of divestment gain.
- Revenue improved 13.4% on higher investment contributions and hospitality operations.
- OCBC places TP of $2.69 under review but maintain its BUY rating.

SG Market (12 May 16)

SG Market: Cautious trading sentiment is likely to impact the Singapore market as investors weigh between global growth worries, poor 1Q earnings and the recent rebound in crude oil.

Regional bourses opened red in Tokyo (-1.2%), Seoul (-0.5%) and Sydney (-0.6%).

From a chart perspective, a breach of the immediate support at 2,710 could take the STI to the next level at 2,680. Topside resistance remains at 2,805.

Stocks to watch:
*Singtel: 4QFY16 results within expectations with headline net profit of $946m (+0.8% y/y). Revenue fell 5.6% to $4.1b due to a reduction of mobile termination rates in Australia and lower equipment sales in Singapore, but performance was pared by improved EBITDA margin of 30.8% (+1.4ppt), and higher contribution from regional mobile associates of $699m (+12.3%). Final DPS maintained at 10.7¢, bringing FY16 payout to 17.5¢ (flat). NAV/share at $1.57.

*City Dev: 1Q results missed after net profit slipped 14.4% y/y to $105.3m, as revenue of $723.3m (-11.2%) was weighed by fewer project milestones, absence of projects that were completed in 2015 and weaker hotel operations amid stiffer competition. Operating margin widened 1.9ppt to 19.7ppt helped by investment gains, but bottom line was hurt by a plunge in JV contributions (-83%). Guides challenging conditions to persist but overseas projects to contribute in 2H16. NAV/share at $9.85.

*Yanlord: 1Q results trailed estimates despite a 17-fold jump in net profit to Rmb260.1m, mainly boosted by higher interest income of Rmb47.7m (1Q15: Rmb25.2m) and FX gain of Rmb119.8m (1Q15: Rmb96.8m loss). Revenue leapt to Rmb2.85b (+182%), on a substantial growth in GFA delivered and increased ASP due to sales of higher-end projects. However, gross margin shrank to 28.6% (-14.1ppt) on lower resettlement service fee income. NAV/share at Rmb10.52.

*Super: 1Q16 net profit tumbled to $11.6m (-15% y/y), missing estimates, on a $2.1m FX swing to $0.7m loss and wider fair value loss of $0.7m (1Q15: $0.2m). Revenue dipped 2% to $119.4m on weaker sales in branded consumer (-2%) and food ingredient (-3%) segments, caused by lower A&P spending and market slowdown in Thailand, Myanmar and Malaysia.

*United Engineers: 1Q16 net profit slumped 72% y/y to $6.9m on a $2.4m FX swing to $1.2m loss and absence of $3m in disposal gains. Revenue fell 35% to $333.6m on reduced contributions from its property development (-75%) and manufacturing (-28%) arms, partially mitigated by growth in its engineering (+34%) business. Gross margin improved to 17.5% (+0.9 ppt), with bottom line supported by $2.3m (1Q15: -$0.6m) profit turnaround in associates and JVs. NAV/share at $2.94.

*Silverlake: 3QFY16 net profit fell 20% y/y to RM61.5m, while revenue dropped 10% to RM157m on lower maintenance and enhancement services (-6%) and sale of software and hardware products (-76%). Bottom line further eroded by gross margin contraction to 57% (-11ppt), consolidation of costs for recent acquisition Symmetri, as well as FX losses (Rm2.9m). Third interim DPS of 0.65¢ (3QFY15: 1.1¢). NAV/share at RM0.215.

*Haw Par: 1Q16 net profit jumped 26.8% y/y to $17.1m mainly due to disposal gains of $2.9m and FX gains of $1.8m (1Q15: $0.1m loss). Revenue climbed 14.9% to $52.3m on rise in healthcare (+17.8%) and property (+4.9%) segments but partially offset by leisure (-9.6%) segment. Bottom line was shored up investment (+103%) and interest (+92.2%) income as well as lower finance expenses (-26%). NAV/share at $11.17.

*Best World: Blowout 1Q16 despite being traditionally the weakest quarter. Net profit spiked from a low base of $0.2m to $6m boosted by operational leverage. Revenue accelerated 161% to $35.2m, led by continued growth momentum from key direct selling markets Taiwan (+353%) and Indonesia (+200%) due to increased product acceptance, as well as higher export and manufacturing/wholesale orders from China (+242%). Net cash/share slipped marginally to 21.2¢ (4Q15: 21.5¢), mainly on inventory build-up in anticipation of increased orders.

*Ezion: 1Q16 in line as net profit sank 62.2% y/y to US$15.5m, as revenue dipped to US$82.1m (-8.9%) on absence of contribution from projects in Queensland and a reduced fleet as some service rigs underwent servicing, while gross margin eroded to 25.2% (-20.9ppt). NAV/share at US$0.796.

*Pacific Radiance: 1Q16 results trailed estimates on a net loss of US$6.8m (1Q15: US$2.5m profit), with revenue plunging 42% y/y to US$18.4m, as the slump in oil prices hurt its subsea (-61%) and offshort support (-40%) businesses. Bottom line was further hit by a jump in finance costs due to higher borrowings. NAV/share at US$0.575.

*Vard: 1Q16 turned in net profit of NOK37m (1Q15: NOK92m loss), lifted by net FX gain NOK68m (1Q15: 207m loss). Revenue slumped 34% y/y to NOK2b on reduced shipbuilding activity, while EBITDA margin before restructuring cost increased to 2.8% (1Q15: 2.1%), although group recorded an operating loss after workforce reduction costs of NOK5m. Order book contracted to NOK8.58b (end-4Q15: NOK10.23b). NAV/share at $0.52.

*Vard: Secured contract to design and construct 15 module carrier vessels for Topaz Energy and Marine, worth ~US$300m. Delivery scheduled between 3Q17 and 2Q18.

*Nam Cheong: 1Q16 results missed; Slipped into net loss of RM40.1m (1Q15: RM39.3m profit), after revenue swung to negative RM93m (1Q15: RM326.3m positive), due to sales reversal stemming from the cancellation of an accommodation work barge, reduced deliveries and weak chartering business. NAV/share at 59.4 sen.

*Ezra: Subsidiaries EMAS Offshore and EMAS Energy secured new contracts worth an aggregate US$40m (including options) in 3QFY16.

*SBS Transit: 1Q16 net profit leapt 69.5% y/y to $8.1m on substantially lower fuel and electricity costs. Revenue increased 6.6% to $263.5m with stronger contributions from both rail (+27.4%) and bus (+1.2%). Operating margin fattened to 4.2% (+1.4 ppt). NAV/share at $1.13.

*Hock Lian Seng: 1Q16 net profit plummeted 86.5% y/y to $2.5m, as revenue of $25.6m (-33.2%) was eroded by absence of contributions from its property development segment, partially mitigated by growth in its civil engineering (+41.6%) segment. Gross margin shrank 17.8ppt to 6.1%, dragged by lower margins in civil engineering segment. Bottomline was supported by contributions from JV (+66.4%) project, Skywoods. NAV/share at $0.44.

*Cityneon: To issue 40m new shares at $0.55/share to PE fund China Media Capital, backed by investors including Tencent and Alibaba. Part of the new shares was also allotted to other institutional and financial investors, in line with efforts to increase its investor base, and liquidity.

*Cordlife: Swung to 3QFY16 net lossof $2.0m (3QFY15 net profit: $18.1m), largely due to both the absence of $11.3m of fair value gains and $4.6m FX gain booked last year. Gross margin contraction (65.3%, -3.3ppt) due to the consolidation of Stemlife negated a 4.7% increase in revenue to $14.9m from increased client deliveries. NAV/share at 49.75¢.

Wednesday, May 11, 2016


Gold: Billionaire hedge fund manager Paul Singer says rally just beginning

Investors can get exposure to gold through ETFs or miners, such as:
- iShare Gold Trust (IAU)
- Direxion Daily Gold Miners Indext Bull 3X Shares (NUGT)
- Market Vectors Gold Miners ETF (GDX)
- Newmont Mining (MEM)

- Gld US$
- CNMC Goldmine
- Wilton Resources
- Anchor Resources


UMS: (S$0.585) Weak 1Q16 results; eye potential pickup in 2H16
-1Q16 net profit of $3.4m (-55%) was dragged by weaker revenues (-26%) and FX losses
- For UMS, 2Q is expected to be subdued. However, SEMI World Fab Forecast expects front-end fab equipment spending to accelerate into 2H16, which may portend well for UMS.
-Trading at 9.9x forward P.E, 8.6% indicative yield. Sits on Market Insight Yield portfolio
- Latest broker ratings:
CIMB downgrades to Hold from Add with TP of $0.63


Wilmar: CLSA maintains Conviction Buy and TP of $4.34
- Saw strong 1Q16 EBIT growth of 14% y/y driven by good sugar trading and consumer pack contributions
- Core net profit fell on lower associate profits and higher depreciation due to IAS41
- Record margins on low feedstock costs while sugar trading profitted from the rally in sugar prices
- gearing has declined on improved earnings and reduced capex needs
- Outlook looks positive

SG Market (11 May 16)

SG Market: Stocks are poised for a technical bounce from oversold levels and track higher oil prices but upside may be capped by underwhelming corporate results.

Regional bourses opened generally positive in Tokyo (+1.3%), Seoul (-0.1%) and Sydney (+1.3%).

From a chart perspective, topside for STI capped at 2,805 with support at 2,710.

Stocks to watch:
*SingPost: 4QFY16 results missed as underlying net profit tumbled 20% y/y to $31.8m, although revenue jumped 28% to $105.4m (+196% y/y), boosted mainly by e-commerce logistics volume and recently acquired subsidiaries, TradeGlobal and Jagged Peak. Operating margin contracted to 10% (-6ppt) as its e-commerce investments swung into losses. Bottom line was shored by one-off divestment gain of $78.5m. Notably, balance sheet weakened significantly into a net debt position from net cash of $345.8m as at Mar '15. Maintained DPS of 2.5¢, taking FY16 payout to 7¢.

*Wilmar: 1Q16 came below expectations on core net profit of US$222.4m (-12.5%), as revenue slipped 4.3% to $9b from lower CPO price and reduced soy crush margins, partially mitigated by stronger sales volumes across all segments. EBITDA margin improved to 6.2% (+1.2ppt). NAV/share at $2.332.

*SIA Engineering: In line 4QFY16; net profit remained flat at $41.4m, as a drag in associate contributions (-36.4%) were pared by higher revenue of $294.2m (+6.6%) from improved line maintenance and fleet management businesses, as well as wider operating margin of 9.3% (+0.9ppt) due to cost control efforts. Final DPS lowered to 8¢; FY16 DPS of 14¢ (FY15: 14.5¢).

*F&N: 2QFY16 core net profit grew 32.1% y/y to $11.6m, boosted by wider operating margin of 5.8% (+0.8ppt) arising from cheaper commodity prices and operational efficiencies. However, revenue slipped 4.9% to $474.3m on reduced contributions from dairies (-5.4%) due to the weaker RM and lower sales volume, and lacklustre print and publishing business from slow demand in China. Interim dividend shaved to 1.5¢ (2QFY15: 2¢).

*OUE Commercial REIT: 1Q16 met estimates; DPU of 1.32¢ (+33%) was partially dragged by a spike in financing costs (+194%) due to new acquisition and increased interest rates. Revenue and NPI soared to $42.9m (+110%) and $33.3m (+112%), respectively, thanks to newly acquired One Raffles Place and improved operating performance at OUE Bayfront. Portfolio occupancy inched up 0.5ppt q/q to 94.8%, with WALE of 2.8 years. Aggregate leverage crept up 0.4ppt q/q to 40.5%, with average debt cost of 3.56% (+0.11ppt), debt tenor of 2.04 years. NAV/unit at $0.91.

*UMS: 1Q16 net profit tumbled 55% y/y to $3.4m, dragged by FX loss of $1.9m (1Q15: $0.8m gain) stemming from a softer USD. Revenue tumbled to $20.4m (-26%), as the semiconductor business deteriorated against a weak global economic backdrop. Maintained interim DPS of 1¢. NAV/share at $0.4641.

*Straco: 1Q net profit slipped 4% y/y to $8.3m, although revenue edged up 5% to $26.4m in tandem with better visitation (+5.1%). Top line was held up by higher contribution from the Flyer, Shanghai Ocean Aquarium (SOA) and Lixing Cable Car, which outweighed a drag from Underwater World Xiamen. Operating margin shrank 3.3ppt to 47.8% on higher marketing costs, and staff expenses for workers at newly opened restaurant at the flyer. Bottom line was further weighed by a sales tax on SOA ticket revenue, effective Apr ’15, but is subjected to a potential waiver later this year. NAV/share at $0.2624.

*Emas Offshore: Awarded charter contracts worth US$32m, including options, since the start of 3QFY16 from National Oil companies, International Oil companies and other offshore contractors on drilling operations and cargo supply runs for offshore projects.

*Fragrance Group: Acquiring a freehold 3,009sqm property at 2-6 Collins Street, Hobart, Tasmania, Australia, for A$5.5m, to be funded via internal funds. The group is still considering its development options, which include office, retail, hotel and residential uses.

*Tiong Seng: 1Q15 net profit climbed 17% to $3.7m, while revenue surged 142% to $247.2m from a boost from construction contracts and development sales. Bottom line was dragged by gross margin contraction for construction segment (2.4%,-10.8ppt) due to project mix, and a $2.2m FX loss. NAV/share at $0.5549.

*Talkmed: 1Q16 net profit of $8.6m (-15.8%) was dragged by increased staff costs (+22.5%), and share of associates’ loss ($0.7m) while revenue was flat at $16m. NAV/share at 9.88¢

*Profit warning:
- Longcheer
- Dyna-Mac
- Ziwo
- Abterra