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.