SG Market (09 Jun 16)

SG Market: The market could see continued interest in O&M counters as crude broke clear of the US$51 mark.

Regional bourses opened mixed, with Tokyo (-0.4%) weaker, but firmer in Seoul (+0.2%) and Sydney (+0.2%).

From a chart perspective, stochastics suggest the STI is entering overbought territory. Immediate resistance for the benchmark index is seen at 2,890 with bottomside support at 2,830.

Stocks to watch:
*Otto Marine: Exit offer by executive chairman and controlling shareholder Datuk Yaw Chee Saw (61.2% stake) at $0.32/share, 39% above last traded price of $0.23. The deal values loss-making Otto at 0.24x P/B.

*Starhill Global: Renewed the master lease with Toshin in Ngee Ann City for three years at 5.5% higher base rent, effective 8 Jun. The lease contributed ~20% to the REIT's gross rent.

*Olam: Expands peanut shelling presence in US with acquisition of Brooks Peanut Company for US$85m. The deal is expected to be earnings accretive in 2016 and meet the targeted EBITDA on invested capital range of 13-16% from 2017.

*Japfa: Partial divestment of Indonesian subsidiary PT Japfa Tbk to PE firm KKR, which is taking a 10.44% stake for US$81.2m. Post deal, Japfa will hold 51% interest, and record a divestment gain of US$21.2m, or 1.25¢ per share.

*Ascendas REIT: Proposed divestment of Jiashan Logistics Centre in Shanghai, China, for Rmb125m ($26m) or 1.3x P/B. This will reduce its aggregate leverage to 37% (-0.2ppt).

*China Everbright Water: Setting up a 51:49 JV with Jiangsu Xinyi municipal government to undertake PPP wastewater projects. Total investment is ~Rmb300m, with designed wastewater treatment capacity of 90,000 m3/day.

*Tuan Sing: Entered into a 90/10 JV with controlling shareholder Michelle Liem Mei Fung for $39.3m to develop an 85-ha land at Marina City Batam, Indonesia, into a mixed development. Initial phase will comprise a 400-room resort hotel, 30,000 sqm retail zone, and close to 2,000 residential apartments, while future phases may include educational, medical tourism and new entertainment facilities. Project expected to be launched between end 2017 and early 2018.

*Trek 2000: Appointed forensic accounting firm, RSM Corporate Advisory, to review past interested party transactions.

*Tianjin Zhongxin: Following review of a product recall in Hong Kong, authorities have reinstated the good manufacturing practices certification for its Long Shun Rong pharmaceutical factory. Production has re-commenced since.

*Hi-P: Deputy Announced resignation of deputy CEO Tay Ewee Liang, aged 59.