SG Market (05 Aug 16)

SG Market: Investors likely to sit tight ahead of the US jobs report this evening but Genting S'pore and Sing Post are likely to face selling pressure following their dismal 2Q results.

Regional bourses opened higher in Tokyo (+0.5%), Seoul (+0.4%) and Sydney (+0.4%).

From a chart perspective, resistance for the STI remains at 2,900 with downside support at 2,810.

Stocks to watch:
*Genting SP: 2Q16 results widely missed the mark even as net loss narrowed to $10.5m from $16.9m a year ago but was down from 1Q16 profit of $10.8m. Revenue shrank to $480.9m (-17% y/y, -21% q/q) as gaming business slumped to $331.9m (-23% y/y, -26% q/q) on weak VIP and mass market volumes. Despite booking a smaller bad debt provision of $53.6m (-5% y/y, -42% q/q), adjusted EBITDA sank to $116.1m (-61% y/y, -40%) due to the low win rate. Even a 87% drop in FX loss to $11.3m and 45% jump in interest income was unable to stop the red ink at the bottom line. No interim DPS declared (1H15: 1.5¢). MKE downgraded to Sell from Hold and cut its TP to $0.71 from $0.78.

*SingPost: 1QFY17 results fell short of estimates as core net profit declined 11% to $35.8m despite a 31% revenue jump to $333.4m, buoyed by recent acquisitions. But bottom line was hit by loss of rental income from redevelopment of SPC mall, higher depreciation charges for its regional e-commerce logistics hub, higher marketing expenses for its US e-commerce investments. Interim DPS maintained at 1.5¢, but dividend policy remains under review. MKE maintains Sell with street low TP of $1.29.

*Yangzijiang: 2Q16 results were below expectations as net profit crashed 60% to Rmb415.4m on a double whammy of 1) tumbling sales of Rmb2.99b (-48%) from fewer vessel deliveries and reduced trading volume, as well as soaring expenses (+54.7%) arising from FX loss on USD borrowings on the weaker CNY. Shipbuilding outlook remains weak with orders still facing termination risks. NAV/share at Rmb5.70.

*UOL: 2Q16 results trailed estimates; net profit fell 55% y/y to $68.8m, on a fair value loss of $28.7m (2Q15: $57.9m gain) to its investment properties. Revenue grew 6% to $363.6m on stronger contributions in property development (+14%) and hotel operations (+3%), although pared by a decline in dividend income (-23%). Bottom line was further crimped by $10.8m in costs associated with its acquisition of a London property (110 High Holborn). NAV/share at $9.80.

*Bumitama Agri: 2Q16 net profit of Rp107.6b (-39% y/y) missed, as revenue fell 12.9% to Rp1.38t on lower volumes for CPO (-23.6%) and palm kernel (-20%), although partially mitigated by higher ASPs (CPO +3.4%, palm kernel +35.7%). Gross margin shrunk 4.4ppt to 17.7%. MKE last had a Hold with TP of SGD0.80.

*Perennial Real Estate: 2Q16 net profit crashed 93.2% y/y to $0.6m, as revenue slumped 38.7% to $24.1m due to the absence of one-off acquisition fee and lower rental revenue from TripleOne Somerset. EBIT margin expanded to 77.2% (+13.3ppt) on higher investment income, while bottom line was shaved by increased share to NCI of $1.8m (2Q15: -$0.3m). NAV/share at $1.573.

*F&N: 3QFY16 net profit dipped 3.5% to $38.6m following the divestment of Myanmar Brewery in Aug '15. Otherwise, earnings solely from continuing operations surged 58%, despite lower revenue of $524m (-4.1%) from weak beverages (-8.6%) and printing (-11.2%) operations. Gross margin widened 5.6ppt to 38.2% on a shift in mix, while bottom line was partially lifted by higher investment income (+17%) and net finance income. NAV/share at $1.78.

*Best World: Seventh consecutive quarter of phenomenal earnings growth; 2Q16 net profit spiked 3.5x to $7.4m (2Q15: $2.1m), bringing 1H16 earnings to $13.3m, just under the group's all-time record earnings of $13.7m in FY07. Revenue of $51.6m (+145%) was boosted by continued traction on its product take up in key direct selling markets Taiwan (+242%) and Indonesia (+75%), as well as higher export and manufacturing/wholesale orders from China (+120%). Operating margin expanded to 21.5% (2Q15: 11.9%; 1Q16: 21.6%). Interim DPS raised to 2¢ (1H15: 0.5¢) and proposed a 1-for-4 bonus issue.

*Ascendas Hospitality Trust: 1QFY17 results met expectations; DPU inched up 0.8% to 1.29¢, although revenue edged lower to $52.3m (-0.8%) on loss of contribution following the sale of Pullman Cairns Int'l in Jun'15, and adverse FX movements. NPI climbed 5.5% to $22.6m on reduced property expenses (-5.1%) and stronger JPY. Aggregate leverage crept up to 33.2% (+0.5ppt q/q), with average debt cost of 3.4% and tenor of 2.3 years. NAV/unit at $0.85.

*Lippo Malls Indonesia Retail Trust: 2Q16 DPU rose 16.3% to 0.85¢, thanks to increased revenue ($46.8m, +10.8%) and NPI ($43.1, +10.4%), due to the acquisition of Lippo Plaza Batu and Palembang Icon. Occupancy inched up 0.1ppt q/q to 94.8%, with WALE of 4.67 years. Aggregate leverage was steady at 35.7%. NAV/unit at $0.38.

*Hyflux: 2Q16 results beat estimates even as net profit dived 90% y/y to $2.6m due to the surge in raw materials and subcontractor costs (+697% to $186.8m). Revenue leapt 2.7x to $260m on higher contributions from its TuasOne and Oman water projects, while bottom line was pared by higher finance (+32%) and depreciation (+160%) costs. Interim DPS trimmed to 0.2¢ (1H15: 0.7¢). NAV/share at $0.443.

*Hi-P: Turned around to a 2Q16 net profit of $7.6m (2Q15: $8m loss) due largely to a $10.5m disposal gain. Revenue slid 9.3% to $285.4m on the shift in project schedules to 3Q16. However, gross margin expanded to 7.3% (+3.2 ppt) on better cost controls. NAV/share at $0.6297.

*Gallant Venture: 2Q16 net loss narrowed to $28.6m (2Q15: $31.1m) on a softer revenue of $425.9m, as it recorded lower sales for passenger vehicles, heavy duty trucks and equipment, as well lower lease rates at its industrial park. (-13%). Bottom line was hurt by lower sales incentives from car manufacturers, but more than offset by lower finance costs (-18%) and taxes (-83%). NAV/share at $0.3389.

*Rotary Engineering: 2Q16 net profit tumbled to $2m (-45%), partly due to maintenance costs of a vessel. Revenue declined 23% to $51.8m amid completion on major projects. Net cash was $77.2m or 13.6¢/share, representing 34% of last closing price. NAV/share at $0.491.

*QT Vascular: Turned in 2Q16 net profit of US$15.2m (2Q15: -US$6.4m) due to a reversal of US$24.1m legal liability provision. Stripping this out, net loss would deepen to US$8.9m, as finance cost spiked more than 5x and revenue fell to US$2.4m (-28%) amid lower sales for its Chocolate PTA Balloon Catheter. NAV/share at US$0.003.

*Secura: 2Q16 net profit plummeted to $0.1m (-78%), as distribution (+13x) and admin (+90%) expenses surged faster than revenue of $8.7m (+73.2%). Top line growth was mainly from the acquisition of 100% interest in cheque printing business, Secura Singapore, amid a restructuring during its IPO in Jan. NAV/share at $0.1117.