SG Market (12 Aug 16)

SG Market: Positive sentiment is expected to spill over to the Singapore market as crude prices surged following bullish remarks by a Saudi oil minister and IEA on a rebalancing of the oil market.

Regional bourses are up in Tokyo (+0.5%), Seoul (+0.5%), and Sydney (+0.6%).

STI faces immediate resistance at 2,900, with downside support at 2,830.

Stocks to watch:
*GLP: 1QFY17 core net profit (ex. revaluation) slumped 31.8% to US$38.6m, making up 15% of FY17 street estimate. Revenue rose 8.6% to US$206.6m on completion and stabilisation of development projects in China with increasing rents, higher management fee income from the inclusion of GLP US Income Partners II, and growth in development activities in Japan but EBIT fell 14% due to lower fair value gains. Met 20% of development starts. NAV/share at US$1.94.

*Olam: 2Q16 results above estimates as core net profit rose 19.2% to $114.8m, on revenue of $4.98b (+3.5%), buoyed by new acquisitions in the food category (+2.9%) and higher cotton volumes from its non-food segment(+7.2%). EBITDA margin expanded to 6.3% (+0.3ppt), while bottom line was lifted by lower finance costs (-9.3%) due to debt optimisation initiatives. NAV/share at $1.65.

*Noble: Swung to 2Q16 net loss of USD54.9m, as revenue tanked 32% on lower tonnage (-17.3%). Operating margin contracted 0.4ppt to 1.4%, while bottom line was weighed by a fall in fair value gains of commodity contracts. Operating cash flow remained negative, with a higher adjusted net debt of US$2.58b (1Q16: US$2.29b; FY15: US$2.26b), while liquidity headroom halved to US$0.8b from US$1.9b in 1Q16 on the reduced credit facility. NAV/share at US$0.52.

*Wilmar: 2Q16 core net loss of USD220.3m was flagged earlier as EBITDA margin collapsed to 0.4% (-4.3ppt) due to untimely purchases of soybeans, as well as delayed sugar harvests plus hedging losses. Revenue inched up to US$9.4b (+0.9%) on better trading volume. Interim DPS of 2.5¢ maintained. NAV/share at US$2.225.

*Golden Agri: 2Q16 in line; net profit rose 278.6% to US$39.5m, lifted mainly by tax credits due to an asset revaluation. Revenue slipped to US$1.74b (-4.9%) mainly on lower production yield, while EBITDA margin contracted to 4.9% (-3ppt) dragged by compressed refining margin and increased purchase cost of soy beans. NAV/share at US$0.30.

*ThaiBev: 2Q16 net profit slipped 1% y/y to Bt5.81b, dragged by a 66.4% slump in contribution from associate (F&N/FCL). Revenue grew 17% to Bt45.45b on stronger sales in all segment- spirits (+0.7%), beer (+69.4%), non-alcoholic beverages (+3.3%) and food (+4.8%). However, EBITDA margin contracted to 18.5% (-3 ppt) on weaker contributions from both its F&N/FCL associate (-58.1%) and increased raw material costs in the non-alcoholic beverage (-73.7%) segment. Interim DPS raised to Bt0.2 (1H15: Bt0.15).

*Super Group: 2Q16 net profit of $9.8m (-6.6% y/y) missed estimates, on lower revenue of $115m (-8.4%) due to weaker contributions from branded consumer (-6.3%) and food ingredient (-12.1%) segments. Bottom line was further dragged by increased operating expenses (+7.3%), which resulted in lower EBIT margin of 10.2% (-2.1 ppt). Interim DPS of 1¢ maintained. NAV/share at $0.455.

*Yanlord: 2Q16 missed despite higher net profit of Rmb323.8m (+89%), as revenue more than tripled to Rmb7.4b (2Q15: Rmb2.3) on increased GFA delivered to customers and sale of higher-priced properties. Bottom line was pared by lower gross margin of 20% (-15ppt) and JV losses amid absence of land sales. NAV/share at Rmb10.56.

*Riverstone: 2Q16 net profit of RM27.3m (+1.2%) missed. Increased revenue of RM156.7m (+21.5%) was negated by lower gross margin of 24.4% (-5,7ppt), due to raw material and FX fluctuations, gas and wage hikes in Malaysia and a more competitive environment. Interim DPS lowered to 1.3sen (1H15: 2.4sen). NAV/share at RM0.6643.

*Wheelock Properties: 2Q16 net profit increased 3.4% to $13.2m, boosted by a jump in associate contribution of $11m (2Q15: $1m), thanks to higher profit from d’Leedon condominium at Farrer Road. Revenue fell 20.8% to $129.7m mainly on reduced contribution from Tomlinson Heights condominium and softer takings at Maldives resorts. NAV/share at $3.25

*Q&M: 2Q16 core net profit of $3.7m, (+95.7%) at the lower range of estimates. Revenue jumped 25.6% to $38.3m on contribution from acquisitions of dental clinics in Singapore and China. Interim DPS of 0.42¢ maintained.

*Sino Grandness: 2Q16 net profit jumped 25% to Rmb157.7m on firmer revenue of Rmb1.13b (+22.1%), led by increased sales from canned products (+28%) and beverage (+27%) segment in China. Gross margin stable at 41.8% (-0.1ppt). NAV/share at Rmb3.469.

*Cityneon: 1H16 results beat expectations as it marked its return to black with net profit of $4.7m (1H15: $0.7m loss). Revenue rose to $46.3m (+13.8%) on maiden contribution from recently-acquired Victory Hill Exhibitions, which helped expand gross margin to 38.8% (+15.3 ppt). NAV/share at $0.26.

*ISEC: 2Q16 net profit surged 47% y/y to $1.7m, while revenue increased 11% to $8.2m, boosted by new acquisition Southern Specialist Eye Centre which offset the cessation of a clinic at Mount Elizabeth Novena Specialist Centre. Gross margin expanded to 47.5% (+0.8%). Interim DPS of 0.22¢ maintained. NAV/share at $0.11.

*Singapore O&G: 1H16 net profit surged 90.7% y/y to $5.2m on revenue of $13.9m (+80.5%), led by contribution from its new dermatology segment ($4.3m), on top of increased patient loads for its O&G and oncology segments. Operating margin widened to 44.4% (+2.4ppt) as expenses expanded at a slower pace than topline growth. Declared higher interim DPS of 1.53¢ (1H15: 0.88¢). NAV/share at $0.175.

*Yongnam: 2Q16 net profit dived 91.8% to $0.2m, even though revenue leapt 19.2% to $84.3m, with stronger contribution from both structural steelworks (+21.4%) and mechanical engineering (+13.8x) businesses. Gross margin shrank 1ppt to 8.7%, and bottom line was further hit by a spike in admin expenses (+56%). NAV/share at $0.9419.

*Courts Asia: 1QFY17 net profit surged 55.8% y/y to $9.4m, although revenue fell 0.9% to $196.3m, as lower Malaysia contributions were offset by Indonesia growth. Bottom line shored by gross margin expansion (36.1%, +1.6ppt), higher rental and interest income, and lower expenses. NAV/share at $0.568

*SBS Transit/SMRT: Entered into public bus services contracts with LTA for the operation of public bus services under the Bus Contracting Model. SBS will be paid fees totalling ~$5.32b by LTA for eight bus packages which average seven years.