Friday, September 30, 2016

SG Market (30 Sep 16)

The Singapore market is likely to end the week on a mixed note as positive US economic data is eclipsed by growing worries over the spillover effects of Deutsche Bank woes.

Regional markets opened lower in Tokyo (-1.3%), Seoul (-0.8%) and Sydney (-0.7%).From a technical perspective, resistance for the STI is now seen at 2,900, with immediate support at 2,880.

Stocks to watch:
*SMRT: An overwhelming majority of shareholders has voted in favour for the sale of train assets to Land Transport Authority under the new rail financing framework, as well as the $1.18b buyout offer by Temasek at $1.68 per share in the form of a scheme of arrangement. Last day of trading for SMRT shares is on 17 Oct 2016.

*Gaming: Online betting has been legalised in Singapore under strict conditions, with the approval of the applications of two operators, Singapore Pools and Singapore Turf Club. The move is neutral-to-negative for casino operator Genting Singapore as it draws a different gaming crowd.

*Keppel Corp: Acquiring a retail development in Shanghai, China, for Rmb500m ($102m). The recently-completed 40,927 sqm mixed development has a net lettable area of 32,800 sqm and comprises offices, shops and residential towers. MKE last had a Sell with TP of $4.54.

*Civmec: Awarded contracts worth an aggregate A$85m for works over a three-year period, comprising 1) shutdown works for alumina refineries in Australia (Pinjarra & Queensland), ongoing maintenance services for shutdown work across Fortescue Metal's mines and ports, and modification work contracts for BHP Billiton’s mine in the Pillar area of Western Australia.

*Super Group: Received official recognition as Malaysia's largest coffee manufacturer by Malaysia Book of Records. Super owns one of the largest instant coffee plants in Southeast Asia with capacity of over 20,000 tonnes, equivalent to 10b cups of coffee.

*Challenger Technologies: Opening its new flagship store in Bugis Junction by 2Q17. The store will span 14,000 sf and will complement its existing store in the same mall.

*Ezra: Completed the divestment of a 10% stake in EMAS Chiyoda Subsea to Nippon Yusen Kabushiki Kaisha (NYK). Ezra, Chiyoda, and NYK now hold 40:35:25 in EMAS Chiyoda Subsea, as the three parties look to strengthen its presence in global markets.

*Halcyon Agri: Expects to complete the acquisition of natural rubber assets from Sinochem International on 3 Oct 2016.

*Serrano: Interior fit-out solutions provider looks to be close to receivership, after it received another letter of demand from Maybank for $33.4m for overdue principal amount and accrued/penalty interests. As at Dec 2015, group had $8.4m cash and net gearing of 11.4x.

*Croesus Retail Trust: Issued $50m 5% fixed rate notes due 2020 for debt refinancing and general working capital.

Thursday, September 29, 2016

Fullerton (IPO)

Fullerton's IPO valuation premium predicated on acquisitions
- Fullerton Health intends to launch an IPO of 140.3m shares of which 93m are new shares and 47.3m vendor shares by Abraham Healthcare, Oceanfront Investments and Web Dragon.
- The IPO is expected to be priced between $1.70 to $1.80 per share, with the current indicative offer price of $1.73.
- The IPO will be fully underwritten by JP Morgan, UBS, Credit Suisse and DBS Bank.
- The group currently owns 198 self-owned clinical facilities on top of its network of 8,000 associate hospitals and clinics.
- Of particular concern however, is the possibility of dilution to potential investors as Fullerton has agreed to issue new shares to Salamat Investments (linked to GIC)

Based on its indicative IPO price, Fullerton would be valued at $1.285b, which would translate to a FY15 EV/EBITDA of 33x, a significant premium over its peer range of 20-25x. We do note however that Fullerton’s EBITDA has upside potential arising from its acquisitions made in May ’15.

SG Market (29 Sep 16)

Focus will be on oil-related names following the OPEC agreement to limit production although we question if this is a Saudi ploy to talk up the oil price in order to support a US$10-15b bond issue next month. Maybank KE prefers Ezion (Buy, TP $0.45), over Keppel Corp (Sell, TP $4.50) and Sembcorp Marine (Sell, TP $1.00).

Regional markets opened higher in Tokyo (+0.8%), Seoul (+0.8%) and Sydney (+0.9%).From a technical perspective, topside resistance for STI is pegged at 2,880, with underlying support at 2,800.

Stocks to watch:
*Economy: Deputy PM Tharman notes that the Singapore economy is “in a tough period that will last for a while” and expects 2016 growth to be at lower end of 1-2% forecast, below street estimate of 1.8%. However, he sees pockets of growth in certain industries, such as tourism, healthcare and professional services.

*Water: PUB is expected to unveil the winner of a $400-500m tender for the construction of Singapore's fourth desalination plant. The six contenders are SGX-listed Hyflux, United Engineers, Sembcorp Industries and Keppel Corp, as well as China-linked MCC Land and Spain's Tedagua.

*Noble: Franklin Resources raised its stake to 6.01% via the acquisition of 25m shares on the open market on 26 Sep, at an average price of $0.138. Noble closed at $0.151 after breaking out of a channel formed earlier this month.

*Sapphire: Secured a contract worth Rmb452m ($92m) for works on the Beijing Metro Line 12. The project is targeted to be completed in four years and is expected to positively impact the group from FY17 onwards. This follows the Rmb873m award of metro and infrastructure contracts in other Chinese cities two months ago.

*Zhongmin Baihui: Entered agreement with Hui’an Hongyi Property Development to acquire a 25,466 sqm retail property located in Quanzhou City, China, for Rmb122.2m ($24.9m). The group expects to record a gain on bargain purchase of Rmb15.6m.

*Rickmers Maritime: Informed by its trustee that >25% of noteholders for its $100m 8.45% notes due 2017 have served a notice of acceleration for principal repayment. However, it did not disclose the specific default event, evidence of attaining >25% threshold nor request that the notes be redeemed immediately. The group will provide further update in due course.

*Figtree: Obtained permit for the construction of a multi-storey residential cum retail development on a 671 sqm land along La Trobe Street, Melbourne. The development will comprise 210 residential apartments, retail and cafe outlets.

*SUTL: Announced that it will provide management and consultancy services to two to-be-built marinas in Jakarta and Zhuhai.

*Trendlines: Completed sale of the 25.5% owned E.T View Medical to Ambu. The group estimates pro forma FY15 net loss to narrow from US$3.6m to US$0.9m.

*China New Town: Counter requested for a trading suspension following an earlier trading halt on 26 Sep, pending regulatory clearance from Securities & Futures Commission of Hong Kong in relation to a corporate action.*Serrano: Received letter of demand from Maybank for US$2m for overdue principal amount and accrued/penalty interests.

Wednesday, September 28, 2016


ComfortDelGro: (S$2.80) Newcomers join hands to tackle incumbents as competition heats up
- Competition is intensifying in the taxi industry as a surge in private car rental fleet exacerbates the entry of new players collaborating with Uber and Grab
- Apart from their own networks, Uber and Grab could also disrupt the industry through partnerships with start-ups.
- The growing number of private rental cars appear to bode well for Uber and Grab. This contrasts with difficulties CDG currently faces in recruiting new drivers.
- With technological disruption here to stay, private rental car hires are poised to eat into the market share of incumbents.

CDG is currently trading at 18.6x forward P/E with an indicative yield of 3.3%. The street is still fairly bullish on the counter with 10 Buy, 4 Hold, and 1 Sell ratings with consensus TP of $3.14.

Duty Free International

Duty Free International (DFI, S$0.43) A captive retail model
- Maybank KE issued an unrated note on DFI, one of the largest duty-free trading groups in Malaysia
- Revenue is highly correlated to Malaysia’ retail spending, which has been recovering since late 2015 after GST implementation
- Rising middle class in ASEAN and Greater Asia may also boost tourist traffic and duty free goods consumption
- Recent tie-up with global partner Heinemann will likely lead to margin expansion, and operation efficiencies
- Tap on Heinemann's global purchasing capability for bulk discount with lower risk of overstocking, and introduction of higher-margin products
- Strong MYR is beneficial to the group, currency could be a wild card for FY2/17- DFI trading at 23x FY16 P/E, 3.8SD above 2-year mean of 17x, but lower than the 25x avg of Msian consumer stocks under coverage
- Despite the valuation, duty free business is unique and serves mainly a captive market
- DFI also obtained approval in-principle to transfer to SGX Mainboard form Catalist
- Based on peer average, DFI could trade within a range of $0.34-0.47

SG Market (28 Sep 16)

Attention is expected to turn to economic releases in US (Thu) and China (Fri) for glimpse on the overall health of the global economy.

Slump in crude prices on fading prospects of an oil deal is likely to weigh on oil-related names such as Keppel Corp, Sembcorp Marine and Ezion.In the consumer space, MKE downgrades Sheng Siong from Buy to Hold given limited 5% upside to TP of $1.13, and calls for a switch to Jumbo, which is upgraded from Hold to Buy, with 40% upside to the revised TP of $0.78. Seasonally stronger 4Q would benefit Jumbo, which should outperform defensive stocks such as Sheng Siong. Valuations currently favour Jumbo and positive catalysts await it as well, while Sheng Siong could face neutral to negative developments.

Regional markets opened mixed in Tokyo (-1.2%), Seoul (-0.1%) and Sydney (+0.5%).From a technical perspective, topside resistance for STI is at 2,880, with underlying support at 2,800.

Stocks to watch:
*Macro: WTO forecasts Asian export volumes to pick up 1.8-3.2% in 2017, up from 0.3% this year. Historically, strong trade growth is a leading indicator of economic growth given that trade accounts for 3x GDP.

*Economy: Pro-birth policies have worked out; Singapore's population grew 1.3% to 5.61m, with 33,725 citizen births in 2015 the highest in over a decade.

*SMRT: On media reports that SMRT's consortium with PT T-Files Indon has been awarded the contract for the construction of rail-based public transport facilities in Bandung, Indonesia, the transport group clarified it has not received official notification of the outcome of its tender. Parent Temasek Holdings is seeking to privatise SMRT and MKE is recommending shareholders to accept the SGD1.68 buyout offer.

*Keppel Corp: Subsidiary Keppel Land will buy an additional 25% stake in Vietnamese property developer Quoc Loc Phat from shareholder Pham Quang Hung for VND412.3b ($25.6m), lifting its stake to 45%.

*Halcyon Agri/GMG Global: Halcyon has obtained 58.3% acceptances in relation to its swap offer of 0.9333 new Halcyon shares for each GMG share. Closing date for the offer is on 21 Oct.*SIIC Environment: Entered agreement to acquire 60% in Ranhill Water Technologies for Rmb273.9m (1.3x P/B). Ranhill provides services for the industrial wastewater treatment market in China and its current concession contracts have a total design capacity of 260,000 tpd.

*Sing Holdings: Jointly submitted a $287.1m tender bid ($517 psf ppr) with Wee Hur for a land parcel at Fernvale Road. Subject to the award, Sing Holdings and Wee Hur will form a 70:30 JV to undertake development for a condominium project.

*Hyflux: IRAS has ruled that distributions from its $500m 6% perpetual capital securities are regarded as interest expense and accordingly, will be tax deductible. As at 1H16, the group had a tax credit of $1.3m (1H15: $1.4m expense).

*ISR Capital: Grants short term bridging loan facility of$6m to Tantalum Holding for its critical rare earth project in Madagascar.

Tuesday, September 27, 2016

Cache Logistics Trust

Cache Logistics Trust (S$0.920) Temporary lease arrangement to Schenker may hurt DPU
- Cache agreed to a holding arrangement with Schenker, while the legal dispute between itself, C&P and Schenker is on-going
- This entitles Cache to receive rental at a below market rate of $0.77 psf/month for the Schenker Megahub
- A related scenario study back in May ‘16 estimates that Cache's proforma 1Q16 DPU would drop by 7.3% to 1.89¢.
- Extrapolating the impact, the industrial landlord's 2Q16 annualised distribution may slip to 7.9% from 8.6%.
- Cache's 13% surge from a low in Jun has driven up its price to meet the consensus TP of $0.92 (5 Buy, 4 Hold)
- Viva Industrial Trust (>9% fwd yield) could be an alternative for industrial REIT exposure. Resides in Market Insight Yield Porfolio

SG Market (27 Sep 16)

The Singapore market appears to be caught in a limbo as investors brace for the US presidential election, which may have significant implications for trade and investments, as well as a key oil producers meeting this week that could send oil prices either way.

Regional markets opened in the red in Tokyo (-1.4%), Seoul (-0.7%) and Sydney (-1.1%).From a technical perspective, topside resistance for STI is at 2,880, with underlying support at 2,800.

Stocks to watch:
*OCBC/Great Eastern: Reviewing strategic options of their combined 20.5% stake in United Engineers and WBL after exclusive sale talks with Thai tycoon Charoen Sirivadhanabhakdi lapsed last year, but no decision has been reached yet. Assuming a sale at current market price, OCBC could net a divestment gain of $63m for its 4.1% direct stake and reduce its RWAs by $275m, as well as potentially raise its fully-loaded CET1 by 6bps to 12.76%.

*SGX: Baltic Exchange shareholders have approved the resolutions required for the proposed acquisition by SGX via a scheme of arrangement. The completion of the £87m ($153m) deal remains subject to certain conditions, including the court sanctioning and regulatory approvals.

*GLP: Signed leases totalling 66,000 sqm with new customers, global auto makers Fiat, Chrysler and Daimler in Brazil and China.

*Yanlord: Acquiring two prime development sites with total gfa of 106,232 sqm in Suzhou for Rmb3.69b. Management believes Suzhou remains a healthy market, as evidenced by the 94% sale of the 265 units launched at its development Riverbay Gardens during the opening weekend recently.

*SPH: Entered into a 49:51 JV with Wholesale Investor to expand its online investor relations business through, in Australia and New Zealand.

*Cache Logistics Trust: Agreed on a holding arrangement with Schenker, which is in dispute with master lessor C&P on the lease agreement for 51 Alps Avenue. The arrangement allows Cache to collect monthly rental of $0.77 psf for the property, while the dispute is pending court resolution.

*Soilbuild Construction: Constructing five units of two-storey detached dwelling houses with basement and attic along Wilkinson Road in Marina Parade, for a total of $13.1m. The project will commence in 4Q16, and are targeted for completion in 3Q18.*Boustead Projects: Signed an agreement with Guangdong New Co-Op to jointly develop an unspecified number of agricultural logistics network in Guangdong, China.

*Eu Yan Sang: Privatisation offer at $0.60/share by Righteous Crane, a consortium comprising a private equity firm (42%), Temasek Holdings (30%) and founding Eu family (28%) will close on 27 Sep. The offeror has obtained 84.9% of acceptances as at 23 Sep.

*TTJ: FY16 net profit jumped 65.8% to $25.8m on revenue of $136.6m (+45.1%), boosted by strong contribution from the structural steel business (+59.2%) on more project completions, partially pared by lower occupancy for its dormitory business (-6.5%). Gross margin remained stable at 28.9% (-0.3ppt), while order book stood at $48m, of which a substantial amount of work is due for completion in FY17-18. First and final DPS slashed to 1.7¢ (FY15: 8¢).

*Rowsley: Partnering with UK’s National Football Museum to operate more football-themed cafes and hotels which are co-owned by former Manchester United players, Gary Neville and Ryan Giggs. The museum will also loan its collection of football memorabilia to the F&B and hospitality venues.

*Xpress: Proposed issue of 5.7m new shares at $0.70 apiece to six individual investors to raise $4m net proceeds for working capital and business expansion.

*China Environment: Reviewing a letter of demand sent by China Construction Bank, claiming repayment of Rmb85,801 in overdue interest for a working capital loan of Rmb23m.

Monday, September 26, 2016


Sunright: (S$0.28) Resilient business; net cash >40% of market cap
- Posted improved FY16 pretax profit of $9m (+18.6%), but net profit declined (-55.9%), due to higher profit share of minority interests.
- Revenue slipped 5.6% on lower distribution sales and a weaker MYR against SGD, but operating costs reduced at a faster pace.
- Balance sheet health is strong with net cash of $49.5m ($0.403/share), underpinned by a stable operating cash flow of $27m (FY15: $27.5m).
- Despite its large cash pile, management maintained its first and final DPS of 0.2¢, but did not pay out a special DPS this year (FY15: 0.2¢), which may be a signal of potential M&A in the pipeline.
- At $0.28, we believe Sunright is attractively valued at a 31% discount to its net cash and see a trading opportunity for the stock.

SG Market (26 Sep 16)

Trading this week is expected to be volatile, as markets anticipate the OPEC/Russia oil talks, the first of three US presidential debates, a heavy dosage of central bank speeches and economic releases from US and China, as well as quarter-end window dressing. Stick to defensives such as consumer, healthcare and yield stocks.

Regional markets opened weaker in Tokyo (-0.3%), Seoul (-0.1%) and Sydney (-0.2%).From a technical perspective, topside resistance for STI is at 2,880, with underlying support at 2,800.

Stocks to watch:*SMRT: Its consortium with PT T-Files Indon submitted bid to participate in the public tender for the construction of rail-based public transport facilities in Bandung, Indonesia. Parent Temasek Holdings is seeking to privatise SMRT and MKE is recommending shareholders to accept the $1.68 buyout offer.

*Mapletree Logistics Trust: Acquiring Mapletree Logistics Park Phase 2 in Vietnam for VND339.2b ($20.6m). The 66,300 sqm gfa property is fully occupied and is expected to generate NPI yield of 9.9%.

*Wilmar: Launching its Olenex JV with Archer Daniels Midland, which is in the European oils and fats business, in the coming weeks, after obtaining all required competition approvals.

*Starhill Global: Pricing its $70m notes due 2026 at 3.14% with coupons paid semi-annually in arrears. Post-issuance, average debt tenor will increase from 3.1 years to 3.6 years, with higher aggregate leverage of 35.3% (+0.3ppts), assuming $55m of proceeds is used to pay off debt.

*GMG Global: Independent financial advisor RHB opines that the Halcyon Agri swap offer (0.9333 new Halcyon shares for each GMG share) is not fair but is reasonable, on the basis that the offer value is below GMG’s NAV but at the same time, it gives shareholders the opportunity to participate in the prospects and future growth of an enlarged Halcyon group. Hence, shareholders are advised to accept the offer if they believe in the competitive strengths of the enlarged group.

*Sunright: FY16 net profit slumped 55.9% to $1.4m on higher profit share of minority interests (+56.9%), although the group incurred lower expenses (-7.1%) due to absence of FV losses and changes in inventories. Revenue slipped 5.5% to $129.4m on lower distribution and weaker MYR, which impacted its burn-in, testing and electronic manufacturing services segment. Maintained first and final DPS of 0.2¢ (FY15: Final 0.2¢ + 0.2¢ special DPS). NAV/share at $0.573.

*Otto Marine: Counter will cease trading today, prior to closing date of exit offer on 30 Sep, after the offer was declared unconditional in all respects and delisting proposal conditions were fulfilled.

*Ley Choon: Creditors agree to a debt restructuring agreement as Ley Choon seeks to divest its non-core assets. Instead of a charge over project proceeds previously, the new agreement will allow for an interest-only regular repayment scheme, with the principal amount to be paid as a lump sum on 31 Mar 2021.

*Swissco: US-based contractor, X-Drill, has commenced legal proceedings for claims of $1.8m. Swissco is currently consulting its legal advisers on the claims.

Friday, September 23, 2016


SGX (S$7.49): Striving for leadership in LNG pricing through derivatives
- attempting to gain pricing dominance in liquefied natural gas (LNG), as it launch more derivative products for LNG in 2Q17
- new contracts will be based on a new North Asia LNG price index that SGX introduced on Mon
- if successful, SGX could see an influx of derivative trading- this would boost commodities derivative trading, which was one of the rare bright spots in Aug (trading volume +59% y/y)
- But SGX is likely to face competition for these price indices, and the race is still wide open
- SGX is currently trading at 21.9x forward P/E and offers an indicative dividend yield of 3.7%
- The street does not have conviction on going long on SGX, as it has 7 Buy, 8 Hold, and 2 Sell rating, with a consensus TP of $7.78, on the counter.

SG Market (23 Sep 16)

The local market is still struggling on a dearth of news flow and catalysts despite the Fed clearing the way for low interest rate environment to persist for a little longer. That said, rising oil prices could bring some relief for the battered O&M sector.

Regional markets opened mixed, with Tokyo (-0.2%) lower, although Seoul (+0.2%) and Sydney (+0.3%) were firmer.Judging by yesterday's performance, the STI faces heavy resistance near the 2,880 level, with bottom-side support at 2,800.

Stocks to watch:
*CapitaLand: Acquired prime 0.50ha land site in Ho Chi Minh City for USD51.9m, which will be redeveloped into a mixed-used development, comprising 304 residential units and serviced apartments, with estimated project value of US$106m.

*SGX: Launching more LNG derivative products in 2Q17, in its bid to gain pricing dominance for that commodity. The new contracts will be based on its new North Asia price index.

*Lum Chang: 50% JV Dorado Holdings is acquiring property investment firm Corwin Holding, which owns Chill@The Verge (8-storey shopping mall), for S$189.8m.

*CNMC Goldmine: Its Sokor gold mine has to-date produced more than 100,000oz of fine gold since production commenced in 2010, far exceeding initial reserve estimates of 70,300oz of gold ore in its Aug ’11 technical review.

*Santak Holdings: Updated that the discussion with a potential buyer for the proposed disposal of its loss-making China operations is still on-going, and has not arrived at any definitive agreements.

*Golden Energy & Resources (suspended): 67%-owned PT Golden Energy Mines, and 99.9%-owned PT Kuansing have jointly acquired 100% stake in PT Era Mitra Selaras for US$37.2m, which was fully funded by internal resources. The target has proven plus probable coal reserves of 68m tonnes.

*Overseas Education: Repurchased $7m worth of 5.2% bonds issued on 17 Apr ’14 due in 2019. It currently has a remaining $143m in bonds due in the same year.

Thursday, September 22, 2016


Gold: Expect gold miners to benefit from Fed inaction
- CNMC Goldmine up 2.7% to $0.565 in morning trade as gold prices (+0.4% to US$1,337.30/oz) continue on overnight rally.
- Gold is currently being bought as the market takes the Fed's inaction into consideration as well as a 2017 FOMC board that appears to be more dovish
- Other precious commodities also rose, silver (+0.7% to US$19.90/oz), platinum (+0.2% to US$1,053.20/oz)

SG Market (22 Sep 16)

The market will likely open stronger after supportive policy decisions by BoJ and FOMC spurred a rally in global equities.It may also get a further boost from a jump in oil prices overnight, offering some breathing space to oil & gas counters.

Regional markets such as Seoul (+0.9%) and Sydney (+0.8%) opened notably higher, while Tokyo is closed for a public holiday.From a technical stand-point, Topside resistance for STI is at 2,880 with underlying support is at 2,800.

Stocks to watch:
*Vard: Secured a US$40m contract to build two module carrier vessels for Topaz Energy & Marine. Delivery of both vessels is scheduled in 2Q18. But, investors should remain cautious, as its net gearing remains high at 3.6x as at Jun '16, and interest coverage is less than 0.5x.

*Secura: Clinched a service contract from Singtel worth up to $7.9m to provide unarmed security guarding services at certain premises for two years, effective from Oct ’16- Sep’ 18.

*HLH Group: Terminated to US$36.8m contract it awarded to Yanjian Group Cambodia for the construction of D'Seaview, a 737-unit residential project, as the latter was unable to comply with the terms of the contract. HLH has re-awarded the contract to Sinohydro Corp. for US$35.3m. Sales of the project currently stand at 53%.

*Fragrance Group: Obtained a planning permit for its property at 555 Collins Street, Melbourne CBD, Australia. The 2,300sqm freehold site with plot ratio of 24 will be developed into a mixed use property comprising retail outlets, 625 residential units and four basement levels.

*SMRT: Entered 60:40 JV with Cyclect Electrical Engineering to provide electrical system solutions for land transportation in ASEAN, Australia, and New Zealand. Total investment cost is $1m.

*Asiamedic: Responded to SGX irregular trading query for its price surge, that it is having ongoing discussions on prospective business opportunities, including possible M&A, but has not attained any definitive agreement at this point.

*PSL Holdings: Placing out 7.7m new shares to three individuals, Atan, Edison, and Melda Veronica, at $0.3825 per share to raise gross proceeds of $2.96m.

*Annica Holdings: Disposing a single-storey intermediate terrace factory at 38 Kallang Place, which occupies 1,034sqm of land, for $3.33m.

*Jiutian Chemical: Received approval from SGX to transfer its listing from the Mainboard to the Catalist board. The move is now pending shareholders’ approval at an upcoming EGM.

*Trek 2000: Auditor EY disclaims from making an audit opinion due to inconsistencies in Trek’s accounting records, the ongoing investigation by CAD, as well as certain interested-party transactions that were previously not disclosed.

Wednesday, September 21, 2016

Keppel Corp

Keppel Corp (S$5.26): Limited divestment options to cushion against any cash crunch
- Depressed O&M business and limited divestment options hinder ability to free up capital should it face a cash crunch
- two most likely divestment options are M1 (potential threat of new entrants), and its T27 data centre to Keppel DC
- M1 and T27 are expected to fetch proceeds of $342m and $200m respectively
- but the positive impact is insufficient to swing the house to take a more bullish stance on the group
- Odds to sell KrisEnergy and Dyna-Mac is low, as the group would need to realise significant losses at market values
- Borrowing ability may also be capped by its net-debt/EBITDA of 5.5x, and EBITDA-interest-coverage of 6.3x
- Maybank KE maintains Sell, although TP was raised by 4¢ to $4.54 to account for a lift in market values of its listed entities.

Cogent Holdings

Cogent Holdings (S$0.885): Potential offer for peer could be an upward re-rating catalyst
- Shareholders with 41.3% stake in Poh Tiong Choon Logistics (PTC) are seeking a strategic review of shareholdings
- PTC surged more than 17% early this week to $1.30, implying 1H16 annualised P/E of 18.8x- This could spark a re-rating of Cogent, which was recently granted approval to develop another iconic logistics hub
- If PTC transaction materialises, Cogent could trade between 11-15x P/E, implying fair value of $0.94-$1.28.
- Cogent continues to sit in Market Insight's Value portfolio.

SG Market (21 Sep 16)

Traders will be in a waiting mode heading into the policy decisions by BoJ and Fed, which have the potential to trigger market volatility. Meanwhile interest is dominated by microcaps.

Regional markets opened generally muted in Tokyo (-0.1%), Seoul (-0.1%) and Sydney (+0.2%).From a technical perspective, topside resistance for STI is at 2,880, with underlying support at 2,800.

Stocks to watch:
*Economy: Credit agency Fitch has cut its growth forecast for Singapore to 1.8% from its earlier forecast of 2.1% and expects growth to only recover gradually to 2% by 2018.

*Poh Tiong Choon: Co-founders and substantial shareholders are undertaking a strategic review of their 41.3% stake and are in the process of appointing an independent corporate advisory firm. A potential offer at attractive valuations could spark a re-rating for other logistics players like Cogent Holdings.

*Asian Pay Television Trust: Instructed CDP to transfer units held by mainland Chinese investors to its trustee-manager for subsequent sale in the open market, to comply with Taiwanese regulations that limits the sectors in which Chinese investors are allowed to invest.

*Sunpower: Awarded a Rmb22.6m contract by China Shenhua Coal to Liquid and Chemical Co to provide EPC services to the E1 concentrated liquid crystallisation project in Ordos City, Mongolia. The project will be completed in 2017, and expected to have a positive impact to FY17 earnings.

*Japfa: Entered 40:60 JV with Cargill Food Investment Indonesia to manufacture unbranded cooked poultry products for the Indonesian market. The JV will lease the Boyolali factory from Japfa, and expects to commence operations in 1Q17.

*Hotel Properties: Inked management agreement with InterContinental Hotels Group to manage an 83-room resort in Maldives, scheduled to open in 3-5 years.

*China International: Currently engaged in preliminary discussions with various investors regarding a potential deal relating to its subsidiary.

*GSH: Launched 200 of the 632 units at high-end condominium Eaton Residences in Kuala Lumpur, and has received bookings for 150 units. Prices for the units measuring between 635 sf and 2,982 sf are in the range of RM1.1m-2.6m.

*Lippo Malls: Issuing $140m 7% perpetual securities, the highest priced debt this year amid the challenging environment. The retail landlord is trading at 9.1% annualised yield and 1x P/B.

Tuesday, September 20, 2016


REITs: Positive inflection point for offices in sight?
- UBS opines that office REITS are regaining interest despite downward rental pressure
- this is due to an increasing number of transactions buoying prices
- pre-commitment for new office space is also on the rise - seen at Guoco Tower and Marina One
- UBS' top pick for sector exposure is CapitaLand Commercial Trust (CCT)
- the positive bias is in line with Maybank KE, which upgraded CCT and Keppel REIT to Buy earlier this month:
- Maybank KE- CCT: TP raised to $1.81 from $1.52 on target yield of 5%
- Maybank KE - Keppel REIT: TP raised to $1.21 from $1.05 on target yield of 5.25%


Aztech: Proposed exit offer of $0.42/share. Irrevocable undertakings representing 24.92% has been obtained, and the offeror intends to exercise its right of compulsory acquisition if more than 90% acceptances has been obtained.

SG Market (20 Sep 16)

Heightened volatility is expected over the next two days ahead of BoJ and FOMC policy statements, but with some upward bias as the technical momentum turns slightly more favourable.

Regional markets opened generally lower in early trade in Tokyo (-0.7%), Seoul (-0.1%) and Sydney (-0.3%).

From a technical perspective, STI sees topside resistance at 2,880, with support at 2,800.

Stocks to watch:
*SingPost: MKE upgrades to Buy from Sell and raises TP vy 37% to $1.77. Earlier concerns are gradually being addressed: 1) corporate governance issues fading with a partial revamp of the board; 2) significantly lower risk of inorganic growth with focus shifting to integration; 3) stock has fallen 13% ytd and growth consensus estimates cut >10%.

*Chiwayland: 60:40 JV with Jiangsu Shagang Group Hongrun Real Estate Development has won the land use rights of a 73,351 sqm land parcel in Wuxi, China, at an undisclosed price. Separately, the group will develop three land parcels in China, comprising a residential development in Wuxi City (12,888 sqm), and mixed projects in Wuhan (175,282 sqm) and Zhangjiagang (70,604 sqm). All three projects are expected to be launched in 2017 and completed by 4Q18. Total land and construction cost of Rmb3.13b will be funded via internal cash and borrowings.

*Thakral: 50:50 JV with retirement resort developer Living Gems Lifestyle Resorts acquired two properties in Queensland, Australia, for the operation and development of world-class resort style retirement housing in Bribie Island (24.9ha) and Toowoomba (9.4ha), which will have 404 and 223 homes, respectively. Properties at both projects have been sold out, with construction expected to commence in mid-2017.

*Ryobi Kiso: Secured new contracts worth $78.8m for 1) foundation and geoservices work at deepwater ocean basin at Prince Georges Park in NUS; 2) Sengkang HDB; 3) Seletar Airport; and 4) water reclamation plant at Changi East. This brings new contracts secured year-to-date to $168.8m, and will lift net order book to $127.3m.

*Frasers Hospitality Trust: Undertaking an underwritten and renounceable 32-for-100 rights issue at $0.603 per unit to raise net proceeds of $262.7m, mainly to finance the acquisition of a 380-room hotel, Novotel Melboune on Collins, in Australia. Pro forma FY15 DPU is expected to decline 16.2% to 6.338¢, while aggregate leverage will drop from 38.3% to 34.1%.

*Ramba Energy: Proposed renounceable non-underwritten 1-for-5 rights-cum-warrants issue at $0.20 each, attached with one free detachable warrant having an exercise price of $0.20 each. Estimated net proceeds of $4m will mainly be used for exploration and production expenses.*Moya: Entered non-binding MOU with Maynilad Water Services to establish a JV to provide water and wastewater management services in Indonesia, including M&A ventures.

*CWT: Obtained operating license to set up a physical commodity exchange in Indonesia. The group plans to roll out a suite of agricultural products in 2017 such as cocoa, coffee, rubber, soybean and sugar.

*QT Vascular: Obtained US FDA conditional approval for its drug-coated catheter, Chocolate Touch, which will allow the group to enrol patients in a study.

*Challenger Technologies: Secured new lease for its retail operations at Tampines Hub, which will commence from 4Q16.

Monday, September 19, 2016


Macro: String of debt defaults to increase financial strain

- S&P opined that several sectors in the $60b domestic bond market are vulnerable to increasing financial strain
- Singled out three main sectors: 1. Oil services, 2. agriculture & commodities, 3. real estate
- Shipping counters are also coming under pressure and we feel that Hanjin's high profile bankruptcy will have dire ramifications on sector plays.
- Counters to take note of:1. Rickmers Maritime2. Marco Polo 3. Ezra4. Samudera Shipping

SG Market (19 Sep 16)

The market will likely remain cautious ahead of FOMC and BoJ policy meetings this week, although market expectations have effectively ruled out a Sep Fed rate hike and technicals are turning slightly positive.

Regionally, Seoul (-0.1%) opened lower, while Tokyo is closed. In Sydney, opening for the ASX is delayed due to a technical issue.

From a chart perspective, immediate support for STI is at 2,800 (200-dma), with topside resistance at 2,880.

Stocks to watch:
*Macro: S&P Global Ratings opines that several sectors in the $60b domestic bond market are vulnerable to rising financial strain after a series of recent defaults. The oil services sector is the most vulnerable followed by agriculture & commodities and some real estate companies.

*Swiber: Defaulting on the upcoming coupon payment for the Rmb450m 7.75% fixed rate notes due 2017 and updated that claims against the group have reached US$231.4m, which its interim judicial managers are trying to verify. Counter remains suspended. This could re-ignite concerns towards highly geared offshore support services players amid still turbulent times.

*UOB: Showcased its leading digital capabilities at the UOB Engage 2016 Presentations. Maybank KE is positive towards the bank’s digital initiatives to retain and attract customers. Maintain Hold (TP: $18.34).

*Vard: Its marine design has been selected for the US Coast Guard's new Offshore Patrol Cutter program.

*Federal Int'l: Its 20.7%-owned associate, Gunanusa Utama Fabricators (PTG) has received a letter of intent for the engineering, procurement, construction and installation of an offshore platform from PTTEP Int'l, valued at US$155m, with an option for a second platform. Separately, the group signed a procurement agreement with PTG with relation to the same project which would bring its order book to about $90m.

*Global Yellow Pages: Proposed placement of 34.1m new shares to Yong Yin Min (Pacific Radiance director) and Thomas Knudsen (Damco Asia CEO) at $0.154 per share, a 9.9% discount to the last trading price of $0.171.

*Secura: Subsidiary Red Sentry has agreed to collaborate with Singapore Business Federation to conduct workshops to help companies, especially SMEs, raise their capabilities in cyber security.

*CSC: Acquiring a 21% stake in Coriolis Hertford for $0.9m. Coriolis owns a 40% stake in Railway Street Hertford which recently obtained approval for the development of a ~0.7 acre freehold land in Hertford, UK into a 28 residential units and 1 commercial space with about 30,000 sf of sellable area.

*TSH: Proposed capital reduction via cash distribution of $0.1072/share, and special DPS of $0.016, following the disposal of Wow Technologies , Explomo Technical Services and freehold land and building at 62 Burn Road for total net proceeds of $9.9m. TSH is now a cash company and is exploring various potential new business opportunities to satisfy SGX listing requirements.

*Dyna-Mac: Lodged police report after suspecting criminal conduct by an ex-employee involving the misappropriation of funds amounting $1m.

*Best World: 55.4m new shares issued pursuant to the 1-for-4 bonus issue will begin trading on 19 Sep.

Friday, September 16, 2016


Avi-Tech: (S$0.30) Possible upward re-rating on exit of SGX Watch-List- Removed from the SGX Watch-List with immediate effect, slightly earlier than expected.- Avi-Tech is a beneficiary to the rising use of electronic components, particularly in the automotive and consumer industries, where reliability and fail-safe for the parts are critical.- The recent Samsung Galaxy Note 7 smartphone incident, which dented reputation for the Korean powerhouse, highlighted the severity of insufficient burn-in testing.

- Further, the company is backed by a healthy net cash position (including fixed deposits) of $28.3m, or $0.165/share, 54% of its current market cap.
- Avi-Tech is attractively valued at 7.9x trailing P/E (3.7x ex-cash), or a 30% discount to its peer Sunright, and offers a indicative dividend yield of 6.1%.

SG Market (16 Sep 16)

Market could get a much-needed reprieve from the recent selldown following the bounce on Wall Street, which was uplifted by Apple and diminished expectations of a near term Fed rate hike.

Regional markets climbed in early trade in Tokyo (+0.3%) and Sydney (+0.8%). Seoul market is closed for public holiday.Immediate backstop for STI is at 2,800 (200-dma), with topside resistance at 2,880.

Stocks to watch:
*Keppel Corp: Subsidiaries Keppel Land and Alpha Investment Partners are divesting their combined 80% stake Sparkle Bright Holdings, which owns Life Hub @ Jinqiao, a mixed-use development in Shanghai, for US$516.9m. The sale will reap a gain of $73m and add $0.04/share to its NAV of $6.07. MKE opines that more divestments could be in the pipeline as the group seeks more cash to fund its existing businesses. Last call was a Sell with TP of $4.50.

*SIA: Aug pax load factor slumped 5.2ppts to 79.7%, on declining traffic (-2.9%) and higher capacity (+3.6%), while cargo load factor improved 1ppt to 60.5% due to strong carriage (+8.6%). Load factors declined in all its regions, particularly Europe (-8ppts to 80.8%) and across its subsidiary carriers with SilkAir (-5.2ppts to 71%) taking the biggest hit along with Scoot (-4.8ppts to 80.4%) and TigerAir (-2.9ppts to 82.2%). MKE last had a Hold with TP of $10.00.

*ST Engineering: President & CEO, Tan Pheng Hock will relinquish his current roles and be re-appointed as advisor to the incoming President & CEO, Vincent Chong from Oct. Chong was previously Deputy CEO in charge of corporate development.

*Low Keng Huat: 2QFY17 net profit surged 436% to $43.1m, boosted by disposal gain of $51.5m from sale of Duxton Hotel Saigon in May '16. However, revenue slumped 58% to $8.6m on the absence of development revenue and significantly reduced sales at construction (-96%) and hotel & F&B (-58%) segments. Gross margin tumbled to 22.2% (-58.2ppts) on the shift in revenue mix. NAV/share at $0.87.

*Rotary Engineering: Awarded $64m worth of new contracts between Jun and Sep, including the extension of a chemical storage and handling facility in UAE, as well as fabrication works of O&G production-related modules in Thailand.

*Nordic: Clinched contracts worth an aggregate $4.8m from repeat customers, of which $4m was for flow control systems, and $0.8m for ad-hoc scaffolding projects. The contracts are expected to be completed by 4Q16 and 2017, respectively.

*Choo Chiang: Disposing 50% stake in electrical fittings assembler Neiken Switchgear for $1.4m. Apart from a $0.3m gain, the group expects to recover $1m of inter-company loans upon divestment. Sale proceeds of $1.5m will be earmarked to acquire an investment property located at 9 Tagore Lane, which is expected to complement its existing portfolio of properties located in the same area.

*IHC: Lenders Westpac and National Australia Bank have appointed receivers for three Australian properties to safeguard their interests and procure their fair-value sale, as a direct consequence of the ongoing dispute with the group's creditors over the winding down of IHC Medical Re and IHC Management, which own the assets.

*SBI Offshore: Lodged report with CAD on possible breaches of securities laws related to the purchase and sale of 35% stake in Jiangyin Neptune Marine Appliance Co. A special investigation committee was also formed to investigate the independent PwC findings on the transactions and other connected matters.

*Resources Prima: Commenced production at new mine, IPPKH2, ahead of schedule. As at 31 Aug, it has mined about 88,200 tonnes of coal at the new 897.56 ha site.*Avi-Tech: Removed from the SGX watch-list with effect from 16 Sep.


Economy: Weak underlying retail spending in Jul- Retail sales in Jul rose 2.8% (est: 11.4%, prior: 1.3%) to $3.7b in Jul, lifted by a 36.5% surge in motor vehicle purchases.

- Excluding that, retail sales slumped 3.1% (est: -2.8%, prior: -2.5%).
- Sales at supermarkets were resilient (+0.3%), which should translate to stable revenue for operators such as Sheng Siong and Dairy Farm.

Other notable segments:
- Watches & jewellery (-9.6%)
- Food & beverages (-7.5%)
- Recreational goods (-5.6%)
- Medical goods & toiletries (+4.5%)
- Spending at restaurants slipped 0.2%, which could be an indicator for weak sales at restaurant owners like Jumbo Group, Soup Restaurant, Katrina Group and Japan Foods.
- Overall, the gloomy set of retail data would likely continue to cap rental rates for retail landlords.
- Maybank KE prefers Starhill Global (TP: $0.89), followed by CapitaLand Mall Trust (Hold, TP $2.10) and Frasers Centrepoint Trust (Sell, TP: 1.90).

Thursday, September 15, 2016


Olam: (S$2.04) Embarking on another acquisition spree?
- Olam is looking to acquire more assets as it pushes into its next phase of growth
- With a cash hoard of $2.15b as at 2Q16, the group will be hoping to leverage on the current consolidation wave
- It is still working to derive synergies from the consolidation of its acquisitions over the past two years
- Nonetheless, Olam’s substantial shareholders have been relatively supportive of its strategy
- The counter is currently trading at 17x forward P/E and 1.24x P/B.

SG Market (15 Sep 16)

Cautious trading is expected as investors pare risks and look to BoJ and FOMC policy meetings next week.

Defensive stocks remain in favour, with yield and consumer names preferred.Regional markets slipped in early trading in Tokyo (-0.6%) and Sydney (-0.2%). Seoul market is closed for public holiday.

STI see immediate support at 2,800 (200-dma), with topside resistance at 2,880.

Stocks to watch:*Best World: Acquisition of its manufacturing facility in Singapore has been completed, enabling the direct seller to support the anticipated surge in demand for its skin care products in China. MKE last had a BUY with bonus-adjusted TP of $2.10.

*Mapletree Logistics Trust: Completed the RM160m acquisition of Mapletree Shah Alam Logistics Park in Malaysia, bringing the portfolio to 123 properties worth $5.2b. The industrial landlord trades at an indicative 6.8% yield and 1.1x P/B.

*Roxy Pacific: Acquiring a freehold residential site with land area of 7,685 sf at Jalan Eunos for $11m, or $1,020 psf ppr. Roxy intends to amalgamate it with an adjourning plot, which was previously acquired in Nov’15 at $779 psf ppr, to build apartments.*Allied Tech: Proposed acquisition of six parcels of freehold land in Malacca, Malaysia, for RM7.6m, to construct a factory for its manufacturing and operating activities. The purchase consideration will be funded by bank borrowings.

*Swiber: SGX confirms probe into possible disclosure breaches, following Swiber's shock application for winding up action.

*Kitchen Culture: Disclosed it is considering the issue of up to US$20m convertible notes to a potential investor.

*New Silkroutes: Acquiring 51% stake in loss-making Healthsciences Int'l (HSI) for $2.2m. HSI operates a complementary integrative healthcare clinic and also provides management consulting services for healthcare firms. Based on independent valuation, HSI is valued at $8.5m with book value of $2.1m.

*Secura: Formed a 50:50 JV with Bursa-listed Willowglen to provide security-related services and products in Malaysia.

Wednesday, September 14, 2016


GLP is acquiring its third US portfolio for US$1.1b from Hillwood Development, a premier property developer founded by the son of Texas billionaire and former US presidential candidate Ross Perot.

Post acquisition, GLP will become the second largest logistics property owner and operator in US after Prologis and increase the number of assets under its portfolio by 32 to 1,434.

The portfolio comprise 15m sf of gfa with facilities in Atlanta, Chicago and Los Angeles which are riding on the e-commerce growth. Its biggest customers include household names like Amazon, Home Depot and FedEx.

The deal will take place in phases. An initial US$700m of the portfolio, comprising 10m sf of newly built and fully occupied logistics facilities, will be acquired in Dec '16, while the remaining US$400m will be acquired in phases upon completion and full lease-up.

GLP will be the asset manager of these assets, and intends retain ~10% in the portfolio post-syndication.

The purchase will be funded by US$470m equity and US$635m debt. The US$47m equity is expected to generate 13% ROE in the first year of investment.

That said, a foreign broker opines that the deal is a marginal accretive, as the portfolio is small in scale (US$1.1b vs existing US$13b US AUM). The 5.7% cap rate of the deal is also slightly lower than current portfolio at 5.9%.

The street currently has 11 Buys, 3 Holds and 2 Sells on the logistics counter with TP of $2.19.

SG Market (14 Sep 16)

SG Market: Singapore market will likely be weighed by the broad selloff in Wall Street amid Fed rate uncertainty and sharp drop in crude prices.

Regional markets opened lower in Tokyo (-0.6%) and Sydney (-0.1%). Seoul market is closed for public holiday.

STI sees immediate support at 2,800, with topside resistance at 2,880.

Stocks to watch:
*ComfortDelGro/SMRT: Public transport fares in Singapore could be slashed by as much as 5.7% in 2017 following a 1.9% cut this year, amid falling energy prices and deflationary pressures. MKE last had a HOLD on ComfortDelGro with TP of $2.63.

*SGX: Hopes to extend the reach of investors after procuring access to S&P Global Market Intelligence’s Alpha Factor Library for an undisclosed fee. The database will help identify sources of alpha and enhance SGX's existing index research and design capabilities, while developing further customisation of index offerings.

*Perennial: Gains immediate access to the Shanghai eldercare market after its move to acquire a 49.9% stake in Renshoutang for Rmb735.5m ($148m), or 12.9x P/EBITDA. Renshoutang currently operates a portfolio of 11 eldercare facilities comprising 2,400 beds and related assets, located predominantly in Changning district in Shanghai, China.

*Bumitama Agri: Proposed acquisition of a 95% stake in Gemiland Makmur Subur for $1.3m will boost its land bank by 2.5% to 212,190 ha. MKE last had a Buy with TP of $0.97.

*Darco Water: Secured $19.8m worth of orders comprising a desalination project for the Bajiao power plant in Shandong, China ($9.9m), wastewater treatment EPC contract in Malaysia ($2.4m) and a pneumatic waste conveyance system system in Singapore ($4.4m). The new contracts are expected to have a positive material impact for the group in FY16.

*iX Biopharma: Received positive test results for its novel sublingual sildenafil wafer (PheoniX) study, and will subsequently apply for the registration of the erectile dysfunction therapy for sale in Australia.

*Uni-Asia: Jointly investing with real estate investment firm CPG, in a small residential property project in Japan. Uni-Asia will pay US$0.5m for a 20% stake in the JV and provide fee-based development and investment management services to the project.

*Regal Int'l: 55%-owned subsidiary entered into a Heads of Agreement with the China-Malaysia Qinzhou Industrial Park Administrative Committee for potential development projects in an industrial park situated in Qinzhou, China.

*Equation Summit: Wal-Mart has launched the proof-of-concept of Equation's asset protection technology for tablets sold at the store. Essentially, the technology is aimed at improving the retail eco-system by preventing theft via locking the device digitally until the point-of-sale.

*Samudera Shipping: Has existing slot exchange arrangements with beleaguered Hanjin Shipping for various services. Net exposure is estimated at US$2.5m-US$3m. It is currently looking for replacement cargo and will undertake the realignment of service routes to mitigate the impact from Hanjin’s bankruptcy proceedings.

*Hoe Leong: Otto Marine withdrew application with Singapore High Court to wind up Hoe Leong after the latter paid US$0.9m without admission of liability that the debt is due.

Tuesday, September 13, 2016

Perennial Real Estate

Perennial Real Estate: Acquired 49.9% in Renshoutang, the largest private integrated eldercare services operator in Shanghai, for Rmb735.5m ($148m), or 12.9x P/EBITDA. It currently operates a portfolio of 11 eldercare facilities, with over 2,400 beds, and four pharmacies, each with a dedicated TCM clinic, and all of which are located predominantly in Changning District in Shanghai.This gives Perennial the immediate access to the eldercare industry, and the group intends to subsequently scale the business to become the largest eldercare services operator in the Yangtze River Delta Region to meet the rising demand for integrated medical and eldercare driven by China’s aging population.No details provided at this point on pro forma numbers, or the trading resumption for the counter.

Counter to resume trading at 12.45pm


AREIT: (S$2.44) Two more accretive acquisitions in Australia
- AREIT acquiring two industrial properties in Australia for A$168.2m.
- Expected to lift overall net property income by 6.5% in the first year, with rental leases embedded with annual escalation of between 3.5%-4%.
- Funding for the new acquisition will be via its recent private placement ($2.417 apiece).
- AREIT's price correction today caused by rate hike jitters may present a good entry opportunity for longer-term investors, backed by a pro forma yield of 6.3%.
- MKE last had a BUY with TP of $2.70.

SG Market (13 Sep 16)

Volatility is expected to hit the market as investors tackle mixed signals from Fed officials on the US rate hike. We remain advocates on consumer and yield plays for their defensive nature, with counters such as Sheng Siong, AREIT and MINT.Regional markets opened higher in Tokyo (+0.5%), Seoul (+0.9%) and Sydney (+1%).

STI has broken below the 2,880 support, with the next at 2,800. Overhead resistance is now reset at 2,880.

Stocks to watch:
*GLP: To acquire its second portfolio of industrial assets in US comprising a total ~15m sf gfa for ~US$1.1b. GLP intends to seek syndication for the stake and ultimately retain ~10% in the portfolio. Separately, 50:50 JV with Canada Pension Plan Investment Board has commenced development of a modern logistics property GLP Neyagawa worth ¥5b (US$49m), a 27,000 sqm project in Osaka targeted for completion in 1QFY19.

*Ascendas REIT: Acquired two industrial properties in Australia for A$168.2m, comprising a business park in Sydney (A$143.4m) and a logistics property in Melbourne (A$24.8m). The new assets are expected to add 6.5% to overall NPI in the first year, with the leases embedded with rental escalation of between 3.5%-4% per annum. Pro forma FY3/16 DPU is estimated to rise by 0.1% to 15.374¢. MKE last had a BUY with TP of $2.70.

*CWT: Granted full capital markets services license by the MAS, which allows for the offering of financial and commodity derivatives. Separately, CWT updated that controlling shareholder C&P is still in negotiations over a potential buyout.

*Vard: Secured a new contract for an equipment and electrical installation package to Cochin Shipyard for an undisclosed sum, for a vessel under construction for the Indian Government.

*SBS Transit: Discovered hairline cracks on the bogie frame of 11 Sengkang-Punggol LRT trains during a planned fleet-wide inspection. Six of the trains have been restored, and the remaining five will be reinstated in Oct '16. Management disclosed that services have not been affected and costs will be borne by the manufacturer, Mitsubishi Heavy Industry.

*Serial System: Investing US$0.45m for a 45:55 JV in Hong Kong with South Korean-listed Unitrontech, in which the group holds a 8.2% interest. The JV Unitrontech China will engage in marketing and distribution of Micron memory products, with a focus on automotive market in China.

*ISDN: Appointed Shenwan Hongyuan Capital as its compliance adviser for its proposed dual primary listing in Hong Kong.

*China New Town: Entered strategic cooperation framework agreement with Danyang Municipal Government for investment, development and operation in the education industry. In relation, the group injected Rmb300m into Danyang Education for a 27.3% stake, to develop the Zhongbei College project, and obtain a guaranteed 9.8% return during the one-year investment period.

*Secura: Secured its first Chinese contract in Chongqing, for security consultancy services at upcoming integrated development Raffles City Chongqing, by CapitaLand. It hopes to use the contract as an entry point into the Chinese security services market.

Friday, September 9, 2016


Cogent has finally secured the long awaited approval from JTC to develop Phase 1 of its Jurong Island Chemical Logistics facility (JICL).

The two-phase development will occupy up to 6-ha of land, with a total built-up area of about 150,000 sqm. The specifications suggest that JICL could replicate the design of its existing Cogent 1. Logistic Hub (C1.LH), which integrates five floors of warehouse space with a patented roof top container depot concept.

As previously highlighted, JICL could add $15.4m to the group's net operating profit from 2019 onwards, based on 2015 market warehouse rental and occupancy. This is equivalent to 55% of Cogent's FY15's NOPAT.

For phase 1, a 3.5-ha land plot at Tembusu Crescent will be allocated to Cogent at preferential land cost, similar to the case of C1.LH.

Development for the 1st phase of JICL will need to be completed within three years from Apr '17, and upon completion, the group will be granted a 30-year lease to operate the facility on condition that it will be used for container depot, warehousing or other logistics related services only.

As for phase 2, the group can apply to JTC for land allocation of the remaining 2.5-ha no later than four year after phase 1 commences operations. Despite the maximum timeframe of seven years, the terms do not seem to prevent Cogent from applying phase 2 earlier, as the group previously only took about two years to build the C1.LH.

Separately, the logistics service provider will also be applying for Land Intensification Allowance (LIA) from Economic Development Board (EDB) for the phase 1 development, which could yield substantial tax benefits going forward.

With the approval for JICL, Cogent will now be in a stronger position to showcase its rooftop depot design to other interested parties, and potentially monetising the intellectual property.

The group will update on the LIA application status, as well as potential development costs at a later date.

Advancer Global

Advancer Global: (S$0.44) Buying two real estate management service providers
- Acquiring 76% stake in two real estate management service providers for $3m, or 9.7x P/E and 3.8x P/B.
- The deal is expected to raise pro forma FY15 EPS to 3.59¢ (+6.8%) and lower its NTA/share to 1.98¢ (-46.2%).
- At the current price, Advancer is trading at 17.3x trailing P/E and an indicative dividend yield of 2.9%.

SG Market (09 Sep 16)

SG Market: The Singapore market could be in a tight situation as a sharp recovery in oil-related counters due to the recent spike in crude oil prices may be pared by profit-taking in the broader market following ECB inaction on additional stimulus.

Regional bourses opened generally lower in Tokyo (+0.4%), Seoul (-1.1%) and Sydney (-0.9%).

Immediate support for STI is at 2,880, with overhead resistance at 2,960.

Stocks to watch:
*Cogent Holdings: Obtained the long awaited approval from JTC to commence development for Phase 1 of its patented integrated logistics hub in Jurong Island, to be completed within three years from Apr '17. When operational, the entire development could add $15.4m to the group's net operating profit in FY19/20, or 55% above FY15's figures.

*Advancer Global: Acquring 76% stake in two real estate management service providers for an aggregate $3m (9.7x P/E and 3.8x P/B), in a bid to grow its facilities management business. Pro forma FY15 EPS is estimated to rise 6.8% to 3.59¢, while NTA/share will be reduced to 1.98¢ (-46%).

*Tat Hong: Ceased discussions on the potential buyout due to the current challenging economic conditions. Counter could slump back towards the $0.40 (-23%) pre-takeover talk level.

*Yoma: Appointed by JC Bamford Excavators, the world's third largest manufacturer of construction equipment, as the exclusive distributor for the Myanmar market.

*The Trendlines Group: Non-binding MOU with German medical device company Braun Melsungen AG, for investment and incubation of early-stage healthcare companies in Singapore and the region. Braun intends to hold a minority stake in the entity and will support the development of portfolio companies with its expertise in the medical technology field.

*Mermaid Maritime: Awarded two subsea contracts in SE Asia worth a total of US$5.1m, for charter of a dive support vessel with heavy duty work-class ROVs for a 30-day period, as well as inspection services to a third party diving vessel for 45 days. Additionally, group announced a one month work extension valued at US$1.8m, by a major EPC contractor in the Middle East for a dive support vessel.

*Civmec: Setting up a 88:12 JV with Mala to provide construction and engineering services to O&G, metals, minerals, and infrastructure industries in Papua New Guinea.

*Oceanus: Signed binding term-sheet with two key creditors, Ocean Wonder Int'l , and BW Investment, to covert $54.2m out of total $71.9m outstanding debt into new Oceanus shares at price ranging between 0.3¢ and 2.17¢ apiece. The expiry date for the remaining debt of $17.7m will also be extended to end-2018 from end-2016, and will also cease to accrue interest from Jul '16 onwards.

Thursday, September 8, 2016

Marco Polo Marine

Marco Polo Marine (MPM): Bracing for liquidity crunch ahead of $50m MTN expiry next month
- Meeting noteholders on 12 Sep to discuss option for its $50m 5.75% note, expiring on 18 Oct '16
- as at Jun '16, current liabilities of $232m > current assets of $111.1m; cash balance at $18.3m
- previous signs of crack - abrupt attempt to cancel a US$214.3m jack up rig contract with Semb Marine
- MPM total debt $253.8m smaller than Swiber's $1.37b, net gearing 1.4x vs 1.6x
- principal bankers and joint book runners for the MTN facility, DBS and UOB, will be under the spotlight
- Maybank KE is Negative on O&M sector, and has Sell call on DBS (TP: $14.30) and Hold rating on UOB (TP: $18.34)

SG Market (08 Sep 16)

SG Market: The Singapore market could face slight profit taking as economists pared their 2017 economic growth estimate to 1.8% from 2.1%, while keeping 2016 forecast of 1.8% unchanged.

Regional bourses opened generally lower in Tokyo (-0.1%), Seoul (+0.4%) and Sydney (-1.1%).

Immediate support for STI is at 2,880, with overhead resistance at 2,960.

Stocks to watch:
*Economy: Economists trimmed their 3Q16/4Q16 GDP growth forecasts to 1.7%/1.5% from 1.8%/1.7%, respectively, but kept the full year estimate at 1.8%. Growth estimate for 2017 was also pared to 1.8% from 2.1%.

*Pacific Radiance: Reached a settlement with Shanghai Waigaoqiao Shipbuilding & Offshore and China Shipbuilding Trading, after the two shipyards failed to deliver two platform supply vessels to the group. The shipyards will refund the full pre-delivery instalment of US$10.6m and equipment cost of US$0.1m, within 60 days.

*Marco Polo Marine: Latest O&G services provider to come under liquidity crunch. The group will be holding an informal meeting with its noteholders on 13 Sep to discuss options in relation to its $50m 5.75% MTN, which expires on 18 Oct '16. Financiers DBS (Sell, TP $14.30) and UOB (Hold, TP $18.34) to come under scrutiny.

*Keppel Corp: Investing US$48.6m into a 40:60 JV with Myanmar conglomerate Shwe Taung, to develop 260 units of premium serviced residences and offices in Phase 2 of Junction City, Yangon. Construction for the 50,000 sqm gfa development is expected to commence in 2018. MKE last had a SELL with TP of $4.50.

*GLP: Completed the 24.49% syndication of its US portfolio of industrial assets for US$485m, reducing its stake to 9.85%.

*Cache Logistics Trust: Suing parent C&P and C&P Holding to claim double the amount of rent payable under the master lease agreement arising from failure of Schenker to vacant 51 Alps Avenue following expiry and non-renewal of the anchor lease in Aug.

*TEE Int'l: Awarded $95m worth of new engineering contracts, bringing outstanding order book to $324m. The new addition & alteration and M&E contracts are scheduled for completion over the next 33 months.

*Rowsley: Acquiring Ariva, a hotel management and consultancy firm, which has more than 6,500 room keys under management and in pipeline spread over 47 properties in the Asia-Pacific region, for up to $10.6m. The acquisition will be funded via cash ($1m) and 8m new shares issued at $0.15/share, with the remaining subject to the achievement of cumulative net profit target of $5.2m up till Dec '19.

*Yuexiu Property: Acquired a 52,018 sqm land parcel in Jiangmen province, China, for Rmb514.4m, or Rmb2,800 psm ppr. This brings the group's total land bank to 10.6m sqm.

*CSC Holdings: JV with Triplestar Properties and Zillion Holding entered conditional agreements with Sime Darby to purchase two pieces of freehold land in Negeri Sembilan, Malaysia, totalling 15 acres for RM43m ($14m).

*Wong Fong: 1H16 net profit tumbled 76.9% to $0.8m due to IPO expenses, higher provision for doubtful debts and increased rent. Revenue fell 30.6% to $30.6m on reduced project and equipment sales. NAV/share at $0.1359.

Wednesday, September 7, 2016

SG Market (07 Sep 16)

SG Market: Positive sentiment could nudge the market higher following the overnight rally in Wall Street and crude oil. We favour consumer and yield plays such as Sheng Siong, AREIT and MINT.

Regional bourses opened relatively mixed in Tokyo (-0.8%), Seoul (+0.2%) and Sydney (+0.1%).

STI has broken above the 2,880 resistance, with the next objective at 2,960. Underlying support is now reset at 2,880.

Stocks to watch:
*CapitaLand Mall Trust: Broke ground for the integrated project at the former Funan mall, with scheduled completion in 4Q19. The 887,000 sf development will comprise retail (500,000 sf), office (266,000 sf) and residential (121,000 sf) components. MKE last had a Hold with TP of $2.10.

*Frasers Centrepoint: Secured $140m in sales at the weekend launch for Wonderland, the final residential stage of Central Park in Chippendale, Australia. Wonderland comprises 294 apartments and terraces, with prices ranging from $0.6m to $2.8m.

*SGX: Sets up the Securities Industry Working Group, comprising a broad range of stakeholders and representatives from the investment community, in a bid to improve the Singapore equity market's operational resilience.

*Vallianz: Proposed fund raising to strengthen balance sheet via renounceable non-underwritten 1-for-1 rights issue at $0.02 apiece, attached with two free detachable warrants carrying an exercise price of $0.02 each. Net proceeds of $71.8m could be used to meet payment claims of US$63.5m from parent Swiber, which has granted a charge over its 25.2% shareholding in Vallianz in favour of DBS.

*China Minzhong: Pre-conditional takeover offer by Marvellous Glory, owned by Anthoni Salim (93%) and CMZ BVI (7%) by way of either 1) $1.20 cash per share or 2) $0.7665/share plus $0.4335 in principal amount of zero coupon exchangeable bonds. The offer is subject to minority approval of 82.9% stake disposal by Indofood Sukses Makmur.

* Launched B2B travel website in China, which focuses on outbound travel. Group disclosed that a virtual reality tour of various Asia Pacific tourist attractions is currently being developed.

*KS Energy: 80.1%-owned subsidiary KS Drilling clinched a US$7m geothermal drilling contract in North Sumatra, Indonesia. Works expected to commence in mid-4Q16 for a period of six months.

*Sunpower Group: Secured a Rmb20.7m contract to supply flare systems to Shaanxi Yanchang Petroleum Group, to be delivered in 2017.

*Global Invacom: Obtained a patent in China for the structure and components of an automatic cap press machine, which management believes to lift process efficiency by >30%.

*ValueMax: Acquired a HDB shop house pawn shop, Teck Chong Pawnshop, including the strata unit, for $3.8m.

*Karin Technology: Appointed by GN Netcom Asia as the exclusive distributor for its full range of Jabra-branded products in Hong Kong and Macau wef 1 Oct '16.

Tuesday, September 6, 2016


M1: (S$2.52) Axiata mulls potential stake purchase
- Largest shareholder and Malaysia's largest mobile operator, Axiata Group is keen to raise its stake in M1
- Axiata currently owns a 28.5% stake in M1, which was acquired in 2010 at an average cost of ~$1.42 (after dividends)
- Earlier this year, Bloomberg reported that Temasek Holdings was weighing the possibility of Keppel Corp selling its 19.2% stake in M1.
- Maybank KE recently downgraded the stock to Sell from Hold with a TP of $2.04 (prior: $2.94) and FY16e dividend yield of 5.7%.

SG Market (06 Sep 16)

SG Market: Singapore market could continue its upswing as oil bounced on a Saudi-Russian pledge to stabilise prices after meeting at the G20 summit and investors dialled back expectations of a Sep rate hike following a disappointing US jobs report.

Regional bourses saw a muted open in Tokyo (flat), Seoul (flat) and Sydney (-0.3%).

From a chart perspective, topside resistance for the STI is at 2,880, with underlying support at 2,800.

Stocks to watch:
*Economy: Nikkei Singapore PMI rose to 52.3 (Jul: 50.7) for a fourth consecutive month, aided by output and new orders from improved domestic demand, but exports fell for a sixth month.

*City Dev: Took a 20% stake in mamahome, a fast-growing Chinese online apartment rental platform with presence in >20 cities in China, for Rmb100m, alongside other investors Shanghai Chongfu (56%) and E-House Capital (24%). The platform reportedly has more than 100,000 listings, with >75% of listings in Tier 1 cities such as Shanghai, Beijing and Guangzhou. MKE has a Hold with TP of $9.17.

*Q&M: Maintains its acquisition momentum with completion of $1.3m acquisition of Jurong Point Dental Surgery, which comes with a profit guarantee of the sale amount over an eight-year period. MKE last had a Buy with TP of $1.08.

*BreadTalk: Acquiring the remaining 15% of Megabite (HK) for $1.7m. Megabite owns BreadTalk Concept Hong Kong, Food Republic Guangzhou F&B Management and Food Republic Shenzhen F&B Management.

*Sim Lian: Buyout offer of $1.08/share has been declared unconditional in all respects after the controlling shareholder garnered 90.1% of total share capital. The counter will cease trading at close of odder and the offeror intends to exercise its right of compulsory acquisition. Offer remains open for acceptance until 5.30 pm on 10 Oct.

*Silverlake: Established a Vietnamese subsidiary to provide workflows and networking systems to the insurance industry there.

*Ezion/ Charisma Energy: Both parties entered into a 50/50 JV to venture into the electricity trading business.

*Hyflux: Marking its foray into the consumer business with the upcoming launch of its City Square Mall outlet on 8 Sep, which retails bath equipment that leverages on Hyflux’s special oxygenated water.

*Chiwayland: Established financing partnership with Shanghai Caitong Asset Management (Caitong), in which Caitong will finance the group's property development projects up to a maximum of Rmb55m over an 18-month period, in return for a guaranteed 11% return on its principal.

*Rex Int'l: Management assures that the group's balance sheet remains financially sound, with liquid assets of US$68.5m exceeding total debt of US$60.5m, and supported by tax refunds from the Norwegian government. However, we note that the upstream O&G company bled further in 1H16 with operating cash outflow of US$18m (1H15: US$5.5m) depleting its cash balance to US$36.3m (FY15: US$53.5m).

*AVIC International Maritime: Awarded a €3m contract to provide design services for a ro-pax vessel to be built for Danish company Mols-Linien. Work will be carried out over 12 months.

*Mermaid Maritime: Clarified recent media reports that delivery of its vessel had been delayed to 30 Jun '17 and that it is currently evaluating options. Reports had previously surfaced that it had sold the vessel to Ultra Deep Subsea with delivery in 1Q17.

*Ipco: Profit warning for 1QFy17 amid a decrease in demand for burn-in boards in the semiconductor industry.

Monday, September 5, 2016


Telecoms: Incumbents to feel competitive heat; downgrade to negative*
- MKE is downgrading the telecoms sector to Negative from Neutral in light of heightened competitive risk on the likely entry of a fourth telco.
- M1 – Most at risk, downgraded to Sell from Hold with TP of $2.04 from $2.94
- StarHub – Enterprise to hold the fort, downgraded to Hold from Buy with TP of $3.52 from $4.15
- Singtel – Least affected, although trouble is brewing in India, reiterate Hold but with lower TP of $3.70 from $4.41

SG Market (05 Sep 16)

SG Market: The market could be set for a slight rebound after a soft US job report allayed fears of an interest rate hike later this month.

We remain advocates of consumer, healthcare and defensive names such as Sheng Siong, Best World, mm2, Ascendas REIT and MINT.

Regional markets opened higher in Tokyo (+1.2%), Seoul (+0.9%) and Sydney (+0.8%).

Immediate support for STI is at 2,800, with topside resistance at 2,880.

Stocks to watch:
*CapitaLand: Updated that its Rmb24b ($4.9b) Raffles City Chongqing, Singapore’s largest single development in China, is on track for completion in phases from 2018 onwards.

*Oxley: Entered MOU with Chongqing Liangjiang New Area Administrative Committee to develop a Rmb5b integrated medical hub (Lijia Health City), comprising a general hospital, specialist centres, high-end residences, hotels, service apartments, nursing homes and other-related facilities, on a 533,000 sqm plot in the Lijia CBD of the Chongqing Liangjiang New Area.

*Innovalues: Advised that matters have progressed in relation to a possible buyout but talks are still ongoing. MKE last had a Buy rating on the precision parts maker with TP of $1.15.

*Q&M: Completed the acquisitions of 1) Tooffy for $0.3m, which comes with a five year profit guarantee of $0.2m p.a., and 2) Ho Dental Surgery for $1.7m, with a profit guarantee of $1.2m for 5.5 years. MKE last had a Buy with TP of $1.08.

*Yoma: Acquired the remaining 25% interest in its Balloons over Bagan hot air balloon business in Myanmar via 70% owned Chindwin Holdings for US$1.5m, with intention to restructure and spin-off its tourism assets into a new company.

*Cambridge Industrial Trust: Proposed sale of the remaining leasehold interest in a light industrial building at 2 Ubi View for $10.5m, or a 6% premium to its book value.

*Sunvic: Divesting its stake in loss-making Jiangsu Jurong Petrochemicals to Shenzhen Qianhai Gatway Petrochemical for Rmb388m, and expects to book a gain of Rmb14m.

*Jasper Investments: Reached in-principle understanding with Guangdong Zhuhai City LuYuan Construction Engineering (LuYuan) to project-manage certain parts of the infrastructural projects secured by the Chinese company. In that respect, Jasper has been earmarked for two LuYuan projects in the Pearl River Delta region (marine transportation) and Sanya (reclamation works).

*Delong: Proposed to invest $8.2m and $11.6m in Shunwei Fund and CEG Fund, respectively, as part of its diversification efforts. Shunwei is a $204.2m PE fund which invests in internet, technology, media and telecoms industry in China, while CEG is a US100m PE fund that invests in seed and early stage internet-related and IT companies in the US.

*China Minzhong: Requested for an extension to the trading halt until 5pm on 6 Sep, as it is currently finalising terms for the proposed takeover by PT Indofood Sukses Makmur at $1.20/share.

*Excelpoint: Private placement of 15m shares (12.8% of enlarged share capital) at $0.525 (34.6% premium to last close) to an investment company to raise net proceeds of $7.8m intended for strategic M&As and the development of new technology, applications and R&D.

*Swiber: Interim judicial managers updated that as at 1 Sep, total sum of claims received amounted US$227m.

*Creative: Filed infringement lawsuit against ARM regarding four of its patents.

*Debao Property: Removed from SGX Watch-List after meeting exit criteria.

*Nico Steel: Placed on the SGX Watch-list with effect from 5 Sep 2016.

Friday, September 2, 2016


Three bidders, MyRepublic, AirYotta, and TPG Telecom, have formally thrown their names in the hat to become Singapore's fourth telco.

The trio have expressed their interest (EOI) to bid for a chunk of available spectrum that will be on auction this quarter.

Of the three players, only MyRepublic needs no introduction, being an upstart ISP and broadband network operator started in 2011 by former StarHub executive and currently has a subscriber base of 55,000. MyRepublic was previously reported to have faced funding issues for the auction.

AirYotta is an unknown entity that is fronted by former executives of OMGTel, which was backed by Consistel. The latter did not enter the race after a recent misstep when it was fined by the IDA for providing misleading information and committing to an unauthorised network asset sale.

A surprising third player is TPG Telecom, Australia's second largest Internet Service Provider (ISP) and largest Mobile Virtual Network Operator (MVNO). TPG is well known in Australia as a very competitive ISP and mobile service provider.

The IDA will now assess the three submissions within the next 20 working days based on their business plans, technical capabilities and whether they are "fit-and-proper persons". An auction of the frequency is expected to be carried out in Oct.

Notably, the street is gearing up for the prospect of a fourth telco in view of the three potential spectrum bidders, which includes a seasoned player (TPG).

Of the three, Maybank KE opines that the industry could be negatively affected if either MyRepublic or TPG Telecom becomes the fourth telco. This would stem from the two players' low-cost, disruptor approach, which could lead to intense competition and ARPU compression.

The house's last calls are Singtel (Hold, TP: $4.41), M1 (Hold, $2.94) and StarHub (Buy, TP: $4.15).

Land transport

Land transport: Grab-Trans-cab partnership may wrestle drivers away from competitors
- Grab entered exclusive partnership with Trans-cab, Spore 2nd largest taxi operator
- All 7,000 drivers under Trans-cab will only use Grab as its external online passenger booking platform
- Grab to offer app training, and special smartphone and telecom deals to drivers
- Arrangement can help fence off competition for drivers from Uber, Comfort, and SMRT
- This may concern Comfort and SMRT as both encountered deteriorating taxi operating metrics
- Maybank KE is negative on Land Transport sector. Comfort (Hold, TP: $2.63), SMRT (Accept Temasek's offer)

SG Market (02 Sep 16)

SG Market: Cautious trading is expected as investors hold off fresh positions in risk assets ahead of the US job report this evening, which could give policy makers the justification to raise rates as soon as this month.

Regional markets opened lower in Tokyo (-0.2%), Seoul (-0.1%) and Sydney (-0.5%).

Immediate support for STI is at 2,800, with topside resistance at 2,880.

Stocks to watch:
*STI: In its Sep quarterly review, Jardine Matheson will be added to the index, while Sembcorp Marine will be removed. Reserve list comprises Mapletree Commercial Trust, Suntec REIT, Keppel REIT, Mapletree Industrial Trust and Sing Post.

*Telecom: Three bidders have emerged for Singapore's fourth telco licence, namely MyRepublic, AirYotta and TPG Telecom. MyRepublic's appearance is no suprise, AirYotta is an unknown entity fronted by ex OMGTel (Consistel) executives, while TPG is a seasoned Australian player. IDA will review their EOIs within the next 20 working days, which could lead to increased industry competition and ARPU compression. MKE's latest calls are Singtel (Hold, TP: $4.41), M1 (Hold, TP: $2.94), and StarHub (Buy, TP: $4.15).

*Property: MAS has finetuned the TDSR refinancing rule to give property borrowers more flexibility in refinancing their home loans. With immediate effect, loans for all homes bought before the TDSR framework can be refinanced above the 60% debt-to-income threshold (30% for HDB and ECs) as long as the borrower commits to repay at least 3% of the outstanding balance over a maximum of three years. MKE sees minimal impact to the market from this revision.

*CapitaLand: Launched move-in-ready houses at Victoria Park Villas in District 10. The 106 semi-detached houses and three bungalows will feature built-in smart home systems and occupy a 403,000 sf site with prices ranging between $1,008 - $1,056 psf.

*Frasers Centrepoint: Its hospitality arm disclosed that Fraser Residence Putrajaya will be opened in 2019, adding to its growing Malaysia serviced residence portfolio across eight properties with >2,400 units.

*First Resources: FFB harvest declined 10% y/y in Jul to 207,588 tonnes, on lower yield of 1.3 tonnes/ha (Jul '15: 1.6 tonnes/ha), while CPO production shrank 15.3% to 48,398 tonnes, and extraction rate dipped 0.9ppt to 21.8

*Infinio Group: Proposed issue of $20m 1% equity-linked redeemable convertible notes due 2019 to Advance Opportunities Fund 1. Proceeds will be used to for investments (70%) and working capital (30%).

*Best World: 1-for-4 bonus issue will go ex on 7 Sep.

Thursday, September 1, 2016

SG Market (01 Sep 16)

SG Market: Singapore shares could face further selling pressure following the sharp drop in crude price and upbeat US economic data adding more cause for the Fed to lift interest rates.

Regional markets opened lower in Tokyo (-0.1%), Seoul (-0.7%) and Sydney (-0.2%).

Immediate support for STI now seen at 2,800, with topside resistance at 2,880.

Stocks to watch:
*Banks: Jul loans rose 1.1% m/m (Jun: -0.4%) to $597b, the strongest since Jun '15. The surprise jump was mainly lifted by financial institutions (+11.9%) stemming from the hunt for yield, as well as general commerce, which cushioned the slowdown in construction lending.

*SingPost: Sold its 60% stake in Japan Self Storage for $2.4m and booked a $1.6m disposal loss, which confirms the impairment risk of the massive $579m goodwill in its balance sheet. MKE's last rating was a contrarian Sell with TP of $1.29.

*Sino Grandness. Updated that the recent 2.25m sale of shares by substantial shareholder Soleado Holdings that reduced its stake to 14.01% from 14.35% was due to Soleado's internal portfolio management. The Thai investment company has reassured that Sino Grandness remains one of its core strategic investments.

*mm2 Asia: Proposed 1-into-2 stock split to make each share more affordable to investors.

*Vallianz: Received letters of demand from Swiber's interim judicial managers for payments totalling US$63.5m. The group has declined payment arguing that the parties have substantial commercial dealing and a a practice of netting off receivables and payables. For reference, Vallianz had receivables/payables amounting US$65.9m/US$67.3m owing from/to Swiber as at Jun '16.

*SIIC Environment: Acquiring 60% in Ranhill Water Technologies for Rmb273.9m (1.3x P/B). Ranhill provides services for the industrial wastewater treatment market in China and its current concession contracts has a total design capacity of 260,000 tpd.

*Roxy Pacific: Acquired a freehold residential site, Harbour View Gardens along Pasir Panjang Road for $33.3m or ~$772 psf ppr.

*Darco Water: 60% owned unit acquired a four-storey office building in Hubei, China for $2.4m. The 1,493 sqm leasehold property (45 years) will be used for expansion.

*Otto Marine: Secured shipbuilding contracts worth US$8m, for harbour tugs from an Indonesian state-owned company. Delivery is expected in 4Q17.

*Trendlines: Commenced ADR trading on the US OTCQX under the symbol TRNLY. As there is no new issuance of shares, the ADR trading does not dilute existing shareholders.

*MMP Resources: Issuing 185.7m new shares to Singapore-based investment holding company. Vessel Gate Investment, at $0.007/share, or 75% premium on the last close. Net proceeds of $1.2m will be used to fund the potential acquisition of a Japanese ski operator.

*TSH: Following completion of recent disposals of its operating businesses, TSH has become a cash shell with cash of $32.7m ($0.136/share).

*Secura: Formed strategic alliance with M1 to be its cyber advisory and consultancy partner.

*Katrina: CFO Lee Li Eng has resigned with immediate effect to pursue personal interests.

*Aspial Corp: Repurchased $4m of the $80m notes issued at 4.5% in 2014.