Tuesday, September 20, 2016

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.

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