Public Transport Council (PTC) announced that it will lower Singapore's public transport fares by 4.2% from 30 Dec 2016 due to lower energy prices, limiting earnings upside for operators SMRT and SBS Transit (75% owned by ComfortDelGro).
A further 1.5% reduction will be staggered over to the next fare review exercise, likely to be held at end-2017 to early-2018. About 2.2m commuters will stand to benefit from the fare revision.
At the same time, PTC will be introducing a simplified fare structure based on distance travelled instead of distance of the fastest travel path. Additionally, fares for fully underground rail lines (Circle Line, North-East Line and Downtown Line) will be reduced to the same level as those above ground (North-South-East-West Lines), LRT and buses.
The fare reduction would translate to a $79m revenue impact for SMRT ($34.6m or 2.7% of 2015 revenue), SBS Transit ($8.9m, 0.9% of revenue) and LTA ($35.6m). As fares are being reduced, the public transport operators will be relieved from contributing to the Public Transport Fund this time round.
All in, market watchers estimate the fare cuts would shave 2.1% off ComfortDelGro's FY17e EPS to $0.16, implying a forward P/E of 16.4x.
The street has 10 Buy, 4 Hold and 1 Sell ratings and average TP of $3.11 for the transport group.
Monday, October 31, 2016
SG Market (31 Oct 16)
SG Market: Heightened uncertainty is set to rule the Singapore market this week with a BoJ policy update tomorrow, Fed meeting on Thu, which is anticipated to stand pat on rates, as well as more corporate earnings lined up, including:
- DBS (Mon am)
- SIAE (Tue)
- StarHub (Wed)
- SIA, Genting Sp (Thu)
- Sing Post (Fri)
But the biggest risk event will be the upcoming US presidential election on 8 Nov where a potential Trump victory could rock investor sentiment and create market volatility.Regional bourses opened weaker in Tokyo (-0.3%), Seoul (-0.2%) and Sydney (flat).Technically, STI could test the lower bound of its 2,800-2,880 consolidation band.
Stocks to watch:
*DBS: 3Q16 net profit of $1.07b (unch y/y, +2% q/q) came above expectations on higher non-interest income of $1.11b (+24% y/y, +2.6% q/q) due to higher contributions from wealth management, increased trading income and gains from investment securities, as well as lower expenses. Net interest income stayed relatively flat at $1.82b (unch y/y, -1% q/q) on narrower NIM of 1.77% (-1bps y/y, -10bps q/q) and tepid loan growth (+1.8% y/y, +1.9% q/q). Provisions spiked to $436m (+145% y/y, +19% q/q) on increase in general allowances, raising NPL ratio to 1.3% (3Q15: 0.9%, 2Q16: 1.1%). Tier 1 CAR improved to 14.4 (2Q16: 14.2). NAV/share stood at $16.68.
*DBS: Agreed to acquire ANZ's wealth management and retail banking business in five Asian countries (Singapore, Hong Kong, China, Taiwan and Indonesia) for a price tag $110m above book value. The portfolio of businesses comprises total deposits of $17b, loans of $11b, investment AUM of $6.5b. This will add $23b to the group's current wealth AUM of $159b, as well as $200m/600m to its FY17/18 income, with projected earnings accretion of $200m within three years.
*Frasers Hospitality Trust: 4QFY16 DPU to fell 9.4% to 1.19¢ on an enlarged unit base, bringing FY16 payout to 5.23¢ (-10.1%), missing estimates. Otherwise, revenue of $33.5m (+8.6%) and NPI of $28.6m (+11.5%) for the quarter were lifted by new contributions from Maritim Hotel Dresden and strong performance from Singapore and Australian properties. Aggregate leverage narrowed to 37.7% (-0.6ppt q/q) with effective borrowing cost of 2.55%. Trading at 7.6% yield and 0.83x P/B.
*Starhill Global: In-line 1QFY17 DPU of 1.3¢ (-0.8% y/y). Gross revenue slipped 2.7% to $55.3m on weaker contributions from properties in Australia, China and Japan, partially offset by stronger rentals from Singapore and Malaysia, while NPI fell at a slower pace of 1.7% to $42.9m on lower property expenses (-6%). Portfolio occupancy slipped to 93.8% (-1.3ppt q/q) on tenant transition in China. Aggregate leverage stood at 35.1% (+0.1ppt q/q) with average interest rate of 3.06%. P/B. NAV/unit at $0.91.
*Roxy-Pacific: 3Q16 net profit slid 39% to $8.1m, despite higher revenue of $90.9m (+3.7%) led by property development (+4.8%), although partially mitigated by the hotel ownership (-1.6%) segment. Gross margin shrank 6.1ppt to 20.3% on absence of write-back in provision for development cost, lower RevPAR for hotel business, and higher leasing and maintenance costs from the property investment segment. NAV/share at $0.4015.
*UIC: 3Q16 net profit slipped 1.9% to $64m on a $14.2m drop in contribution from JVs, amid completion of residential projects in earlier quarters. Revenue jumped 38% to $262m on stronger property sales, but gross margin shrank 4.5ppt to 35.5%. NAV/share at $4.35.
*Tianjin Zhong Xin Pharmaceutical: 3Q16 net profit eased to Rmb90.6m (-5.8%) on softer revenue of Rmb1.49b (-10.1%). Gross margin widened 5.5ppt to 31.6%, as direct costs declined faster than top line. Bottom line was further eroded by a Rmb57.4m drop in gains on associate disposal. NAV/share at Rmb5.39..
*Sino Grandness: Strenuously refutes allegations in the report released by GeoInvesting last week, citing misconstrued, erroneous and/or inappropriate interpretation of information that is likely to mislead shareholders and potential investors.
*MTQ: 2QFY17 net loss deepened to $4.3m (2QFY16: $0.5m) on a drop in revenue to $24.8m (-46%), due to weaker oilfield and subsea activities, and project deferrals. Gross margin narrowed 7ppt to 17% on pricing pressures. Bottom line was also further weighed by absence of insurance claims. NAV/share at $0.64.
*YuuZoo: Investing between US$50m and US$150m in film producer and distributor Relativity for up to a full buyout, to be funded by debt and other fund raising exercises to be carried out. Separately, group drew down $2.1m in funds from its facility provided by GEM Global Yield Fund through the issuance of 15m new shares at $0.14/share, for a major marketing push to launch a number of products on its platform. Under the facility agreement, GEM Global cannot sell more than 1m shares on any given day in the open market.
*GKE: Acquiring 100% interest in port operations and logistics service provider TNS Ocean Lines for $9m, to be satisfied with cash ($2.7m) and 52.5m shares at $0.12 each. The deal also include a profit guarantee of $3.5m p.a. for three years.
*Luzhou Bio-Chem Technology: Proposed to set up production facilities in Xinjiang, China, with an initial investment of Rmb120m. The investment may be increased to Rmb300m, subject to favourable market conditions in the future. The move is aimed at capturing demand for corn sweetener in North West China from major players such as Coca-Cola, and Pepsico.
*Vibrant: Proposing to acquire ASX-listed Chongqing based thermal coal producer, Blackgold International Holdings, for $137.6m via a scheme of arrangement. Post-deal, pro forma FY16 EPS is expected to surge to 3.76¢ from 1.86¢.
*Novo Group: Swung to 1QFY17 net profit of US$2.5m (1QFY16net loss: US$3.2m), boosted only by US$4.2m disposal gains. Revenue jumped 33% to US$22.4m, driven by higher trading revenue. Net liability/share at US0.6¢.
- DBS (Mon am)
- SIAE (Tue)
- StarHub (Wed)
- SIA, Genting Sp (Thu)
- Sing Post (Fri)
But the biggest risk event will be the upcoming US presidential election on 8 Nov where a potential Trump victory could rock investor sentiment and create market volatility.Regional bourses opened weaker in Tokyo (-0.3%), Seoul (-0.2%) and Sydney (flat).Technically, STI could test the lower bound of its 2,800-2,880 consolidation band.
Stocks to watch:
*DBS: 3Q16 net profit of $1.07b (unch y/y, +2% q/q) came above expectations on higher non-interest income of $1.11b (+24% y/y, +2.6% q/q) due to higher contributions from wealth management, increased trading income and gains from investment securities, as well as lower expenses. Net interest income stayed relatively flat at $1.82b (unch y/y, -1% q/q) on narrower NIM of 1.77% (-1bps y/y, -10bps q/q) and tepid loan growth (+1.8% y/y, +1.9% q/q). Provisions spiked to $436m (+145% y/y, +19% q/q) on increase in general allowances, raising NPL ratio to 1.3% (3Q15: 0.9%, 2Q16: 1.1%). Tier 1 CAR improved to 14.4 (2Q16: 14.2). NAV/share stood at $16.68.
*DBS: Agreed to acquire ANZ's wealth management and retail banking business in five Asian countries (Singapore, Hong Kong, China, Taiwan and Indonesia) for a price tag $110m above book value. The portfolio of businesses comprises total deposits of $17b, loans of $11b, investment AUM of $6.5b. This will add $23b to the group's current wealth AUM of $159b, as well as $200m/600m to its FY17/18 income, with projected earnings accretion of $200m within three years.
*Frasers Hospitality Trust: 4QFY16 DPU to fell 9.4% to 1.19¢ on an enlarged unit base, bringing FY16 payout to 5.23¢ (-10.1%), missing estimates. Otherwise, revenue of $33.5m (+8.6%) and NPI of $28.6m (+11.5%) for the quarter were lifted by new contributions from Maritim Hotel Dresden and strong performance from Singapore and Australian properties. Aggregate leverage narrowed to 37.7% (-0.6ppt q/q) with effective borrowing cost of 2.55%. Trading at 7.6% yield and 0.83x P/B.
*Starhill Global: In-line 1QFY17 DPU of 1.3¢ (-0.8% y/y). Gross revenue slipped 2.7% to $55.3m on weaker contributions from properties in Australia, China and Japan, partially offset by stronger rentals from Singapore and Malaysia, while NPI fell at a slower pace of 1.7% to $42.9m on lower property expenses (-6%). Portfolio occupancy slipped to 93.8% (-1.3ppt q/q) on tenant transition in China. Aggregate leverage stood at 35.1% (+0.1ppt q/q) with average interest rate of 3.06%. P/B. NAV/unit at $0.91.
*Roxy-Pacific: 3Q16 net profit slid 39% to $8.1m, despite higher revenue of $90.9m (+3.7%) led by property development (+4.8%), although partially mitigated by the hotel ownership (-1.6%) segment. Gross margin shrank 6.1ppt to 20.3% on absence of write-back in provision for development cost, lower RevPAR for hotel business, and higher leasing and maintenance costs from the property investment segment. NAV/share at $0.4015.
*UIC: 3Q16 net profit slipped 1.9% to $64m on a $14.2m drop in contribution from JVs, amid completion of residential projects in earlier quarters. Revenue jumped 38% to $262m on stronger property sales, but gross margin shrank 4.5ppt to 35.5%. NAV/share at $4.35.
*Tianjin Zhong Xin Pharmaceutical: 3Q16 net profit eased to Rmb90.6m (-5.8%) on softer revenue of Rmb1.49b (-10.1%). Gross margin widened 5.5ppt to 31.6%, as direct costs declined faster than top line. Bottom line was further eroded by a Rmb57.4m drop in gains on associate disposal. NAV/share at Rmb5.39..
*Sino Grandness: Strenuously refutes allegations in the report released by GeoInvesting last week, citing misconstrued, erroneous and/or inappropriate interpretation of information that is likely to mislead shareholders and potential investors.
*MTQ: 2QFY17 net loss deepened to $4.3m (2QFY16: $0.5m) on a drop in revenue to $24.8m (-46%), due to weaker oilfield and subsea activities, and project deferrals. Gross margin narrowed 7ppt to 17% on pricing pressures. Bottom line was also further weighed by absence of insurance claims. NAV/share at $0.64.
*YuuZoo: Investing between US$50m and US$150m in film producer and distributor Relativity for up to a full buyout, to be funded by debt and other fund raising exercises to be carried out. Separately, group drew down $2.1m in funds from its facility provided by GEM Global Yield Fund through the issuance of 15m new shares at $0.14/share, for a major marketing push to launch a number of products on its platform. Under the facility agreement, GEM Global cannot sell more than 1m shares on any given day in the open market.
*GKE: Acquiring 100% interest in port operations and logistics service provider TNS Ocean Lines for $9m, to be satisfied with cash ($2.7m) and 52.5m shares at $0.12 each. The deal also include a profit guarantee of $3.5m p.a. for three years.
*Luzhou Bio-Chem Technology: Proposed to set up production facilities in Xinjiang, China, with an initial investment of Rmb120m. The investment may be increased to Rmb300m, subject to favourable market conditions in the future. The move is aimed at capturing demand for corn sweetener in North West China from major players such as Coca-Cola, and Pepsico.
*Vibrant: Proposing to acquire ASX-listed Chongqing based thermal coal producer, Blackgold International Holdings, for $137.6m via a scheme of arrangement. Post-deal, pro forma FY16 EPS is expected to surge to 3.76¢ from 1.86¢.
*Novo Group: Swung to 1QFY17 net profit of US$2.5m (1QFY16net loss: US$3.2m), boosted only by US$4.2m disposal gains. Revenue jumped 33% to US$22.4m, driven by higher trading revenue. Net liability/share at US0.6¢.
Friday, October 28, 2016
SG Market (28 Oct 16)
Singapore market will continue to struggle as corporate earnings offer little catalyst to justify a rally to higher ground. Prefer USD beneficiaries such as STE, Venture, UMS and Innovalues.
Regional bourses opened mixed in Tokyo (+0.6%), Seoul (-0.2%) and Sydney (-0.1%).Technically, STI remains range-bound between the 2,800-2,880 consolidation band.
Stocks to watch:
*UOB: 3Q16 net profit of $791m (-7.8% y/y, -1.2% q/q) came in at upper end of estimates. Net interest income was stable at $1.23b (-0.4% y/y, +1.6% q/q) amid healthy loan growth (+7% y/y, +2.4% q/q) but was offset by tighter NIM of 1.69% (-8bps y/y, +1bps q/q)), while non-interest income slipped to $810m (-4.7% y/y, -0.4% q/q) mainly due to an absence of a one-off gain from sale of securities. Provisions jumped to $185m (+15.7% y/y, +15% q/q) largely stemming from the O&G sector. NPL ratio ticked up to 1.6% (3Q15: 1.4%; 2Q16: 1.3%). Tier-1 CAR improved to 13.4% (2Q16: 13.1%). NAV/share at $18.54.
*Sembcorp Industries; 3Q16 net profit plummeted 55.9% to $53.9m, eroded by 1) impairment losses, 2) unfavourable FX, 3) spike in finance costs and 4) an absence of divestment gains. Revenue slid 10.8% to $2.14b on reduced contributions from O&M and its specialised construction units. Net gearing climbed to 0.85x from 0.65x in FY15. MKE maintains its Hold and TP of $2.40.
*Mapletree Greater China Commercial Trust: 2QFY17 DPU of 1.765¢ (-2.4%) was in line. Revenue of $83.1m (-1.9%) and NPI of $67.3m (-3.2%) were dragged by weaker HKD & CNY against SGD, offset by higher rental income from Festival Walk. Occupancy slipped 2.1ppt q/q to 95.7%. Aggregate leverage remained at 39.9% (-0.2 ppt q/q). NAV/share at $1.19.*Indofood Agri: 3Q16 core net profit jumped to Rp129.9b (+128%), bringing 9M16 earnings to Rp50.2b (-71%), or 14% of full year consensus estimate. Revenue rose to Rp3.55t (+8.7%) on stronger sales volume of edible oil products, which lifted gross margin to 23.3% (+2ppt). NAV/share at Rp8,298..
*CDL Hospitality: 3Q16 DPU of 2.44¢ (+3.4%) came in line. Revenue of $45.4m (+10.5%) was lifted by contribution from recently acquired Hilton Cambridge City Centre in Oct '15, but partially offset by weaker performance from Singapore hotels and Maldives resorts. NAV/unit at $1.5586.
*SingPost: JV with Alibaba through a 34% sale of stake in subsidiary Quantum Solutions has completed. Also, SingPost has obtained approval for Alibaba to raise its stake to 14.4% at $1.74/share, which is expected to be completed by 28 Feb 2017. MKE maintains Buy with TP of $1.77.
*Ascendas REIT: Divesting Shanghai business park A-REIT City @ Jinqiao to China Vanke for $221.6m, equivalent to 1.8x of its purchase price back in 2013, and 8.6% above its book value. This is expected to complete by 4Q16, and would increase pro-forma FY3/16 DPU by 0.13¢ to 15.487¢.
*Frasers Centrepoint: Marked its foray into Spain with the opening of its 97-unit Capri-branded hotel apartment in Barcelona. Hospitality group intends to follow up with new openings in the near-term across Shanghai, Shenzhen, Jakarta and others, as it looks to open 19 Capri-branded properties by 2020.
*Japfa: 3Q16 net profit leapt to US$48m (3Q15: US$8m), lifted by FX gains of US$1.6m (3Q15: US$28.9m loss). Revenue grew to US$788m (+13.3%) on broad-based growth across animal proteins (+14.4%), dairy (+3%) and consumer food (+10.2%) segments, while gross margin expanded to 23.8% (+3.9ppts) on a better pricing environment for the Indonesian poultry business and lower feed costs. NAV/share at US$0.42.
*Wing Tai: Lacklustre 1QFY17 net profit of $1.1m (-48%) came below estimates, on reduced revenue of $70.2m (-59%) due to a drop in contribution from property development. Operating margin shrank 6.7ppt to 3.3%. On a positive note, net gearing was lowered to 0.05x from 0.2x in FY16. NAV/share at $4.05. MKE maintains Hold with TP of $1.75..
*Tuan Sing: 3Q16 net profit tumbled 60% to $6.4m, while revenue fell 51% to $90.3m, following the completions of Seletar Park Residence, Sennett Residence and Cluny Park Residence earlier this year. NAV/share at $0.746.
*Sunningdale Tech: 3Q16 net profit plunged 35.9% to $10.2m on a $8.8m drop in FX gains. Excluding FX, bottom line would have surged 48.7% to $7.9m. Revenue slipped to $172.5m (-2.3%), dragged by weaker healthcare (-8.8%) and mould fabrication (-21.6%) businesses. NAV/share at $1.74.
*Hiap Hoe: Intends to sell its unsold properties Cavenagh Road to its parent, Hiap Hoe Holdings, for $30m. The deal is expected to net a divestment gain of $24m for the group and avoid payment for extension charges for the units.
*Super 800: Awarded a $133.7m contract by PUB for the treatment and disposal of sludge from water reclamation plants for a period of 15.5 years till 6 May ’32. *Delong: Guided that 3Q16 net profit will be significantly higher year-on-year due to higher sales volume and average selling price for its steel products, amid tighter industry supply in China following production cuts in 2015.
*Kitchen Culture: To issue $2m worth of 9% two-year bonds on a crowdfunding platform. Proceeds will be used to fund its general working capital needs.
*Swiber: Will be defaulting on its upcoming coupon payment of its $50m 6.25% notes due in 2017.
Regional bourses opened mixed in Tokyo (+0.6%), Seoul (-0.2%) and Sydney (-0.1%).Technically, STI remains range-bound between the 2,800-2,880 consolidation band.
Stocks to watch:
*UOB: 3Q16 net profit of $791m (-7.8% y/y, -1.2% q/q) came in at upper end of estimates. Net interest income was stable at $1.23b (-0.4% y/y, +1.6% q/q) amid healthy loan growth (+7% y/y, +2.4% q/q) but was offset by tighter NIM of 1.69% (-8bps y/y, +1bps q/q)), while non-interest income slipped to $810m (-4.7% y/y, -0.4% q/q) mainly due to an absence of a one-off gain from sale of securities. Provisions jumped to $185m (+15.7% y/y, +15% q/q) largely stemming from the O&G sector. NPL ratio ticked up to 1.6% (3Q15: 1.4%; 2Q16: 1.3%). Tier-1 CAR improved to 13.4% (2Q16: 13.1%). NAV/share at $18.54.
*Sembcorp Industries; 3Q16 net profit plummeted 55.9% to $53.9m, eroded by 1) impairment losses, 2) unfavourable FX, 3) spike in finance costs and 4) an absence of divestment gains. Revenue slid 10.8% to $2.14b on reduced contributions from O&M and its specialised construction units. Net gearing climbed to 0.85x from 0.65x in FY15. MKE maintains its Hold and TP of $2.40.
*Mapletree Greater China Commercial Trust: 2QFY17 DPU of 1.765¢ (-2.4%) was in line. Revenue of $83.1m (-1.9%) and NPI of $67.3m (-3.2%) were dragged by weaker HKD & CNY against SGD, offset by higher rental income from Festival Walk. Occupancy slipped 2.1ppt q/q to 95.7%. Aggregate leverage remained at 39.9% (-0.2 ppt q/q). NAV/share at $1.19.*Indofood Agri: 3Q16 core net profit jumped to Rp129.9b (+128%), bringing 9M16 earnings to Rp50.2b (-71%), or 14% of full year consensus estimate. Revenue rose to Rp3.55t (+8.7%) on stronger sales volume of edible oil products, which lifted gross margin to 23.3% (+2ppt). NAV/share at Rp8,298..
*CDL Hospitality: 3Q16 DPU of 2.44¢ (+3.4%) came in line. Revenue of $45.4m (+10.5%) was lifted by contribution from recently acquired Hilton Cambridge City Centre in Oct '15, but partially offset by weaker performance from Singapore hotels and Maldives resorts. NAV/unit at $1.5586.
*SingPost: JV with Alibaba through a 34% sale of stake in subsidiary Quantum Solutions has completed. Also, SingPost has obtained approval for Alibaba to raise its stake to 14.4% at $1.74/share, which is expected to be completed by 28 Feb 2017. MKE maintains Buy with TP of $1.77.
*Ascendas REIT: Divesting Shanghai business park A-REIT City @ Jinqiao to China Vanke for $221.6m, equivalent to 1.8x of its purchase price back in 2013, and 8.6% above its book value. This is expected to complete by 4Q16, and would increase pro-forma FY3/16 DPU by 0.13¢ to 15.487¢.
*Frasers Centrepoint: Marked its foray into Spain with the opening of its 97-unit Capri-branded hotel apartment in Barcelona. Hospitality group intends to follow up with new openings in the near-term across Shanghai, Shenzhen, Jakarta and others, as it looks to open 19 Capri-branded properties by 2020.
*Japfa: 3Q16 net profit leapt to US$48m (3Q15: US$8m), lifted by FX gains of US$1.6m (3Q15: US$28.9m loss). Revenue grew to US$788m (+13.3%) on broad-based growth across animal proteins (+14.4%), dairy (+3%) and consumer food (+10.2%) segments, while gross margin expanded to 23.8% (+3.9ppts) on a better pricing environment for the Indonesian poultry business and lower feed costs. NAV/share at US$0.42.
*Wing Tai: Lacklustre 1QFY17 net profit of $1.1m (-48%) came below estimates, on reduced revenue of $70.2m (-59%) due to a drop in contribution from property development. Operating margin shrank 6.7ppt to 3.3%. On a positive note, net gearing was lowered to 0.05x from 0.2x in FY16. NAV/share at $4.05. MKE maintains Hold with TP of $1.75..
*Tuan Sing: 3Q16 net profit tumbled 60% to $6.4m, while revenue fell 51% to $90.3m, following the completions of Seletar Park Residence, Sennett Residence and Cluny Park Residence earlier this year. NAV/share at $0.746.
*Sunningdale Tech: 3Q16 net profit plunged 35.9% to $10.2m on a $8.8m drop in FX gains. Excluding FX, bottom line would have surged 48.7% to $7.9m. Revenue slipped to $172.5m (-2.3%), dragged by weaker healthcare (-8.8%) and mould fabrication (-21.6%) businesses. NAV/share at $1.74.
*Hiap Hoe: Intends to sell its unsold properties Cavenagh Road to its parent, Hiap Hoe Holdings, for $30m. The deal is expected to net a divestment gain of $24m for the group and avoid payment for extension charges for the units.
*Super 800: Awarded a $133.7m contract by PUB for the treatment and disposal of sludge from water reclamation plants for a period of 15.5 years till 6 May ’32. *Delong: Guided that 3Q16 net profit will be significantly higher year-on-year due to higher sales volume and average selling price for its steel products, amid tighter industry supply in China following production cuts in 2015.
*Kitchen Culture: To issue $2m worth of 9% two-year bonds on a crowdfunding platform. Proceeds will be used to fund its general working capital needs.
*Swiber: Will be defaulting on its upcoming coupon payment of its $50m 6.25% notes due in 2017.
Thursday, October 27, 2016
Sheng Siong
Sheng Siong:
- Net profit +8.2%, in line, boosted by fatter margins
- Revenue +1.2%, as new stores contribution were offset by weak same store sales, and closure of Loyang store.
- Boosted by gross margins (+1.6ppt to 25.9%), which was driven by higher rebates.
- Management cautious on ability to fully pass on cost increases to customers, amid tough environment
- Market Insight is locking in profit and exiting the retailer from its Yield portfolio with 24% gains since entry
- Net profit +8.2%, in line, boosted by fatter margins
- Revenue +1.2%, as new stores contribution were offset by weak same store sales, and closure of Loyang store.
- Boosted by gross margins (+1.6ppt to 25.9%), which was driven by higher rebates.
- Management cautious on ability to fully pass on cost increases to customers, amid tough environment
- Market Insight is locking in profit and exiting the retailer from its Yield portfolio with 24% gains since entry
SG Market (27 Oct 16)
Singapore market could face further profit taking on muted 3Q earnings and lack of fresh catalysts although bank shares may get a nudge from slightly above par OCBC results.
Regional bourses opened mixed in Tokyo (-0.3%), Seoul (+0.2%) and Sydney (-0.1%).Technically, STI remains trapped between the upside resistance at 2,850 and underlying support at 2,800.
Stocks to watch:
*OCBC: 3Q16 net profit of $943m (+5% y/y, +6% q/q) came in above expectations, on higher non-interest income $788m (+25% y/y, +23% q/q), underpinned by income from wealth management, life insurance, unrealised investment gains at Great Eastern and net gains from sale of properties. However, net interest income dipped to $1.23b (-6% y/y, -2% q/q) in tandem with a decline in loan growth (-2% y/y, +2% q/q) and thinner NIM of 1.62% (-4bps y/y, -6bps q/q). Provisions surged to $166m (+10% y/y, +89% q/q) on higher specific allowances mainly from Greater China and the Rest of the World, while NPL ratio ticked up to 1.2% (3Q15: 0.9%, 2Q16: 1.1%). Tier-1 CAR improved to 15.1% (3Q15: 14.5%, 2Q16: 14.9%). NAV/share at $8.31.
*Mapletree Commercial Trust: 2QFY17 matched expectations with DPU of 2.05¢ (+1.5%) on an enlarged unit base. Distributable income jumped 25.4% to $53.6m, as gross revenue of $88.1m (+23.6%) and NPI of $68.4m (+24.8%) enjoyed robust growth, thanks to maiden contribution from Mapletree Business City 1 and higher rental income at VivoCity. Portfolio occupancy ticked up 1ppt q/q to 98.8%, with WALE of 2.8 years. Aggregate leverage increased 2.3ppt q/q to 37.3%, with average debt cost of 2.66% and tenor of 4.3 years. NAV/unit at $1.32. MKE last had a Hold with TP of SGD1.54.
*Sheng Siong: 3Q16 net profit of $15.7m (+8.2%) came in within expectations. Revenue inched 1.2% to $202.4m as new stores contribution were offset by sluggish same store sales growth (-1.2%) due to relatively weaker 7th lunar month demand and temporary store closure at Loyang in Jun. Gross margin improved 1.6ppt to 25.9% as higher rebates lowered input prices. MKE last had a Hold with TP of $1.13.
*ParkwayLife REIT: 3Q16 results in line as core DPU rose to 3.06¢ (+2.7%). Gross revenue of $28.1m (+8.2%) and NPI of $26.2m (+8%) were buoyed by contribution from a nursing home acquired in Mar, higher rent from Singapore hospitals and appreciation of the yen. Portfolio occupancy remained at 100% with long WALE of 8.69 years. Aggregate leverage crept up to 38.2% (+0.4ppt q/q) with average debt cost stable at 1.4% and tenor of 3.4 years. NAV/share at $1.67.
*K1 Ventures: 1QFY17 net profit plunged 88% to $10.5m, on revenue of $12.3m (-86.2%) due to lower investment income from Knowledge Universe Holdings following its divestment in Aug '15. Net cash increased 18% to $63.4m from FY16. Declared interim DPS of 2¢ (1QFY16: nil). NAV/share at $0.51.
*Citic Envirotech: 3Q16 net profit surged 57.4% to $23.6m, while revenue soared 93.4% to $137.1m, boosted by a 3x increase in engineering revenue. NAV/share at $1.223..
*Viva Industrial Trust: Successfully placed 60.8m new units at $0.74 apiece in a strongly oversubscribed private placement. Net proceeds of $43.5m will be used to partially fund the $87.3m acquisition of a logistics property at 6 Chin Bee Avenue.
*First Resources: Sep FFB harvest slipped 1.2% to 301,493 tonnes, on lower yield of 1.9 tonnes/ha (Sep '15: 2.1 tonnes/ha), while CPO production fell 6% to 71,274 tonnes, as extraction rate edged down 0.9ppt to 22.2%.
*ARA Asset Management: Established the ARA Harmony VI fund, anchored by an established insurer, to invest in Century Link, a newly-completed commercial property in Pudong, Shanghai at an agreed value of Rmb20b ($4.1b). Century Link is a mixed-use development, comprising two high-rise office towers, a six-storey retail podium with total gfa of 362,361 sqm. The fund will have an initial term of 10 years and will lift its AUM, which stood at $29.7b at end-Jun.
*Sino Grandness: Entered into exclusive agreement with PM Group, controlled by substantial shareholder Chalermchai Mahagitsiri, to distribute its P80 Longan Health Essence in China and Hong Kong.
*Lum Chang: Clinched a $325m contract from the LTA for addition and alteration works at the Tanah Merah MRT Station, lifting its orderbook to $885m. Construction works are slated to begin at end-2016 and complete in 2024.
*Ntegrator: Secured a $20.8m order from Vietnamese mobile network operator Viettel, for the supply of high-performance battery. Delivery is targeted at end-2016, and will contribute positively to FY16 earnings.
*Tritech: Awarded three site investigation contracts worth $23m by LTA.
*Metech International: Expects to report a profitable 1QFY17 following nine straight quarters of decline, after a successful operational restructuring and diversification amidst the commodity rout.
Regional bourses opened mixed in Tokyo (-0.3%), Seoul (+0.2%) and Sydney (-0.1%).Technically, STI remains trapped between the upside resistance at 2,850 and underlying support at 2,800.
Stocks to watch:
*OCBC: 3Q16 net profit of $943m (+5% y/y, +6% q/q) came in above expectations, on higher non-interest income $788m (+25% y/y, +23% q/q), underpinned by income from wealth management, life insurance, unrealised investment gains at Great Eastern and net gains from sale of properties. However, net interest income dipped to $1.23b (-6% y/y, -2% q/q) in tandem with a decline in loan growth (-2% y/y, +2% q/q) and thinner NIM of 1.62% (-4bps y/y, -6bps q/q). Provisions surged to $166m (+10% y/y, +89% q/q) on higher specific allowances mainly from Greater China and the Rest of the World, while NPL ratio ticked up to 1.2% (3Q15: 0.9%, 2Q16: 1.1%). Tier-1 CAR improved to 15.1% (3Q15: 14.5%, 2Q16: 14.9%). NAV/share at $8.31.
*Mapletree Commercial Trust: 2QFY17 matched expectations with DPU of 2.05¢ (+1.5%) on an enlarged unit base. Distributable income jumped 25.4% to $53.6m, as gross revenue of $88.1m (+23.6%) and NPI of $68.4m (+24.8%) enjoyed robust growth, thanks to maiden contribution from Mapletree Business City 1 and higher rental income at VivoCity. Portfolio occupancy ticked up 1ppt q/q to 98.8%, with WALE of 2.8 years. Aggregate leverage increased 2.3ppt q/q to 37.3%, with average debt cost of 2.66% and tenor of 4.3 years. NAV/unit at $1.32. MKE last had a Hold with TP of SGD1.54.
*Sheng Siong: 3Q16 net profit of $15.7m (+8.2%) came in within expectations. Revenue inched 1.2% to $202.4m as new stores contribution were offset by sluggish same store sales growth (-1.2%) due to relatively weaker 7th lunar month demand and temporary store closure at Loyang in Jun. Gross margin improved 1.6ppt to 25.9% as higher rebates lowered input prices. MKE last had a Hold with TP of $1.13.
*ParkwayLife REIT: 3Q16 results in line as core DPU rose to 3.06¢ (+2.7%). Gross revenue of $28.1m (+8.2%) and NPI of $26.2m (+8%) were buoyed by contribution from a nursing home acquired in Mar, higher rent from Singapore hospitals and appreciation of the yen. Portfolio occupancy remained at 100% with long WALE of 8.69 years. Aggregate leverage crept up to 38.2% (+0.4ppt q/q) with average debt cost stable at 1.4% and tenor of 3.4 years. NAV/share at $1.67.
*K1 Ventures: 1QFY17 net profit plunged 88% to $10.5m, on revenue of $12.3m (-86.2%) due to lower investment income from Knowledge Universe Holdings following its divestment in Aug '15. Net cash increased 18% to $63.4m from FY16. Declared interim DPS of 2¢ (1QFY16: nil). NAV/share at $0.51.
*Citic Envirotech: 3Q16 net profit surged 57.4% to $23.6m, while revenue soared 93.4% to $137.1m, boosted by a 3x increase in engineering revenue. NAV/share at $1.223..
*Viva Industrial Trust: Successfully placed 60.8m new units at $0.74 apiece in a strongly oversubscribed private placement. Net proceeds of $43.5m will be used to partially fund the $87.3m acquisition of a logistics property at 6 Chin Bee Avenue.
*First Resources: Sep FFB harvest slipped 1.2% to 301,493 tonnes, on lower yield of 1.9 tonnes/ha (Sep '15: 2.1 tonnes/ha), while CPO production fell 6% to 71,274 tonnes, as extraction rate edged down 0.9ppt to 22.2%.
*ARA Asset Management: Established the ARA Harmony VI fund, anchored by an established insurer, to invest in Century Link, a newly-completed commercial property in Pudong, Shanghai at an agreed value of Rmb20b ($4.1b). Century Link is a mixed-use development, comprising two high-rise office towers, a six-storey retail podium with total gfa of 362,361 sqm. The fund will have an initial term of 10 years and will lift its AUM, which stood at $29.7b at end-Jun.
*Sino Grandness: Entered into exclusive agreement with PM Group, controlled by substantial shareholder Chalermchai Mahagitsiri, to distribute its P80 Longan Health Essence in China and Hong Kong.
*Lum Chang: Clinched a $325m contract from the LTA for addition and alteration works at the Tanah Merah MRT Station, lifting its orderbook to $885m. Construction works are slated to begin at end-2016 and complete in 2024.
*Ntegrator: Secured a $20.8m order from Vietnamese mobile network operator Viettel, for the supply of high-performance battery. Delivery is targeted at end-2016, and will contribute positively to FY16 earnings.
*Tritech: Awarded three site investigation contracts worth $23m by LTA.
*Metech International: Expects to report a profitable 1QFY17 following nine straight quarters of decline, after a successful operational restructuring and diversification amidst the commodity rout.
Wednesday, October 26, 2016
SG Market (26 Oct 16)
Market could face a sell-off after the MAS gave a gloomy outlook for the trade-reliant economy, warning that external headwinds are unlikely to go away anytime soon and does not expect any significant pick-up in growth in near term. Meanwhile, investors are struggling to find any catalysts from the latest 3Q results.
Regional bourses opened in the red in Tokyo (-0.2%), Seoul (-0.8%) and Sydney (-1.4%).Technically, STI remains trapped between the upside resistance at 2,880 and underlying support at 2,800.
Stocks to watch:
*Economy: MAS sees no significant pickup in Singapore GDP growth in the near term and maintains its 2016 forecast to come in at the lower end of the 1-2% range, and only slightly higher in 2017. The central bank cited that the trade-reliant economy is in a cyclical downturn and lacklustre external demand and weak global trade remain key drags.
*Sembcorp Marine: Sank into a 3Q16 net loss of $21.8m from $32.1m profit in 3Q15, dragged mainly by an adverse FX swing of $54m, bringing 9M16 earnings of $44.5m (-82%) to just 25% of full year consensus estimate. Revenue tumbled to $888m (-21.4%) on delivery deferment of rigs and weak contribution from ship repair. No new contracts secured; order book shrank to $5.2b from $6b in preceding quarter. The group continue to grapple with a severe downturn and onward margins are expected to be lower. MKE maintains Sell with $1.00 TP.
*Innovalues: 3Q16 results were on track although net profit fell 10.9% to $6m (-10.9%) on the absence of FX gains. Revenue rose to $31.5m (+11.5%), driven by increased automotive orders from Chinese clients, while gross margin expanded to 32.9% (+4.5ppt) on operational efficiency. The stock offers good value at 11x P/E and 4% yield. MKE maintains Buy with TP of $1.15.
*Starhub: Claims that broadband service outages on 22 and 24 Oct were due to intentional and malicious DDoS attacks on its servers.
*Cambridge Industrial Trust: 3Q16 results in line. DPU of 0.987¢ (-18%) was mainly diluted by cash payment of management fees. Otherwise, adjusted DPU would have dipped 13.1%, on lower gross revenue of $27.6m (-2.9%) and NPI of $19.9m (-8.3%), attributed to the conversion of properties from single-tenancy to multi-tenancy, as well as increased property expenses. Portfolio occupancy was stable at 93.6% (+0.2ppt q/q) with WALE of 3.8 years, while aggregate leverage narrowed to 36.9% (-0.5ppt q/q) with average cost of debt of 3.65%. NAV/share at $0.669.
*Sin Heng Heavy Machinery: 1QFY17 net profit spiked close to five-fold from a low base to $1.8m, bolstered by reduced admin expenses (-15.3%), disposal gain ($0.3m) and lower FX loss. Revenue of $37.7m (+32.3%) saw stronger contributions from both heavy equipment rental (+9.6%) and trading (+46%), while gross margin shrank 1.8ppt to 16% on lower utilisation of rental equipment. Net gearing crept up to 0.17x from 0.1x in FY16. NAV/share at $1.0843.
*China Everbright Water: Won a bid with consortium partner Jinan Urban Construction, for the Nanjing Municipal Water Public-Private Partnership Project. It will own a 100% stake in the project while Jinan Urban will handle the construction. The project will require a total investment of Rmb275m and have an operating concession period of ten years.
*Pacific Radiance: Successfully refinanced term loans and renewed revolving credit facilities totalling ~US$185m, with maturity profile of these debt facilities extended from 2019 to 2021. Consequently, group's principal repayment burden has been reduced by US$103m up to 2019.
*Civmec: Secured A$30m worth of contracts for projects on Australia's east coast, comprising works for NRT Infrastructure JV, Acciona Infrastructure, ThyssenKrupp and the WestConnex project..
*Cosco Corp: Orders for two float accommodation units (N381 & N675) at its 51% owned Cosco Shipyard were terminated by the owners. Separately, the subsidiary also extended the delivery date for one semi-submersible accommodation vessel for Prosafe Rigs by three years to 31 Dec 2019.
*Samudera Shipping: Slumped into a 3Q16 net loss of US$3.8m (3Q15: US$1.2m profit), on a slide in revenue to US$61m (-18.8%) due to reduced container shipping volume stemming from Hanjin Shipping's bankruptcy and lower charter rates for its bulk & tanker divisions. Bottom line took a US$2.4m provision relating to Hanjin Shipping. NAV/share at US$0.456.
*Advancer Global: Acquiring three companies that offer pest control and fumigation businesses for an initial sum of $3m, with further consideration to be determined as at 31 Dec ’17.
*Huationg Global: Clinched three new civil engineering contracts worth $26.6m from HDB.
*LionGold: Value Capital Asset Management disposed 97.5m shares, trimming its stake to 3.8% from 6.2%, and has ceased to be a substantial shareholder.
*China Environment: Disclosed that it is unable to access financial records, which are locked within a premise of the landlord.
Regional bourses opened in the red in Tokyo (-0.2%), Seoul (-0.8%) and Sydney (-1.4%).Technically, STI remains trapped between the upside resistance at 2,880 and underlying support at 2,800.
Stocks to watch:
*Economy: MAS sees no significant pickup in Singapore GDP growth in the near term and maintains its 2016 forecast to come in at the lower end of the 1-2% range, and only slightly higher in 2017. The central bank cited that the trade-reliant economy is in a cyclical downturn and lacklustre external demand and weak global trade remain key drags.
*Sembcorp Marine: Sank into a 3Q16 net loss of $21.8m from $32.1m profit in 3Q15, dragged mainly by an adverse FX swing of $54m, bringing 9M16 earnings of $44.5m (-82%) to just 25% of full year consensus estimate. Revenue tumbled to $888m (-21.4%) on delivery deferment of rigs and weak contribution from ship repair. No new contracts secured; order book shrank to $5.2b from $6b in preceding quarter. The group continue to grapple with a severe downturn and onward margins are expected to be lower. MKE maintains Sell with $1.00 TP.
*Innovalues: 3Q16 results were on track although net profit fell 10.9% to $6m (-10.9%) on the absence of FX gains. Revenue rose to $31.5m (+11.5%), driven by increased automotive orders from Chinese clients, while gross margin expanded to 32.9% (+4.5ppt) on operational efficiency. The stock offers good value at 11x P/E and 4% yield. MKE maintains Buy with TP of $1.15.
*Starhub: Claims that broadband service outages on 22 and 24 Oct were due to intentional and malicious DDoS attacks on its servers.
*Cambridge Industrial Trust: 3Q16 results in line. DPU of 0.987¢ (-18%) was mainly diluted by cash payment of management fees. Otherwise, adjusted DPU would have dipped 13.1%, on lower gross revenue of $27.6m (-2.9%) and NPI of $19.9m (-8.3%), attributed to the conversion of properties from single-tenancy to multi-tenancy, as well as increased property expenses. Portfolio occupancy was stable at 93.6% (+0.2ppt q/q) with WALE of 3.8 years, while aggregate leverage narrowed to 36.9% (-0.5ppt q/q) with average cost of debt of 3.65%. NAV/share at $0.669.
*Sin Heng Heavy Machinery: 1QFY17 net profit spiked close to five-fold from a low base to $1.8m, bolstered by reduced admin expenses (-15.3%), disposal gain ($0.3m) and lower FX loss. Revenue of $37.7m (+32.3%) saw stronger contributions from both heavy equipment rental (+9.6%) and trading (+46%), while gross margin shrank 1.8ppt to 16% on lower utilisation of rental equipment. Net gearing crept up to 0.17x from 0.1x in FY16. NAV/share at $1.0843.
*China Everbright Water: Won a bid with consortium partner Jinan Urban Construction, for the Nanjing Municipal Water Public-Private Partnership Project. It will own a 100% stake in the project while Jinan Urban will handle the construction. The project will require a total investment of Rmb275m and have an operating concession period of ten years.
*Pacific Radiance: Successfully refinanced term loans and renewed revolving credit facilities totalling ~US$185m, with maturity profile of these debt facilities extended from 2019 to 2021. Consequently, group's principal repayment burden has been reduced by US$103m up to 2019.
*Civmec: Secured A$30m worth of contracts for projects on Australia's east coast, comprising works for NRT Infrastructure JV, Acciona Infrastructure, ThyssenKrupp and the WestConnex project..
*Cosco Corp: Orders for two float accommodation units (N381 & N675) at its 51% owned Cosco Shipyard were terminated by the owners. Separately, the subsidiary also extended the delivery date for one semi-submersible accommodation vessel for Prosafe Rigs by three years to 31 Dec 2019.
*Samudera Shipping: Slumped into a 3Q16 net loss of US$3.8m (3Q15: US$1.2m profit), on a slide in revenue to US$61m (-18.8%) due to reduced container shipping volume stemming from Hanjin Shipping's bankruptcy and lower charter rates for its bulk & tanker divisions. Bottom line took a US$2.4m provision relating to Hanjin Shipping. NAV/share at US$0.456.
*Advancer Global: Acquiring three companies that offer pest control and fumigation businesses for an initial sum of $3m, with further consideration to be determined as at 31 Dec ’17.
*Huationg Global: Clinched three new civil engineering contracts worth $26.6m from HDB.
*LionGold: Value Capital Asset Management disposed 97.5m shares, trimming its stake to 3.8% from 6.2%, and has ceased to be a substantial shareholder.
*China Environment: Disclosed that it is unable to access financial records, which are locked within a premise of the landlord.
Tuesday, October 25, 2016
Ezra
Ezra: The O&M group released its presentation slides for its informal meeting with Noteholders this morning. This is related to its $150m notes due Apr 2018.In light of its own liquidity crunch, and that of the its associate Perisak Petroleum, it is requesting noteholders to waive the financial covenants.For those who provides an early consent (by 2 Nov), they will receive a fee equal to 0.1% of principal amount (i.e: $250 for every $250,000). otherwise, noteholders may receive a 0.05% fee ($125 for every $250,000).Note that the noteholders will vote on the decision on 9 Nov.
HPH Trust
HPH Trust:
- 3Q16 results missed, net profit HK$430.2m (-18.2%)
- 9M16 core earnings HK$1.01b (-17.4%), met 64% of full year consensus estimate
- 3Q16 revenue HK$3.27b (-6.8%)
- lower container throughput and average revenue per TEU in HK and Yantian
- 3Q16 Operating margin 35.5% (-2.5ppt)
- bad debt provision for Hanjin, and high depreciation
- Management expects structural changes to shipping industry
- continue to focus on cost improvements- offers indicative yield of 8.6% and trades at 0.74x P/B
- Street is not bullish: - 2 Buy, 7 Hold, 2 Sell, Consensus TP US$0.47
- 3Q16 results missed, net profit HK$430.2m (-18.2%)
- 9M16 core earnings HK$1.01b (-17.4%), met 64% of full year consensus estimate
- 3Q16 revenue HK$3.27b (-6.8%)
- lower container throughput and average revenue per TEU in HK and Yantian
- 3Q16 Operating margin 35.5% (-2.5ppt)
- bad debt provision for Hanjin, and high depreciation
- Management expects structural changes to shipping industry
- continue to focus on cost improvements- offers indicative yield of 8.6% and trades at 0.74x P/B
- Street is not bullish: - 2 Buy, 7 Hold, 2 Sell, Consensus TP US$0.47
SG Market (25 Oct 16)
SG Market: The market could head higher amid signs of improving US and China investor sentiment. Stick to defensives and names that benefit from a rising USD.
Regional bourses opened generally higher today in Tokyo (+0.7%), Seoul (-0.3%) and Sydney (+0.7%).STI has penetrated above its 50-dma with next resistance at 2,880, while underlying support remains at 2,800.
Stocks to watch:
*Hutchison Port Holdings Trust: 3Q16 core net profit of HK$442.4m (-17.2%) missed estimates, on softer revenue of HK$3.26b (-6.8%) due to lower container throughput and reduced average revenue per TEU in both Hong Kong and Yantian terminals. EBIT margin shrank to 35.5% (-2.5ppt) mainly from a provision for beleaguered Hanjin Shipping, while bottom line was further dragged by higher finance cost (+14.1%). NAV/unit at HK$4.71.
*Mapletree Logistics Trust. 2QFY17 results in line; DPU of 1.86¢ was flat due to increased distribution to perpetual holders, while revenue of $91.6m (+4.7%) and NPI of $76.8m (+5.3%) were boosted by five new properties and the completed redevelopment of Mapletree Logistics Hub. NAV/unit at $1.00.
*Mapletree Industrial Trust: 2QFY17 DPU of 2.83¢ (+1.4%) met expectations. Gross revenue and NPI grew to $84.2m (+1.8%) and $63.6m (+4.3%), thanks to higher rental rates and higher occupancies achieved in Hi-Tech Buildings. NAV/unit at $1.37.
*CapitaLand Retail China Trust: 3Q16 DPU of 2.36¢ (-10.6%) was at the lower end of estimates, dragged by a weaker CNY against SGD. Revenue slipped to Rmb248.8m (-1.2%) as the implementation of China VAT reform from May shaved 5% from the top line, while NPI inched up to Rmb161.3m (+0.6%) on reduced property taxes. NAV/unit at $1.56.
*GL: 1QFY17 net profit tumbled 65% to US$11m due to the absence of a US$13.4m one-off compensation from the cessation of management for 19 regional Thistle hotels, as well as a legal provision of US$8.5m. Revenue slipped 15% to US$97.8m from reduced takings in the hotel and gaming segments amid a weaker pound, but offset by higher Bass Strait royalty income. NAV/share at US$0.795.
*GuocoLand: 1QFY17 net profit plunged 95% to to $25.6m due to the absence of a $480m disposal gain from the Beijing Dongzhimen project that was booked in previous year. Revenue slumped 54% to $202.8m on the absence of sale of an office block in Shanghai Guoson Centre. Correspondingly, gross margin contracted to 21% (1QFY16: 32.7%) on the shift in sales mix. NAV/share at $2.98.
*China Minzhong: 5QFY16 surged nearly three-fold to Rmb45.1m, mainly boosted by a favourable FX swing to Rmb5.2m gain (1QFY16: Rmb21.2m loss). Revenue slipped 11.8% to Rmb412.4m on lower contributions from its cultivation (-15.8%) and branded (-43.8%) businesses, but partially mitigated by growth in its processed segment (+3%). Gross margin dipped to 23.9% (-1.4ppts) on the change in sales mix. NAV/share at Rmb8.15.
*CapitaLand: Established its third private equity fund in China, Raffles City China Investment Partners III (RCCIP III), which closed at a record US$1.5b ($2b). RCCIP III will have an investment period of eight years and focus in prime integrated developments in gateway cities in China. CapitaLand will hold a 41.7% sponsor stake in RCCIP III.
*Frasers Centrepoint: Secured a 115-ha site in West Melbourne, Australia, for $440m. The development in Wyndham Vale will comprise ~1,200 residential lots and over 20,000 sqm of retail facilities.
*Olam: Acquiring East African coffee specialist, Schluter, for US$7.5m. Schluter runs farmer support programmes funded by European development agencies, which comprises six nurseries and 1,800 organic coffee suppliers. The acquisition is part of its aim to expand its coffee presence as well as to deepen upstream coffee operations in East Africa..
*Olam: Acquiring East African coffee specialist, Schluter, for US$7.5m. Schluter runs farmer support programmes funded by European development agencies, which comprises six nurseries and 1,800 organic coffee suppliers. The acquisition is part of its aim to expand its coffee presence as well as to deepen upstream coffee operations in East Africa.
*Vibrant/Figtree: 36%/24%-owned JV is acquiring a 70-year leasehold land site in Jiangyin City, Jiangsu, China for Rmb225m. The 30,249 sqm plot of land will have a maximum plot ratio of 3 and is expected to be developed into a mixed-use project, which will comprise 508 apartments, 148 commercial units and 400 carport lots.
*GK Goh: Emerged as the top bidder with its $24.3m tender for a land parcel at Venus Drive, on which the group intends to build a nursing home that will have a maximum gfa of 5,600 sqm.
*Bumitama Agri: 3Q16 FFB harvest fell 5.5% to 751,492 MT, on lower yield of 3.7 MT/ha (3Q15: 4.4 MT/ha), while CPO production declined 8% to 167,436 MT on slimmer extraction rate of 22.4% (-0.8ppts).
*ISOTeam: Launched a new mobile app to better tap on retail demand for its handymen services such as electrical works, plumbing, painting and other general repair works.
Regional bourses opened generally higher today in Tokyo (+0.7%), Seoul (-0.3%) and Sydney (+0.7%).STI has penetrated above its 50-dma with next resistance at 2,880, while underlying support remains at 2,800.
Stocks to watch:
*Hutchison Port Holdings Trust: 3Q16 core net profit of HK$442.4m (-17.2%) missed estimates, on softer revenue of HK$3.26b (-6.8%) due to lower container throughput and reduced average revenue per TEU in both Hong Kong and Yantian terminals. EBIT margin shrank to 35.5% (-2.5ppt) mainly from a provision for beleaguered Hanjin Shipping, while bottom line was further dragged by higher finance cost (+14.1%). NAV/unit at HK$4.71.
*Mapletree Logistics Trust. 2QFY17 results in line; DPU of 1.86¢ was flat due to increased distribution to perpetual holders, while revenue of $91.6m (+4.7%) and NPI of $76.8m (+5.3%) were boosted by five new properties and the completed redevelopment of Mapletree Logistics Hub. NAV/unit at $1.00.
*Mapletree Industrial Trust: 2QFY17 DPU of 2.83¢ (+1.4%) met expectations. Gross revenue and NPI grew to $84.2m (+1.8%) and $63.6m (+4.3%), thanks to higher rental rates and higher occupancies achieved in Hi-Tech Buildings. NAV/unit at $1.37.
*CapitaLand Retail China Trust: 3Q16 DPU of 2.36¢ (-10.6%) was at the lower end of estimates, dragged by a weaker CNY against SGD. Revenue slipped to Rmb248.8m (-1.2%) as the implementation of China VAT reform from May shaved 5% from the top line, while NPI inched up to Rmb161.3m (+0.6%) on reduced property taxes. NAV/unit at $1.56.
*GL: 1QFY17 net profit tumbled 65% to US$11m due to the absence of a US$13.4m one-off compensation from the cessation of management for 19 regional Thistle hotels, as well as a legal provision of US$8.5m. Revenue slipped 15% to US$97.8m from reduced takings in the hotel and gaming segments amid a weaker pound, but offset by higher Bass Strait royalty income. NAV/share at US$0.795.
*GuocoLand: 1QFY17 net profit plunged 95% to to $25.6m due to the absence of a $480m disposal gain from the Beijing Dongzhimen project that was booked in previous year. Revenue slumped 54% to $202.8m on the absence of sale of an office block in Shanghai Guoson Centre. Correspondingly, gross margin contracted to 21% (1QFY16: 32.7%) on the shift in sales mix. NAV/share at $2.98.
*China Minzhong: 5QFY16 surged nearly three-fold to Rmb45.1m, mainly boosted by a favourable FX swing to Rmb5.2m gain (1QFY16: Rmb21.2m loss). Revenue slipped 11.8% to Rmb412.4m on lower contributions from its cultivation (-15.8%) and branded (-43.8%) businesses, but partially mitigated by growth in its processed segment (+3%). Gross margin dipped to 23.9% (-1.4ppts) on the change in sales mix. NAV/share at Rmb8.15.
*CapitaLand: Established its third private equity fund in China, Raffles City China Investment Partners III (RCCIP III), which closed at a record US$1.5b ($2b). RCCIP III will have an investment period of eight years and focus in prime integrated developments in gateway cities in China. CapitaLand will hold a 41.7% sponsor stake in RCCIP III.
*Frasers Centrepoint: Secured a 115-ha site in West Melbourne, Australia, for $440m. The development in Wyndham Vale will comprise ~1,200 residential lots and over 20,000 sqm of retail facilities.
*Olam: Acquiring East African coffee specialist, Schluter, for US$7.5m. Schluter runs farmer support programmes funded by European development agencies, which comprises six nurseries and 1,800 organic coffee suppliers. The acquisition is part of its aim to expand its coffee presence as well as to deepen upstream coffee operations in East Africa..
*Olam: Acquiring East African coffee specialist, Schluter, for US$7.5m. Schluter runs farmer support programmes funded by European development agencies, which comprises six nurseries and 1,800 organic coffee suppliers. The acquisition is part of its aim to expand its coffee presence as well as to deepen upstream coffee operations in East Africa.
*Vibrant/Figtree: 36%/24%-owned JV is acquiring a 70-year leasehold land site in Jiangyin City, Jiangsu, China for Rmb225m. The 30,249 sqm plot of land will have a maximum plot ratio of 3 and is expected to be developed into a mixed-use project, which will comprise 508 apartments, 148 commercial units and 400 carport lots.
*GK Goh: Emerged as the top bidder with its $24.3m tender for a land parcel at Venus Drive, on which the group intends to build a nursing home that will have a maximum gfa of 5,600 sqm.
*Bumitama Agri: 3Q16 FFB harvest fell 5.5% to 751,492 MT, on lower yield of 3.7 MT/ha (3Q15: 4.4 MT/ha), while CPO production declined 8% to 167,436 MT on slimmer extraction rate of 22.4% (-0.8ppts).
*ISOTeam: Launched a new mobile app to better tap on retail demand for its handymen services such as electrical works, plumbing, painting and other general repair works.
Monday, October 24, 2016
Raffles Medical
Raffles Medical:
- 3Q16 net profit of $16.2m (+4%) came in line.
- Revenue jumped 17.5% to $119.3m, with more than half the growth (9.6%) contributed by newly acquired medical assistance company International SOS.
- However, bottom line was dragged by a surge in staff expenses (+23%).
- Net cash remained resilient although it slipped to $78m (2Q16: $92.8m) on an increase in trade payables from the higher business volume on consolidation of the larger entity.
- Medical Centres in Orchard and Holland V, which started in Jun 2015 and Jun 2016, continued to show increasing patient load, while the Raffles Hospital extension is on track for completion in 2017.
- The stock is currently trading at 36x forward P/E. MKE last had a Buy with TP of $1.84.
- 3Q16 net profit of $16.2m (+4%) came in line.
- Revenue jumped 17.5% to $119.3m, with more than half the growth (9.6%) contributed by newly acquired medical assistance company International SOS.
- However, bottom line was dragged by a surge in staff expenses (+23%).
- Net cash remained resilient although it slipped to $78m (2Q16: $92.8m) on an increase in trade payables from the higher business volume on consolidation of the larger entity.
- Medical Centres in Orchard and Holland V, which started in Jun 2015 and Jun 2016, continued to show increasing patient load, while the Raffles Hospital extension is on track for completion in 2017.
- The stock is currently trading at 36x forward P/E. MKE last had a Buy with TP of $1.84.
SG Market (24 Oct 16)
Banks, O&M firms and more REITS will come under the spotlight this week as the corporate earnings season picks up pace, with SembCorp Marine (25 Oct), MCT (26 Oct), OCBC (27 Oct) and UOB (28 Oct) all releasing results.
Investors will also keep an eye on the Sixth Plenum meeting in China, which could offer clues on the strength of top leaders in securing key roles for their allies. Regional bourses opened mixed today in Tokyo (+0.2%), Seoul (+0.5%) and Sydney (-0.9%).STI remains largely range bound between its topside resistance at 2,850 (50-dma) and support at 2,800 (200-dma).
Stocks to watch:
*Raffles Medical: 3Q16 net profit of $16.2m (+4%) brought 9M16 earnings of $48.4m (+4.1%) to 66% of street FY16 estimate. For the quarter, revenue jumped 17.5% to $119.3m on increased patient load, expanding clinic network and incremental sales contribution from more specialist consultants, as well as newly acquired MCH, but bottom line was weighed by a surge in staff expenses (+23%) due to the higher headcount. MKE last had a Buy with TP of $1.84.
*CapitaLand Mall Trust: 3Q16 results in line with DPU of 2.78¢ (-6.7%) diluted by a larger unit base, increased finance cost and an absence of retained income distribution. Revenue of $169.7m (+4.9%) and NPI of $119.5m (+5.5%) rose on contributions from recently-acquired Bedok Mall and completion of AEIs. Portfolio occupancy edged higher to 98.6% (+0.7ppt q/q), with WALE of 2 years. Aggregate leverage held steady at 35.4%, with average debt cost of 3.2% and tenor of 5.5 years. NAV/unit at $1.89. Trades at annualised yield of 5.2%, and 1.1x P/B.
*Cache Logistic Trust: 3Q16 results met expectations even though DPU slid to 1.847¢ (-13.7%) on the absence of a distribution of divestment gain. Revenue jumped 21.2% to $28m on increased contributions from DSC ARC building and three Australian properties acquired in 4Q15, although NPI rose at a slower pace to $22.1m (+17.5%) due to higher property expenses. Portfolio occupancy inched up to 96.5% (+0.7ppt) with WALE of 4 years, while aggregate leverage remained at 41.2% (+0.3ppt), with average debt cost at 3.62% and tenor of 2.4 years. Trades at 8.4% annualised yield and 1.1x P/B.
*Hwa Hong: 3Q16 net profit surged nearly 3x from a low base to $1.6m, bolstered by FX gain of $1.9m from its sterling loans. Revenue grew 1.6% to $3.1m as gains from investment (+41.6%) were pared by a decline in rental (-13.2%). Gross margin dropped to 62% (-4.5ppt) from increased business rates for its Eagle House property. NAV/unit at $0.2981.
*Mapletree Industrial Trust: Completed Phase One (825,400 sf gfa) of the build-to-suit development for Hewlett-Packard, with Phase Two on track for completion in 2Q17.
*Cordlife: Appointed Myanmar-based Bio Secure Company as its marketing agent in Myanmar to offer cord blood, cord lining and cord tissue banking services, as well as other services to local expectant families.*Straits Trading: Disposing its 26-storey office building with NLA of 21,010.8sqm in Melbourne, Australia, to AFIAA Australia 4 for A$161.5m ($171.8m) . Straits Trading expects to book a disposal gain of A$27.5m.
*Halcyon Agri/GMG Global: Halcyon has extended the closing date of its 0.9333 Halcyon share for every GMG share offer to 8 Nov. The group has garnered 88.64% controlling interest in GMG.
*CapitaLand: AI concierge chatbot “Sparkle”, which seeks to improve the consumer retail experience, will be embedded in CapitaLand’s CapitaStar app on 1 Nov.
*Hoe Leong: 49% owned Semua International will cease operations and will dispose its vessels, thereby terminating a previous non-binding term sheet with R&A Telecommunication signed in May ’16.
Investors will also keep an eye on the Sixth Plenum meeting in China, which could offer clues on the strength of top leaders in securing key roles for their allies. Regional bourses opened mixed today in Tokyo (+0.2%), Seoul (+0.5%) and Sydney (-0.9%).STI remains largely range bound between its topside resistance at 2,850 (50-dma) and support at 2,800 (200-dma).
Stocks to watch:
*Raffles Medical: 3Q16 net profit of $16.2m (+4%) brought 9M16 earnings of $48.4m (+4.1%) to 66% of street FY16 estimate. For the quarter, revenue jumped 17.5% to $119.3m on increased patient load, expanding clinic network and incremental sales contribution from more specialist consultants, as well as newly acquired MCH, but bottom line was weighed by a surge in staff expenses (+23%) due to the higher headcount. MKE last had a Buy with TP of $1.84.
*CapitaLand Mall Trust: 3Q16 results in line with DPU of 2.78¢ (-6.7%) diluted by a larger unit base, increased finance cost and an absence of retained income distribution. Revenue of $169.7m (+4.9%) and NPI of $119.5m (+5.5%) rose on contributions from recently-acquired Bedok Mall and completion of AEIs. Portfolio occupancy edged higher to 98.6% (+0.7ppt q/q), with WALE of 2 years. Aggregate leverage held steady at 35.4%, with average debt cost of 3.2% and tenor of 5.5 years. NAV/unit at $1.89. Trades at annualised yield of 5.2%, and 1.1x P/B.
*Cache Logistic Trust: 3Q16 results met expectations even though DPU slid to 1.847¢ (-13.7%) on the absence of a distribution of divestment gain. Revenue jumped 21.2% to $28m on increased contributions from DSC ARC building and three Australian properties acquired in 4Q15, although NPI rose at a slower pace to $22.1m (+17.5%) due to higher property expenses. Portfolio occupancy inched up to 96.5% (+0.7ppt) with WALE of 4 years, while aggregate leverage remained at 41.2% (+0.3ppt), with average debt cost at 3.62% and tenor of 2.4 years. Trades at 8.4% annualised yield and 1.1x P/B.
*Hwa Hong: 3Q16 net profit surged nearly 3x from a low base to $1.6m, bolstered by FX gain of $1.9m from its sterling loans. Revenue grew 1.6% to $3.1m as gains from investment (+41.6%) were pared by a decline in rental (-13.2%). Gross margin dropped to 62% (-4.5ppt) from increased business rates for its Eagle House property. NAV/unit at $0.2981.
*Mapletree Industrial Trust: Completed Phase One (825,400 sf gfa) of the build-to-suit development for Hewlett-Packard, with Phase Two on track for completion in 2Q17.
*Cordlife: Appointed Myanmar-based Bio Secure Company as its marketing agent in Myanmar to offer cord blood, cord lining and cord tissue banking services, as well as other services to local expectant families.*Straits Trading: Disposing its 26-storey office building with NLA of 21,010.8sqm in Melbourne, Australia, to AFIAA Australia 4 for A$161.5m ($171.8m) . Straits Trading expects to book a disposal gain of A$27.5m.
*Halcyon Agri/GMG Global: Halcyon has extended the closing date of its 0.9333 Halcyon share for every GMG share offer to 8 Nov. The group has garnered 88.64% controlling interest in GMG.
*CapitaLand: AI concierge chatbot “Sparkle”, which seeks to improve the consumer retail experience, will be embedded in CapitaLand’s CapitaStar app on 1 Nov.
*Hoe Leong: 49% owned Semua International will cease operations and will dispose its vessels, thereby terminating a previous non-binding term sheet with R&A Telecommunication signed in May ’16.
Friday, October 21, 2016
SG Market (21 Oct 16)
Investor sentiment is likely to be dampened by the pullback in oil prices on profit-taking and poor 3Q results from bellwether Keppel Corp, which could be the precursor for the O&M sector.
Regional bourses opened mixed today in Tokyo (+0.3%), Seoul (-0.5%) and Sydney (-0.4%).STI remains largely range bound between its topside resistance at 2,850 (50-dma) and support at 2,800 (200-dma).
Stocks to watch:
*Keppel Corp: 3Q16 net profit slumped to $224.5m (-38.1%) despite being shored up by property divestment gains, jobs and pay cuts. The results brought 9M16 core earnings to just 55% of lowered FY16 estimates. Revenue of $1.46b (-56%) was mainly weighed by reduced O&M activity from project deferments and suspension of Sete Brasil contracts, which squeezed operating O&M margin to 9.5% (3Q15: 12.3%). The property division (+3.7%) is now the group's largest earnings contributor, with better showing in Singapore but lower sales from China. No O&M orders secured in 3Q and order book contracted to $4.1b (2Q16: $4.3b). MKE maintains Sell with TP of $4.57.
*Suntec REIT: 3Q16 results in line with DPU of 2.535¢ (+0.5%) on stronger income contribution from JVs (Marina Bay Financial Centre and One Raffles Quay). Gross revenue and NPI of $82.4m (-4.3%) and $57.2m (-2.1%), slipped on absence of contribution from Park Mall (divested in Dec ’15), partly offset by takings from new property 177 Pacific Highway (acquired in Aug ’16). Office portfolio occupancy inched up to 99.4% (+0.6ppt q/q), while its retail portfolio slipped to 97.3% (-0.4ppt q/q). Aggregate leverage expanded to 37.8% (+3.1 ppt q/q), while cost of debt lowered to 2.28% (-0.49ppt q/q). NAV/unit at $2.128.
*Ascendas REIT: 2QFY17 results in line with DPU of 4.03¢ (-3.1%) on an enlarged unit base. Gross revenue and NPI rose to $205.4m (+12.5%) and $152.4m (+23.1%), respectively, mainly boosted by the acquisition of its Australian portfolio and ONE@Changi City, as well as lower property taxes (-37.2%). Portfolio occupancy inched up to 89% (+0.8 ppt q/q), while aggregate leverage was reduced to 34.2% (-2.8ppt q/q), with average debt cost steady at 3.02%. NAV/unit at $2.05.
*Frasers Centrepoint Trust: 4QFY16 DPU of 2.815¢ (-1.5%) brought FY16 DPU to 11.764¢ (+1.3%), in line with expectations. Gross revenue slipped 6% to $44.6m on lower contribution from Northpoint arising from ongoing AEI works and a changeover in anchor tenant at Changi City Point. NPI slipped a slower 0.9% to $31.5m on lower utilities tariff rates. Occupancy contracted to 89.4% (-1.4ppt), with WALE of 1.38 years. NAV/unit at $1.93.
*Viva Industrial Trust: In line 3Q16; DPU jumped 9.9% to 1.81¢, led by higher gross revenue and NPI of $24.3m (+31.9%) and $17.4m (+39.2%), respectively, on additional rental income from two newly acquired light industrial properties and higher rental income from Viva Business Park. Portfolio occupancy remained stable at 88.6% (+0.7ppt q/q), with WALE of 3.3 years. Aggregate leverage remained at 39.8% (-0.2ppt q/q), with average debt cost of 3.9% and tenor of 3.5 years. NAV/unit at $0.803.
*Ascott REIT: 3Q16 DPU of 2.35¢ (+14%) was a slight beat, lifted by FX gains of $3.3m. Revenue of $123.9m (+9%) and gross profit of $57.5m (+4%) were buoyed by seven new properties acquired between Jul ’15 and Mar ’16. RevPAU rose 2% to $144 from the new acquisitions, but excluding that, same-store-RevPAU tumbled 11% on weaker performance from the China, Singapore, Philippines (arising from renovation) and UK (on GBP/SGD depreciation). Aggregate leverage remained steady, but high at 41%, while group remains on the lookout for accretive M&A opportunities in key gateway cities of Australia, Japan, Europe and the US. NAV/unit at $1.30..
*City Dev: To sell Nouvel 18 through a profit participation securities scheme and unlock $977.6m, representing an implied ASP of $2,750 psf, above MKE's current assumptions of $2,500 psf. Last call was a Hold with TP of $9.43.
*Kim Heng Offshore & Marine: Reallocating $5m out of $20 of IPO proceeds initially designated for yard facility enhancement and fleet expansion, to general working capital due to the depressed oil & gas market sentiment.
*Natural Cool: Proposed private placement of 27m new shares (12.1% share capital) at 6.5¢ (7.1% discount on last close) apiece to strategic investor Ng Quek Peng, who has >30 years of corporate finance experience. Net proceeds of $1.7m will be used to fund growth and expansion of the group’s aircon and paint businesses.
*Advanced Integrated Manufacturing: Disposed a freehold bungalow in Penang for RM11m, and is expecting to book a gain of RM2.7m.
Profit warning:
- United Food
- MMP Resources
Regional bourses opened mixed today in Tokyo (+0.3%), Seoul (-0.5%) and Sydney (-0.4%).STI remains largely range bound between its topside resistance at 2,850 (50-dma) and support at 2,800 (200-dma).
Stocks to watch:
*Keppel Corp: 3Q16 net profit slumped to $224.5m (-38.1%) despite being shored up by property divestment gains, jobs and pay cuts. The results brought 9M16 core earnings to just 55% of lowered FY16 estimates. Revenue of $1.46b (-56%) was mainly weighed by reduced O&M activity from project deferments and suspension of Sete Brasil contracts, which squeezed operating O&M margin to 9.5% (3Q15: 12.3%). The property division (+3.7%) is now the group's largest earnings contributor, with better showing in Singapore but lower sales from China. No O&M orders secured in 3Q and order book contracted to $4.1b (2Q16: $4.3b). MKE maintains Sell with TP of $4.57.
*Suntec REIT: 3Q16 results in line with DPU of 2.535¢ (+0.5%) on stronger income contribution from JVs (Marina Bay Financial Centre and One Raffles Quay). Gross revenue and NPI of $82.4m (-4.3%) and $57.2m (-2.1%), slipped on absence of contribution from Park Mall (divested in Dec ’15), partly offset by takings from new property 177 Pacific Highway (acquired in Aug ’16). Office portfolio occupancy inched up to 99.4% (+0.6ppt q/q), while its retail portfolio slipped to 97.3% (-0.4ppt q/q). Aggregate leverage expanded to 37.8% (+3.1 ppt q/q), while cost of debt lowered to 2.28% (-0.49ppt q/q). NAV/unit at $2.128.
*Ascendas REIT: 2QFY17 results in line with DPU of 4.03¢ (-3.1%) on an enlarged unit base. Gross revenue and NPI rose to $205.4m (+12.5%) and $152.4m (+23.1%), respectively, mainly boosted by the acquisition of its Australian portfolio and ONE@Changi City, as well as lower property taxes (-37.2%). Portfolio occupancy inched up to 89% (+0.8 ppt q/q), while aggregate leverage was reduced to 34.2% (-2.8ppt q/q), with average debt cost steady at 3.02%. NAV/unit at $2.05.
*Frasers Centrepoint Trust: 4QFY16 DPU of 2.815¢ (-1.5%) brought FY16 DPU to 11.764¢ (+1.3%), in line with expectations. Gross revenue slipped 6% to $44.6m on lower contribution from Northpoint arising from ongoing AEI works and a changeover in anchor tenant at Changi City Point. NPI slipped a slower 0.9% to $31.5m on lower utilities tariff rates. Occupancy contracted to 89.4% (-1.4ppt), with WALE of 1.38 years. NAV/unit at $1.93.
*Viva Industrial Trust: In line 3Q16; DPU jumped 9.9% to 1.81¢, led by higher gross revenue and NPI of $24.3m (+31.9%) and $17.4m (+39.2%), respectively, on additional rental income from two newly acquired light industrial properties and higher rental income from Viva Business Park. Portfolio occupancy remained stable at 88.6% (+0.7ppt q/q), with WALE of 3.3 years. Aggregate leverage remained at 39.8% (-0.2ppt q/q), with average debt cost of 3.9% and tenor of 3.5 years. NAV/unit at $0.803.
*Ascott REIT: 3Q16 DPU of 2.35¢ (+14%) was a slight beat, lifted by FX gains of $3.3m. Revenue of $123.9m (+9%) and gross profit of $57.5m (+4%) were buoyed by seven new properties acquired between Jul ’15 and Mar ’16. RevPAU rose 2% to $144 from the new acquisitions, but excluding that, same-store-RevPAU tumbled 11% on weaker performance from the China, Singapore, Philippines (arising from renovation) and UK (on GBP/SGD depreciation). Aggregate leverage remained steady, but high at 41%, while group remains on the lookout for accretive M&A opportunities in key gateway cities of Australia, Japan, Europe and the US. NAV/unit at $1.30..
*City Dev: To sell Nouvel 18 through a profit participation securities scheme and unlock $977.6m, representing an implied ASP of $2,750 psf, above MKE's current assumptions of $2,500 psf. Last call was a Hold with TP of $9.43.
*Kim Heng Offshore & Marine: Reallocating $5m out of $20 of IPO proceeds initially designated for yard facility enhancement and fleet expansion, to general working capital due to the depressed oil & gas market sentiment.
*Natural Cool: Proposed private placement of 27m new shares (12.1% share capital) at 6.5¢ (7.1% discount on last close) apiece to strategic investor Ng Quek Peng, who has >30 years of corporate finance experience. Net proceeds of $1.7m will be used to fund growth and expansion of the group’s aircon and paint businesses.
*Advanced Integrated Manufacturing: Disposed a freehold bungalow in Penang for RM11m, and is expecting to book a gain of RM2.7m.
Profit warning:
- United Food
- MMP Resources
Thursday, October 20, 2016
Genting SP
Genting SP:
- 3Q16 results to be announced on Thu 3 Nov expected to not be any better than 2Q16's record low.
- High margin mass market GGR is under a lot of negative pressure due to the poor macro environment in Singapore. VIP volumes are also believed to remain poor.
- Maybank KE last had a Sell with TP of $0.71 on GENS.
- 3Q16 results to be announced on Thu 3 Nov expected to not be any better than 2Q16's record low.
- High margin mass market GGR is under a lot of negative pressure due to the poor macro environment in Singapore. VIP volumes are also believed to remain poor.
- Maybank KE last had a Sell with TP of $0.71 on GENS.
Frasers Commerical Trust
- 4QFY16 DPU slipped to 2.45¢ (-3%) due to an enlarged unit base, bringing FY16 DPU of 9.82¢ (+1%) in line with street estimates.
- 4Q gross revenue climbed 6% while NPI gained 7%, lifted by new contribution from 357 Collins Street acquired in Aug '15, and higher rental rates and lower utilities expenses at Alexandra Technopark.
- Occupancy inched up to 93% (-0.3ppt q/q).- Aggregate leverage remained at 36% (-0.3ppt q/q), with average interest cost steady at 3%.
- Redevelopment works at China Square Central are on track, and construction for the 16-storey hotel and commercial project is expected to be completed by mid-2019.
- At the current price, FCOT trades at 7% annualised yield and 0.92x P/B.
- 4Q gross revenue climbed 6% while NPI gained 7%, lifted by new contribution from 357 Collins Street acquired in Aug '15, and higher rental rates and lower utilities expenses at Alexandra Technopark.
- Occupancy inched up to 93% (-0.3ppt q/q).- Aggregate leverage remained at 36% (-0.3ppt q/q), with average interest cost steady at 3%.
- Redevelopment works at China Square Central are on track, and construction for the 16-storey hotel and commercial project is expected to be completed by mid-2019.
- At the current price, FCOT trades at 7% annualised yield and 0.92x P/B.
SG Market (20 Oct 16)
Expect some positive spillover activity from steadily rising oil prices, although lacklustre 3Q results from local companies could cap upside gains.Regional bourses opened positive in early trading in Tokyo (+0.3%), Seoul (+0.2%) and Sydney (+0.2%).Technically, STI could test its immediate resistance at 2,850 (50-dma), with next objective at 2,890. Underlying support is at 2,800 (200-dma).
Stocks to watch:
*SGX: 1QFY17 results missed with a 16% drop in net profit to $83.1m as revenue slid 13.1% on lower volume of market activity in both securities trading (-16%) and derivatives (-22%). Securities daily average turnover shrank 19% to $1b despite 8 new IPOs that raised $647m (1QFY16: $103.9m from 7 new listings), while derivatives volume dived 24%, mostly dragged by China A50 and Nikkei 225 futures. Operating margin shrank to 50.9% (-2.5ppts) on higher maintenance for new systems launched. But ongoing acquisition of Baltic Exchange and efforts to draw new listings remain the bright spots. Interim DPS of $0.05 was maintained.
*Keppel T&T: 3Q16 net profit leapt 357% to $69.9m, boosted by a disposal gain of $55.8m from the sale of its 50% stake in Keppel DC REIT Management. Revenue fell 8.7% to $46.5m on lower logistics sales, partly offset by higher contribution from the data centre division, stemming from increased co-location service income. NAV/share at $1.41. Separately, the group is acquiring a 59.6% stake in Courex for $4.6m, a third-party logistics company that uses a crowdsourcing model to tap on a large network of delivery personnel in Singapore. The acquisition is in line with its e-commerce growth plans.
*Frasers Commercial Trust: 4QFY16 results in line. Distributable income rose 4% to $19.5m but DPU slipped to 2.45¢ (-3%) on an enlarged unit base. Gross revenue and NPI climbed to $39.3m (+6%) and $29.3m (+7%) respectively, lifted by newly acquired 357 Collins Street and higher rental rates at Alexandra Technopark. Portfolio occupancy inched up to 93% (-0.3ppt q/q) with WALE of 3 years. Aggregate leverage held steady at 36% (-0.3ppt q/q) with average interest cost maintained at 3%. NAV/share at $1.52.
*First REIT: 3Q16 distributable income rose to $16.3m (+4.7%), but DPU lagged at 2.12¢ (+1.9%) due to an enlarged unit base. Gross revenue and NPI rose in tandem to $26.9m (+6.5%) and $26.6m (+6.3%), respectively, underpinned by new contributions from Siloam Hospitals Kupang and Lippo Plaza Kupang that were acquired in Dec '15. Aggregate leverage reduced to 30% (-4.4ppt q/q). NAV/unit $1.0293.
*mm2 Asia: Acquiring the exclusive rights to produce and broadcast “The Voice”, for Singapore and Malaysia. The global franchise is scheduled to air in 2017.
*Ezra/Emas Offshore: Associate Perisai Petroleum received a notice from noteholders seeking full immediate repayment of its $125m 6.875% notes.
*Acromec: Clinched a $7m contract for fitting out a biosafety level 3 lab for National Centre for Infectious Diseases by 1Q18. The deal also has a $1.8m option for maintenance services within a year from completion. This brings order book to $49m.
*SHS: To supply electric energy to the Bangladeshi government with its future solar power plant, at a tariff of US$0.17/kWh for a 20-year period.
*Global Invacom: Received approval to supply its new generation Low Noise Block products to its largest customer, a leading satellite equipment provider in the US.
*China Taisan Technology: Group's Taiwan Depository Receipts will be delisted from the Taiwan Stock Exchange on 29 Nov.
*China Environment: Receive letter of demand from one of its major shareholders seeking overdue rental of Rmb3.2m to be paid by 20 Oct.
Stocks to watch:
*SGX: 1QFY17 results missed with a 16% drop in net profit to $83.1m as revenue slid 13.1% on lower volume of market activity in both securities trading (-16%) and derivatives (-22%). Securities daily average turnover shrank 19% to $1b despite 8 new IPOs that raised $647m (1QFY16: $103.9m from 7 new listings), while derivatives volume dived 24%, mostly dragged by China A50 and Nikkei 225 futures. Operating margin shrank to 50.9% (-2.5ppts) on higher maintenance for new systems launched. But ongoing acquisition of Baltic Exchange and efforts to draw new listings remain the bright spots. Interim DPS of $0.05 was maintained.
*Keppel T&T: 3Q16 net profit leapt 357% to $69.9m, boosted by a disposal gain of $55.8m from the sale of its 50% stake in Keppel DC REIT Management. Revenue fell 8.7% to $46.5m on lower logistics sales, partly offset by higher contribution from the data centre division, stemming from increased co-location service income. NAV/share at $1.41. Separately, the group is acquiring a 59.6% stake in Courex for $4.6m, a third-party logistics company that uses a crowdsourcing model to tap on a large network of delivery personnel in Singapore. The acquisition is in line with its e-commerce growth plans.
*Frasers Commercial Trust: 4QFY16 results in line. Distributable income rose 4% to $19.5m but DPU slipped to 2.45¢ (-3%) on an enlarged unit base. Gross revenue and NPI climbed to $39.3m (+6%) and $29.3m (+7%) respectively, lifted by newly acquired 357 Collins Street and higher rental rates at Alexandra Technopark. Portfolio occupancy inched up to 93% (-0.3ppt q/q) with WALE of 3 years. Aggregate leverage held steady at 36% (-0.3ppt q/q) with average interest cost maintained at 3%. NAV/share at $1.52.
*First REIT: 3Q16 distributable income rose to $16.3m (+4.7%), but DPU lagged at 2.12¢ (+1.9%) due to an enlarged unit base. Gross revenue and NPI rose in tandem to $26.9m (+6.5%) and $26.6m (+6.3%), respectively, underpinned by new contributions from Siloam Hospitals Kupang and Lippo Plaza Kupang that were acquired in Dec '15. Aggregate leverage reduced to 30% (-4.4ppt q/q). NAV/unit $1.0293.
*mm2 Asia: Acquiring the exclusive rights to produce and broadcast “The Voice”, for Singapore and Malaysia. The global franchise is scheduled to air in 2017.
*Ezra/Emas Offshore: Associate Perisai Petroleum received a notice from noteholders seeking full immediate repayment of its $125m 6.875% notes.
*Acromec: Clinched a $7m contract for fitting out a biosafety level 3 lab for National Centre for Infectious Diseases by 1Q18. The deal also has a $1.8m option for maintenance services within a year from completion. This brings order book to $49m.
*SHS: To supply electric energy to the Bangladeshi government with its future solar power plant, at a tariff of US$0.17/kWh for a 20-year period.
*Global Invacom: Received approval to supply its new generation Low Noise Block products to its largest customer, a leading satellite equipment provider in the US.
*China Taisan Technology: Group's Taiwan Depository Receipts will be delisted from the Taiwan Stock Exchange on 29 Nov.
*China Environment: Receive letter of demand from one of its major shareholders seeking overdue rental of Rmb3.2m to be paid by 20 Oct.
Wednesday, October 19, 2016
CCT
CCT
- 3Q16 DPU of 2.3¢ (+7.5%) matched expectations, bringing 9M16 DPU to 6.69¢ (+3.7%), representing 76% of street FY16 estimate.
- Revenue and NPI rose to $74.4m (+8.9%) and $57m (+8.3%), respectively, thanks to full contribution from CapitaGreen which was fully acquired at end-Aug (previously: 40% stake).
- Rental rates for office space could come under pressure going forward.
- However, Maybank KE believes the oversupply issue has been well flagged and has turned positive on office REITs early last month, citing that REIT prices could react ahead of a bottom to rents.
- Separately, CCT has applied to authorities to rezone its prime asset Golden Shoe Car Park to commercial use.
- At the current price, CCT is trading at 5.8% 3Q annualised yield and 0.9x P/B.
- 3Q16 DPU of 2.3¢ (+7.5%) matched expectations, bringing 9M16 DPU to 6.69¢ (+3.7%), representing 76% of street FY16 estimate.
- Revenue and NPI rose to $74.4m (+8.9%) and $57m (+8.3%), respectively, thanks to full contribution from CapitaGreen which was fully acquired at end-Aug (previously: 40% stake).
- Rental rates for office space could come under pressure going forward.
- However, Maybank KE believes the oversupply issue has been well flagged and has turned positive on office REITs early last month, citing that REIT prices could react ahead of a bottom to rents.
- Separately, CCT has applied to authorities to rezone its prime asset Golden Shoe Car Park to commercial use.
- At the current price, CCT is trading at 5.8% 3Q annualised yield and 0.9x P/B.
SG Market (19 Oct 16)
Trading is likely to be tepid ahead of the release of China 3Q GDP growth (est: 6.7%) at 10am.Regional bourses opened mixed in early trading in Tokyo (+0.1%), Seoul (-0.2%) and Sydney (+0.3%).Technically, STI remains range-bound between its immediate support at 2,800 (200-dma) and resistance at 2,852 (50-dma) within a larger downward trend channel.
Stocks to watch:
*M1: 3Q16 net profit of $34.4m (-23.4%) missed estimates as revenue slumped 10.3% to $249.1m on lower handset sales (-28.9%) and service revenue (-3.6%). While overall customer base rose 6.7%, ARPU deteriorated across the board, which compressed EBITDA margin to 29.9% (-1.3ppt q/q). Management guided FY16 earnings contraction to be in the low-teens (2Q16: single-digit decline). MKE maintains Sell and cuts TP to $1.90 from $2.04.
*CCT: 3Q16 DPU of 2.3¢ (+7.5%) matched expectations on higher revenue of $74.4m (+8.9%) and NPI of $57m (+8.3%), thanks to full contribution from CapitaGreen, which was fully acquired in Aug (prior: 40%). Consequently, aggregate leverage spiked 8ppt q/q to 37.8%. Portfolio occupancy inched up 0.2ppt to 97.4%, with WALE at 6.8 years. NAV/unit at $1.75. Separately, CCT has applied to redevelop prime asset Golden Shoe Car Park into a landmark commercial development, which could add a significant 25% to current NLA.
*Keppel REIT: 3Q16 DPU of 1.6¢ (-5.9%) was at the lower bound of street estimates, as revenue and NPI slipped to $39.5m (-6.3%) and $31.6m (-5.4%), respectively, following the divestment of Sydney office, 77 King Street, in 1Q16. Portfolio occupancy stood at 99.5% (-0.2ppt q/q) with longer WALE of 8.5 years (2Q16: 6 years). Aggregate leverage held steady at 39% with average cost of capital at 2.53%. NAV/unit at $1.42.
*ST Engineering: Warned that it will take a $61m impairment charge in 3Q16, likely stemming from the cessation of production at 75.3% owned loss-making Chinese construction business Jiangsu Huaran Kinetics. This hit accounts for 12% of MKE/consensus net profit forecast of $499m/$497m for FY16. STE will announce its 3Q16 results on 10 Nov. MKE last had a Hold and TP of $3.17.
*City Dev: Acquiring 20% stake in a freehold prime residential project in Tokyo, Japan, for an undisclosed sum. The 163-apartment project, Park Court Aoyama The Tower, has an estimated gross development value of ¥50b ($668m).*SIIC Environment: Acquiring an additional 32.7% stake in Longjiang Environmental Protection Group for Rmb836m. With 58% stake now, pro forma FY15 EPS is expected to rise by 11% to Rmb0.1871.
*MoneyMax/AP Oil: To go into a 12.5:12.5:70 JV with Chinese motorcycle manufacturer Zhongshen, to undertake financial leasing business in Chongqing, China.
*Equation: Its DiSa point-of-sale activation asset protection solution has been proven by the Loss Prevention Research Council to be a scalable solution that will help retailers drive sales, while enhancing in-store consumer experience.
*Venture: Substantial shareholder Silchester International Investors disposed 250,000 shares at an average $9.36 on 14 Oct, paring its stake from 5.06% to 4.97%.
Stocks to watch:
*M1: 3Q16 net profit of $34.4m (-23.4%) missed estimates as revenue slumped 10.3% to $249.1m on lower handset sales (-28.9%) and service revenue (-3.6%). While overall customer base rose 6.7%, ARPU deteriorated across the board, which compressed EBITDA margin to 29.9% (-1.3ppt q/q). Management guided FY16 earnings contraction to be in the low-teens (2Q16: single-digit decline). MKE maintains Sell and cuts TP to $1.90 from $2.04.
*CCT: 3Q16 DPU of 2.3¢ (+7.5%) matched expectations on higher revenue of $74.4m (+8.9%) and NPI of $57m (+8.3%), thanks to full contribution from CapitaGreen, which was fully acquired in Aug (prior: 40%). Consequently, aggregate leverage spiked 8ppt q/q to 37.8%. Portfolio occupancy inched up 0.2ppt to 97.4%, with WALE at 6.8 years. NAV/unit at $1.75. Separately, CCT has applied to redevelop prime asset Golden Shoe Car Park into a landmark commercial development, which could add a significant 25% to current NLA.
*Keppel REIT: 3Q16 DPU of 1.6¢ (-5.9%) was at the lower bound of street estimates, as revenue and NPI slipped to $39.5m (-6.3%) and $31.6m (-5.4%), respectively, following the divestment of Sydney office, 77 King Street, in 1Q16. Portfolio occupancy stood at 99.5% (-0.2ppt q/q) with longer WALE of 8.5 years (2Q16: 6 years). Aggregate leverage held steady at 39% with average cost of capital at 2.53%. NAV/unit at $1.42.
*ST Engineering: Warned that it will take a $61m impairment charge in 3Q16, likely stemming from the cessation of production at 75.3% owned loss-making Chinese construction business Jiangsu Huaran Kinetics. This hit accounts for 12% of MKE/consensus net profit forecast of $499m/$497m for FY16. STE will announce its 3Q16 results on 10 Nov. MKE last had a Hold and TP of $3.17.
*City Dev: Acquiring 20% stake in a freehold prime residential project in Tokyo, Japan, for an undisclosed sum. The 163-apartment project, Park Court Aoyama The Tower, has an estimated gross development value of ¥50b ($668m).*SIIC Environment: Acquiring an additional 32.7% stake in Longjiang Environmental Protection Group for Rmb836m. With 58% stake now, pro forma FY15 EPS is expected to rise by 11% to Rmb0.1871.
*MoneyMax/AP Oil: To go into a 12.5:12.5:70 JV with Chinese motorcycle manufacturer Zhongshen, to undertake financial leasing business in Chongqing, China.
*Equation: Its DiSa point-of-sale activation asset protection solution has been proven by the Loss Prevention Research Council to be a scalable solution that will help retailers drive sales, while enhancing in-store consumer experience.
*Venture: Substantial shareholder Silchester International Investors disposed 250,000 shares at an average $9.36 on 14 Oct, paring its stake from 5.06% to 4.97%.
Tuesday, October 18, 2016
SG Market (18 Oct 16)
Singapore stocks are likely to thread water as investors adopt wait-and-see mode ahead of local company results.
Regional bourses opened mixed in early trading in Tokyo (-0.2%), Seoul (+0.3%) and Sydney (0.3%).Immediate support for STI is at 2,800 (200-dma), with topside resistance at 2,852 (50-dma).
Stocks to watch:
*Keppel DC REIT: 3Q16 results in line with DPU of 1.9¢ (+15.9%), bolstered by derivative gains and finance income. Revenue tumbled to $22.7m (-12%) on lower rental from overseas assets and weaker variable income at local properties, but NPI was lifted back to $22.7m (+6.2%) on a one-off property tax refund and lower costs. Portfolio occupancy edged up 0.4ppt q/q to 92.7% with WALE of 8.6 years. Aggregate leverage was steady at 29.4%, but will increase to 36.1% upon completion of asset acquisitions in Cardiff and Dublin, while average debt cost was 2.4% and tenor at 2.5 years. NAV/unit at $0.889.
*Keppel DC REIT: Acquiring a 90% stake in a fully-committed data centre (Keppel DC Singapore 3) for $202.5m from a 70:30 JV between Keppel T&T and Keppel Land. The deal will be funded by a fully underwritten 274-for1,000 preferential offering of 242m shares at $1.155 apiece. The proposed acquisition will expand its portfolio assets to $1.35b from $1.14b, comprising 11 data centres globally. FY15 pro forma DPU is estimated to increase to 6.88¢ (+5.7%), while aggregate leverage will fall to 27.7% (-8.4ppt).
*Keppel Corp/Keppel T&T: Divestment of Keppel DC Singapore 3 (formerly T27) held by a 30:70 JV between Keppel Corp and Keppel T&T is expected to unlock ~$141m in cash, which will be used to fund investments in logistics/ data centres, with the remaining for general corporate and working capital purposes.
*Keppel Corp: Divesting an effective 44.05% share in Chengdu Century Development (CCD) for Rmb150.7m ($30.8m), in a bid to recycle capital. CCD owns and develops the Botanica, a township project in Jinjiang District, Chengdu. MKE estimates that the sale would net a gain of $9m and support its argument that the O&M segment could no longer be relied upon to fund other businesses. MKE last had a Sell with TP of $4.54.
*Keppel Infra Trust: Flat 3Q16 DPU of 0.93¢ came in line. Revenue dipped to $160.3m (-0.2%) on lower tariffs at City Gas (-10.5%) and reduced concessions (-4.7%) at the SingSpring Desalination plant, partially offset by increased contributions from Basslink (+79.5%). NAV/share at $0.316.
*Sabana REIT: 3QFY16 DPU tumbled 32.2% to 1.2¢, as revenue ($23m,-9.7%) and NPI ($13.9m, -24%) were dragged by negative rental reversions at certain master leases, lower occupancies and higher expenses arising from multi-tenanted lease conversions. Portfolio occupancy improved to 89.2% (+0.4ppt q/q) with WALE of 2.5 years, while aggregate leverage inched up to 41.2% (+0.3ppt q/q). NAV/unit at $0.81.
*SIA: Group pax load factor slipped 2.3ppts to 77.9% in Sep as traffic (+1.7%) lagged capacity increase (+3.1%), while cargo load factor eased to 62.4% (-0.5 ppts) on similar carriage (+5.3%) and capacity (+5.2%) growth. Load factors declined across all its regions except East Asia (flat) for its parent airline, and across subsidiary carriers Scoot (-4.9ppts to 78.6%), TigerAir (-2.7ppts to 79%) and SilkAir (-1ppt to 65.7%). MKE last had a Hold with TP of $10.00.
*ST Engineering: Electronics arm secured contracts worth $480m (+29.8% y/y, -26.2% q/q) in 3Q16, comprising work in rail electronics & intelligent transportation, satellite & broadband communications, as well as advanced electronics & ICT solutions sectors..
*GLP: Signed 218,000 sqm of e-commerce related leases in China (153,000 sqm), US (55,000 sqm) and Japan (10,000 sqm).
*SMRT: Privatisation offer at $1.68/share from parent Temasek Holdings has been sanctioned by the High Court. Last day of trading will be on 18 Oct.
*Ascendas Hospitality Trust: Appointed ONYX Hospitality Group as the operator of the serviced apartments component at Aurora Melbourne Central.
*SPH: Merging My Paper and The New Paper to a revamped product, which will be distributed for free from Dec. Consequently, SPH expects to cut up to 10% of its staff force over the next two years.
*mm2 Asia: Entered MOU to acquire 30% stake in Rings.TV for $4.5m. The group intends to tap on the interactive live-streaming broadcasting platform to broadcast exclusive material from its movie productions and unlock new revenue streams from concert producer/ organiser UnUsUaL. Subsequently if Rings.TV successfully lists in five years, it will grant mm2 with a guaranteed investment buyback plus coupon of 5% per annum on the deal.
*Lian Beng: Acquired Khong Guan Industrial Building for $31m, or $544 psf. The freehold light industrial building sits on a fully maxed-out gfa of 57,019 sf, and will be held for rental income.
*Yongnam: CEO Seow Soon Yong exercised a call option to acquire 10m shares in the company from CIMB Securities Singapore for $2.1m, or $0.21/share, lifting his stake from 20.31% to 22.41%.
*Cosco Corp: Deferring delivery again for the Sevan 650 drilling unit by six months to 15 Apr ’17, and the final payment of the contract will be reduced to US$499.7m (original price: US$526m). A US$26.3m refund will be made to the client in 4Q16 as part of the deferment agreement.
*China New Town: Proposed voluntary delisting via a selective share buyback scheme of 7¢/share, for shareholders who do not wish to continue holding their shares and trade on the primary listing in Hong Kong.
*Asia Fashion: 60-day MOU with Xamax Development to negotiate on the development and production of a theatrical movie project. If firmed up, production is expected to run throughout 2017, with the premiere anticipated in early 2018.
*Sing Holdings: Acquiring its first hotel property in Melbourne, Australia, for A$107m. The freehold, 291-room asset is intended to boost recurring income.
*Ley Choon: Secured a $3m contract from PUB for the supply and laying of water mains in the east from 2016 to 2019.*Asian Micro: Embarking on LNG and related businesses from Jan ’17 onwards, after it was appointed as the authorised importer, installer and distributor for three companies specialising in LNG storage systems, LNG vaporisers, LNG engines and power generators.
Regional bourses opened mixed in early trading in Tokyo (-0.2%), Seoul (+0.3%) and Sydney (0.3%).Immediate support for STI is at 2,800 (200-dma), with topside resistance at 2,852 (50-dma).
Stocks to watch:
*Keppel DC REIT: 3Q16 results in line with DPU of 1.9¢ (+15.9%), bolstered by derivative gains and finance income. Revenue tumbled to $22.7m (-12%) on lower rental from overseas assets and weaker variable income at local properties, but NPI was lifted back to $22.7m (+6.2%) on a one-off property tax refund and lower costs. Portfolio occupancy edged up 0.4ppt q/q to 92.7% with WALE of 8.6 years. Aggregate leverage was steady at 29.4%, but will increase to 36.1% upon completion of asset acquisitions in Cardiff and Dublin, while average debt cost was 2.4% and tenor at 2.5 years. NAV/unit at $0.889.
*Keppel DC REIT: Acquiring a 90% stake in a fully-committed data centre (Keppel DC Singapore 3) for $202.5m from a 70:30 JV between Keppel T&T and Keppel Land. The deal will be funded by a fully underwritten 274-for1,000 preferential offering of 242m shares at $1.155 apiece. The proposed acquisition will expand its portfolio assets to $1.35b from $1.14b, comprising 11 data centres globally. FY15 pro forma DPU is estimated to increase to 6.88¢ (+5.7%), while aggregate leverage will fall to 27.7% (-8.4ppt).
*Keppel Corp/Keppel T&T: Divestment of Keppel DC Singapore 3 (formerly T27) held by a 30:70 JV between Keppel Corp and Keppel T&T is expected to unlock ~$141m in cash, which will be used to fund investments in logistics/ data centres, with the remaining for general corporate and working capital purposes.
*Keppel Corp: Divesting an effective 44.05% share in Chengdu Century Development (CCD) for Rmb150.7m ($30.8m), in a bid to recycle capital. CCD owns and develops the Botanica, a township project in Jinjiang District, Chengdu. MKE estimates that the sale would net a gain of $9m and support its argument that the O&M segment could no longer be relied upon to fund other businesses. MKE last had a Sell with TP of $4.54.
*Keppel Infra Trust: Flat 3Q16 DPU of 0.93¢ came in line. Revenue dipped to $160.3m (-0.2%) on lower tariffs at City Gas (-10.5%) and reduced concessions (-4.7%) at the SingSpring Desalination plant, partially offset by increased contributions from Basslink (+79.5%). NAV/share at $0.316.
*Sabana REIT: 3QFY16 DPU tumbled 32.2% to 1.2¢, as revenue ($23m,-9.7%) and NPI ($13.9m, -24%) were dragged by negative rental reversions at certain master leases, lower occupancies and higher expenses arising from multi-tenanted lease conversions. Portfolio occupancy improved to 89.2% (+0.4ppt q/q) with WALE of 2.5 years, while aggregate leverage inched up to 41.2% (+0.3ppt q/q). NAV/unit at $0.81.
*SIA: Group pax load factor slipped 2.3ppts to 77.9% in Sep as traffic (+1.7%) lagged capacity increase (+3.1%), while cargo load factor eased to 62.4% (-0.5 ppts) on similar carriage (+5.3%) and capacity (+5.2%) growth. Load factors declined across all its regions except East Asia (flat) for its parent airline, and across subsidiary carriers Scoot (-4.9ppts to 78.6%), TigerAir (-2.7ppts to 79%) and SilkAir (-1ppt to 65.7%). MKE last had a Hold with TP of $10.00.
*ST Engineering: Electronics arm secured contracts worth $480m (+29.8% y/y, -26.2% q/q) in 3Q16, comprising work in rail electronics & intelligent transportation, satellite & broadband communications, as well as advanced electronics & ICT solutions sectors..
*GLP: Signed 218,000 sqm of e-commerce related leases in China (153,000 sqm), US (55,000 sqm) and Japan (10,000 sqm).
*SMRT: Privatisation offer at $1.68/share from parent Temasek Holdings has been sanctioned by the High Court. Last day of trading will be on 18 Oct.
*Ascendas Hospitality Trust: Appointed ONYX Hospitality Group as the operator of the serviced apartments component at Aurora Melbourne Central.
*SPH: Merging My Paper and The New Paper to a revamped product, which will be distributed for free from Dec. Consequently, SPH expects to cut up to 10% of its staff force over the next two years.
*mm2 Asia: Entered MOU to acquire 30% stake in Rings.TV for $4.5m. The group intends to tap on the interactive live-streaming broadcasting platform to broadcast exclusive material from its movie productions and unlock new revenue streams from concert producer/ organiser UnUsUaL. Subsequently if Rings.TV successfully lists in five years, it will grant mm2 with a guaranteed investment buyback plus coupon of 5% per annum on the deal.
*Lian Beng: Acquired Khong Guan Industrial Building for $31m, or $544 psf. The freehold light industrial building sits on a fully maxed-out gfa of 57,019 sf, and will be held for rental income.
*Yongnam: CEO Seow Soon Yong exercised a call option to acquire 10m shares in the company from CIMB Securities Singapore for $2.1m, or $0.21/share, lifting his stake from 20.31% to 22.41%.
*Cosco Corp: Deferring delivery again for the Sevan 650 drilling unit by six months to 15 Apr ’17, and the final payment of the contract will be reduced to US$499.7m (original price: US$526m). A US$26.3m refund will be made to the client in 4Q16 as part of the deferment agreement.
*China New Town: Proposed voluntary delisting via a selective share buyback scheme of 7¢/share, for shareholders who do not wish to continue holding their shares and trade on the primary listing in Hong Kong.
*Asia Fashion: 60-day MOU with Xamax Development to negotiate on the development and production of a theatrical movie project. If firmed up, production is expected to run throughout 2017, with the premiere anticipated in early 2018.
*Sing Holdings: Acquiring its first hotel property in Melbourne, Australia, for A$107m. The freehold, 291-room asset is intended to boost recurring income.
*Ley Choon: Secured a $3m contract from PUB for the supply and laying of water mains in the east from 2016 to 2019.*Asian Micro: Embarking on LNG and related businesses from Jan ’17 onwards, after it was appointed as the authorised importer, installer and distributor for three companies specialising in LNG storage systems, LNG vaporisers, LNG engines and power generators.
Monday, October 17, 2016
Cedar Strategic
Cedar Strategic: Acquiring a 49% stake in Yangon development, Golden City
- Acquiring a 49% effective stake in Golden City, a mixed-use luxury development with a GFA of 335,284 sqm in Yangon Myanmar through DAS for US$24.9m.
- The acquisition will be executed in two phases with the first phase entailing the acquisition of a 75% stake in DAS from various vendors to be completed by end 2016.
- The final phase will see the acquisition of the remaining shares in DAS from D3 Capital. The final phase is subject to approval at an EGM in 1Q17.
- To be funded through internal resources as well as a shareholder loan of US$5m from controlling shareholder Luo Shandong (27.7% stake). The loan will carry a 6% interest rate and will have a term of 18 months from the date of disbursement. Golden City will have a gross development value of US$694m upon completion in 3-5 years time.
Note that company has no debt as at 2Q16 and has cash reserves of RMB56.8m (~US$8.4m). This implies that the company could take on more debt to fill in the gap of about ~US$11.5m to fund the acquisition.
- Acquiring a 49% effective stake in Golden City, a mixed-use luxury development with a GFA of 335,284 sqm in Yangon Myanmar through DAS for US$24.9m.
- The acquisition will be executed in two phases with the first phase entailing the acquisition of a 75% stake in DAS from various vendors to be completed by end 2016.
- The final phase will see the acquisition of the remaining shares in DAS from D3 Capital. The final phase is subject to approval at an EGM in 1Q17.
- To be funded through internal resources as well as a shareholder loan of US$5m from controlling shareholder Luo Shandong (27.7% stake). The loan will carry a 6% interest rate and will have a term of 18 months from the date of disbursement. Golden City will have a gross development value of US$694m upon completion in 3-5 years time.
Note that company has no debt as at 2Q16 and has cash reserves of RMB56.8m (~US$8.4m). This implies that the company could take on more debt to fill in the gap of about ~US$11.5m to fund the acquisition.
ThaiBev
(Bloomberg Gadfly) -- Here's an anomaly: The third-largest company in the world's biggest Buddhist-majority country is ThaiBev, which makes its money selling rum and beer to a population whose religious texts exhort them to abstain from alcohol.Fully 63% of working-age Thais are teetotallers, according to a 2007 study, and yet trailing 12-month revenues at the maker of Chang beer and Mekhong rum have risen 53% over the past five years.You might expect the death of Thailand's King Bhumibol Adulyadej last Thu to have interrupted this revelry. Public drinking will be frowned on during the 12-month period of mourning and ThaiBev's own website was switched into sombre black and white to mark the event. Alcohol sales will be more strictly limited to particular times of the day, according to the Guardian, and hypermarket giant Tesco Lotus suspended all sales of alcoholic drinks, according to AEC News Today.If that's bad news for ThaiBev, someone omitted to tell the shareholders. After falling last week as the king's health worsened, the Singapore-traded stock rebounded with a 1.7% gain ahead of the official announcement of his death. In a classic example of sell-the-rumor, buy-the-fact, it rose as much as 3.8% on Fri - the sharpest gain since July.By the close of trade it had only modestly underperformed the benchmark SET index over the period since the King was hospitalized.Part of this may represent doubts that the mourning period will turn out to be quite as stringent as everyone expects, though the wailing crowds thronging Thai streets since news of the king's death broke argue against such a conclusion.ThaiBev's very success is a testament to the country's relaxed interpretation of some of its moral codes. Indeed, one 2002 paper found that Thai men who'd spent periods in their youth living in Buddhist temples were more likely to be heavy drinkers in adulthood than those who had not - the opposite of what would be expected if the sanction on alcohol was unbreakable.It's certainly not based on an expectation that ThaiBev's other businesses will help the company ride out a decline in drinking: Just 4.1% of its 2015 revenues came from overseas, and 13% from food and non-alcoholic drinks.Shareholders at present give ThaiBev a forward P/E of 21x - bang on the median for brewers and distillers globally with more than $1b in trailing 12-month sales, and ahead of the likes of Diageo, Heineken, Carlsberg and Kweichow Moutai. If more Thais respond to theirmonarch's death by abstaining from alcohol than choose to drown their sorrows, that valuation could start looking tipsy.
Economy
Economy: Singapore’s non-oil domestic exports fell 4.8% y/y in Sep vs estimates of 5.8% decline, dragged by lower shipments of electronics (-6.6%) and petrochemicals (-6.5%).Among the top export markets, Indonesia (-16.1%), Malaysia (-12.3%) and Japan (-11.3%) were worst hit, while EU (+9.9%) recovered and HK was robust (+21.7%). Exports to US (-7.2%) and China (-2.2%) were still on the decline.
SG Market (17 Oct 16)
Market focus will swing inwards this week on a slew of 3Q results from REITs, CapitaLand, SGX and Keppel Corp. Sentiment could also be swayed by release of NODX today, key economic data from China (loans, industrial production, GDP) mid-week as well as the final US presidential debate on Thurs.
Regional bourses opened mostly flat this morning in Tokyo (flat), Seoul (+0.2%) and Sydney (+0.1%).Technically, immediate support for STI is at 2,800 (200-dma), with topside resistance capped at 2,852 (50-dma).
Stocks to watch:
*SPH: FY16 net profit of $265.3m (-17.5%) fell within expectations. Revenue slipped to $1.15b (-4.3%), dragged by weak advertising (-9.2%) and circulation (-3%) sales, although property income was relatively stable. Bottom line was further hit by impairment charges of $28.4m (+212%), mainly related to its magazine business. Final and special DPS cut to $0.11 (FY15: $0.15), bringing full year payout to $0.18 (FY15: $0.20). NAV/share at $2.18.
*TEE Land: 1QFY17 net profit declined 32.5% to $0.6m, despite a 311% surge in revenue to $13.8m, unnderpinned by progressive sales recognition of property projects Third Avenue (Malaysia) and Hilbre 28 (S'pore). Bottom line weakness was weighed by 1) lower gross margin of 28.4% (-25.7ppt) from reduced share of rental income, 2) 73.4% slump in associates’ contributions following project completions in FY16 and 3) 33% increase in finance costs due to higher borrowings. NAV/share at $0.356.
*TEE Int'l: 1QFY17 net profit tanked 73.7% to $0.6m, largely from a slump in JVs/associates income of $0.8m (-71.2%) and absence of disposal gains (1QFY16: $1.7m). Revenue rose 4.8% to $64m on increased sales of development properties, while gross margin improved to 11.3% (+1ppt). NAV/share at $0.20.
*STE: Secured lesser new aerospace contracts in 3Q16 of $520m (-32.5% q/q), comprising aircraft conversion, airframe maintenance, pilot training, and related MRO services. MKE last had a Hold rating with TP of $3.17.
*ISEC Healthcare: MOU to form JV with Vietnamese eye clinics operator Hai Yen Anh Tran has lapsed after pre-conditions were not fulfilled.
*GKE: 50:50 JVCo Ocean Latitude renewed its chartering contract with Sinogas Carriers for a liquefied gas carrier vessel for two months till mid-Dec 2016, albeit at a lower charter rate.
*Sri Trang: Disclosed that a fire has broken out at its rubber factory in Pontianak, Indonesia, with damage incurred at its raw material storage and sections of its production lines. Prior to the fire, the factory accounted for ~5% of the group's total rubber production of 2,000-4,000 tonnes/month.
*CFM Holdings: Renewed the lease for its factory at No.4 Ang Mo Kio Avenue 12 for 30 years commencing 1 Nov 2016.
*MYP: Clarified that the $560m consideration for its proposed acquisition of Straits Trading building will be funded by bank financing (65%), proceeds of rights issue (33.6%) and internal resources (1.4%).
*Yamada: Updated that the three recent typhoons that swept through Taiwan and China have resulted in heavy rainfall in Zhangping City, where some of the group's raw materials were kept, and may impact the production volume and/or quality of the shiitake mushrooms once the harvesting season commences.
Regional bourses opened mostly flat this morning in Tokyo (flat), Seoul (+0.2%) and Sydney (+0.1%).Technically, immediate support for STI is at 2,800 (200-dma), with topside resistance capped at 2,852 (50-dma).
Stocks to watch:
*SPH: FY16 net profit of $265.3m (-17.5%) fell within expectations. Revenue slipped to $1.15b (-4.3%), dragged by weak advertising (-9.2%) and circulation (-3%) sales, although property income was relatively stable. Bottom line was further hit by impairment charges of $28.4m (+212%), mainly related to its magazine business. Final and special DPS cut to $0.11 (FY15: $0.15), bringing full year payout to $0.18 (FY15: $0.20). NAV/share at $2.18.
*TEE Land: 1QFY17 net profit declined 32.5% to $0.6m, despite a 311% surge in revenue to $13.8m, unnderpinned by progressive sales recognition of property projects Third Avenue (Malaysia) and Hilbre 28 (S'pore). Bottom line weakness was weighed by 1) lower gross margin of 28.4% (-25.7ppt) from reduced share of rental income, 2) 73.4% slump in associates’ contributions following project completions in FY16 and 3) 33% increase in finance costs due to higher borrowings. NAV/share at $0.356.
*TEE Int'l: 1QFY17 net profit tanked 73.7% to $0.6m, largely from a slump in JVs/associates income of $0.8m (-71.2%) and absence of disposal gains (1QFY16: $1.7m). Revenue rose 4.8% to $64m on increased sales of development properties, while gross margin improved to 11.3% (+1ppt). NAV/share at $0.20.
*STE: Secured lesser new aerospace contracts in 3Q16 of $520m (-32.5% q/q), comprising aircraft conversion, airframe maintenance, pilot training, and related MRO services. MKE last had a Hold rating with TP of $3.17.
*ISEC Healthcare: MOU to form JV with Vietnamese eye clinics operator Hai Yen Anh Tran has lapsed after pre-conditions were not fulfilled.
*GKE: 50:50 JVCo Ocean Latitude renewed its chartering contract with Sinogas Carriers for a liquefied gas carrier vessel for two months till mid-Dec 2016, albeit at a lower charter rate.
*Sri Trang: Disclosed that a fire has broken out at its rubber factory in Pontianak, Indonesia, with damage incurred at its raw material storage and sections of its production lines. Prior to the fire, the factory accounted for ~5% of the group's total rubber production of 2,000-4,000 tonnes/month.
*CFM Holdings: Renewed the lease for its factory at No.4 Ang Mo Kio Avenue 12 for 30 years commencing 1 Nov 2016.
*MYP: Clarified that the $560m consideration for its proposed acquisition of Straits Trading building will be funded by bank financing (65%), proceeds of rights issue (33.6%) and internal resources (1.4%).
*Yamada: Updated that the three recent typhoons that swept through Taiwan and China have resulted in heavy rainfall in Zhangping City, where some of the group's raw materials were kept, and may impact the production volume and/or quality of the shiitake mushrooms once the harvesting season commences.
Friday, October 14, 2016
SG Market (14 Oct 16)
Singapore market is likely to pull back on mounting geopolitical tensions between Russia and the West, royal succession uncertainty in Thailand, impending US rate hike in Dec and upcoming 3Q results season, which is expected to be uninspiring.
Regional bourses opened firmer in Tokyo (+0.1%) and Seoul (+0.5%), while Sydney is flat.Technically, immediate support for STI is at 2,800 (200-dma), with topside resistance at 2,852 (50-dma).
Stocks to watch:
*Economy: 3Q GDP grew a tepid 0.6% y/y (2Q: +2%), falling short on expectation for a 1.7% expansion. The weaker-than-expected data came on the back of a contraction in the manufacturing sector (-1.1%), dragged by lower output in transport engineering, biomedical manufacturing and general manufacturing clusters.
*Keppel Corp: Commenced 10-year operations and maintenance work for the sludge treatment facilities in Doha following its completion. The design-build-operate project is the largest in Qatar and has the capacity to treat an average flow of 245,000m3/day. But group outlook is still hampered by O&M headwinds, asset write-down risks and lack of re-rating catalysts, MKE maintained Sell with TP of $4.54.
*CWT: Updated that controlling shareholder C&P is still in negotiation on the possible share sale and there is no certainty of a definitive agreement. Stock is trading at 12.2x forward P/E, above its historical average of 9.5x.
*Lian Beng: 1QFY17 net profit plunged 60.8% to $12.7m, as revenue slid 47.8% to $70.8m on weaker construction and ready-mixed concrete businesses. Bottom line was further eroded by steep drop in JV/associate contribution, FX losses, impairment on investment in Centurion and increased marketing expenses for industrial development T-Space. NAV/share at $1.1194.
*Vallianz: Judicial managers of parent, Swiber has expressed interest in participating in its rights cum warrants issue. Payment for the subscription will be set off against the outstanding amounts owed by Vallianz.
*Vard: Acquiring Storvik Aqua, an equipment supplier for the aquaculture industry, for NOK35m, representing 2.4x P/B, in a bid to broaden its product offering.
*Chip Eng Seng: Incorporated two subsidiaries in Vietnam to engage in provision of real estate management and consultancy services to local market.
*Vibrant Group: Formed a 51:49 JV with Harmony Gold Ventures for financial leasing business in China. Harmony will inject US$0.2m for its JV stake and will subsequently extend an interest-free shareholder loan of US$14.5m for working capital.
*Chiwayland: Intends to raise US$25.3m from high net worth individuals to finance its project in Toowong, Brisbane, Australia.
*IHC: Sought to vary an injunction order to prevent the disbursement of proceeds from the sale of its Australian properties to Crest Funds, which initiated the receivership tussle. Hearing over the provisional liquidation of the company has been adjourned to 20 Oct.
*Noble: Substantial shareholder Franklin Templeton disposed of 8m shares in the open market at $0.1978 on 11 Oct, reducing its stake to 5.98% from 6.04%.
*Olam: Secured a US$2b revolving credit facility to be applied for refinancing of existing bank loans.
*Phillip SGX APAC Dividend Leaders REIT ETF: Priced the ETF at US$0.9333 apiece, and trading is expected to commence on 20 Oct.
Regional bourses opened firmer in Tokyo (+0.1%) and Seoul (+0.5%), while Sydney is flat.Technically, immediate support for STI is at 2,800 (200-dma), with topside resistance at 2,852 (50-dma).
Stocks to watch:
*Economy: 3Q GDP grew a tepid 0.6% y/y (2Q: +2%), falling short on expectation for a 1.7% expansion. The weaker-than-expected data came on the back of a contraction in the manufacturing sector (-1.1%), dragged by lower output in transport engineering, biomedical manufacturing and general manufacturing clusters.
*Keppel Corp: Commenced 10-year operations and maintenance work for the sludge treatment facilities in Doha following its completion. The design-build-operate project is the largest in Qatar and has the capacity to treat an average flow of 245,000m3/day. But group outlook is still hampered by O&M headwinds, asset write-down risks and lack of re-rating catalysts, MKE maintained Sell with TP of $4.54.
*CWT: Updated that controlling shareholder C&P is still in negotiation on the possible share sale and there is no certainty of a definitive agreement. Stock is trading at 12.2x forward P/E, above its historical average of 9.5x.
*Lian Beng: 1QFY17 net profit plunged 60.8% to $12.7m, as revenue slid 47.8% to $70.8m on weaker construction and ready-mixed concrete businesses. Bottom line was further eroded by steep drop in JV/associate contribution, FX losses, impairment on investment in Centurion and increased marketing expenses for industrial development T-Space. NAV/share at $1.1194.
*Vallianz: Judicial managers of parent, Swiber has expressed interest in participating in its rights cum warrants issue. Payment for the subscription will be set off against the outstanding amounts owed by Vallianz.
*Vard: Acquiring Storvik Aqua, an equipment supplier for the aquaculture industry, for NOK35m, representing 2.4x P/B, in a bid to broaden its product offering.
*Chip Eng Seng: Incorporated two subsidiaries in Vietnam to engage in provision of real estate management and consultancy services to local market.
*Vibrant Group: Formed a 51:49 JV with Harmony Gold Ventures for financial leasing business in China. Harmony will inject US$0.2m for its JV stake and will subsequently extend an interest-free shareholder loan of US$14.5m for working capital.
*Chiwayland: Intends to raise US$25.3m from high net worth individuals to finance its project in Toowong, Brisbane, Australia.
*IHC: Sought to vary an injunction order to prevent the disbursement of proceeds from the sale of its Australian properties to Crest Funds, which initiated the receivership tussle. Hearing over the provisional liquidation of the company has been adjourned to 20 Oct.
*Noble: Substantial shareholder Franklin Templeton disposed of 8m shares in the open market at $0.1978 on 11 Oct, reducing its stake to 5.98% from 6.04%.
*Olam: Secured a US$2b revolving credit facility to be applied for refinancing of existing bank loans.
*Phillip SGX APAC Dividend Leaders REIT ETF: Priced the ETF at US$0.9333 apiece, and trading is expected to commence on 20 Oct.
Thursday, October 13, 2016
SG Market (13 Oct 16)
The Singapore market could get some temporary reprieve today following a mixed close on Wall Street, but REITs might face some pressure after FOMC minutes hinted of an increased likelihood of a Dec rate hike.
Regional bourses opened firmer in Tokyo (+0.6%) stronger, but Seoul (-0.1%) and Sydney (-0.5%) were weaker. From a technical perspective, STI has breached below its 50-dma (2,850) and is approaching the 200-dma support level at 2,800.
Stocks to watch:
*Q&M: Outlined restructuring steps to be fulfilled regarding the proposed spin-off and listing of Aoxin on the Catalist board. Assuming the listing was completed in FY15, proforma EPS and NTA would have been 1.12¢ (+183%) and 5.75¢ (+105%) respectively.
*Duty Free Int’l: 2QFY17 results met expectations as net profit surged 46% to RM13.8m. Bottom line was boosted by a 4.7% increase in revenue from better pricing and new outlets, as well as from improved gross margin, and absence of FX loss. No interim DPS declared (2QFY16: 0.6¢). NAV/share at RM0.4556.
*Soilbuild REIT: 3Q16 results came in at low end of estimates. DPU slid 13.9% to 1.399¢ on a 3.9% drop in distributable income to $14.6m and larger unit base. Revenue of $19.7m (-4.7%) and NPI of $17.3m (-2.9%) were dragged by lower occupancy at West Park BizCentral and Tuas Connection. Overall portfolio occupancy improved 2.8ppt q/q to 94.8%, with WALE of 4.7 years. Aggregate leverage held steady at 36%, with average debt cost of 3.42% and maturity of 3.1 years. NAV/unit at $0.77.
*Declout: Divesting its 72.09%-owned Acclivis, a cloud and system integration service provider, to HK-listed CITIC Group for between $58.3m and $75m. The group expects to realise a gain of $22.6m-34.6m from the sale and distribute net proceeds of up to $45.4m to shareholders, with the remainder used to pare down debt, fund JVs and M&As, and as working capital.
*TEE Int'l: Won $48m worth of engineering contracts for the design, supply, installation and commissioning of the Airfield Lighting System for Changi Airport’s three-runway system.
*Gallant Venture: Required by ACRA to restate and re-audit FY14/15 financial statements and received warning letters for non-compliance to certain accounting standards. The reviewed financial statements will be put up for shareholders' scrutiny at the next AGM (30 Apr '17).
*Jason Holdings: 51m shares or entire 23.6% stake belonging to non-executive director Jason Sim Chon Ang have been seized under court order between 9 Sep and 3 Oct to satisfy a $1.3m debt owed to CIMB Securities. Sim is also under investigation by CAD for possible offence under the Penal Code.
*Swissco (susp): Begun arbitration proceedings in HK, demanding US$31.3m from three firms for outstanding charter due and refund of installment payments for terminated shipbuilding contracts. This comes after a recent update that it will default on a $2.85m coupon regarding its $100m 5.7% bonds due 2018. Swiscco has US$221.6m debt maturing from now until 2020.
*Fullerton Healthcare: Reportedly facing delays for its IPO as regulators questioned the group after receiving complaints outlining concerns about its business. Fullerton was planning to price the offering this week at $1.52 a share, the bottom end of a marketed range, to raise $213m, and start trading on 17 Oct.
Regional bourses opened firmer in Tokyo (+0.6%) stronger, but Seoul (-0.1%) and Sydney (-0.5%) were weaker. From a technical perspective, STI has breached below its 50-dma (2,850) and is approaching the 200-dma support level at 2,800.
Stocks to watch:
*Q&M: Outlined restructuring steps to be fulfilled regarding the proposed spin-off and listing of Aoxin on the Catalist board. Assuming the listing was completed in FY15, proforma EPS and NTA would have been 1.12¢ (+183%) and 5.75¢ (+105%) respectively.
*Duty Free Int’l: 2QFY17 results met expectations as net profit surged 46% to RM13.8m. Bottom line was boosted by a 4.7% increase in revenue from better pricing and new outlets, as well as from improved gross margin, and absence of FX loss. No interim DPS declared (2QFY16: 0.6¢). NAV/share at RM0.4556.
*Soilbuild REIT: 3Q16 results came in at low end of estimates. DPU slid 13.9% to 1.399¢ on a 3.9% drop in distributable income to $14.6m and larger unit base. Revenue of $19.7m (-4.7%) and NPI of $17.3m (-2.9%) were dragged by lower occupancy at West Park BizCentral and Tuas Connection. Overall portfolio occupancy improved 2.8ppt q/q to 94.8%, with WALE of 4.7 years. Aggregate leverage held steady at 36%, with average debt cost of 3.42% and maturity of 3.1 years. NAV/unit at $0.77.
*Declout: Divesting its 72.09%-owned Acclivis, a cloud and system integration service provider, to HK-listed CITIC Group for between $58.3m and $75m. The group expects to realise a gain of $22.6m-34.6m from the sale and distribute net proceeds of up to $45.4m to shareholders, with the remainder used to pare down debt, fund JVs and M&As, and as working capital.
*TEE Int'l: Won $48m worth of engineering contracts for the design, supply, installation and commissioning of the Airfield Lighting System for Changi Airport’s three-runway system.
*Gallant Venture: Required by ACRA to restate and re-audit FY14/15 financial statements and received warning letters for non-compliance to certain accounting standards. The reviewed financial statements will be put up for shareholders' scrutiny at the next AGM (30 Apr '17).
*Jason Holdings: 51m shares or entire 23.6% stake belonging to non-executive director Jason Sim Chon Ang have been seized under court order between 9 Sep and 3 Oct to satisfy a $1.3m debt owed to CIMB Securities. Sim is also under investigation by CAD for possible offence under the Penal Code.
*Swissco (susp): Begun arbitration proceedings in HK, demanding US$31.3m from three firms for outstanding charter due and refund of installment payments for terminated shipbuilding contracts. This comes after a recent update that it will default on a $2.85m coupon regarding its $100m 5.7% bonds due 2018. Swiscco has US$221.6m debt maturing from now until 2020.
*Fullerton Healthcare: Reportedly facing delays for its IPO as regulators questioned the group after receiving complaints outlining concerns about its business. Fullerton was planning to price the offering this week at $1.52 a share, the bottom end of a marketed range, to raise $213m, and start trading on 17 Oct.
Wednesday, October 12, 2016
SATS
SATS: The 23m sale of shares by Temasek at 4.4% below yesterday's close at $4.75 may have sparked profit taking sentiment among other investors, following the 30% surge in share price YTD
SG Market (12 Oct 16)
Amid continued market volatility, Singapore shares are likely to swing down on the rising possibility of a Fed tightening, as well as lagged impact of China property curbs.
Regional bourses opened lower in Tokyo (-1%), Seoul (-0.1%) and Sydney (-0.8%). Technical indicators are showing signs of weakness with STI sitting on its 50-dma. Topside resistance is at 2,880.
Stocks to watch:
*Genting SP: May see some positive spillover from surge in Macau gaming names, boosted by strong Sep GGR (+7.4%) and a good start in Oct (+8%) with Golden Week visitation growth. While GENS has no direct exposure in Macau, inbound Chinese tourists to Singapore have picked up and appear sustainable. The counter is trading at a discounted 9x forward EV/EBITDA vs Macau peers' 15x.
*Frasers Centrepoint: Awarded $140m contract to Multiplex to build the final residential stage of Central Park in Sydney, Australia, comprising 294 apartments within a 13-storey curvilinear building. Construction for the `Wonderland' development is expected to commence in Nov and will be completed in 19 months.
*SingMedical: Broadened its scale and patient base with a $60m acquisition for Astra Women’s Specialist group of clinics, which comprises six O&G clinics. Funding for the deal will be via a combination of new shares (45%) and cash (55%), and will come with a profit guarantee of $4.6m/year over the next five years. Pro forma FY15 net profit implies a P/E of 28.5x, cheaper than sector range of 35-40x.
*Chiwayland: Divesting a 40% stake in Ryde 88, the owner of a land plot in Sydney, Australia, to Shanghai Yongda. Both parties will subsequently inject an aggregate A$24m to jointly develop the mixed-use project which sits on a 2,980 sqm prime plot, that was acquired in Feb 2016.
*Metro: Responding to activist investor Quarz Capital Management's call for a special dividend payout from its $479m net cash hoard, the group revealed that it is evaluating property development and investment opportunities to deploy the cash, which shot up due to recent divestment of properties.
*Mermaid Maritime: 50:50 JVCo Zamil Mermaid Offshore Services Company retained its long-term offshore inspection, repair and maintenance services contract with Mid-East client till 4Q17 but at lower rates.
*Manhattan Resources: Divesting the bulk of its loss-making chartering business, consisting 22 tugs and 22 barges or 66% of its fleet, to Karunia Samudera Lines, for Rp170.58b ($18m). The group expects to book a disposal gain of $7.3m from the sale.
*Trendlines: Fulfilled pre-requisites for its Israeli medtech incubator license to include agtech investments.
*JEP: Undertaking a renounceable non-underwritten 1-for-2 rights cum warrants issue at a rights price of $0.02 apiece. Every two rights will be entitled to detachable warrant with an exercise price of $0.02 each. The $10.5m to be raised is earmarked to fund the design and construction of a light industrial development at Seletar Aerospace Park.
*HLH: Proposed private placement of 250m new shares (4.1% share capital) at 0.9¢ each to Persistent Asset Trading Fund to raise gross proceeds of $2.3m, to be used for general working capital.
*Profit Warning:
-Jason Marine
-Azeus Systems
Regional bourses opened lower in Tokyo (-1%), Seoul (-0.1%) and Sydney (-0.8%). Technical indicators are showing signs of weakness with STI sitting on its 50-dma. Topside resistance is at 2,880.
Stocks to watch:
*Genting SP: May see some positive spillover from surge in Macau gaming names, boosted by strong Sep GGR (+7.4%) and a good start in Oct (+8%) with Golden Week visitation growth. While GENS has no direct exposure in Macau, inbound Chinese tourists to Singapore have picked up and appear sustainable. The counter is trading at a discounted 9x forward EV/EBITDA vs Macau peers' 15x.
*Frasers Centrepoint: Awarded $140m contract to Multiplex to build the final residential stage of Central Park in Sydney, Australia, comprising 294 apartments within a 13-storey curvilinear building. Construction for the `Wonderland' development is expected to commence in Nov and will be completed in 19 months.
*SingMedical: Broadened its scale and patient base with a $60m acquisition for Astra Women’s Specialist group of clinics, which comprises six O&G clinics. Funding for the deal will be via a combination of new shares (45%) and cash (55%), and will come with a profit guarantee of $4.6m/year over the next five years. Pro forma FY15 net profit implies a P/E of 28.5x, cheaper than sector range of 35-40x.
*Chiwayland: Divesting a 40% stake in Ryde 88, the owner of a land plot in Sydney, Australia, to Shanghai Yongda. Both parties will subsequently inject an aggregate A$24m to jointly develop the mixed-use project which sits on a 2,980 sqm prime plot, that was acquired in Feb 2016.
*Metro: Responding to activist investor Quarz Capital Management's call for a special dividend payout from its $479m net cash hoard, the group revealed that it is evaluating property development and investment opportunities to deploy the cash, which shot up due to recent divestment of properties.
*Mermaid Maritime: 50:50 JVCo Zamil Mermaid Offshore Services Company retained its long-term offshore inspection, repair and maintenance services contract with Mid-East client till 4Q17 but at lower rates.
*Manhattan Resources: Divesting the bulk of its loss-making chartering business, consisting 22 tugs and 22 barges or 66% of its fleet, to Karunia Samudera Lines, for Rp170.58b ($18m). The group expects to book a disposal gain of $7.3m from the sale.
*Trendlines: Fulfilled pre-requisites for its Israeli medtech incubator license to include agtech investments.
*JEP: Undertaking a renounceable non-underwritten 1-for-2 rights cum warrants issue at a rights price of $0.02 apiece. Every two rights will be entitled to detachable warrant with an exercise price of $0.02 each. The $10.5m to be raised is earmarked to fund the design and construction of a light industrial development at Seletar Aerospace Park.
*HLH: Proposed private placement of 250m new shares (4.1% share capital) at 0.9¢ each to Persistent Asset Trading Fund to raise gross proceeds of $2.3m, to be used for general working capital.
*Profit Warning:
-Jason Marine
-Azeus Systems
Tuesday, October 11, 2016
SMG
SMG announced acquisition of women's specialist clinic chain for $60m
- Astra Women's Specialist group comprises of 6 O&G clinics with 5 reputable doctors
- Five year profit guarantee of $4.6m per year
- Consideration to be funded through shares ($0.33288/share) as well as $33m in cash
- Purchased at implied P/E of 13x versus SO&G's 29.4x forward P/E
- Proforma FY16E net profit (if acquisition was completed in Jan '16) = $10.5m indicating a P/E of 13.4x.
- Counter currently in a trading halt
- Astra Women's Specialist group comprises of 6 O&G clinics with 5 reputable doctors
- Five year profit guarantee of $4.6m per year
- Consideration to be funded through shares ($0.33288/share) as well as $33m in cash
- Purchased at implied P/E of 13x versus SO&G's 29.4x forward P/E
- Proforma FY16E net profit (if acquisition was completed in Jan '16) = $10.5m indicating a P/E of 13.4x.
- Counter currently in a trading halt
Saizen REIT
Saizen REIT
- A$355.8m acquisition will be satisfied via a combination of new Saizen units (79.4%) and cash (20.6%).
- Pre-RTO, Saizen will distribute its existing cashpile of up to $0.0237/unit back to unitholders.
- Aggregate annual rental yields an attractive 7.4%, and secured by a long WALE of 16.7 years.
- Based on the current share price of 6.1¢ and post capital distribution of 2.37¢, the residual 3.73¢ implies that Saizen is trading at a fair value of 1.1x pro forma P/B.
- A$355.8m acquisition will be satisfied via a combination of new Saizen units (79.4%) and cash (20.6%).
- Pre-RTO, Saizen will distribute its existing cashpile of up to $0.0237/unit back to unitholders.
- Aggregate annual rental yields an attractive 7.4%, and secured by a long WALE of 16.7 years.
- Based on the current share price of 6.1¢ and post capital distribution of 2.37¢, the residual 3.73¢ implies that Saizen is trading at a fair value of 1.1x pro forma P/B.
SG Market (11 Oct 16)
Investors could switch to a risk-on mood on the back of the oil price surge above US$50/bbl after Russia expressed support on the OPEC production cut, as well as a Clinton win in the second US presidential debate, which is seen as more favourable to financial markets.
On the Singapore economy, MTI does not expect an outright recession but does not rule out some quarters of negative growth amid global headwinds. 2H16 GDP is forecast to come in lower than the 2.1% seen in 1H16, dragging 2016 growth to the lower end of the official 1-2% range compared to street estimate of 1.8%.
Regional bourses crept up in early trading in Tokyo (+0.5%), Seoul (+0.1%) and Sydney (+0.3%). Technically, STI could test its immediate resistance at 2,880 with downside support at 2,800.
Stocks to watch:
*SingPost: Appointed three new non-executive independent directors to the board and substantially implemented all recommendations in the Jul independent review in a bid to improve its corporate governance. MKE has a Buy with TP of $1.77.
*GLP: Leased 32,000 sqm build-to-suit facility in China to Walmart, which is the group's global customer leasing a total of 210,000 sqm across nine cities in China, Japan and US.
*Q&M: Updated that the proposed 33% stake acquisition in Shenzhen New Perfect Dental Research has lapsed.
*GuocoLand: Its Tanjong Pagar Centre has received TOP for the building's office component, Guoco Tower (890,000 sf), which is now 80% leased, as well as basement retail space. The integrated commercial, retail and lifestyle complex, which also includes 181 luxury apartments, 222-room Sofitel hotel and 150,000 sf Urban Park, will open in phases from next month.
*Saizen REIT: Proposed acquisition of 20 industrial properties in Australia via reverse takeover by Sime Darby Property Singapore. The A$355.8m deal will be done via issue of new Saizen REIT units at $0.03604 each, plus cash of A$73.2m. Pre-RTO proceeds of up to $0.0237/unit will be distributed to existing unitholders.
*Sim Lian: Privatisation offer at $1.08/share by controlling Kuik family has closed, with final acceptances of 99.2%. Offeror will proceed to compulsorily acquire the remaining shares.
*Sapphire: Responding to SGX query, management cited that share price movement and volume spike could be explained by a recent investment presentation jointly organised by SGX and WeR1 Consultants, as well as a feature on The Edge financial magazine published on 10 Oct.
*Ley Choon: Clinched a $9.5m contract from PUB for watermain repairs and network services for works between 2016 and 2019.
*Equation Summit: Showcasing its anti-theft protection technology DiSa Asset Protection System at the DiSa Point-of-Sale Activation summit organized by Loss Prevention Research Council in US on 18 Oct, which will be attended by eight of the top 12 retailers in the US.
*Jackspeed: 1HFY17 net profit slumped 72.5% to $1.6m on the absence of a $4.6m disposal gain and higher share of profits attributable to minority interests. Revenue surged 88.6% to $45.9m on increased contributions from accessories (+46.5%) and automotive (+272.6%) segments, pared by a decline in leather business (-24.7%). However, gross margin narrowed to 16.5% (-7ppt) on a shift in sales mix. NAV/share at $0.1688.
*Cheung Woh: 2QFY8/17 net profit tumbled 33.7% to $1.9m on softer revenue of $21.7m (-0.4%), weighed by weak demand for precision metal stamping and ringgit depreciation. Gross margin shrank to 18.2% (-5ppt) on higher cost of materials for the HDD segment and rising labor expenses. Bottom line was dragged by a $0.4m swing in tax expense (2QFY16 tax credit: $0.2m). Interim DPS cut to 0.3¢ (2QFY16: 0.5¢). NAV/share at $0.3649.
On the Singapore economy, MTI does not expect an outright recession but does not rule out some quarters of negative growth amid global headwinds. 2H16 GDP is forecast to come in lower than the 2.1% seen in 1H16, dragging 2016 growth to the lower end of the official 1-2% range compared to street estimate of 1.8%.
Regional bourses crept up in early trading in Tokyo (+0.5%), Seoul (+0.1%) and Sydney (+0.3%). Technically, STI could test its immediate resistance at 2,880 with downside support at 2,800.
Stocks to watch:
*SingPost: Appointed three new non-executive independent directors to the board and substantially implemented all recommendations in the Jul independent review in a bid to improve its corporate governance. MKE has a Buy with TP of $1.77.
*GLP: Leased 32,000 sqm build-to-suit facility in China to Walmart, which is the group's global customer leasing a total of 210,000 sqm across nine cities in China, Japan and US.
*Q&M: Updated that the proposed 33% stake acquisition in Shenzhen New Perfect Dental Research has lapsed.
*GuocoLand: Its Tanjong Pagar Centre has received TOP for the building's office component, Guoco Tower (890,000 sf), which is now 80% leased, as well as basement retail space. The integrated commercial, retail and lifestyle complex, which also includes 181 luxury apartments, 222-room Sofitel hotel and 150,000 sf Urban Park, will open in phases from next month.
*Saizen REIT: Proposed acquisition of 20 industrial properties in Australia via reverse takeover by Sime Darby Property Singapore. The A$355.8m deal will be done via issue of new Saizen REIT units at $0.03604 each, plus cash of A$73.2m. Pre-RTO proceeds of up to $0.0237/unit will be distributed to existing unitholders.
*Sim Lian: Privatisation offer at $1.08/share by controlling Kuik family has closed, with final acceptances of 99.2%. Offeror will proceed to compulsorily acquire the remaining shares.
*Sapphire: Responding to SGX query, management cited that share price movement and volume spike could be explained by a recent investment presentation jointly organised by SGX and WeR1 Consultants, as well as a feature on The Edge financial magazine published on 10 Oct.
*Ley Choon: Clinched a $9.5m contract from PUB for watermain repairs and network services for works between 2016 and 2019.
*Equation Summit: Showcasing its anti-theft protection technology DiSa Asset Protection System at the DiSa Point-of-Sale Activation summit organized by Loss Prevention Research Council in US on 18 Oct, which will be attended by eight of the top 12 retailers in the US.
*Jackspeed: 1HFY17 net profit slumped 72.5% to $1.6m on the absence of a $4.6m disposal gain and higher share of profits attributable to minority interests. Revenue surged 88.6% to $45.9m on increased contributions from accessories (+46.5%) and automotive (+272.6%) segments, pared by a decline in leather business (-24.7%). However, gross margin narrowed to 16.5% (-7ppt) on a shift in sales mix. NAV/share at $0.1688.
*Cheung Woh: 2QFY8/17 net profit tumbled 33.7% to $1.9m on softer revenue of $21.7m (-0.4%), weighed by weak demand for precision metal stamping and ringgit depreciation. Gross margin shrank to 18.2% (-5ppt) on higher cost of materials for the HDD segment and rising labor expenses. Bottom line was dragged by a $0.4m swing in tax expense (2QFY16 tax credit: $0.2m). Interim DPS cut to 0.3¢ (2QFY16: 0.5¢). NAV/share at $0.3649.
Monday, October 10, 2016
Noble
Noble:
- Found buyer for Noble Americas Energy Solutions (NAES), for US$1.05b, in a bid to boost liquidity.
- Scheduled for completion in Dec 2016, the deal would result in a net gain of US$386m for Noble.
- Post-sale, pro forma FY15 NAV/share is estimated to rise 12% to US$0.56.
- While the move is expected to unlock value for Noble, the cash-generative unit was previously touted by former CEO Yusuf Alireza as the core asset to help the group turn around its flagging commodity trading business.- Could see further uplift in the near-term from its depressed valuation of 0.26x P/B, on a pro forma basis.
- Found buyer for Noble Americas Energy Solutions (NAES), for US$1.05b, in a bid to boost liquidity.
- Scheduled for completion in Dec 2016, the deal would result in a net gain of US$386m for Noble.
- Post-sale, pro forma FY15 NAV/share is estimated to rise 12% to US$0.56.
- While the move is expected to unlock value for Noble, the cash-generative unit was previously touted by former CEO Yusuf Alireza as the core asset to help the group turn around its flagging commodity trading business.- Could see further uplift in the near-term from its depressed valuation of 0.26x P/B, on a pro forma basis.
SG Market (10 Oct 16)
SG MarketThin liquidity is expected to persist in Singapore for the earlier part of the week, ahead of the FOMC minutes to be released on Wed. Onward, all eyes will be focused on inflation data in China on Fri, as well as the commencement of the 3Q results season.
Regional bourses opened mixed in Seoul (-0.4%) and Sydney (+0.3%). Japan market is closed for public holiday.Technically, STI sees near-term resistance at 2,880 followed by 2,910, with downside support at 2,800.
Stocks to watch:
*Tourism: STB launched a two-day Singapore Festival in Myanmar, hoping to sustain and raise growth momentum from visitorship, which rose 7.8% as at 7M16. In 2015, Singapore received 105,000 arrivals from Myanmar visitors and STB is looking to double that.
*Noble: Proposed divestment of Noble Americas Energy Solutions to US electricity generator Calpine Corporation for US$1.05b, or 1.6x P/B. If completed, this will result in a net gain of US$386m, and pro forma FY15 NAV/share is estimated to rise to US$0.56 (+12%), while LPS will narrow from US$0.2616 to US$0.2020. Counter could see further uplift in the near-term from its depressed valuation of 0.25x P/B.
*Ezion: Extended the maturity date of its $30m redeemable exchangeable preference shares by three years to Oct 2019. Also, no dividends will accrue and be payable up till the maturity date, which will help relieve the strain on its cash flows amid the O&G downturn. MKE last had a Buy with TP of $0.45.
*Frasers Centrepoint: Potential subscription of 735m new shares in TICON Industrial Connection, for 13.23b baht ($520m). The Thai developer and asset owner currently owns and manages 2.5m sqm of industrial space and is also the sponsor of three listed property funds and a REIT in Thailand, with combined AUM of 32.4b baht ($1.3b).
*OUE: Signed management agreement with Oakwood Asia Pacific to manage 268 serviced residences in OUE Downtown, slated to open by mid-2017.
*Ascendas REIT: Stake held by substantial shareholder Temasek has been reduced from 20.01% to 19.98%, after its associate DBS Bank sold 770,000 units at $2.4774 each on the market on 3 Oct. MKE last had a Buy with TP of $2.70.
*Sino Grandness: Substantial shareholder Asdew Acquisitions sold 709,000 shares at $0.3561 each on 5 Oct, paring its stake from 5.1% to 4.995%.
*SunMoon: Entered a binding term sheet with Shanghai YIGUO E-commerce (Yiguo), a leading fresh food e-commerce player in China, whereby Yiguo will invest $24m via a placement of 333.3m new shares at 4.5¢ apiece, attached with free warrants on the basis of 1-for-2 with an exercise price of 5.4¢ each. Subject to a whitewash waiver, Yiguo will own 51% stake in the enlarged share capital of SunMoon upon completion..
*WE Holdings/ Jubilee Industries: WE Holdings will be extending US$16m in loans to Jubilee Industries. The loan comprises an US$8m loan that is convertible into new shares in Jubilee, as well as an US$8m direct loan, whereby Jubilee has the option to repay WE Holdings via shares in KL-listed EG Industries, which it holds an 11.8% stake in.
*WE Holdings: Proposed diversification into the corporate accretion services sector with a focus on financial technology and education industries. The move entails providing 1) a securities-based crowdfunding avenue where retail investors can have sight of projects in various industries supported by the company, 2) partnering a foreign-based industry leader to provide local merchants with technological and structural support, as well as 3) the construction and acquisition of various educational businesses in Asia.
*Acesian Partners: Currently locked in a $24.4m contract dispute with main-con Takenaka on the proposed development of Changi Airport Terminal 4. If the dispute’s outcome is unfavourable, Acesian expects that its FY16 results will be materially impacted.
*Federal Int’l: 20.7% owned associate Gunanusa Utama Fabricators (PTG) has secured its second contract from PTTEP International worth US$150m to build two wellhead platforms for the Zawtika development project, scheduled for completion in 2Q18. Latest contract will lift group’s order book to $140m.
*Addvalue Technologies: Updated that the proposed disposal of Addvalue Communications for $330m will be delayed as certain conditions remained unfulfilled, more than two years since the deal was first announced. Separately, management disclosed that a few third parties have indicated their intentions to take a significant interest in the company that may result in a change of control.
Regional bourses opened mixed in Seoul (-0.4%) and Sydney (+0.3%). Japan market is closed for public holiday.Technically, STI sees near-term resistance at 2,880 followed by 2,910, with downside support at 2,800.
Stocks to watch:
*Tourism: STB launched a two-day Singapore Festival in Myanmar, hoping to sustain and raise growth momentum from visitorship, which rose 7.8% as at 7M16. In 2015, Singapore received 105,000 arrivals from Myanmar visitors and STB is looking to double that.
*Noble: Proposed divestment of Noble Americas Energy Solutions to US electricity generator Calpine Corporation for US$1.05b, or 1.6x P/B. If completed, this will result in a net gain of US$386m, and pro forma FY15 NAV/share is estimated to rise to US$0.56 (+12%), while LPS will narrow from US$0.2616 to US$0.2020. Counter could see further uplift in the near-term from its depressed valuation of 0.25x P/B.
*Ezion: Extended the maturity date of its $30m redeemable exchangeable preference shares by three years to Oct 2019. Also, no dividends will accrue and be payable up till the maturity date, which will help relieve the strain on its cash flows amid the O&G downturn. MKE last had a Buy with TP of $0.45.
*Frasers Centrepoint: Potential subscription of 735m new shares in TICON Industrial Connection, for 13.23b baht ($520m). The Thai developer and asset owner currently owns and manages 2.5m sqm of industrial space and is also the sponsor of three listed property funds and a REIT in Thailand, with combined AUM of 32.4b baht ($1.3b).
*OUE: Signed management agreement with Oakwood Asia Pacific to manage 268 serviced residences in OUE Downtown, slated to open by mid-2017.
*Ascendas REIT: Stake held by substantial shareholder Temasek has been reduced from 20.01% to 19.98%, after its associate DBS Bank sold 770,000 units at $2.4774 each on the market on 3 Oct. MKE last had a Buy with TP of $2.70.
*Sino Grandness: Substantial shareholder Asdew Acquisitions sold 709,000 shares at $0.3561 each on 5 Oct, paring its stake from 5.1% to 4.995%.
*SunMoon: Entered a binding term sheet with Shanghai YIGUO E-commerce (Yiguo), a leading fresh food e-commerce player in China, whereby Yiguo will invest $24m via a placement of 333.3m new shares at 4.5¢ apiece, attached with free warrants on the basis of 1-for-2 with an exercise price of 5.4¢ each. Subject to a whitewash waiver, Yiguo will own 51% stake in the enlarged share capital of SunMoon upon completion..
*WE Holdings/ Jubilee Industries: WE Holdings will be extending US$16m in loans to Jubilee Industries. The loan comprises an US$8m loan that is convertible into new shares in Jubilee, as well as an US$8m direct loan, whereby Jubilee has the option to repay WE Holdings via shares in KL-listed EG Industries, which it holds an 11.8% stake in.
*WE Holdings: Proposed diversification into the corporate accretion services sector with a focus on financial technology and education industries. The move entails providing 1) a securities-based crowdfunding avenue where retail investors can have sight of projects in various industries supported by the company, 2) partnering a foreign-based industry leader to provide local merchants with technological and structural support, as well as 3) the construction and acquisition of various educational businesses in Asia.
*Acesian Partners: Currently locked in a $24.4m contract dispute with main-con Takenaka on the proposed development of Changi Airport Terminal 4. If the dispute’s outcome is unfavourable, Acesian expects that its FY16 results will be materially impacted.
*Federal Int’l: 20.7% owned associate Gunanusa Utama Fabricators (PTG) has secured its second contract from PTTEP International worth US$150m to build two wellhead platforms for the Zawtika development project, scheduled for completion in 2Q18. Latest contract will lift group’s order book to $140m.
*Addvalue Technologies: Updated that the proposed disposal of Addvalue Communications for $330m will be delayed as certain conditions remained unfulfilled, more than two years since the deal was first announced. Separately, management disclosed that a few third parties have indicated their intentions to take a significant interest in the company that may result in a change of control.
Friday, October 7, 2016
SG Market (07 Oct 16)
The Singapore market may wade into wait-and-see mode amid light profit taking ahead of the US jobs report this Fri and IMF meeting this weekend.
Regional markets slipped in early trading in Tokyo (-0.2%), Seoul (-0.2%) and Sydney (-0.3%).Technically, STI is hovering near its immediate support at 2,880, with topside resistance at 2,910.
Stocks to watch:
*SPH REIT: 4Q16 DPU of 1.41¢ (+1.4%) was in line with estimates. Revenue ($52.2m, +2.7%) and NPI ($40.2m, +5.3%) rose on higher rental income from Paragon and The Clementi Mall, as well as lower operating expenses. Full occupancy in its malls was maintained, with WALE of 2.3 years, while aggregate leverage remains steady q/q at 25.7%, with weighted average maturity term of 3.1 years. NAV/unit at $0.94.
*Keppel DC REIT: Acquired a data centre in Cardiff, Wales, for £34m.The data centre is currently leased to one of the largest global cloud service providers for a period of 15 years beginning Jun ’16. Pro forma FY15 DPU is expected to be lifted by 4.3% to 6.8¢ post deal, translating to an indicative 5.6% yield.*Keppel DC REIT: Substanstial shareholder Temasek raised its stake from 36.99% to 37.02%, after independently managed Fullerton Fund Management acquired 294,200 shares on the open market at $1.2189 apiece on 30 Sep.
*SATS: 50:50 JV with Air India has commenced trial operations of India’s first integrated on-airport perishable cargo handling centre, AISATS COOLPORT, at Kempegowda International Airport in Bengaluru. Official inauguration for the 11,000 sqm centre, which is designed to handle 40,000 tonnes of cargo per year, is slated for end-2016.
*Frasers Centrepoint: Acquired a 15.19 ha site in Sydney’s Chullora industrial area for an undisclosed sum and intends to deliver a mix of pre-committed and development space with GDV of A$55m. The site comprises a 6-ha parcel that is available for immediate development and an investment component on the adjoining 9.2-ha plot that will be subject to a 20-year triple net lease to SUEZ Recycling & Recovery. This follows recent acquisition of sites in Sydney and Melbourne totalling 45.72 ha to expand its industrial footprint.
*SGX: Securities turnover stood pat in Sep on a m/m basis but fell 8% y/y to $20.7b, with daily average turnover value of $984m (+5% m/m, -13% y/y). Derivatives volume dipped to 13.4m contracts (-3% m/m, -8% y/y), weighed by reduced trading in China A50 index futures (-16% m/m, -14% y/y).
*Oxley: Launched its first development project in Ireland, its second flagship project outside Asia, following the overwhelming reception for London's Royal Wharf. Located in the prime business district, the 2.35-ha site will be developed into a mixed-use project called Dublin Landings, comprising 700,000 sf of flexible Grade A office and retail space, as well as 273 luxury apartments, and scheduled for completion by 2020.
*Vard: Awarded contracts to design and construct two luxury expedition cruise vessels for Hapag-Lloyd Cruises, with delivery scheduled in 1Q19 and 4Q19.*Chip Eng Seng: Entered into a 70% JV to acquire Kodhipparu Island Resort in Maldives for US$65m. The resort consists of 120 villas and is a 15-min speedboat ride from Male International Airport and is expected to open in 2Q17.
*AEM: Order book stood at $38.3m as at 5 Oct, comprising of equipment orders and kits to be delivered within the next 12 months.
*Swiber: Granted court approval to be placed under judicial management.
*MMP Resources: Intends to contest winding up action brought upon by Edward Lee for failure to settle a $5.2m demand. The High Court will hear the application on 28 Oct. Meanwhile, the group would undertake a forensic audit into its 2014 and 2015 activities.
Regional markets slipped in early trading in Tokyo (-0.2%), Seoul (-0.2%) and Sydney (-0.3%).Technically, STI is hovering near its immediate support at 2,880, with topside resistance at 2,910.
Stocks to watch:
*SPH REIT: 4Q16 DPU of 1.41¢ (+1.4%) was in line with estimates. Revenue ($52.2m, +2.7%) and NPI ($40.2m, +5.3%) rose on higher rental income from Paragon and The Clementi Mall, as well as lower operating expenses. Full occupancy in its malls was maintained, with WALE of 2.3 years, while aggregate leverage remains steady q/q at 25.7%, with weighted average maturity term of 3.1 years. NAV/unit at $0.94.
*Keppel DC REIT: Acquired a data centre in Cardiff, Wales, for £34m.The data centre is currently leased to one of the largest global cloud service providers for a period of 15 years beginning Jun ’16. Pro forma FY15 DPU is expected to be lifted by 4.3% to 6.8¢ post deal, translating to an indicative 5.6% yield.*Keppel DC REIT: Substanstial shareholder Temasek raised its stake from 36.99% to 37.02%, after independently managed Fullerton Fund Management acquired 294,200 shares on the open market at $1.2189 apiece on 30 Sep.
*SATS: 50:50 JV with Air India has commenced trial operations of India’s first integrated on-airport perishable cargo handling centre, AISATS COOLPORT, at Kempegowda International Airport in Bengaluru. Official inauguration for the 11,000 sqm centre, which is designed to handle 40,000 tonnes of cargo per year, is slated for end-2016.
*Frasers Centrepoint: Acquired a 15.19 ha site in Sydney’s Chullora industrial area for an undisclosed sum and intends to deliver a mix of pre-committed and development space with GDV of A$55m. The site comprises a 6-ha parcel that is available for immediate development and an investment component on the adjoining 9.2-ha plot that will be subject to a 20-year triple net lease to SUEZ Recycling & Recovery. This follows recent acquisition of sites in Sydney and Melbourne totalling 45.72 ha to expand its industrial footprint.
*SGX: Securities turnover stood pat in Sep on a m/m basis but fell 8% y/y to $20.7b, with daily average turnover value of $984m (+5% m/m, -13% y/y). Derivatives volume dipped to 13.4m contracts (-3% m/m, -8% y/y), weighed by reduced trading in China A50 index futures (-16% m/m, -14% y/y).
*Oxley: Launched its first development project in Ireland, its second flagship project outside Asia, following the overwhelming reception for London's Royal Wharf. Located in the prime business district, the 2.35-ha site will be developed into a mixed-use project called Dublin Landings, comprising 700,000 sf of flexible Grade A office and retail space, as well as 273 luxury apartments, and scheduled for completion by 2020.
*Vard: Awarded contracts to design and construct two luxury expedition cruise vessels for Hapag-Lloyd Cruises, with delivery scheduled in 1Q19 and 4Q19.*Chip Eng Seng: Entered into a 70% JV to acquire Kodhipparu Island Resort in Maldives for US$65m. The resort consists of 120 villas and is a 15-min speedboat ride from Male International Airport and is expected to open in 2Q17.
*AEM: Order book stood at $38.3m as at 5 Oct, comprising of equipment orders and kits to be delivered within the next 12 months.
*Swiber: Granted court approval to be placed under judicial management.
*MMP Resources: Intends to contest winding up action brought upon by Edward Lee for failure to settle a $5.2m demand. The High Court will hear the application on 28 Oct. Meanwhile, the group would undertake a forensic audit into its 2014 and 2015 activities.
Thursday, October 6, 2016
Phillip Capital introduces its first ETF
Phillip Capital introduces its first ETF
- Phillip SGX APAC Dividend Leaders REIT ETF will have an initial offer priod from 5 - 13 Oct at an indicative issue price of US$0.88 to US$1.10 ($1.188-$1.485)
- ETF to make dividend distributions semi-annually and will track the recently launched SGX APAC Ex-Japan Dividend Leaders REIT Index
- Index comprises of top 30 REITs across APAC ranked according to the total trailing 12-month dividend paid; it represents 70% of the region's REITs by total market cap
- Index also takes into account the REIT's size, free float and liquidity
- ETF to trade from 20 Oct in SGD and USD
- Phillip SGX APAC Dividend Leaders REIT ETF will have an initial offer priod from 5 - 13 Oct at an indicative issue price of US$0.88 to US$1.10 ($1.188-$1.485)
- ETF to make dividend distributions semi-annually and will track the recently launched SGX APAC Ex-Japan Dividend Leaders REIT Index
- Index comprises of top 30 REITs across APAC ranked according to the total trailing 12-month dividend paid; it represents 70% of the region's REITs by total market cap
- Index also takes into account the REIT's size, free float and liquidity
- ETF to trade from 20 Oct in SGD and USD
Swiber
Swiber to be placed under Judicial Management
- Judicial managers, KPMG should make updates to creditors every 6 weeks
- All of Swiber's creditors expressed "no objection" or took "no position"on the application
- "Clearly no dispute that Swiber is insolvent", a question of whether there is a real prospect of rehabilitating Swiber under the JM
- A JM would result in a more orderly disposal of its assets compared with a winding-up
- Returns likely to be better under JM than liquidation if projects contribute accordingly
- Judicial managers, KPMG should make updates to creditors every 6 weeks
- All of Swiber's creditors expressed "no objection" or took "no position"on the application
- "Clearly no dispute that Swiber is insolvent", a question of whether there is a real prospect of rehabilitating Swiber under the JM
- A JM would result in a more orderly disposal of its assets compared with a winding-up
- Returns likely to be better under JM than liquidation if projects contribute accordingly
UPP
UPP: Entered a share purchase agreement comprising the acquisition of a controlling stake (58.3%) in Taiga Building Products for C$18.9m, and unsecured subordinated notes representing 35.7% of outstanding notes in the company for C$52.9m.The acquisition is priced at 2.8x FY3/16 earnings, and the notes will give UPP a before tax yield of 12.2%.Listed on the Toronto Stock Exchange, Taiga owns and operates three wood preservation plants that produce pressure-treated wood products. It is also a wholesale distributor of building materials. It has 15 distributioncentres in Canada and 2 distribution centres in California, USA. Products include panel products, mouldings, doors and other specialty products.Post acquisition, pro forma FY15 EPS for UPP is expected to surge 63% to 2.5¢, translating to a P/E of 10.6x on the current price of $0.265.
UOL
UOL: JV with UIC won enbloc tender for Potong Pasir property and commented
- Won enbloc tender for residential development in Potong Pasir for $334.2m, or $593 psf ppr.
- Based on an estimated cost breakeven of $1,000 psf (including demolition/dumping costs), the new development is expected to be launched at a sale price of $1,200 psf.
- Recent land banking activities reflect intense competition among developers, which could lead to a margin squeeze.
- House stays cautious on property developers. Top pick in the sector is CapitaLand (Buy, TP $3.93), with Hold ratings for CityDev (TP: $8.92), Ho Bee (TP: $2.28) and Wing Tai (TP: $1.71).
- Won enbloc tender for residential development in Potong Pasir for $334.2m, or $593 psf ppr.
- Based on an estimated cost breakeven of $1,000 psf (including demolition/dumping costs), the new development is expected to be launched at a sale price of $1,200 psf.
- Recent land banking activities reflect intense competition among developers, which could lead to a margin squeeze.
- House stays cautious on property developers. Top pick in the sector is CapitaLand (Buy, TP $3.93), with Hold ratings for CityDev (TP: $8.92), Ho Bee (TP: $2.28) and Wing Tai (TP: $1.71).
SG Market (06 Oct 16)
Oil-related counters will continue to be lifted by the recovery in oil prices following plans for an informal meeting by OPEC and non-OPEC members in Istanbul next week to discuss production cuts, while yield stocks could come under pressure from growing prospect of a US rate hike.
Regional markets opened in the green in Tokyo (+0.9%), Seoul (+0.5%) and Sydney (+0.3%).
Technically, STI is hovering near its support at 2,880, with upside resistance at 2,910.
Stocks to watch:
*Keppel Corp: Awarded a US$26.7m contract to provide technology and services to the Baoan waste-the-energy plant in Shenzhen, China, scheduled for completion by 2018. Separately, the group divested its 100% stake in Wiseland Investment, which owns the 250-room Sedona Hotel Mandalay in Myanmar, for US$41m ($55.4m), and expects to book a gain of $43.2m (2.4¢/share).
*UOL/UIC: 50:50 JV has won an enbloc tender for a residential development, Raintree Gardens, in Potong Pasir, for $334.2m, or $593 psf ppr. The The JV intends to redevelop the 99-year leasehold property, which has a site area of 201,406 sf and plot ratio of 2.8.
*IREIT: Shareholders of manager IREIT Global Group will divest an 80% stake to European Asset Manager Tikehau Investment. Subsequently, Tikehau intends to change the investment mandate of IREIT to cover all commercial income-producing properties including offices, retail and industrial properties across Europe.
*New Toyo: Acquiring British American Tobacco Indonesia’s printing business for Rp304b (RM96.9m). The deal comes with a six-year manufacturing and supply of packing materials agreement, in which New Toyo will be appointed as the printing supplier for the vendor.
*Asia Fashion: Entered in a 14-day MOU with G Music (HK) to negotiate on the promotion for the 15th Anniversary Live Tour “Forever Memories” concert for Japanese dance boy group, W-inds, in Hong Kong.
*SMRT: Court hearing date for the privatisation by Temasek via a scheme of arrangement will be on 17 Oct. The counter will cease trading on 18 Oct.
*Dutech: Completed the $4.5m acquisition of METRIC mobility solutions, which manufactures and designs intelligent terminals such as parking machines.
Regional markets opened in the green in Tokyo (+0.9%), Seoul (+0.5%) and Sydney (+0.3%).
Technically, STI is hovering near its support at 2,880, with upside resistance at 2,910.
Stocks to watch:
*Keppel Corp: Awarded a US$26.7m contract to provide technology and services to the Baoan waste-the-energy plant in Shenzhen, China, scheduled for completion by 2018. Separately, the group divested its 100% stake in Wiseland Investment, which owns the 250-room Sedona Hotel Mandalay in Myanmar, for US$41m ($55.4m), and expects to book a gain of $43.2m (2.4¢/share).
*UOL/UIC: 50:50 JV has won an enbloc tender for a residential development, Raintree Gardens, in Potong Pasir, for $334.2m, or $593 psf ppr. The The JV intends to redevelop the 99-year leasehold property, which has a site area of 201,406 sf and plot ratio of 2.8.
*IREIT: Shareholders of manager IREIT Global Group will divest an 80% stake to European Asset Manager Tikehau Investment. Subsequently, Tikehau intends to change the investment mandate of IREIT to cover all commercial income-producing properties including offices, retail and industrial properties across Europe.
*New Toyo: Acquiring British American Tobacco Indonesia’s printing business for Rp304b (RM96.9m). The deal comes with a six-year manufacturing and supply of packing materials agreement, in which New Toyo will be appointed as the printing supplier for the vendor.
*Asia Fashion: Entered in a 14-day MOU with G Music (HK) to negotiate on the promotion for the 15th Anniversary Live Tour “Forever Memories” concert for Japanese dance boy group, W-inds, in Hong Kong.
*SMRT: Court hearing date for the privatisation by Temasek via a scheme of arrangement will be on 17 Oct. The counter will cease trading on 18 Oct.
*Dutech: Completed the $4.5m acquisition of METRIC mobility solutions, which manufactures and designs intelligent terminals such as parking machines.
Wednesday, October 5, 2016
Ausgroup
Ausgroup: Obtained consent from noteholders to amend the details of its Series 001 $110m 7.45% notes due 2016
1. Upfront principal redemption of $4m on 20 Oct '16
2. Waiver of certain financial covenants
3. Pushed back original maturity date by 2 years to 20 Oct '18
4. In line with the extension, the interest rate on the notes will be adjusted upwards to 7.95% (1st year of extension), and 8.45% (second year of extension).
5. Interest will also be paid out on a monthly basis.
As at 30 Jun, Ausgroup's net gearing stood at a whopping 309% with only $22.1m in cash reserves. The agreement with noteholders essentially provides Ausgroup with a much needed lifeline. However, headwinds continue to persist particularly for the offshore segment of its business.
1. Upfront principal redemption of $4m on 20 Oct '16
2. Waiver of certain financial covenants
3. Pushed back original maturity date by 2 years to 20 Oct '18
4. In line with the extension, the interest rate on the notes will be adjusted upwards to 7.95% (1st year of extension), and 8.45% (second year of extension).
5. Interest will also be paid out on a monthly basis.
As at 30 Jun, Ausgroup's net gearing stood at a whopping 309% with only $22.1m in cash reserves. The agreement with noteholders essentially provides Ausgroup with a much needed lifeline. However, headwinds continue to persist particularly for the offshore segment of its business.
Q&M
Q&M:
- Completed the acquisition of British Dental Surgery in Choa Chu Kang for $0.6m.
- Small-scale acquisitions would gradually enable Q&M build significant scale.
- Further, the acquisitions are relatively cheap, priced at a >70% discount relative to Q&M's valuations.
- Q&M remains as a key constituent in the Market Insight Growth portfolio.
- Current valuation of 29x FY17 P/E is attractive.
- Maybank KE last had a Buy call on the healthcare counter with TP of $1.08.
- Completed the acquisition of British Dental Surgery in Choa Chu Kang for $0.6m.
- Small-scale acquisitions would gradually enable Q&M build significant scale.
- Further, the acquisitions are relatively cheap, priced at a >70% discount relative to Q&M's valuations.
- Q&M remains as a key constituent in the Market Insight Growth portfolio.
- Current valuation of 29x FY17 P/E is attractive.
- Maybank KE last had a Buy call on the healthcare counter with TP of $1.08.
SG Market (05 Oct 16)
Singapore market is expected to trade within a tight band amid renewed concerns of near term US interest rate hike and speculation over ECB's early tapering of its QE programme. Counters that benefit from a stronger USD include Venture, Innovalues, ST Engineering, SIA Engineering, Riverstone and UG Healthcare, while yield stocks could come under pressure.
Regional markets opened mixed in Tokyo (+0.3%), Seoul (-0.8%) and Sydney (-0.7%).Technically, topside resistance for the STI is now seen at 2,910, with immediate support at 2,880.
Stocks to watch:
*Sembcorp Marine: Further extends the standstill agreement with North Atlantic Drilling for a harsh environment semisub drilling rig to 6 Jan 2017, reflecting the dire state in the offshore drilling market. The development proves it is not time to turn positive on the rigbuilders yet, despite the recent rise in oil price. Last call on counter was Sell with TP of $1.00.
*Q&M: Expanded its footprint after completing the acquisition of British Dental Surgery for $0.6m ($0.5m in cash, $0.1m via issuance of new shares at $0.72/share), which came with a profit guarantee of $0.6m over an 8-year period. MKE last had a Buy with TP of $1.08.
*Jumbo: Announced the expansion of its Riverside seafood outlet (addition of 150 seats to boost capacity to 450) and the opening of its fifth Ng Ah Sio bak kut teh outlet at RWS. MKE has a Buy call on Jumbo with TP of $0.78.
*Wilmar: Formed 50:50 JV, Raisen & Wilmar Sugar (RAW) with Brazilian energy company Raizen Energia to export high polarization (VHP) sugar globally. Raisen's VHP sugar output of 3m tonnes combined with Wilmar's existing sugar supplies in Brazil, will make RAW into one of the largest exporters of Brazilian sugar, with an annual volume of 4.5m tonnes.
*YuuZoo: YuuGames, the Chinese JV between YuuZoo and Alisports, has signed a 5-year extension to its initial 1-year agreement to manage all its Alisport's eSports Arenas in China. Management believes the extension is expected to generate a steady revenue stream via gaming, e-commerce and social network services for the huge gaming market in China with an estimated 450m gamers and online market size of Rmb150b.
*Astaka: Entered into a 51:49 JV agreement with Saling Syabas to undertake a proposed property development project in Kota Tinggi, Johor. The group is currently seeking approval on a change in land use of the 258.5-acre land site from agriculture to commercial.
*Thai Bev: Thailand credit rating agency TRIS Rating upgraded the company rating one notch from AA to AA+, with stable outlook.
*mm2 Asia: Counter will go ex for its share split on 10 Oct.
*Sino Grandness: Substantial shareholder Chalermchai Mahagitsir, CEO of Thoresen Thai Agencies, disposed 1.6m shares at $0.37269 apiece on 3 Oct, reducing its stake from 14.01% to 13.78%.
*ISOTeam: Revised its dividend policy to distribute at least 20% of core net profit.
*Triyards: Vietnam facility Saigon Offshore Fabrication and Engineering became the first in the country to receive the API-2C Monogram Certificate from American Petroleum Institute.
Regional markets opened mixed in Tokyo (+0.3%), Seoul (-0.8%) and Sydney (-0.7%).Technically, topside resistance for the STI is now seen at 2,910, with immediate support at 2,880.
Stocks to watch:
*Sembcorp Marine: Further extends the standstill agreement with North Atlantic Drilling for a harsh environment semisub drilling rig to 6 Jan 2017, reflecting the dire state in the offshore drilling market. The development proves it is not time to turn positive on the rigbuilders yet, despite the recent rise in oil price. Last call on counter was Sell with TP of $1.00.
*Q&M: Expanded its footprint after completing the acquisition of British Dental Surgery for $0.6m ($0.5m in cash, $0.1m via issuance of new shares at $0.72/share), which came with a profit guarantee of $0.6m over an 8-year period. MKE last had a Buy with TP of $1.08.
*Jumbo: Announced the expansion of its Riverside seafood outlet (addition of 150 seats to boost capacity to 450) and the opening of its fifth Ng Ah Sio bak kut teh outlet at RWS. MKE has a Buy call on Jumbo with TP of $0.78.
*Wilmar: Formed 50:50 JV, Raisen & Wilmar Sugar (RAW) with Brazilian energy company Raizen Energia to export high polarization (VHP) sugar globally. Raisen's VHP sugar output of 3m tonnes combined with Wilmar's existing sugar supplies in Brazil, will make RAW into one of the largest exporters of Brazilian sugar, with an annual volume of 4.5m tonnes.
*YuuZoo: YuuGames, the Chinese JV between YuuZoo and Alisports, has signed a 5-year extension to its initial 1-year agreement to manage all its Alisport's eSports Arenas in China. Management believes the extension is expected to generate a steady revenue stream via gaming, e-commerce and social network services for the huge gaming market in China with an estimated 450m gamers and online market size of Rmb150b.
*Astaka: Entered into a 51:49 JV agreement with Saling Syabas to undertake a proposed property development project in Kota Tinggi, Johor. The group is currently seeking approval on a change in land use of the 258.5-acre land site from agriculture to commercial.
*Thai Bev: Thailand credit rating agency TRIS Rating upgraded the company rating one notch from AA to AA+, with stable outlook.
*mm2 Asia: Counter will go ex for its share split on 10 Oct.
*Sino Grandness: Substantial shareholder Chalermchai Mahagitsir, CEO of Thoresen Thai Agencies, disposed 1.6m shares at $0.37269 apiece on 3 Oct, reducing its stake from 14.01% to 13.78%.
*ISOTeam: Revised its dividend policy to distribute at least 20% of core net profit.
*Triyards: Vietnam facility Saigon Offshore Fabrication and Engineering became the first in the country to receive the API-2C Monogram Certificate from American Petroleum Institute.
Tuesday, October 4, 2016
Metro
Metro: Activist backer Quarz urges Metro to return cash
- Share spike today to $0.995 (+8.7%) is possibly due to the call for Metro to return excess cash to investors.
- Net cash held is at $393m, represents 48% of current market cap.
- Quarz urged Metro to pay a one-off DPS of 21¢/share, as well as provide a clearer strategy.
- Share spike today to $0.995 (+8.7%) is possibly due to the call for Metro to return excess cash to investors.
- Net cash held is at $393m, represents 48% of current market cap.
- Quarz urged Metro to pay a one-off DPS of 21¢/share, as well as provide a clearer strategy.
Innovalues
Innovalues: Technical sell call sparks selloff; fundamentals remain intactInnovalues’ share price fell as low as 5.3% intraday after a broker issued a technical sell call with a price objective of 72-73¢.
Fundamentally, Maybank KE believes business growth is on track for the precision parts manufacturer to meet its full year net profit forecast.
To recap, Innovalues is expected to perform better in 2H16 than 1H16 due to improving sales and margins. The house also notes that major customers such as Sensata and VW have performed better than expected, and the group has recently secured a new Japanese customer.
From a situational perspective, the group has recently reaffirmed that the M&A related discussions are still in progress. Given that talks have already been ongoing for six months, it should have passed the due diligence phase and it should now boil down to pricing.
Given the state of the markets and world economies, Maybank KE believes a range of $1-1.20 (8-10x FY16E EV/EBITDA) should be acceptable. Maybank KE’s current TP for Innovalues is $1.15. The stock is a constituent in Market Insight Growth portfolio.
Fundamentally, Maybank KE believes business growth is on track for the precision parts manufacturer to meet its full year net profit forecast.
To recap, Innovalues is expected to perform better in 2H16 than 1H16 due to improving sales and margins. The house also notes that major customers such as Sensata and VW have performed better than expected, and the group has recently secured a new Japanese customer.
From a situational perspective, the group has recently reaffirmed that the M&A related discussions are still in progress. Given that talks have already been ongoing for six months, it should have passed the due diligence phase and it should now boil down to pricing.
Given the state of the markets and world economies, Maybank KE believes a range of $1-1.20 (8-10x FY16E EV/EBITDA) should be acceptable. Maybank KE’s current TP for Innovalues is $1.15. The stock is a constituent in Market Insight Growth portfolio.
SG Market (04 Oct 16)
The market will likely continue to flounder on low liquidity with little to excite investors as we head into the 3Q results season. Property developers may return to unfavourable light after 3Q private home prices suffered its steepest fall in 7 years.
Regional markets opened mostly higher in Tokyo (+0.3%), Seoul (+0.4%) and Sydney (-0.4%). From a technical perspective, resistance for STI remains at 2,880, with support at 2,800.
Equity highlights:
*Economy: Factory activity expanded in Sep after 14 months of contraction. Manufacturing PMI came in at 50.1 (est: 49.9, prior: 49.8), boosted by increased new domestic and export orders, and expansion of inventory and finished goods. The reading for the electronics sector improved to 50.3 for the second straight month after 13 months of decline. Whether this uptick will materialise into a sustained trend will depend on the global economic outlook.
*Property: Flash URA data showed private home prices slumped 1.5% in 3Q, with declines in both landed homes (-2.2%) and non-landed properties (-1.4%). The index is in its 12th quarter of contraction and the longest correction since 1975. With a persistently weak macro outlook, we prefer stable REITs over developers.
*Ezra: 75.5% subsidiary EMAS Offshore is in discussions with sister company Perisai Petroleum, in which Ezra has a 25.5% stake, on an outstanding put option held by Perisai to sell its 51% stake in SJR Marine to EMAS for US$43m. The group has received an indicative financing package offer for the SJR deal, with US$20m earmarked towards an acceptable resolution with holders of its $125m notes due 2016.
*First Resources: Aug FFB harvest slumped 15.7% to 264,276 tonnes, on lower yield of 1.7 tonnes/ha (Aug '15: 2.1 tonnes/ha), while CPO production shrank 19% to 62,774 tonnes, and extraction rate dipped 0.6ppt to 22.4%.
*Halcyon Agri: Completed the acquisition of Sinochem’s rubber processing facilities and trading business for $210m, satisfied via the issuance of 280m new shares that will be listed wef 4 Oct.
*P99: Proposed acquisition of UES Holdings for $65m via cash of $16m and 612.5m new P99 shares at 8¢ apiece. Upon completion, the transaction will result in an RTO and P99 will be transformed into a environmental engineering services provider.*Azeus: Disclosed the completion of a £0.6m software development contract for the UK and Scottish parliaments, involving a browser-based legislation drafting tool.
*KLW: Received a reprimand from SGX after former MD Lee Boon Teck and CFO Jaslin Gaw Kuan Ching breached Catlist rules by failing to disclose material information, including the payment and non-refund of commitment fees owed by overseas development projects in Indonesia and China, failure to obtain approval and misstatement of interested party fees, non-disclosure of Key Bay Furniture acquisition, non-disclosure and inaccurate the use of proceeds from a 2014 share placement, rights cum warrants issue and 2013 rights issue.
*Jason Holdings: Directors Jason Sim and Sim Choon Joo received statutory demand from ANZ’s solicitors for the repayment of $1.74m outstanding debt.
Regional markets opened mostly higher in Tokyo (+0.3%), Seoul (+0.4%) and Sydney (-0.4%). From a technical perspective, resistance for STI remains at 2,880, with support at 2,800.
Equity highlights:
*Economy: Factory activity expanded in Sep after 14 months of contraction. Manufacturing PMI came in at 50.1 (est: 49.9, prior: 49.8), boosted by increased new domestic and export orders, and expansion of inventory and finished goods. The reading for the electronics sector improved to 50.3 for the second straight month after 13 months of decline. Whether this uptick will materialise into a sustained trend will depend on the global economic outlook.
*Property: Flash URA data showed private home prices slumped 1.5% in 3Q, with declines in both landed homes (-2.2%) and non-landed properties (-1.4%). The index is in its 12th quarter of contraction and the longest correction since 1975. With a persistently weak macro outlook, we prefer stable REITs over developers.
*Ezra: 75.5% subsidiary EMAS Offshore is in discussions with sister company Perisai Petroleum, in which Ezra has a 25.5% stake, on an outstanding put option held by Perisai to sell its 51% stake in SJR Marine to EMAS for US$43m. The group has received an indicative financing package offer for the SJR deal, with US$20m earmarked towards an acceptable resolution with holders of its $125m notes due 2016.
*First Resources: Aug FFB harvest slumped 15.7% to 264,276 tonnes, on lower yield of 1.7 tonnes/ha (Aug '15: 2.1 tonnes/ha), while CPO production shrank 19% to 62,774 tonnes, and extraction rate dipped 0.6ppt to 22.4%.
*Halcyon Agri: Completed the acquisition of Sinochem’s rubber processing facilities and trading business for $210m, satisfied via the issuance of 280m new shares that will be listed wef 4 Oct.
*P99: Proposed acquisition of UES Holdings for $65m via cash of $16m and 612.5m new P99 shares at 8¢ apiece. Upon completion, the transaction will result in an RTO and P99 will be transformed into a environmental engineering services provider.*Azeus: Disclosed the completion of a £0.6m software development contract for the UK and Scottish parliaments, involving a browser-based legislation drafting tool.
*KLW: Received a reprimand from SGX after former MD Lee Boon Teck and CFO Jaslin Gaw Kuan Ching breached Catlist rules by failing to disclose material information, including the payment and non-refund of commitment fees owed by overseas development projects in Indonesia and China, failure to obtain approval and misstatement of interested party fees, non-disclosure of Key Bay Furniture acquisition, non-disclosure and inaccurate the use of proceeds from a 2014 share placement, rights cum warrants issue and 2013 rights issue.
*Jason Holdings: Directors Jason Sim and Sim Choon Joo received statutory demand from ANZ’s solicitors for the repayment of $1.74m outstanding debt.
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