Wednesday, October 12, 2016

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

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