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.

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