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%.
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