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.