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.