SG Market (08 Nov 16)

The FBI-inspired respite yesterday could be short-lived as investors are on tenterhooks for negative surprises from the closely fought US presidential elections tonight.

Regional bourses opened higher in Tokyo (+0.4%), Seoul (+0.2%) and Sydney (+0.2%).Technically, STI is hovering at its 2,800 support, just below the 200-dma, with topside resistance at 2,880.

Stocks to watch:
*GLP: 2QFY17 core net profit (ex. revaluation) jumped 44.1% to US$71.6m, bringing 1HFY17 core earnings of US$110.2m (+3.7%) to 40% of full year street estimate. For the quarter, revenue rose 12.9% to US$213.7m on completion and stabilisation of development projects in China, and higher management fee income from US and Japan, while EBIT climbed 34.5% on increased income from its Japanese associate. Achieved US$950m of development starts and management remains confident of meeting its FY17 target of US$2.1b. Trading at 25% discount to its NAV/share of US$1.96.

*Yoma: 2QFY17 net profit soared to $8.5m from $0.3m last year, bringing 1HFY17 earnings to $10m (+244%) or 39% of full year estimate. For the quarter, earnings were boosted by an unrealised fair value gain ($14.7m) from its edotco stake. Revenue rose 25.2% to $24.9m across all segments with growth mainly derived from sale of residences and land development rights (+26.1%) in Pun Hlaing Estate and more KFC stores in the consumer segment (+96%). But bottom line was weighed by JV/associate losses of $1.9m (2QFY16: $0.5m gain). Separately, the group will be divesting half its 25% interest in edotco Singapore for US$35m at US$2.4m above book value. NAV/share at $0.376.

*F&N: FY16 headline net profit slumped 82.9% to $108.1m on the absence of a $541.5m disposal gain. Excluding that, core earnings would have surged 72.9% to $109m, despite a 6.7% slide in revenue to $1.98b on weaker contributions from beverages (-10.5%), dairies (-3.7%) and printing & publishing (-9.8%) operations. Bottom line benefitted from an expansion in gross margin to 36.8% (+4ppts) stemming from a shift in sales mix, as well as increased investment income (+16.5%) and net finance income. Final DPS of 3¢ maintained, taking full year payout to 4.5¢ (FY15: 5¢). NAV/share at $1.97.

*SIIC Environment: 3Q16 net profit of Rmb94m (+5.3%) brought 9M16 earnings to Rmb284.7m (+18.2%) or 62% of full year street estimate. For the quarter, revenue slumped 21.4% to Rmb394.9m on reduced construction activities (-74.9%), partly mitigated by operating and maintenance income (+9.1%), and financial income (+9.8%) from service concession arrangements. Accordingly, gross margin expanded 7.9ppt to 45.8%. Bottom line shored by VAT refunds and disposal sale. NAV/share at Rmb2.59.

*CNMC: 3Q16 net profit slid 5.6% to US$2.2m, as revenue fell 15% to US$8.5m on reduced production (-24.3%) and sales volume (-24.3%) of fine gold due to a stop-work order between 19 and 25 Jul, although partially mitigated by higher average realised gold price of US$1,345.31/oz (+12.3%). The stop-work order also resulted in 29% rise in all-in production costs to to US$728/oz. Trading at 3.8x P/B..

*Avi-Tech: 1QFY17 net profit fell 16.9% to $1.5m, mainly weighed by a steep drop in FX gain. Revenue climbed 6.3% to $8.5m as improvement at its burn-in board manufacturing and PCBA services segment more than offset weakness from burn-in services and engineering services division. Gross margin narrowed 3.7ppt to 29.5% on changes to services mix. Net cash position jumped 82% to $4.9m, or 9.6% of current market cap. NAV/share at $0.2736.

*Chiwayland: 3Q16 net loss widened to Rmb56.6m (3Q15: Rmb6.4m loss), as revenue shrank 70% to Rmb118.1m on fewer handover of property units. Gross margin expanded 27.7ppt to 37.1% on higher ASP for its Suzhou developments. But bottom line was dragged by increased distribution (+76%), admin (+30%) and financing (+170%) costs, as well as FX losses and higher taxes (+65%). Operating cash outflow swelled to Rmb1.7b (3Q15: Rmb77.4m) on advance payments and higher trade receivables, while net gearing spiked to 4.4x from 2.4x in FY15. The group remains confident of turning profitable for FY16 and paying out DPS of 1¢. NAV/share at Rmb1.413.

*Yeo Hiap Seng: 3Q16 net profit plunged 45.7% to $5.1m on a softer revenue of $94.7m (-13.5%), amid deterioration in F&B sales. Gross margin narrowed 2.5ppt to 37.5% on higher raw materials costs, while bottom line was further hit by a $4.4m drop in FX gain. NAV/share at $1.0335.

*Hai Leck: 1QFY17 net profit jumped 65.2% from a low base to $2.6m, on better revenue of $24.5m (+32.8%) from higher maintenance activity. Separately, the group was awarded a mechanical and piping project from a new customer to fabricate, erect and surface treat piping and install equipment at facilities in Jurong Island for an unspecified sum. Together with other projects secured recently, management updated that order book has expanded by $25m. NAV/share at $0.601..

*China Star Food: Swung to 2QFY17 net profit of Rmb17.1m, due to the absence of a goodwill write-off and RTO expenses. Revenue rose 13.3% to Rmb120.7m from increased sales of candies and crisps, while gross margin dipped 0.3ppt to 45.4% on change in sales mix. NAV/share at Rmb1.49.

*SGX: Received court approval for its proposed acquisition of Baltic Exchange. SGX expects to complete the purchase today.

*ARA: Requested for extension of the trading halt, pending release of a material announcement before market re-opens on 9 Nov.

*Sunpower: Secured Rmb98.9m worth of contracts to supply fluidized bed reactors and heat exchangers for several customers, and is expected to be FY17 accretive.

*MMP Resources: Acquiring a three-storey freehold property at Aze Hinode, Japan, for ¥26m ($0.3m), funded via proceeds from recent placement. The property has close proximity to the Chisenupuri ski field, and will be redeveloped into a premium rental asset with hot spring facilities.

*Procurri: Purchased a loss-making European distributor of IT spare parts, EAF Supply Chain Holdings, for £1.5m (0.52x P/B), in a bid to expand its geographical reach.

*Anchor Resources: Invested RM2.2m ($0.7m) in a new ball mill system which would have daily processing capacity of 600t of hard rock ore.*Wong Fong: Appointed as a Public Training Organisation by Skills Future Singapore to carry out construction sector related courses.

*Global Invacom: Exploring consolidation of its China manufacturing activities to optimise cost advantages, which could result in the closure of its Shenzhen subsidiary.

*Equation Summit: Concluded the initial stage of store deployment for its DiSa Asset Protection solution with the proof-of-concept showing strong results when deployed in a live retail ecosystem.

*Profit warning:
- Tat Hong
- Pharmesis
- LH Group
- PSL Holdings
- Advanced Holdings
- A-Sonic Aerospace