SG Market (14 Nov 16)

Expect more volatility as Asian investors are still unclear about the possible impact of a Trump presidency amid weaker currencies, oil prices and moderating credit in China. Local corporate results will wind to an end today after a largely uninspiring quarter.

Regional bourses opened mixed in Tokyo (+0.5%), Seoul (-0.1%) and Sydney (-0.8%).Technically, STI is still hemmed between its immediate resistance at 2,840 (50-dma) and near term support seen at 2,780.

Stocks to watch:
*Vard: Received cash offer of $0.24/share, or 0.67x P/B, from parent Fincantieri to take it private. As at 13 Nov, Fincantieri owns 55.6% of Vard and the offer will turn unconditional upon valid acceptances of >90%.

*ComfortDelGro: 3Q16 results met expectations, as net profit edged up to $87.3m (+2.5%), on lower fuel (-24.4%) and material (-27.1%) costs. However, revenue slipped 3.1% to $1.02b, weighed by bus (-7.3%), automotive engineering services (-10%) and adverse FX movements, which overshadowed growth in the rail business (+26.3%), while taxi operations remained flat. EBITDA margin widened slightly to 22.2% (+0.5ppt). MKE last had a Hold with TP of $2.63.

*Olam: 3Q16 results trailed estimates although core net profit slipped 20.2% to $20.5m, bringing 9M16 earnings of $261.4m (+2.3%) to 72% of FY16 street forecast. Quarter revenue rose 6% to $4.74b, buoyed by higher overall volume (+15.8%), and sales in the food category (+1.7%) and non-food segment (+32.7%). EBITDA margin was stable at 4.3%, while bottom line was dragged by higher depreciation charges (+43.5%) due to a higher fixed asset base. NAV/share at $1.8528.

*Q&M: 3Q16 core net profit grew 3% to $2.8m, bringing 9M16 earnings of $10.2m (+10%) to 65% of FY16 street estimate. Revenue jumped 22% to $29m on contribution from existing and new dental outlets in Singapore, coupled with new acquisition of dental companies in Singapore and China. MKE last had a Buy with TP of $1.08.

*Silverlake: 1QFY17 results missed despite a 2.5x jump in net profit to RM168.6m, boosted by a RM143.7m gain from partial disposal of associate Global InfoTech. Revenue slipped 3% to RM126.7m due to weaker software licensing, software project services and sale of software & hardware products. Gross margin narrowed 2ppt to 58% on a change in sales mix. NAV/share at RM0.29.

*Haw Par: 3Q16 net profit jumped 21.3% to $42.3m, on higher revenue of $49.7m (+3.3%), driven by healthcare (+7.1%) and property (+32%) divisions, but the leisure (-76.5%) business sagged on closure of Underwater World Singapore. Gross margin expanded 5.5ppt to 65.2%, while bottom line was further lifted by an absence of disposal loss. NAV/share at $10.88.

*United Engineers: 3Q16 headline net profit soared 7.2x to $134.6m, largely boosted by $122m gains from disposal of subsidiaries, including US-listed Multi-Fineline Electronix. Earnings from continuing operations climbed 10% to $11.7m on higher other income (+89%), and increased JV/associate contributions of $2.4m. However, revenue plunged 43% to $101.7m from weaker property development sales following completion of Eight Riversuites. NAV/share at $3.06.

*Cordlife: Tumbled to 3Q16 net loss of $0.6m (3Q15: $7.2m profit) amid absence of fair value and FX gains, as well as finance income. Revenue inched up 0.8% to $14.6m on increased contribution from the relatively lower value service cord tissue banking, but was smothered by higher discounts offered for its India business to stay competitive. No dividend was declared (3Q15: special DPS 13¢). NAV/share at $0.5092..

*Cogent: 3Q16 net profit rose 13% to $7.8m on firmer revenue of $34.1m (+4%), as improvements from container depot, automotive logistics and warehouse operations continued to outweigh weakness in transport management segment, which is still reeling from the depressed O&G sector. Operating margin widened 2.8ppt to 29.8% as rental expenses (-9%) trended down. NAV/share at $0.2466.

*Sarine: Turned in 3Q16 net profit of $4m (3Q15: $1.4m loss), which brought 9M16 earnings to $13m (+515%), or 65% of FY16 street estimate. Quarter revenue soared 82% to US$17.3m, buoyed by sales in Europe (+142.9%) and India (+115.2%), primarily due to increased diamond manufacturing equipment sales, including recurring revenues from Galaxy systems. Gross margin expanded to 69% (+6 ppt). NAV/share at $0.2894.

*QAF: 3Q16 net profit leapt 84% to $19.4m, mainly from the de-consolidation of Gardenia Bakeries (KL) after a 20% stake sale to 50% in Apr. Accordingly, operating costs were reduced by 16%, while bottom line was lifted by $2.7m from the former subsidiary turned JV. Revenue slipped 13% to $212.4m from the loss of KL unit but was partially mitigated by improved contribution from all other business segments on new product launches and increased market penetration, as well as higher sales volume and ASPs from Rivalea. NAV/share at $0.843.

*Oxley: 1QFY17 net profit plunged 80% to $7.1m as revenue slumped to $126.5m (-71%) due to the completion of of industrial property Ecotech@Sunview in 1QFY16. However, gross margin improved to 37.6% (+13.7ppt) from five ongoing residential and mixed-use projects, some handover units at The Royal Wharf Phase 1 and rental properties. Total unbilled contract value amounted to $2.66b, of which $1.37b will be booked in the next 12 months. Net gearing eased from 2.2x to 2.1x as the group continued to pare its debt pile, supported by stable operating cash flow of $146m. NAV/share at $0.2695.

*Hiap Hoe: 3Q16 results turned in a net profit of $13.7m (3Q15: $3m loss), stemming from a disposal gain of $20m and FX gain of $4.4m (3Q15: $2.4m loss). However, revenue slumped 48.2% to $19.9m on the absence of contribution from development properties (3Q15: $15.2m), as well as declines across rental (-27.2%), leisure (-7.6%) and hotel (-4.9%) businesses. NAV/share at $1.4607.

*Starburst: 9M16 net loss deepened to $7.8m, despite higher revenue of $18.2m (+73%), underpinned by contribution from Singapore architectural steel project Marina One, and increased contribution from firearm shooting range projects in the Middle East. However, bottom line was dragged by higher costs and provision losses (+144.5%) for projects. NAV/share at $0.1476.

*Cosco Corp: Dismal 3Q16 as net loss deepened to $102.3m (3Q15: $82.1m loss), on
1) higher impairment of trade receivables due to rising credit risk from some customers,
2) increased FX loss and
3) a jump in finance costs (+26%). Revenue tumbled to $662.3m (-30%), on weaker shipyard (-30.3%) and shipping (-21%) businesses.
NAV/share at $0.2825.

*Fu Yu: 3Q16 net profit slumped 61.2% to $1.8m, mainly on lower FX gains of $0.8m (3Q15: $3.4m) and absence of lower rental income and liquidation gain (3Q15: $0.4m). Revenue fell 13.6% to $48.1m on a slowdown in demand from Chinese customers, while gross margin contracted to 14.6% (-1.1ppts) due to fixed overhead costs. Interim DPS of 0.25¢ maintained. NAV/share at $0.225.

*Boustead Singapore: 2QFY16 net profit fell 25.9% to $7.6m, as gross margin contracted to 31.9% (-3ppts), with pressure continuing to build up. Revenue slipped 1.4% to $113.5m on declines in energy-related engineering (-27.8%) and geo-spatial technology (-1.5%) segments, mitigated by growth in its real estate solutions (+15.6%) segment. Interim DPS shaved to 0.5¢ (2QFY17: 1¢). NAV/share at $0.583..

*SUTL: 3Q16 core net profit rose 8% to $0.5m, while revenue inched up 3% to $6.4m, on higher sale of goods and services (+4%), although membership-related fees slipped (-4%). NAV/share at $0.604.

*Food Empire: 3Q16 net profit surged 782.3% from a low base to US$5.8m (3Q15: $0.6m), as FX loss narrowed to US$0.2m from US$6.4m previously. Revenue grew 10.7% to US$68.3m, lifted by increased sales to Russia (+7.4%), Indochina (+36%) and other markets (+38.1%), while gross margin expanded 1.4ppt to 38.3%. NAV/share at US$0.283.

*EuroSports: 1HFY17 net loss widened to $3.4m (1HFY16: $1.7m loss), on a 9.7% drop in revenue to $29.4m mainly on fewer sales of new Lamborghini models (10 vs 1HFY16’s 15). Gross margin also reduced from 15.2% to 12.9% on lower profitability of sales for pre-owned automobiles. NAV/share at 6.43¢.

*GSS Energy: 3Q16 net profit halved to $1.5m (-51.7%), on absence of a $3m land compensation in China. Revenue rose 15.1% to $20.2m from higher orders in the precision engineering segment, although gross profit margin contracted to 23.8% (-3.6ppt) due to changes in product mix and price adjustment. NAV/share at 7.23¢.

*Nordic: 3Q16 net profit grew 12.1% to $3.6m on stronger gross margin of 31.4% (+3ppts), led by increased profitability in maintenance services. Revenue slipped 1.5% to $21.4m on lower contributions from project services (-12.4%). Bottomline was supported by declines in marketing & distribution (-58.1%) and admin (-9.4%) expenses. NAV/share at $0.16.

*Dyna-Mac: 3Q16 results swung back into net loss of $1m ($0.5m profit), as revenue tumbled to $34.2m (-59.2%) due to lower workload. Despite that, gross margin expanded to 32.8% (+18ppts) on higher contribution from order variation, while bottom line was dragged by a tax expense of $0.3m (3Q15: $1.5m credit). NAV/share at $0.172.

*Trek 2000: 3Q16 net profit spiked 70.7% from a low base to US$1.8m, boosted by increased gross margin of 11.1% (+2.4ppt) attributed to cost containment and lower R&D expenses. Revenue fell 1.9% to US$43.2m from decreased sales in customer solutions division and lower licensing fees. NAV/share at US$0.174.

*iX Biopharma: Narrowed 1QFY17 net losses to $0.8m (1QFY16: $2.4m), mainly from R&D tax incentives of $0.5m (1QFY16: $0.1m). Revenue slipped to $1.5m (-1.3%) on a decline in chemical analysis (-1.6%), while gross margin contracted to 22.9% (-8.3ppts) on a one-off cost for operating efficiency. NAV/share at 6.5¢.

*YuuZoo: 3Q16 jumped 50.8% to $8.4m on a $2.5m swing to FX gains of $1.3m ($3Q15: $1.2m loss), as well as lower cost of services (-53.5%), amortisation (-72%) and employee benefits (-35.6%). However, revenue fell 15.5% to $14.6m on reduced e-commerce revenue (-52.9%) and franchise sales (-8.2%). Group continued to bleed cash with operating cash outflow of $1.7m (3Q15: $3.4m inflow). Separately, it announced the resignation of its CEO after slightly more than one year at the helm. NAV/share at $0.201.

*SunMoon Food: Swung into 3Q16 net loss of $1.5m (3Q15: $0.4m profit), as gross margin tumbled to 1.1% (-6.5ppts) due to the return of frozen durian. Revenue jumped 36% to $8m on increased sales in Indonesia after the government lifted trade restrictions on fresh fruits from China. NAV/share of $2.16¢..

*Ramba: 3Q16 net loss widened to $3.7m (3Q15: $1.8m loss), on lower revenue of $13.6m (-12.7%) from reduced logistics volume. Bottom line was further dragged by one-time costs relating to a legal proceeding and lower FX gains. NAV/share of 11.58¢.

*IHH Healthcare: Divesting 29.9% stake (20.7m shares) in PCH (formerly known as Parkway China Holdings) to Taikang Insurance, for Rmb 291.1m (RM182.8m). *Silverlake Axis: Sold a block of 4m Global InfoTech shares on ChiNex via block trade at Rmb24.65/share, expected to reap RM47.5m gain from the sale.

*iFAST: Acquired Hong Kong insurance brokerage Canadian Financial Consultants for HK$5.4m. The deal is intended to expand the range of products available on its investment platform.

*Cosco Shipping: 51%-owned subsidiary Cosco Guangdong Shipyard has mutually agreed with rig owner Edrill 3, to defer delivery for a semi-submersible tender assist drilling rig by one year to 30 Nov 2017.

*ValueMax: Granted a $42m bridging loan facility as part of its moneylending business.

*Global Yellow Pages: Disposed 21.6m shares of Yamada Green Resources in a married deal at $0.31/share to substantial shareholder Sam Goi Seng Hui. Net proceeds of $6.7m is intended for general working capital purposes and/ or investment opportunities in the property market.

*QT Vascular: Secured a legal victory over Angioscore, as the Federal Court of Appeals denied a petition for a rehearing and maintained its reversal of a previous judgement for US$20m in damages payable to AngioScore.

*Swissco: Guided for losses in 3Q16 and 9M16 results, due to impairments on its fleet of vessels, rigs and receivables, as well as two 50% owned drilling rigs which continue to be off-charter.