Tuesday, November 29, 2016

SG Market (29 Nov 16)

Market could face some profit taking as investors may turn cautious ahead of the OPEC meeting tomorrow and the Italian referendum on Sun.

Regional bourses opened mixed in Tokyo (-0.4%), Seoul (+0.1%) and Sydney (+0.2%).Technically, immediate resistance for STI is still at 2,880 after a failed break yesterday with downside support at 2,840 (50-dma).

Stocks to watch:
*Perennial Real Estate/SPH: Both parties agreed to buy an additional 40%/20% of Chinatown Point Mall from two funds for $61.8m/$30.9m. Upon completion, Perennial and SPH will increase their stakes in the retail mall from 5.2% and 7.4% to 45.2% and 27.4%, respectively.

*Perennial Real Estate: Entered call option agreement to acquire 20% stake in Aviva Tower for £330.0m or 2.2% above current market valuation. Aviva Tower is a 24-storey office building in London and has received approval to triple its gfa to 154,100 sqm, and is the tallest building in the City of London.

*Keong Hong: 4QFY16 net profit slumped 24.4% to $17m in tandem with 24.8% decline in revenue to $57.1m. This brought FY16 earnings and revenue to $34.7m (-9%) and $248m (-12%) respectively. For the year, the revenue drop was attributed to lower contributions from construction as two projects were largely completed in FY15, while two new projects, Raffles Hospital Extension and Parc Life, were at initial sales recognition stage. Gross margin expanded to 15.6% (+5ppt) as certain construction projects were in advanced stages of completion. NAV/share at $0.595.

*ASL Marine: 1QFY17 net profit tumbled 69.5% to $1.6m, dragged by a $1.3m swing in unrealised FX loss and higher tax provision. Revenue rose 27.3% to $96.7m, lifted by improved contributions from shipbuilding (+26.7%), shipchartering (+40.7%), engineering (+68.8%), but partially mitigated by shiprepair and conversion (-3.5%). However, gross margin narrowed to 13.5% (-2.1ppt) due to cost overruns in the shipbuilding segment, despite a reversal in cost provision. Order book stood at $177m with deliveries up to 4QFY18, of which 59% is expected to be booked in FY17. NAV/share at $1.006.

*LHN: 4Q16 net profit surged to $9.2m (4Q15: $0.8m), driven mainly by fair value gains from investment properties and revaluation of industrial properties. Revenue crept up 1.1% to $26m, from an increase in facilities management and logistics services, while gross margin widened 5.8ppt to 25.1% on lower rental costs. Final DPS raised to 0.45¢ (4Q15: 0.3¢), bringing full year payout to 0.65¢. NAV/share at $0.193.

*Acromec: Swung to FY16 net loss of $0.6m, mainly due to cost overruns, project execution difficulties and delays in tender for new projects. While revenue rose 23% to $43.5m, gross margin was crushed to 11.8% (-9.3ppt). Bottom line was further impacted by IPO fees of $0.7m and a spike in admin expenses (+43%). Excluding IPO fees, pretax profit would have still plunged 95.7% to $0.2m. NAV/share at $0.0899.

*Astaka Holdings: Signed a RM308m agreement with Johor Bahru City Council to construct and develop a 15-storey Grade-A office tower, with gfa of 0.45m sf at One Bukit Senyum in Johor. There is also a potential RM35m supplemental agreement not awarded at this stage for the interior design of the tower.

*Trendlines: Received US$2.8m investment from Braun for one of its portfolio companies ApiFix, which develops minimally invasive and non-fusion spinal implant system to treat scoliosis.

*Thakral Corp: 50% owned JV Thakral Japan Properties invested in a 105-room business hotel property, the Hotel Oaks Reaze Tsukamoto, located at Osaka, Japan.*Equation: Proposed placement of 380m new shares (5.9% of share capital) at 0.99¢ each to three subscribers Teo Khiam Chong (58%), Chen Dawei (26%) and Island Asset Management (16%). Net proceeds of $3.8m are intended for expansion through acquisitions and JVs.

*Citic Envirotech: Proposed 1-into-2 stock split in a bid to improve trading liquidity, and to broaden shareholding base.

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