Tuesday, December 6, 2016

SG Market (06 Dec 16)

Blue chips may track overnight gains on Wall Street on funds inflow as the Trump rally continues, although upside might be capped by an overbought market.

Regional bourses in Tokyo (+1%), Seoul (+1.1%) and Sydney (+0.7%) opened firmer.Technically, the overstretched STI looks poised test the 2,950 topside resistance, while underlying support is seen at the 2,882 breakaway gap.

Stocks to watch:
*UOL: Maybank KE initiates on UOL with Buy and TP of $7.39 (27% upside), implying a 24% discount to RNAV. Risk-averse market will favour its conservative trading portfolio and strong recurring income. Downside supported by its stub value, which is currently at a 42% discount to its underlying assets. Recommend a switch from City Dev (Hold, TP: $8.90) for Singapore property exposure.

*Ascendas REIT: Proposing to acquire DSO National Laboratories buildings and DNV GL Technology Centre for $420m from sponsor Ascendas. Deal will be partially funded by issuance of new units amounting $100m. The acquisition is expected to generate 6% NPI yield in the first year, and would have been accretive to FY3/16 DPU by 0.059¢ to $0.1542 on a proforma basis.

*Super: Flat 3Q16 net profit of $7.4m (-0.1%) missed estimates. Revenue slipped 1.2% to $119.5m due to weaker contributions from food ingredients (-4.8%) but partially cushioned by stable brand consumer sales (+0.7%). Gross margin widened 2ppt to 34.6% from sales mix shift, but bottom line was weighed by 9% increase in admin expenses due to severance expenses related to the consolidation of its non-dairy creamer facilities in Singapore. Maybank KE has Hold call with TP of $1.30.

*Sabana REIT: Divesting 218 Pandan Loop to X Properties Inc for $14.8m. The property has a gfa of 50.374 sf, representing about 1.1% of its portfolio. The industrial trust expects to book a gain of $1.8m from the sale and proceeds will be used to repay borrowings, pursue acquisition opportunities and for working capital purposes.

*8Telecom: Granted a facilities-base operations licence by the IMDA. This would allow it to utilise 1.79-1.8 GHz spectrum to provide dedicated LTE network services to the public transportation, public safety, security, surveillance and other vertical industries.

*Samudera: Expects to record a net loss for 4Q16 and FY16 due to provisions for impairment of its fleet as well as bad debt for Hanjin Shipping, which filed for receivership.

*Pacific Radiance: Executive Director Mok Weng Vai was arrested by CPIB on 2 Dec, on the suspicion of an offence under Section 6(c) of the Prevention of Corruption Act (Cap. 241).*SMJ: Investing US$0.2m in 33:47:20 JVCo, PT Spektrum with Jusuf Wijaya and Gergorious Janus. Spektrum will supply and distribute carpets and other furnishing materials in Indonesia.

*YuuZoo: Launched YuuWallet, an e-wallet that enables secure payments and money transfer without credit cards. *Civmec: Incorporated ForgacsValco with JV partner Valco Group. ForgacsValco will provide repair, overhaul and testing services of valves in the oil & gas, water, mining and defence markets.

*MS Holdings: Profit warning

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