SG Market (09 Dec 16)

The market is likely to trade sideways, as any positive sentiment overflowing from Wall Street and higher oil prices could be met with profit-taking amid an overbought market.

Regional bourses opened mixed, with Tokyo (+0.6%) and Sydney (+0.3%) stronger, and Seoul (-0.4%) lower.Technically, the overstretched STI could face some resistance at the 2,960 triple-top, with next objective at 3,040. Underlying support is at the 2,882 breakaway gap.

Stocks to watch:
*Property: Consultant JLL expects the recent mild recovery in private residential transactions to spill into 2017, as buyers feel that residential prices have fallen to more acceptable levels. However, expected higher interest rates will cap home demand and price upside. MKE’s top call is UOL (Buy, TP SGD7.39).

*SGX: Nov securities turnover jumped on renewed market favour to $29.3b (+51% y/y, +49% m/m), with daily average turnover value at $1.3b (+37% y/y, +43% m/m). Derivatives volume totalled 16.6m contracts (+22% y/y, +43% m/m) on stronger performance across equity index (+10% y/y, +36% m/m) and FX futures (+51% y/y, +41% m/m) volume.

*SMM: Denied that it is putting up PPL Shipyard or any other yards for sale. This came as a response from a press query, as SMM was understood to have sought valuation for one or more of PPL’s assets.

*Wilmar: South African subsidiary Wilmar Continental Edible Oils and Fats was raided as part of an industry-wide investigation by the Competition Commission.

*Sabana REIT: Entered into a put and call option agreement with LHN Group to purchase a six-storey single-user light industrial building at 72 Eunos Avenue 7 for $20m conditional upon HDB’s approval. The building has a GFA of 67,977 sf with a remaining lease of 24 years. Upon completion of the acquisition, LHN will lease back 71% of the total GFA of the building for 10 years and be appointed as the property’s manager.

*Low Keng Huat: 3QFY17 net profit plunged 74.4% y/y to $3m, as 1) gross margin normalised from 104% to 41.8% on the absence of cost writeback and 2) Other income plunged 76% to $2.5m, due to an absence of disposal gains. Revenue of $12.4m (-33.7%) was dragged by lower construction (-50%), hotel and F&B (-25.5%), and investments (-2.2%) performance, on top of zero contribution from its development business (3QFY16: $$3.2m) as it sold no residential units during the quarter. NAV/share at $0.88.

*Vibrant: 2QFY17 net profit surged 159.5% y/y to $9m on stronger associates’ contributions of $3.8m (+572.4%) from the sale of strata units at GSH Plaza. Revenue slipped 4.5% to $45m due to lower warehousing revenue, partially offset by contributions from its housing project in Jiangyin, China. Gross margin expanded to 34% (+7.4ppt) on the cost rationalisation in its freight and logistics business, as well as divestment of a loss making arm. Bottomline was further supported by FV gains of $3.4m (2QFY17: $1.6m loss), FX gains of $1.7m (2QFY17: $0.5m) as well as $1.2m in divestment gains. NAV/share at $0.63.

*Hotel Properties: Acquired an effective 73.99% stake in Boathouse Kata for 44.6m baht. In addition, it acquired 539.8m baht worth of notes issued by Boathouse. Boathouse owns a 38-unit boutique resort at Kata Beach, Phuket, Thailand.

*MMP Resources: Entered into a settlement agreement with its parent, Primeforth to commence repayment of $1m worth of fees owing to Magnum Energy from 1 Apr ’17.