The market could take a pause into the Lunar New Year holiday but sentiment could be supported by surprisingly strong Dec industrial production and Trump reflation trade.
Regional bourses opened higher in Tokyo (+0.3%) and Sydney (+0.6%). Korean markets are closed for public holiday.Technically, the STI has breached above the 3,040 resistance, with next objective at 3,110, while underlying support is at 2,980.
Stocks to watch:
*Economy: Industrial Production (IP) surged 21.3% in Dec, led by robust electronics sector (+49.4%), extending its double-digit growth into the seventh month on the back of semiconductor production. The biomedical cluster surged 44.9%. Excluding this typically volatile cluster, IP grew 16.1%. This could lift 4Q GDP growth to 2%, above the flash estimate of 1.8%. MKE is forecasting growth to strengthen to 2.5% in 2017, at upper end of MTI’s 1-3% range.
*Keppel Corp: 2016 net profit plunged 48.9% to a decade-low of $783.9m against $906.9m estimate, as 4Q earnings of $143.1m (-64.7%) was battered by $313m of provisions and impairments. O&M fell into the red (-$138m), while property was the top contributor ($269m). Despite rebounding oil prices, management does not envisage any quick recovery in the offshore business given low rig utilization rates and supply overhang and has slashed 35% of its workforce, mothballed two overseas yards and closing three more. Orderbook shrank to $3.7b as orders dried up since Aug. Final DPS cut to $0.12, bring FY16 payout to $0.20 (FY15: $0.34). MKE maintains its Sell with TP of $4.57.
*Mapletree Greater China Commercial Trust: 3QFY17 DPU of 1.778¢ (-4.1%) matched estimates. Revenue of $87.8m (-0.5%) and NPI of $71.4m (-1.5%) were dragged by weaker CNY against SGD, and lower contribution from Gateway Plaza due to the implementation of VAT, although partly offset by higher rental income from Festival Walk. Occupancy improved to 98.6% (+2.9 ppts q/q). Aggregate leverage remained high at 40.5% (+0.6 ppts q/q). NAV/share at $1.213.
*Starhill Global: 2QFY17 DPU slid 4.5% to 1.26¢, on track with estimates. Gross revenue of $54.1m (-2.8%) and NPI of $41.4m (-5.4%) were dragged by lower occupancies and average rents at Ngee Ann City (Office) and Wisma Atria, as well as reduced takings in China from mall repositioning and the divestment of a mall in Japan. Portfolio occupancy improved to 95.4% (+0.6 ppts q/q), while aggregate leverage stood at 35.2% (+0.1ppt q/q) with average interest rate of 3.16%. NAV/unit at $0.92.
*OUE Commercial REIT: 4Q16 DPU slumped 13.2% to 1.18¢, as distributable income fell 12.5% to $15.4m due to a one-off capital distribution. This brought FY16 DPU to 5.18¢ (+18.3%), in line with expectations. Revenue of $45m (+11.6%) and NPI of $34.8m (+17.3%) was led by contribution from One Raffles Place (acquired in Oct '15) and improved performances at OUE Bayfront and Lippo Plaza. Portfolio occupancy inched up to 94.8% (+0.4ppt q/q) with WALE of 2.5 years. Aggregate leverage stood at 39.8% (-1ppt q/q), with average cost of debt at 3.6% and tenor of 1.5 years. NAV/unit at $0.93.*Frasers Hospitality Trust: 1QFY17 results met. DPS fell 18.9% to 1.3258¢, due to a 22% increase in unitbase post rights issue in Sep '16, while distributable income rose 3.1% to $24.4m, thanks to the absence of a payment top up and distribution to perps holders. Revenue surged 26.1% to $39.6m, boosted by the addition of Novotel Melbourne on Collins and Maritim Hotel Dresden, as well as better performance of Sydney properties, while NPI rose at a slower clip to $30.5m (+15.9%) due to higher property expenses. Aggregate leverage stood at 33.7% (-4ppt). NAV/unit at $0.7479..
*Ascendas Hospitality Trust: 3QFY17 results slight beat as DPU jumped 13.1% to 1.64¢. Revenue grew 8% to $59.2m, while NPI advanced at a faster pace of 12.9% to $26.4m, thanks to stronger contributions from Japan (+35.5%), China (+11.4%) and Australia (+9.7%), but pared by contraction in Singapore (-5.2%). Aggregate leverage edged higher to 33.3% (+0.9 ppts q/q). NAV/share at $0.85.
*Fortune REIT: FY16 results in line with DPU higher at HK$0.4923 (+5%), on distributable income of HK$935.2m (+5.7%). Revenue and NPI of HK$1.98b (+5%) and HK$1.41b (+6.5%) was attributable to healthy rental portfolio reversions, as well as the full-year contribution of increased rental from Belvedere Square post-AEI, partially offset by a slip in portfolio occupancy to 96.7% (FY15: 98.8%, 1H16: 96.4%). Aggregate leverage stood at 29.5% (1H16: 29.8%), with average debt cost of 2.4% (1H16: 2.39%). NAV/share at HK$12.90.
*Tuan Sing: 4Q16 net profit fell 13% to $12.5m, dragged by the absence of an income tax credit. Revenue dropped 29% to $101.7m on lower recognition in property development revenue, while the bottom line was partially cushioned by a FX gain from the stronger AUD and firmer results from JV/associates. NAV/share at $0.777.
*First Resources: Dec FFB harvest surged 23.9% to 260,503 tonnes, on increased yield of 1.6 tonnes/ha (Dec '15: 1.4 tonnes/ha). CPO production soared 26.3% to 63,012 tonnes, on improved extraction rate of 22.5% (Dec '15: 22.2%). MKE last had a Hold on the counter with TP of $1.97.
*Cogent: Awarded a 2.5ha land in Jurong Island to build and operate the only full-fledged container depot. This adds to the recently awarded 5.9ha container depot at Tuas South and the patented Sky Depot at the Cogent One Stop Logistics Hub, both of which are expected to be fully operational by the 2Q17.
*Fragrance: Commenced construction on its Australian mixed-use development project, Premier Tower, which will house 780 residential units, retail spaces and a 187 room hotel. Slated for completion in 2021, the project has already secured sales for 70% of its residential units.
*Mencast: Entered into an MOU with Houston Technology Center-Asia to jointly offer technology innovation, incubation, acceleration and commercialisation assistance, to Singapore entrepreneurs and emerging hard science technology companies enabling them to accelerate and commercialise their technologies.
*ISOTeam: Awarded contracts worth $18m for works including upgrading, repair and waterproofing projects for public housing, as well as the supply and installation of timber flooring for Resorts World at Sentosa. Works are expected for completion between Jul '17 and Aug '18.
*IHC: Voluntary trading suspension, for the new board of directors to determine the current state of affairs of the company.
Friday, January 27, 2017
Thursday, January 26, 2017
SG Market (26 Jan 17)
The market could take a much-needed breather as optimism over Trump’s pro-growth stance could be met with profit-taking pressure.Regional bourses in Tokyo (+1.1%), Seoul (+0.2%) and Sydney (+0.4%) opened higher. Technically, the overbought STI needs to clear the 3,040 resistance before moving up to next objective at 3,110, while underlying support is at 2,980.
Stocks to watch:
*Mapletree Commercial Trust: 3QFY17 results slightly ahead of estimates as DPU jumped 9.6% to 2.28¢ despite a larger post rights unit base. Gross revenue and NPI surged to $108.8m (+47.4%) and $84.4m (+49%) respectively, driven by contributions from newly acquired Mapletree Business City 1 and 13.5% rental uplift at VivoCity. Portfolio occupancy improved 0.2ppt q/q to 99%, while aggregate leverage stood at 37% (-0.3ppt q/q). Trades at 6.2% annualised yield and 1.1x P/B.
*OUE Hospitality Trust: 4Q16 DPS of 1.36¢ (-20%) was diluted by an enlarged unit base (+34.4%) post-rights issue in Apr ’16, bringing FY16 DPS to 4.61¢ (-29.6%), beating estimates. Gross revenue ($33.2m, +0.7%) was supported by growth in its hotel business (+2.9%) with higher master lease from Crowne Plaza, partially offset by weakness in its retail segment (-4.8%). NPI rose 2.5% to $29.6m, buttressed by lower retail property expenses. Retail occupancy rose 5.1ppt q/q to 94.1%, while aggregate leverage grew 0.8ppt q/q to 38.1%. Trading at 7.9% annualised yield and 0.9x P/B.
*Keppel T&T: 4Q16 net profit slumped 93.1% YoY to $3.1m on lower data centre fair value gains of $4m (-87.4%). This brought FY16 net profit to $105.1m (+14.9%). Revenue fell 5.5% to $49.7m due to lower takings from its logistics and data centre divisions. Bottomline was further hurt by lower contributions ($9.5m, -69.7%) from JV/associates. First and final DPS hiked to 4.5¢ (4Q15: 3.5¢).
*CDL Hospitality Trust: 4Q16 DPU of 3.11¢ (+3.3%) was ahead of street estimates. Distributable income rose 3.8% to $30.9m from capital distribution. Revenue ($48.3m, -3.6%) was weighed by weaker Singapore/Maldives performance, partially offset by Grand Millenium Auckland. NPI ($37.7m, -0.3%) fell at a slower clip on lower property expenses. Singapore occupancy slumped 7.1ppt q/q to 83.6%, while aggregate leverage climbed 0.1ppt to 36.8%. Trading at 8.9% annualised yield and 0.9x P/B.
*CapitaLand RCT: 4Q16 DPU of 2.37¢ (-8.5%) brought full year DPU to 10.05¢ (-5.2%), meeting expectations. Quarter distributable income fell 5.6% to $20.6m from a weaker Rmb. Revenue (Rmb275.4m, +8.7%) and NPI (Rmb169.1m, +6.5%) were boosted by new contribution from CapitaMall Xinnan (acquired: 30 Sep), offset by higher property taxes. Occupancy improved 0.7ppt q/q to 95.9%, while aggregate leverage fell 1.4ppt to 35.3%. Trading at 6.7% annualized yield and 0.9x P/B.
*Viva Industrial Trust 4Q16 results met estimates with a DPU of 1.76¢ (+7.7%), as a stronger distributable income of $15.9m (+27.9%) overshadowed dilution of a larger unit base. Gross revenue and NPI soared to $25.6m and $18.1m respectively, on three new properties acquired since Nov '15, and improved occupancy at Viva Business Park. Overall portfolio occupancy rose 1.2ppt q/q to 89.8%, with WALE of 3.1 years. Aggregate leverage was pared to 37.2% (-2.6ppt q/q), but has risen back to 39.4% post acquisition of 6 Chin Bee Ave in Jan '17. Average debt cost at 4% and tenor at 3.2 years. Trades at 9.2% yield and 0.97x P/B..
*Sabana REIT: 4Q16 DPU slid 16.7% to 1.25¢, on a sharp drop in distributable income to $9.3m (-16.1%). Payout would plunge to 0.88¢ (-41.3%) if dilution from rights issue on 26 Jan '17 is accounted. Gross revenue tumbled to $22.5m (-8.2%) due to negative rental reversion, property divestments, and lower occupancy at some assets post conversion to multi-tenancy arrangement, which also gave rise to higher property expenses. Consequently, NPI fell to $13.9m (-14.7%). Portfolio occupancy declined 2ppt q/q to 87.2%, with WALE of 2.9 years. Aggregate leverage crept up to 43.2% (+1.7ppt q/q. 40% post-rights) amid a $40m fair value loss on investment properties, which slashed NAV/unit to $0.75 (-7.4% q/q). Trading at 9.4% annunalized yield post-rights, and 0.5x P/B pre-rights.
*Sembcorp Industries: Its 49% owned, Rmb4.67b ($966.5m) 1,320-MW power plant in Chongqing, China commenced full commercial operations but is not expected to contribute meaningfully in FY17.
*Perennial REH/ Breadtalk/Singhaiyi/Boustead Projects: Consortium led by Perennial is selling 70% of its stake in TripleOne Somerset for $305m. Perennial will receive $101m for its 20.2% stake, and book a $34.3m gain, whilst retaining a 30% share in the mall. Singhaiyi/Boustead/Breadtalk are completely exiting their 20%/5.5%/5.3% stakes.
*Fragrance Group: Acquiring The Imperial Hotel, a freehold four-star hotel located at Blackpool, UK, with total land area of 9,388 sqm. The hotel has hosted royalty, politicians and famous names since it was build in 1867. Total consideration for the property is 12.8m pounds.
*Cambridge Industrial Trust: Proposed to divest 55 Ubi Avenue 3, a five-storey light industrial building with GFA of 141,135 sf and remaining lease tenure of 39 years, for $22.138m (book value: $22m). The sale is subject to HDB's approval.
*SIIC Environment: Acquired CITIC Envirotech Water Resource (Hegang) from CITIC Envirotech for Rmb112.1m ($23.2m). The company operates two waste water treatment plants and a reclaimed water project with total design capacity of 110,000 tpd in Hegang, China.
*Equation Summit: Increased capital in subsidiary Disa Digital Safety, which rolled out its point-of-sale activation system for digital devices at all US Walmart stores, by $11.5m to $15.3m. The injection is via inter-company loan of $7.86m, and placement proceeds amounting to $3.64m.
*AusGroup: Terminated its lease agreement with Boustead Projects for the premises at 36 Tuas Road as it winds down its operations in Singapore. The agreement will see it pay $6.9m to Boustead after forfeiture of a security deposit over two years.
*Innovalues: Set to be taken over by Northstar and delisted on 17 Mar after 95% of shareholders present and voting at a court-directed meeting approved the acquisition.
Stocks to watch:
*Mapletree Commercial Trust: 3QFY17 results slightly ahead of estimates as DPU jumped 9.6% to 2.28¢ despite a larger post rights unit base. Gross revenue and NPI surged to $108.8m (+47.4%) and $84.4m (+49%) respectively, driven by contributions from newly acquired Mapletree Business City 1 and 13.5% rental uplift at VivoCity. Portfolio occupancy improved 0.2ppt q/q to 99%, while aggregate leverage stood at 37% (-0.3ppt q/q). Trades at 6.2% annualised yield and 1.1x P/B.
*OUE Hospitality Trust: 4Q16 DPS of 1.36¢ (-20%) was diluted by an enlarged unit base (+34.4%) post-rights issue in Apr ’16, bringing FY16 DPS to 4.61¢ (-29.6%), beating estimates. Gross revenue ($33.2m, +0.7%) was supported by growth in its hotel business (+2.9%) with higher master lease from Crowne Plaza, partially offset by weakness in its retail segment (-4.8%). NPI rose 2.5% to $29.6m, buttressed by lower retail property expenses. Retail occupancy rose 5.1ppt q/q to 94.1%, while aggregate leverage grew 0.8ppt q/q to 38.1%. Trading at 7.9% annualised yield and 0.9x P/B.
*Keppel T&T: 4Q16 net profit slumped 93.1% YoY to $3.1m on lower data centre fair value gains of $4m (-87.4%). This brought FY16 net profit to $105.1m (+14.9%). Revenue fell 5.5% to $49.7m due to lower takings from its logistics and data centre divisions. Bottomline was further hurt by lower contributions ($9.5m, -69.7%) from JV/associates. First and final DPS hiked to 4.5¢ (4Q15: 3.5¢).
*CDL Hospitality Trust: 4Q16 DPU of 3.11¢ (+3.3%) was ahead of street estimates. Distributable income rose 3.8% to $30.9m from capital distribution. Revenue ($48.3m, -3.6%) was weighed by weaker Singapore/Maldives performance, partially offset by Grand Millenium Auckland. NPI ($37.7m, -0.3%) fell at a slower clip on lower property expenses. Singapore occupancy slumped 7.1ppt q/q to 83.6%, while aggregate leverage climbed 0.1ppt to 36.8%. Trading at 8.9% annualised yield and 0.9x P/B.
*CapitaLand RCT: 4Q16 DPU of 2.37¢ (-8.5%) brought full year DPU to 10.05¢ (-5.2%), meeting expectations. Quarter distributable income fell 5.6% to $20.6m from a weaker Rmb. Revenue (Rmb275.4m, +8.7%) and NPI (Rmb169.1m, +6.5%) were boosted by new contribution from CapitaMall Xinnan (acquired: 30 Sep), offset by higher property taxes. Occupancy improved 0.7ppt q/q to 95.9%, while aggregate leverage fell 1.4ppt to 35.3%. Trading at 6.7% annualized yield and 0.9x P/B.
*Viva Industrial Trust 4Q16 results met estimates with a DPU of 1.76¢ (+7.7%), as a stronger distributable income of $15.9m (+27.9%) overshadowed dilution of a larger unit base. Gross revenue and NPI soared to $25.6m and $18.1m respectively, on three new properties acquired since Nov '15, and improved occupancy at Viva Business Park. Overall portfolio occupancy rose 1.2ppt q/q to 89.8%, with WALE of 3.1 years. Aggregate leverage was pared to 37.2% (-2.6ppt q/q), but has risen back to 39.4% post acquisition of 6 Chin Bee Ave in Jan '17. Average debt cost at 4% and tenor at 3.2 years. Trades at 9.2% yield and 0.97x P/B..
*Sabana REIT: 4Q16 DPU slid 16.7% to 1.25¢, on a sharp drop in distributable income to $9.3m (-16.1%). Payout would plunge to 0.88¢ (-41.3%) if dilution from rights issue on 26 Jan '17 is accounted. Gross revenue tumbled to $22.5m (-8.2%) due to negative rental reversion, property divestments, and lower occupancy at some assets post conversion to multi-tenancy arrangement, which also gave rise to higher property expenses. Consequently, NPI fell to $13.9m (-14.7%). Portfolio occupancy declined 2ppt q/q to 87.2%, with WALE of 2.9 years. Aggregate leverage crept up to 43.2% (+1.7ppt q/q. 40% post-rights) amid a $40m fair value loss on investment properties, which slashed NAV/unit to $0.75 (-7.4% q/q). Trading at 9.4% annunalized yield post-rights, and 0.5x P/B pre-rights.
*Sembcorp Industries: Its 49% owned, Rmb4.67b ($966.5m) 1,320-MW power plant in Chongqing, China commenced full commercial operations but is not expected to contribute meaningfully in FY17.
*Perennial REH/ Breadtalk/Singhaiyi/Boustead Projects: Consortium led by Perennial is selling 70% of its stake in TripleOne Somerset for $305m. Perennial will receive $101m for its 20.2% stake, and book a $34.3m gain, whilst retaining a 30% share in the mall. Singhaiyi/Boustead/Breadtalk are completely exiting their 20%/5.5%/5.3% stakes.
*Fragrance Group: Acquiring The Imperial Hotel, a freehold four-star hotel located at Blackpool, UK, with total land area of 9,388 sqm. The hotel has hosted royalty, politicians and famous names since it was build in 1867. Total consideration for the property is 12.8m pounds.
*Cambridge Industrial Trust: Proposed to divest 55 Ubi Avenue 3, a five-storey light industrial building with GFA of 141,135 sf and remaining lease tenure of 39 years, for $22.138m (book value: $22m). The sale is subject to HDB's approval.
*SIIC Environment: Acquired CITIC Envirotech Water Resource (Hegang) from CITIC Envirotech for Rmb112.1m ($23.2m). The company operates two waste water treatment plants and a reclaimed water project with total design capacity of 110,000 tpd in Hegang, China.
*Equation Summit: Increased capital in subsidiary Disa Digital Safety, which rolled out its point-of-sale activation system for digital devices at all US Walmart stores, by $11.5m to $15.3m. The injection is via inter-company loan of $7.86m, and placement proceeds amounting to $3.64m.
*AusGroup: Terminated its lease agreement with Boustead Projects for the premises at 36 Tuas Road as it winds down its operations in Singapore. The agreement will see it pay $6.9m to Boustead after forfeiture of a security deposit over two years.
*Innovalues: Set to be taken over by Northstar and delisted on 17 Mar after 95% of shareholders present and voting at a court-directed meeting approved the acquisition.
Wednesday, January 25, 2017
SG Market (25 Jan 17)
The market could track higher on renewed Wall Street’s optimism over Trump’s pro-growth executive action despite lingering fears over his protectionist policies.
Regional bourses in Tokyo (+1.7%), Seoul (+0.3%) and Sydney (+0.3%) opened firmer.Technically, the overstretched STI has barely breached the 3,040 resistance with next objective at 3,110, while underlying support now sits at 2,980.
Stocks to watch:
*M1: 4Q16 net profit dropped 27.1% to $31.8m, taking FY16 earnings to $149.7m (-16.1%), missing estimates. For the quarter, revenue edged up 1.9% to $313.9m, buoyed by firmer handset sales (+14.2%), but was weighed by lower service revenue of $201m (-3.9%). While customer base rose 6% to 2.2m, ARPU fell across the board and customer acquisition cost jumped 10.1%, compressing EBITDA margin to 35.8% (-2ppt q/q). Challenging operating environment expected to persist. Final DPS shaved to 5.9¢, bringing full year payout to 12.9¢ (FY15: 15.3¢). MKE maintains Sell and cuts TP to $1.85 from $1.90.
*Keppel REIT: 4Q16 DPU of 1.48¢ (-11.9%) disappointed, bringing FY16 payout to 6.37¢ (-4.9%). Quarter revenue and NPI slipped to $40m (-6.5%) and $31.4m (-9.6%) respectively as 77 King Street was divested 1Q16, while Bugis Junction Towers (-15.3%) saw reduced takings. Occupancy stood at 99.2% (-0.3ppt q/q), while aggregate leverage held steady at 38.5%. Trading at 5.7% annualised yield and 0.7x P/B. MKE maintains Buy but shaves TP to SGD1.18 from SGD1.21.
*Mapletree Industrial Trust: 3QFY17 DPU of 2.83¢ (+0.4%) met expectations despite a slightly larger unit base (+0.9%). Growth in distributable income ($51.1m, +1.6%) was pared by higher borrowing cost (+7.8). Gross revenue climbed 1.4% to $84.5m, while NPI rose faster 2.5% clip to $63.4m on higher rental rates, contribution from Phase 1 of HP built-to-suit property and lower property expenses. Occupancy slipped to 92.1% (-0.4ppt q/q), while aggregate leverage stood at 29.4% (+0.4ppt q/q). Trades at 6.9% annualised yield and 1.2x P/B.
*Suntec REIT: 4Q16 DPU of 2.6¢ (-5.6%) met consensus estimates, while distributable income fell 4.9% to $66.1m, from the divestment of Park Mall and cessation MBFC income support. Although revenue inched up 1.6% to $88.9m from contribution of 177 Pacific Highway in Sydney, NPI fell 2.9% to $60.7m, from higher expenses at Suntec Singapore. Office and retail occupancies stood at 98.6% (-0.7%ppt q/q) and 97.7% (+0.4ppt) respectively, while aggregate leverage held at 37.7% (-0.1ppt). Trading at 6.2% annualised yield and 0.8x P/B.
*ParkwayLife REIT: 4Q16 results in line. DPU fell 9.2% to 3.06¢ due to the absence of one-off distribution of divestment gains of seven Japan nursing homes. Recurring distributable income rose 2.3% to $18.5m. Revenue of $27.7m (+5.4%) and NPI of $25.6m (+4%) were driven by a new nursing home in Japan, higher Singapore rents, and the stronger yen. Gearing stood at 36.3% (-1.9% q/q). Trading at 5.1% annualised yield and 1.4x P/B.
*Cambridge Industrial Trust: 4Q16 results met estimates even as DPU and distributable income fell to 0.996¢ (-12.6%) and $13m (-12%) on absence of capital distribution. Gross revenue slid 2.5% to $27.8m due to several master lease expiries and divestment of properties. NPI dropped 8.8% on increased multi-tenant building conversion costs. Portfolio occupancy rose 1.1ppt q/q to 94.7%, with WALE of 3.7 years. Aggregate leverage ticked up 0.6ppt to 37.5%. NAV/unit shrank 5.8% to $0.634 after it booked a $44.2m fair value loss on investment properties..
*Cosco: Its 51%-owned COSCO Shipyard Group won a shipbuilding contract from Everbright Int'l (HK) Offshore to construct a multi-purpose wind farm support unit scheduled for delivery in 4Q18 for an undisclosed amount. It has also granted an option to Everbright to build another similar unit within six months from the contract.
*Frasers Centrepoint: Hospitality arm Frasers Hospitality is launching Fraser Suites Kuningan, a 210-unit serviced residence in Jakarta. This is the fourth of nine properties that it plans to launch in Jakarta by 2019.
*MTQ: 3QFY17 net losses deepened to $4.3m (3QFY16: -1.1m) as revenue sank to $31.2m (-29.4%) due to lower activity levels in its oilfield and subsea divisions. Gross margin contracted to 17% (-4.8ppts) on pricing pressures. Bottom line was further affected by absence of disposal gains as well as insurance claims. NAV/share at $0.64.
*Yangzijiang Shipbuilding: Invested Rmb196.8m for a 32.8% stake in Wuxi Jinrui Zhonghe Investment Enterprise which is an investment holding company.
*Chasen: Its relocation business has secured contracted worth $20.6m for FY17 with projects in the US and Singapore spilling over into FY18.
*MoneyMax Financial Services: Incorporating three new 51:49 JV entities with an existing JV partner Chong Mei Sang, paving the way to acquire 11 Malaysian prawn broking businesses with valid licenses.*Roxy-Pacific: Acquiring five adjoining two-storey shophouses along Upper Bukit Timah Road for $17m. The freehold residential site has total land area of 10,256 sf with a plot ratio of 2.5, translating into potential GFA of 25,640 sf, and cost of $663 psf.
*Yuuzoo: Sold a franchise license to Congo-based emerging telco, Telkonex to tap on growing e-commerce, digital advertising, mobile games and mobile payments potential in the market. The licence will also provide its platforms such as YuuWallet and its marketplace with a stronger footprint in Africa.
*Sarine: Appointed David Block as CEO wef 1 May ’17 following Uzi Levami’s decision to retire. Levami will continue serving as executive director.
*Aspial Corp: Fully redeemed the outstanding $55.75m 4.5% notes due on 23 Jan 17.
Regional bourses in Tokyo (+1.7%), Seoul (+0.3%) and Sydney (+0.3%) opened firmer.Technically, the overstretched STI has barely breached the 3,040 resistance with next objective at 3,110, while underlying support now sits at 2,980.
Stocks to watch:
*M1: 4Q16 net profit dropped 27.1% to $31.8m, taking FY16 earnings to $149.7m (-16.1%), missing estimates. For the quarter, revenue edged up 1.9% to $313.9m, buoyed by firmer handset sales (+14.2%), but was weighed by lower service revenue of $201m (-3.9%). While customer base rose 6% to 2.2m, ARPU fell across the board and customer acquisition cost jumped 10.1%, compressing EBITDA margin to 35.8% (-2ppt q/q). Challenging operating environment expected to persist. Final DPS shaved to 5.9¢, bringing full year payout to 12.9¢ (FY15: 15.3¢). MKE maintains Sell and cuts TP to $1.85 from $1.90.
*Keppel REIT: 4Q16 DPU of 1.48¢ (-11.9%) disappointed, bringing FY16 payout to 6.37¢ (-4.9%). Quarter revenue and NPI slipped to $40m (-6.5%) and $31.4m (-9.6%) respectively as 77 King Street was divested 1Q16, while Bugis Junction Towers (-15.3%) saw reduced takings. Occupancy stood at 99.2% (-0.3ppt q/q), while aggregate leverage held steady at 38.5%. Trading at 5.7% annualised yield and 0.7x P/B. MKE maintains Buy but shaves TP to SGD1.18 from SGD1.21.
*Mapletree Industrial Trust: 3QFY17 DPU of 2.83¢ (+0.4%) met expectations despite a slightly larger unit base (+0.9%). Growth in distributable income ($51.1m, +1.6%) was pared by higher borrowing cost (+7.8). Gross revenue climbed 1.4% to $84.5m, while NPI rose faster 2.5% clip to $63.4m on higher rental rates, contribution from Phase 1 of HP built-to-suit property and lower property expenses. Occupancy slipped to 92.1% (-0.4ppt q/q), while aggregate leverage stood at 29.4% (+0.4ppt q/q). Trades at 6.9% annualised yield and 1.2x P/B.
*Suntec REIT: 4Q16 DPU of 2.6¢ (-5.6%) met consensus estimates, while distributable income fell 4.9% to $66.1m, from the divestment of Park Mall and cessation MBFC income support. Although revenue inched up 1.6% to $88.9m from contribution of 177 Pacific Highway in Sydney, NPI fell 2.9% to $60.7m, from higher expenses at Suntec Singapore. Office and retail occupancies stood at 98.6% (-0.7%ppt q/q) and 97.7% (+0.4ppt) respectively, while aggregate leverage held at 37.7% (-0.1ppt). Trading at 6.2% annualised yield and 0.8x P/B.
*ParkwayLife REIT: 4Q16 results in line. DPU fell 9.2% to 3.06¢ due to the absence of one-off distribution of divestment gains of seven Japan nursing homes. Recurring distributable income rose 2.3% to $18.5m. Revenue of $27.7m (+5.4%) and NPI of $25.6m (+4%) were driven by a new nursing home in Japan, higher Singapore rents, and the stronger yen. Gearing stood at 36.3% (-1.9% q/q). Trading at 5.1% annualised yield and 1.4x P/B.
*Cambridge Industrial Trust: 4Q16 results met estimates even as DPU and distributable income fell to 0.996¢ (-12.6%) and $13m (-12%) on absence of capital distribution. Gross revenue slid 2.5% to $27.8m due to several master lease expiries and divestment of properties. NPI dropped 8.8% on increased multi-tenant building conversion costs. Portfolio occupancy rose 1.1ppt q/q to 94.7%, with WALE of 3.7 years. Aggregate leverage ticked up 0.6ppt to 37.5%. NAV/unit shrank 5.8% to $0.634 after it booked a $44.2m fair value loss on investment properties..
*Cosco: Its 51%-owned COSCO Shipyard Group won a shipbuilding contract from Everbright Int'l (HK) Offshore to construct a multi-purpose wind farm support unit scheduled for delivery in 4Q18 for an undisclosed amount. It has also granted an option to Everbright to build another similar unit within six months from the contract.
*Frasers Centrepoint: Hospitality arm Frasers Hospitality is launching Fraser Suites Kuningan, a 210-unit serviced residence in Jakarta. This is the fourth of nine properties that it plans to launch in Jakarta by 2019.
*MTQ: 3QFY17 net losses deepened to $4.3m (3QFY16: -1.1m) as revenue sank to $31.2m (-29.4%) due to lower activity levels in its oilfield and subsea divisions. Gross margin contracted to 17% (-4.8ppts) on pricing pressures. Bottom line was further affected by absence of disposal gains as well as insurance claims. NAV/share at $0.64.
*Yangzijiang Shipbuilding: Invested Rmb196.8m for a 32.8% stake in Wuxi Jinrui Zhonghe Investment Enterprise which is an investment holding company.
*Chasen: Its relocation business has secured contracted worth $20.6m for FY17 with projects in the US and Singapore spilling over into FY18.
*MoneyMax Financial Services: Incorporating three new 51:49 JV entities with an existing JV partner Chong Mei Sang, paving the way to acquire 11 Malaysian prawn broking businesses with valid licenses.*Roxy-Pacific: Acquiring five adjoining two-storey shophouses along Upper Bukit Timah Road for $17m. The freehold residential site has total land area of 10,256 sf with a plot ratio of 2.5, translating into potential GFA of 25,640 sf, and cost of $663 psf.
*Yuuzoo: Sold a franchise license to Congo-based emerging telco, Telkonex to tap on growing e-commerce, digital advertising, mobile games and mobile payments potential in the market. The licence will also provide its platforms such as YuuWallet and its marketplace with a stronger footprint in Africa.
*Sarine: Appointed David Block as CEO wef 1 May ’17 following Uzi Levami’s decision to retire. Levami will continue serving as executive director.
*Aspial Corp: Fully redeemed the outstanding $55.75m 4.5% notes due on 23 Jan 17.
Tuesday, January 24, 2017
SG Market (24 Jan 17)
Focus will be on the protectionist trade policies being rolled out by the new Trump administration and local corporate earnings.
Regional bourses opened mixed in Tokyo (-0.2%), Seoul (-0.2%) and Sydney (+0.5%).Technically, the STI remains in overbought territory with underlying support at 2,968 and topside resistance at 3,040.
Stocks to watch:
*Keppel DC REIT: 4Q16 results missed estimates as DPU of 1.31¢ (-20.1%) was diluted by an enlarged unit base arising from the acquisition of Keppel DC Singapore 3. This brought FY16 DPU to 6.14¢ (-5.7%). For the quarter. revenue grew 4.2% to $26.8m from increased contributions from Cardiff and Milan data centres, as well as higher variable income at its Singapore properties. NPI of $24.9m (+14.1%) was further lifted by lower property tax and expenses. Portfolio occupancy rose to 94.4% (+1.7ppt q/q) with WALE of 9.6 years (3Q16: 8.6 years), while aggregate leverage eased to 28.3% (-1.1ppt). NAV/share at $0.954.
*Mapletree Logistics Trust: Flat 3QFY17 of 1.87¢ was in line with estimates. Revenue of $95.5m (+7.4%) and NPI of $79.9m (+7.7%) were boosted by acquisitions/AEIs, as well as stronger performance in Hong Kong. However, distributable income of $46.8m (+0.8%) was crimped by a negative tax adjustment, while DPU was further diluted by increased distribution to perps holders. Occupancy slipped 0.3ppt q/q to 96.1% with WALE of 4.1 years. Aggregate leverage climbed 1.1% to 38.7%. NAV/unit at $1.03.
*Frasers Commercial Trust: Flat 1QFY17 DPU of 2.51¢ met expectations, while distributable income of $19.9m (+12%) was shored by capital distribution. Revenue of $39.7m (+0.1%) and NPI of $29.2m (-0.6%) stayed relatively flat as higher contribution from 357 Collins Street and a stronger AUD were offset by lower occupancy rates at China Square Central and Central Park due to redevelopment works and tenant adjustments. Overall portfolio occupancy was stable at 93% with WALE of 3.8 years, while aggregate leverage was unchanged at 36%. NAV/unit at $1.55.
*Ascott REIT: In line 4Q16; DPU slipped 1% y/y to 2.04¢, although distributable income rose 6% to $33.9m, which included a FX gain ($2m) arising from repayment of foreign currency bank loans with the divestment proceeds from Fortune Garden Apartments, and repayment of shareholders’ loan. Revenue grew 6% on increased contribution from recently-acquired Sheraton Tribeca New York Hotel in Apr '16, which lifted overall RevPAU by 2% to $148. However, excluding the acquisition, same-store-RevPAU tumbled 6% on weaker performances from China and UK assets. Aggregate leverage narrowed to 39.8% (-1.5ppt), and group remains on the lookout for accretive M&A opportunities in key gateway cities of Australia, Japan, Europe and the US. NAV/unit at $1.33.
*Cache Logistics Trust: 4Q16 results missed expectations as DPU tumbled 10.8% to 1.85¢ on a higher unit base, while distributable income fell 5.2% to $16.6m from increased finance costs and reduced capital distributions. Revenue and NPI rose to $27.3m (+13.5%) and $21.3m (+11.3%), respectively, driven by increased contribution from DHL Supply Chain Advanced Regional Centre and three Australian properties acquired in 4Q15. Portfolio occupancy remained stable at 96.4% with WALE of 3.9 years, while aggregate leverage crept up 1.9ppt q/q to 43.1%. NAV/unit at $0.78.
*Keppel Infra Trust: 4Q16 results met expectations although DPU was flat at 0.93¢, bringing FY16 DPU to 3.72¢ (+40.9%), post-merger of Keppel Merlimau Cogen in Jun '15. Quarter revenue fell to $152.2m (-5.2%) on lower tariffs at City Gas (-6.9%), reduced concessions (-27.9%) due to lower construction revenue following boiler upgrades in 4Q15, although partially offset by higher contribution from Basslink (+47.4%). NAV/share at $0.325..
*Soilbuild REIT: 4Q16 results in line despite a 2.7% slip in DPU to 1.57¢, which brought FY16 total payout to 6.091¢ (-6.1%), as an enlarged unit base offset the 4.1% growth in distributable income to $60.3m. Quarter revenue and NPI rose to $21.7m (+6.1%) and $18.9m (+8%), thanks to higher takings from Loyang Way, Bukit Batok Connection, Solaris and Eightrium properties. Overall portfolio occupancy slid to 89.6% (-5.2ppts q/q) with WALE of 3.4 years, while aggregate leverage stood at 37.6% (1.6ppts q/q). NAV/share at $0.72.
*UOL: Granted an option to purchase a residential freehold site at 45 Amber Road for $156m. The site currently holds a horticultural and gardening retail centre, which sits on a land area of 69,858 sf and plot ratio of 2.1, equating to a potential gfa of 146,702 sf ($1,063 psf ppr ex development charges).
*Genting HK: Expects to record a FY16 net loss in the range of US$500m-US$550m (FY15: US$2.1b net profit), mainly due an absence of a one-off accounting gain of US$1.57b and divestment gain of US658.6m, both arising from the partial stake sale in associate Norwegian Cruise Line (NCL) in 2015. Additionally, an impairment loss of ~US$300m will be taken on its remaining stake in NCL from a decline in fair value in late-2016. Further, group incurred a one-time start-up and marketing costs, as well as additional depreciation expenses related to its premium liner Crystal cruise brands and newly acquired German shipyards.
*Banyan Tree: Established 50:50 JVCo with China Vanke, via an asset injection of Banyan Tree's China properties to be determined by an independent valuation. The current book value of these assets is ~Rmb720m. In association with the JV, China Vanke will take a 5% equity take in Banyan Tree through a private placement at $0.60/share.
*IHC: EGM to remove current board members has been approved. Separately, OUE purchased 208.1m IHC shares on 23 Jan for $0.077 apiece, and has emerged as a substantial shareholder with a 12.5% stake.*Swing Media: Proposed placement of 8.5m new shares (19.1% share capital) at $0.60 each to seven individuals, to raise net proceeds of $5.1m intended for working capital (20%) and inorganic growth (80%).
Regional bourses opened mixed in Tokyo (-0.2%), Seoul (-0.2%) and Sydney (+0.5%).Technically, the STI remains in overbought territory with underlying support at 2,968 and topside resistance at 3,040.
Stocks to watch:
*Keppel DC REIT: 4Q16 results missed estimates as DPU of 1.31¢ (-20.1%) was diluted by an enlarged unit base arising from the acquisition of Keppel DC Singapore 3. This brought FY16 DPU to 6.14¢ (-5.7%). For the quarter. revenue grew 4.2% to $26.8m from increased contributions from Cardiff and Milan data centres, as well as higher variable income at its Singapore properties. NPI of $24.9m (+14.1%) was further lifted by lower property tax and expenses. Portfolio occupancy rose to 94.4% (+1.7ppt q/q) with WALE of 9.6 years (3Q16: 8.6 years), while aggregate leverage eased to 28.3% (-1.1ppt). NAV/share at $0.954.
*Mapletree Logistics Trust: Flat 3QFY17 of 1.87¢ was in line with estimates. Revenue of $95.5m (+7.4%) and NPI of $79.9m (+7.7%) were boosted by acquisitions/AEIs, as well as stronger performance in Hong Kong. However, distributable income of $46.8m (+0.8%) was crimped by a negative tax adjustment, while DPU was further diluted by increased distribution to perps holders. Occupancy slipped 0.3ppt q/q to 96.1% with WALE of 4.1 years. Aggregate leverage climbed 1.1% to 38.7%. NAV/unit at $1.03.
*Frasers Commercial Trust: Flat 1QFY17 DPU of 2.51¢ met expectations, while distributable income of $19.9m (+12%) was shored by capital distribution. Revenue of $39.7m (+0.1%) and NPI of $29.2m (-0.6%) stayed relatively flat as higher contribution from 357 Collins Street and a stronger AUD were offset by lower occupancy rates at China Square Central and Central Park due to redevelopment works and tenant adjustments. Overall portfolio occupancy was stable at 93% with WALE of 3.8 years, while aggregate leverage was unchanged at 36%. NAV/unit at $1.55.
*Ascott REIT: In line 4Q16; DPU slipped 1% y/y to 2.04¢, although distributable income rose 6% to $33.9m, which included a FX gain ($2m) arising from repayment of foreign currency bank loans with the divestment proceeds from Fortune Garden Apartments, and repayment of shareholders’ loan. Revenue grew 6% on increased contribution from recently-acquired Sheraton Tribeca New York Hotel in Apr '16, which lifted overall RevPAU by 2% to $148. However, excluding the acquisition, same-store-RevPAU tumbled 6% on weaker performances from China and UK assets. Aggregate leverage narrowed to 39.8% (-1.5ppt), and group remains on the lookout for accretive M&A opportunities in key gateway cities of Australia, Japan, Europe and the US. NAV/unit at $1.33.
*Cache Logistics Trust: 4Q16 results missed expectations as DPU tumbled 10.8% to 1.85¢ on a higher unit base, while distributable income fell 5.2% to $16.6m from increased finance costs and reduced capital distributions. Revenue and NPI rose to $27.3m (+13.5%) and $21.3m (+11.3%), respectively, driven by increased contribution from DHL Supply Chain Advanced Regional Centre and three Australian properties acquired in 4Q15. Portfolio occupancy remained stable at 96.4% with WALE of 3.9 years, while aggregate leverage crept up 1.9ppt q/q to 43.1%. NAV/unit at $0.78.
*Keppel Infra Trust: 4Q16 results met expectations although DPU was flat at 0.93¢, bringing FY16 DPU to 3.72¢ (+40.9%), post-merger of Keppel Merlimau Cogen in Jun '15. Quarter revenue fell to $152.2m (-5.2%) on lower tariffs at City Gas (-6.9%), reduced concessions (-27.9%) due to lower construction revenue following boiler upgrades in 4Q15, although partially offset by higher contribution from Basslink (+47.4%). NAV/share at $0.325..
*Soilbuild REIT: 4Q16 results in line despite a 2.7% slip in DPU to 1.57¢, which brought FY16 total payout to 6.091¢ (-6.1%), as an enlarged unit base offset the 4.1% growth in distributable income to $60.3m. Quarter revenue and NPI rose to $21.7m (+6.1%) and $18.9m (+8%), thanks to higher takings from Loyang Way, Bukit Batok Connection, Solaris and Eightrium properties. Overall portfolio occupancy slid to 89.6% (-5.2ppts q/q) with WALE of 3.4 years, while aggregate leverage stood at 37.6% (1.6ppts q/q). NAV/share at $0.72.
*UOL: Granted an option to purchase a residential freehold site at 45 Amber Road for $156m. The site currently holds a horticultural and gardening retail centre, which sits on a land area of 69,858 sf and plot ratio of 2.1, equating to a potential gfa of 146,702 sf ($1,063 psf ppr ex development charges).
*Genting HK: Expects to record a FY16 net loss in the range of US$500m-US$550m (FY15: US$2.1b net profit), mainly due an absence of a one-off accounting gain of US$1.57b and divestment gain of US658.6m, both arising from the partial stake sale in associate Norwegian Cruise Line (NCL) in 2015. Additionally, an impairment loss of ~US$300m will be taken on its remaining stake in NCL from a decline in fair value in late-2016. Further, group incurred a one-time start-up and marketing costs, as well as additional depreciation expenses related to its premium liner Crystal cruise brands and newly acquired German shipyards.
*Banyan Tree: Established 50:50 JVCo with China Vanke, via an asset injection of Banyan Tree's China properties to be determined by an independent valuation. The current book value of these assets is ~Rmb720m. In association with the JV, China Vanke will take a 5% equity take in Banyan Tree through a private placement at $0.60/share.
*IHC: EGM to remove current board members has been approved. Separately, OUE purchased 208.1m IHC shares on 23 Jan for $0.077 apiece, and has emerged as a substantial shareholder with a 12.5% stake.*Swing Media: Proposed placement of 8.5m new shares (19.1% share capital) at $0.60 each to seven individuals, to raise net proceeds of $5.1m intended for working capital (20%) and inorganic growth (80%).
Monday, January 23, 2017
SG Market (23 Jan 17)
The market will be on tenterhooks after US President Donald Trump took a decidedly protectionistic stance in his inauguration speech and withdrew the US from TPP on his first day in office. Traders are also watching UK’s court decision on Brexit, domestic inflation and industrial data as well as 4Q results from a host of REITs and the Keppel group this week.
Regional bourses opened negative in early trading this week in Tokyo (-1%), Seoul (flat) and Sydney (-0.4%).Technically, the STI is still correcting from overbought levels with underlying support at 2,968 and topside resistance at 3,040.
Stocks to watch:
*Frasers Centrepoint Trust: 1QFY17 DPU of 2.89¢ (+0.7%) met estimates although distributable income of $26.6m (+1.1%) was lifted by tax adjustments. However both revenue and NPI fell 6.4% and 5.7% to $44.1m and $31.6m respectively due to reduced takings from Northpoint, which is undergoing AEI. Causeway Point was the star performer, contributing 52.8% of NPI. Occupancy rose 1.9ppt q/q to 91.34% with WALE of 1.62 years, while aggregate leverage climbed 1.4ppt to 29.7%. NAV/unit at $1.93.
*GuocoLand: 2QFY17 net profit jumped 46.3% to $57.1m, mainly boosted by associates/JVs contribution of $44.8m arising from a land disposal by a Malaysian associate. Revenue slipped 3.1% to $232m, while gross margin contracted to 20.4% (-5ppts) due to a change in sales mix. Despite the challenging property market, the office and retail components of its Tanjong Pagar Centre, which obtained TOP in Oct, have achieved more than 80% commitment levels. NAV/share was little changed at $2.96.
*Bumitama Agri: 4Q16 FFB harvest climbed 11% to 1,087,484 MT, as yield improved to 5.3 MT/ha (4Q15: 5.1 MT/ha). CPO production also rose 11.1% to 246,864 MT, even though extraction rate was flat at 22.5% (+0.1ppt). MKE sees value in the stock, which is supported by a 25% FFB nucleus output growth in 2017. Buy with TP of $0.97.
*Keppel Corp: Awarded a 25-year build-own-operate contract for Singapore's fourth water desalination plant, which is expected to commence operations by 2020. The plant will be able to treat sea water and produce 137,000 m3 of fresh drinking water per day. MKE sees downside risk from EPS downgrades and last had a Sell with TP of $4.57.
*CapitaLand: Invested $10.4m for a 90% stake in CapitaLand Thanh Nien, which owns a 0.8ha plot of land in Ho Chi Ming City, Vietnam, which will be developed into a 317-unit residential development. This is in line with its strategy to expand its residential portfolio in Vietnam. Saigon Commercial and Tourism Corp will hold the remaining 10% stake.
*Cambridge REIT: Proposed divestment of light industrial building, 55 Ubi Avenue 3, for $22.1m. The property has a gfa of 141,135 sf (1.7% of portfolio), with a remaining land tenure of approximately 39 years.
*CNMC Goldmine: Completed due diligence works for its proposed 51% stake acquisition of Pulai Mining for RM13.8m. The target owns a brownfield project in Kelantan, Malaysia, that is nearly four times the size of CNMC's existing Sokor gold field. Separately, the group has renewed the mining lease for the Sokor gold field with Kelantan state government for another 21 years till Dec 2034.
*HC Surgical Specialists: Extended the lease for its clinic space at 1 Farrer Park Station Road, Connexion, by three years to 2019, with total rental payment of $0.18m..
*Advanced Holdings: Entered a non-binding term sheet for the proposed $180m-240m acquisition of Agricore Global (AG), which would result in a RTO. AG owns concessions to 23 parcels of agricultural permits covering 232,102 ha in Sulawesi, Indonesia, that can be cultivated into crude palm oil plantations, as well as 2 forestry concessions for timber management.
*AsiaMedic: Acquiring LuyeEllium Healthcare for $42.2m via an issue of 527m new shares at $0.08 apiece, which will result in a RTO transaction. The target provides construction-related non-clinical support and consultancy services to medical institutions in South Korea and China, and will come with an annual profit guarantee of $3.4-4.2m over FY16-20.
*Dukang Distillers: Expects 2QFY17 revenue and earnings to be substantially lower due to ongoing restrictions to the high-end alcohol market in China, switch in consumers' drinking trend to red wine and beer, and severe air pollution hindering the group's operations.
*AA Group: Proposed to acquire Engineering Manufacturing Services (EMS) for $25m, or 4.3x 9M16 annualised P/E, in a bid to diversify its income stream. EMS provides value-added general warehousing and logistics services, industrial and office space and workers' dormitory facilities. Upon completion, pro forma FY15 LPS of 0.15¢ is expected to swing to an EPS of 4.94¢.
Regional bourses opened negative in early trading this week in Tokyo (-1%), Seoul (flat) and Sydney (-0.4%).Technically, the STI is still correcting from overbought levels with underlying support at 2,968 and topside resistance at 3,040.
Stocks to watch:
*Frasers Centrepoint Trust: 1QFY17 DPU of 2.89¢ (+0.7%) met estimates although distributable income of $26.6m (+1.1%) was lifted by tax adjustments. However both revenue and NPI fell 6.4% and 5.7% to $44.1m and $31.6m respectively due to reduced takings from Northpoint, which is undergoing AEI. Causeway Point was the star performer, contributing 52.8% of NPI. Occupancy rose 1.9ppt q/q to 91.34% with WALE of 1.62 years, while aggregate leverage climbed 1.4ppt to 29.7%. NAV/unit at $1.93.
*GuocoLand: 2QFY17 net profit jumped 46.3% to $57.1m, mainly boosted by associates/JVs contribution of $44.8m arising from a land disposal by a Malaysian associate. Revenue slipped 3.1% to $232m, while gross margin contracted to 20.4% (-5ppts) due to a change in sales mix. Despite the challenging property market, the office and retail components of its Tanjong Pagar Centre, which obtained TOP in Oct, have achieved more than 80% commitment levels. NAV/share was little changed at $2.96.
*Bumitama Agri: 4Q16 FFB harvest climbed 11% to 1,087,484 MT, as yield improved to 5.3 MT/ha (4Q15: 5.1 MT/ha). CPO production also rose 11.1% to 246,864 MT, even though extraction rate was flat at 22.5% (+0.1ppt). MKE sees value in the stock, which is supported by a 25% FFB nucleus output growth in 2017. Buy with TP of $0.97.
*Keppel Corp: Awarded a 25-year build-own-operate contract for Singapore's fourth water desalination plant, which is expected to commence operations by 2020. The plant will be able to treat sea water and produce 137,000 m3 of fresh drinking water per day. MKE sees downside risk from EPS downgrades and last had a Sell with TP of $4.57.
*CapitaLand: Invested $10.4m for a 90% stake in CapitaLand Thanh Nien, which owns a 0.8ha plot of land in Ho Chi Ming City, Vietnam, which will be developed into a 317-unit residential development. This is in line with its strategy to expand its residential portfolio in Vietnam. Saigon Commercial and Tourism Corp will hold the remaining 10% stake.
*Cambridge REIT: Proposed divestment of light industrial building, 55 Ubi Avenue 3, for $22.1m. The property has a gfa of 141,135 sf (1.7% of portfolio), with a remaining land tenure of approximately 39 years.
*CNMC Goldmine: Completed due diligence works for its proposed 51% stake acquisition of Pulai Mining for RM13.8m. The target owns a brownfield project in Kelantan, Malaysia, that is nearly four times the size of CNMC's existing Sokor gold field. Separately, the group has renewed the mining lease for the Sokor gold field with Kelantan state government for another 21 years till Dec 2034.
*HC Surgical Specialists: Extended the lease for its clinic space at 1 Farrer Park Station Road, Connexion, by three years to 2019, with total rental payment of $0.18m..
*Advanced Holdings: Entered a non-binding term sheet for the proposed $180m-240m acquisition of Agricore Global (AG), which would result in a RTO. AG owns concessions to 23 parcels of agricultural permits covering 232,102 ha in Sulawesi, Indonesia, that can be cultivated into crude palm oil plantations, as well as 2 forestry concessions for timber management.
*AsiaMedic: Acquiring LuyeEllium Healthcare for $42.2m via an issue of 527m new shares at $0.08 apiece, which will result in a RTO transaction. The target provides construction-related non-clinical support and consultancy services to medical institutions in South Korea and China, and will come with an annual profit guarantee of $3.4-4.2m over FY16-20.
*Dukang Distillers: Expects 2QFY17 revenue and earnings to be substantially lower due to ongoing restrictions to the high-end alcohol market in China, switch in consumers' drinking trend to red wine and beer, and severe air pollution hindering the group's operations.
*AA Group: Proposed to acquire Engineering Manufacturing Services (EMS) for $25m, or 4.3x 9M16 annualised P/E, in a bid to diversify its income stream. EMS provides value-added general warehousing and logistics services, industrial and office space and workers' dormitory facilities. Upon completion, pro forma FY15 LPS of 0.15¢ is expected to swing to an EPS of 4.94¢.
Friday, January 20, 2017
SG Market (20 Jan 17)
Investors are likely to stay cautious amid policy uncertainty on the eve of Trump's inauguration and ahead of a slew of corporate results from the REIT sector next week.
Regional bourses opened weaker in Sydney (-0.6%) and Seoul (-0.4%), but positive in Tokyo (+0.3%).Technically, the STI is still correcting from overbought levels with underlying support at 2,968 and topside resistance at 3,040.
Stocks to watch:
*SGX: 2QFY17 net profit of $88.3m (+5.5%) topped estimates as active securities trading (+17%) on the back of post US election rally lifted total revenue by 2.6% to $199.6m (+2.6%). However, derivatives revenue slipped 3.4% to $74.9m as higher volume (+5%) was offset by lower average fees per contract (-9.4%). Operating margin improved 1.2 ppt to 51.3% on tight cost control. Maintained interim DPS of $0.05. Expects a healthy pipeline of IPOs in 2HFY17.
*CapitaLand Mall Trust: Flat 4Q16; DPU of 2.88¢ brought FY16 payout to 11.13¢ (-1.1%), in line with estimates. For the quarter, both gross revenue of $169.3m (-6.1%) and NPI of $116.2m, (-7.6%) were dragged by the closure of Funan mall due to redevelopment works, and Rivervale Mall that was sold in Dec '15. Portfolio occupancy remained healthy at 98.5% (-0.1 ppt q/q), while aggregate leverage narrowed to 34.8% (-0.6ppt). NAV/unit at $1.89.
*GL: 1HFY17 net profit tumbled 52% to US$24.6m on weaker revenue of US$184.5m (-20%), mainly due to an 18% drop in GBP against USD, despite improvements in hotel RevPAR (+3%). Bottom line was further hit by the absence of a one-off $13m gain from the compensation for hotel management contract cessation last year, as well as $11m of other opex comprising a legal claim and asset write-offs. NAV/share at US$0.759.
*Oxley: 2QFY17 net profit surged 163% to $123.7m on revenue of $605.7m (+241%), due to the completion of commercial project Oxley Tower, and handover of certain plots in The Royal Wharf Phase 1A. Gross margin contracted to 33.3% (-4.9ppt) on a change in sales mix, while bottom line was impacted by the absence of marked-to-market FX gains (2QFY16: $12.9m) and JV/associate losses of $4.5m (2QFY16: $26.5m profit) due to fair value adjustments. Total unbilled contract value amounted to $2.6b. Net gearing eased from 2.1x to 1.8x as the group continued to pare its debt pile, underpinned by healthy operating cash flow of $273.6m. Interim DPS shaved to 0.5¢ (0.75¢). NAV/share rose 16% to $0.3105.
*mm2 Asia: Executive chairman and CEO Melvin Ang sold 10m vendor shares to Timothy Mou En-Kuang at $0.485 each. Industry verteran Mou manages Chinese superstar Fan Bingbing and is the CEO of several film studios in China. The group believes Mou's ownership of a 0.95% stake would enhance its business development in the North Asia market.
*AIMS AMP Capital Industrial REIT: In clarification to the media report citing that the REIT is studying potential investment targets, management stated that it is always on the lookout for M&A opportunities, but has not entered into any firm commitment for acquisition.
*Dasin Retail Trust: Public offer of 2m IPO units at $0.80 apiece was 7.6x oversubscribed. The Chinese business trust will commence trading at 2pm today.
Regional bourses opened weaker in Sydney (-0.6%) and Seoul (-0.4%), but positive in Tokyo (+0.3%).Technically, the STI is still correcting from overbought levels with underlying support at 2,968 and topside resistance at 3,040.
Stocks to watch:
*SGX: 2QFY17 net profit of $88.3m (+5.5%) topped estimates as active securities trading (+17%) on the back of post US election rally lifted total revenue by 2.6% to $199.6m (+2.6%). However, derivatives revenue slipped 3.4% to $74.9m as higher volume (+5%) was offset by lower average fees per contract (-9.4%). Operating margin improved 1.2 ppt to 51.3% on tight cost control. Maintained interim DPS of $0.05. Expects a healthy pipeline of IPOs in 2HFY17.
*CapitaLand Mall Trust: Flat 4Q16; DPU of 2.88¢ brought FY16 payout to 11.13¢ (-1.1%), in line with estimates. For the quarter, both gross revenue of $169.3m (-6.1%) and NPI of $116.2m, (-7.6%) were dragged by the closure of Funan mall due to redevelopment works, and Rivervale Mall that was sold in Dec '15. Portfolio occupancy remained healthy at 98.5% (-0.1 ppt q/q), while aggregate leverage narrowed to 34.8% (-0.6ppt). NAV/unit at $1.89.
*GL: 1HFY17 net profit tumbled 52% to US$24.6m on weaker revenue of US$184.5m (-20%), mainly due to an 18% drop in GBP against USD, despite improvements in hotel RevPAR (+3%). Bottom line was further hit by the absence of a one-off $13m gain from the compensation for hotel management contract cessation last year, as well as $11m of other opex comprising a legal claim and asset write-offs. NAV/share at US$0.759.
*Oxley: 2QFY17 net profit surged 163% to $123.7m on revenue of $605.7m (+241%), due to the completion of commercial project Oxley Tower, and handover of certain plots in The Royal Wharf Phase 1A. Gross margin contracted to 33.3% (-4.9ppt) on a change in sales mix, while bottom line was impacted by the absence of marked-to-market FX gains (2QFY16: $12.9m) and JV/associate losses of $4.5m (2QFY16: $26.5m profit) due to fair value adjustments. Total unbilled contract value amounted to $2.6b. Net gearing eased from 2.1x to 1.8x as the group continued to pare its debt pile, underpinned by healthy operating cash flow of $273.6m. Interim DPS shaved to 0.5¢ (0.75¢). NAV/share rose 16% to $0.3105.
*mm2 Asia: Executive chairman and CEO Melvin Ang sold 10m vendor shares to Timothy Mou En-Kuang at $0.485 each. Industry verteran Mou manages Chinese superstar Fan Bingbing and is the CEO of several film studios in China. The group believes Mou's ownership of a 0.95% stake would enhance its business development in the North Asia market.
*AIMS AMP Capital Industrial REIT: In clarification to the media report citing that the REIT is studying potential investment targets, management stated that it is always on the lookout for M&A opportunities, but has not entered into any firm commitment for acquisition.
*Dasin Retail Trust: Public offer of 2m IPO units at $0.80 apiece was 7.6x oversubscribed. The Chinese business trust will commence trading at 2pm today.
Thursday, January 19, 2017
SG Market (19 Jan 17)
Market participants are expected to tread lightly in the next few weeks as they wait for a clearer picture of 4Q corporate results and the outlook for 2017, and Trump's trade policies after he steps into office.
Regional bourses opened higher in Tokyo (+0.9%), Seoul (+0.2%) and Sydney (+0.4%).Technically, the STI is pulling back from overbought level with underlying support at 2,968 and topside resistance at 3,040.
Stocks to watch:
*Sembcorp Industries: Awarded a US$300m build-own-transfer contract by Ministry of Electricity and Energy of Myanmar for a 225MW gas-fired power plant in Mandalay, with concession period of 22 years. MKE last had a Hold with TP of $2.40.
*ST Engineering: Conditionally agreed to purchase a 51% stake in SP Telecommunications, which owns an extensive network of fibre optic back-haul infrastructure and facilities in Singapore, for $54-60m.
*City Dev: Proposed acquisition of a 24% stake in Distrii, a China-based operator of co-working spaces in Shanghai for Rmb72m ($14.9m). Distrii currently has a capacity for >2,200 members across nine different locations, of which 80% is filled. Distrii will be opening a new facility in Beijing in 1H17 and plans to further expand into Guangzhou, Shenzhen and other global gateway cities. Additionally, Distrii will take up ~60,000 sf of space (currently leased out) in CDL's Republic Plaza Tower 1, and expects to commence operations in 1H18.
*Straits Trading: Acquiring a freehold 14-storey rental residential apartment in Osaka, Japan, for ¥924.7m ($11.6m). The property has NLA of 2,992.8 sqm and 95% occupancy, as at end-Dec '16, for its 120 apartment units.
*Sunpower: Formed a 51:10:39 JVCo with CITIC Envirotech and Guangdong Keying Zhiran Environmental, to undertake a Rmb1.6b ($331m) project in Shantou, Guangdong. The JVCo will undertake the investment, design, build and operation of a cogeneration plant, with construction expected for completion by 1H18.
*Sino Grandness: Entered into strategic agreement with LYZB E-Commerce to distribute the group's products including Garden Fresh beverages and Grandness canned food, through the latter's mobile internet platform "Ji Shi Hui".
*Singapore Myanmar Investco: JV partner Golden Infrastructure Group plans to submit a criminal complaint against its directors and management for possible breaches, relating to the JVCo's proposed US$12.7m divestment of its 97% stake in a telecom tower business.
*IHC: Disclosed the letter from activist investor Quarz Capital Management, which called for the entire replacement of IHC's board due to their inactivity to stop destruction to shareholder value. In response, IHC's board deems the accusations not accurate and imperative for existing members to stay on to assure continuity to the group's business partners and financial supporters.
*Wong Fong: Established a 60% owned subsidiary in Myanmar with three other individuals to undertake distribution of heavy and construction machinery in the country.
*China New Town: Disclosed that an administrative lapse caused the trading delay up to 10.15am on 18 Jan.
*Cosco: 51% subsidiary Cosco Shipyard delivered a salvage lifting vessel and a bulk carrier to their Chinese and European buyers.
*Ipco: Terminated the proposed placement of 1.06b new shares at 0.18¢ each after the long stop date has passed.
Regional bourses opened higher in Tokyo (+0.9%), Seoul (+0.2%) and Sydney (+0.4%).Technically, the STI is pulling back from overbought level with underlying support at 2,968 and topside resistance at 3,040.
Stocks to watch:
*Sembcorp Industries: Awarded a US$300m build-own-transfer contract by Ministry of Electricity and Energy of Myanmar for a 225MW gas-fired power plant in Mandalay, with concession period of 22 years. MKE last had a Hold with TP of $2.40.
*ST Engineering: Conditionally agreed to purchase a 51% stake in SP Telecommunications, which owns an extensive network of fibre optic back-haul infrastructure and facilities in Singapore, for $54-60m.
*City Dev: Proposed acquisition of a 24% stake in Distrii, a China-based operator of co-working spaces in Shanghai for Rmb72m ($14.9m). Distrii currently has a capacity for >2,200 members across nine different locations, of which 80% is filled. Distrii will be opening a new facility in Beijing in 1H17 and plans to further expand into Guangzhou, Shenzhen and other global gateway cities. Additionally, Distrii will take up ~60,000 sf of space (currently leased out) in CDL's Republic Plaza Tower 1, and expects to commence operations in 1H18.
*Straits Trading: Acquiring a freehold 14-storey rental residential apartment in Osaka, Japan, for ¥924.7m ($11.6m). The property has NLA of 2,992.8 sqm and 95% occupancy, as at end-Dec '16, for its 120 apartment units.
*Sunpower: Formed a 51:10:39 JVCo with CITIC Envirotech and Guangdong Keying Zhiran Environmental, to undertake a Rmb1.6b ($331m) project in Shantou, Guangdong. The JVCo will undertake the investment, design, build and operation of a cogeneration plant, with construction expected for completion by 1H18.
*Sino Grandness: Entered into strategic agreement with LYZB E-Commerce to distribute the group's products including Garden Fresh beverages and Grandness canned food, through the latter's mobile internet platform "Ji Shi Hui".
*Singapore Myanmar Investco: JV partner Golden Infrastructure Group plans to submit a criminal complaint against its directors and management for possible breaches, relating to the JVCo's proposed US$12.7m divestment of its 97% stake in a telecom tower business.
*IHC: Disclosed the letter from activist investor Quarz Capital Management, which called for the entire replacement of IHC's board due to their inactivity to stop destruction to shareholder value. In response, IHC's board deems the accusations not accurate and imperative for existing members to stay on to assure continuity to the group's business partners and financial supporters.
*Wong Fong: Established a 60% owned subsidiary in Myanmar with three other individuals to undertake distribution of heavy and construction machinery in the country.
*China New Town: Disclosed that an administrative lapse caused the trading delay up to 10.15am on 18 Jan.
*Cosco: 51% subsidiary Cosco Shipyard delivered a salvage lifting vessel and a bulk carrier to their Chinese and European buyers.
*Ipco: Terminated the proposed placement of 1.06b new shares at 0.18¢ each after the long stop date has passed.
Wednesday, January 18, 2017
SG Market (18 Jan 17)
The local market will likely continue to be wary of US policy risks as Trump takes an increasing strident view over trade, with the latest charge that the yuan is making dollar too expensive.
Regional bourses opened in negative territory in Tokyo (-0.5%), Seoul (-0.6%) and Sydney (-0.7%).STI remains overbought with psychological support at 3,000 level and topside resistance at 3,040.
Stocks to watch:
*CCT: 4Q16 DPU jumped 10.1% to 2.39¢, taking FY16 payout to 9.08¢ (+5.3%), meeting estimates. For the quarter, revenue and NPI surged to $89.7m (+32.7%) and $70.8m (+35.4%), boosted by the acquisition of the remaining 60% stake in CapitaGreen in Sep '16 (4Q15: 40% stake). Portfolio occupancy remained healthy at 97.1% (3Q16: 97.4%), with aggregate leverage unchanged at 37.8%. NAV/unit at $1.78.
*First REIT: 4Q16 DPU of 2.13¢ (+1.9%) grew at a slower clip to distributable income ($16.5m, +5.1%), due to the issuance of new units. This brought FY16 payout to 8.45¢ (+2%), in line with estimates. For the quarter, growth in revenue ($27m, +5.1%) and NPI ($26.7m, +5.2%) was mainly lifted by the Kupang Property, acquired in Dec '15. Aggregate leverage stood at 31.1% (+1.1ppt q/q). NAV/unit at $1.01.
*GLP: Another co-investor of its US Income Partners III fund has made its initial capital contribution of US$26m, representing 8.1% of the aggregate capital contributions to-date. Following this third syndication, GLP’s interest in the fund has been reduced to 74.1% from 82.2%.
*Lippo Malls Trust: Terminated a JV with First REIT to acquire Siloam Hospitals Yogyakarta (SHYG) and retail mall Lippo Plaza Jogja (LPJ). The parties intend to resume talks after AEI works on LPJ is completed, and upon SHYG obtaining required licenses for operations by end-2017.
*Next-Gen Satellite Communications: Entered 55:45 JV with AR Evans Financial to provide investment management, economic publication, investment research and fund raising activities.
*Huationg Global: Formed 40:60 JV with construction peer Samwoh, to participate in a BCA tender.
*Sen Yue: 50% owned SMC Industrial entered into an agreement to purchase a Singapore property located at No 3 Jalan Pesawat for $7.3m.
Regional bourses opened in negative territory in Tokyo (-0.5%), Seoul (-0.6%) and Sydney (-0.7%).STI remains overbought with psychological support at 3,000 level and topside resistance at 3,040.
Stocks to watch:
*CCT: 4Q16 DPU jumped 10.1% to 2.39¢, taking FY16 payout to 9.08¢ (+5.3%), meeting estimates. For the quarter, revenue and NPI surged to $89.7m (+32.7%) and $70.8m (+35.4%), boosted by the acquisition of the remaining 60% stake in CapitaGreen in Sep '16 (4Q15: 40% stake). Portfolio occupancy remained healthy at 97.1% (3Q16: 97.4%), with aggregate leverage unchanged at 37.8%. NAV/unit at $1.78.
*First REIT: 4Q16 DPU of 2.13¢ (+1.9%) grew at a slower clip to distributable income ($16.5m, +5.1%), due to the issuance of new units. This brought FY16 payout to 8.45¢ (+2%), in line with estimates. For the quarter, growth in revenue ($27m, +5.1%) and NPI ($26.7m, +5.2%) was mainly lifted by the Kupang Property, acquired in Dec '15. Aggregate leverage stood at 31.1% (+1.1ppt q/q). NAV/unit at $1.01.
*GLP: Another co-investor of its US Income Partners III fund has made its initial capital contribution of US$26m, representing 8.1% of the aggregate capital contributions to-date. Following this third syndication, GLP’s interest in the fund has been reduced to 74.1% from 82.2%.
*Lippo Malls Trust: Terminated a JV with First REIT to acquire Siloam Hospitals Yogyakarta (SHYG) and retail mall Lippo Plaza Jogja (LPJ). The parties intend to resume talks after AEI works on LPJ is completed, and upon SHYG obtaining required licenses for operations by end-2017.
*Next-Gen Satellite Communications: Entered 55:45 JV with AR Evans Financial to provide investment management, economic publication, investment research and fund raising activities.
*Huationg Global: Formed 40:60 JV with construction peer Samwoh, to participate in a BCA tender.
*Sen Yue: 50% owned SMC Industrial entered into an agreement to purchase a Singapore property located at No 3 Jalan Pesawat for $7.3m.
Tuesday, January 17, 2017
SG Market (17 Jan 17)
SG MarketSentiment is turning increasingly jittery over US president-elect Donald Trump's incoming policies following his sweeping criticisms of China, EU, Nato, German Chancellor Angela Merkel, as well as foreign automakers ahead of British PM's Brexit speech this evening.
Regional bourses are mostly lower in Tokyo (-0.4%), Seoul (+0.4%) and Sydney (-0.7%).Technically, STI is overbought and could test the psychological 3,000 level, with underlying support at 2,968 and upside resistance remains at 3,040.
Stocks to watch:
*SIA: Group pax load factor rose 0.6ppt to 82.9% in Dec, as passenger traffic growth (+5.3%) outpaced capacity expansion (+4.5%). Load factors improved across East Asia (+3.3ppt), Americas (+0.6ppt), and Europe (+0.5ppt), due to stronger demand from year-end holiday travel, but deteriorated in SW Pacific (-3.2ppt), West Asia and Africa (-0.9ppt). Load factors at SilkAir (+0.4ppt to 75.5%), Scoot (+1.4ppt to 87.4%), and Tigerair (+2.1ppt to 88.3%) also recovered. Cargo load factor rose 1.5ppt to 64.9% as carriage growth (+8.8%) was stronger than the increase in capacity (+6.3%). MKE last had a Hold with TP of $9.70.
*CapitaLand: Divested 45 unsold units at upmarket condo The Nassim, to veteran banker Wee Cho Yaw's family vehicle Kheng Leong for $411.6m or $2,300 psf (~18% discount), uplifting its EPS by 3.8¢. While the pricing for this deal is not particularly compelling, MKE believe the avoidance of hefty QC penalties and the ability to recycle capital into new projects are key positives. Separately, the group will acquire a 0.6-ha prime commercial site in Ho Chi Minh City, Vietnam to develop a Grade A office tower, to be ready in 2020. MKE last had a Buy with TP of $3.46.
*GLP: Signed 128,000 sqm of new leases in China and Japan for domestic distribution, catering to demand from industries such as auto parts, e-commerce and consumer goods.*STE: Aerospace arm ST Aerospace secured $840m new contracts in 4Q16 (3Q16: $520m, 4Q15: $415m) for services ranging from line and airframe maintenance to component repair and overhaul.
*Best World: Terminated the JV agreement with Prolife Biobank and Celcott Biobank to distribute stem cell banking services.
*Vard: Signed LOI to design and construct an expedition cruise vessel for an undisclosed international cruise company for ~NOK1b. If agreed upon, delivery is scheduled from one of Vard's Norwegian yards in 2019.
*Hi-P: Arbitration proceedings between Hi-P and Yota Devices have resulted in a settlement of US$17m ($24.6m) to be paid by to Hi-P, which will continue to sell the existing inventory of Yotaphone 2. The settlement is expected to result in a $9.4m impact ($8.1m bad debt, $1.3m inventory provision) on its 4Q16 profit.
*Sunpower: Secured a Rmb338m build-own-operate centralised heat transfer oil project in Liutuan Industrial Park, Shandong Province, China. The project is expected to be carried out by a 75:25 JVCo, and will be financed via proceeds from its US$110m convertible bonds, bank loans and internal funds.
*SIIC Environment: Proposed placement of 350m new shares (15.5% share capital) at $0.63 apiece (5.9% premium to last close) to controlling shareholder Shanghai Industrial Holdings. Net proceeds of $220m will be used to repay existing borrowings (60%) and finance business expansion.
*United Food: Proposed placement of 22m new shares (20% share capital) at 3.8¢/share to two private investors Christine Mak (14.3m shares) and Ip Ka Kit (7.7m shares). Net proceeds of $0.8m will be used to strengthen its working capital to further expand business operations.
*Vallianz: Proposed placement of 350m new shares (9.7% share capital) at 2¢ apiece to Greatwill Asset Global, owned by Lim Oon Cheng, brother of the founder of oil trading firm Hin Leong. Net proceeds of $6.8m will be used for strengthening JVs/ strategic alliances and working capital..
*Koh Brothers: Entered into an MOU with Koracle to form a JV to set up beauty clinics and wellness spas in Singapore and Johore, Malaysia.
*Advancer Global: Wholly owned Nation Employment unit joined the Advance Placement Scheme, to allow it to source for and bring in a specific number of foreign domestic workers prior to employment, which facilitates better matching.
*United Global: Invested US$0.1m worth of products into a JVCo in Myanmar as its initial capital to sell lubricants in the country for a three-year period.
Regional bourses are mostly lower in Tokyo (-0.4%), Seoul (+0.4%) and Sydney (-0.7%).Technically, STI is overbought and could test the psychological 3,000 level, with underlying support at 2,968 and upside resistance remains at 3,040.
Stocks to watch:
*SIA: Group pax load factor rose 0.6ppt to 82.9% in Dec, as passenger traffic growth (+5.3%) outpaced capacity expansion (+4.5%). Load factors improved across East Asia (+3.3ppt), Americas (+0.6ppt), and Europe (+0.5ppt), due to stronger demand from year-end holiday travel, but deteriorated in SW Pacific (-3.2ppt), West Asia and Africa (-0.9ppt). Load factors at SilkAir (+0.4ppt to 75.5%), Scoot (+1.4ppt to 87.4%), and Tigerair (+2.1ppt to 88.3%) also recovered. Cargo load factor rose 1.5ppt to 64.9% as carriage growth (+8.8%) was stronger than the increase in capacity (+6.3%). MKE last had a Hold with TP of $9.70.
*CapitaLand: Divested 45 unsold units at upmarket condo The Nassim, to veteran banker Wee Cho Yaw's family vehicle Kheng Leong for $411.6m or $2,300 psf (~18% discount), uplifting its EPS by 3.8¢. While the pricing for this deal is not particularly compelling, MKE believe the avoidance of hefty QC penalties and the ability to recycle capital into new projects are key positives. Separately, the group will acquire a 0.6-ha prime commercial site in Ho Chi Minh City, Vietnam to develop a Grade A office tower, to be ready in 2020. MKE last had a Buy with TP of $3.46.
*GLP: Signed 128,000 sqm of new leases in China and Japan for domestic distribution, catering to demand from industries such as auto parts, e-commerce and consumer goods.*STE: Aerospace arm ST Aerospace secured $840m new contracts in 4Q16 (3Q16: $520m, 4Q15: $415m) for services ranging from line and airframe maintenance to component repair and overhaul.
*Best World: Terminated the JV agreement with Prolife Biobank and Celcott Biobank to distribute stem cell banking services.
*Vard: Signed LOI to design and construct an expedition cruise vessel for an undisclosed international cruise company for ~NOK1b. If agreed upon, delivery is scheduled from one of Vard's Norwegian yards in 2019.
*Hi-P: Arbitration proceedings between Hi-P and Yota Devices have resulted in a settlement of US$17m ($24.6m) to be paid by to Hi-P, which will continue to sell the existing inventory of Yotaphone 2. The settlement is expected to result in a $9.4m impact ($8.1m bad debt, $1.3m inventory provision) on its 4Q16 profit.
*Sunpower: Secured a Rmb338m build-own-operate centralised heat transfer oil project in Liutuan Industrial Park, Shandong Province, China. The project is expected to be carried out by a 75:25 JVCo, and will be financed via proceeds from its US$110m convertible bonds, bank loans and internal funds.
*SIIC Environment: Proposed placement of 350m new shares (15.5% share capital) at $0.63 apiece (5.9% premium to last close) to controlling shareholder Shanghai Industrial Holdings. Net proceeds of $220m will be used to repay existing borrowings (60%) and finance business expansion.
*United Food: Proposed placement of 22m new shares (20% share capital) at 3.8¢/share to two private investors Christine Mak (14.3m shares) and Ip Ka Kit (7.7m shares). Net proceeds of $0.8m will be used to strengthen its working capital to further expand business operations.
*Vallianz: Proposed placement of 350m new shares (9.7% share capital) at 2¢ apiece to Greatwill Asset Global, owned by Lim Oon Cheng, brother of the founder of oil trading firm Hin Leong. Net proceeds of $6.8m will be used for strengthening JVs/ strategic alliances and working capital..
*Koh Brothers: Entered into an MOU with Koracle to form a JV to set up beauty clinics and wellness spas in Singapore and Johore, Malaysia.
*Advancer Global: Wholly owned Nation Employment unit joined the Advance Placement Scheme, to allow it to source for and bring in a specific number of foreign domestic workers prior to employment, which facilitates better matching.
*United Global: Invested US$0.1m worth of products into a JVCo in Myanmar as its initial capital to sell lubricants in the country for a three-year period.
Monday, January 16, 2017
Best World
Best World
- CLSA initiated with a Buy and TP of $2.50, translating to an upside of 78%.
- Despite the share-price rally (480% over the past one year), the stock remains undervalued vs regional peers.
- The stock trades at a large discount to regional peers at 9.9x/7.8x FY17/18 P/E, despite its superior earnings, dividend yield and ROE.
- With the stock seeing its first coverage from a foreign broker, we do not rule out increased interests in the stock, particularly in the year ahead, as Best World increases its penetration into China.
- CLSA initiated with a Buy and TP of $2.50, translating to an upside of 78%.
- Despite the share-price rally (480% over the past one year), the stock remains undervalued vs regional peers.
- The stock trades at a large discount to regional peers at 9.9x/7.8x FY17/18 P/E, despite its superior earnings, dividend yield and ROE.
- With the stock seeing its first coverage from a foreign broker, we do not rule out increased interests in the stock, particularly in the year ahead, as Best World increases its penetration into China.
SG Market (16 Jan 17)
The Singapore market may be range-trade bound as investors grapple with the lack of details on Trump's trade policies and search for signs of an earnings rebound with the start of the 4Q results season this week.
Regional bourses saw mixed trading today in Tokyo (-0.3%), Seoul (+0.1%) and Sydney (+0.6%).Technically, STI is overbought with immediate resistance at 3,040 and underlying support at 2,968.
Stocks to watch:
*SPH: 1QFY17 net profit plunged 43.8% to $45.7m, forming just 18% of full year estimates, hurt by staff layoff expenses, impairment charges on a press line and video business associate and fair value loss on FX hedges for its portfolio investments. Revenue declined 6% to $278.3m, as the core media business (-9.5%) was dragged by weaker advertising sales, but partly mitigated by smaller property (+1.3%) and others (+17.9%) segments. NAV/share at $2.16. The group continues to guide for challenging times in view of economic and structural headwinds confronting the media industry.
*TEE Int’l: 2QFY17 net profit sank 85.6% to $0.4m, as results from associates/JV swung into loss of $0.5m (2QFY16: $2.5m profit). Revenue rose 6.6% to $64.7m on higher progressive recognition from development properties. Backed by Total engineering order book stood at $302m but business prospects continue to face challenges amid weaker economic outlook and rising geopolitical uncertainties. Cuts interim DPS to 0.12¢ (2QFY16: 0.15¢). NAV/share at $0.118.
*GKE Corp: Swung to a 2QFY17 net loss of $0.6m (2QFY16: $0.4m profit) due to consolidation of expenses from recently-acquired marine logistics service provider, Marquis Services, and its China ready-mix concrete manufacturing plant, as well as higher warehouse rental. While revenue rose 45.3% to $11.9m, gross margin contracted 9.2ppt to 15% on a change in sales mix. Bottom line was further dragged by an absence of a disposal gain (2QFY16: $1.2m). NAV/share at $0.1255.
*Jumbo: Substantial shareholder Temasek pared its stake from 6.237% to 1.237% to Ron Sim, who doubled his stake to 10%, via a married deal of 32.1m shares at $0.665/share. MKE last had a Buy with TP of $0.78.
*Frencken: Disposing wholly-owned subsidiary Precico for RM128m, which would have increased pro forma FY15 EPS to 5.26¢ from 2.28¢.
*Asiamedic: Disclosed that it received expressions of interest on a potential commercial opportunity, although no definitive agreement has yet been entered. The group is also reviewing several capex plans including the possible relocation of clinics and upgrading of medical equipment.
*CNMC Goldmine: Expects to report a 4Q16 loss due to net unrealised FX loss from the RM depreciation, as well as a decline in revenue from lower ore grades.
Regional bourses saw mixed trading today in Tokyo (-0.3%), Seoul (+0.1%) and Sydney (+0.6%).Technically, STI is overbought with immediate resistance at 3,040 and underlying support at 2,968.
Stocks to watch:
*SPH: 1QFY17 net profit plunged 43.8% to $45.7m, forming just 18% of full year estimates, hurt by staff layoff expenses, impairment charges on a press line and video business associate and fair value loss on FX hedges for its portfolio investments. Revenue declined 6% to $278.3m, as the core media business (-9.5%) was dragged by weaker advertising sales, but partly mitigated by smaller property (+1.3%) and others (+17.9%) segments. NAV/share at $2.16. The group continues to guide for challenging times in view of economic and structural headwinds confronting the media industry.
*TEE Int’l: 2QFY17 net profit sank 85.6% to $0.4m, as results from associates/JV swung into loss of $0.5m (2QFY16: $2.5m profit). Revenue rose 6.6% to $64.7m on higher progressive recognition from development properties. Backed by Total engineering order book stood at $302m but business prospects continue to face challenges amid weaker economic outlook and rising geopolitical uncertainties. Cuts interim DPS to 0.12¢ (2QFY16: 0.15¢). NAV/share at $0.118.
*GKE Corp: Swung to a 2QFY17 net loss of $0.6m (2QFY16: $0.4m profit) due to consolidation of expenses from recently-acquired marine logistics service provider, Marquis Services, and its China ready-mix concrete manufacturing plant, as well as higher warehouse rental. While revenue rose 45.3% to $11.9m, gross margin contracted 9.2ppt to 15% on a change in sales mix. Bottom line was further dragged by an absence of a disposal gain (2QFY16: $1.2m). NAV/share at $0.1255.
*Jumbo: Substantial shareholder Temasek pared its stake from 6.237% to 1.237% to Ron Sim, who doubled his stake to 10%, via a married deal of 32.1m shares at $0.665/share. MKE last had a Buy with TP of $0.78.
*Frencken: Disposing wholly-owned subsidiary Precico for RM128m, which would have increased pro forma FY15 EPS to 5.26¢ from 2.28¢.
*Asiamedic: Disclosed that it received expressions of interest on a potential commercial opportunity, although no definitive agreement has yet been entered. The group is also reviewing several capex plans including the possible relocation of clinics and upgrading of medical equipment.
*CNMC Goldmine: Expects to report a 4Q16 loss due to net unrealised FX loss from the RM depreciation, as well as a decline in revenue from lower ore grades.
Friday, January 13, 2017
SG Market (13 Jan 17)
The market is likely to see some profit taking as the US post-election exuberance wanes amid the lack of clarity on Trump's policies.
Regional bourses opened mixed in Tokyo (+0.4%), Seoul (-0.4%) and Sydney (-0.9%).Technically, the STI is overbought with underlying support at 2,968 and topside resistance at 3,040.
Stocks to watch:
*Strategy: Financial services provider Markit projects total dividends for S'pore listed companies to rise by 0.6% to $16.4b in 2017 (2016: $16.3b, +0.4%), above Asian peers including Thailand (+0.4%), Hong Kong (-0.8%) and South Korea (-9.6%).
*Telecom: M1 and StarHub signed an MOU for a potential collaboration in mobile infrastructure sharing, to enable both companies to optimise resources to improve network coverage and capacity. The pooling could also enable both companies to reduce capex spending for the roll-out of next-generation networks.
*GLP: Reports suggest that Blackstone may vie With Warburg Pincus and a Chinese consortium to bid for the logistics facilities operator. The stock now trades at 1x P/B and a 15% discount to the consensus RNAV/share of SGD3.06.
*Duty Free Int'l: 3QFY17 results exceeded expectations as net profit jumped 26.6% to RM21.2m, lifted mainly by a net FX gain of RM9.6m (3QFY16: RM2.2m) and lower purchasing costs. However, revenue slid 13% to RM133m from a slowdown in tourism traffic from Thailand. Second interim DPS of 1.25¢ declared (3QFY16: nil). Separately, the group proposed a 2-for-5 bonus five-year warrants with exercise price of $0.43 to raise maximum gross proceeds of $205.4m for investments and working capital.
*ST Engineering: The electronics arm secured contracts worth $695m (4Q15: $435m) in 4Q16 bringing 2016 total contracts won to $2.33b (2015: $1.61b).
*Yoma: Landmark development projects have been approved by the Myanmar Investment Commission.
*Oxley: National Treasury Management Agency of Ireland will lease levels 3 to 8 of Block D1 or 11.8% of total gfa at upcoming development in Ireland, Dublin Landings, for 25 years. The lease will commence from the handover of the premises, expected in Feb 2018.
*AusGroup: To supply Shell Australia with scaffold equipment and consumables for the Prelude FLNG project in Australia’s Browse Basin, for an undisclosed sum.
*CSE Global: Acquiring 100% stake of Gulf Coast Power & Control of Louisiana for US$4.9m, which may be raised to US$5.4m upon reaching profit milestones. The target provides equipment and services to the midstream and downstream O&G industry. Post-deal, FY15 pro-forma EPS is estimated to increase 3% to 6.81¢.
*Aztech: Exit offer of $0.42/share has been declared unconditional after offeror AVS Investments garnered 52.86% control. Closing date of the offer will be on 23 Jan.
*Samurai 2K Aerosol: Placement of 20m new shares at $0.20/share was fully subscribed, with trading to debut on 16 Jan.
Regional bourses opened mixed in Tokyo (+0.4%), Seoul (-0.4%) and Sydney (-0.9%).Technically, the STI is overbought with underlying support at 2,968 and topside resistance at 3,040.
Stocks to watch:
*Strategy: Financial services provider Markit projects total dividends for S'pore listed companies to rise by 0.6% to $16.4b in 2017 (2016: $16.3b, +0.4%), above Asian peers including Thailand (+0.4%), Hong Kong (-0.8%) and South Korea (-9.6%).
*Telecom: M1 and StarHub signed an MOU for a potential collaboration in mobile infrastructure sharing, to enable both companies to optimise resources to improve network coverage and capacity. The pooling could also enable both companies to reduce capex spending for the roll-out of next-generation networks.
*GLP: Reports suggest that Blackstone may vie With Warburg Pincus and a Chinese consortium to bid for the logistics facilities operator. The stock now trades at 1x P/B and a 15% discount to the consensus RNAV/share of SGD3.06.
*Duty Free Int'l: 3QFY17 results exceeded expectations as net profit jumped 26.6% to RM21.2m, lifted mainly by a net FX gain of RM9.6m (3QFY16: RM2.2m) and lower purchasing costs. However, revenue slid 13% to RM133m from a slowdown in tourism traffic from Thailand. Second interim DPS of 1.25¢ declared (3QFY16: nil). Separately, the group proposed a 2-for-5 bonus five-year warrants with exercise price of $0.43 to raise maximum gross proceeds of $205.4m for investments and working capital.
*ST Engineering: The electronics arm secured contracts worth $695m (4Q15: $435m) in 4Q16 bringing 2016 total contracts won to $2.33b (2015: $1.61b).
*Yoma: Landmark development projects have been approved by the Myanmar Investment Commission.
*Oxley: National Treasury Management Agency of Ireland will lease levels 3 to 8 of Block D1 or 11.8% of total gfa at upcoming development in Ireland, Dublin Landings, for 25 years. The lease will commence from the handover of the premises, expected in Feb 2018.
*AusGroup: To supply Shell Australia with scaffold equipment and consumables for the Prelude FLNG project in Australia’s Browse Basin, for an undisclosed sum.
*CSE Global: Acquiring 100% stake of Gulf Coast Power & Control of Louisiana for US$4.9m, which may be raised to US$5.4m upon reaching profit milestones. The target provides equipment and services to the midstream and downstream O&G industry. Post-deal, FY15 pro-forma EPS is estimated to increase 3% to 6.81¢.
*Aztech: Exit offer of $0.42/share has been declared unconditional after offeror AVS Investments garnered 52.86% control. Closing date of the offer will be on 23 Jan.
*Samurai 2K Aerosol: Placement of 20m new shares at $0.20/share was fully subscribed, with trading to debut on 16 Jan.
Thursday, January 12, 2017
SG Market (12 Jan 17)
The Singapore market could consolidate gains after its extended run since the start of the year as investors await fresh catalysts from the 4Q results season kicking off next week.
Regional bourses are mixed this morning in Tokyo (-0.8%), Seoul (+0.3%) and Sydney (+0.2%).The STI is hovering at the psychological 3,000 mark with upside resistance at 3,040 and underlying support at 2,968.
Stocks to watch:
*GLP: Media reports cited that US private equity firm, Warburg Pincus, is cobbling a consortium to bid for GLP. Separately, the group has extended 3.6m sf of leases (2.1% of US portfolio) with its key customer in the US, a leading global appliance company.
*Vard: Parent and offeror, Fincantieri, has lowered the acceptance condition for its voluntary cash offer of $0.24/share from >90% to >50%. Hence, with Fincantieri's latest control of 55.63%, the offer has turned unconditional and the closing date is extended to 2 Feb.
*SPH REIT: 1QFY17 DPU of 1.34¢ (+0.8% y/y) was in line with consensus estimates as revenue inched up 0.9% to $52.6m on rental uplift of 4.6% and full occupancy for its two malls. NPI rose by a quicker 3.3% to $41.4m, helped by reduced utility and maintenance expenses. Aggregate leverage remained at 25.7%. Manager predicts stable performance despite challenging retail environment ahead. NAV/unit at $0.94.
*Lian Beng: 2QFY17 net profit slumped 75% to $5.7m as revenue decline 62.1% to $49.2m from reduced construction and ready-mixed concrete sales. This was further dragged by a 75.6% plunge in associate/JV contributions due to the absence of completion for development projects. Interim DPS kept at 1¢. NAV/share at $1.11.
*TEE Land: 2QFY17 net profit sank 54.1% to $0.7m on a $3.1m swing in associate contributions to $0.7m loss. Revenue jumped 144.1% to $24m due to higher progressive revenue recognised for Malaysia’s Third Avenue and new project Hilbre 28. However, gross margin contracted to 27.5% (-9.8ppts) due to the change in revenue mix. Interim DPS shaved to 0.15¢ (2QFY16: 0.22¢). NAV/share at $0.355.
*Silverlake: Insurance processing unit Merimen Ventures has marked its foray into Hong Kong, with the establishment of an office, expected to be used as a launchpad into Greater China and Northeast Asian markets. It recently secured accounts with two insurance companies, bringing its HK client stable to four.
*Keppel Corp: Divested 80% stake in JVCo, PT Sentral Tunjungan Perkasa, for Rp529b (~$57m), which will yield a disposal gain of $32m.*Federal Int’l: Divested 12% stake in PT Gasuma Federal Indonesia for US$1.9m, and expects to record a divestment gain of $1.3m.
*Uni-Asia: Disclosed that bulk carrier, MV Inspiration Lake, was involved in a collision with a fishing boat near South Korea.
Regional bourses are mixed this morning in Tokyo (-0.8%), Seoul (+0.3%) and Sydney (+0.2%).The STI is hovering at the psychological 3,000 mark with upside resistance at 3,040 and underlying support at 2,968.
Stocks to watch:
*GLP: Media reports cited that US private equity firm, Warburg Pincus, is cobbling a consortium to bid for GLP. Separately, the group has extended 3.6m sf of leases (2.1% of US portfolio) with its key customer in the US, a leading global appliance company.
*Vard: Parent and offeror, Fincantieri, has lowered the acceptance condition for its voluntary cash offer of $0.24/share from >90% to >50%. Hence, with Fincantieri's latest control of 55.63%, the offer has turned unconditional and the closing date is extended to 2 Feb.
*SPH REIT: 1QFY17 DPU of 1.34¢ (+0.8% y/y) was in line with consensus estimates as revenue inched up 0.9% to $52.6m on rental uplift of 4.6% and full occupancy for its two malls. NPI rose by a quicker 3.3% to $41.4m, helped by reduced utility and maintenance expenses. Aggregate leverage remained at 25.7%. Manager predicts stable performance despite challenging retail environment ahead. NAV/unit at $0.94.
*Lian Beng: 2QFY17 net profit slumped 75% to $5.7m as revenue decline 62.1% to $49.2m from reduced construction and ready-mixed concrete sales. This was further dragged by a 75.6% plunge in associate/JV contributions due to the absence of completion for development projects. Interim DPS kept at 1¢. NAV/share at $1.11.
*TEE Land: 2QFY17 net profit sank 54.1% to $0.7m on a $3.1m swing in associate contributions to $0.7m loss. Revenue jumped 144.1% to $24m due to higher progressive revenue recognised for Malaysia’s Third Avenue and new project Hilbre 28. However, gross margin contracted to 27.5% (-9.8ppts) due to the change in revenue mix. Interim DPS shaved to 0.15¢ (2QFY16: 0.22¢). NAV/share at $0.355.
*Silverlake: Insurance processing unit Merimen Ventures has marked its foray into Hong Kong, with the establishment of an office, expected to be used as a launchpad into Greater China and Northeast Asian markets. It recently secured accounts with two insurance companies, bringing its HK client stable to four.
*Keppel Corp: Divested 80% stake in JVCo, PT Sentral Tunjungan Perkasa, for Rp529b (~$57m), which will yield a disposal gain of $32m.*Federal Int’l: Divested 12% stake in PT Gasuma Federal Indonesia for US$1.9m, and expects to record a divestment gain of $1.3m.
*Uni-Asia: Disclosed that bulk carrier, MV Inspiration Lake, was involved in a collision with a fishing boat near South Korea.
Wednesday, January 11, 2017
UOL
The bullish outcome of a recent land tender for a city-fringe site has reinforced Maybank KE's cautious view on developers, as intensifying competition could further erode margins.
According to the URA, a 3,848 sqm site at Perumal Road, located next to Farrer Park MRT, attracted 11 bidders with Low Keng Huat submitting the top bid of $174m or $1,001 psf ppr. This is 4.4% higher than the next best bid tabled by China Construction and 27% above the $787 psf ppr paid for the nearby Sturdee Residences plot in Mar '15. Notably, nine of the 11 bids were also above the Sturdee Residences land price.
The 99-year leasehold site can be developed into 200 private apartments with commercial space on the first floor and should be able to garner keen interest given its proximity to commercial amenities, including City Square mall and Mustafa Centre.
Based on the potential average selling price of $1,600 psf, Maybank KE estimates that the developer could be looking at a rather fine pretax margin of 11% for the project.
This is also in line with the trend of narrowing margins for residential sites sold last year, underpinning the broker's cautious stance on developers. Furthermore, the persistently slow home sales could raise development risks and lower return on capital for developers.
Nevertheless, it is worth noting that recent hopes for potential sale of United Engineers and GLP could steer fund flows into the three large-cap developers, CapitaLand, City Dev, and UOL, as investors redeploy capital within the sector.
Under such climate, Maybank KE maintains its Neutral rating on the sector, and advocates exposure to stability over growth.
UOL remains as its top pick, with a Buy rating and TP of $7.39, as the developer may offer decent returns from its large recurring income base, and relatively better development earnings visibility from a conservative residential portfolio.
Downside of UOL is also largely supported by its compelling valuation, as it currently trades at a discount of 35% to RNAV.
With UOL touted to have greater potential upside among developers under Maybank KE coverage, investors may consider switching out of other developers into the counter.
- UOL: Buy, TP $7.39, potential upside 17%
- CapitaLand: Buy, TP $3.14, potential upside 10%
- City Dev: Hold, TP $8.90, potential upside 3%
- Ho Bee Land: Hold, TP $2.13, potential upside 3%
- Wing Tai: Hold, TP $1.67, potential upside 2%
According to the URA, a 3,848 sqm site at Perumal Road, located next to Farrer Park MRT, attracted 11 bidders with Low Keng Huat submitting the top bid of $174m or $1,001 psf ppr. This is 4.4% higher than the next best bid tabled by China Construction and 27% above the $787 psf ppr paid for the nearby Sturdee Residences plot in Mar '15. Notably, nine of the 11 bids were also above the Sturdee Residences land price.
The 99-year leasehold site can be developed into 200 private apartments with commercial space on the first floor and should be able to garner keen interest given its proximity to commercial amenities, including City Square mall and Mustafa Centre.
Based on the potential average selling price of $1,600 psf, Maybank KE estimates that the developer could be looking at a rather fine pretax margin of 11% for the project.
This is also in line with the trend of narrowing margins for residential sites sold last year, underpinning the broker's cautious stance on developers. Furthermore, the persistently slow home sales could raise development risks and lower return on capital for developers.
Nevertheless, it is worth noting that recent hopes for potential sale of United Engineers and GLP could steer fund flows into the three large-cap developers, CapitaLand, City Dev, and UOL, as investors redeploy capital within the sector.
Under such climate, Maybank KE maintains its Neutral rating on the sector, and advocates exposure to stability over growth.
UOL remains as its top pick, with a Buy rating and TP of $7.39, as the developer may offer decent returns from its large recurring income base, and relatively better development earnings visibility from a conservative residential portfolio.
Downside of UOL is also largely supported by its compelling valuation, as it currently trades at a discount of 35% to RNAV.
With UOL touted to have greater potential upside among developers under Maybank KE coverage, investors may consider switching out of other developers into the counter.
- UOL: Buy, TP $7.39, potential upside 17%
- CapitaLand: Buy, TP $3.14, potential upside 10%
- City Dev: Hold, TP $8.90, potential upside 3%
- Ho Bee Land: Hold, TP $2.13, potential upside 3%
- Wing Tai: Hold, TP $1.67, potential upside 2%
SG Market (11 Nov 16)
The market could hold steady as investors continue to bottom fish for undervalued counters amid potential takeover bids for GLP and United Engineers.Regional bourses opened higher today in Tokyo (+0.3%), Seoul (+0.5%) and Sydney (+0.4%).Technically, the STI has topped the psychological 3,000 mark for the first time in more than a year and appears headed to the next objective at 3,040, with underlying support now at 2,968.
Stocks to watch:
*GLP: Merged 12 indirect US subsidiaries into two existing entities, simplifying its group structure ahead of a possible takeover. At $2.55, the global logistics asset owner and manager is valued at 0.98x P/B and 17% discount to consensus RNAV/share of $3.06.
*Low Keng Huat: Tendered the top price of $174.1m or $1,001 psf ppr for a 3,848 sqm land parcel at Perumal Road out of 11 bidders. This is 4.4% higher than the next best bid and 27% higher than the nearby Sturdee Residences plot, which was sold for $787 psf ppr in Mar '15, signaling that developers remain hungry for sites. The 99-year leasehold site is near Farrer Road MRT station and can be developed into 200 apartments with estimated sale price of $1,700 psf.
*QAF: Plans to invest a total $21.5m to expand its bread production and distribution business in the Philippines via setting up of a new bread manufacturing plant in Mindanao (completion in 2018) and acquiring a plot of land in Luzon for another bread plant in future. Trades at 10x consensus forward P/E.
*mm2 Asia: Appointed ex-Mediacorp veteran Chang Long Jong as its new CEO, whom will replace Melvin Ang, that was appointed as the group's Executive Chairman on 9 Jan.*Pacific Radiance: Inked multiyear contracts with independent and national oil companies for five of its OSVs to support production in the Arabian Gulf. The contracts are worth over US$68m for vessels that are off-hire.
*Vard: Secures contracts to construct two LNG powered ferries for Torghatten Nord for NOK600m.
*Silverlake Axis: Sold 3m Global Infotech shares on the Shenzhen Stock Exchange. It is expected to book a disposal gain of RM26.2m which it intends to use for general working capital, special dividends, repayment of debt as well as other business opportunities.
*Emas Offshore: 1QFY17 net loss of US$2.2m (1QFY16: US$3.2m), while revenue slipped 15% to US$42.5m on weak chartering services arising from the general weakness in the offshore industry. The bottom line was partially lifted by FX gains of $3m (1QFY16: US$0.5m), from the favourable USD against SGD and MYR.
*Boustead Projects: Secured a development contract for a new R&D centre for automotive supplier Continental Corporation in Singapore. Construction for the new development, adjacent to two previous developments for the same client, will commence this month and be completed by 1Q18. Value for the new contract is undisclosed, but will lift order book to $149m.
*Nordic: Purchased US$3m of carbon allowances under China's National Emissions Trading Scheme, in relation to a previous agreement with a multinational corporation to purchase and sell-back pilot carbon allowances.
*YuuZoo: To launch an E-Sports League for Blizzard Entertainment's Warcraft III - The Frozen Throne, with Harbin Sports Bureau in China. The league will feature 1,000 internet cafes throughout 16 cities in China and shown live on several Chinese TV stations. Group expects to earn revenue from sponsorships, advertising and ticket sales.
*Natural Cool: Received special notice from two shareholders comprising over 10% of share capital, for an EGM to completely remove and replace the entire board, with the exception of CEO Tsng Joo Peng, due to the lack of honesty and good faith to raise capital..
*Samurai 2K Aerosol: Clarified that the number of aerosol spray paint it sold in Malaysia (14.3m cans) and Indonesia (58m cans), as reported by local media including Business Times, are the total market size in the respective markets. Instead, the group sold 3.8m and 5.5m cans in FY3/15 and FY3/16, respectively, across all regions.
*Adventus Holdings: Providing a $3.88m convertible loan to JVCo Regis Bay Vietnam Investment to invest in real estate projects in major Vietnamese cities with its partner Panthera. Its maiden project is for a 4-5 star hotel development in Da Nang with 300-500 rooms. The loan is convertible for a 75% stake in the JV.
Stocks to watch:
*GLP: Merged 12 indirect US subsidiaries into two existing entities, simplifying its group structure ahead of a possible takeover. At $2.55, the global logistics asset owner and manager is valued at 0.98x P/B and 17% discount to consensus RNAV/share of $3.06.
*Low Keng Huat: Tendered the top price of $174.1m or $1,001 psf ppr for a 3,848 sqm land parcel at Perumal Road out of 11 bidders. This is 4.4% higher than the next best bid and 27% higher than the nearby Sturdee Residences plot, which was sold for $787 psf ppr in Mar '15, signaling that developers remain hungry for sites. The 99-year leasehold site is near Farrer Road MRT station and can be developed into 200 apartments with estimated sale price of $1,700 psf.
*QAF: Plans to invest a total $21.5m to expand its bread production and distribution business in the Philippines via setting up of a new bread manufacturing plant in Mindanao (completion in 2018) and acquiring a plot of land in Luzon for another bread plant in future. Trades at 10x consensus forward P/E.
*mm2 Asia: Appointed ex-Mediacorp veteran Chang Long Jong as its new CEO, whom will replace Melvin Ang, that was appointed as the group's Executive Chairman on 9 Jan.*Pacific Radiance: Inked multiyear contracts with independent and national oil companies for five of its OSVs to support production in the Arabian Gulf. The contracts are worth over US$68m for vessels that are off-hire.
*Vard: Secures contracts to construct two LNG powered ferries for Torghatten Nord for NOK600m.
*Silverlake Axis: Sold 3m Global Infotech shares on the Shenzhen Stock Exchange. It is expected to book a disposal gain of RM26.2m which it intends to use for general working capital, special dividends, repayment of debt as well as other business opportunities.
*Emas Offshore: 1QFY17 net loss of US$2.2m (1QFY16: US$3.2m), while revenue slipped 15% to US$42.5m on weak chartering services arising from the general weakness in the offshore industry. The bottom line was partially lifted by FX gains of $3m (1QFY16: US$0.5m), from the favourable USD against SGD and MYR.
*Boustead Projects: Secured a development contract for a new R&D centre for automotive supplier Continental Corporation in Singapore. Construction for the new development, adjacent to two previous developments for the same client, will commence this month and be completed by 1Q18. Value for the new contract is undisclosed, but will lift order book to $149m.
*Nordic: Purchased US$3m of carbon allowances under China's National Emissions Trading Scheme, in relation to a previous agreement with a multinational corporation to purchase and sell-back pilot carbon allowances.
*YuuZoo: To launch an E-Sports League for Blizzard Entertainment's Warcraft III - The Frozen Throne, with Harbin Sports Bureau in China. The league will feature 1,000 internet cafes throughout 16 cities in China and shown live on several Chinese TV stations. Group expects to earn revenue from sponsorships, advertising and ticket sales.
*Natural Cool: Received special notice from two shareholders comprising over 10% of share capital, for an EGM to completely remove and replace the entire board, with the exception of CEO Tsng Joo Peng, due to the lack of honesty and good faith to raise capital..
*Samurai 2K Aerosol: Clarified that the number of aerosol spray paint it sold in Malaysia (14.3m cans) and Indonesia (58m cans), as reported by local media including Business Times, are the total market size in the respective markets. Instead, the group sold 3.8m and 5.5m cans in FY3/15 and FY3/16, respectively, across all regions.
*Adventus Holdings: Providing a $3.88m convertible loan to JVCo Regis Bay Vietnam Investment to invest in real estate projects in major Vietnamese cities with its partner Panthera. Its maiden project is for a 4-5 star hotel development in Da Nang with 300-500 rooms. The loan is convertible for a 75% stake in the JV.
Tuesday, January 10, 2017
SG Market (10 Jan 17)
Some profit taking could set in on simmering tensions with China over the Terrex issue and uncertainty ahead of the Trump presidency on 20 Jan.
Regional bourses opened in negative territory in Tokyo (-0.3%), Seoul (-0.3%) and Sydney (-0.7%).Technically, a sustained move above the 2,968 triple-top could take the index higher to the next resistance at 3,040, with near term support at 2,920.
Stocks to watch:
*SGX: Dec securities turnover totalled $20.9b (+23% y/y, -29% m/m), with average daily value of $996m (+29% y/y, -25% m/m), while derivatives volume shrank to 13.3m contracts (-8% y/y, -20% m/m) on weaker trades in equity indexes (-9% y/y, -13% m/m) and FX futures (-30% y/y, -20% m/m).
*Capitaland: Inked its second mall management contract in five months and crossed the 12m sf retail gfa mark in western China. The group will manage a 50,000 sqm shopping mall in La Botanica, a township located in Xi’an’s Chan-Ba Ecological District that is being developed by a JV between CapitaLand and Hong Kong's Henderson Land.
*Citic Envirotech: Secured first river restoration project in Yixing, Jiangsu in China, worth Rmb650m. A 90/10 JV with Yixing Industrial Park for Environmental Science & Technology Management Committee will undertake the build-lease-transfer project. Construction is expected to take two years with lease period of eight years.
*Hyflux: Egyptian Ain Sokhna Integrated Water and Power Project has been changed to a BOT/BOO structure instead of the initial EPC contract that was worth US$500m, with new terms currently being discussed.
*ISOTeam: Awarded $22.65m worth in contracts, including solar leasing of grid-tied solar photovoltaic system, repair and redecoration works for public housing and addition and alteration works. Contracts scheduled to be completed between Jan '17 and Jun '18.
*Yanlord Land: Acquired the remaining 25% stake in Shenzhen Hengming Commercial for Rmb1.125b or 0.56x P/B.
*F&N: Acquiring the Singapore and Malaysian distribution arms of book publisher Penguin Random House for $8m.
*Innovalues: Date for the $1.01/share buyout by Northstar Private Equity via a scheme of arrangement is set on 25 Jan. MKE had previously advised to await further developments prior to the court meeting.
*CWT: Updated that the potential transaction relating to controlling shareholder C&P is still in progress, since 16 May 2016.
*CEFC: Updated that the successful acquisition of a downstream distribution network, CEFC Assets Management & Equity Investment (HK), advances the group's penetration into Europe’s energy market, its key strategic market.
*Cheung Woh Tech: 3QFY17 net profit dived 83.2% to $0.3m on softer revenue of $20.4m (-18.6%), dragged by lower sales in HDD components (-24.7%), although partially offset by stronger precision metal stamping components (+22.7%). Gross margin contracted to 16.7% (-5.1ppts) as it grappled with higher labour and overhead costs. NAV/share at $0.369.
Regional bourses opened in negative territory in Tokyo (-0.3%), Seoul (-0.3%) and Sydney (-0.7%).Technically, a sustained move above the 2,968 triple-top could take the index higher to the next resistance at 3,040, with near term support at 2,920.
Stocks to watch:
*SGX: Dec securities turnover totalled $20.9b (+23% y/y, -29% m/m), with average daily value of $996m (+29% y/y, -25% m/m), while derivatives volume shrank to 13.3m contracts (-8% y/y, -20% m/m) on weaker trades in equity indexes (-9% y/y, -13% m/m) and FX futures (-30% y/y, -20% m/m).
*Capitaland: Inked its second mall management contract in five months and crossed the 12m sf retail gfa mark in western China. The group will manage a 50,000 sqm shopping mall in La Botanica, a township located in Xi’an’s Chan-Ba Ecological District that is being developed by a JV between CapitaLand and Hong Kong's Henderson Land.
*Citic Envirotech: Secured first river restoration project in Yixing, Jiangsu in China, worth Rmb650m. A 90/10 JV with Yixing Industrial Park for Environmental Science & Technology Management Committee will undertake the build-lease-transfer project. Construction is expected to take two years with lease period of eight years.
*Hyflux: Egyptian Ain Sokhna Integrated Water and Power Project has been changed to a BOT/BOO structure instead of the initial EPC contract that was worth US$500m, with new terms currently being discussed.
*ISOTeam: Awarded $22.65m worth in contracts, including solar leasing of grid-tied solar photovoltaic system, repair and redecoration works for public housing and addition and alteration works. Contracts scheduled to be completed between Jan '17 and Jun '18.
*Yanlord Land: Acquired the remaining 25% stake in Shenzhen Hengming Commercial for Rmb1.125b or 0.56x P/B.
*F&N: Acquiring the Singapore and Malaysian distribution arms of book publisher Penguin Random House for $8m.
*Innovalues: Date for the $1.01/share buyout by Northstar Private Equity via a scheme of arrangement is set on 25 Jan. MKE had previously advised to await further developments prior to the court meeting.
*CWT: Updated that the potential transaction relating to controlling shareholder C&P is still in progress, since 16 May 2016.
*CEFC: Updated that the successful acquisition of a downstream distribution network, CEFC Assets Management & Equity Investment (HK), advances the group's penetration into Europe’s energy market, its key strategic market.
*Cheung Woh Tech: 3QFY17 net profit dived 83.2% to $0.3m on softer revenue of $20.4m (-18.6%), dragged by lower sales in HDD components (-24.7%), although partially offset by stronger precision metal stamping components (+22.7%). Gross margin contracted to 16.7% (-5.1ppts) as it grappled with higher labour and overhead costs. NAV/share at $0.369.
Monday, January 9, 2017
SG Market (09 Jan 16)
Singapore market will likely push further upwards from continued optimism in the US economy, as investors take fresh cues to buy ahead of the US earnings season kicking off this week.
Regional bourses opened marginally positive in Seoul (+0.1%) and Sydney (+0.6%). The Japanese market is closed for public holiday.Technically, the STI faces immediate resistance at the 2,968 triple top, with next objective at 3,040, and support at 2,920 fibonacci level.
Stocks to watch:
*REITs: Industrial landlords could see headwinds for rental uplift this year, after national developer JTC gave 3-10% rental rebates to all its O&M tenants and lessees for 2017.
*Construction: The Building and Construction Authority is projecting total construction contracts to be awarded this year to reach $28-35b (2016: $26.1b), boosted by a surge in public sector construction demand to $20-24b (2016: $15.8b). However, industry consultant Rider Levett Bucknall sees tender prices falling a further 1-2% (2016: -4.1%) on continued competitive pressure.
*Sarine Tech: Delivered a record 24 Galaxy systems in 4Q16 (3Q16: 22, 2Q16: 20), bringing total 2016 deliveries to 84. There is currently a cumulative installed base of 299 units contributing to recurring income. MKE last had a Buy with TP of $1.97.
*Oxley/KSH Holdings: 27.5%/22.5%-owned Chinese associate Sino Singapore KAP Construction has expanded the scope of business activities from property development to include property and car park management, and related activities.
*Sembcorp Marine: Incorporated a 37.5%-owned logistics company BSW Marine to own and operate a push barge to transport the cargo of tenants at Batam and Bintan industrial parks.
*Cosco Corp: 51%-owned Cosco Shipyard Group have agreed with an Asian client to extend the delivery of a jackup drilling rig from 30 Mar '17 to 30 Mar '18.
*AA Group: Entered MOU with Poh Huat Heng to undertake exclusive negotiations over one-month on potential cooperation. JV or M&A with the latter's Engineering Manufacturing Services, which provides value-added general warehousing and logistics services, industrial and office space and workers' dormitory facilities.
*TA Corp: Acquired The Investment Firm for $2m. The entity is an investment holding, business and management consultancy firm that owns two commercial properties at Orchard Plaza, with 59 years of lease remaining.*Secura: Awarded a 3-year contract worth $6.7m by SBS Transit for the provision of unarmed security services at certain sites, effective from Mar '17 to Feb '20.
*GKE: Issued a profit warning for 2QFY17 due to 1) operating losses for the ready-mix concrete plant in Wuzhou, China, 2) significantly lower charter rates for the LNG vessel under its 50:50 JV and 3) lower profit contribution from warehousing & logistics business division.
Regional bourses opened marginally positive in Seoul (+0.1%) and Sydney (+0.6%). The Japanese market is closed for public holiday.Technically, the STI faces immediate resistance at the 2,968 triple top, with next objective at 3,040, and support at 2,920 fibonacci level.
Stocks to watch:
*REITs: Industrial landlords could see headwinds for rental uplift this year, after national developer JTC gave 3-10% rental rebates to all its O&M tenants and lessees for 2017.
*Construction: The Building and Construction Authority is projecting total construction contracts to be awarded this year to reach $28-35b (2016: $26.1b), boosted by a surge in public sector construction demand to $20-24b (2016: $15.8b). However, industry consultant Rider Levett Bucknall sees tender prices falling a further 1-2% (2016: -4.1%) on continued competitive pressure.
*Sarine Tech: Delivered a record 24 Galaxy systems in 4Q16 (3Q16: 22, 2Q16: 20), bringing total 2016 deliveries to 84. There is currently a cumulative installed base of 299 units contributing to recurring income. MKE last had a Buy with TP of $1.97.
*Oxley/KSH Holdings: 27.5%/22.5%-owned Chinese associate Sino Singapore KAP Construction has expanded the scope of business activities from property development to include property and car park management, and related activities.
*Sembcorp Marine: Incorporated a 37.5%-owned logistics company BSW Marine to own and operate a push barge to transport the cargo of tenants at Batam and Bintan industrial parks.
*Cosco Corp: 51%-owned Cosco Shipyard Group have agreed with an Asian client to extend the delivery of a jackup drilling rig from 30 Mar '17 to 30 Mar '18.
*AA Group: Entered MOU with Poh Huat Heng to undertake exclusive negotiations over one-month on potential cooperation. JV or M&A with the latter's Engineering Manufacturing Services, which provides value-added general warehousing and logistics services, industrial and office space and workers' dormitory facilities.
*TA Corp: Acquired The Investment Firm for $2m. The entity is an investment holding, business and management consultancy firm that owns two commercial properties at Orchard Plaza, with 59 years of lease remaining.*Secura: Awarded a 3-year contract worth $6.7m by SBS Transit for the provision of unarmed security services at certain sites, effective from Mar '17 to Feb '20.
*GKE: Issued a profit warning for 2QFY17 due to 1) operating losses for the ready-mix concrete plant in Wuzhou, China, 2) significantly lower charter rates for the LNG vessel under its 50:50 JV and 3) lower profit contribution from warehousing & logistics business division.
Friday, January 6, 2017
SG Market (06 Jan 16)
Regional bourses opened mixed, with Tokyo (-0.7%) weaker, and Seoul (+0.3%) and Sydney (+0.1%) firmer.
Technically, the STI has covered the 2,953 breakdown gap, and will take another crack at the 2,968 triple top. Immediate support is seen at 2,920 fibonacci level.
Stocks to watch:
*SingPost: Obtained shareholder’s approval to issue an additional 5% new shares to Alibaba. The e-commerce giant will increase its stake to 14.4% and inject $184m net proceeds to fund growth in e-commerce logistics. MKE has Hold with $1.75 TP.
*GLP: Confirmed news reports that it is in preliminary discussions with various parties in connection to a possible buyout but has not entered into any definitive transaction. Stock is currently trading at 0.92x P/B vs US peer Prologis 1.93x.
*United Engineers: Major shareholders OCBC and Great Eastern have jointly-appointed Credit Suisse as the financial adviser for a strategic review in United Engineers and WBL Corp.
*CapitaLand: Serviced-residence arm Ascott’s attempt to replace a 100-year-old art gallery in its premises in The Cavendish with retail stores has hit a snag, and needs to appear before court on 16 Jan to explain why it has grounds to evict Franses Gallery.
*Triyards: 1QFY17 net profit plunged 66% y/y to US$2.1m, despite a 17% increase in revenue to US$91.2m, from contributions from 12 vessels, as well as from the Strategic Marine Group for the construction of aluminium crew boats and wind farm vessels. Bottom line was weighed by a 7.2ppt drop in gross margin to 11.5% from product mix difference, as well as from increased admin and financial expenses. NAV/share at US$0.6952.
*ISOTeam: To acquire Rong Shun Engineering & Construction for $6.5m from Ting Guak Choo. Rong Shun provides building construction, renovation services and electrical works and will help expand its ability to offer a full suite of engineering services and solutions.
*Vallianz: Streamlining operations. Ended the business of providing crew management services to external parties and travel services to offshore O&G industry, to focus on the core vessel chartering business.
*Cacola: Placing out 142m shares to raise $0.6m to four private investors for working capital.
Technically, the STI has covered the 2,953 breakdown gap, and will take another crack at the 2,968 triple top. Immediate support is seen at 2,920 fibonacci level.
Stocks to watch:
*SingPost: Obtained shareholder’s approval to issue an additional 5% new shares to Alibaba. The e-commerce giant will increase its stake to 14.4% and inject $184m net proceeds to fund growth in e-commerce logistics. MKE has Hold with $1.75 TP.
*GLP: Confirmed news reports that it is in preliminary discussions with various parties in connection to a possible buyout but has not entered into any definitive transaction. Stock is currently trading at 0.92x P/B vs US peer Prologis 1.93x.
*United Engineers: Major shareholders OCBC and Great Eastern have jointly-appointed Credit Suisse as the financial adviser for a strategic review in United Engineers and WBL Corp.
*CapitaLand: Serviced-residence arm Ascott’s attempt to replace a 100-year-old art gallery in its premises in The Cavendish with retail stores has hit a snag, and needs to appear before court on 16 Jan to explain why it has grounds to evict Franses Gallery.
*Triyards: 1QFY17 net profit plunged 66% y/y to US$2.1m, despite a 17% increase in revenue to US$91.2m, from contributions from 12 vessels, as well as from the Strategic Marine Group for the construction of aluminium crew boats and wind farm vessels. Bottom line was weighed by a 7.2ppt drop in gross margin to 11.5% from product mix difference, as well as from increased admin and financial expenses. NAV/share at US$0.6952.
*ISOTeam: To acquire Rong Shun Engineering & Construction for $6.5m from Ting Guak Choo. Rong Shun provides building construction, renovation services and electrical works and will help expand its ability to offer a full suite of engineering services and solutions.
*Vallianz: Streamlining operations. Ended the business of providing crew management services to external parties and travel services to offshore O&G industry, to focus on the core vessel chartering business.
*Cacola: Placing out 142m shares to raise $0.6m to four private investors for working capital.
Thursday, January 5, 2017
SG Market (05 Jan 16)
The local market could continue to ride on the global risk-on sentiment amid the recent spate of positive economic data.
Regional bourses opened mixed, with Tokyo (-0.1%) and Seoul (-0.03%) weaker, and Sydney (+0.2%) stronger.Technically, the STI is testing the 2,920 fibonacci resistance (20-dma), with next objective at the 2,953 breakaway gap. Downside support is at 2,900.
Stocks to watch:
*Sino Grandness. Partnering Wechat Food to distribute its products, including its Garden Fresh line, Grandness canned food and Hao Tian Yuan snacks via Wechat's mobile internet platform..
*AEM: Disclosed an outstanding order book of $84.5m as at 1 Jan, or $17.8m higher than its previous update on 9 Dec, comprising purchase orders for equipment and kits to be delivered in the financial year.
*MoneyMax: Proposed to acquire Malaysian pawnbroker Pajak Gadai Hen Teck for RM4.14m.
*TIH: Injected $4.6m as an additional loan to Fortune Code to maintain its 8% share of shareholder funding (i.e. equity and shareholder loans). The additional loan will be used to repay debt as well as for working capital purposes.
*Trendlines: Prime Partners becomes the third investor in Trendlines Medical Singapore, acquiring a 3.75% stake in the subsidiary for an undisclosed price.
*YuuZoo: Issued 53.5m drawdown shares on 4 Jan at $0.1359/share, relating to its GEM facility. The drawdown of $7.3m will be used for business development and working capital.
Regional bourses opened mixed, with Tokyo (-0.1%) and Seoul (-0.03%) weaker, and Sydney (+0.2%) stronger.Technically, the STI is testing the 2,920 fibonacci resistance (20-dma), with next objective at the 2,953 breakaway gap. Downside support is at 2,900.
Stocks to watch:
*Sino Grandness. Partnering Wechat Food to distribute its products, including its Garden Fresh line, Grandness canned food and Hao Tian Yuan snacks via Wechat's mobile internet platform..
*AEM: Disclosed an outstanding order book of $84.5m as at 1 Jan, or $17.8m higher than its previous update on 9 Dec, comprising purchase orders for equipment and kits to be delivered in the financial year.
*MoneyMax: Proposed to acquire Malaysian pawnbroker Pajak Gadai Hen Teck for RM4.14m.
*TIH: Injected $4.6m as an additional loan to Fortune Code to maintain its 8% share of shareholder funding (i.e. equity and shareholder loans). The additional loan will be used to repay debt as well as for working capital purposes.
*Trendlines: Prime Partners becomes the third investor in Trendlines Medical Singapore, acquiring a 3.75% stake in the subsidiary for an undisclosed price.
*YuuZoo: Issued 53.5m drawdown shares on 4 Jan at $0.1359/share, relating to its GEM facility. The drawdown of $7.3m will be used for business development and working capital.
Wednesday, January 4, 2017
HC Surgical
Endoscopy specialist, HC Surgical Specialists' (HCSS) 1HFY17 net profit slumped 91.8% to $0.1m, hurt by listing expenses of $1.3m. Excluding one-offs, earnings would have been relatively stable at $1.5m (+0.9%).
Revenue grew 11.1% to $4.3m as it welcomed contributions from 51%-owned Lai Bec (Mt Elizabeth Medical Centre clinic) and wholly owned CTK Tan Surgery (clinics at both Mount Elizabeth Novena and Gleneagles Hospital).
Bottomline was further dampened by higher staff costs of $1.3m (+76.6%) on increased headcount from the new subsidiaries as well as interest expense of $0.3m (+370.8%), related to its redeemable convertible loans, which has since been converted to shares prior to its IPO.
HCSS's balance sheet continues to remain robust with net cash of $13.4m or $0.092/share and no debt. Meanwhile operating cash flow strengthened during the period to $0.9m (+62.2%) albeit from a low base.
Interestingly, the group announced its maiden interim DPS of 1.8¢ which translates to about $2.6m, or >70% more than its underlying 1HFY17 net profit. The group had guided that it intends to distribute 70% of its FY17 net profit to shareholders.
The distribution translates to 2.9% yield at current prices versus peers' 1.4-4.4%. .
While the group expects operating conditions to be challenging in light of the gloomy economic climate, it intends to continue expanding and improving operating efficiencies to contain costs.
Separately, the group announced a $0.8m investment for a 40% stake in a JVCo with Iridium Investment Management (40%) and JILB International (20%). The JVCo will be focused on operating and expanding additional clinics in the heartlands as well as develop and grow the range of medical services provided by HCSS.
Moving forward, the JV partners also intend to increase their investment in the JVCo by up to $3m at a later stage.
HCSS is currently trading at a relatively undemanding 22.4x trailing P/E versus industry average of 35-55x.
Revenue grew 11.1% to $4.3m as it welcomed contributions from 51%-owned Lai Bec (Mt Elizabeth Medical Centre clinic) and wholly owned CTK Tan Surgery (clinics at both Mount Elizabeth Novena and Gleneagles Hospital).
Bottomline was further dampened by higher staff costs of $1.3m (+76.6%) on increased headcount from the new subsidiaries as well as interest expense of $0.3m (+370.8%), related to its redeemable convertible loans, which has since been converted to shares prior to its IPO.
HCSS's balance sheet continues to remain robust with net cash of $13.4m or $0.092/share and no debt. Meanwhile operating cash flow strengthened during the period to $0.9m (+62.2%) albeit from a low base.
Interestingly, the group announced its maiden interim DPS of 1.8¢ which translates to about $2.6m, or >70% more than its underlying 1HFY17 net profit. The group had guided that it intends to distribute 70% of its FY17 net profit to shareholders.
The distribution translates to 2.9% yield at current prices versus peers' 1.4-4.4%. .
While the group expects operating conditions to be challenging in light of the gloomy economic climate, it intends to continue expanding and improving operating efficiencies to contain costs.
Separately, the group announced a $0.8m investment for a 40% stake in a JVCo with Iridium Investment Management (40%) and JILB International (20%). The JVCo will be focused on operating and expanding additional clinics in the heartlands as well as develop and grow the range of medical services provided by HCSS.
Moving forward, the JV partners also intend to increase their investment in the JVCo by up to $3m at a later stage.
HCSS is currently trading at a relatively undemanding 22.4x trailing P/E versus industry average of 35-55x.
SG Market (04 Jan 17)
The market might resume its upward climb, taking stock of the better-than-expected Dec manufacturing PMI and 4Q GDP growth as well as buoyant mood on Wall Street. O&M counters could come into focus in light of oil price volatility.
Regional bourses opened mixed, with Tokyo (+1.3%) playing catch-up and Seoul (-0.01%) and Sydney (-0.01%) flattish.Technically, the STI is poised to sail past 2,900 to test next resistance at 2,920. Bottom side support is seen at 2,868 (50-dma).
Stocks to watch:
*Strategy: Consumer staples was the best performing sector within the Singapore stock market in 2016, surging 25.8%. The best performing stocks include Japfa, Super Group and Golden Agri. For 2017, MKE favours office REITs (Buy KREIT, CCT) and healthcare (Buy Raffles Med).
*Jumbo: Inked its first franchise agreement for an initial 10 years to bring its seafood restaurants to Vietnam. The first outlet is expected to open in Ho Chi Minh City in mid-2017, with another two in the pipeline to be opened over the next two years. Separately, a new Ng Ah Sio bak kut teh outlet has opened in Ngee Ann City. MKE maintains its Buy with TP of $0.78.
*Midas: 32.5%-owned JV CRRC Nanjing Puzhen Rail Transport secured two metro train car supply contracts worth Rmb1.77b. The first contract (Rmb1.05b) is for the Changzhou Rail Transit Line One Phase One, slated for delivery between Jan '18 and Nov '19, while the second contract (Rmb720m) is for Xuzhou Urban Rail Transit Line One Phase One, scheduled for delivery between May '18 and Aug '19.
*First Resources: Nov FFB harvest surged 22.7% to 289,823 tonnes, with yield rising 12.5% to 1.8 tonnes/ha. CPO production soared 25% to 67,770 tonnes even though extraction rate slipped 0.2ppt to 22.1%. MKE last had a Hold with TP of $1.97.
*HC Surgical Specialists: 1HFY17 net profit slumped 91.8% to $0.1m, hurt by listing expenses of $1.3m. Excluding one-offs, earnings would have been stable at $1.5m (+0.9%). Revenue grew 11.1% to $4.3m on contributions from its new subsidiaries, Lai Bec and CTK Tan Surgery. Balance sheet remained intact with net cash of $13.4m (9.1¢/share) which it intends to use to expand operations in the heartlands. Declared maiden interim DPS of 1.8¢. NAV/share at $0.10. Separately, it set up a 40:40:20 JV with Iridium Investment Management and JILB Int'l to provide medical services in the heartlands.
*Regal Int'l: Entered into a RM90m conditional offtake agreement with Malaysian-based MyAngkasa Bina for the sale of all 276 residential units under Phase 3 of its Airtrollis property development project in Nilai, Negeri Sembilan. Construction and sales of the project will commence in 2017, and expected to be completed by 2020.
*Kitchen Culture: Entered into an agreement with Crede CG III to issue US$20m worth of 24-month 6% convertible notes in tranches of US$5m. It intends to use up to 20% of the net proceeds of $27.9m to repay debts with the remaining used for capex, growth expansion and general working capital.
*ISR Capital: Quah Su Yin has stepped down as CEO to “focus on family business”. The stock has been suspended since 27 Nov, and Quah has previously claimed that there is no direct or indirect link between the group and the 2013 penny stock saga, save for the fact that she is the sister of one of the co-accused persons.
Regional bourses opened mixed, with Tokyo (+1.3%) playing catch-up and Seoul (-0.01%) and Sydney (-0.01%) flattish.Technically, the STI is poised to sail past 2,900 to test next resistance at 2,920. Bottom side support is seen at 2,868 (50-dma).
Stocks to watch:
*Strategy: Consumer staples was the best performing sector within the Singapore stock market in 2016, surging 25.8%. The best performing stocks include Japfa, Super Group and Golden Agri. For 2017, MKE favours office REITs (Buy KREIT, CCT) and healthcare (Buy Raffles Med).
*Jumbo: Inked its first franchise agreement for an initial 10 years to bring its seafood restaurants to Vietnam. The first outlet is expected to open in Ho Chi Minh City in mid-2017, with another two in the pipeline to be opened over the next two years. Separately, a new Ng Ah Sio bak kut teh outlet has opened in Ngee Ann City. MKE maintains its Buy with TP of $0.78.
*Midas: 32.5%-owned JV CRRC Nanjing Puzhen Rail Transport secured two metro train car supply contracts worth Rmb1.77b. The first contract (Rmb1.05b) is for the Changzhou Rail Transit Line One Phase One, slated for delivery between Jan '18 and Nov '19, while the second contract (Rmb720m) is for Xuzhou Urban Rail Transit Line One Phase One, scheduled for delivery between May '18 and Aug '19.
*First Resources: Nov FFB harvest surged 22.7% to 289,823 tonnes, with yield rising 12.5% to 1.8 tonnes/ha. CPO production soared 25% to 67,770 tonnes even though extraction rate slipped 0.2ppt to 22.1%. MKE last had a Hold with TP of $1.97.
*HC Surgical Specialists: 1HFY17 net profit slumped 91.8% to $0.1m, hurt by listing expenses of $1.3m. Excluding one-offs, earnings would have been stable at $1.5m (+0.9%). Revenue grew 11.1% to $4.3m on contributions from its new subsidiaries, Lai Bec and CTK Tan Surgery. Balance sheet remained intact with net cash of $13.4m (9.1¢/share) which it intends to use to expand operations in the heartlands. Declared maiden interim DPS of 1.8¢. NAV/share at $0.10. Separately, it set up a 40:40:20 JV with Iridium Investment Management and JILB Int'l to provide medical services in the heartlands.
*Regal Int'l: Entered into a RM90m conditional offtake agreement with Malaysian-based MyAngkasa Bina for the sale of all 276 residential units under Phase 3 of its Airtrollis property development project in Nilai, Negeri Sembilan. Construction and sales of the project will commence in 2017, and expected to be completed by 2020.
*Kitchen Culture: Entered into an agreement with Crede CG III to issue US$20m worth of 24-month 6% convertible notes in tranches of US$5m. It intends to use up to 20% of the net proceeds of $27.9m to repay debts with the remaining used for capex, growth expansion and general working capital.
*ISR Capital: Quah Su Yin has stepped down as CEO to “focus on family business”. The stock has been suspended since 27 Nov, and Quah has previously claimed that there is no direct or indirect link between the group and the 2013 penny stock saga, save for the fact that she is the sister of one of the co-accused persons.
Tuesday, January 3, 2017
SG Market (03 Jan 17)
The market could trade sideways amid some caution at the start of the year and ahead of anticipated policy changes by the incoming Trump administration in the US.
Regional bourses opened firmer in Seoul (+0.2%) and Sydney (+1%), while Tokyo is closed for a bank holiday.Technically, bottomside support for the STI is seen at 2,865 (50-dma), with immediate resistance at 2,900, followed by 2,910.
Stocks to watch:
*Macro: Most broking houses are eyeing single-digit growth for the STI in 2017, with corporate earnings expected to bottom out, or post a mild recovery depending on cost cutting ability.
*Economy: According to advance MTI estimates, the S'pore economy grew 1.8% in 4Q16 as well as in 2016, above the earlier 1-1.5% forecast, but the difficult environment is likely to persist in 2017. The government's focus now is to strengthen ties with major trade partners, while the Committee on the Future Economy will unveil recommendations on the longer term growth strategies in the coming weeks.
*Keppel Corp. Entered into a settlement agreement with Parden’s guarantor for the resale of a jackup rig to the guarantor’s associate (361 Projects) for US$164.8m, which is the balance 80% unpaid portion of Parden’s contract value. The rig is slated for delivery in 4Q17.
*Oxley: Sold two blocks of its township development project, Royal Wharf for £156.2m to Notting Hill Home Ownership and Notting Hill Housing Trust of London. Upon the sale, it would have sold 89% or 3,000 homes in the UK project.
*Hong Leong Asia: Agreement with Aspen Vision Synergy, an unrelated third party, for the sale of a piece of land in Selangor, Malaysia has lapsed due to failure to obtain regulatory approval for a conversion of land use.
*Mermaid Maritime: Construction contracts with China Merchants Industry Holdings for tender rigs MTR 3 and 4 has been cancelled by mutual agreement. Prepaid instalments and associated costs were already impaired in FY15. Separately, it has extended the charter in of the DP2 multi-purpose support vessel by one year.
*Sapphire: Conditionally agreed to sell an 81% stake in Mancala for HK$63.2m. The deal would have resulted in pro forma FY16 NTA of 23.88¢, up from 23.77¢. Post disposal, Sapphire’s stake in Mancala would be reduced to 19%, and the group will focus on the infrastructure business under subsidiary Ranken.
*Memtech: Disposing two pieces of land in Huzhou City, China for Rmb41m to Zhejiang Add Auto-Parts as part of its strategy to divest under-utilised assets. It expects to record disposal gains of Rmb21.7m.
*TPV Technology: Entered into a new trademark licensing agreement with Philips TV, which grants it exclusive rights and license to develop, assemble and manufacture certain products outside of Hong Kong for sales, marketing and distribution in Hong Kong.
*CSC: Divesting its 49%-stake in Siam CSC Engineering to JV partner, The Pathumthani Concrete for Bt34.5m ($1.4m). It expects to record a gain of about $0.2m.
*Cordlife: Extended the closing date of its RM0.575/share StemLife voluntary offer to 30 Jan (prior: 5 Jan). It currently owns a 97.8% stake in Bursa-listed StemLife.
*Swiber (suspended): Announced it has so far received claims for about US$288.8m, as at 29 Dec ’16.
Regional bourses opened firmer in Seoul (+0.2%) and Sydney (+1%), while Tokyo is closed for a bank holiday.Technically, bottomside support for the STI is seen at 2,865 (50-dma), with immediate resistance at 2,900, followed by 2,910.
Stocks to watch:
*Macro: Most broking houses are eyeing single-digit growth for the STI in 2017, with corporate earnings expected to bottom out, or post a mild recovery depending on cost cutting ability.
*Economy: According to advance MTI estimates, the S'pore economy grew 1.8% in 4Q16 as well as in 2016, above the earlier 1-1.5% forecast, but the difficult environment is likely to persist in 2017. The government's focus now is to strengthen ties with major trade partners, while the Committee on the Future Economy will unveil recommendations on the longer term growth strategies in the coming weeks.
*Keppel Corp. Entered into a settlement agreement with Parden’s guarantor for the resale of a jackup rig to the guarantor’s associate (361 Projects) for US$164.8m, which is the balance 80% unpaid portion of Parden’s contract value. The rig is slated for delivery in 4Q17.
*Oxley: Sold two blocks of its township development project, Royal Wharf for £156.2m to Notting Hill Home Ownership and Notting Hill Housing Trust of London. Upon the sale, it would have sold 89% or 3,000 homes in the UK project.
*Hong Leong Asia: Agreement with Aspen Vision Synergy, an unrelated third party, for the sale of a piece of land in Selangor, Malaysia has lapsed due to failure to obtain regulatory approval for a conversion of land use.
*Mermaid Maritime: Construction contracts with China Merchants Industry Holdings for tender rigs MTR 3 and 4 has been cancelled by mutual agreement. Prepaid instalments and associated costs were already impaired in FY15. Separately, it has extended the charter in of the DP2 multi-purpose support vessel by one year.
*Sapphire: Conditionally agreed to sell an 81% stake in Mancala for HK$63.2m. The deal would have resulted in pro forma FY16 NTA of 23.88¢, up from 23.77¢. Post disposal, Sapphire’s stake in Mancala would be reduced to 19%, and the group will focus on the infrastructure business under subsidiary Ranken.
*Memtech: Disposing two pieces of land in Huzhou City, China for Rmb41m to Zhejiang Add Auto-Parts as part of its strategy to divest under-utilised assets. It expects to record disposal gains of Rmb21.7m.
*TPV Technology: Entered into a new trademark licensing agreement with Philips TV, which grants it exclusive rights and license to develop, assemble and manufacture certain products outside of Hong Kong for sales, marketing and distribution in Hong Kong.
*CSC: Divesting its 49%-stake in Siam CSC Engineering to JV partner, The Pathumthani Concrete for Bt34.5m ($1.4m). It expects to record a gain of about $0.2m.
*Cordlife: Extended the closing date of its RM0.575/share StemLife voluntary offer to 30 Jan (prior: 5 Jan). It currently owns a 97.8% stake in Bursa-listed StemLife.
*Swiber (suspended): Announced it has so far received claims for about US$288.8m, as at 29 Dec ’16.
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