Tuesday, February 7, 2017

SG Market (07 Feb 17)

Stocks could move lower on the overnight drop in crude oil prices and weakening technical picture, with banks and O&M counters likely to face knock-on pressure from Ezra's financial woes.

Regional bourses opened lower today in Tokyo (-0.8%), Seoul (-0.1%) and Sydney (-0.2%).Technically, topside resistance for the STI remains at 3,110, with underlying support at 3,025.

Stocks to watch:
*Wing Tai: 2QFY17 net profit almost doubled to $2.1m (+98%) but 1HFY17 earnings of $3.2m (+3%) met only 5% of consensus full year estimate. For the quarter, revenue halved to $60.9m on lower contributions from development properties, while bottom line was lifted by higher JV/associates income of $18.5m (+119%), contributed by Wing Tai Properties in HK and Uniqlo in Singapore and Malaysia. MKE maintains Hold with TP of $1.67.

*RHT Health: 3QFY17 DPU slumped 34.6% to 1.25¢ in absence of contribution from Fortis Hospotel following its 51% stake disposal. Revenue grew 1.6% to $22.5m and 3.1% in local currency (INR) on higher average revenue per operating bed, but was muted by the impact of the demonetisation policy. Net service fee and hospital income fell 3.6% to $12.8m and 2.1% in rupee terms due to increased operating expenses. Portfolio occupancy fell to 75% (-9ppts q/q), while aggregate leverage stood at 19.9% . NAV/unit at $0.838.

*Micro-Mechanics: 2QFY6/17 net profit climbed 23.5% to $3.4m, lifting 1HFY17 earnings to $6.7m (+6.7%). The good set of results came on the back of record quarterly revenue of $14.2m (+16.3%), largely driven by higher sales in Singapore, Malaysia and US, as global semiconductor sales picked up. While gross margin held steady at 55.4%, core operating margin dipped 1.5ppt to 33.4% on higher staff costs to gear up manufacturing and improve delivery. NAV/share at $0.3696.

*Auric Pacific: Voluntary conditional offer of $1.65/share by controlling shareholders Stephen Riady and Andy Adhiwana, currently owning 49.3% and 27.4% stakes, respectively. The offer is not entitled to rights of compulsory acquisition and the offer price is final.

*SGX: Courting Saudi Aramco for a secondary listing, slated in 2018. Estimated to be worth US$100b, the planned listing of up to 5% of the energy giant is expected to be the world's biggest IPO. The exchange is hoping the full package of government incentives and state investments could give it a better chance of winning the proposal against other markets including NY, London, HK and Tokyo.*Innovalues: Last day of trading today (7 Feb) following the court sanction of the scheme of arrangement by Northstar Private Equity at $1.01/share.

*GSH/Vibrant: Plaza Ventures for $725.2m, an investment vehicle owned by GSH (51%), Vibrant DB2 (35%) and Sam Goi's TYJ Group (14%) was sold to HK-listed Fullshare, owned by China tycoon Ji Changqun, for $725.2m . The target owns GSH Plaza (formerly known as Equity Plaza), a office building in Raffles Place area. The deal values the office units at $2,900 psf and will net a divestment gain of $79.6m/$27.8m for GSH/Vibrant.

*XMH Holdings: Non-binding MOU with Myanmar MarcoPolo to incorporate a 70:30 JV that engages in manufacturing, assembly and selling of generator sets and related power solution products in Myanmar.*Ezra: Seeking advice on a claim lodged by Forland, to seek repayment of NOK25.5m ($4.4m) that is due and owing by Ezra as the parent corporate guarantor to 40% owned EMAS Chiyoda Subsea.

*Luzhou Bio-Chem Tech: Fire broke out at its Liaoning premises on 5 Feb ’17, which resulted in suspension of operations at a production line. The company is seeking an insurance claim.

*Profit warning:
- Gaylin
- SBI Offshore
- Metal Component
- CSC Holdings

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