Friday, April 28, 2017

SG Market (28 Apr 17)

Singapore stocks are likely to range trade as more 1Q17 earnings appear to fall in line with consensus estimates.

Regional markets are seeing tepid early trading in Tokyo (-0.03%), Seoul (+0.1%) and Sydney (-0.1%).Technically, topside resistance for the STI is at 3,190 with immediate support near the 50-dma at 3,140.

Stocks to watch:
*M1: Reportedly attracted three non-binding offers from Shanxi Meijin Energy, China Broadband Capital and Bahrain Telecoms after its largest shareholders (Axiata, KepCorp, SPH) said they are reviewing their stakes for potential sale as fourth telco operator TPG Telecom prepares the roll-out of its mobile services next year.

*UOB: 1Q17 net profit of $807m (+9.3%) met 25.3% of full year street estimate. Net interest income rose 2.3% to $1.3b on a 9.5% jump in loan growth but partly squeezed by tighter NIM of 1.73% (1Q16: 1.69%). Notably, non-interest income surged 17.8% to $819m, led by strong growth in wealth management (+56.1%) and higher trading income (+58.8%). However, bottom line was weighed by increased provisions of $186m (+59%), mainly from the O&G sector. NPL ratio held steady at 1.5% with Tier-1 CAR at 13.2% (1Q16: 13%). NAV/share rose 2.8% q/q to $19.35.

*Sembcorp Marine: 1Q17 net profit of $39.5m (-27.9%) was propped up by a $46.8m gain from disposal of its 30% stake in Cosco Shipyard Group, favourable $21m FX swing and $2.8m tax credit. Otherwise, it would have ended in the red. Revenue sank 17.2% to $760m on deferment on rig delivery and slower repair works. Operating margin slumped to 1.8% (-6ppts), impacted by increased costs for a floater project that is pending client acceptance. Net order book (excluding Sete Brasil drillships) shrank to $4.02b (4Q16: $4.7m) but management remains hopeful of winning FLNG contracts. NAV/share at $1.24.

*Mapletree Logistics Trust: 4QFY17 DPU of 1.86¢ (+3.3%) brought full year DPU to 7.44¢ (+1%), in line with estimates. Quarter revenue rose 9.1% to $96.5m, while NPI jumped 10.5% to $80.3m, thanks to four new acquisitions, higher rents from HK properties and contribution from the redeveloped Mapletree Logistics Hub. Distributable income (+4.1%) was eroded by a payout to perps holders. Occupancy expanded 0.2ppt q/q to 96.3%, while aggregate leverage narrowed to 38.5% (-0.2ppt q/q). NAV/unit at $1.04.

*Frasers Hospitality Trust: 2QFY17 DPS fell 4.2% to 1.2063¢, representing 23.7% of full year estimate, following the 22% expansion in unit base post-rights issue in Sep '16, while distributable income jumped 21.4% to $22.3m. Revenue surged 43.1% to $38.7m, boosted by the addition of Novotel Melbourne on Collins and Maritim Hotel Dresden, as well as better performance of Sydney, UK and Malaysia properties, while NPI rose at a slower clip to $28.9m (+29.9%), crimped by higher property expenses. Aggregate leverage steadied at 33.4% (-0.3ppt q/q). NAV/unit at $0.7682.

*Viva Industrial Trust: 1Q17 DPU of 1.854¢ (+13.2%) met estimates as a stronger distributable income of $17.8m (+25.9%) overshadowed dilution from a larger unit base (+11.2%). Gross revenue and NPI jumped to $27.4m (+24.9%) and $20.3m (+28.8%), underpinned by two newly-acquired properties and higher rental at Viva Business Park. Occupancy rose 1.3ppt q/q to 91.1%, while aggregate leverage climbed to 39.2% (+2ppt q/q). NAV/unit at $0.792..

*Starhill Global REIT: 3QFY17 DPU fell 6.3% to 1.18¢, coming in at the lower end of street estimates. Gross revenue of $53.3m (-0.6%) and NPI of $41.2m (-0.9%) slipped on lower contributions from Wisma Atria, Ngee Ann City (Office) and Myer Centre Adelaide. Occupancy stayed at 95.1%, while aggregate leverage held steady at 35.3% (+0.1ppt q/q). NAV/unit at $0.92. Trading at 6.1% annualised 3QFY17 yield and 1.3x P/B.

*Yangzijiang: 1Q17 net profit jumped 49% to Rmb667.7m, exceeding 36% of FY17 street estimate, as revenue surged 73% to Rmb4.68b, boosted by increased shipbuilding trading activities, which contributed Rmb1.52b (1Q16: Rmb429.7m), as well as sale of four bulk carriers. However, gross margin contracted to 19% (-5ppts) on the shift in mix. Order book declined to US$4.03b (4Q16: US$4.3b), comprising 84 vessels, after four shipbuilding orders were terminated. NAV/share Rmb6.0962.

*Indofood Agri: 1Q17 net profit of Rp170.6b (+79.6%) beat estimates on higher revenue of Rp4.4t (+39.8%). The strong performance was attributable to growth across plantations (+53.9%) and edible oils & fats (+29%) on higher ASP and increased sales volume, which helped spearhead gross margin to 24% (+7.3ppts). NAV/share at $0.903.

*Tuan Sing: 1Q17 net profit fell 44% to $5.4m, as revenue dropped 29% to $74.8m on lower contribution from property (-54%) following the sale for most of the residential projects last year. Bottom line was buttress by higher JV income (+107%) due to stronger takings at GulTech. NAV/share at $0.781.

*Japfa: 1Q17 net profit tumbled 91% to US$2.1m, largely weighed by a 72% drop in FX gain and US$11.7m fair value loss from biological assets. Otherwise, core net profit slumped 65% to US$7.3m due to negative operating leverage, despite higher revenue of US$736.1m (+3%) from increased contribution from animal protein (Indonesia) dairy, and consumer segments, but offset by weakness in animal protein business in other markets from a drop in swine prices in Vietnam. Gross margin contracted 1.9ppt to 18.5%. NAV/share at US$0.45.

*China Sunsine Chemical: 1Q17 net profit soared to Rmb57.2m (+70%), on solid revenue of Rmb574.6m (+29%), driven by higher average selling price (+17%) for its rubber chemical products and improved sales volume (+10%), due to higher purchases from China's tire makers, as well as spillover demand after production at competitors plants were affected by the enforcement of stringent environmental protection regulations. Gross margin remained stable at 24%.

*iFAST: 1Q17 net profit jumped 60.7% to $2m on operating leverage, on the back of higher revenue of $22.1m (+18.3%), led by increased assets under administration (+17.2% to $6.46b). Operating margin fattened to 9.8% (+3.5ppts), while expenses grew a slower 5.1% to $9.4m, with the increase attributed to expansion of its China operations.

*Memtech: 1Q17 net profit surged 180.7% to US$1.6m, on the back of a 9.8% increase in revenue to US$36.4m, attributable to higher contributions from automotive and consumer electronics segments. Bottom line surge was driven by a 2.2ppt increase in gross margin to 18.1%. NAV/share at US$0.799..

*Samudera Shipping: Swung to 1Q17 net loss of US$0.9m (1Q16: US$2.9m) on weaker revenue of US$62.7m (-7.9%), as contribution from container shipping business (-7.9%) was weighed by lower freight rates, while bulk & tanker business (-8.7%) shrank amid a smaller fleet size. Gross margin narrowed 6.4ppt to 3%. NAV/share at US$0.445.

*Keppel Corp: Secured its first US$40m contract from PTSC Mechanical & Construction to provide engineering, technology and construction management support services for a Tension Leg Wellhead Platform in Vietnam. *CapitaLand Mall Trust: Upcoming IT-focused Funan mall has received strong support, with leasing commitment of >25% on its total net lettable retail area of 325,000 ahead of its completion in 4Q19.

*Soilbuild Construction: Set up a subsidiary Soilbuild Thilawa in Thailand with capital of US$6.7m to manufacture construction materials, and wholesale of pre-fabricated materials.

*Delong: Positive profit guidance for 1Q17 due to higher average selling price for its steel products amid production capacity cuts across the industry and increase in demand in China.

*Global Palm Resources: Expected to report 1Q17 net profit which is substantially higher than 1Q16 mainly due to the higher ASP and sales volume of CPO and palm kernel.

*Sarine Tech: Its Sarine Profile Paradigm is being implmented in full by K-Uno jewellery retail chain in Japan.

Thursday, April 27, 2017

SG Market (27 Apr 17)

The market may consolidate its gains, taking cue from the muted reaction on Wall Street as investors assess the implications of Trump’s radical tax plan and question how it will be funded and whether it will pass muster with Congress.Regional bourses in Tokyo (-0.4%), Seoul (-0.2%) and Sydney (-0.1%) opened lower.Technically, immediate support for STI is 3,140 (50-dma) with topside resistance at 3,190.

Stocks to watch:
*Economy: If US President Trump’s proposed tax bill is passed, Singapore’s role as a regional HQ and top investment destination could be affected; the government may have to lower corporate tax rate but raise other taxes such as GST to make up for the reduced corporate tax revenue.

*Mapletree Greater China Commercial Trust: 4QFY17 DPU of 1.969¢ (+1.9%) brought full year payout to 7.32¢ (+1%), at the higher end of estimates. Revenue and NPI rose 7.9% and 6.1% to $94.7m and $77.5m on higher rental income across its portfolio and from the reversal of VAT at Gateway Plaza. Occupancy steadied at 98.6%, while aggregate leverage fell 1.3ppt q/q to 39.2%. Trading at 6.9% annualised 4Q yield and 0.8x P/B.

*Duty Free Int'l: 4QFY17 net profit of RM17.8m (-14.9%) brought FY17 headline earnings to RM72.7m (+17.8%), ahead of consensus estimate. However, the beat was largely due to one-off gains on FX (RM9.9m) and fair value of option (RM4m) during the year. For the quarter, revenue fell 7.4% to RM150m, weighed by the recent flood in Thailand and the after-effect from the demise of Thai King Bhumibol, as well as the imposition of GST at its border outlets and duty free zones from 1 Jan '17. Gross margin narrowed by 1.4ppt to 34.7%. Cash position ballooned to RM272.2m (FY2/17: RM49.3m) or S$0.071/share. NAV/share at RM0.4488

*AIMS AMP: 4QFY17 DPU fell 5.8% to 2.78¢ (-5.8%), translating to FY17 payout of 11.05¢, which met expectations. Gross revenue edged up 1.1% to $30.6m on maiden contributions from 30 Tuas West Road and higher rentals from 27 Perjuru Lane. But NPI slipped 2% to $20m due to higher maintenance and costs arising from the conversion of 20 Gul Way to multi-tenant building. Occupancy improved 0.6ppt q/q to 94.6%, while aggregate leverage rose to 36.1% (+1.5 ppt q/q). Currently trades at FY17 yield of 7.9% and 1x P/B.

*AsiaPhos: Broke even in 1Q17 with net profit of $0.1m (1Q16: $0.9m loss). Revenue surged 512% to $12.1m, largely attributable to its downstream contributions of $10m (1Q16: $0.3m) on sales volume of 3,700 tonnes (1Q16: nil). Gross margin slipped to 14% (-11ppts), mainly from the change in sales mix. Bottomline was shored by lower general & admin costs (-9%). NAV/share at $0.0974.

*Rowsley: Slumped to 1Q17 net loss of $1.6m (1Q16: $4.8m profit), dragged by a 68% decline in fair value gains on purchase consideration payable. Revenue grew 10% to $22.6m mainly due to consolidation of its M&E arm, Squire Mech, which was previously an associate, but this was partially offset by a weaker GBP. NAV/share at $0.085.

*SBS Transit: Entered MOU with ST Kinetics to collaborate and strengthen maintenance and engineering capabilities for its rail operations, through the use of automation, robotics solutions and data analytics to improve operational productivity and efficiency.

*ST Engineering: ST Kinetics signed its first agreement to provide expertise and services to refurbish electronics components used in SBS Transit's trains on the North East Line and light rail vehicles on the Sengkang-Punggol LRT systems. This marks the group's entry into rail MRO and engineering.

*Civmec: Commenced construction of a 53,470 sf purpose-built ship and module construction, ship repair, and maintenance facility. This will be Australia's largest undercover shipbuilding facility, and its construction plan requires the daily removal of 90-120 truckloads of earth over six months from a 7-ha site.

*YuuZoo: Signed framework agreement with Harbin Municipal Government, to set and run an eSports college and sSports development park in Harbin, China.

*Z-Obee: Expects to record a significant increase in net profit due to growing purchase orders from its customers.

Wednesday, April 26, 2017

SG Market (26 Apr 217)

The market could be greeted by positive spillover sentiment from US as investors get excited over Trump’s long-awaited tax cut announcement tonight.

Regional markets are higher again this morning in Tokyo (+0.7%), Seoul (+0.4%) and Sydney (+0.9%).Technically, STI is likely to break above its 20-dma at 3,164 before heading towards next objective at 3,190. Immediate support is now at 3,140.

Stocks to watch:
*CapitaLand: 1Q17 core net profit leapt 121.1% to $337.8m, or 35% of full year street estimate, boosted by a $160.9m gain from the 45-unit sale of The Nassim, otherwise earnings would have improved by 15.7% to $176.9m. Revenue was relatively flat at $897.5m (+0.4%) as higher handover from development projects in China and rental income from newly acquired properties were offset by fewer sales in Singapore. Net gearing stood at 0.44x. Trades at 0.72x P/RNAV and 0.88x P/B. MKE last had a Hold with TP of $3.70.

*Ascendas REIT: 4QFY17 DPU of 3.852¢ (+13%) brought FY17 payout to 15.743¢ (+2.5%), meeting estimates. Quarter revenue edged up 2.4% to $208.9m on contributions from newly acquired ONE@Changi City, three Science Park Buildings and a Sydney business park, while NPI rose 7.4% to $154.1m due to lower utility expenses and a property tax refund. Portfolio occupancy held steady at 90.2%, while aggregate leverage crept up 2ppt q/q to 33.8%. Trades at 6% 4QFY17 annualised yield and 1.24x P/B. MKE maintains Buy with TP of $2.85.

*Mapletree Commercial Trust: 4QFY17 DPU rose 11.9% to 2.26¢ despite an enlarged unit base, bringing FY17 DPU of 8.62¢ (+6%), in line with expectations. For the quarter, revenue and NPI surged to $107.5m (+47.3%) and $83.2m (+51.2%), mainly driven by Mapletree Business City I (acquired in Aug '16) and higher rental income from VivoCity. Portfolio occupancy slipped 1.1ppt q/q to 97.9%, while aggregate leverage narrowed 0.7ppt q/q to 36.3%. Trades at 5.7% 4QFY17 annualised yield and 1.14x P/B.

*Suntec REIT: 1Q17 DPU of 2.425¢ (+2.3%) was in line with estimate on distributable income of $61.8m (+3.1%). Revenue and NPI climbed to $88.4m (+12.9%) and $61.8m (+14.6%), led mainly by contribution from newly-opened 177 Pacific Highway A-Grade office in North Sydney, Australia. Both occupancies for office (+0.3ppts to 98.9%) and retail (+0.3ppts to 98%) improved, while aggregate leverage was flat at 37.7%. NAV/unit at $2.145.

*CDL Hospitality Trusts: 1Q17 DPS rose 9% to 2.42¢, in tandem with higher distributable income of $26.8m (+10%), meeting estimates. Revenue and NPI rose to $46.4m (+3.9%) and $35.9m (+6.4%), on higher contribution from Grand Millenium Auckland and lower property expenses (-3.8%), although partially offset by weaker contribution from properties in Australia (-5.1%), Maldives (-8.2%) and Japan (-13.1%), and further dragged by a weaker GBP. Singapore occupancy improved to 88.4% (1Q16: 83.9%; 4Q16: 83.6%) with RevPAR at $159 (1Q16: $161; 4Q16: $154). Aggregate leverage held steady at 36.8%. NAV/unit at $1.5298..

*Ho Bee Land: 1Q17 net profit surged 205% to $56.3m, lifted by a divestment gain of $7.4m from Rose Court, as well as higher associate income of $32.7m (+252%) arising from profits from the Shanghai JV project. Revenue grew 13.9% to $42.4m from sales recognition of two Australian residential projects in Melbourne and Gold Coast, but partially offset by a 4.3% decline in rental income. NAV/share of $4.45. MKE retains Hold with TP of $2.60, based on a 36% discount to its RNAV/share of $4.07.

*Citic Envirotech: 1Q17 net profit swelled 41.2% to $17m but achieved just 19% of the sole FY17 street forecast. Revenue grew 14.3% to $113.7m, on increased takings from engineering (+53.4%) and treatment (+4.7%) divisions, offset by a 43.4% reduction in membrane sales. Gross margin narrowed to 31.4% (-5.9ppts) on the shift in sales mix, while bottom line was buttressed by lower finance costs (-42.2%) after redemption of its $100m MTN bond. NAV/share at $0.658.

*SIIC Environment: 1Q17 net profit rose 34.3% to $120.1m, meeting 22% of FY17 consensus estimate. Revenue shot up 77.6% to Rmb999.7m, boosted by significant growth in construction (+70.7%), operating and maintenance income (+73.2%), financial income (+135.9%) and others (+107%), while gross margin expanded to 35.5% (+4.1ppts) on the change in sales mix. However, bottom line was weighed by a spike in finance costs (+180%) and lower JV/ associate income (-53.6%), as well as a higher effective tax rate of 28.1% (1Q16: 19.7%). NAV/share at Rmb2.735.

*Far East Orchard: 1Q17 net profit tumbled 66.8% to $5.6m, weighed by a sharp drop in JV income (-94%) due to the absence of one-off gain. Revenue slumped 22.9% to $39.4m following the expiry of certain lease agreements in Australia and New Zealand, as well as weaker performance from two hospitality assets in Perth. NAV/share at $2.94.

*Talkmed: 1Q17 net profit dipped 0.4% to $8.5m, dragged by higher staff costs (+5.7%), while revenue inched higher to $16.3m (+1.4%) from increased patient loads and higher contribution from subsidiary Stem Med.

*SPH: Diversifying into the healthcare sector via the acquisition of nursing home operator Orange Valley Healthcare, which owns and operates five nursing homes in Singapore, for $164m or 2.3x P/RNAV. The group notes that one in four Singaporeans will be aged above 65 by 2030, which will lead to strong demand for elderly care services in the next decade.

*Atlantic Navigation: 49/51 JV with Oceanus Co. Korea was awarded a US$45.2m project by a Mid-East national oil company to purchase and remove decommissioned offshore and onshore facilities. The project is expected to start in Jun '17, and be completed within 18 months. In addition, the group is also providing around seven vessels to support the offshore phase of the project.

*First Ship Lease Trust: Extended bareboat charters for three vessels, namely Speciality, Superiority, and Seniority.

*Lian Beng: Disposing a freehold property with 1,915.5 sqm NLA at Collins Street, Melbourne, Australia for A$35m..

*Amplefield: Disposing three plots spanning 19,181 sqm in Johor, Malaysia, along with buildings constructed on the land, to URC Snack Foods Malaysia for RM12.75m ($4m) or 1.28x P/B and realising a net gain of RM0.3m.

*Global Premium Hotels: Chairman Koh Wee Meng will exercise his right to compulsorily acquire all remaining shares in Global Premium Hotels at $0.33/share, after obtaining 94.55% control through the voluntary offer.

*Bukit Sembawang: Granted an option to an associate company of non-executive and non-independent director Lee Chien Shih, to purchase a unit in the Paterson Collection development project for $3.3m. The proposed sale price is based on market valuation and no preferential terms were given.

*Yanlord: Credit ratings agency Moody's has upgraded the group's corporate family and senior unsecured debt ratings to Ba2 from Ba3, with outlook stable.

*YuuZoo: Applying to SGX for extension to current deadline of 30 Apr '17 to hold its FY16 AGM, as it needs more time to prepare its audit report for shareholders' review.

*Eratat: To be liquidated following a failed judicial management bid.

*Profit warnings:
- Asia Enterprises
- Weiye

Tuesday, April 25, 2017

SG Market (25 Apr 17)

Sentiment could be positively swayed by the global relief rally after the first round of French election eased fears of Frexit, but outsized gains may be capped by caution ahead of key corporate results.

Regional markets opened higher in Tokyo (+0.1%), Seoul (+0.2%) and Sydney (+0.3%).Technically, STI is poised to break above its 20-dma at 2,160 before heading towards next objective at 3,190. Immediate support is at 3,110.

Stocks to watch:
*Hutchison Port Trust: 1Q17 net profit plunged 70% to HK$166.9m, accounting for just 13% of full year forecast in the absence of a HK$430m government rebate. Excluding the one-off rent and rates refund, earnings would have dropped 15.7%. Revenue fell 6.3% to HK$2.58b on weaker container throughput at Yantian terminals (-1.4%) as well as lower revenue per TEU from its HK and Shenzhen ports due to concessions offered to certain liners and depreciation of the yuan. Bottom line was also hurt by a jump in finance costs (+15%) from higher interest rates. NAV/unit dipped 3.2% q/q to HK$4.59.

*Mapletree Industrial Trust: 4QFY17 DPU of 2.88¢ (+2.5%) brought full year DPU to 11.39¢ (+2.2%), slightly ahead of estimates. Quarter gross revenue and NPI climbed 4.5% and 6.4% to $87.8m and $66m, respectively, on higher rentals, new contribution from Phase 1 of the HP BTS property and lower maintenance expenses and marketing commission. Occupancy rose 1ppt q/q to 93.1%, while aggregate leverage held steady at 29.2% (-0.25ppt q/q). NAV/unit at $1.41. MKE last had a Buy with TP of $2.00.

*Frasers Centrepoint Trust: 2QFY17 DPU held steady at 3.04¢, in line with estimates, but both revenue and NPI fell to $45.7m (-2.9%) and $32.6m (-3.3%) from the loss of revenue from Northpoint due to ongoing AEI works. Occupancy fell to 87.2% (-4.1% q/q) with WALE of 1.7 years, while aggregate leverage fell 0.3ppt to 29.4%. NAV/unit at $1.93.

*ParkwayLife REIT: 1Q16 DPU of 3.28¢ (+9.6%) was in line and included a 0.22¢ capital distribution on divestment gains. Gross revenue inched up 0.2% to $26.9m, while NPI stayed flat at $25.1m, as contribution from one nursing home acquired on Mar '16, higher rent from the Singapore properties and JPY appreciation was offset by the absence of contribution from four divested Japan properties in Dec '16. Aggregate leverage rose to 37.6% (+1.3ppts q/q). NAV/unit at $1.72.

*Cambridge Industrial Trust: 1Q17 DPU of 1.004¢ (-9.7%) was dragged by the absence of capital distribution and cash payment of management fees but remained on track with estimates. Gross revenue of $27.7m (-2.2%) and NPI of $19.7m (-8.4%) slipped amid the transition from single-tenanted to multi-tenanted properties and higher conversion costs. Occupancy inched 0.7ppts q/q higher to 95.4%, while aggregate leverage ticked up 0.3ppts to 37.8%. NAV/unit at $0.634.

*AEM: 1Q17 net profit of $4.1m (1Q16: $0.2m) overshot the street's sole estimate as revenue soared more than three-fold to $42.1m from increased sales of the latest generation HDMT test handlers and related consumables. Gross margin contracted 12.7ppt to 28.2% on a shift in sales mix, but is anticipated to improve when higher-margin consumables pick up. Management guided 9M17 revenue and pretax profit of $142m and $17.5m, respectively. Based on FY16 tax rate of 22%, AEM is trading at an implied 9M17 annualised P/E of 5.6x..

*Soilbuild Construction: 1Q17 net profit dived 90.7% to $0.4m, as revenue of $66.6m (-35%) was weighed by lower recognition from ongoing projects, while recently-secured projects are still at preparation stages. Gross profit margin slumped to 4% (-3.1ppts) from a higher mix of lower-margin HDB projects and increased construction costs. Order book grew to $493.6m (4Q16: $385.7m). NAV/share at $0.147.

*Cheung Woh: Swung to a 4QFY17 net loss of $1.8m (4QFY16: $2.6m profit), as revenue tumbled to $21.1m (-16.3%) on slower sales of HDD components. Gross margin collapsed to 0.6% (4QFY16: 19.4%) as operating costs remained sticky, while bottom line was further dragged by an absence of a $1m tax credit. Final DPS slashed to 0.1¢ (4QFY16: 0.75¢), bringing full-year payout to 0.4¢ (FY16: 1.25¢). NAV/share at $0.3597.

*Citic Envirotech: 90:10 JV with Xinji county government for a Rmb204m project to operate an existing 66,000 m3/day wastewater treatment plant in Xinji City, China. The project will include the construction of a separate 34,000 m3/day BOT wastewater treatment plant, with works scheduled between Jul '17 and Mar '18, which will have a 30-year minimum offtake service agreement with the local government. Separately, group was also awarded a Rmb230m BOT project for a 90,000 m3/day water recycling plant in Changyi City, China, which will come with a 30-year concession period. Construction for phase 1 (30,000 m3/day) will start immediately and expected to be completed by Oct '17.

*First Resources: 1Q17 FFB harvest surged 43.7% to 706,264 tonnes, with yield rising 0.9ppts to 4.0 tonnes/ha. CPO production jumped 33.9% to 161,194 tonnes, despite lower extraction rate of 22.4% (-0.6ppts). MKE last had a Hold on the counter with TP of $1.97.

*UMS: 51% owned water and chemical engineering solutions provider, Kalf Engineering, secured five electro-chlorination systems projects in Singapore, Chile and Middle East, which are expected for completion in 2H17. It also clinched an acid cleaning system project in Qatar and a drinking-water treatment plant project in China, both slated to complete by 2H18. Total value of the seven projects is $13m.

*Sapphire: Secured new infrastructure construction and consultancy contracts worth Rmb432m ($88m) bringing its order book to ~Rmb2.5b ($510m), with activity stretching up to 2021.

*NeraTel: Received contracts worth $7.2m for the supply, delivery, installation and maintenance of security application equipment for a Filipino telco.

*Profit warnings:
- Serrano
- Secura Group

Monday, April 24, 2017

SG Market (24 Apr 17)

Several global events could sway market sentiment this week, including the French election runoff (between centrist Macron and far-right leader Le Pen), North Korea’s increasing louder war drumbeat and announcement of Trump’s tax plan. Investors are also eyeing more 1Q results to gauge the current business climate.

Regional markets opened stronger in Tokyo (+1.5%), Seoul (+0.4%) and Sydney (+0.5%).Technically, STI is likely to trade within the 3,110-3,190 range, with six index stocks slated to go ex dividend this week.

Stocks to watch:
*Raffles Medical: Flat 1Q17 net profit of $15.5m (+0.1%) came in at the lower-end of estimates, buttressed by better cost control. Revenue slipped 1.7% to $114.9m on softer demand from foreign patients. MKE last had a Buy with TP of $1.70.

*CRCT: 1Q17 DPU of 2.74¢ (+1.1%) was in line despite growing at a slower pace than distributable income of $24.4m (+5%) due to an enlarged unit base. Revenue climbed 13.4% to Rmb290.9m on contribution from recently-acquired CapitaMall Xinnan in Sep ’16, while NPI jumped 15.1% to Rmb194.9m, thanks to cost savings. Occupancy improved slightly to 96.2% (+0.3ppt q/q), but aggregate leverage inched higher to 36.4% (+0.9ppt q/q). NAV/unit of $1.58.

*GL: 9MFY17 net profit tumbled 47% to US$29m, partially hurt by the absence of an one-off compensation from hotel management contract termination fees. Revenue fell 17% to US$252.9m on lower hotel contribution amid a softer GBP against USD, as well as weakness in gaming and property development segments. NAV/share at US$0.772.

*Frasers Centrepoint: Sales launch for 843-unit Seaside Residences in Siglap over the weekend saw a strong take-up of 392 units, or 70% of the 560 units released, reflecting continued recovery in the private residential market. Average selling price achieved was reportedly $1,700 psf.

*Nam Cheong: As part of on-going measures to restructure its business amid the protracted O&G sector downturn, the group is in discussions with its principal lenders on refinancing options, as well as possible cost cutting measures to help improve its tight liquidity position.

*Keong Hong: Acquiring a 60% stake in timber flooring supplier Hansin Timber Specialist and Trading for $4.5m, comprising $3m cash and 2.6m new shares at $0.585 each.

*Delfi: Formed 60:40 JV with Japan’s Yuraku Confectionary to produce, market and sell a range of chocolate snack products under the “Delfi” masterbrand in Indonesia. Total initial capital commitment is estimated at ~US$5-7m.

*United Foods: Entered into an MOU to acquire an 80% stake in food traders and distributor, The Really Time Trading, for Rmb16m. The potential acquisition will come with an annual profit guarantee of Rmb2m till 2020.

*KS Energy: Updated that its geothermal drilling contract for work in North Sumatra, Indonesia will conclude at end Apr, one month earlier than expected. Hence, the contract value will be reduced by US$1.2m from US$7m.

*Imperium Crown: Disclosed that Executive chairman and CEO Wan Jinn Woei is in discussions with third party financial and strategic investors on a private placement.

*Singtel: Granted aggregate credit facilities of ~$4.1b from 12 banks, to be used for general corporate purposes and refinancing of existing facilities.

*Profit warnings:
- Asia Fashion
- Grand Banks Yachts
- Lion Asiapac

Friday, April 21, 2017

SG Market (21 Apr 17)

Bargain hunters may offer some respite following the overnight rally on Wall Street on optimism over tax reform and BoJ governor Kuroda’s dovish stance.Regional bourses in Tokyo (+0.8%), Seoul (+0.7%) and Sydney (+0.8%) opened firmer.Technically, the STI could break above its 50-dma at 3,138 with next resistance at 3,160.

Stocks to watch:
*Keppel Corp: 1Q17 net profit rose 24% to $260.4m (+24%), boosted by $169.3m of land sales, writebacks, divestment, FX and Fair value gains; otherwise the results would have been a big miss. Revenue of $1.25b (-28%) was dragged by lower volume of O&M work and slower property sales from China and S’pore. O&M barely broke even amid continued yard downsizing and shrinking order book ($3.5b), while property earnings slipped 3% to $102.8m. Bottom line was cushioned by one-off gains from infrastructure ($32m) and investment ($125m) divisions. MKE has Sell with TP of SGD4.57.

*SGX: 3QFY17 net profit of $83.1m (-6.8%) was weighed by a $4m loss from the disposal of its investment in Bombay Stock Exchange. Otherwise, core earnings would have dipped 2% and met estimates. Revenue slipped 1.5% to $202.7m on weaker contributions from derivatives trading (-8.6%), partially offset by stronger contributions from equities & fixed income (+1.1%) on higher securities total traded value (+5%). Operating margin widened to 50.8% (+0.9ppts) on tight cost control. Interim DPS of $0.05 was maintained.

*CapitaLand Mall Trust: Flat 1Q17 DPU of 2.73¢ came in line with expectations. Revenue and NPI fell to $172m (-4.3%) and $120.1m (-6.1%) respectively, mainly due to loss of income from the redevelopment of Funan DigitaLife Mall. Both shopper traffic (-0.5%) and tenant sales (-0.7%) slipped, Portfolio occupancy declined 0.8ppt q/q to 97.7%, while aggregate leverage edged up 0.5ppt to 35.3%. Trading at 1Q annualised yield of 5.5% and 1.06x P/B.

*Ascott Residence Trust: 1Q17 results missed estimate, as DPU sank 14% to 1.51¢ on an enlarged unit base following a placement and lower distributable income of $25.1m (-8%) due to absence of FX gain. Revenue rose 5% to $111.3m, shored by the acquisition of Sheraton Tribeca New York Hotel in Apr '16. On same store basis, RevPAU declined 2% on weaknesses in Singapore and UK. Gross margin shrank 3.6ppt to 42.4%. Aggregate leverage rose to 41.1% (+1.3ppt q/q), but will be pared to 36.6% post rights issue. Currently offers 1Q annualised yield of 5.5%.

*Frasers Commercial Trust: 2QFY17 DPU grew 2.4% to 2.51¢ meeting expectations, shored up by capital distributions, while distributable income rose 3.5% to $20m. Revenue of $40.2m (+3.2%) and NPI of $30m (+4.1%) benefitted from 357 Collins Street’s stronger occupancy and rental rates, as well a firmer AUD, partially offset by lower occupancy rates at China Square Central and Alexandra Technopark. Portfolio occupancy slipped to 91.8% (-1.2ppts q/q) with WALE of 3.7 years. Aggregate average held steady at 35.9% with an average borrowing rate of 3.01%. Trades at annualised yield of 7.6% and 0.86x P/B..

*Cache Logistics Trust: 1Q17 DPU fell 2.7% to 1.8¢, meeting street estimates. Distributable income fell 2.5% to $16.2m. Revenue was shaved 0.8% to $27.1m due to the divestment of Cache Changi Districentre 3 and the lower income received under protest for 51 Alps Avenue, while NPI fell at a faster 2.6% clip due to expenses from single-to-multi tenant building conversion. Occupancy improved 0.8ppt q/q to 97.2% with WALE of 3.6 years. Aggregate leverage steady at 43.1%. Trading at 8.3% annualized 1Q yield.

*GuocoLand: 3QFY17 net profit of $29.6m (+161%) brought 9MFY17 earnings to $112.3m (-80%) and 52% of street's full-year estimate. Quarter revenue jumped 63% to $271.1m on higher sales and revenue recognition from Singapore's residential projects, but gross margin shrank 6.5ppt to 23.3% from a change in sales mix. Bottom line was shored by FX gain of $18.9m and turnaround in associates and JVs' contribution to $2m (3QFY16: $1.5m loss). NAV/unit at 2.95.

*Singapore Medical Group: Acquiring two earnings accretive Singapore paediatric clinics for $25.3m, funded by the issuance of new shares at $0.54/share and $13.9m cash payable in three tranches. The acquisitions come with 5-year profit guarantee of $2.3m p.a., implying 11x P/E.

*Federal 2000: Signed MOU with China Merchants Industry to co-operate exclusively on certain identified O&G projects in Indonesia.

*Sabana REIT: Has received non-binding proposals in relation to its ongoing strategic review. Discussions are currently preliminary, and these will be reviewed with the assistance of financial adviser Morgan Stanley.

*Asiamedic: Conditionally agreed to acquire LuyuEllium Healthcare for $42.2m, which will result in a very substantial acquisition. The target provides non-clinical management services to medical institutions in South Korea and China. The deal comes with profit guarantees ranging $3.3m-4.2m for FY16-20, and would have resulted in FY16 EPS of 0.27¢ from loss per share of 0.42¢ on a pro-forma basis.

*Nera Telecoms: Received purchase orders of about $19.9m for the supply, delivery, installation and maintenance of IP network equipment for service providers in Singapore.

*Alliance Mineral: Requested for trading halt. The announcement could pertain to an announcement made by HK-listed Burwill Holdings (24 HK) where it entered into an exclusive lithium concentrate offtake agreement with where it will buy lithium concentrate from Alliance Mineral and Tawana for five years. Burwill highlighted that the offtakes are only legally binding once signed.

Thursday, April 20, 2017

SG Market (20 Apr 17)

The market is likely to come under pressure from the overnight drop in crude prices following the surprise build in US gasoline stockpiles, poltical uncertainty over upcoming elections in Europe as well as growing voices for ECB to end its monetary easing.

Regional markets had a tepid opening today in Tokyo (flat), Seoul (flat) and Sydney (+0.3%).Technically, the STI has broken below its 50-dma at 3,135 with next support at 3,110.

Stocks to watch:
*Keppel REIT: 1Q17 DPU fell 13.7% to 1.45¢ in absence of a capital distribution, achieving 23% of full year street forecast. Revenue and NPI slipped 3.2% and 4.6% to $39.9m and $31.4m, due to absence of income from 77 King Street (divested in Jan ’16) and lower contribution from Bugis Junction Towers. Portfolio occupancy inched up to 99.4% (+0.2ppts q/q), while aggregate leverage held steady at 38.4% (-0.1ppts). Trades at 5.4% annualised yield and 0.8x P/B. MKE last had a Buy with TP of $1.18.

*China Aviation Oil: 1Q17 net profit climbed 4.7% to US$25.3m, meeting 26% of FY17 street estimate. Revenue soared 126.1% to US$3.31b from increased volume traded to 7.39m tonnes (+49%), fuelled mainly by expansion of trading in crude oil to China and fuel oil to Mid-East, but gross margin was squeezed to 0.5% (-0.4ppts). Bottom line was lifted by stronger associate contribution from Shanghai Pudong Int’l Airport Aviation Fuel Supply Company (+7.1%), but pared by weaker contribution from its Korean oil hub (-1.6%). NAV/share at US$0.788.

*ComfortDelGro: 75% owned SBS Transit was awarded the Seletar bus package (currently operated by SMRT) after putting in the lowest bid of $480.3m, well below the first two packages won by Tower Transit (Bulim: $556m) and Go-Ahead (Loyang: $498m). This is the third and last package up for grabs, with the remaining contracts held by incumbents set for future tender once they expire over the next 2-10 years. The five-year contract with a 2-year extension option will commence in 1Q18 and will add ~2% to CDG’s FY18 revenue and earnings. MKE maintains Hold with TP of $2.68.

*Hong Leong Asia: 40.2% owned China Yuchai has acquired the remaining 47.5% and 20% interests in JVs Sichuan Yuchai Machinery Industrial Development and Chongqing Yuchai Machinery Monopoly for Rmb8.9m and Rmb0.15m, respectively.

*ABR Holdings: Raised its stake in Malaysia property developer Sering Manis (SM) from 10% to 19% for RM1.1m. ABR will also dish out a shareholder loan of RM21.7m. SM is in the process of acquiring a 1.13m sqm plot of freehold land in Pahang, Malaysia, near Genting Highlands for RM170.67m.

*Meghmani Organics: 57% owned Meghmani Finechem plans to expand both the chemical and power capacity at GIDC Dahej, South Gujarat in India, by 50%. The project will cost Rs4b and is expected to be commissioned in Jun 2019.

*IEV: 25% owned JV Gas Malaysia IEV has commenced its virtual pipeline business, following the launch of the compressed natural gas distribution station in Gelang, Malaysia.

*Profit warning:
- SP Corp
- Versalink

Wednesday, April 19, 2017

SG Market (19 Apr 17)

The market remains in a cautious mood as investors wait for more corporate results amid a recovering economy and ahead of crucial elections in France and Britain.

Regional markets opened lower in Tokyo (-0.3%), Seoul (-0.4%) and Sydney (-0.5%).Technically, the STI appears trapped between the 20 and 50-dmas at 3,135 and 3,160, with downward bias towards next level at 3,110.

Stocks to watch:
*CCT: 1Q17 DPU climbed 9.6% to 2.4¢, meeting 26% of full year street estimate. Post-acquisition of remaining 60% stake in CapitaGreen in Sep ’16, gross revenue and NPI surged to $89.5m (+33.9%) and $69.9m (+32.6%). Portfolio occupancy improved slightly to 97.8% (4Q16: 97.1%), while aggregate leverage inched 0.3ppt higher to 38.1%. Management guided that NPI of some properties is expected to soften in later part of 2017 as more renewals and new leases are committed below expiring rents. NAV/share at $1.75.

*Keppel T&T: 1Q17 results missed estimates as net profit fell 13.1% to $11.6m on weaker contributions from data centre and logistics units. Revenue dropped 15.6% to $40.7m following the partial disposals of 90% stake in Keppel DC Singapore 3 and 50% interest in Keppel DC REIT Management to sister companies, both of which have been reclassified as associates. NAV/share inched up 1¢ q/q to $1.44.

*ST Engineering: Its electronics arm secured $464m worth of contracts in 1Q17 for rail electronics & intelligent transportation, satellite & broadband communications as well as advanced electronics & information communications technologies solutions.

*Keppel Corp: Its Infrastructure arm has signed a non-binding agreement with the EDB to develop, own and operate a gasification facility on Jurong Island.

*UOB/ SIA: UOB launched the KrisFlyer UOB current account, which allows customers to earn KrisFlyer miles at a quicker rate on spending, provided there is a minimum average balance of $3,000 and above. The bank aims to open at least 200,000 KrisFlyer UOB accounts over the next five years, and bring in deposits of ~$1.5b. MKE last had a Hold and TP of $19.54.

*AEM: Flagged that it has received purchase orders worth $152m for delivery in FY17.

*King Wan: Secured new mechanical and electrical projects in Singapore worth $33m in 1Q17. This brings its order book to $163m with contracts lasting till 2024.

*China Kangda: A group of vendors led by Gao Sishi with cumulative shareholding of 57.1% and Zensho Holdings (12.1% stake) have entered into two separate agreements with a potential purchaser to extend the exclusivity period for a possible transaction till 30 Apr.

*Far East Hospitality Trust: Withdrew its Moody's corporate credit rating, following the amendment to the Code on Collective Investment Schemes to adopt a single-tier aggregate leverage limit of 45% without the requirement for a credit rating.

Tuesday, April 18, 2017

SG Market (18 Apr 17)

The market could see a slight rebound following the relief rally on Wall Street but trading is likely to remain subdued as geopolitical tensions simmer and investors refocus on the 1Q corporate results season, which kicked off yesterday.

Regional markets opened mixed in Tokyo (+0.8%), Seoul (+0.1%) and Sydney (-0.7%).Technically, the STI is sitting just above its 50-dma at 3,135 with topside resistance recalibrated at 3,160.

Stocks to watch:
*M1: 1Q17 results were in line although net profit of $36.3m (-14.6%) was dented by higher opex and interest costs. Service revenue remained stable at $201.5m (-0.1%) as growth in fixed services offset lower IDD and roaming turonover. While total customer base grew 6.6% to 2.2m and postpaid data usage increased 12% to 3.7GB/month, ARPU fell across the board and customer acquisition cost jumped 14%, compressing EBITDA margin to 39.2% (1Q16: 40.9%, 4Q16: 35.8%). Lack of full year guidance reflects uncertainty but there could be situational interest as major shareholders undertake a strategic stake review. MKE last had a Sell with TP of $1.75.

*Keppel DC REIT: 1Q17 distributable income swelled 47.6% to $21.8m, translating to a diluted DPU of 1.89¢ (+13.2%), which met estimates. Gross revenue of $32.2m grew 30.1% on contributions from KDC Singapore 3, Milan DC and Cardiff DC but partially pared by lower income from Dublin 1 (client downsizing) and KDC Singapore 1 & 2 (variable income). NPI of $28.8m (+36.1%) was further lifted by lower property tax expenses and maintenance costs. Portfolio occupancy rose to 95.1% (+0.7ppts q/q) with WALE of 9.2 years (4Q16: 9.6 years), while aggregate leverage narrowed to 27.9% (-4ppts q/q). NAV/unit at $0.946.

*Keppel Infra Trust: Flat 1Q17 DPU of 0.93¢ was in line with expectations. Revenue grew 18.3% to $155.3m, mainly due to stronger contribution from City Gas (+9.8%) on increased town gas tariff and volume, as well as higher facility fees from Basslink ($21.2m) as no fees were recognised in 1Q16 due to a cable outage and higher revenue for Keppel Merlimau Cogen plant. However, this was pared by a dip from its waste and water concessions in the absence of construction revenue. Aggregate leverage rose to 38.7% (+1.3ppts q/q). NAV/share at $0.32.

*First REIT: 1Q17 DPU of 2.14¢ (+2.5%) came in line as revenue and NPI rose 2.5% to $27.2m and $26.9m, respectively, on new contribution from recently-acquired Siloam Hospitals Labuan Bajo in Dec ’16. Aggregate leverage stood at 31% (-0.1ppt q/q). NAV/unit at $1.01.

*SIA: Mar group pax load factor improved 1.1ppts to 79.7%, as growth in passenger traffic (+6.6%) outpaced capacity expansion (+5.1%). This was attributed to fare promotions, with higher load factors across Europe (+8.2ppts), Americas (+4.7ppts) and East Asia (+1.7ppts), but lower from South West Pacific (-4.3ppts) and West Asia & Africa (-0.4ppts). However, load factors fell in subsidiary carriers Scoot (-5.7ppts to 81.2%), Silkair (-2.3ppts to 69.2%) and Tigerair (-2ppts to 82.4%). Cargo load factor rose 3.5ppts to 67.5% on improved carriage (+5.4%) and reduced capacity (-0.1%). MKE last had a Hold with TP of $9.70.

*SATS: Received EU approval to provide meat transshipment services between New Zealand and the EU, via Singapore.*Tung Lok Restaurants: Entered a 3-year tenancy agreement for 8,547 sf premise with interested-party Orchard Central for $2m, which will be used to operate restaurants.

*ST Engineering: Aerospace unit secured new contracts worth about $1.11b in 1Q17 for services ranging from line and heavy airframe maintenance to component repair and overhaul.

*China Jinjiang Environment: Secured a BOT waste management project in Lucknow City, India, with investment amount of ~Rmb300m. Operations are scheduled to commence in Apr '19 for the 1,500tpd facility, under a 30-year concession period.

Monday, April 17, 2017

SG Market (17 Apr 17)

Jittery sentiment is likely to persist as pressure builds over the failed North Korean missile test in defiance of warnings and as investors eye the start of the 1Q corporate earnings season.

Regional markets opened mixed in Tokyo (-0.5%) and Seoul (+0.4%). Australia markets are closed for Public Holiday.Technically, immediate resistance for the STI is set at 3,210, with downside support at 3,160.

Stocks to watch:
*Ascott REIT: Divesting 18 rental housing properties in Tokyo, Japan, for ¥12b ($153.6m). According to the manager, the properties were mostly completed in 2006 and are due for asset enhancement, hence limiting rental upside. The REIT will book a net gain of ¥831m and intends to redeploy funds to other higher yielding assets.

*SATS: Unveiled a $21m automated e-commerce airhub spanning 6,000sqm, which will increase mailbag processing capacity by more than 3x, and lower mail processing time by 50%.

*Frasers Centrepoint: Acquiring an 86.56% stake in a listed European commercial real estate firm, Geneba Properties, for $471.6m. Following the purchase, the group will make an offer for the remaining stake in Geneba. Geneba manages a predominantly logistics and industrial property portfolio (98% occupied) in Germany and Netherlands, which has a weighted average lease expiry of 9.5 years.

*IHC: OUE has secured 86.16% control of the healthcare service provider after its unconditional cash offer at $0.106 each closed on 13 Apr and it intends to maintain the listing status of the company.

*OKH Global: Sued by Weston Global Realty and KTNC Real Estate Consultant, which are claiming a total of $4.5m commissions payable by the group for the sale and lease transactions for Ace@Buroh and Loyang Enterprise.

*DeClout: Disposing 40% owned AWS Distribution Phils to an existing employee, Poh Teck Boon, for $2m (1x P/B). The Philippines-based company engages in import and export of electronic and related equipment.

*Hi-P: Expects to be profitable in 1QFY17 instead of breakeven as previously guided, mainly due to improvement in operational efficiency and cost management.

*Marco Polo Marine: Intends to undertake a refinancing and debt restructuring exercise due to liquidity pressure. Separately, the group issued a profit warning for 2QFY17, dragged by the challenging market environment.

*GKE: Updated that a potential investor is still in discussions with substantial shareholders, and the group has not received any formal proposal regarding a potential acquisition.

Thursday, April 13, 2017

SG Market (13 Apr 17)

The local market is likely to range trade amid simmering geopolitical tensions and lack of local catalysts ahead of 1Q earnings season. Defensives and safe-haven assets such as gold and JPY are expected to gain strength.

Regional markets opened mostly lower in Tokyo (-0.9%), Seoul (+0.1%) and Sydney (-0.6%).Technically, immediate resistance for the STI is found at 3,210, with downside support at 3,160.

Stocks to watch:
*Economy: 1Q17 GDP growth eased to 2.5% (est: 2.6%, prior: 2.9%), but is expected to remain modest for the year. MAS keeps zero appreciation path of SGD and neutral policy stance for extended period and zero appreciation path of SGD to support the economic recovery. Leaves 2017 inflation estimate at 0.5-1.5% and core CPI at 1-2%.

*SPH: 2QFY17 net profit dipped 1.2% to $53.5m, bringing 1H17 earnings to $99.2m (-26.7%), making up just 41% of full year consensus estimate. Operating revenue fell 8.2% to $238m from weak core media business (-11.9%) due to lower advertising sales (-16.8%), but partly shored by stronger contributions from property (+1.3%) and others (+6.5%). Bottom line was cushioned by a $9.5m gain in investment income to $16.7m and improved contributions from associates and JVs. Interim DPS was shaved to $0.06 (2QFY16: $0.07). Business conditions remain challenging in view of the uncertain economic outlook and the continuing disruption of the media industry. NAV/share at $2.08.

*Soilbuild Business REIT: Lower 1Q17 DPU of 1.489¢ (-4.4%) was weighed by payment of property and lease management fees in cash instead of units, but results still came slightly above estimates. Gross revenue and NPI rose to $21.9m (+9.2%) and $19.2m (+11.7%) due to new contribution from Bukit Batok Connection, acquired in Sep '16. Distributable income of $15.6m (+6.6%) rose at a slower pace amid a jump in finance costs (+19%). Portfolio occupancy ticked up 2.2ppt q/q to 91.8%, with a stable WALE of 3.4 years. Aggregate leverage was steady at 37.5%, with average debt cost of 3.37% (1Q16: 3.25%) and tenor of 2.6 years. NAV/unit at $0.72.

*Lian Beng: 3QFY17 net profit plunged 83.5% to $2.9m, bringing 9MFY17 earnings to $21.2m (-70.7%), following the completion of property development projects by associates/JVs in May '16. For the nine months, revenue tumbled 57.4% to $156.2m on weakness in construction and ready-mixed concrete segments, but gross margin improved 13.5ppt to 25.2% from higher profit recognition in construction. Net gearing spiked to 0.86x from 0.45x at end-FY16 due to loans drawn down for property acquisitions. NAV/share at $1.1141.

*GKE Corp: 3QFY17 loss deepened to $0.9m (3QFY16: $0.7m loss) on a surge in admin costs (+45.3%) due to the acquisition of TNS Ocean Lines and production ramp-up at its ready-mix concrete plant (Wuzhou Xing Jian). Revenue jumped 73% to $16m due to stronger contributions from chemical warehouse operator (Marquis Services) and concrete manufacturing, as well as maiden contribution from port operations (TNS). Gross margin contracted to 20.4% (-7.4ppts) on a change in sales mix, while bottom line was weighed by loss-making vessel chartering JV. NAV/share at $0.123.

*Tuan Sing: Exercised a call option for a 4,046.6 sqm plot of vacant freehold land, earmarked for residential use at 1 Jalan Remaja for $47.8m. At a plot ratio of 1.92, the group estimates that the site can potentially yield ~100 residential units.*Ley Choon: Clinched two contracts worth a total of $2.88m from PUB for trial trenching works for deep tunnel sewerage system, as well as supply and installation of water connection works.

*Addvalue Tech: Proposed placement of 103.8m new shares to eight investors, including Alan Wang, Julian Yap and Ron Tan, at $0.039 apiece to raise net proceeds of $3.8m, which will be used for the development of space programme (60.5%) and working capital (39.5%)..

*Ocean Sky: Entered equal JV with C.I.A.C Investment, and Centra Properties to jointly acquire, develop and manage a proposed mall project, comprising 71 shophouses in Kandal Province, Cambodia.

*AsiaPhos: Issued a positive profit alert in light of stronger ASPs of mined phosphate in 1Q17 as well as stronger sales volume.

*ISR Capital: Auditor RT LLP has issued a disclaimer of opinion for its FY16 results, drawing attention to recoverability of a $3.5m loan made to Tantalum as well as the group’s ability to continue as a going concern.

*AIMS AMP Capital REIT: Credit agency S&P has reaffirmed the REIT's BBB- investment rating with a stable outlook.

Wednesday, April 12, 2017

Rickmers Maritime

Rickmers Maritime: To wind up after failing to reach an agreement with banks on debt restructuring
- Unable to repay about US$197m to HSH Nordbank and DBS. MKE assumes DBS's exposure to about $138m.
- Full impact (if not previously provided for) will result in DBS's FY17E profits to fall ~2%.
- Maybank KE expects banks' provisions for NPLs to remain elevated. It last had a Hold rating on the counter with TP of $18.13.


(Bloomberg) Singtel drops as much as 2.6%, most in five months, after TPG Telecom said it won a government spectrum auction and plans to build a mobile network in Australia.

* TPG Telecom plans to build network over three years starting in 2018 that aims to cover ~80% of Australia’s population
* Singtel derived 52.9% of its 3Q revenue from Australia; 47.1% from Singapore: Bloomberg data
* NOTE: Earlier, Telstra Shares Fall as TPG Plans Rival Australian Mobile Network
* Dec. 14, TPG Telecom Wins Bid to Become Singapore’s Fourth Telco
* April 5, TPG Telecom Buys Additional 10MHz of Singapore Spectrum for S$23.8m
* Singapore Telcos Pay More Than Expected in Auction

SG Market (12 Apr 17)

The market is likely to drift in a holding pattern as geopolitical worries in Syria and North Korea linger along, with upcoming French polls that hold implications for the future of the Eurozone, before the 1Q17 results season unfold.

Regional markets opened mixed in Tokyo (-0.9%), Seoul (+0.2%) and Sydney (flat).Technically, the STI remains pegged against topside resistance at 3,200, with immediate support at 3,160.

Stocks to watch:
*City Dev: Updated that it has sold 80% (Feb '17: 64%) of the 88 units available for Phase 1 of its 174-unit luxury condominium project Gramercy Park at an ASP of $2,600 psf. Another 11 Phase 2 units were sold at higher ASP of $2,800 psf. The pick-up in sales and pricing reflects improving sentiment in Singapore's housing market. MKE last had a Hold on the developer with TP of $9.80.

*OCBC: Divesting its entire 100% stakes in two entities, Banking Computer Services and BCS Information Systems, to 33% owned Network for Electronic Transfers (NETS) for $38m on a debt-free and cash-free basis. MKE last had a Sell on OCBC with TP of $8.05.

*Oxley: 50% JV Oxley Planetvision Properties is acquiring Flitous Properties and Jemina Properties, which collectively own properties in Cyprus with total area of 96,448 sqm, for €28m ($41.7m), or 8.8% below market valuation.

*Kingboard Copper Foil: The privatisation offer of $0.40/share has been extended to 1 May, 5.30pm from 17 Apr. As at last update, parent company Kingboard Chemical has obtained 68.5% control.

*Sysma: Secured a $6m contract to build a two-storey detached house with a basement and swimming pool along Gallop Road. Construction will take 15 months commencing May '17.

*Imperium Crown: Received a letter of intent from a third party to acquire its Green Forest Itabashi and Hatchobori Place properties for at least ¥3.05b ($38.6m). In total, it has received LOIs for its entire Japanese portfolio for a total sale price of $80.4m. It intends to use the sale proceeds to invest in growth markets in Australia and China.

*Tritech: Awarded a 5-year minimum off-take contract at an undisclosed fee, for the operation and maintenance for a municipal solid waste landfill leachate treatment plant in Anyue Country of Sichuan Province, China.

*Alliance Mineral: Harbour Asia Opportunity Fund ceased to be a substantial shareholder after it sold 7.2m shares at $0.36 apiece on 7 Apr, paring its stake from 5% to 3.5%.

*TA Corp: Proposed 1-for-4 warrant issue at 0.3¢ apiece, exercisable at $0.28 within five years from the issue date.

*SIA: Issued $700m 3.035% notes due 2025 under its $5b multicurrency medium-term note programme.

Tuesday, April 11, 2017

SG Market (11 Apr 17)

Market sentiment could stay muted amid heightened geopolitical tensions as a US carrier strike force sails towards North Korea, anxiety over the upcoming French presidential election and ahead of the start of the 1Q17 results season.

Regional markets are seeing tepid early trading in Tokyo (-0.4%), Seoul (+0.1%) and Sydney (+0.1%).Technically, the STI is pegged against topside resistance at 3,200, with immediate support at 3,140.

Stocks to watch:
*SPH REIT: Flat 2QFY17 DPU of 1.4¢ met expectations on larger unit base as distributable income grew 2.4% to $37.3m. Revenue inched 1.7% higher to $54m on increased rental income at The Paragon and The Clementi Mall, while NPI jumped at a faster clip to $11.3m (+9.7%) on proactive management of utility contracts and absence of one-off provision for prior years’ property tax. Both malls enjoyed rental uplift and full occupancy. Aggregate leverage remained steady at 25.7%. NAV/share at $0.94.

*Keppel Corp: Inked a term sheet agreement for the proposed sale of its Rotterdam-based Keppel Verolme shipyard to Dutch builder Damen Shipyards for an undisclosed amount following a strategic review This is in line with the group's efforts to optimise operations and rationalise its global network of yards. MKE last had a Sell with TP of $4.57.

*SGX: Launched SGX Developed Asia ex Japan Quality Index, its first smart beta index that features a factor-selection method with a bottom-up approach to selecting its constituents. Separately, SGX appointed six and two new members to its Disciplinary and Appeal Committees, respectively, to replace retiring members.

*Super Group: Offeror Jacob Douwe Egberts does not intend to revise the offer price of $1.30 for the instant cereal manufacturer. Closing date of the offer is on 25 Apr.

*Midas: 32.5% owned associate Nanjing Puzhen Rail Transport secured a Rmb543m metro train car supply contract from Shanghai Rail Transit Line Two Development. Delivery is scheduled in 2018.

*Rotary Engineering: Secured two EPC projects worth US$120m in Dubai and Thailand, to build tank storage for the oil refineries of Emirates National Oil Company and Thai Oil Public Company.

*Civmec: 50% owned JV Amec Foster Wheeler Civmec has clinched a contract for the Gruyere Gold Project in Yamarna greenstone belt, Australia. Works include the design and installation of a process plant, admin office, workshop, warehouse, water pipelines and power lines, and are scheduled between Jul '17 and Dec '18. The group's 50% share of the contract will lift order book to $526m (Dec '16: $425m).

*Roxy-Pacific: Entered into heads of agreement with third parties for the proposed sale of a freehold property at 59 Goulburn Street in Sydney, Australia, for A$158m.

*Spackman: Issued positive profit alert for 1Q17, following losses incurred in 1Q16 and FY16. This is due to recognition of revenue from the film "Master", for which its costs were booked last year, production revenue from upcoming thriller "Golden Slumber" and lower opex following disposal of loss-making Opus Pictures in Aug '16. 1Q17 results will be released on 15 May.

*Citic Envirotech: Secured credit facilities of up to Rmb20b for five years from China Merchants Bank, to fund projects in the water and environmental sector.

*GCCP Resources: Auditor Ernest & Young has drawn attention to uncertainty related to the group's ability to continue as a going concern, in light of FY16 loss of RM10.3m and negative operating cash flow of RM1m. In addition, it has loans worth RM10.2m that will be due for repayment this year.

*Hoe Leong: Auditor KPMG has drawn attention to uncertainty related to its ability to continue as a going concern following its FY16 loss of $46.9m, as well as the net current liability position of $47.9m which has resulted in additional loans due in 2017. The group now needs to repay $80.7m in 2017, or 6.8x its current market cap.

Monday, April 10, 2017

SG Market (10 Apr 17)

The market could consolidate with a positive bias following the amicable first summit between Presidents Trump and Xi last week, with both sides agreeing on a 100-day plan for trade talks and averting a potentially damaging trade war.

Focus this shortened trading week will be centred on MAS policy statement, which is expected to stay neutral, and Singapore's 1Q flash GDP estimate, which may have some upside risk.Regional markets opened mixed in Tokyo (+0.7%), Seoul (-0.6%) and Sydney (+0.5%).Technically, topside resistance for the STI is at 3,200 with immediate support at 3,140.

Stocks to watch:
*CWT: China's HNA Group has launched a US$1b takeover offer at $2.33 apiece (excluding FY16 DPS of $0.03), after controlling Loi, Liao and Lim families, which collectively own 65.13% of the logistics group, gave their undertaking to accept the offer. Pre-conditions, including anti-trust approval from six regulators, are required to be fulfilled before 9 Sep.

*Sembcorp Industries: Won a bid to build a new 250MW wind power plant in Tamil Nadu, India. The $250m project is is expected to be fully commissioned in 2H19, with its entire output sold to Power Trading Corp under a 25-year power purchase agreement.

*SGX: Mar securities turnover grew 7% y/y and 3% m/m to $29.1b over a longer trading month of 23 days (Mar '16: 22 days, Feb '17: 20 days), with average daily value of $1.27b (+2% y/y, -10% m/m). Derivatives volume totalled 15.7m contracts (-8% y/y, +26% m/m) as trading in equity indexes slowed 10% y/y (+25% m/m) but was partly mitigated by increased trading in FX futures (+ 56% y/y, +27% m/m). Commodities derivatives trading volume fell 11% y/y but was up 35% m/m.

*F&N: Plans to buy 14.5m Vinamilk shares from the open market between 12 Apr and 11 May '17, potentially raising its ownership to 242.2m shares, or 16.69%.

*UnUsUaL: Marks its trading debt today following the listing of 97m new shares at $0.20 apiece. Parent mm2 Asia is expected to track the performance of UnUsUaL on account of its 42% (post IPO) shareholding.

*Cogent: Completed and commenced full operations at 1) Jurong Island Container Depot and 2) Sky Depot at Cogent 1.Logistics Hub, as well as the completed its Malaysian warehouse at Port Klang, which will be leased to a single tenant for 3 years from 14 Apr.

*Keong Hong: Awarded $214.2m construction contract for the Seaside Residences condominium project at Siglap Road. Works include the construction of four residential towers of 27 storeys totalling 843 units and ancillary facilities.

*Tuan Sing: Acquiring Sime Darby Centre at 896 Dunearn Road for $365m and intends to reposition the property into a hub of activities..

*Heeton/ KSH/ Lian Beng/ Ryobi Kiso: Formed a consortium that entered a franchise agreement with Hilton Int'l to operate the 192-room Hampton hotel in Leeds, UK, currently under construction. Operations are expected to begin in late 2019.

*Vard: Secured a contract for the design and construction of a live fish transportation vessel for an undisclosed amount for Fjordlaks Aqua in Norway. Delivery is expected to be in 3Q18.

*Vibrant/Sabana REIT: Vibrant disclosed that it is in discussions to acquire a further 45% stake in the manager of Sabana REIT, which holds 12% of the REIT's total units, but no binding arrangements have been entered into.

*Falcon Energy: Plans to dispose its 21.83% stake in CH Offshore for $20m as it seeks funds to meet its obligation to repay a CIMB term loan instalment. The potential sale is expected to incur a further loss of $10.8m on top of the US$35.4m already written down.

*Miyoshi: 2QFY17 net profit tumbled 54% from a low base to $0.2m, as revenue shrank 11.8% to $11.7m on fewer orders from consumer electronics customers. Bottom line was further dragged by a 76.1% jump in tax. NAV/share at $0.1193.

*Imperium Crown: Disposing its remaining Japanese property portfolio for ¥1.52b ($19.3m), or 11% below market valuation. Pro forma FY16 NTA is expected to drop 3.6% to $0.1056, while LPS will widen from 2.53¢ to 3.13¢.

*KS Energy: Disclosed that Executive Chairman and CEO Kris Taenar Wiluan and Executive Director Richard James Wiluan have been interviewed by the CAD in its investigations into a potential breach of the provisions of the Securities and Futures Act.

*KOP: Paid a deposit of Rmb176.6m together with JV partners Shanghai LuJiaZui Zhi Mao Investment and Shanghai Harbour City Development, to acquire a plot of land at Lingang, Pudong New District in Shanghai for the development of a resort named Wintastar.

*Cosco Corp: 51% owned subsidiary, COSCO Shipyard has been hit with a delivery deferral relating to two jack-up rigs under construction for Northern Offshore. The new agreement stipulates that acceptance for the rigs will be pushed back to end-Sep ’17 and Mar ’18, with delivery of the rigs deferred until further notice.

Friday, April 7, 2017

SG Market (07 Apr 17)

Traders are expected to stay cautious as they follow the high-stakes Trump-Xi superpower summit, with trade and security issues looming over market sentiment.

Regional markets opened mostly higher in Tokyo (+0.6%), Seoul (flat) and Sydney (+0.4%).Technically, immediate support for the STI is seen at 3,140, with topside resistance at 3,200.

Stocks to watch:
*CWT: Reportedly in advanced talks with China's HNA Group, which could make a formal takeover bid at $1.4b ($2.30/share), valuing the logistics provider at 18.9x historical P/E and 1.4x P/B.

*Singapore Myanmar Investco: Starting business operations at Junction City, a 260,000 sqm integrated complex in downtown Yangon, with plans to operate up to 10 retail brands and F&B concepts, including Coach, Aigner, Benetton and Crystal Jade. This is the group's second major venture in Myanmar, following the successful roll-out of its duty-free retail operations at Yangon International Airport.

*Lian Beng/KOP/KSH: 32%/25%/28% owned consortium Epic Land has issued a non-binding LOI to dispose eight strata-titled office units spanning 55,711 sf in Prudential Tower. The buyer has been given an exclusive period of six weeks, with option to extend by another two weeks, to conduct due diligence.

*Keppel T&T: Collaborating with PCCW Global, the international operating division of HKT, to launch PCCW Global-Keppel International Carrier Exchange (ICX) to provide faster business interconnectivity. ICX will have a network facility management space of 7,800 sf, coupled with redundant power configuration.

*Triyards: Dived into 2QFY17 net loss of US$6.3m (2QFY16: US$5.9m profit) due to a US$8.4m provision related to related entities of beleaguered Ezra. Revenue was flat at US$70.6m, mainly coming from 12 chartered vessels, but gross margin of 15.7% (-5.2ppts) was squeezed by lower charter rates. NAV/share at US$0.6725.

*GP Hotels: Voluntary offer of $0.365/share has been declared unconditional after the offeror secured 90.1% control. Closing date for the offer has been extended to 27 Apr.*Sen Yue: Accepted an offer from JTC Corp to dispose its 5,280 sqm property at 16 Tuas Avenue 20 for $3.1m. The group will reap a disposal gain of ~$1.6m, representing 6% of its market cap.

*Hong Leong Asia: 40.2% owned China Yuchai has installed 200 engines into buses that are put in Lahore’s Bus Rapid Transit in Pakistan. A further 100 will also be supplied in the city of Multan, further extending its coverage in Pakistan.

*Huan Hsin: External auditor Deloitte flagged a going concern issue as its FY16 current liabilities exceeded current assets. Failure to secure a proposed $40m equity injection could worsen the group's financial condition.

*City Dev: Issued the first green bond in Singapore, raising $100m 1.98% fixed rate due 2019.

Thursday, April 6, 2017


CWT: Bloomberg reported that Maybank and RHB are working on a financing plan to back HNA Group's potential bid at $2.30/share of CWT. The counter is currently halted.

SG Market (06 Apr 17)

The market could lose momentum, taking cue from the biggest one-day reversal in Wall Street since Feb 2016 after FOMC minutes signalled a shift by the Fed towards unwinding its massive US$4.5t balance sheet this year, and on disappointment over the pace of US tax reform as well as a pullback in crude prices.

Regional markets opened lower in Tokyo (-0.5%), Seoul (-0.6%) and Sydney (-0.3%).Technically, immediate support for the STI is seen at 3,140, with topside resistance at 3,200.

Stocks to watch:
*Land Transport: The Public Transport Council has begun the review of the 2018 public transport fare adjustment formula and mechanism, targeted to be completed by 1Q18, with hints of a possible hike. Within the sector, MKE last had a Hold rating on ComfortDelGro with TP of $2.68, with a bearish outlook for its taxi segment.

*GLP: Signed 264,000 sqm of new leases over the past three months with global demand coming from third-party logistics providers, including Best Logistics in China and a new e-commerce customer in Brazil. The group is still in discussions with several shortlisted parties and due diligence has commenced over a potential buyout. At last close, GLP trades at a 9.8% discount to consensus RNAV/share of $3.06.

*Oxley: Terminated a term sheet with Wyndham Hotel to operate a Days hotel in Batam, Indonesia.

*Spindex: Mandatory privatisation offer of $0.85/share will close on 12 Apr. As at 30 Mar, the offeror has obtained valid acceptances for 65.27% of share capital.*Serial System: Proposed to acquire a 70% stake in printing business Print IQ Singapore for $0.3m, to broaden the scope of its consumer products distribution business.

*SHS Holdings: Signed MOU to develop a 300MW solar farm in Ninh Thuan Province, Vietnam, for a yet-to-be-disclosed amount.

*KS Energy: Expects overall operating cash flow to remain negative for the next 12 months. However, the group anticipates cash flow to be positive before working capital changes, boosted by existing and prospective rig charter contracts.

*Cheung Woh Technologies: Expects to report a 4QFY17 loss, due to lower sales generated and higher costs incurred for the HDD components segment.

*Mercator Lines: Entered an agreement for the proposed transfer of its listing status to Essence Holdco, an Australian firm to be incorporated by two individuals, Nickolaos Mitropoulos and Dimitrios Podaridis via a scheme of arrangement, and for it to be listed on the Catalist board. Three companies, Champion Commodities, County Fresh Milk and Champion Beverages will be injected into Essence, which will place out $5m new shares to shareholders and creditors and $1m to the judicial manager.

*Maxi-Cash: Established a $300m multicurrency medium term note programme with DBS as its sole arranger, with net proceeds used for general corporate purposes.

Wednesday, April 5, 2017

SG Market (05 Apr 17)

The market will likely continue to trade cautiously ahead of several risk events this week, including FOMC minutes to be released today, jobs report on Fri, and the crucial Trump-Xi summit that may impact global trade on Thu/Fri.

Regional bourses in Tokyo (+0.6%) and Sydney (+0.2%) opened firmer, although Seoul (0.1%) is weaker.Technically, immediate resistance for the STI is currently pegged at 3,200 with downside support at 3,140.

Stocks to watch:
*SingTel/StarHub/M1: Bid aggressively for Phase 1 of general spectrum auction, which led to huge price premiums of 297-560% vs MKE estimate of 50-100%. While Singtel (Hold, TP: $3.72) has sufficient cash to absorb the additional cost, Starhub (Sell, TP: $2.36) and M1 (Sell, TP: $1.75) may have to cut dividends to cope with spectrum payments and keep gearing levels within limits.

*SIA Engineering: Entered MOU with Nasdaq-listed Stratasys to establish a strategic partnership specialising in additive manufacturing to accelerate the adoption of 3D printed production parts for commercial aviation.

*SGX: 20 companies made total share buybacks of SGD29.1m (-57% y/y, -12% m/m) in Mar. This brought 1Q17 repurchases to SGD82m. The drop in number of companies and transaction value might be due to higher stock price levels.

*Ascott Residence Trust: Its 29:100 rights issue at $0.919 per unit to raise $442.7m was oversubsribed by 1.8 times. The rights units will start trading on 11 Apr '17.

*Oxley/KSH/Lian Beng/Heeton: Updated that their 27.5%/22.5%/7.5%/10% owned development project in Gaobeidian, China is likely to benefit from establishment of a new special economic zone (NSEZ) in Hebei's Xiongxian, Anxin and Rongcheng cities, to integrate with Beining and Tianjin and akin in importance to Shenzhen and Pudong. Gaobeidian is located 40km from NSEZ and is not subject to recent property transaction freeze there. The project has a land size of 5.3 sq km, of which 2 sq km has been approved for development.

*Q&M: Fulfilled the quotation requirements for listing of Aidite on China’s New Third Board. Separately, the group has also completed the restructuring of Aidite and agreed to sell a 2% stake in Adite to Qianhai Jianyuan Investment Consultancy (Shenzhen) Co for Rmb10m.

*Fischer Tech: Received a non-binding expression of interest from a third party, which may result in a transaction involving its shares. In connection with this, certain shareholders have entered into exclusive discussions with the third party.

*KS Energy: Awarded a US$11.1m contract for its 80.1%-owned jack-up drilling rig "KS Java Star 2" for work in Vietnam.

*Top Global: Appointed Stirling Coleman Capital as its independent financial adviser for the $0.33/share privatisation offer by its chairman, Oei Siu Hoa.

*RH Petrogas: Auditor Ernst & Young flagged doubts of the group's ability to continue as a going concern in light of its FY16 net loss of US$8.6m (FY15: US$170.8m loss), with its balance sheet in a net liability position of US$36.1m. The group has US$14.8m worth of net debt that is payable in 2017.

*Blumont: Auditor made a disclaimer of opinion as the company’s current liabilities have exceeded current assets by $2.9m. In return, Blumont said it will be able to raise enough funds for operational requirements over the next 12 months

.*Singhaiyi: Its conditional right of first refusal for the transfer of 500m shares in OKH Global at $0.10/share has lapsed. OKH is currently trading at 6.8¢/share.

*ARA Asset Management: The last day of trading of its shares will be on 5 Apr with trading suspended from 6 Apr, 9am onwards.


UnUsUaL IPO: Placement shares of 97m shares at $0.20 each.
- Placement agent: Hong Leong Finance
- To raise $17.4m in net proceeds which will be used to expand its operations locally and regionally as well as expand its access to event and concert venues. Also exploring possible acquisitions, JVs and investments
- Reported 9M16 net profit of $3.8m (+40.4%) although revenue slipped 28.1% to $16m after SG50 celebrations in 9M15. Earnings were supported by expansion in gross margin to 37.6% (+10.1ppts) as it utilised internal resources for more of its projects instead of outsourcing.
- Post IPO, mm2 Asia will own a 41.9% effective stake (prior: 51%) in UnUsUaL, while founders, Ong brothers will own a collective 40.2% effective stake.

Indicative timetable:
6 Apr, 1200hrs: Closure of placement application
10 Apr, 9am: Commencement of trading.

UnUsUaL Catalist IPO Prospectus can be found here: can be found here:

Tuesday, April 4, 2017

Raffles Medical Group

Private healthcare provider, Raffles Medical Group (RMG) is broadening its horizons in China with a second hospital in Chongqing, China. While details are scarce, Maybank KE sees much merit in the acquisition and reiterates its Buy rating with TP of $1.70.

RMG is acquiring a 28,000 sqm site that houses a partially constructed building in Liangjiang, Chongqing, which will be developed into a 700-bed international tertiary general hospital.

Financial details such as ownership, total capex and start-up plans have yet to be determined, RMG is confident of keeping capex for its second Chinese hospital at below Rmb1b. For comparison, its 400-bed Shanghai New Bund Hospital, which is currently under construction and slated for completion in 2019 has an investment price tag of Rmb800m.

As construction of the Chongqing hospital is already underway, management expects completion to be fast-tracked with the hospital up and running by 3Q18.

With the addition of this new hospital, RMG's Chinese hospital portfolio will swell to 1,100 beds, dwarfing its domestic bed capacity of 380.

While management continues to be bullish on the Chinese healthcare industry, Maybank KE notes that execution risks in managing the opening of two large hospitals in China have increased.

On this, RMG is building up its understanding of the operating environment through its seven medical clinics/centres in China.

The fact that the Chongqing hospital is an inter-governmental project should also help to mitigate any regulatory risks.

With planning for the Chongqing hospital currently ongoing, Maybank KE notes that its valuation for the Shanghai New Bund Hospital of $0.38/share could be applied conservatively to the Chongqing hospital (larger but with lower spending power than Shanghai residents). This would indicate further 22% upside to the house's current TP.

SG Market (04 Apr 17)

Despite the solid start to 2Q, market action may turn cautious following Wall Street's risk-off sentiment amid the uncertainty over Trump's policy agenda and US-China trade talks later this week.

Regional bourses in Tokyo (-0.7%), Seoul (-0.3%) and Sydney (-0.3%) opened weaker.Technically, immediate resistance for the STI is currently pegged at 3,200 with downside support at 3,140.

Stocks to watch:
*Property: Flash URA data showed that private housing prices dipped 0.5% in 1Q17, for the 14th consecutive quarter of decline, with landed homes falling 2.8%, while non-landed properties stayed flat. Private home prices have fallen 11.7% since peaking in 3Q13. MKE is Neutral on the property sector, with UOL (Buy, TP $7.68) as its key pick.

*GLP: Divested two portfolio companies with distribution facilities to its GLP US Income Partners III fund for USD34m, as well as three other companies holding a completed asset that is part of the fund's target portfolio. This pared down its stakes in the portfolio companies (held through the fund) from 100% to 49.9%.

*CapitaLand: Serviced residence unit Ascott inks two serviced residences franchise agreements with Vitacon in Sao Paulo, Brazil. The two Citadines serviced residences will add a cumulative 214 rooms, with one scheduled to open in 4Q17, and the other in 2020. Vitacon intends to establish a portfolio of at least 5,000 Citadines-branded units in Sao Paulo.

*Healthway Medical: Private equity firm Gateway Partners, which is subscribing to $70m convertible B notes that can be swapped into 45.7% of HMC enlarged share capital, has declared that it has no intention of buying out the healthcare group. This statement would prohibit Gateway from making any general offer or acquire any shares that will result in it holding >30% of the company in the next six months. Meanwhile, Lippo-linked Gentle Care’s offer for the company at 4.2¢/share has received 23% acceptances.

*Chasen: Secured relocation contracts worth RM2.2m and US$0.2m in Malaysia and Vietnam respectively. The contracts are expected to be completed within the year.

*AnnAik: Acquiring 85% of LinXing Water Supply Co for Rmb9.4m. The target company supplies new water to residents of Lincheng, Zhejiang. The acquisition is complementary to the group’s industrial and municipal wastewater treatment business.

*Sincap: Appointed legal advisors to refute a letter of demand from Fu Hao claiming Rmb6.8m. Separately, it received a qualified opinion from independent auditor Baker Tilly for its FY16 financial statements due to unconfirmed outstanding claims from Shandong Luneng Taishan Mining for a mine refilling project.

*Secura: Wee Ee Chao, through KIP Industrial, is no longer a substantial shareholder following its sale of 1m shares at $0.17093 apiece, paring his stake to 4.76% from 5.01%

*Delong: Selling its pig iron production capacity of 1.1m mt and steel production capacity of 1.21m mt for Rmb400m ($81.1m) to Tsing Tuo. Proceeds from the sale will be used to pay severances as well as other expenses incurred for cessation of operations.

*Asian Micro: Acquiring a plot of land spanning 11,039 sf in Pulau Pinang, Malaysia for RM1.9m (~$0.6m).

*Kingsmen Creative: Its MOU with Regal International, The Destination Lab and ONG&ONG has lapsed and it will not proceed with the project to own, develop and operate two hospitality properties in East Malaysia.

*Auric Pacific: Received 97.02% valid acceptances for the privatisation offer at $1.65/share by Stephen Riady and CEO Andy Adhiwana. The company will be delisted after the close of the offer on 7 Apr.

*Ezra: Holding informal meeting with noteholders on 17 Apr to update on its filing for Chapter 11 bankruptcy in the US.

*Frasers Centrepoint Trust: Issued $90m 2.365% notes due 2020 under $1b multi-currency medium term note programme.

*Azeus Systems: Expects to report a loss for FY3/17 due to its products investments.

Monday, April 3, 2017

SG Market (03 Apr 17)

The market is likely to open on a cautious note amid OPEC’s optimism that the oil market rebalancing is underway, while the harsh stance taken by US President Trump on China trade issues ahead of his meeting with President Xi later this week could spark worries of a trade war.

Regional markets opened mixed, with Tokyo (+0.1%) and Seoul (+0.1%) higher, and Sydney (-0.02%) weaker.Technically, immediate resistance for the STI is still pegged at 3,200 with downside support at 3,140.

Stocks to watch:
*Economy: Economists do not expect the MAS will not tighten the exchange rate policy in Apr or even this year despite the recent stronger growth data as the Singapore economy is still on a weak footing and private investment has yet to pick up.* Property. After regulators closed a tax loophole that allowed developers to offload properties in bulk to institutional investors or wealthy Singaporeans, developers now face the unpalatable choice of discounting luxury homes to dispose inventory, or pay stiff QC charges for missing stipulated sales deadlines. MKE prefers UOL (Buy, TP: $7.68) for sector exposure.

* Sembcorp Marine/ Keppel Corp. US District Court for Columbia has dismissed the claims filed by EIG Management against Petrobras, pertaining to EIG’s investments in Sete Brasil. SMM and Keppel Corp were among rigbuilders that were named as defendants in the suit. MKE has Sell ratings on SMM (TP: $1.00) and Keppel Corp (TP: $4.57).

*SGX: Colloborating with Tullett Prebon to launch a LNG spot index to offer a trusted reference price for LNG delivered to key ports in Dubai, Kuwait, and India. Separately, it has also inked agreements with equity crowdfunding platform Crowdo and PwC’s entrepreneurship consulting unit Venture Hub to help start-ups improve capital access.

*Yangzijiang: Won 13 shipbuilding contracts amounting US$318m in 1Q17. This comprises five 82,000 dwt bulk carriers, five 62,000 dwt woodchip carriers, two 1,800-TEU containerships and one 6,500 dwt conro vessel, with deliveries from 2018-2020.*Frasers Centrepoint: Entered a 19.9/80.1 JV agreement with TCC Assets to acquire and develop a leasehold site in central Bangkok into an integrated mixed-use development. The project, with total gfa of 1.83m sqm, will have a retail component, office towers, residences, hotels and serviced apartments.

*Raffles Medical: Acquired a 28,000 sqm land with building under construction in Liangjiang, Chongqing for the development of a 700-bed international tertiary general hospital. Construction is expected to be completed in 2Q18. The consideration payable for the land and construction costs incurred up to end Jan ’17 amounts Rmb188m..

*China Everbright Water: Won the Ji’nan Zhangqiu Urban-Rural Integration Water Supply project in Shandong, which commands a total investment of Rmb3.1b. CEW will hold an 80% equity stake in project, which has a 30 year concession period.

*Q&M: Expects to raise $9.1m net proceeds from the proposed-listing of its China dental equipment and supplies business Aoxin Q&M. Preliminary documents indicate that Aoxin intends to place out 57m new shares at $0.20/share.

*TEE Int’l: CEO Phua Chian Kin is offering to privatise the engineering firm via scheme of arrangement. Shareholders may elect a cash consideration of $0.215/share (12.6% premium over last traded price) or one new share in the Phua’s wholly-owned vehicle, Oscar Investment. The offer prices the group at 1.08x P/B.

*Ezion: Following recent acquisition of remaining stakes in several JVs with Swissco, the group is divesting its 50% stake in Teras Cargo Logistics, Strategic Offshore, and Strategic Excellence to Malaysian strategic partner Sea Explorer for US$70m. The transaction is expected to be completed by 2Q17.

*Low Keng Huat: 4Q16 net profit plunged 80% to $6.3m, bringing full year earnings to $55.7m (flat). Quarter revenue halved to $10.2m, largely weighed by the absence of construction revenue as the group is no longer tendering for third party construction contracts. The group also saw nil development sales in the quarter. Bottom line further dragged by $1.5m of other operating expenses, largely attributable to additional provisioning for impairment losses on the Balestier Tower project. NAV/share at $0.90.

*Olam: 75%-owned Nutrifoods Ghana has opened its newly expanded US$8.25m biscuit production facility in Ghana, doubling its capacity. Separately, the group is issuing ¥5.7b 0.47% fixed rate notes due 2022 under its US$5b euro medium term note programme. Proceeds will be used for working capital, capex, potential acquisition opportunities and other general corporate purposes.

*Saizen REIT: Terminated the proposed acquisition of 20 Australian freehold industrial properties from Sime Darby Property Singapore, which would have resulted in an RTO.

*FJ Benjamin: Divested loss-making NooTrees, a subsidiary that sells sustainable consumer products, to Lam Soon Singapore for $2.2m, and realising a gain of $1.79m.