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.

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