Friday, May 19, 2017

SG Market (19 May 17)

Market sentiment is likely to stay muted amid concerns of political stability in the US, while at home, investors digest 4QFY17 earnings of three STI index stocks, SIA, SATS and GLP, all missing estimates.

Regional bourses are mixed in Tokyo (+0.1%), Seoul (-0.1%) and Sydney (-0.3%).Technically, the benchmark STI bounced off its immediate support at 3,190 yesterday, with topside resistance pegged at 3,275.

Stocks to watch:
*SIA: Ran into 4QFY17 loss of $138.3m from $224.7m profit a year ago, due to intense competition and a cargo provision, brining FY17 earnings to $360.4m (-55.2%), missing estimates. Revenue stagnated at $3.72b as the increase in load factor to 80.6% (+2.1ppts) was offset by a 4.7% drop in passenger yield. Operating profit plunged 82% to $27.6m, dragged by higher fuel costs (+4.6%) and weak subsidiary performances at SilkAir (-15.6%), Scoot/Tigerair (-53.2%) and SIAE (-11.1%). Final DPS shaved to $0.11, giving FY17 payout of $0.20 (FY16: $0.45). Outlook remains challenging amidst overcapacity and aggressive pricing by rivals. Trades at 0.98x P/B.

*SATS: 4QFY17 underlying net profit of $51.6m (+1.8%) took FY17 core earnings to $234.3m (+7.4%), which fell short of estimates. Revenue inched up 2% to $425.8m on growth in gateway services (+3.6%) and food solutions (+0.7%), but operating margin narrowed to 10.8% (-1.1ppt) on cost pressures. Outlook expected to be challenging amid increasing pressure in airline margins. Final DPS of $0.11 raised FY17 payout to $0.17 (FY16: $0.15). MKE last had a Sell with TP of $3.76.

*GLP: 4QFY17 net profit (ex-revaluation) inched up 3.8% to US$53.6m, bringing FY17 core earnings of US$205.6m (-14.6%), below street estimates. Revenue rose 14% to US$226.9m mainly on rental growth and completion and stabilisation of China development projects. FY17 development starts amounted to US$2.2b, exceeding its target by 5%. Final DPS maintained at $0.06. Trading 12% above NAV/share of US$1.86.

*Citic Envirotech: Secured a Built-Transfer project in Feng Hua District, Ningbo, China worth Rmb3b. The project, of which it has a 60%-stake in, involves the investment, design, construction, procurement and commissioning to restore the rivers and its surrounding environment.

*mm2: Agreed to buy Malaysian cinema owner Lotus Fivestar, which owns 13 cinemas across the country, for $38.2m in cash. Post-acquisition, pro-forma FY16 EPS would increase 2.7% to $0.76.

*Fragrance: To acquire a 4,868 sqm mixed-use site in Hobart, Tasmania, Australia for an undisclosed price. Currently located on site are the University of Tasmania’s conservatories of music with a gross building area of 4,313 sqm, a 1,108 sqm warehouse and six other buildings.

*Wee Hur: Secured a construction project worth $62m from Stuttgart Auto, to erect an 8-storey factory & ancillary office with construction scheduled to complete end-Nov ’19..

*Anchor Resources: To pay subcontractor Sinomine Resource Exploration an aggregate US$337k in new shares for undisclosed reasons, following a mutual agreement to terminate the mining engagement at Anchor's Lubuk Mandi mine. Separately, Anchor has engaged Great Aims Resources (GAR) to be its exclusive mining contractor at Lubuk Mandi, with revenue generated from gold sales split on a 35:65 basis between GAR and Anchor, with the latter entitled to tributes and royalties of a minimum RM80k/month based on GAR's 65% revenue share.

*Meghmani Organics: Considering potential delisting of its Singapore Depository Receipts.

*Viking Offshore & Marine: Proposed 2-for-5 renounceable and non-underwritten rights shares at $0.018 apiece, with one free detachable warrant (2.5¢ exercise price) attached with every two rights shares subscribed.

*Marco Polo Marine: Filed application to restrain all legal proceedings against the group, in a bid to finalise a scheme of arrangement with creditors.

*Kitchen Culture: $2m 9% notes issue via crowdfunding was lacklustre despite attractive terms, with just $0.8m raised. The group may conduct further fundraising campaigns for the remaining sum.

*Olam Int'l: Issuing ¥6b 0.9725% fixed rate senior unsecured notes due 2022 under its US$5b Euro Medium Term Note Programme.

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