MARKET OVERVIEW
- Slight profit-taking likely ahead of the weekend although downside may be supported by improving sentiment over banks and property counters.
- MAS maintains its 2017 GDP growth forecast of 1-3%, with strong likelihood that it would surpass last year's 2% expansion.
- Technically, STI broke clear of its 20 and 50-dms and is approaching top end of its pennant formation at 3,268. A breakout could take the index to next resistance at 3,355. Downside support remains at 3,190.
POSITIVE NEWS
*Keppel REIT
- Acquired a 50% stake in a prime freehold office building (717,000 sf) to be developed in central Melbourne for A$347.8m.
- Construction is due to start in 3Q17 with completion expected in 4Q19
- The 41-storey office tower will be fully leased to the Victoria state government for 30 years with fixed rental escalation and a market rent review after 15 years.
- It comes with a stable average NPI yield of 6.4% over the first 15 years of the lease and will extend portfolio WALE to nine years.
- This is an accretive purchase with minimal leasing risk, and will lift pro forma FY16 DPU by 1.1% to 6.44¢.
*Del Monte Pacific
- 4QFY17 core net profit rose 16.5% to US$17.2m (+16.5%) bringing FY17 core earnings to US$45.5m (+80.1%), beating street estimates.
- Quarter revenue grew 3.9% to US$545.2m (+3.9%) on broad-based growth across Americas (+1.5%), Asia (+5.1%) and Europe (+68.8%).
- Gross margin improved to 23.3% (+1.4ppt) on cost improvements but operating margin of 6.7% (-5.3ppt) was marred by higher selling and marketing expenses at its US unit and absence of net US$15.2m one-off gains.
- First and final DPS of US$0.0061 represents 50% dividend payout.
*CWT
- Updated that offeror HNA Belt and Road Investments has released its EGM circular to seek shareholder approval on the pre-conditional buyout offer at $2.33/share.
- The date for the EGM has not been set, with the long-stop date of the offer on 9 Sep '17.
*Nordic
- Secured several contracts worth a total of $9.6m, scheduled for completion through to 3Q20.
- Contracts were from both new and repeat customers, comprising MNCs, and companies in O&M, infrastructure and petrochemical industries.
- Trading at 11.2x trailing P/E, above the 5-year average of 8.1x.
NEUTRAL NEWS
*mm2 Asia
- StarHub has agreed to subscribe for 26.3m shares at $0.57 apiece in the proposed placement of 87.7m new shares.
- Post-placement, StarHub's stake will be lifted from 8.39% to 10.1%.
*shopper360
- Debut trading today following the placement of 38m shares (18m new shares, 20m vendor shares) at $0.29 apiece (7.4x FY16 P/E).
- Substantial placees include Asdew Acquisitions (5.3m shares), Island Asset Management (4.3m) and BTS Group Holdings (2.3m)
- Net proceeds of $3.4m will be used to fund business expansion.
- No fixed dividend policy, but it intends to distribute not less than 20% of earnings in FY17 and FY18.
*Raffles United
- Acquired a 2-storey freehold shophouse at 359 Jalan Besar for $5.2m.
- Store to be opened to sell bearings, seals, gearbox and electrical products.
*Miyoshi
- Acquired a freehold industrial property in Siang Cavite, Philippines for Php125m ($3.4m).
- The 13,600 sqm gfa property will be used to expand its light electric vehicle business in Philippines.
*Keppel Corp
- Broke ground at Keppel Marina East Desalination Plant.
- The facility will be able to produce 30m gallons of drinking water per day.
- Slated for completion by 2020.
*SGX
- Welcomed Shinhan Investment and Cathay Futures as new derivatives trading members.
- Total members lifted to 59.
Friday, June 30, 2017
Thursday, June 29, 2017
SG Market (29 Jun 17)
MARKET OVERVIEW
- Caution could reign as UK election results stream in; polls suggest the prospect of a hung parliament which would rekindle Brexit uncertainty.
- Stocks with GBP exposure such as GL, ComfortDelGro and Frasers Hospitality Trust could be impacted by the drop in the pound.
- STI expected to range trade between immediate support at at 3,218 and near term resistance at 3,250.
MACRO WATCH
*Myanmar
- Trade agency IE Singapore signed MOU with Myanmar Investment Commission to open doors for Singapore firms to explore collaboration in urban and housing solutions, utilities, transport and logistics, manufacturing, oil and gas, and professional services in fast emerging Myanmar.
*Property
- 50% unit of Malaysian property developer Selangor Dredging acquired a prime residential property, 1 Draycott Park, off Orchard Road, for $72m to be redeveloped into exclusive mid-rise apartments.
- Including development charge of $15.3m, the transaction works out to $1,787 psf ppr for the 17,442 sf site.
- Breakeven price for the new development is estimated at $2,700-2,800 psf with selling price of around $3,300 psf.
- MKE opines that the aggressive bid points to an imminent housing price rebound and is Positive on the sector. For exposure, City Dev (Buy, TP: $12.05) is the best proxy to the area.
POSITIVE NEWS
*GLP
- Shortlisted bidders have up to end Jun to put in firm offer for final evaluation.
- No binding proposal have been received to date and there is no certainty that any transaction will materialise.
- Bidders that have expressed interest include Blackstone, Warburg Pincus, a Chinese consortium comprising CIC, Hopu and Hillhouse as well as CEO Ming Z Mei and non-executive director Fang Fenglei.
- Trades at 1.14x P/B vs 2.04x for US industry giant Prologis.
*Pacific Radiance
- Granted $85m in loans by DBS and UOB, backed by two government-backed financing schemes.
- Government will take on 70% of the risk share for both the IE Singapore's IFS and Spring Singapore's BL loans.
- Funds will be used to for working capital needs over the medium term.
*Boustead Projects
- Secured a design-and-build contract for a hazardous chemical waste treatment facility in Tuas.
- The contract was awarded by Veolia ES Singapore Industrial with undisclosed project value.
- This raises the group's order book to $170m.
*SMJ International
- Clinched its first interior design and fit-out consultancy project for the Huangshan Lilang Holiday resort in China.
- The Rmb2m deal is part of the carpet company's diversification into property investment and management.
NEGATIVE NEWS
*QT Vascular
- 1Q17 net loss widened to US$8.8m (1Q16: US$6.8m) on revenue of US$3.2m (-8.3%).
- Revenue was affected by fewer catheter units sold (-16.7%), while bottom line was further hit by higher finance costs (+348%).
- NAV/share at -US$0.01.
NEUTRAL NEWS
*HRnetGroup
- Launched IPO of 193.4m new shares at $0.90 on SGX mainboard; translating to a listing market cap of $910.3m for the recruitment group.
- 103.9m shares will go to cornerstone investors, 85.7m for placement and 3.8m public tranche, including 0.44m reserved for directors and employees.
- Cornerstone investors include Aberdeen AM, FIL Investment, Meiji Yasuda AM and Heliconia Capital Management.
- Public offer closes on 14 Jun (noon) with trading to commence on 16 Jun.
*SPH
- Invested $0.98m for a 33.33% stake in RecomN Singapore.
- RecomN operates a services portal that matches customers with relevant service providers.
*CapitaLand Retail China Trust
- AIA ceased to be a substantial shareholder.
- Disposed 0.35m shares, shaving its stake to 4.9657%.
- Caution could reign as UK election results stream in; polls suggest the prospect of a hung parliament which would rekindle Brexit uncertainty.
- Stocks with GBP exposure such as GL, ComfortDelGro and Frasers Hospitality Trust could be impacted by the drop in the pound.
- STI expected to range trade between immediate support at at 3,218 and near term resistance at 3,250.
MACRO WATCH
*Myanmar
- Trade agency IE Singapore signed MOU with Myanmar Investment Commission to open doors for Singapore firms to explore collaboration in urban and housing solutions, utilities, transport and logistics, manufacturing, oil and gas, and professional services in fast emerging Myanmar.
*Property
- 50% unit of Malaysian property developer Selangor Dredging acquired a prime residential property, 1 Draycott Park, off Orchard Road, for $72m to be redeveloped into exclusive mid-rise apartments.
- Including development charge of $15.3m, the transaction works out to $1,787 psf ppr for the 17,442 sf site.
- Breakeven price for the new development is estimated at $2,700-2,800 psf with selling price of around $3,300 psf.
- MKE opines that the aggressive bid points to an imminent housing price rebound and is Positive on the sector. For exposure, City Dev (Buy, TP: $12.05) is the best proxy to the area.
POSITIVE NEWS
*GLP
- Shortlisted bidders have up to end Jun to put in firm offer for final evaluation.
- No binding proposal have been received to date and there is no certainty that any transaction will materialise.
- Bidders that have expressed interest include Blackstone, Warburg Pincus, a Chinese consortium comprising CIC, Hopu and Hillhouse as well as CEO Ming Z Mei and non-executive director Fang Fenglei.
- Trades at 1.14x P/B vs 2.04x for US industry giant Prologis.
*Pacific Radiance
- Granted $85m in loans by DBS and UOB, backed by two government-backed financing schemes.
- Government will take on 70% of the risk share for both the IE Singapore's IFS and Spring Singapore's BL loans.
- Funds will be used to for working capital needs over the medium term.
*Boustead Projects
- Secured a design-and-build contract for a hazardous chemical waste treatment facility in Tuas.
- The contract was awarded by Veolia ES Singapore Industrial with undisclosed project value.
- This raises the group's order book to $170m.
*SMJ International
- Clinched its first interior design and fit-out consultancy project for the Huangshan Lilang Holiday resort in China.
- The Rmb2m deal is part of the carpet company's diversification into property investment and management.
NEGATIVE NEWS
*QT Vascular
- 1Q17 net loss widened to US$8.8m (1Q16: US$6.8m) on revenue of US$3.2m (-8.3%).
- Revenue was affected by fewer catheter units sold (-16.7%), while bottom line was further hit by higher finance costs (+348%).
- NAV/share at -US$0.01.
NEUTRAL NEWS
*HRnetGroup
- Launched IPO of 193.4m new shares at $0.90 on SGX mainboard; translating to a listing market cap of $910.3m for the recruitment group.
- 103.9m shares will go to cornerstone investors, 85.7m for placement and 3.8m public tranche, including 0.44m reserved for directors and employees.
- Cornerstone investors include Aberdeen AM, FIL Investment, Meiji Yasuda AM and Heliconia Capital Management.
- Public offer closes on 14 Jun (noon) with trading to commence on 16 Jun.
*SPH
- Invested $0.98m for a 33.33% stake in RecomN Singapore.
- RecomN operates a services portal that matches customers with relevant service providers.
*CapitaLand Retail China Trust
- AIA ceased to be a substantial shareholder.
- Disposed 0.35m shares, shaving its stake to 4.9657%.
Wednesday, June 28, 2017
SG Market (28 Jun 17)
MARKET OVERVIEW
- The SG market could see some volatility, as continued weakness in the tech sector on Wall Street could outweigh near-term excitement in North Asia ahead of the 20th anniversary of HK's handover to China on 1 Jul.
- On the flip side, crude oil has risen the fourth straight day, which could ease recent selling pressure in oil-related stocks such as Keppel Corp, Sembcorp Marine and Ezion.
- The end-Jun bidding deadline for the potential sale of GLP could be delayed, after largest shareholder GIC is said be to looking into complaints on unfair information advantage held by the insider bid of the Chinese consortium led by GLP's chief executive Ming Mei and director Fang Fenglei.
- Technically, the STI sees immediate support at 3,215 (50-dma), with overhead resistance at 3,268.
POSITIVE NEWS
*Singtel
- Spin off for fibre network infrastructure provider NetLink Trust to be largest SGX IPO since 2011.
- NetLink is seeking to raise between $2.3b and $2.7b via a public offer of 2.9b units, priced at $0.80-$0.93 each, representing 75% of total unitbase.
- The trust is expected to yield FY18/19 distribution yield of between 4.73% and 5.8%.
- IPO will open on 10 Jul at 5pm and close at noon on 17 Jul.
*CDL Hospitality Trusts (CDLHT)
- Acquired an effective 94.5% stake in 337-room Pullman Hotel Munich and its office and retail components for €100m ($156.3m), at NPI yield of 5.4%.
- Separately, CDLHT launched an underwritten and renounceable 20-for-100 rights issue at $1.28 apiece, with gross proceeds of $255.4m to be used mainly to pare debt.
- Post transactions, aggregate leverage will contract to 33.6% from 42.6%.
- Pro forma FY16 distributable income will be lifted by 13%, but DPU would fall 5.7% to 9.43¢, due to the 20% increase in unit base.
*Croesus Retail Trust (CRT)
- PE firm Blackstone Group reportedly in the process of buying out CRT in a deal worth >$1.4b.
- CRT last traded at 1.1x P/B.
*Centurion
- Submitted application to The Stock Exchange of Hong Kong (SEHK) for its proposed dual listing on the mainboard of SEHK.
*Next-Gen Satellite Comm
- Granted a 2.5-year american option to acquire 0.65m shares (65% stake) in Zhong Ping Trading at $7.02m.
- Option provides exposure to the industrial consumable burner business in China.
NEUTRAL NEWS
*Frasers Logistics & Industrial Trust:
- Launch private placement of 78m new units at an issue price between $0.985 and $1.01 apiece.
- Maximum net proceeds of $77.2m to be used to part-fund the proposed acquisition of seven properties.
*UnUsUal
- Bringing Danish pop-rock band Michael Learns to Rock for live concerts in Manila, Singapore, and Kuala Lumpur.
- The SG market could see some volatility, as continued weakness in the tech sector on Wall Street could outweigh near-term excitement in North Asia ahead of the 20th anniversary of HK's handover to China on 1 Jul.
- On the flip side, crude oil has risen the fourth straight day, which could ease recent selling pressure in oil-related stocks such as Keppel Corp, Sembcorp Marine and Ezion.
- The end-Jun bidding deadline for the potential sale of GLP could be delayed, after largest shareholder GIC is said be to looking into complaints on unfair information advantage held by the insider bid of the Chinese consortium led by GLP's chief executive Ming Mei and director Fang Fenglei.
- Technically, the STI sees immediate support at 3,215 (50-dma), with overhead resistance at 3,268.
POSITIVE NEWS
*Singtel
- Spin off for fibre network infrastructure provider NetLink Trust to be largest SGX IPO since 2011.
- NetLink is seeking to raise between $2.3b and $2.7b via a public offer of 2.9b units, priced at $0.80-$0.93 each, representing 75% of total unitbase.
- The trust is expected to yield FY18/19 distribution yield of between 4.73% and 5.8%.
- IPO will open on 10 Jul at 5pm and close at noon on 17 Jul.
*CDL Hospitality Trusts (CDLHT)
- Acquired an effective 94.5% stake in 337-room Pullman Hotel Munich and its office and retail components for €100m ($156.3m), at NPI yield of 5.4%.
- Separately, CDLHT launched an underwritten and renounceable 20-for-100 rights issue at $1.28 apiece, with gross proceeds of $255.4m to be used mainly to pare debt.
- Post transactions, aggregate leverage will contract to 33.6% from 42.6%.
- Pro forma FY16 distributable income will be lifted by 13%, but DPU would fall 5.7% to 9.43¢, due to the 20% increase in unit base.
*Croesus Retail Trust (CRT)
- PE firm Blackstone Group reportedly in the process of buying out CRT in a deal worth >$1.4b.
- CRT last traded at 1.1x P/B.
*Centurion
- Submitted application to The Stock Exchange of Hong Kong (SEHK) for its proposed dual listing on the mainboard of SEHK.
*Next-Gen Satellite Comm
- Granted a 2.5-year american option to acquire 0.65m shares (65% stake) in Zhong Ping Trading at $7.02m.
- Option provides exposure to the industrial consumable burner business in China.
NEUTRAL NEWS
*Frasers Logistics & Industrial Trust:
- Launch private placement of 78m new units at an issue price between $0.985 and $1.01 apiece.
- Maximum net proceeds of $77.2m to be used to part-fund the proposed acquisition of seven properties.
*UnUsUal
- Bringing Danish pop-rock band Michael Learns to Rock for live concerts in Manila, Singapore, and Kuala Lumpur.
Tuesday, June 27, 2017
SG Market (27 Jun 17)
MARKET OVERVIEW
- Cautious mood expected ahead of several key meetings and economic releases in the region.
- Notably, investors would keep an eye on potential catalysts from the Summer Davos held in Dalian, China, over the next 3 days.
- Probable profit taking for Noble Group (NOBL SP) after Fitch Ratings issued a widespread credit downgrade on the commodity trader due to poor liquidity and weak profitability.
POSITIVE NEWS
*Silverlake Axis
- Awarded a contract by an existing customer, a leading ASEAN bank, to implement its integrated banking solution.
- The core banking system transformation project will be for the client's international bank branches.
- Work is scheduled for completion in nine months.
*GLP
- Substantial shareholder Bank of America raised its stake from 9.98% to 10.98%.
- Acquired 47.2m shares on 20 Jun at an undisclosed sum.
*Delfi
- First State Investments (FSI) emerged as a new substantial shareholder.
- FSI acquired 914,800 shares at $2.02 each on 22 Jun via the market.
- Stake raised from 4.91% to 5.06%.
*The Trendlines
- Bayer Trendlines Ag Innovation Fund, consisting US$10m investment from Bayer and managed by Trendlines, makes its first investment.
- The investment will conduct research in crop protection, with the aim to discover and develop a pest management platform.
*Dragon Group
- MOU with HK-based Argos Enterprise for the latter to invest in two of Dragon's upcoming projects.
- First being the construction of the world's largest wooden ZhengHe Treasure Boat, with estimated investment of Rmb130m.
- Second is for the development and management of a 19.76 acres riverfront land along Yangtze River Bank.
NEGATIVE NEWS
*Noble
- Fitch Ratings downgraded Noble's credit rating to junk status.
- Group's 1) long-term foreign-currency issuer default rating, 2) senior unsecured rating and 3) outstanding senior unsecured notes cut from B- to CCC.
- The widespread credit downgrade on the commodity trader is due to poor liquidity and weak profitability.
- Separately, Noble disposed entire stakes in three subsidiaries that carry out non-ferrous metals warehousing services for US$4.7m ($6.5m).
NEUTRAL NEWS
*Second Chance Properties
- To divest property at 12 Haig Road for $10m; estimated to net a divestment gain of $0.6m.
- Disposal due to downward rental pressure amid heightened retail competition in the vicinity.
*Top Glove
- To place out up to 6.5m (including top-up option of 1.5m shares) vendor shares for $1.71 apiece, or 6.6% discount to last close.
- Retail investors have till 28 Jun to register for the placement.
*Neo Group
- Extended the exclusive negotiation period on the proposed acquisition of Lavish Dine Catering to 31 Dec '17 from 30 Jun '17.
*Vibrant Group
- To acquire ASX-listed Blackgold Intl for A$0.045/share, by way of a scheme of arrangement.
- Cautious mood expected ahead of several key meetings and economic releases in the region.
- Notably, investors would keep an eye on potential catalysts from the Summer Davos held in Dalian, China, over the next 3 days.
- Probable profit taking for Noble Group (NOBL SP) after Fitch Ratings issued a widespread credit downgrade on the commodity trader due to poor liquidity and weak profitability.
POSITIVE NEWS
*Silverlake Axis
- Awarded a contract by an existing customer, a leading ASEAN bank, to implement its integrated banking solution.
- The core banking system transformation project will be for the client's international bank branches.
- Work is scheduled for completion in nine months.
*GLP
- Substantial shareholder Bank of America raised its stake from 9.98% to 10.98%.
- Acquired 47.2m shares on 20 Jun at an undisclosed sum.
*Delfi
- First State Investments (FSI) emerged as a new substantial shareholder.
- FSI acquired 914,800 shares at $2.02 each on 22 Jun via the market.
- Stake raised from 4.91% to 5.06%.
*The Trendlines
- Bayer Trendlines Ag Innovation Fund, consisting US$10m investment from Bayer and managed by Trendlines, makes its first investment.
- The investment will conduct research in crop protection, with the aim to discover and develop a pest management platform.
*Dragon Group
- MOU with HK-based Argos Enterprise for the latter to invest in two of Dragon's upcoming projects.
- First being the construction of the world's largest wooden ZhengHe Treasure Boat, with estimated investment of Rmb130m.
- Second is for the development and management of a 19.76 acres riverfront land along Yangtze River Bank.
NEGATIVE NEWS
*Noble
- Fitch Ratings downgraded Noble's credit rating to junk status.
- Group's 1) long-term foreign-currency issuer default rating, 2) senior unsecured rating and 3) outstanding senior unsecured notes cut from B- to CCC.
- The widespread credit downgrade on the commodity trader is due to poor liquidity and weak profitability.
- Separately, Noble disposed entire stakes in three subsidiaries that carry out non-ferrous metals warehousing services for US$4.7m ($6.5m).
NEUTRAL NEWS
*Second Chance Properties
- To divest property at 12 Haig Road for $10m; estimated to net a divestment gain of $0.6m.
- Disposal due to downward rental pressure amid heightened retail competition in the vicinity.
*Top Glove
- To place out up to 6.5m (including top-up option of 1.5m shares) vendor shares for $1.71 apiece, or 6.6% discount to last close.
- Retail investors have till 28 Jun to register for the placement.
*Neo Group
- Extended the exclusive negotiation period on the proposed acquisition of Lavish Dine Catering to 31 Dec '17 from 30 Jun '17.
*Vibrant Group
- To acquire ASX-listed Blackgold Intl for A$0.045/share, by way of a scheme of arrangement.
Friday, June 23, 2017
SG Market (23 Jun 17)
MARKET OVERVIEW
- Market likely to range trade ahead of the long weekend and on slight disappointment over the partial unwinding of UOB's Wee Cho Yaw's stable of property holdings.
- Technically, the STI is ranging near its 50-dma at 3,213. Next support is at 3,190, with overhead resistance at 3,268.
POSITIVE NEWS
*Noble
- Surprise emergence of Abu Dhabi Financial Group (ADFG), comprising members of the Abu Dhabi royal family,
as a new substantial shareholder.
- Goldilocks Investment, an opportunistic fund launched by ADFG, acquired 66m shares at $0.4653 each in the open market on 20 Jun, raising its stake 1.2% to 5%.
*Hong Leong Asia
- 40.2% owned China Yuchai clinched tow large orders to supply bus engines to Myanmar and Saudi Arabia.
- The first is for 2,000 heavy-duty natural gas engines for Yangon's upgraded public transportation system, with another 1,000 engines to be ordered during the second phase.
- The second is to supply 600 engines to equip high-end buses for the Saudi Arabian market.
*iFAST
- Launched its pre-funded stock dealing service in SGX-listed stocks and ETFs on FSMOne.
- Brokerage fees are competitive at 12bps for stocks and 8bps for ETFs, with minimum of $10/trade, which will give retail brokers a run for their money although a large percentage of retail business still stems from the contra model.
- Trading at 47x trailing P/E and 2.6% yield.
*Secura
- Clinched a $3.2m contract from a leading global semiconductor company.
- Work includes provision of security services at two purpose-built facilities in Singapore for two years.
NEUTRAL NEWS
*UOL/UIC/Haw Par
- UOL will issue 27.3m shares in exchange for 60m UIC shares owned by Haw Par, based on 1:2.2 ratio.
- Post share swap, UOL's stake in UIC will increase to 48.9% from 44.7%, while Haw Par's stake in UOL will be raised to 43.4% from 41.5%.
- UOL has obtained SIC waiver from making a general offer for UIC. Deal is conditional upon UOL shareholders' approval of a MGO waiver by Haw Par.
- This partial unwinding of Wee's cross-holdings is likely to cool recent speculation that a privatisation of UIC could trigger a re-rating of undervalued property counters.
*Serial System
- Spinning off Serial Microelectronics (HK) (SMHK) on the main board of Hong Kong Stock Exchange.
- SMHK distributes electronic components in HK and China.
- Separately, the group intends to transfer its listing from SGX Main Board to Catalist.
*BlackGold Natural Resources
- Proposed non-underwritten placement of 66.7m new shares at $0.123 each.
- Net proceeds of $8m are intended for business investment (50%) and working capital (50%).
*M1
- Secured 3-year fixed rate term loan of $200m for working capital.
- Participating banks include CIMB, DBS, Sumitomo Mitsui.
- Market likely to range trade ahead of the long weekend and on slight disappointment over the partial unwinding of UOB's Wee Cho Yaw's stable of property holdings.
- Technically, the STI is ranging near its 50-dma at 3,213. Next support is at 3,190, with overhead resistance at 3,268.
POSITIVE NEWS
*Noble
- Surprise emergence of Abu Dhabi Financial Group (ADFG), comprising members of the Abu Dhabi royal family,
as a new substantial shareholder.
- Goldilocks Investment, an opportunistic fund launched by ADFG, acquired 66m shares at $0.4653 each in the open market on 20 Jun, raising its stake 1.2% to 5%.
*Hong Leong Asia
- 40.2% owned China Yuchai clinched tow large orders to supply bus engines to Myanmar and Saudi Arabia.
- The first is for 2,000 heavy-duty natural gas engines for Yangon's upgraded public transportation system, with another 1,000 engines to be ordered during the second phase.
- The second is to supply 600 engines to equip high-end buses for the Saudi Arabian market.
*iFAST
- Launched its pre-funded stock dealing service in SGX-listed stocks and ETFs on FSMOne.
- Brokerage fees are competitive at 12bps for stocks and 8bps for ETFs, with minimum of $10/trade, which will give retail brokers a run for their money although a large percentage of retail business still stems from the contra model.
- Trading at 47x trailing P/E and 2.6% yield.
*Secura
- Clinched a $3.2m contract from a leading global semiconductor company.
- Work includes provision of security services at two purpose-built facilities in Singapore for two years.
NEUTRAL NEWS
*UOL/UIC/Haw Par
- UOL will issue 27.3m shares in exchange for 60m UIC shares owned by Haw Par, based on 1:2.2 ratio.
- Post share swap, UOL's stake in UIC will increase to 48.9% from 44.7%, while Haw Par's stake in UOL will be raised to 43.4% from 41.5%.
- UOL has obtained SIC waiver from making a general offer for UIC. Deal is conditional upon UOL shareholders' approval of a MGO waiver by Haw Par.
- This partial unwinding of Wee's cross-holdings is likely to cool recent speculation that a privatisation of UIC could trigger a re-rating of undervalued property counters.
*Serial System
- Spinning off Serial Microelectronics (HK) (SMHK) on the main board of Hong Kong Stock Exchange.
- SMHK distributes electronic components in HK and China.
- Separately, the group intends to transfer its listing from SGX Main Board to Catalist.
*BlackGold Natural Resources
- Proposed non-underwritten placement of 66.7m new shares at $0.123 each.
- Net proceeds of $8m are intended for business investment (50%) and working capital (50%).
*M1
- Secured 3-year fixed rate term loan of $200m for working capital.
- Participating banks include CIMB, DBS, Sumitomo Mitsui.
Thursday, June 22, 2017
SG Market (22 Jun 17)
MARKET OVERVIEW
- The market is expected to bounce around as oil prices slumped to a 10-month low on growing worries of excess crude supply.
- However, property counters will be supported by possible privatisation of UIC.
- Technically, the STI breached its 50-dma at 3,212 and has also broken below the intermediate uptrend line drawn from late-2016. Immediate support is now at 3,190, with overhead resistance at 3,268.
POSITIVE NEWS
*CapitaLand
- Divested its entire 65% stake in Vietnam-based developer Sparkle Value Homes for US$4.6m ($6.4m), or 1.35x P/B.
- Deal expected to net a divestment gain of US$1.2m ($1.7m).
- MKE last had a Hold with TP $3.75.
*SIA Engineering
- MOA with Boeing to provide aircraft maintenance training services to Southeast Asian airlines.
- Aircraft types include current and new generation models including 737, 777 and 787.
*mm2 Asia
- Placement of 87.7m new shares at $0.57 each has been successfully placed out.
*QT Vascular
- Obtained favourable data from the 24-month follow-up of patients.
- Treatment was using group's Chocolate Heart drug-coated coronary balloon.
- Counter still loss-making and has net liability value of US$0.01/share.
*Imperium Crown
- Disposing two Japanese properties (New City Apartments Kuramae and Minowa) for ¥1.12b ($23.4m).
- Deal expected to reap disposal gain of $0.2m.
- Proceeds earmarked for acquisitions of other properties and investments in the Asia-Pacific region.
*Abterra
- Acquiring 51% stake in Tianjin Belong Faith Energy Minerals for Rmb74.2m.
- Funding via 48.6m new Abterra shares at $0.31 apiece, 8.8% below last traded.
- Pro forma FY16 NTA/share to inch up to 23.08¢ (+0.3%), while LPS will narrow from 9.47¢ to 7.34¢.
*KS Energy
- Maturity date for the $45m 6% convertible bond extended from 21 Jun '17 to 21 Sep '17.
NEGATIVE NEWS
*Genting Hong Kong
- 44.9% associate Travellers Int'l ordered to suspend gaming operations at Resorts World Manila.
- This is pending investigation into its alleged liability in a recent deadly attack at its hotel-casino complex.
- Travellers contributed US$32.7m share of profit to GENHK's core pretax loss of US$195.6m in FY16.
- Trades at 0.54x P/B.
NEUTRAL NEWS
*SGX
- Welcomed Taiwan-based Hua Nan Futures as a derivatives trading member.
- Participation to add liquidity and distribution.
- Trades at 22.8x forward P/E vs HKEx 35.3x.
*Perennial Real Estate
- 90:10 JV with Shanghai Broad Ocean Investments.
- JVCo to set up a specialist medical centre in China.
- Local JV partner is an investment firm with businesses in the consumer and logistics industries.
- Counter trades at a 44% discount to its NAV/share of $1.61.
*SHC Capital
- Appointed Asian Corporate Advisors as its IFA for the proposed RTO of Yoma's tourism business.
- The market is expected to bounce around as oil prices slumped to a 10-month low on growing worries of excess crude supply.
- However, property counters will be supported by possible privatisation of UIC.
- Technically, the STI breached its 50-dma at 3,212 and has also broken below the intermediate uptrend line drawn from late-2016. Immediate support is now at 3,190, with overhead resistance at 3,268.
POSITIVE NEWS
*CapitaLand
- Divested its entire 65% stake in Vietnam-based developer Sparkle Value Homes for US$4.6m ($6.4m), or 1.35x P/B.
- Deal expected to net a divestment gain of US$1.2m ($1.7m).
- MKE last had a Hold with TP $3.75.
*SIA Engineering
- MOA with Boeing to provide aircraft maintenance training services to Southeast Asian airlines.
- Aircraft types include current and new generation models including 737, 777 and 787.
*mm2 Asia
- Placement of 87.7m new shares at $0.57 each has been successfully placed out.
*QT Vascular
- Obtained favourable data from the 24-month follow-up of patients.
- Treatment was using group's Chocolate Heart drug-coated coronary balloon.
- Counter still loss-making and has net liability value of US$0.01/share.
*Imperium Crown
- Disposing two Japanese properties (New City Apartments Kuramae and Minowa) for ¥1.12b ($23.4m).
- Deal expected to reap disposal gain of $0.2m.
- Proceeds earmarked for acquisitions of other properties and investments in the Asia-Pacific region.
*Abterra
- Acquiring 51% stake in Tianjin Belong Faith Energy Minerals for Rmb74.2m.
- Funding via 48.6m new Abterra shares at $0.31 apiece, 8.8% below last traded.
- Pro forma FY16 NTA/share to inch up to 23.08¢ (+0.3%), while LPS will narrow from 9.47¢ to 7.34¢.
*KS Energy
- Maturity date for the $45m 6% convertible bond extended from 21 Jun '17 to 21 Sep '17.
NEGATIVE NEWS
*Genting Hong Kong
- 44.9% associate Travellers Int'l ordered to suspend gaming operations at Resorts World Manila.
- This is pending investigation into its alleged liability in a recent deadly attack at its hotel-casino complex.
- Travellers contributed US$32.7m share of profit to GENHK's core pretax loss of US$195.6m in FY16.
- Trades at 0.54x P/B.
NEUTRAL NEWS
*SGX
- Welcomed Taiwan-based Hua Nan Futures as a derivatives trading member.
- Participation to add liquidity and distribution.
- Trades at 22.8x forward P/E vs HKEx 35.3x.
*Perennial Real Estate
- 90:10 JV with Shanghai Broad Ocean Investments.
- JVCo to set up a specialist medical centre in China.
- Local JV partner is an investment firm with businesses in the consumer and logistics industries.
- Counter trades at a 44% discount to its NAV/share of $1.61.
*SHC Capital
- Appointed Asian Corporate Advisors as its IFA for the proposed RTO of Yoma's tourism business.
Wednesday, June 21, 2017
Cosco
Cosco: The only bright spot for Cosco Corp is the proposed Rmb1,465.8m buyout for its entire loss-making shipbuilding business by parent China COSCO Shipping Corp, which is pending China regulatory clearance and shareholder's approval at the upcoming EGM to be held in Jul/ Aug.Target closing date for the deal is in 2H17.Post-disposal, Cosco is expected to record a disposal gain of ~$285m, which will turn its balance sheet into a healthy net cash position of $300m ($0.13/share).
SG Market (21 Jun 17)
MARKET OVERVIEW
- Choppy trading likely to continue, particularly in oil-related counters as crude prices sagged to their lowest level this year, while the partial inclusion of China A-shares in MSCI EM Index might boost sentiment.
- Technically, STI dipped below its 20-dma and is sitting near its immediate support at 3,228, with next level at 3,190. Topside resistance remains at 3,268.
POSITIVE NEWS
*Haw Par/UOL/UIC
- All three of UOB's Wee family controlled companies have requested for trading halt pending announcement.
- Potential corporate action includes the long-awaited major restructuring and unwinding of cross-holdings to unlock value for shareholders, particularly for Haw Par.
- UOB owns a 9.9% interest in Haw Par, which holds direct stakes in UIC (0.5%) and UOL (5.6%). UOL, in turn, owns 44.6% of UIC.
*Manulife US REIT
- Private placement of 73.6m new units was over-subscribed, triggering the upsize option. In total, 97m new units were issued at US$0.83 apiece, raising gross proceeds of US$80.5m.
- Bulk of proceeds will be used to part-fund its maiden acquisition since IPO of a New Jersey office building for US$115m.
- The street is bullish on MUST with 4 Buys and consensus TP of US$0.97.
*Ho Bee Land
- Acquiring freehold property at 67 Lombard Street in London for £129.3m ($228m) giving 4.1% net yield.
- The property is currently multi-let to six tenants with WALE of 10.2 years.
- MKE has a Buy with TP of $3.00 or 29% discount to its RNAV/share of $4.23.
*OKP Holdings:
- Secured $8.8m eight-month project from JTC to construct a temporary road at Bulim in Jurong West.
- The contract will raise its net construction order book to $326.6m, extending till 2019.
*Ouhua Energy
- Removed from the SGX watchlist (financial criteria) in view of its return to profitability in FY15 and FY16.
- However, it remains on the SGX MTP watchlist.
NEGATIVE NEWS
*Nam Cheong
- Received a writ of summons from OCBC in Malaysia, claiming for US$10m arising from owings.
- Last traded at 0.14x P/B.
NEUTRAL NEWS
*mm2 Asia
- Obtained SGX approval in-principle to transfer from Catalist to the Mainboard.
*DMX Tech
- Divesting 60% stake in PT Packet Systems Indonesia for $10.4m (US$7.5m).
- This will raise cash to pay audit fees relating to investigations by the Hong Kong police.
- Expects to reap a nominal gain of $17,873 from the sale.
- Choppy trading likely to continue, particularly in oil-related counters as crude prices sagged to their lowest level this year, while the partial inclusion of China A-shares in MSCI EM Index might boost sentiment.
- Technically, STI dipped below its 20-dma and is sitting near its immediate support at 3,228, with next level at 3,190. Topside resistance remains at 3,268.
POSITIVE NEWS
*Haw Par/UOL/UIC
- All three of UOB's Wee family controlled companies have requested for trading halt pending announcement.
- Potential corporate action includes the long-awaited major restructuring and unwinding of cross-holdings to unlock value for shareholders, particularly for Haw Par.
- UOB owns a 9.9% interest in Haw Par, which holds direct stakes in UIC (0.5%) and UOL (5.6%). UOL, in turn, owns 44.6% of UIC.
*Manulife US REIT
- Private placement of 73.6m new units was over-subscribed, triggering the upsize option. In total, 97m new units were issued at US$0.83 apiece, raising gross proceeds of US$80.5m.
- Bulk of proceeds will be used to part-fund its maiden acquisition since IPO of a New Jersey office building for US$115m.
- The street is bullish on MUST with 4 Buys and consensus TP of US$0.97.
*Ho Bee Land
- Acquiring freehold property at 67 Lombard Street in London for £129.3m ($228m) giving 4.1% net yield.
- The property is currently multi-let to six tenants with WALE of 10.2 years.
- MKE has a Buy with TP of $3.00 or 29% discount to its RNAV/share of $4.23.
*OKP Holdings:
- Secured $8.8m eight-month project from JTC to construct a temporary road at Bulim in Jurong West.
- The contract will raise its net construction order book to $326.6m, extending till 2019.
*Ouhua Energy
- Removed from the SGX watchlist (financial criteria) in view of its return to profitability in FY15 and FY16.
- However, it remains on the SGX MTP watchlist.
NEGATIVE NEWS
*Nam Cheong
- Received a writ of summons from OCBC in Malaysia, claiming for US$10m arising from owings.
- Last traded at 0.14x P/B.
NEUTRAL NEWS
*mm2 Asia
- Obtained SGX approval in-principle to transfer from Catalist to the Mainboard.
*DMX Tech
- Divesting 60% stake in PT Packet Systems Indonesia for $10.4m (US$7.5m).
- This will raise cash to pay audit fees relating to investigations by the Hong Kong police.
- Expects to reap a nominal gain of $17,873 from the sale.
Tuesday, June 20, 2017
SG Market (20 Jun 17)
MARKET OVERVIEW
- Local shares could push higher after the Dow, S&P 500 and DAX rallied to record highs as large tech stocks reversed a spate of weakness.
- Play in tech manufacturers could return; proxies include Venture (Buy, TP: $13.35), AEM, UMS and Micro-Mechanics.
- Technically, the STI held its ground above the 20 and 50-dmas and appears to be forming a pennant pattern. A breakout of the topside resistance at 3,268 could signal the resumption of its uptrend. Immediate support lies at 3,228.
POSITIVE NEWS
*Noble Group
- Updated that the senior secured revolving credit facility at Noble Americas Corp will be extended by 120 days from 20 Jun 2017.
- Continues to be in talks with potential investors concerning the sale of an interest in the group or parts of its business.
- Discussions with bankers are continuing in relation to its revolving credit facility due May 2018. Deferred the coupon payment of its US$400m perpetual capital securities due on 26 Jun 2017.
- Expects to complete its strategic review once discussions with banks and potential investors become clearer, with results likely to include an asset realisation programme and further reduction in overhead expenses.
*SIA Engineering
- 49:51 JV with Pratt & Whitney, Eagle Services Asia, has been designated as an MRO facility in Singapore for one of two engines that power the Airbus A320neo aircraft.
- ESA will invest US$85m to equip the facility and services are expected to commence in 2019 to tap on growth opportunities arising from large orders of A320neos in the region.
- Trading at 24.1x FY3/18 consensus P/E with indicative dividend yield of 3.1%.
*Manulife US REIT
- Proposed private placement of 73.6m new units (11.7% of unit base) to institutional and other investors at US$0.817-0.842/unit.
- Bulk of the gross proceeds of up to US$80.5m (including 24.9m upsize option) is intended to part fund the US$115m acquisition of an 11-storey prime office building in New Jersey, US.
- The property will increase its total NLA by 25.9% to 2.25m sf and is underpinned by a long WALE of 9.2 years with built-in rental escalation and high occupancy of 98.9%.
- Post-deal, pro forma FY16 DPU will rise 2.3% to US$0.0363.
*Dyna-Mac
- Clinched two contracts from new customers worth a total provisional sum of $30m.
- First was awarded by Schlumberger for fabrication of a MEG reclamation unit, expected to be completed by 3Q18.
- Second is fabrication of a skid package for Papua New Guinea, expected to be completed by 2Q18.
- Group is loss-making and trades at 0.95x P/B.
*Sarine Tech
- Launched Advisor 7.0, the latest version of its industry-leading rough planning software tool.
- Updated software includes many new features that further revolutionise rough planning, helping diamond manufacturers to further streamline the planning process and optimise the polished yield.
- Trading at 24.3x trailing P/E and 5.1x P/B.
*Ley Choon
- Bagged five new contracts worth $51.4m for underground utility infrastructure and construction works.
- The contracts lift order book to $172.3m.
*Wong Fong Industries
- Collaborating with two European principals Bucher Industries and Europress to supply a range of waste management products and solutions in Singapore and Myanmar.
- Under the agreement, it will be the exclusive distributor for Bucher's sweeper vehicles for two years till May '19.
- The group was also appointed to develop and market waste compactors for Europress, with the first shipment to be delivered for field testing in Jul '17.
NEUTRAL NEWS
*China Flex Packaging
- Voluntary unconditional management buyout at $1.25/share or 0.53x P/B.
- Offeror and concert parties currently own 58.4% of the loss-making plastic film manufacturer.
*Nobel Design
- Extended the offer period of its mandatory unconditional offer at $0.51/share to 20 Jun.
- As at 19 Jun, offeror Gland Slam RF18 Investments has garnered 82.51% control.
*Eurosports Global
- 51:49 JV with S Agata to distribute automobiles, parts and related accessories in Indonesia.
- S Agata is owned by a third party with business interest in the property and services sector in Indonesia.
- The group is currently loss-making and trades at 5.2x P/B.
*TIH
- Updated that discussions on the potential share sale and change of control are still on-going.
- Trading at 13.5x trailing P/E and 1.03x P/B.
*Vallianz
- Issuing 156.3m new shares at $0.02 apiece, for settlement of $3.1m in trade payables.
- This will result in NAV/share falling to US4.07¢ from US4.17¢
- Implied P/B valuation of 0.3x.
- Local shares could push higher after the Dow, S&P 500 and DAX rallied to record highs as large tech stocks reversed a spate of weakness.
- Play in tech manufacturers could return; proxies include Venture (Buy, TP: $13.35), AEM, UMS and Micro-Mechanics.
- Technically, the STI held its ground above the 20 and 50-dmas and appears to be forming a pennant pattern. A breakout of the topside resistance at 3,268 could signal the resumption of its uptrend. Immediate support lies at 3,228.
POSITIVE NEWS
*Noble Group
- Updated that the senior secured revolving credit facility at Noble Americas Corp will be extended by 120 days from 20 Jun 2017.
- Continues to be in talks with potential investors concerning the sale of an interest in the group or parts of its business.
- Discussions with bankers are continuing in relation to its revolving credit facility due May 2018. Deferred the coupon payment of its US$400m perpetual capital securities due on 26 Jun 2017.
- Expects to complete its strategic review once discussions with banks and potential investors become clearer, with results likely to include an asset realisation programme and further reduction in overhead expenses.
*SIA Engineering
- 49:51 JV with Pratt & Whitney, Eagle Services Asia, has been designated as an MRO facility in Singapore for one of two engines that power the Airbus A320neo aircraft.
- ESA will invest US$85m to equip the facility and services are expected to commence in 2019 to tap on growth opportunities arising from large orders of A320neos in the region.
- Trading at 24.1x FY3/18 consensus P/E with indicative dividend yield of 3.1%.
*Manulife US REIT
- Proposed private placement of 73.6m new units (11.7% of unit base) to institutional and other investors at US$0.817-0.842/unit.
- Bulk of the gross proceeds of up to US$80.5m (including 24.9m upsize option) is intended to part fund the US$115m acquisition of an 11-storey prime office building in New Jersey, US.
- The property will increase its total NLA by 25.9% to 2.25m sf and is underpinned by a long WALE of 9.2 years with built-in rental escalation and high occupancy of 98.9%.
- Post-deal, pro forma FY16 DPU will rise 2.3% to US$0.0363.
*Dyna-Mac
- Clinched two contracts from new customers worth a total provisional sum of $30m.
- First was awarded by Schlumberger for fabrication of a MEG reclamation unit, expected to be completed by 3Q18.
- Second is fabrication of a skid package for Papua New Guinea, expected to be completed by 2Q18.
- Group is loss-making and trades at 0.95x P/B.
*Sarine Tech
- Launched Advisor 7.0, the latest version of its industry-leading rough planning software tool.
- Updated software includes many new features that further revolutionise rough planning, helping diamond manufacturers to further streamline the planning process and optimise the polished yield.
- Trading at 24.3x trailing P/E and 5.1x P/B.
*Ley Choon
- Bagged five new contracts worth $51.4m for underground utility infrastructure and construction works.
- The contracts lift order book to $172.3m.
*Wong Fong Industries
- Collaborating with two European principals Bucher Industries and Europress to supply a range of waste management products and solutions in Singapore and Myanmar.
- Under the agreement, it will be the exclusive distributor for Bucher's sweeper vehicles for two years till May '19.
- The group was also appointed to develop and market waste compactors for Europress, with the first shipment to be delivered for field testing in Jul '17.
NEUTRAL NEWS
*China Flex Packaging
- Voluntary unconditional management buyout at $1.25/share or 0.53x P/B.
- Offeror and concert parties currently own 58.4% of the loss-making plastic film manufacturer.
*Nobel Design
- Extended the offer period of its mandatory unconditional offer at $0.51/share to 20 Jun.
- As at 19 Jun, offeror Gland Slam RF18 Investments has garnered 82.51% control.
*Eurosports Global
- 51:49 JV with S Agata to distribute automobiles, parts and related accessories in Indonesia.
- S Agata is owned by a third party with business interest in the property and services sector in Indonesia.
- The group is currently loss-making and trades at 5.2x P/B.
*TIH
- Updated that discussions on the potential share sale and change of control are still on-going.
- Trading at 13.5x trailing P/E and 1.03x P/B.
*Vallianz
- Issuing 156.3m new shares at $0.02 apiece, for settlement of $3.1m in trade payables.
- This will result in NAV/share falling to US4.07¢ from US4.17¢
- Implied P/B valuation of 0.3x.
Monday, June 19, 2017
SG Market (19 Jun 17)
MARKET OVERVIEW
- Investors may be in cautious mood following the mixed close on Wall Street on weaker-than-expected economic data coming against a hawkish Fed policy plan.
- Key events that could move markets this week include the annual MSCI review, which will decide whether to include China A-shares in its emerging market index, and the formal Brexit negotiations, which start today.
- Technically, the STI looks poised to re-test its 3,228 support line, with next level at 3,190, while upside resistance capped at 3,275.
POSITIVE NEWS
*GLP
- China Vanke is reportedly in talks to join Chinese consortium, led by Hopu Investment and Hillhouse Capital, to bid for GLP.
- Shortlisted bidders, including Blackstone and Warburg Pincus, will have until end Jun to submit their final proposals.
- Currently trading at P/B of 1.15x, well below that of US peer Prologis at 2.1x.
*Noble
- Reportedly won a 4-month reprieve after key lenders agreed to extend a US$2b credit facility until mid-Oct for it to sell its assets or find a white knight.
- Group remains under severe pressure after enduring several turbulent years marked by massive losses, credit rating downgrades and allegations of improper accounting.
- Trading at distressed valuation of 0.08x P/B but worth noting that 74% of its equity base is tied to net fair value gains from commodity derivatives contracts.
*Sarine Tech
- Secured entry into the Thai market after Aurora Group adopted Sarine's light performance technologies.
- Provides a testament of consumer demand for tech-based information on diamonds.
- Trading at 22.6x trailing P/E and 4.9x P/B.
*Darco Water
- Acquired a 12%-stake in Wuhan Kaidi Water Services for $1.9m or 8.6x FY16 P/E.
- Funded via 3.8m new shares at $0.50 apiece.
- Wuhan Kaidi is a China water treatment and management specialist and has 22 ongoing projects worth Rmb487.5m across 14 provinces.
- The group intends to use Wuhan Kaidi's permits and licenses to bid for projects in China.
*Tung Lok Restaurants
- Prominent investor and substantial shareholder Sam Goi acquired 25,000 shares in the open market at $0.121 each on 15 Jun, lifting his stake to 18.62% from 18.611%.
- Trading at hefty trailing P/E of 86.2x but market cap of $36.2m is supported by net cash position of $11.7m.
NEGATIVE NEWS
*F J Benjamin
- Exclusive distribution agreement in Singapore for French leather goods, Goyard, has expired.
- Facing retail headwinds mainly from e-commerce.
- Loss-making and trading at 0.56x P/B.
NEUTRAL NEWS
*Hi-P Int'l
- Entered 20:80 JV with Sino Coffee Machine Mfg to undertake the production of coffee machines, packaging and products related to the business.
- The group's initial investment of Rmb22.8m in the JVCo will include a Rmb19.8m shareholder loan.
- Trading at 10.2x trailing P/E and 1.3x P/B.
- Investors may be in cautious mood following the mixed close on Wall Street on weaker-than-expected economic data coming against a hawkish Fed policy plan.
- Key events that could move markets this week include the annual MSCI review, which will decide whether to include China A-shares in its emerging market index, and the formal Brexit negotiations, which start today.
- Technically, the STI looks poised to re-test its 3,228 support line, with next level at 3,190, while upside resistance capped at 3,275.
POSITIVE NEWS
*GLP
- China Vanke is reportedly in talks to join Chinese consortium, led by Hopu Investment and Hillhouse Capital, to bid for GLP.
- Shortlisted bidders, including Blackstone and Warburg Pincus, will have until end Jun to submit their final proposals.
- Currently trading at P/B of 1.15x, well below that of US peer Prologis at 2.1x.
*Noble
- Reportedly won a 4-month reprieve after key lenders agreed to extend a US$2b credit facility until mid-Oct for it to sell its assets or find a white knight.
- Group remains under severe pressure after enduring several turbulent years marked by massive losses, credit rating downgrades and allegations of improper accounting.
- Trading at distressed valuation of 0.08x P/B but worth noting that 74% of its equity base is tied to net fair value gains from commodity derivatives contracts.
*Sarine Tech
- Secured entry into the Thai market after Aurora Group adopted Sarine's light performance technologies.
- Provides a testament of consumer demand for tech-based information on diamonds.
- Trading at 22.6x trailing P/E and 4.9x P/B.
*Darco Water
- Acquired a 12%-stake in Wuhan Kaidi Water Services for $1.9m or 8.6x FY16 P/E.
- Funded via 3.8m new shares at $0.50 apiece.
- Wuhan Kaidi is a China water treatment and management specialist and has 22 ongoing projects worth Rmb487.5m across 14 provinces.
- The group intends to use Wuhan Kaidi's permits and licenses to bid for projects in China.
*Tung Lok Restaurants
- Prominent investor and substantial shareholder Sam Goi acquired 25,000 shares in the open market at $0.121 each on 15 Jun, lifting his stake to 18.62% from 18.611%.
- Trading at hefty trailing P/E of 86.2x but market cap of $36.2m is supported by net cash position of $11.7m.
NEGATIVE NEWS
*F J Benjamin
- Exclusive distribution agreement in Singapore for French leather goods, Goyard, has expired.
- Facing retail headwinds mainly from e-commerce.
- Loss-making and trading at 0.56x P/B.
NEUTRAL NEWS
*Hi-P Int'l
- Entered 20:80 JV with Sino Coffee Machine Mfg to undertake the production of coffee machines, packaging and products related to the business.
- The group's initial investment of Rmb22.8m in the JVCo will include a Rmb19.8m shareholder loan.
- Trading at 10.2x trailing P/E and 1.3x P/B.
Friday, June 16, 2017
SG Market (16 Jun 17)
MARKET OVERVIEW
- Investors are likely to sit on the sidelines as soft US economic data, Trump and Fed worries, as well as domestic politics weigh on confidence.
- Local tech and oil names may suffer another bout of weakness as US tech selloff worsens, while crude oil held below US$45/bbl.
- Technically, momentum indicators are flashing bearish near term signals, with the STI poised to re-test its 3,228 support line. Below that, the next line of defence is at 3,188. Upside resistance is capped at 3,275.
*POSITIVE NEWS
*SIA
- Group passenger load factor rose 3.4ppt to 77% as traffic (+6.5%) outpaced capacity (+1.8%) growth.
- Load factor for parent on routes to Americas (+3.3ppt), Europe (+9.3ppt), West Asia and Africa (+4.6ppt) climbed the most.
- Load factor for SilkAir (+0.8ppt to 70.3%) and budget carrier subsidiary (+1.5ppt to 81.4%) also improved.
- Cargo load factor grew 4.2ppt to 66.5%.
- Trading at 0.9x P/B, at lower end of historical valuation range.
*HRnetGroup
- Saw robust demand for its IPO; offer of 89.5m new shares at $0.90 each was 14.3x oversubscribed.
- Separately, cornerstone investors Aberdeen, Affin Hwang, Credit Suisse, en-Japan inc, FIL, Meiji Yasuda, TechnoPro will take up 103.9m new shares.
- The group is the largest Asia-based recruitment agency with a 20.5% market share in Singapore.
- Trading debut today with listing market cap of $920m and 22.4x trailing P/E vs Asian industry average of 28.4x.
*Low Keng Huat
- 1QFY18 net profit surged 65% to $5.4m, helped by a $0.6m fair value gain on financial assets and lower costs.
- Revenue rose 7% to $16.9m on increased development sales to $6.4m (+256%) from sale of two office units at Paya Lebar Square (fully sold) and four residential units at Parkland Residences (one unit left).
- Investment income soared more than 4-fold to $2.7m due to reduced losses from Westgate Tower and higher contributions from AXA Tower.
- Hotel and F&B business declined 35.8% to $6.1m, mainly due to lower rates and occupancy at Duxton Perth and absence of contributions from Duxton Saigon, which was disposed in 1QFY16.
- Going forward, the group is targetting to launch 50-unit Kismis Residences in 2QFY18, while 200-unit Perumal is in the planning stage.
- Last traded at 0.7x P/B.
*Silverlake Axis
- Won a contract from an insurance trade association to develop and deliver a digital platform for life insurance and takaful insurers in Malaysia.
- The platform will be able to integrate with new digital insurance platforms and be the source for greater insights into the industry.
*Yongnam
- Bagged four contracts worth $36.2m for projects in Singapore comprising:.
- Two structural steelwork projects for Evonik's Jurong island plant and a proposed commercial development.
- Two specialist civil engineering contracts for Changi Airport's three-runway operations and Thomson-East Coast Line.
*Pacific Radiance
- Secured US$45.3m worth of new contracts, including options for ten offshore support vessels, to support projects in Asia and Middle East.
- Management opines that market conditions will remain challenging even as global spending on exploration and production is expected to rise.
*Mermaid Maritime
- Won two contracts worth a total of US$4.3m comprising:.
- 16-day subsea pipeline freespan rectification project for a national oil company in Thailand.
- Two-year contract to offer site survey & offshore navigation services in Indonesia for an international oil company.
NEUTRAL
*Hiap Hoe
- Strenghtening recurring income base with the acquistion of Holiday Inn Express Trafford City, Manchester, UK.
- Purchase consideration of £26.3m is on par with its book value.
- Trading at 0.45x P/B.
*Oceanus
- Entered into an MOU with WSRC to expand its abalone and seafood business in China, particularly the distribution of its seafood products.
- WSRC has agreed to purchase 250 cartons of canned abalones worth $250,000 and is expected to set up a retail outlet in Chengdu, China to sell its products.
- The outlet is expected to commence operations in FY17.
*Innopac
- Entered into an MOU to acquire a 75% stake in Dongwoo Bioenergy from Low Hyon Young for $0.8m in cash.
- Deal includes an option to acquire a further 24% stake for $0.4m through the issue of 400m shares at 0.1¢/share.
- Dongwoo produces wood waste pellets from sawdust for biomass power plants and will be primarily sold to South Korea.
- Investors are likely to sit on the sidelines as soft US economic data, Trump and Fed worries, as well as domestic politics weigh on confidence.
- Local tech and oil names may suffer another bout of weakness as US tech selloff worsens, while crude oil held below US$45/bbl.
- Technically, momentum indicators are flashing bearish near term signals, with the STI poised to re-test its 3,228 support line. Below that, the next line of defence is at 3,188. Upside resistance is capped at 3,275.
*POSITIVE NEWS
*SIA
- Group passenger load factor rose 3.4ppt to 77% as traffic (+6.5%) outpaced capacity (+1.8%) growth.
- Load factor for parent on routes to Americas (+3.3ppt), Europe (+9.3ppt), West Asia and Africa (+4.6ppt) climbed the most.
- Load factor for SilkAir (+0.8ppt to 70.3%) and budget carrier subsidiary (+1.5ppt to 81.4%) also improved.
- Cargo load factor grew 4.2ppt to 66.5%.
- Trading at 0.9x P/B, at lower end of historical valuation range.
*HRnetGroup
- Saw robust demand for its IPO; offer of 89.5m new shares at $0.90 each was 14.3x oversubscribed.
- Separately, cornerstone investors Aberdeen, Affin Hwang, Credit Suisse, en-Japan inc, FIL, Meiji Yasuda, TechnoPro will take up 103.9m new shares.
- The group is the largest Asia-based recruitment agency with a 20.5% market share in Singapore.
- Trading debut today with listing market cap of $920m and 22.4x trailing P/E vs Asian industry average of 28.4x.
*Low Keng Huat
- 1QFY18 net profit surged 65% to $5.4m, helped by a $0.6m fair value gain on financial assets and lower costs.
- Revenue rose 7% to $16.9m on increased development sales to $6.4m (+256%) from sale of two office units at Paya Lebar Square (fully sold) and four residential units at Parkland Residences (one unit left).
- Investment income soared more than 4-fold to $2.7m due to reduced losses from Westgate Tower and higher contributions from AXA Tower.
- Hotel and F&B business declined 35.8% to $6.1m, mainly due to lower rates and occupancy at Duxton Perth and absence of contributions from Duxton Saigon, which was disposed in 1QFY16.
- Going forward, the group is targetting to launch 50-unit Kismis Residences in 2QFY18, while 200-unit Perumal is in the planning stage.
- Last traded at 0.7x P/B.
*Silverlake Axis
- Won a contract from an insurance trade association to develop and deliver a digital platform for life insurance and takaful insurers in Malaysia.
- The platform will be able to integrate with new digital insurance platforms and be the source for greater insights into the industry.
*Yongnam
- Bagged four contracts worth $36.2m for projects in Singapore comprising:.
- Two structural steelwork projects for Evonik's Jurong island plant and a proposed commercial development.
- Two specialist civil engineering contracts for Changi Airport's three-runway operations and Thomson-East Coast Line.
*Pacific Radiance
- Secured US$45.3m worth of new contracts, including options for ten offshore support vessels, to support projects in Asia and Middle East.
- Management opines that market conditions will remain challenging even as global spending on exploration and production is expected to rise.
*Mermaid Maritime
- Won two contracts worth a total of US$4.3m comprising:.
- 16-day subsea pipeline freespan rectification project for a national oil company in Thailand.
- Two-year contract to offer site survey & offshore navigation services in Indonesia for an international oil company.
NEUTRAL
*Hiap Hoe
- Strenghtening recurring income base with the acquistion of Holiday Inn Express Trafford City, Manchester, UK.
- Purchase consideration of £26.3m is on par with its book value.
- Trading at 0.45x P/B.
*Oceanus
- Entered into an MOU with WSRC to expand its abalone and seafood business in China, particularly the distribution of its seafood products.
- WSRC has agreed to purchase 250 cartons of canned abalones worth $250,000 and is expected to set up a retail outlet in Chengdu, China to sell its products.
- The outlet is expected to commence operations in FY17.
*Innopac
- Entered into an MOU to acquire a 75% stake in Dongwoo Bioenergy from Low Hyon Young for $0.8m in cash.
- Deal includes an option to acquire a further 24% stake for $0.4m through the issue of 400m shares at 0.1¢/share.
- Dongwoo produces wood waste pellets from sawdust for biomass power plants and will be primarily sold to South Korea.
Thursday, June 15, 2017
SG Market (15 Jun 17)
MARKET OVERVIEW
- The market could be in for some turbulence after the Fed lifted interest rates and signalled the beginning of its balance sheet taper this year even as economists raised Singapore's growth forecast.
- Local technology and oil names could come under pressure on a continued US tech sell-off, while crude prices tanked following a bearish US oil inventory buildup and IEA report that global oil output will expand faster than demand in 2018.
- Technically, the STI is capped at topside resistance of 3,275 in near term, with underlying support at 3,228.
MACRO/SECTOR NEWS
*Economy
o Economists are more upbeat about Singapore's economy as global outlook brightens.
o 2017 GDP growth forecast raised to 2.5% from 2.3% in previous MAS survey.
o But pick-up is not broad-based. Trade-related industries, especially electronics manufacturing are enjoying a boost from stronger global demand but domestic-oriented sectors such as construction and F&B are not out of the woods.
o MKE retains its growth estimate of 3% for 2017.
POSITIVE NEWS
*OKP
- Won a 10-month project from JTV for $11.7m which entails the construction of new roads and drains, trunk sewers and junction improvement works in the northern part of Singapore.
- The contract will lift its net order book to $317.8m (1Q17: $306.1m), extending visibility till 2019.
*Kimly
- Acquiring a coffee shop in Bedok for $0.85m via issue of 1.7m shares at $0.50 apiece.
- Also taking over a F&B business within an industrial canteen in Woodlands for $0.65m via issue of 1.3m shares at $0.50 apiece.
- Consideration shares are priced 22.5% higher than average price of $0.4081 on 13 Jun '17.
*Sanli Environmental
- Private equity firm ICH Gemini became a substantial shareholder after acquiring 0.6m shares at $0.34 each in open market, raising its stake to 5.062% from 4.838%.
- Current price of $0.34 implies FY3/16 P/E of 15.5x.
*TLV Holdings
- 70% owned Taka HK Venture made its first foray into the China retail jewellery market with a 49:51 JV with China's Maoming LiuTao ZhuBao Chuangyi Chanye, one of Guangdong's biggest jewellery consortiums.
- The proposed JV plans to open a chain of retail stores/counters in the Miaoming area and expand to other parts of China.
- This will depart from its current sale of jewellery to China market on a wholesale basis through its participation in exhibitions and significantly change the risk profile of the group in future.
NEUTRAL NEWS
*Cambridge Industrial Trust
- Proposed to divest 23 Woodlands Terrace for $17.68m or 1x P/B.
- Property is a 4-storey industrial building (124,425 sf) at JTC Woodlands East Industrial estate, with remaining land tenure of 39 years.
- Proceeds will used be for debt repayment, acquisitions, AEIs and/or working capital.
*World Class Global
- Aspial property spin-off saw a good response to its IPO.
- Offer of 136m new and vendor shares at $0.26 each was oversubscribed by 1.1x.
- The group has property development projects in Australia and Malaysia.
- Making its trading debut today with listing market cap of $235.5m and P/B of 2.2x.
- The market could be in for some turbulence after the Fed lifted interest rates and signalled the beginning of its balance sheet taper this year even as economists raised Singapore's growth forecast.
- Local technology and oil names could come under pressure on a continued US tech sell-off, while crude prices tanked following a bearish US oil inventory buildup and IEA report that global oil output will expand faster than demand in 2018.
- Technically, the STI is capped at topside resistance of 3,275 in near term, with underlying support at 3,228.
MACRO/SECTOR NEWS
*Economy
o Economists are more upbeat about Singapore's economy as global outlook brightens.
o 2017 GDP growth forecast raised to 2.5% from 2.3% in previous MAS survey.
o But pick-up is not broad-based. Trade-related industries, especially electronics manufacturing are enjoying a boost from stronger global demand but domestic-oriented sectors such as construction and F&B are not out of the woods.
o MKE retains its growth estimate of 3% for 2017.
POSITIVE NEWS
*OKP
- Won a 10-month project from JTV for $11.7m which entails the construction of new roads and drains, trunk sewers and junction improvement works in the northern part of Singapore.
- The contract will lift its net order book to $317.8m (1Q17: $306.1m), extending visibility till 2019.
*Kimly
- Acquiring a coffee shop in Bedok for $0.85m via issue of 1.7m shares at $0.50 apiece.
- Also taking over a F&B business within an industrial canteen in Woodlands for $0.65m via issue of 1.3m shares at $0.50 apiece.
- Consideration shares are priced 22.5% higher than average price of $0.4081 on 13 Jun '17.
*Sanli Environmental
- Private equity firm ICH Gemini became a substantial shareholder after acquiring 0.6m shares at $0.34 each in open market, raising its stake to 5.062% from 4.838%.
- Current price of $0.34 implies FY3/16 P/E of 15.5x.
*TLV Holdings
- 70% owned Taka HK Venture made its first foray into the China retail jewellery market with a 49:51 JV with China's Maoming LiuTao ZhuBao Chuangyi Chanye, one of Guangdong's biggest jewellery consortiums.
- The proposed JV plans to open a chain of retail stores/counters in the Miaoming area and expand to other parts of China.
- This will depart from its current sale of jewellery to China market on a wholesale basis through its participation in exhibitions and significantly change the risk profile of the group in future.
NEUTRAL NEWS
*Cambridge Industrial Trust
- Proposed to divest 23 Woodlands Terrace for $17.68m or 1x P/B.
- Property is a 4-storey industrial building (124,425 sf) at JTC Woodlands East Industrial estate, with remaining land tenure of 39 years.
- Proceeds will used be for debt repayment, acquisitions, AEIs and/or working capital.
*World Class Global
- Aspial property spin-off saw a good response to its IPO.
- Offer of 136m new and vendor shares at $0.26 each was oversubscribed by 1.1x.
- The group has property development projects in Australia and Malaysia.
- Making its trading debut today with listing market cap of $235.5m and P/B of 2.2x.
Wednesday, June 14, 2017
SG Market (14 Jun 17)
MARKET OVERVIEW
- Technology-related stocks could swing back into play following the rebound in US tech names.
- Market activity may be tentative as investors position ahead of a widely expected Fed rate hike despite weak inflation but more focus will be on whether there will be a third hike this year.
- Technically, the STI is capped at topside resistance of 3,275 in near term, with underlying support at 3,228.
POSITIVE NEWS
*SPH
Consortium with Kajima Development placed a top bid of $1.13b for a 99-year leasehold mixed-use site in Bidadari estate at Upper Serangoon Road.
- This works out to $1,181 psf ppr, which is significantly above market expectations of $800-900 psf ppr and 52% higher than the $775 psf ppr paid for nearby The Poiz Residences site in Aug 2014.
- The 25,440 sf site is expected to yield 825 homes and has a 15,000 sqm commercial component.
- The state tender attracted a total of 12 bids with 4 parties going above the $1b mark. This is the latest of a series of bullish land deals, which is harbinger of higher home prices.
*mm2 Asia
- Acquiring 50% stake in Dartina, which owns Golden Village cinemas in Singapore for $184.3m, or 17.5x FY15 earnings.
- Golden Village is Singapore's largest cinema chain, operating 11 multiplexes housing 92 screens.
- Acquisition intended to bolster downstream business, following previous cinema deals Cathay Cineplexes and Mega Cinemas Management, acquired at 16.2x and 11.7x earnings.
- Funding will be via debt, internal cash and future fund-raising exercises.
NEGATIVE NEWS
*A-Sonic Aerospace
- Questionable corporate action from proposed a 20-for-1 issue of bonus warrants.
- Exercisable within six months from issue, each warrant can be converted into 5,000 shares at subscription price of $1.00 (0.02¢ each).
- Maximum net proceeds of $0.2m will be used to fund the bonus warrant issue.
NEUTRAL NEWS
*Yanlord
- Secured Rmb12.9b syndication loan facilities of up to eight years.
- Loans will be used for resettlement and construction financing for an old district redevelopment project in Shanghai.
- Trading at fair P/B valuation of 0.87x.
*KSH/Lian Beng/KOP
- JVCo Epic Land terminated negotiations for the proposed disposal of eight strata-office units in Prudential Tower.
*Libra
- Withdrew arbitration proceedings for a $5.7m suit with a sub-contractor
- Costs incurred for the arbitration will be assessed subsequently.
- Technology-related stocks could swing back into play following the rebound in US tech names.
- Market activity may be tentative as investors position ahead of a widely expected Fed rate hike despite weak inflation but more focus will be on whether there will be a third hike this year.
- Technically, the STI is capped at topside resistance of 3,275 in near term, with underlying support at 3,228.
POSITIVE NEWS
*SPH
Consortium with Kajima Development placed a top bid of $1.13b for a 99-year leasehold mixed-use site in Bidadari estate at Upper Serangoon Road.
- This works out to $1,181 psf ppr, which is significantly above market expectations of $800-900 psf ppr and 52% higher than the $775 psf ppr paid for nearby The Poiz Residences site in Aug 2014.
- The 25,440 sf site is expected to yield 825 homes and has a 15,000 sqm commercial component.
- The state tender attracted a total of 12 bids with 4 parties going above the $1b mark. This is the latest of a series of bullish land deals, which is harbinger of higher home prices.
*mm2 Asia
- Acquiring 50% stake in Dartina, which owns Golden Village cinemas in Singapore for $184.3m, or 17.5x FY15 earnings.
- Golden Village is Singapore's largest cinema chain, operating 11 multiplexes housing 92 screens.
- Acquisition intended to bolster downstream business, following previous cinema deals Cathay Cineplexes and Mega Cinemas Management, acquired at 16.2x and 11.7x earnings.
- Funding will be via debt, internal cash and future fund-raising exercises.
NEGATIVE NEWS
*A-Sonic Aerospace
- Questionable corporate action from proposed a 20-for-1 issue of bonus warrants.
- Exercisable within six months from issue, each warrant can be converted into 5,000 shares at subscription price of $1.00 (0.02¢ each).
- Maximum net proceeds of $0.2m will be used to fund the bonus warrant issue.
NEUTRAL NEWS
*Yanlord
- Secured Rmb12.9b syndication loan facilities of up to eight years.
- Loans will be used for resettlement and construction financing for an old district redevelopment project in Shanghai.
- Trading at fair P/B valuation of 0.87x.
*KSH/Lian Beng/KOP
- JVCo Epic Land terminated negotiations for the proposed disposal of eight strata-office units in Prudential Tower.
*Libra
- Withdrew arbitration proceedings for a $5.7m suit with a sub-contractor
- Costs incurred for the arbitration will be assessed subsequently.
Tuesday, June 13, 2017
SG Market (13 Jun 17)
MARKET OVERVIEW
- Continued profit taking likely to pressure high flying tech names, taking cue from the US tech sell-off ahead of Fed's decision on interest rates this week.
- Despite yesterday's drubbing, Venture (+23% ytd), AEM (+331%), Sunningdale (+80%), UMS (+78%), Hi-P (+78%), Valuetronics (+61%) still vastly outperformed the market this year.
- Technically, immediate support for STI is at 3,228, with topside resistance at 3,275.
MACRO WATCH
- Singapore-China relations are on the mend after both countries agreed to work together on China's Belt and Road initiative.
- Beijing proposed three areas of cooperation, including one that will draw on Singapore's strength as a regional financial and yuan clearance centre to raise funds for various BRI projects.
- The two sides will also expedite RCEP negotiations for a stronger and more substantive China-ASEAN relationship and hold talks for upgrading the China-Singapore FTA.
- Two-way trade between the two countries amounted to US$66b last year, or 13% of Singapore's total trade. Singapore is also China's second-largest investor, pouring in US$6.18b in 2016.
- Major beneficiaries: Banks, infrastructure companies
POSITIVE NEWS:
*China Sunsine
- Adopted dividend policy for FY17/18 of not less than 20% of net profit.
- Implied minimum yield of 2.5%, or DPS of 2¢/share, based on FY16 earnings.
- Management sees favourable financial prospects given the current economic outlook.
*SUTL Enterprise
- Signed MOU to provide marine consultancy services for a marina project in Boom Banyuwangi, East Java, Indonesia.
- Project expected to be completed in phases by 2020.
- Upon completion, SUTL will manage the marina under the ONE°15 brand.
- Currently trades at 18.1x forward P/E.
*IPS Securex
- Received a $10.4m variation order to a principal contract, including a $3.6m extension option, to provide maintenance support and equipment replacement services from Jun 2017 to Dec 2019.
*SIA
- Disclosed that flight frequency to Paris, France, will be increased from seven to 10 per week due to stronger demand.
- MKE last had a Hold rating with TP of $9.70.
NEUTRAL NEWS:
*Noble
- Reportedly approached by potential buyers for its US physical oil trading business but has not entered into discussions.
- A potential sale could help raise much needed capital for Noble, which remains engaged in crisis talks with lenders to roll over a US$2b credit facility expiring end Jun.
- Trading at distressed 0.073x P/B.
*SGX
- Launched Net Total Return futures for Taiwan, China, India and Indonesia.
- Contracts provide an exchange-listed solution to OTC equity index swaps in Asia.
- Currently trades at 22.5x forward P/E vs HKEx's 35.2x.
- Continued profit taking likely to pressure high flying tech names, taking cue from the US tech sell-off ahead of Fed's decision on interest rates this week.
- Despite yesterday's drubbing, Venture (+23% ytd), AEM (+331%), Sunningdale (+80%), UMS (+78%), Hi-P (+78%), Valuetronics (+61%) still vastly outperformed the market this year.
- Technically, immediate support for STI is at 3,228, with topside resistance at 3,275.
MACRO WATCH
- Singapore-China relations are on the mend after both countries agreed to work together on China's Belt and Road initiative.
- Beijing proposed three areas of cooperation, including one that will draw on Singapore's strength as a regional financial and yuan clearance centre to raise funds for various BRI projects.
- The two sides will also expedite RCEP negotiations for a stronger and more substantive China-ASEAN relationship and hold talks for upgrading the China-Singapore FTA.
- Two-way trade between the two countries amounted to US$66b last year, or 13% of Singapore's total trade. Singapore is also China's second-largest investor, pouring in US$6.18b in 2016.
- Major beneficiaries: Banks, infrastructure companies
POSITIVE NEWS:
*China Sunsine
- Adopted dividend policy for FY17/18 of not less than 20% of net profit.
- Implied minimum yield of 2.5%, or DPS of 2¢/share, based on FY16 earnings.
- Management sees favourable financial prospects given the current economic outlook.
*SUTL Enterprise
- Signed MOU to provide marine consultancy services for a marina project in Boom Banyuwangi, East Java, Indonesia.
- Project expected to be completed in phases by 2020.
- Upon completion, SUTL will manage the marina under the ONE°15 brand.
- Currently trades at 18.1x forward P/E.
*IPS Securex
- Received a $10.4m variation order to a principal contract, including a $3.6m extension option, to provide maintenance support and equipment replacement services from Jun 2017 to Dec 2019.
*SIA
- Disclosed that flight frequency to Paris, France, will be increased from seven to 10 per week due to stronger demand.
- MKE last had a Hold rating with TP of $9.70.
NEUTRAL NEWS:
*Noble
- Reportedly approached by potential buyers for its US physical oil trading business but has not entered into discussions.
- A potential sale could help raise much needed capital for Noble, which remains engaged in crisis talks with lenders to roll over a US$2b credit facility expiring end Jun.
- Trading at distressed 0.073x P/B.
*SGX
- Launched Net Total Return futures for Taiwan, China, India and Indonesia.
- Contracts provide an exchange-listed solution to OTC equity index swaps in Asia.
- Currently trades at 22.5x forward P/E vs HKEx's 35.2x.
Monday, June 12, 2017
SG Market (12 Jun 17)
MARKET OVERVIEW
- The market may resume its upclimb after last Thu's trio of major risk events passed with little impact, although gains may be capped ahead of FOMC meeting on 13-14 Jun.
- Technically, the STI has broken above its 3,250 resistance and appears headed towards May peak at 3,275, with immediate support at at 3,228.
POSITIVE NEWS
*Moya Holdings
- Acquiring Indonesian water infrastructure developer and operator Acuatico for US$245.2m (9.5x FY16 pretax profit).
- Significant deal expected to boost production capacity and asset base.
- Pro forma FY16 EPS is expected to jump from 0.11¢ to 0.65¢.
- Post deal, the group will flip from net cash position of $58.5m to net debt of $302.9m, with 2.5x net gearing.
*The Trendlines
- Confirmed that the medical device product developed by its "Most Valuable Portfolio Company" remains on track for launch in 2018.
- In a sale agreement signed with third party in 2014, Trendlines will receive cash payment at closing, milestone payments and royalties from future sales of the product.
- Acquirer is in the process of establishing a high-volume manufacturing facility for production of the product.
*Eindec
- Awarded $3m worth of new contracts in Singapore and Malaysia.
- Comprises three major contracts for Clean Room Equipment in Malaysia and a contract to supply HVAC equipment for a commercial tower in CBD of Singapore.
NEGATIVE NEWS
*Ezion
- Proposed capitalisation of US$5.9m shareholder loan to Ausgroup via subscription of 140.8m new AusGroup shares at $0.058 each.
- Post debt restructuring, Ezion will own 20% of AusGroup, up from 17.83%.
- The loan settlement will have little impact on EPS and NTA of the group.
*XMH
- Expects to post a net loss for 4QFY4/17 and FY17, mainly from impairments in intangible assets.
*MS Holdings
- Expects to report a net loss for FY17 due to challenging business conditions and competitiveness in crane rental markets.
NEUTRAL NEWS
*Figtree
- Forms 85:15 JV with local partner in Chongqing, China to undertake design and EPC services to the construction industry in Chongqing.
- The market may resume its upclimb after last Thu's trio of major risk events passed with little impact, although gains may be capped ahead of FOMC meeting on 13-14 Jun.
- Technically, the STI has broken above its 3,250 resistance and appears headed towards May peak at 3,275, with immediate support at at 3,228.
POSITIVE NEWS
*Moya Holdings
- Acquiring Indonesian water infrastructure developer and operator Acuatico for US$245.2m (9.5x FY16 pretax profit).
- Significant deal expected to boost production capacity and asset base.
- Pro forma FY16 EPS is expected to jump from 0.11¢ to 0.65¢.
- Post deal, the group will flip from net cash position of $58.5m to net debt of $302.9m, with 2.5x net gearing.
*The Trendlines
- Confirmed that the medical device product developed by its "Most Valuable Portfolio Company" remains on track for launch in 2018.
- In a sale agreement signed with third party in 2014, Trendlines will receive cash payment at closing, milestone payments and royalties from future sales of the product.
- Acquirer is in the process of establishing a high-volume manufacturing facility for production of the product.
*Eindec
- Awarded $3m worth of new contracts in Singapore and Malaysia.
- Comprises three major contracts for Clean Room Equipment in Malaysia and a contract to supply HVAC equipment for a commercial tower in CBD of Singapore.
NEGATIVE NEWS
*Ezion
- Proposed capitalisation of US$5.9m shareholder loan to Ausgroup via subscription of 140.8m new AusGroup shares at $0.058 each.
- Post debt restructuring, Ezion will own 20% of AusGroup, up from 17.83%.
- The loan settlement will have little impact on EPS and NTA of the group.
*XMH
- Expects to post a net loss for 4QFY4/17 and FY17, mainly from impairments in intangible assets.
*MS Holdings
- Expects to report a net loss for FY17 due to challenging business conditions and competitiveness in crane rental markets.
NEUTRAL NEWS
*Figtree
- Forms 85:15 JV with local partner in Chongqing, China to undertake design and EPC services to the construction industry in Chongqing.
Friday, June 9, 2017
SG Market (09 Jun 17)
MARKET OVERVIEW
- Caution could reign as UK election results stream in; polls suggest the prospect of a hung parliament which would rekindle Brexit uncertainty.
- Stocks with GBP exposure such as GL, ComfortDelGro and Frasers Hospitality Trust could be impacted by the drop in the pound.
- STI expected to range trade between immediate support at at 3,218 and near term resistance at 3,250.
MACRO WATCH
*Myanmar
- Trade agency IE Singapore signed MOU with Myanmar Investment Commission to open doors for Singapore firms to explore collaboration in urban and housing solutions, utilities, transport and logistics, manufacturing, oil and gas, and professional services in fast emerging Myanmar.
*Property
- 50% unit of Malaysian property developer Selangor Dredging acquired a prime residential property, 1 Draycott Park, off Orchard Road for redevelopment into exclusive mid-rise apartments.
- Price tag of $72m includes development charge of $15.3m, translating to $1,787 psf ppr for the 17,442 sf site.
- Breakeven price for the new development is estimated at $2,700-2,800 psf with selling price of around $3,300 psf.
- MKE opines that the aggressive bid points to an imminent housing price rebound and is Positive on the sector.
POSITIVE NEWS
*GLP
- Shortlisted bidders have up to end Jun to put in firm offer for final evaluation.
- No binding proposal have been received to date and there is no certainty that any transaction will materialise.
- Bidders that have expressed interest include Blackstone, Warburg Pincus, a Chinese consortium comprising China Investment Corp, Hopu and Hillhouse as well as CEO Ming Z Mei and non-executive director Fang Fenglei.
- Trades at 1.14x P/B vs 2.04x for US industry giant Prologis.
*Pacific Radiance
- Granted $85m in loans by DBS and UOB, backed by two government-backed financing schemes.
- Government will take on 70% of the risk share for both the IE Singapore's IFS and Spring Singapore's BL loans.
- Funds will be used to for working capital needs over the medium term.
*Boustead Projects
- Secured a design-and-build contract for a hazardous chemical waste treatment facility in Tuas.
- The contract was awarded by Veolia ES Singapore Industrial with undisclosed project value.
- This raises the group's order book to $170m.
*SMJ International
- Clinched its first interior design and fit-out consultancy project for the Huangshan Lilang Holiday resort in China.
- The Rmb2m deal is part of the carpet company's diversification into property investment and management.
NEGATIVE NEWS
*QT Vascular
- 1Q17 net loss widened to US$8.8m (1Q16: US$6.8m) on revenue of US$3.2m (-8.3%).
- Revenue was affected by fewer catheter units sold (-16.7%), while bottom line was further hit by higher finance costs (+348%).
- NAV/share at -US$0.01.
NEUTRAL NEWS
*HRnetGroup
- Launched IPO of 193.4m new shares at $0.90 on SGX mainboard; translating to a listing market cap of $910.3m for the recruitment group.
- 103.9m shares will go to cornerstone investors, 85.7m for placement and 3.8m public tranche, including 0.44m reserved for directors and employees.
- Cornerstone investors include Aberdeen AM, FIL Investment, Meiji Yasuda AM and Heliconia Capital Management.
- Public offer closes on 14 Jun (noon) with trading to commence on 16 Jun.
*SPH
- Invested $0.98m for a 33.33% stake in RecomN Singapore.
- RecomN operates a services portal that matches customers with relevant service providers.
*CapitaLand Retail China Trust
- AIA ceased to be a substantial shareholder.
- Disposed 0.35m shares, shaving its stake to 4.9657%.
- Caution could reign as UK election results stream in; polls suggest the prospect of a hung parliament which would rekindle Brexit uncertainty.
- Stocks with GBP exposure such as GL, ComfortDelGro and Frasers Hospitality Trust could be impacted by the drop in the pound.
- STI expected to range trade between immediate support at at 3,218 and near term resistance at 3,250.
MACRO WATCH
*Myanmar
- Trade agency IE Singapore signed MOU with Myanmar Investment Commission to open doors for Singapore firms to explore collaboration in urban and housing solutions, utilities, transport and logistics, manufacturing, oil and gas, and professional services in fast emerging Myanmar.
*Property
- 50% unit of Malaysian property developer Selangor Dredging acquired a prime residential property, 1 Draycott Park, off Orchard Road for redevelopment into exclusive mid-rise apartments.
- Price tag of $72m includes development charge of $15.3m, translating to $1,787 psf ppr for the 17,442 sf site.
- Breakeven price for the new development is estimated at $2,700-2,800 psf with selling price of around $3,300 psf.
- MKE opines that the aggressive bid points to an imminent housing price rebound and is Positive on the sector.
POSITIVE NEWS
*GLP
- Shortlisted bidders have up to end Jun to put in firm offer for final evaluation.
- No binding proposal have been received to date and there is no certainty that any transaction will materialise.
- Bidders that have expressed interest include Blackstone, Warburg Pincus, a Chinese consortium comprising China Investment Corp, Hopu and Hillhouse as well as CEO Ming Z Mei and non-executive director Fang Fenglei.
- Trades at 1.14x P/B vs 2.04x for US industry giant Prologis.
*Pacific Radiance
- Granted $85m in loans by DBS and UOB, backed by two government-backed financing schemes.
- Government will take on 70% of the risk share for both the IE Singapore's IFS and Spring Singapore's BL loans.
- Funds will be used to for working capital needs over the medium term.
*Boustead Projects
- Secured a design-and-build contract for a hazardous chemical waste treatment facility in Tuas.
- The contract was awarded by Veolia ES Singapore Industrial with undisclosed project value.
- This raises the group's order book to $170m.
*SMJ International
- Clinched its first interior design and fit-out consultancy project for the Huangshan Lilang Holiday resort in China.
- The Rmb2m deal is part of the carpet company's diversification into property investment and management.
NEGATIVE NEWS
*QT Vascular
- 1Q17 net loss widened to US$8.8m (1Q16: US$6.8m) on revenue of US$3.2m (-8.3%).
- Revenue was affected by fewer catheter units sold (-16.7%), while bottom line was further hit by higher finance costs (+348%).
- NAV/share at -US$0.01.
NEUTRAL NEWS
*HRnetGroup
- Launched IPO of 193.4m new shares at $0.90 on SGX mainboard; translating to a listing market cap of $910.3m for the recruitment group.
- 103.9m shares will go to cornerstone investors, 85.7m for placement and 3.8m public tranche, including 0.44m reserved for directors and employees.
- Cornerstone investors include Aberdeen AM, FIL Investment, Meiji Yasuda AM and Heliconia Capital Management.
- Public offer closes on 14 Jun (noon) with trading to commence on 16 Jun.
*SPH
- Invested $0.98m for a 33.33% stake in RecomN Singapore.
- RecomN operates a services portal that matches customers with relevant service providers.
*CapitaLand Retail China Trust
- AIA ceased to be a substantial shareholder.
- Disposed 0.35m shares, shaving its stake to 4.9657%.
Thursday, June 8, 2017
SG Market (08 Jun 17)
MARKET OVERVIEW
- Cautious sentiment ahead of the UK elections and ECB policy meeting today.
- Oil-related counters could come under further selling pressure as oil price slid more than 5% following a surprise build on US crude inventories.
- STI could test uptrend support line at 3,218 drawn from Nov '16, with next objective at 3,190. Immediate resistance lies at 3,250.
POSITIVE NEWS
*SGX
- Turned in improved securities turnover value of $26.5b (+23% m/m, +23% y/y) in May with daily average of $1.26b (+11% m/m, +23% y/y).
- There was one Catalist listing during the month raising $13m and 87 new bond listings raising $41.24b.
- Total derivatives volume rose to 14.73m contracts (+9% m/m, +9% y/y), underpinned by China 50 index futures with 5.86m contracts (+13% m/m, +7% y/y).
- Trades at 22.4x or 38% discount to HKEx of 36x.
*Sanli Environmental
- Trading debut for water-focused EPC contractor on Catalist board.
- IPO of 52m new shares at $0.225 was 11.8x oversubscribed. Pre-IPO investor Heliconia (Temasek-subsidiary) raised its stake to 7.97% from 5.36%.
- Main customer is PUB and eyeing $3b worth of contracts from Deep Tunnel Sewerage System.
- Listing at trailing P/E of 9.8x.
NEGATIVE NEWS
*TTJ
- 3QFY17 net profit slumped 81% to $2.6m on lower revenue of $16.8m (-69%).
- Sales deteriorated for structural steel business and absence of contributions from dormitories.
- On the flip side, order book surged to $157m (1HFY17: $59m); enquiries remain healthy.
- Trades at 11.8x trailing P/E and 1.1x P/B
*Joyas Int'l
- Auditors flagged discrepancies between unaudited and audited results for FY16, arising from disposed business.
- Audited FY16 results reflect a wider net loss to HK$21.7m (unaudited: HK$13.8m).
- Cautious sentiment ahead of the UK elections and ECB policy meeting today.
- Oil-related counters could come under further selling pressure as oil price slid more than 5% following a surprise build on US crude inventories.
- STI could test uptrend support line at 3,218 drawn from Nov '16, with next objective at 3,190. Immediate resistance lies at 3,250.
POSITIVE NEWS
*SGX
- Turned in improved securities turnover value of $26.5b (+23% m/m, +23% y/y) in May with daily average of $1.26b (+11% m/m, +23% y/y).
- There was one Catalist listing during the month raising $13m and 87 new bond listings raising $41.24b.
- Total derivatives volume rose to 14.73m contracts (+9% m/m, +9% y/y), underpinned by China 50 index futures with 5.86m contracts (+13% m/m, +7% y/y).
- Trades at 22.4x or 38% discount to HKEx of 36x.
*Sanli Environmental
- Trading debut for water-focused EPC contractor on Catalist board.
- IPO of 52m new shares at $0.225 was 11.8x oversubscribed. Pre-IPO investor Heliconia (Temasek-subsidiary) raised its stake to 7.97% from 5.36%.
- Main customer is PUB and eyeing $3b worth of contracts from Deep Tunnel Sewerage System.
- Listing at trailing P/E of 9.8x.
NEGATIVE NEWS
*TTJ
- 3QFY17 net profit slumped 81% to $2.6m on lower revenue of $16.8m (-69%).
- Sales deteriorated for structural steel business and absence of contributions from dormitories.
- On the flip side, order book surged to $157m (1HFY17: $59m); enquiries remain healthy.
- Trades at 11.8x trailing P/E and 1.1x P/B
*Joyas Int'l
- Auditors flagged discrepancies between unaudited and audited results for FY16, arising from disposed business.
- Audited FY16 results reflect a wider net loss to HK$21.7m (unaudited: HK$13.8m).
Wednesday, June 7, 2017
SG Market (07 Jun 17)
Market Overview
- Cautious mood is expected to prevail as investors are on edge ahead of the British polls ECB meeting and congressional testimony from sacked FBI chief James Corney tomorrow
- STI remains in a holding pattern between 3,250/3275 resistance levels and 3,190 support.
Positive News
*CapitaLand
- Aims to double AUM in Japan to $5b, underpinned by portfolio of income-producing commercial assets.
- Currently on track to achieve $3b AUM by end-2017.
- MKE last had a Hold with TP of $3.75.
*Straits Trading
- Investing A$119m for a 26% stake in a ARA-managed consortium to acquire an office building at 320 Pitt Street in Sydney, Australia.
- The 29,159 sqm office is located in the CBD and has the potential to be repositioned as a core investment through AEI.
- Trades at 15.3x trailing P/E and 0.74x P/B.
*Silverlake Axis
- Won an integrated banking solution contract from a new Thai bank customer, making it its 11th customer in the kingdom.
- Software implementation and training will take 18 months, followed by four years of maintenance services.
- Contract is expected to contribute positively to its FY18 results and subsequent years.
- Trades at consensus forward P/E of 23.1x.
*Citic Envirotech
- Secured a ToT plus BoT wastewater treatment project with capacity of 20,000 m3/day, in Suzhou, China.
- Total investment value of Rmb100m; project expected to be completed by end-2018.
- Contract comes with a 30-year service concession and minimum offtake of 15,000 m3/day in 2019 and 20,000 m3/day from 2020 onwards.
*Geo Energy
- Received 93.3% approval from noteholders of its $100m 7% notes expiring in Jan '18 for early redemption.
- The move will save ~US$2m in interest cost for FY17, or 9% of FY16 net profit.
*Civmec
- Clinched several contracts in Australia worth an aggregate A$90m.
- Major contracts include an EPC project for Alcoa for 18 months and construction project of a new lithium plant for Altura Mining for an undisclosed period.
*Ryobi Kiso
- Secured $57.5m worth of contracts ytd.
- Order book as at 31 Mar '17 stood at $178.7m.
Neutral News
*Starburst
- Acquiring loss-making Swiss Securitas Asia's security engineering solutions business for $0.6m.
- As part of the strategic partnership, the Swiss Securitas Group will take a 5.1% stake in Starburst, comprising 10m vendor shares and 6m warrants from two controlling shareholders.
- The collaboration will enable the group to tap on its partner's technical expertise and expand its footing in Asia, Europe and beyond.
- Cautious mood is expected to prevail as investors are on edge ahead of the British polls ECB meeting and congressional testimony from sacked FBI chief James Corney tomorrow
- STI remains in a holding pattern between 3,250/3275 resistance levels and 3,190 support.
Positive News
*CapitaLand
- Aims to double AUM in Japan to $5b, underpinned by portfolio of income-producing commercial assets.
- Currently on track to achieve $3b AUM by end-2017.
- MKE last had a Hold with TP of $3.75.
*Straits Trading
- Investing A$119m for a 26% stake in a ARA-managed consortium to acquire an office building at 320 Pitt Street in Sydney, Australia.
- The 29,159 sqm office is located in the CBD and has the potential to be repositioned as a core investment through AEI.
- Trades at 15.3x trailing P/E and 0.74x P/B.
*Silverlake Axis
- Won an integrated banking solution contract from a new Thai bank customer, making it its 11th customer in the kingdom.
- Software implementation and training will take 18 months, followed by four years of maintenance services.
- Contract is expected to contribute positively to its FY18 results and subsequent years.
- Trades at consensus forward P/E of 23.1x.
*Citic Envirotech
- Secured a ToT plus BoT wastewater treatment project with capacity of 20,000 m3/day, in Suzhou, China.
- Total investment value of Rmb100m; project expected to be completed by end-2018.
- Contract comes with a 30-year service concession and minimum offtake of 15,000 m3/day in 2019 and 20,000 m3/day from 2020 onwards.
*Geo Energy
- Received 93.3% approval from noteholders of its $100m 7% notes expiring in Jan '18 for early redemption.
- The move will save ~US$2m in interest cost for FY17, or 9% of FY16 net profit.
*Civmec
- Clinched several contracts in Australia worth an aggregate A$90m.
- Major contracts include an EPC project for Alcoa for 18 months and construction project of a new lithium plant for Altura Mining for an undisclosed period.
*Ryobi Kiso
- Secured $57.5m worth of contracts ytd.
- Order book as at 31 Mar '17 stood at $178.7m.
Neutral News
*Starburst
- Acquiring loss-making Swiss Securitas Asia's security engineering solutions business for $0.6m.
- As part of the strategic partnership, the Swiss Securitas Group will take a 5.1% stake in Starburst, comprising 10m vendor shares and 6m warrants from two controlling shareholders.
- The collaboration will enable the group to tap on its partner's technical expertise and expand its footing in Asia, Europe and beyond.
Tuesday, June 6, 2017
SG Market (06 Jun 17)
Trading is anticipated to be cautious given the escalating Mid-East tensions between Qatar and its Arab neighbours, as well as uncertainty ahead of the British and French polls later this week, FOMC meeting on 13-14 Jun and ECB meeting on Thu.
Regional bourses opened in the red in Tokyo (-0.2%), Seoul (-0.1%) and Sydney (-0.7%).Technically, the STI is likely to be range-bound between 3,250/3,275 resistance levels and downside support is at 3,190.
Stocks to watch:
*Noble: In crisis talks with key lenders as it seeks to extend a US$2b credit facility that is expiring this month and negotiate new covenants on its bank debt. The group is also looking to find new investors, sell assets and exit unprofitable businesses. Its 2020 bonds slumped to US$0.36 on the dollar, while shares have plunged 81% ytd to $0.32, the lowest since Sep 2000. Trading at liquidation valuation of 0.09x P/B.
*SGX: Seeking public consultation on proposed changes to strengthen SICOM rubber derivatives, particularly on the operational aspects of the physical-delivery process. Trading at 22.3x forward P/E or 38% discount to HKEx's 36x.
*Frasers Logistics & Industrial Trust: Proposed acquisition of seven industrial properties across Australia, comprising four completed properties and three under development, for A$169.3m ($174.7m) giving 6.41% NPI yield. Funding will be via a combination of equity and debt, with unit base expected to increase 5.5% to 1.51b units from a private placement and management fees. Pro forma DPU is forecast to rise 0.9% to 5.38¢.
*AEM: Welcomed several undisclosed long-only institutional funds following a vendor sale of 2.7m shares at $2.70 apiece. As a result, this reduces the stake of controlling shareholder Orion Phoenix to 23.96% from 28.17%.
*Soilbuild Construction: Awarded a US$10.5m ($14.5m) contract to construct a 12-storey hotel building in Yangon, Myanmar, with completion expected in 2Q19. The contract win lifts its order book to $508.1m.
*Yangzijiang: BlackRock has emerged as a substantial shareholder after receiving 11.4m shares on 1 Jun 2017 from an increase in collateral, lifting its stake from 4.93% to 5.23%.*Disa: Signed proof-of-concept agreement for a collaboration with pig-farmer KMP Private, using Disa's blockchain-based food trace solution on the latter's pork supplies.
*The Trendlines: Proposed sale of 91.68% owned Misgav/Karmiel Technology Incubator, which holds 3.18% of cancer-treatment technology developer, BioSight, for US$1.3m. Post-sale, pro forma FY16 loss per share will narrow from US$0.013 to US$0.011.
*KS Energy: Disclosed that a share pledging arrangement for 224.2m shares (43.49% of share capital) owned by controlling shareholder, Pacific One Energy (POE), has been terminated by OCBC. As at 5 Jun, POE holds a total 308.3m shares, representing 59.79% of shares outstanding.
Regional bourses opened in the red in Tokyo (-0.2%), Seoul (-0.1%) and Sydney (-0.7%).Technically, the STI is likely to be range-bound between 3,250/3,275 resistance levels and downside support is at 3,190.
Stocks to watch:
*Noble: In crisis talks with key lenders as it seeks to extend a US$2b credit facility that is expiring this month and negotiate new covenants on its bank debt. The group is also looking to find new investors, sell assets and exit unprofitable businesses. Its 2020 bonds slumped to US$0.36 on the dollar, while shares have plunged 81% ytd to $0.32, the lowest since Sep 2000. Trading at liquidation valuation of 0.09x P/B.
*SGX: Seeking public consultation on proposed changes to strengthen SICOM rubber derivatives, particularly on the operational aspects of the physical-delivery process. Trading at 22.3x forward P/E or 38% discount to HKEx's 36x.
*Frasers Logistics & Industrial Trust: Proposed acquisition of seven industrial properties across Australia, comprising four completed properties and three under development, for A$169.3m ($174.7m) giving 6.41% NPI yield. Funding will be via a combination of equity and debt, with unit base expected to increase 5.5% to 1.51b units from a private placement and management fees. Pro forma DPU is forecast to rise 0.9% to 5.38¢.
*AEM: Welcomed several undisclosed long-only institutional funds following a vendor sale of 2.7m shares at $2.70 apiece. As a result, this reduces the stake of controlling shareholder Orion Phoenix to 23.96% from 28.17%.
*Soilbuild Construction: Awarded a US$10.5m ($14.5m) contract to construct a 12-storey hotel building in Yangon, Myanmar, with completion expected in 2Q19. The contract win lifts its order book to $508.1m.
*Yangzijiang: BlackRock has emerged as a substantial shareholder after receiving 11.4m shares on 1 Jun 2017 from an increase in collateral, lifting its stake from 4.93% to 5.23%.*Disa: Signed proof-of-concept agreement for a collaboration with pig-farmer KMP Private, using Disa's blockchain-based food trace solution on the latter's pork supplies.
*The Trendlines: Proposed sale of 91.68% owned Misgav/Karmiel Technology Incubator, which holds 3.18% of cancer-treatment technology developer, BioSight, for US$1.3m. Post-sale, pro forma FY16 loss per share will narrow from US$0.013 to US$0.011.
*KS Energy: Disclosed that a share pledging arrangement for 224.2m shares (43.49% of share capital) owned by controlling shareholder, Pacific One Energy (POE), has been terminated by OCBC. As at 5 Jun, POE holds a total 308.3m shares, representing 59.79% of shares outstanding.
Monday, June 5, 2017
SG Market (05 Jun 17)
The market could continue its upward climb, underpinned by the record highs on Wall Street after lacklustre nonfarm payrolls report raised expectations that the Fed could take a more gradual approach to increasing interest rates.However, oil plays may continue to come under pressure on worries that the US pullout from the Paris climate accord could spark more US drilling and worsen a global glut.
Regional bourses are trading lower in Tokyo (-0.3%), Seoul (-0.1%) and Sydney (-0.6%).Technically, momentum indicators are exhibiting bullish crossover signals for the near term. Immediate resistance for STI is at 3,250 followed by 3,275, while downside support is at 3,190.
Stocks to watch:
*CapitaLand: Acquired two Chinese companies that indirectly owns two service residences in Chongqing and Chengdu from 36.1% owned Ascott Serviced Residence China Fund for US$0.9m. The purchase consideration took into account aggregate value US$56.9m for the properties as well as bank loans owed by the target companies. MKE last had a Hold and TP of $3.75.
*Singtel: Received conditional approval from SGX to list NetLink Trust on the SGX Mainboard and divest its stake to less than 25% by Apr 2018. NetLink Trust designs, builds, owns and operates the infrastructure for Singapore’s next generation nationwide broadband network. MKE last had a Hold and TP of $3.70.
*Perennial Real Estate: Formed strategic partnership with Beijing Hospital of TCM to set up a treatment facility, Ming Yi Guan, in Singapore. The facility located at House of Tan Yeok Nee on Orchard Road will officially commence operations in end-Jun 2017.
*AEM: Received additional sales orders over the past six weeks, lifting outstanding order book from $152m on 18 Apr 2017 to $182m (as at 31 May). These will be delivered this year and represents 97% of the street's sole revenue forecast for FY17.
*Fischer Tech: Entered exclusive discussions with a third party on a possible share sale, which could potentially trigger a mandatory takeover offer.
*Mandarin Oriental: Undertaking a strategic review of its prime waterfront hotel, The Excelsior in Hong Kong, including a possible sale. The property has approval for the the development of a 63,500 gfa commercial building.
*GKE: Signed non-disclosure agreement with a potential investor for the latter to evaluate a possible acquisition of shares in the group.*Tritech: Proposed placement of 28.8m new shares (3.3% share capital) at 7¢ apiece to individual investor Wang Liang. Net proceeds of $2m will be used for working capital purposes.
*TA Corp: Signed an MOU with Kong Hwee Iron Works & Construction to set up an 80:20 JVCo in Johor, Malaysia to design, develop, manufacture and distribute prefabricated refinished volumetric construction modules (PPVC), which will significantly speed up construction works and increase productivity.
Regional bourses are trading lower in Tokyo (-0.3%), Seoul (-0.1%) and Sydney (-0.6%).Technically, momentum indicators are exhibiting bullish crossover signals for the near term. Immediate resistance for STI is at 3,250 followed by 3,275, while downside support is at 3,190.
Stocks to watch:
*CapitaLand: Acquired two Chinese companies that indirectly owns two service residences in Chongqing and Chengdu from 36.1% owned Ascott Serviced Residence China Fund for US$0.9m. The purchase consideration took into account aggregate value US$56.9m for the properties as well as bank loans owed by the target companies. MKE last had a Hold and TP of $3.75.
*Singtel: Received conditional approval from SGX to list NetLink Trust on the SGX Mainboard and divest its stake to less than 25% by Apr 2018. NetLink Trust designs, builds, owns and operates the infrastructure for Singapore’s next generation nationwide broadband network. MKE last had a Hold and TP of $3.70.
*Perennial Real Estate: Formed strategic partnership with Beijing Hospital of TCM to set up a treatment facility, Ming Yi Guan, in Singapore. The facility located at House of Tan Yeok Nee on Orchard Road will officially commence operations in end-Jun 2017.
*AEM: Received additional sales orders over the past six weeks, lifting outstanding order book from $152m on 18 Apr 2017 to $182m (as at 31 May). These will be delivered this year and represents 97% of the street's sole revenue forecast for FY17.
*Fischer Tech: Entered exclusive discussions with a third party on a possible share sale, which could potentially trigger a mandatory takeover offer.
*Mandarin Oriental: Undertaking a strategic review of its prime waterfront hotel, The Excelsior in Hong Kong, including a possible sale. The property has approval for the the development of a 63,500 gfa commercial building.
*GKE: Signed non-disclosure agreement with a potential investor for the latter to evaluate a possible acquisition of shares in the group.*Tritech: Proposed placement of 28.8m new shares (3.3% share capital) at 7¢ apiece to individual investor Wang Liang. Net proceeds of $2m will be used for working capital purposes.
*TA Corp: Signed an MOU with Kong Hwee Iron Works & Construction to set up an 80:20 JVCo in Johor, Malaysia to design, develop, manufacture and distribute prefabricated refinished volumetric construction modules (PPVC), which will significantly speed up construction works and increase productivity.
Friday, June 2, 2017
SG Market (02 Jun 17)
The market could see some strength today, extending yesterday’s 0.8% gain after US stocks closed at historical highs in light of strong US economic data.
Regional bourses are on a tear with Seoul (0.7%), Sydney (+0.6%) and Tokyo (+1.1%) trading higher and Nikkei-225 topping the 20,000 for the first time since Dec ‘15. Technically, momentum indicators are starting to flip up after correcting from overbought levels. Topside resistance for STI can be found at 3,250/3,275, while near term support is at 3,190.
Stocks to watch:
*Property: HongKong Land’s MCL Land won the en-bloc deal for 330-unit Eunosville for $765m ($909 psf ppr), 17-19% higher than the initial asking price. Separately, Chinese developer, Fantasia submitted the top bid of $75.8m ($525.58 psf ppr) for a 99-leasehold site in Hougang. The aggressive bids are indicative of expectations for a home price rebound. MKE is positive on the sector with top pick UOL (Buy; TP: $9.05).
*Keppel Corp: Closed deal to novate the construction contracts of 5 jackup rigs currently being built for Transocean to Borr Drilling. Borr will take over remaining payment installments for the rigs, which will now cost USD216m each versus original contract price of USD219m. The rigs will be delivered between 1Q18 and 2020. This puts to bed the cancellation risk of the Transocean rigs but will have no impact on share price.
*Perennial Real Estate: Confirmed that it has, as part of a consortium, submitted a proposal in relation to United Engineers. UE’s property portfolio include Rochester Mall, UE BizHub City as well as other residential and hospitality properties.
*China Sunsine: Updated that it has installed an online monitoring equipment at the chimney used for sulphur recycling at its Shandong Sunsine plant, meeting the 31 May deadline. This resolves one out of three lapses highlighted by an environmental inspection last week. The group is working to rectify the remaining weaknesses.*Croesus Retail Trust: Global fashion retailer H&M will open a 1,500 sqm store at the Mallage Shou mall in north Tokyo, the brand’s first store in the area. Operations are expected to commence on 31 Aug. As at 31 Mar, occupancy rate at the 68,074 sqm mall stood at 97.3%.
*Willas-Array: Turned around to an FY17 net profit of HK$48.2m (FY16: HK$57.8m loss) mainly due to the absence of HK$70.1m in impairment losses. Revenue edged higher to HK$3.88b (+6.8%) on strong demand for home appliances (+15.6%) and automotive applications (+32.4%) partially offset by weakness in its dealer arm (-20%). Gross profit slipped to 8.2% (-0.5ppts) on weaker ASPs. Bottom line was strengthened by the absence of loss from associates (FY16: HK$38.3m). Declared first and final DPS of HK$0.31 (FY16: nil). NAV/share at HK$7.6533.
*HC Surgical Specialists: Acquiring a 51% stake in Medical L&C Services, which provides chronic home care and palliative care, from Lai Junxu for $1.05m, with $0.79m being in cash and the remaining via issuance of 0.448m new shares at $0.58 apiece. The deal values the entity at 2.9x P/B, and it includes a 10-year employment contract for the vendor, and an option for the group to acquire the remaining 49% stake by Aug '21.
*HC Surgical Specialists: Separately, the group is acquiring a 49% stake in Medinex, which is a management and service provider for medical clinics, from Jessie Low Mui Choo for $4.32m, with $3.24m satisfied by cash and the remaining via issuance 1.86m new shares at $0.58 apiece. The deal values the target at 14x P/B, and comes with a 4.5 year profit guarantee of $2.94m. It also involves a 10-year employment contract for the vendor to act as CEO of Medinex.
*Cosco: It expects to further delay the delay of the Seven Drilling Rig VI to 30 Jun from 15 Apr. Separately, its 51%-owned COSCO (Zhoushan) delivered a bulk carrier to its Hong Kong buyer.
Regional bourses are on a tear with Seoul (0.7%), Sydney (+0.6%) and Tokyo (+1.1%) trading higher and Nikkei-225 topping the 20,000 for the first time since Dec ‘15. Technically, momentum indicators are starting to flip up after correcting from overbought levels. Topside resistance for STI can be found at 3,250/3,275, while near term support is at 3,190.
Stocks to watch:
*Property: HongKong Land’s MCL Land won the en-bloc deal for 330-unit Eunosville for $765m ($909 psf ppr), 17-19% higher than the initial asking price. Separately, Chinese developer, Fantasia submitted the top bid of $75.8m ($525.58 psf ppr) for a 99-leasehold site in Hougang. The aggressive bids are indicative of expectations for a home price rebound. MKE is positive on the sector with top pick UOL (Buy; TP: $9.05).
*Keppel Corp: Closed deal to novate the construction contracts of 5 jackup rigs currently being built for Transocean to Borr Drilling. Borr will take over remaining payment installments for the rigs, which will now cost USD216m each versus original contract price of USD219m. The rigs will be delivered between 1Q18 and 2020. This puts to bed the cancellation risk of the Transocean rigs but will have no impact on share price.
*Perennial Real Estate: Confirmed that it has, as part of a consortium, submitted a proposal in relation to United Engineers. UE’s property portfolio include Rochester Mall, UE BizHub City as well as other residential and hospitality properties.
*China Sunsine: Updated that it has installed an online monitoring equipment at the chimney used for sulphur recycling at its Shandong Sunsine plant, meeting the 31 May deadline. This resolves one out of three lapses highlighted by an environmental inspection last week. The group is working to rectify the remaining weaknesses.*Croesus Retail Trust: Global fashion retailer H&M will open a 1,500 sqm store at the Mallage Shou mall in north Tokyo, the brand’s first store in the area. Operations are expected to commence on 31 Aug. As at 31 Mar, occupancy rate at the 68,074 sqm mall stood at 97.3%.
*Willas-Array: Turned around to an FY17 net profit of HK$48.2m (FY16: HK$57.8m loss) mainly due to the absence of HK$70.1m in impairment losses. Revenue edged higher to HK$3.88b (+6.8%) on strong demand for home appliances (+15.6%) and automotive applications (+32.4%) partially offset by weakness in its dealer arm (-20%). Gross profit slipped to 8.2% (-0.5ppts) on weaker ASPs. Bottom line was strengthened by the absence of loss from associates (FY16: HK$38.3m). Declared first and final DPS of HK$0.31 (FY16: nil). NAV/share at HK$7.6533.
*HC Surgical Specialists: Acquiring a 51% stake in Medical L&C Services, which provides chronic home care and palliative care, from Lai Junxu for $1.05m, with $0.79m being in cash and the remaining via issuance of 0.448m new shares at $0.58 apiece. The deal values the entity at 2.9x P/B, and it includes a 10-year employment contract for the vendor, and an option for the group to acquire the remaining 49% stake by Aug '21.
*HC Surgical Specialists: Separately, the group is acquiring a 49% stake in Medinex, which is a management and service provider for medical clinics, from Jessie Low Mui Choo for $4.32m, with $3.24m satisfied by cash and the remaining via issuance 1.86m new shares at $0.58 apiece. The deal values the target at 14x P/B, and comes with a 4.5 year profit guarantee of $2.94m. It also involves a 10-year employment contract for the vendor to act as CEO of Medinex.
*Cosco: It expects to further delay the delay of the Seven Drilling Rig VI to 30 Jun from 15 Apr. Separately, its 51%-owned COSCO (Zhoushan) delivered a bulk carrier to its Hong Kong buyer.
Thursday, June 1, 2017
SG Market (01 Jun 17)
The market has entered a consolidation phase but oil plays could come under pressure after oil prices tumbled 3% to a three-week low as a surprise increase in Libyan output boosted monthly OPEC production for the first time this year.Meanwhile, latest news that OCBC and Great Eastern are in talks with several parties, including Perennial Real Estate, regarding their combined stakes in UE and WBL could kick up interest in undervalued property counters.
Regional bourses in Seoul (-0.1%) and Sydney (+0.01%) are flattish, while Tokyo is up 1.2%.Technically, near term support for STI is at 3,190, while immediate resistance lies at 3,250.
Stocks to watch:
*OCBC: Received proposals from several parties for its 20.47% effective stake in UEL. Bloomberg reported that the group has picked Perennial for final buyout talks, edging out other suitors, including KKR and Singhaiyi. Based on UEL’s current market cap, OCBC stands to reap gains of $69m and $307m for its direct and indirect holding (via 87% owned Great Eastern), respectively. UE's property portfolio include Rochester Mall, UE BizHub City, as well as condominiums, hotels and serviced apartments. The counter trades at 0.89x P/B.
*M1: According to Bloomberg, Warburg Pincus has dropped out of the bidding race but MyRepublic is reportedly seeking private equity backing to pursue the mobile carrier after failing to win Singapore’s fourth mobile operator license. Other contenders that have submitted first round offers include Shanxi Meijin Energy and China Broadband Capital. Substantial shareholders Axiata Group, Keppel T&T and SPH, which together hold a combined 60% of M1, has appointed Morgan Stanley to review their stakes.
*CapitaLand: Undertaking active capital recycling with the concurrent acquisition and divestment of two Shanghai office buildings. It is acquiring newly-completed Guozheng Center (80,701 sqm) in Yangpu District for Rmb2.64b (or Rmb32,713 psm) and divesting Innov Tower (40,445 sqm) in Xuhui District for Rmb1.56b (or Rmb38,500 psm) and reap a net divestment gain of $85m and raise EPS by 2¢.
*HG Metal: Subject of an open letter by activist hedge fund Quarz Capital Management calling on the group to distribute up to $10m of its hefty cash pile of $29m (65% of market cap) back to investors and to explore the possible sale of its 22.6% stake in listed steel mesh manufacturer BRC Asia, worth $35m. This could boost its boost its shareholder value by >40% by 2018.
*Citic Envirotech: Awarded Rmb54m Phase 2 expansion project with design capacity of 25,000 m3/day for a wastewater treatment plant in Henan, China. This will lift total capacity to 50,000 m3/day. Construction is expected to be completed within one year in a year. The project comes with a 25-year service concession and minimum 15,000/20,000/25,000 m3/day offtake from year 1/2/3 onwards, guaranteed by the government.
*Silverlake: Insurance processing arm launched a suite of analytic solutions, TrueSight Analytics, for insurers and has won its first customer in Indonesia and is looking to extend the product to its regional customer base of 120 insurers.*Miyoshi: Proposed 45m placement of new shares (10% of share capital) at 6.8¢ apiece. Net proceeds of $3m are intended for new investments (35%) and working capital (65%).
*Magnus Energy: Terminating its joint investment agreement with Yangtze Investment Partners and will receive a repayment of US$1.2m of principal sum and 20% profit guarantee. It intends to use the funds for working capital requirements and its current projects.
Regional bourses in Seoul (-0.1%) and Sydney (+0.01%) are flattish, while Tokyo is up 1.2%.Technically, near term support for STI is at 3,190, while immediate resistance lies at 3,250.
Stocks to watch:
*OCBC: Received proposals from several parties for its 20.47% effective stake in UEL. Bloomberg reported that the group has picked Perennial for final buyout talks, edging out other suitors, including KKR and Singhaiyi. Based on UEL’s current market cap, OCBC stands to reap gains of $69m and $307m for its direct and indirect holding (via 87% owned Great Eastern), respectively. UE's property portfolio include Rochester Mall, UE BizHub City, as well as condominiums, hotels and serviced apartments. The counter trades at 0.89x P/B.
*M1: According to Bloomberg, Warburg Pincus has dropped out of the bidding race but MyRepublic is reportedly seeking private equity backing to pursue the mobile carrier after failing to win Singapore’s fourth mobile operator license. Other contenders that have submitted first round offers include Shanxi Meijin Energy and China Broadband Capital. Substantial shareholders Axiata Group, Keppel T&T and SPH, which together hold a combined 60% of M1, has appointed Morgan Stanley to review their stakes.
*CapitaLand: Undertaking active capital recycling with the concurrent acquisition and divestment of two Shanghai office buildings. It is acquiring newly-completed Guozheng Center (80,701 sqm) in Yangpu District for Rmb2.64b (or Rmb32,713 psm) and divesting Innov Tower (40,445 sqm) in Xuhui District for Rmb1.56b (or Rmb38,500 psm) and reap a net divestment gain of $85m and raise EPS by 2¢.
*HG Metal: Subject of an open letter by activist hedge fund Quarz Capital Management calling on the group to distribute up to $10m of its hefty cash pile of $29m (65% of market cap) back to investors and to explore the possible sale of its 22.6% stake in listed steel mesh manufacturer BRC Asia, worth $35m. This could boost its boost its shareholder value by >40% by 2018.
*Citic Envirotech: Awarded Rmb54m Phase 2 expansion project with design capacity of 25,000 m3/day for a wastewater treatment plant in Henan, China. This will lift total capacity to 50,000 m3/day. Construction is expected to be completed within one year in a year. The project comes with a 25-year service concession and minimum 15,000/20,000/25,000 m3/day offtake from year 1/2/3 onwards, guaranteed by the government.
*Silverlake: Insurance processing arm launched a suite of analytic solutions, TrueSight Analytics, for insurers and has won its first customer in Indonesia and is looking to extend the product to its regional customer base of 120 insurers.*Miyoshi: Proposed 45m placement of new shares (10% of share capital) at 6.8¢ apiece. Net proceeds of $3m are intended for new investments (35%) and working capital (65%).
*Magnus Energy: Terminating its joint investment agreement with Yangtze Investment Partners and will receive a repayment of US$1.2m of principal sum and 20% profit guarantee. It intends to use the funds for working capital requirements and its current projects.
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