Tuesday, July 4, 2017

SG Market (04 Jul 17)

- The market could be poised for a stronger start after Dow and S&P 500 came within hair's breath of their all-time highs amid continued strength in US and domestic manufacturing.
- Technically, the market is currently in a consolidation mode. While a rebound could take place, strong resistance lies ahead. Our seasonality analysis suggests that Aug could be a bad month and investors should consider selling the market on strength. Underlying support for STI is at 3,190 with resistance at 3,275.

- Singapore's Jun PMI inched up to 50.9 from May's 50.8 on marginal improvements in new orders and exports, inventory and factory output.
- But manufacturing activity was affected by a slowdown in imports, input prices, supplier deliveries and order backlog.
- The electronics cluster lost some steam as its PMI slipped to 52.1 from 52.4 on declines in new orders, exports, factory output and inventory.

*CapitaLand Commercial Trust/Lian Beng
- CCT is divesting fringe asset Wilkie Edge, a 12-storey development with 154,528sf of NLA comprising retail and office units, as well as service residence, Citadines Mount Sophia to a 50/50 JV between Lian Beng and Apricot Capital, for $280m or $1,812 psf.
- The property has committed occupancy of 99.9% and NPI yield of 3.39% based on the sale price.
- CCT expects to realise a net gain of $76m and coupled with the recent sale of 50% stake in One George Street, would bring its aggregate leverage down to 30.3% from 38.1%.
- We view this deal positively as it helps to address the funding needs for the redevelopment of Golden Shoe and allows CCT to participate in the potential acquisition of Asia Square 2 by parent CapitaLand.
- CCT is offering a DPU yield of 5.5%. MKE has a Buy with TP of $1.81. Lain Beng trades at trailing P/E of 5.9x and yield of 5%.

*Ascott REIT
- Divesting two service residence properties in China, Citadines Biyun Shanghai and Citadines Gaoxin Xi'an for Rmb980m ($198m).
- The sale is estimated to realise a net gain of Rmb239m ($48.3m), and proceeds will be used for paring debt and future acquisitions.
- Trading at 7.6% distribution yield and 0.9x P/B.

*Sinarmas Land
- Acquired 33 Horseferry Road, its fourth freehold prime commercial building in London, UK for £188.6m ($337.6m).
- Of the total of 180,600sf of NLA, 163,761 sf are Grade A office space, fully leased to the UK government with WALE of 17 years. The remaining space is zoned for retail and fully leased to high quality tenants.
- Together with two other properties, Warwick House and Alphabeta Building, the group now owns and manages almost 500,000sf of freehold commercial space in central London with assets under management of over $1b.
- Trading at 0.98x P/B.

*Soilbuild Construction
- Awarded a $82.5m contract by its chariman's company to construct two blocks of nine-storey multi-user industrial factory at 164 Kallang Way.
- The project will commence in 3Q17, and is expected to complete within 20 months.
- Order book has been raised to $590.6m.
- Trading at 16.4x trailing P/E.

*Ziwo Holdings
- Acquiring 20% stake in Estar Investments for $0.57m, thereby increasing its interest to 65%.
- The move is aimed at enhancing the benefits from the business expansion of the target company.

- Secured six orders totalling US$133m in contract value in 2Q17.
- The orders are for three 1,800 TEU containerships and three 82,000 dwt bulk carriers, and are scheduled to be delivered between 2018 and 2020.
- Ytd, the group has clinched 19 shipbuilding contracts worth US$450m, along with nine outstanding options.
- Trading at 11.4x FY17 consensus P/E.

*QT Vascular
- Signed an MOU with the administrative committee of Shijiazhuang high-tech industry development zone and Hong Kong-listed China CAST Industrial Urban Development to explore opportunities in China.
- These include project development, biotechnology sharing, talent exchange and fund raising opportunities.

*First Sponsor
- Disposed Guangdong Idea Valley Advertisement (GIVAL) to Dongguan Zexin Trading for Rmb14.1m ($2.9m) in cash.
- GIVAL owns 145 commercial units and 11 service apartments in the Humen International Cloth Centre in Dongguang, Guangdong, China.
- It intends to use proceeds for working capital purposes.

- Expiry of the group's option to acquire Cinram Europe was extended from 30 Jun to 5 Jul by the vendor, 46 State Street.

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