SG Market (10 Aug 17)

MARKET OVERVIEW
- The market is expected to turn risk-off on renewed geopolitical worries.
- Technically, MACD or the STI has exhibited a bearish crossover. Underlying support for the index lies at 3,275 with topside resistance at 3,360.

CORPORATE RESULTS
*F&N
- 3QFY17 net profit surged 59.9% to $60.7m mainly from increased associate income arising from its 18.74% stake in Vinamilk.
- This brought 9MFY17 net profit to $87m (+15.8%) or 76% of the FY17 consensus estimate.
- However, revenue in the quarter slipped 8.6% to $483.1m on weaker contributions across beverages (-17.1%) and dairies (-3.3%) on competitive pricing pressures, as well as reduced contribution from printing & publishing (-9.2%).
- Bottom line was weighed by increased FX loss of $4.6m (3QFY16: $0.9m loss) although mitigated by higher investment income of $33.4m (+107.3%).
- NAV/share at $1.98.

*Jumbo
- 3QFY17 results missed estimates on a 1.1% slip in net profit to $3.4m, as operating expenses rose at a faster pace from business expansion.
- Revenue grew 6.4% to $34.8m on increased contributions across Singapore and China outlets.
- Gross margin held at 62.7% (-0.2ppts).
- Opened its fourth China outlet in Beijing last month and first franchised restaurant in Ho Chi Minh City in May.
- Trades at trailing P/E of 24.6x.

*ISEC Healthcare
- 2Q17 net profit of $1.9m (+12%) came in at the low end of estimates.
- Revenue climbed 12% to $9.2m, bolstered by new contributions from four recently-acquired general clinics in Singapore.
- Gross margin held relatively steady at 47.3% (-0.2ppt).
- Interim DPS raised to 0.5¢ (2Q16: 0.22¢).
- Last traded at 20x FY17e P/E.

*Hong Leong Finance
- 2Q17 net profit soared 89% to $20.9m, mainly helped by lower interest expense (-30.2%) and reduced staff costs (-6.4%).
- However, on the back of a smaller loan base of $9.56b (-4.8%), net interest income declined 10.1% to $54.8m.
- Proposed higher interim DPS of 4¢ (2Q16: 3¢).
- NAV/share at $3.85.

*QAF
- 2Q17 net profit slumped 72% to $8.1m in absence of a $9.7m disposal gain booked last year from sale of its 20% stake in the KL business.
- Revenue edged 1% higher to $209.8m from rise in bakery operations (+5%) on strength in Philippines, but was pared by weakness in primary production (-2%) on lower ASPs.
- Bottom line was hit by higher distribution costs due to higher fuel prices.
- Maintained interim DPS at $0.01.
- NAV/share at $0.934.

*BHG Retail REIT
- 2Q17 DPU was flat at 1.35¢ despite a larger unit base (+4.7%).
- Revenue rose 3.2% to $15.8m on positive rental reversion and improved occupancy, although pared by a weaker yuan, while NPI rose at a faster clip to $10.9m (+5.7%) from favourable tax in China.
- Portfolio occupancy edged up 0.3ppt q/q to 98.9%, while aggregate leverage ticked 0.1ppt lower to 32.4%.
- Trades at 2Q annualised yield of 7.3% and 0.88x P/B.

*Fragrance Group
- 2Q17 net profit climbed 3.1% to $3.8m, on 14% rise in revenue to $34.9m.
- Top line benefitted from higher property development contribution from City Gate project, improved occupancy in investment properties, and newly acquired The Imperial Hotel in UK.
- Gross margin expanded 5.9ppt to 41.6%, bolstered by its new UK hotel.
- Bottom line was dragged by an absence of tax credit.
- NAV/share at $0.157.

*Boustead Projects
- 1QFY18 net profit slipped 5% to $5.8m as revenue dropped 25% to $45.7m.
- The decline in sales was due to weakness in the design-and-build segment (-28%) on reduced work progress and less contracts secured, while leasing (-7%) was impacted by AusGroup's early lease termination of the 36 Tuas Road property.
- Gross margin expanded to 32% (+10ppts) from improved productivity and cost savings from projects.
- NAV/share at $0.736.

*MoneyMax
- 2Q17 net profit jumped 20% to $1.7m on lower taxes.
- Revenue leapt 37% to $41.1m on stronger pawnbroking business, as well as retail and trading of pre-owned items.
- However, gross margin of 26.4% (-3.6ppt) was squeezed by higher material costs.
- Bottom line was alsoy weighed by increased operation costs due to the business expansion in Singapore and Malaysia, as well as higher finance costs.
- NAV/share at $0.1844.

*Rotary Engineering
- 2Q17 net profit tumbled 43% to $1.2m, from contraction in gross margin to 22% (-7.1ppts) and FX loss of $0.3m (2Q16: $0.3m gain).
- Revenue grew 21% to $62.8m on newly secured projects.
- NAV/share at $0.285.

*QT Vascular
- Swung to 2Q17 net loss of US$5.6m (2Q16: US$15.2m profit) in absence of a US$24.1m write-back for legal liability.
- Revenue jumped 47.8% from a low base to US$3.5m on increased sales of chocolate® PTA Balloon Catheter to Medtronic.
- However, gross margin compressed 19.5ppt to 26.6% following the termination of distribution agreement with Cordis.
- Net liability value at US$0.01/share.