SG Market (11 Aug 17)

MARKET OVERVIEW
- Batch of downbeat results and escalating geopolitical tensions in North Korea are expected to weigh on sentiment.
- Technically, MACD for the STI is exhibiting a bearish crossover. Underlying support for the index lies at 3,275 with topside resistance at 3,360.

CORPORATE RESULTS
*SingTel
- 1QFY18 headline net profit of $891.6m (-5.6%) trailed estimates.
- Revenue rose 8.3% to $4.23b as stronger Australia (+6%) operations were met with stable Singapore business (+2%).
- However, EBITDA margin contracted 1.6ppt to 30% (4QFY17: 30.4%) on higher equipment sales and increased content and programming costs.
- Contribution from regional associates slipped 2.5%, as Airtel continued to face aggressive price war in India.
- FY18 revenue guidance tweaked from mid single digit to low single digit growth, while EBITDA is expected to be flat.
- Trades at 14.9x forward P/E with dividend yield of 4.9%.

*City Dev
- 2Q17 net profit fell 17.9% to $109.9m, bringing 1H17 earnings of $195.3m (-18.3%) to 33% of full year consensus estimate.
- Revenue slumped 21.8% to $854.1m following the TOP of Lush Acres EC and Jewel@Buangkok in 2Q16, although partly offset by healthy sales at Gramercy Park, Coco Palms and The Venue Residences, as well as handover of units in China for Hongqiao Royal Lake and Hong Leong City Center.
- Hotel operations improved from addition of Grand Millennium Auckland and M Social Hotel to its portfolio and better performances from is NY and London hotels.
- Rental properties suffered from disposal of Exchange Tower in Oct '16 and closure of Le Grove Service Apartments for a major revamp plus FX loss booked by CDLHT.
- Bottom line was impacted by absence of one-off gains of $12.7m and JV loss of $4.8m (2Q16: $9.8m profit) after the completion of JV projects, namely Bartley Ridge and Echelon.
- On outlook, management sees stronger activity in the Singapore residential market.
- Maintained special interim DPS of 4¢.
- Trades at 13% discount to its RNAV/share of $13.48 and 1.14x P/B.

*Wilmar
- Turned around to 2Q17 core net profit of US$37.3m against US$220.3m loss a year ago and US$361.6m profit in 1Q17.
- This brought 1H17 core earnings of US$349.9m to 28% of full-year consensus estimate.
- Revenue rose 13.2% to US$10.6b on back of higher commodity prices and stronger sales in oilseeds and grains as well as sugar businesses
- EBITDA margin expanded 2.5ppt to 2.9% from higher soybean volume and positive crush margins.
- Headline earnings of US$60.2m (2Q16: US$220.1m loss) were lifted non-operating investment gain of US$24.1m (2Q16: US$1.2m).
- Interim DPS raised to 3¢ (1H16: 2¢).
- Trading at 13x forward P/E.

*Noble Group
- Blew out a 2Q17 net loss of US$1.75b after taking a massive US$1.26b writedown on the value of its commodity contracts and derivative instruments.
- Revenue fell 19% to US$10.05b on a 20% slump in sales volume, while supply chain income plunged to a US$266.9m loss, hurt by significant credit constraints.
- Notably, operating cash outflow of US$763m (1Q17: US$278m outflow) translated to a sizeable expansion in adjusted net debt-to-capital to 55.2% (1Q17: 29.6%).
- Debt reduction remains a priority.
- NAV/share almost haved to US$1.60/share.

*ST Engineering
- 2Q17 net profit slipped 12.3% to $111.5m, weighed by a swing into operating loss for the marine segment.
- This brought 1H17 earnings to $215m (-9.5%), or 40% of FY17 street forecast.
- Quarter revenue improved 8.2% to $1.76b led by strong growth in electronics (+40%) which outweighed the slump in marine (-34%), while other core segments aerospace (+3%) and land systems (+1%) were stable.
- Operating margin slipped 1ppt to 7.4% on poor performance in marine due to weak industry conditions and US shipyard, as well as an unfavourable sales mix in electronics.
- Order book remained strong at $13.5b (1Q17: $13.3b).
- Management tweaked FY18 pretax profit guidance lower from higher to now comparable, while revenue guidance remains comparable.
- Interim DPS maintained at 5¢.

*IREIT Global
- 2Q17 DPU slid 9.4% to 1.45¢, as €0.6m was retained from distributable income of €6.4m (+0.6%).
- 2Q17 gross revenue and NPI rose to €8.8m (+4%) and €7.8m (+2.7%), due to inflation-linked rental adjustment and one-off compensation from a tenant.
- Portfolio occupancy slipped 1.1ppt q/q to 98.7%, while aggregate leverage fell 0.8ppt q/q to 41.3%.
- Last traded at 2Q annualised yield of 7.3% and 1.18x P/B.

*SBS Transit
- 2Q17 net profit surged 77.7% to $15m thanks to a 30% slide in other operating costs within its public transport services segment.
- Revenue grew 7% to $287.8m on increased ridership across DTL (+14.1%), NEL (+1.4%) and LRT (+6.1%), although partially pared by reduced contribution from other commercial services (-15.3%).
- Bottom line was bolstered by reduced fuel and electricity cost (-10.4%).
- Hiked interim DPS to 3.65¢ (2Q16: 2.35¢).
- NAV/share at $1.40.