SG Market (14 Aug 17)

MARKET OVERVIEW
- Traders will mull over the simmering global tensions in North Korea and Venezuela although an outbreak of military hostilities is highly unlikely, as well as FOMC minutes this week.
- At home, Singapore's Jul export data will show if 2Q economic momentum can be sustained.
- Technically, downward momentum for the STI expected to persist, with immediate support at 3,275 likely to be tested, followed by 3,250. Topside resistance is at 3,320.

CORPORATE RESULTS
*ComfortDelGro
- 2Q17 net profit reversed 6.8% to $79.4m, sending 1H17 earnings to $161.9m (+2.1%), missing estimates.
- Revenue slipped 3.4% to $987.2m, mainly dragged by its taxi business (-10.7%), which suffered in Singapore (smaller operating fleet), Britain (weak sterling) and China (lower double-shift rates), while bus and rail services (+1.3%) benefitted from increased ridership.
- Operating margin narrowed 0.7ppt to 11.3% on increased staff costs (+1.3%) and depreciation (+5.4%).
- Interim DPS raised to 4.35¢ (1H16: 4.25¢), representing a higher dividend payout ratio.
- Management expects revenue for most business segments, expect public transport services in S'pore and Australia, to decline in FY17.
- Trades at 15.8x forward P/E.

*Thai Beverage
- 3QFY17 net profit surged 2.6x to Bt15.2b, with the bulk (Bt8.5b) stemming from fair value gain arising from its stake in Vinamilk. Otherwise, core net profit grew 15.4% to Bt6.8b.
- Revenue dipped 0.4% to Bt45.28b on slower sales in beer (-7.1%) and non-alcoholic beverages (-4.2%), partly mitigated by stronger sales in spirits (+4.6%).
- Core EBTIDA margin expanded to 20.4% (+1.9ppt) on stronger associate income (+155%) from F&N and Frasers Centrepoint.
- Near term risk from excise tax hike on 12 Sep.
- Trades at 21.7x forward P/E

*Ezion
- Dived to 2Q17 net loss of US$2.6m (2Q16: US$8.1m profit), widening 1H17 loss to US$15.3m.
- Revenue slumped 19.5% to US$67.4m on lower charter rates and a drop in utilisation of both jack-up rigs and offshore support vessels.
- Gross margin compressed to 9.9% (2Q16: 21.3%, 1Q17: 12.8%).
- Net gearing remained elevated at 1.04x (1Q17: 1.0x).
- Trading at 0.23x P/B.
- Called for trading suspension to facilitate discussions over its financing and capitalization structure.

*Olam
- 2Q17 core net profit jumped 34.1% to $154m, bringing 1H17 core earnings to $297.8m (+23.6%), beating estimates.
- For the quarter, revenue climbed 30.9% to $6.52b, buoyed by higher overall trading volume (+28.6%).
- However, EBITDA margin slipped to 5.7% (-0.6ppt) on unrealised FX losses.
- Adjusted gearing inched slightly higher to 0.81x (1Q17: 0.79x).
- Declared higher interim DPS of 3.5¢ (1H16: 3¢).
- NAV/share at $1.983.

*Asian Pay TV
- Flat 2Q17 DPU of 1.625¢ was in line with estimates.
- Revenue rose 6.2% to $83.1m on positive FX effects. In constant TWD terms, contribution from all three segments declined on lower ARPUs across basic cable TV (-3.2%), broadband (-4.6%) and premium digital cable TV (-0.2%).
- EBITDA margin inched up 0.5ppt to 60.2%.
- Reaffirmed guidance for FY17 DPU of 6.5¢, implying 11.3% yield.
- NAV/unit at $0.85.

*Valuetronics
- 1QFY18 beat as net profit surged 64.8% to HK$48.7m on improved operational leverage.
- Revenue jumped 45.7% to HK$695.7m, lifted by consumer electronics (+91.8%) arising from the introduction of new products with Internet of Things features, and underpinned by higher demand in industrial & commercial electronics (+21.3%).
- Gross margin dipped 1ppt to 15% on the shift in sales mix.
- Healthy net cash pile of HK$719.3m, or $0.30/share.
- NAV/share at HK$2.40.

*First Resources
- 2Q17 net profit declined 11.4% to US$23.2m, dragged by higher tax expenses (+46.2%).
- This brought 1H17 earnings to US$71.6m (+127.5%) or 45% of FY17 street estimate.
- Revenue dipped 0.6% to US$134.6m, but EBITDA rose 8.4% to US$57.2m due to higher ASPs of processed palm based products.
- Operating margin expanded 1.7ppt to 31.2%, on higher write-back of accruals for employee related expenses.
- Bottom line was weighed by a swing to fair value loss of US$0.8m (2Q16: US$1.9m gain) on derivative financial instruments.
- Interim DPS hiked to 1.25¢ (1H16: 0.625¢).
- Management expects yield to strengthen in 2H17 as a result of continued recovery from the effects of El Nino.

*Bukit Sembawang
- 1QFY18 net profit tumbled 78.3% to $6m, reaching just 17% of the street's sole FY18 forecast.
- Revenue slumped 64.7% to $15.8m on lower sales and profit recognition from development projects Skyline Residences and Watercove.
- Operating margin contracted to 42.4% (-8.1ppt) on the absence of booking fee forfeitures.
- NAV/share at $4.95.

*Dasin Retail Trust
- 2Q17 DPU of 1.53¢ beat its IPO forecast by 7% on stronger-than-expected distributable income of $3.8m (+12%).
- Revenue and NPI of $11.3m and $9.3m was 21% and 22% higher than IPO forecast due to higher takings and the earlier-than-expected completion of the acquisition for Shiqi Metro Mall.
- Portfolio remains fully occupied, while aggregate leverage remained at 31.8%.
- Trades at annualised yield of 7.4% and 0.55x P/B.

*Hotung
- 2Q17 net profit surged 187% to NT$74.7m, as revenue leapt 2.2x to NT$193m, boosted by proceeds from sale of investments (+113%).
- However, bottom line was weighed by a jump in impairment losses of NT$64.8m (2Q16: NT$3.7m).
- NAV/share at $3.01.

*Metro
- 1QFY18 net profit leapt more than 2.6x to $25.4m, lifted by a disposal gain of $8.3m at the associate level.
- Revenue edged 1.7% higher to $32.4m on higher sales from the retail division.
- However, gross margin contracted to 3.4% (-1.4ppt).
- Bottom line was further shored up by another disposal gain of $0.8m arising from its Shanghai investment property, as well as distribution from investments ($1.3m).
- NAV/share at $1.66.

*Zhongmin Baihui
- 2Q17 net profit slumped 63.9% to Rmb19.3m in the absence of write-back of free-rent incentives (-91.2%).
- Revenue grew 16.5% to Rmb234m on strength in direct sales (+25.4%) and commissions (+10.6%), but partially offset by declines in rentals (-30.6%) and managed rental (-46.3%).
- Gross margin contracted to 30.4% (-5.8ppt) on weaker profitability from direct sales activities.
- Cut second interim DPS to 0.5¢ (2Q17: 1¢).

*Hong Leong Asia
- 2Q17 net loss of $18.2m stayed flat (2Q16: $18.3m loss) as reduced attribution to minorities were wiped out by a contraction in gross margin to 17.6% (-2ppt).
- Revenue grew 3.5% to $1.03b on stronger performance from diesel engine unit China Yuchai (+8.3%), but offset by declines at the building materials unit (-24.7%) and consumer products division (-2.6%).
- NAV/share at $1.7383.

*Jadason Enterprises
- Turned around to 2Q17 net profit of $0.7m (2Q16: $1.2m loss), bringing 1H17 earnings to $1m (1H16: $0.9m loss).
- Revenue jumped 42% to $15.4m, attributed to growth in both equipment & supplies (37.8%) and manufacturing & support services (+44.3%) segments.
- Gross margin expanded to 21% (+6.2ppt), which gave rise to improved operational leverage.
- NAV/share at 6.9¢.

*Katrina
- 1H17 net profit crashed 77% to $0.3m, as revenue dipped 1.6% to $27.7m on slow sales, despite an increase in the number of outlets.
- Gross margin contracted 6.3ppt to 9.3%, while pretax margin was shaved to 1.5% (-4.7%) due to stubborn fixed overheads.
- Notably, operating cash flow were almost nil (1H16: $2.1m).
- NAV/share at $0.0583.

*Dyna-Mac
- Swung into 2Q17 net loss of $12.8m (2Q16: $6.4m profit).
- Revenue crashed 84.2% to $5.4m on lower number of projects, which resulted in a gross loss of $6.2m (2Q16: $14.4m profit).
- Bottom line was further impacted by an adversed swing into FX loss of $0.9m from $3.1m gain last year.
- NAV/share at $0.1349.

*Mermaid Maritime
- 2Q17 net profit slumped 53.3% to US$3.6m, dragged by reduced associate income from Asia Offshore Drilling due to lower day rates.
- Revenue declined 10.8% to US$44.9m on reduced subsea income (-10.4%) following a finished cable lay project and day rate reduction in IRM activities and lower utilisation of vessels.
- Consequently, pretax margin almost halved to 8% (2Q16: 15.7%).
- NAV/share at US$0.24.

*Overseas Education
- 2Q17 net profit slid 31.5% to $1.5m, as stubborn operating expenses failed to decline in tandem with sales.
- Revenue slid 7.6% to $22.6m, on lower student enrolments which led to reduced tuition (-7.2%) and registration (-15.7%) fees.