Wednesday, August 16, 2017

SG Market (16 Aug 17)

- The market may succumb to profit-taking as 2Q results season winds to an end and investors await FOMC minutes for clues on the Fed's interest rate path.
- Of the >100 companies tracked, 22% surpassed 2Q earnings estimates, while 32% missed, down from 28% and 36% respectively in 1Q17.
- Technically, STI exhibited a bearish engulfing candlestick yesterday, which point to near term weakness. Support for the index is at 3,275, with topside resistance is at 3,360.

*Healthway Medical
- Dipped into 1QFY18 net loss of $0.5m (1QFY17: $0.5m profit), weighed by a surge in finance costs (+163.1%) and income tax (+134.5%).
- Revenue slid 6.2% to $23.2m on declines across primary healthcare (-$1.1m) and specialist & wellness healthcare (-$0.4m) segments.
- Gross margin held steady at 81% (1QFY17: 79.6%) but operating cash flow deteriorated to negative $4.2m.
- While the operating environment continues to be challenging, the group is well-capitalised following the $60m issuance of convertible notes in Apr.
- SGX has requested it to appoint an independent reviewer to look into loan extensions to related parties.
- Trades at 0.7x P/B.

- Jul operating statistics showed higher group passenger load factor of 83.6% (+1.5ppt) as traffic (+4.1%) outpaced capacity growth (+2.2%).
- Cargo load factor rose 2.5ppt to 63.2%.
- Parent load factor improved for routes to Americas (+3ppt), Europe (+4.5ppt), West Asia and Africa (+2.4ppt), although South West Pacific (-2ppt) deteriorated, while East Asia was muted (+0.5ppt).
- Load factor for SilkAir (+4.5ppt to 76.6%) was also better but that budget carrier (-0.2ppt to 84.7%) weakened slightly.
- Trades at 0.94x P/B.

- Maiden hotel development at Stevens Road has received TOP on 3 Aug and will likely open end 2017.
- The $900m project will have two hotels - 254-room Novotel and 518-room Mercure and includes some commercial space.
- Trades at 1.73x P/B.

*Libra Group
- Secured three projects worth $42m.
- Works include the erection of a 5-storey residential building with scheduled completion in 2018, a sub-contract for architectural works at Lentor Station (completion: 2020) and a sub-contract for architectural works at Stevens Station (completion: 2020).
- Trades at 21.8x trailing P/E.

- Entered a joint marketing agreement with NEC Asia Pacific for sale of a high-performance face-recognition surveillance related product in Singapore, Malaysia and other Asia Pacific region.
- NEC's NeoFace® Watch with real-time facial recognition will be integrated with Miyoshi's wireless audio/video wearable solution.
- The upcoming product will offer on-ground security officers with instant analysis of what they see and enable them to provide actionable intelligence to commanders.
- Trades at 18.1x trailing P/E.

*Best World
- Explained that it has yet to convert its business to direct selling in China after its shares and other similar MLM firms slumped amid a government crackdown against pyramid schemes.
- All its products are currently sold at outlets and workshops under the export model and the clampdown will have little impact on its China business.
- For now, MKE is keeping its Buy rating and TP of $1.88.

*Parkson Retail Asia
- Expected to report FY17 net loss of $62m (FY16: $30m profit) due to retail headwinds and asset write-downs following a comprehensive review.

*United Engineers
- Independent financial adviser SAC Capital views a takeover bid led by Perennial Real Estate and Yanlord Land as fair and reasonable.
- The consortium triggered the mandatory takeover offer at $2.60/share after buying over the 33.5% stake from OCBC, Great Eastern and other vendors for $729.7m.
- Trades at 1.03x offer price and 0.89x P/B.

- Entered into a 50:25:25 JV with Myanmar MarcoPolo and Bulox Power to manufacture and/or assemble transformers, generator sets and power solution products in Myanmar.
- It will invest an initial US$0.5m in the JVCo.

- Disclosed that discussions with a potential investor are still ongoing.

*Singapore eDevelopment
- Collaborating with US-based Chemia Corp to develop specialised fragrances to counter mosquito-borne diseases and stress and anxiety, as well as anti-viral medical applications.

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