SG Market (27 Sep 17)

MARKET OVERVIEW
- Expect lacklustre market activity amid simmering geopolitical uncertainty with some bargain hunting in oil-related and property counters.
- Aug manufacturing output beat forecast to soar 19.1% (est: +16%) for the 13th straight month of growth, sustained by the booming electronics demand. MKE expects the economy to strengthen significantly this quarter, pencilling GDP growth of 3.8% (2Q17: 2.9%).
- Technically, underlying support for STI is at 3,190, with immediate resistance at 3,235 (20-dma).

SECTOR WATCH
*Property
- Freehold prime development Jervois Gardens received an enbloc tender of $72m from SC Global.
- The price translates to ~$1,373 psf ppr for the 34,038 sf site with plot ratio of 1.4.
- MKE is positive on property developers. UOL (Buy, TP: $9.43) and City Dev (Buy, TP: $12.05) are its top large-cap picks, while GuocoLand (Buy, TP: $2.75) offers compelling relative value.

*Oil & Gas
- Global oil trader Trafigura sees an end of persistently weak oil prices, with demand picking up and a supply crunch in the offing.
- The third largest independent trader foresees a shortage of crude supply by 2019, due to overwhelming demand from India.
- Beneficiaries include rigbuilders Sembcorp Marine, Keppel Corp and other oil-related counters.

POSITIVE NEWS
*SGX
- INR/USD futures achieved a daily volume record of 108,417 contracts with notional value of US$3.34b on 22 Sep.
- Recent volume growth has expanded its market share to more than 40%.
- The exchange also recorded the highest daily volume of 25,857 contracts for USD/CNH futures, valued at US$2.59b.
- Last traded at 21.5x forward P/E.

*Mapletree Industrial Trust (MINT)
- Expanding its investment mandate to include overseas data centres.
- The strategy change builds on MIT's track record in building data centres in Singapore and extends its foothold in the fast growing segment.
- The trust currently has 4 data centres in Singapore, of which one is under development. Last traded at 6.4% yield and 1.3x P/B.

*Pacific Star Development
- Signed an MOU to partner Indonesia's PT Kukuh Mandiri to jointly develop mixed-used high rise developments on 10ha of sea-front land in Pantai India Kapuk 2, Jakarta, Indonesia.
- The waterfront township project will comprise residential, commercial, hospitality, education, healthcare and recreational components.
- A successful JV will mark its entry into the Indonesian real estate market as part of its ASEAN expansion strategy.

NEGATIVE NEWS
*Mandarin Oriental
- Updated that none of the proposals received for the sale of The Excelsior, Hong Kong, has not met its expectations.
- The group is continuing to review all options, including a redevelopment of the 848-room hotel into a 684,000 sf commercial building.
- Without the sale, the group will not be unlocking the US$3.84b valuation tagged to the hotel, which exceeds its US$3.51b market cap.
- Last traded at a 9.7% discount to its adjusted NAV/share of US$3.10 but above book value of US$0.93. With the re-rating catalyst no longer forthcoming, we are removing the counter from Market Insight Value basket.

*Boustead Projects
- Directed by SCDF to remove external cladding on walls of its leasehold property at 10 Tukang Innovation Drive, after it was found that the cladding did not meet fire safety requirements.

NEUTRAL NEWS
*Breadtalk
- Granted an option to acquire a freehold corner shophouse at 22 and 22A Lorong Mambong, with land area of 2,350 sf, for $16.2m.
- Option expires on 9 Oct '17.