Tuesday, October 17, 2017

SG Market (17 Oct 17)

- The market will likely stay relatively subdued ahead of the commencement of the China Communist Party congress tomorrow.
- Technically, the STI sees upside resistance at 3,355, with support at 3,275.

- Sep new home sales slowed sequentially to 657 units (Aug: 1,246) due to seasonal factors, but still above 509 homes sold last year.
- Maybank KE expects slower sales in the coming months as developers raise prices to maximise returns.
- Remain POSITIVE on the sector with preferred picks being City Dev (TP $13.60), UOL (TP $9.80) and GuocoLand (TP $2.90).

- 3Q17 net profit of $32.7m (-4.8%) met estimates, dragged by higher depreciation (+2.5%) and interest costs (+52.6%).
- Operating revenue rose 3.4% to $251.6m despite a 13.6% slump in handset sales, as service revenue improved to $206.7m (+4.9%) on a greater number of customers in postpaid (+3.2%) fibre (+20%).
- However, EBITDA margin narrowed 1.3ppt to 36.5%.
- Management maintains its guidance for a decline in FY17 net profit in view of increased competition.
- Last traded at 12.9x forward P/E.

*Keppel Infrastructure Trust
- Flat 3Q17 DPU of 0.93¢ came in line with street estimates.
- Revenue stagnated at $160.3m as stronger takings from City Gas (+13.4%) due to higher gas tariffs was offset by weakness in concessions (-22.4%) and Basslink (-10.7%), while Keppel Merlimau Cogen remained stable.
- Aggregate leverage increased slightly to 39.7% (+0.6ppt q/q).
- Separately, group confirmed it is reviewing a possible divestment of Basslink.
- Trades at 6.8% 9M17 annualised yield and 1.8x P/B.

*Keppel DC REIT
- 3Q17 results met forecasts as DPU spiked 16.8% to 1.74¢, boosted by acquisitions.
- Gross revenue jumped 56.4% to $35.5m on new contribution from four recently-acquired data centres, as well as higher variable income from KDC SGP 1.
- Portfolio occupancy inched 0.3ppt q/q to 93.4% with WALE of 9.2 years, while aggregate leverage expanded 4.4ppt q/q to 32.1%.
- NAV/unit at $0.96.

- Signed 173,000 sqm of leases with 3PL service providers globally.
- Privatisation offer via scheme of arrangement at $3.38/share is pending.

*Hiap Seng
- Secured three contracts worth $52m.
- This comprises EPC of new pipelines for Sembcorp Project Engineering in Singapore, as well as supply of modular pipe racks and mechanical packages for Evonik in Thailand.

- Fined $0.5m for a fibre broadband outage last Dec.
- The disruption was triggered by a planned maintenance on its highly utilised DHCP servers, where a security patch resulted in overloading.
- The group was penalised for not exercising due diligence and greater caution on its servers.
- Last traded at 15.5x forward P/E.

- Invested US$60,000 in a medical device startup, which develops a urological catheter to address the problem of catheter-associated urinary tract infection.
- Separately, Trendlines signed an MOU with Haier Hai Chuanghai Incubator and Ventures to explore possible collaborations to support Trendlines' China portfolio and Haier HCH's entrepreneurs in Israel.

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