Friday, October 20, 2017

SG Market (20 Oct 17)

- The market could be spurred by upbeat 3Q results from Keppel Corp, GuocoLand and CCT as well as the quick reversal in US market from an early pullback on news that President Trump is leaning towards a dovish Fed chair pick.
- Technically, STI could make another attempt at scaling the 3,355 objective although some momentum indicators are approaching overbought levels. Underlying support is at 3,320.

- URA has put the Former Zouk site at Jiak Kim Street up for tender at the minimum bid price of $689.4m ($1,250 psf ppr).
- The 13,482 sqm site is expected to draw strong interest, given the record $1,239 psf ppr land price paid by GuocoLand for Martin Modern site in Jun '16.
- MKE remains Positive on property developers. Preferred picks are City Dev (TP $13.60), UOL (TP $9.80) and GuocoLand (TP $2.90).

*Keppel Corp
- 3Q17 net profit of $291.8m (+30%) beat estimates.
- Revenue was higher at $1.62b (+10.8%) on increased higher contributions from China and Vietnam property trading, power and gas, and asset management businesses as well as project/land sales made up for the shortfall from O&M, which managed to break even despite lower workload and rig deferments.
- Management does not expect a V-shape recovery in O&M although order book grew 15% q/q to $3.9b.
- Starting new unit to capture opportunities in integrated urban development in the Asia-Pacific region.
- Trades at 14.9x trailing P/E.

- 1QFY18 net profit soared more than 6-fold to $165.5m, meeting 60% of full year forecast.
- Revenue surged 79% to $362m from higher sales and progressive revenue recognition from Singapore's residential projects.
- Notably, JV contribution of $170.5m (1QFY17: $0.1m loss) was bolstered by completion of Changfeng Residence in Shanghai.
- Trades at 34% discount to RNAV/share of $3.64.

*CapitaLand Commercial Trust
- 3Q17 DPU of 2.36¢ (+2.6%) came in above estimates.
- Gross revenue slipped 0.4% to $74.1m following the divestments of Golden Shoe Car Park and Wilkie Edge, but NPI climbed 2.7% to $58.6m on lower property operating expenses (-10.4%).
- Portfolio occupancy improved to 98.5% (+0.9ppt q/q), while aggregate leverage was lowered to 33.9% (-2.1ppt q/q).
- Despite indications that office rents may have bottomed out, management guided for lower NPI in FY18 for some properties due to negative rent reversions of leases committed in 2017.
- NAV/unit at $1.84.

*Frasers Commercial Trust
- 4QFY17 DPU of 2.41¢ was in line with estimates.
- Revenue slipped 3% to $38.3m on lower occupancy rates for Alexandra Technopark, China Square Central and Central Park, but partly offset by a stronger AUD.
- NPI slumped 9% to $26.7m on higher repair and maintenance expenses for Caroline Chisholm Centre and lower occupancy rates for Alexandra Technopark, China Square Central and Central Park.
- Portfolio occupancy lowered to 85.9% (-6.7ppt q/q), while aggregate leverage improved to 34.7% (-1.2ppt q/q).
- Trades at 4QFY17 annualised yield of 6.9% and 0.88x P/B.

- 1Q17 net profit jumped 58% to US$17.4m, meeting 35% of full-year estimate.
- Revenue ticked 0.2% higher to US$98m as higher contribution from hotel was pared by reduced sales from gaming and oil & gas royalty income.
- Gross margin slipped 1.6ppt to 60.1%.
- Bottom line was mainly lifted by the absence of a one-off provision of US$8.5m stemming from a legal claim against a UK subsidiary, but was partly pared by higher net financing cost (+36%).
- Management remains cautious on the outlook of the UK hotel industry. Refurbishment of The Cumberland Hotel and Hard Rock Hotel London will impact rooms available for rent.
- NAV/share at US$0.841.

*Creative Technology
- Turned around to a 1QFY18 net profit of US$22.8m (1QFY17: US$6.2m loss), mainly shored by US$31.2m proceeds from settlement of patent lawsuits.
- Revenue declined 7% to US$16.1m due to difficult market conditions for its products.
- Gross margin narrowed 0.2ppt to 27.8%.
- NAV/share at US$1.39.

*SIIC Environment
- 60% owned Ranhill (Wanzai) Water was awarded the Wanzai Industrial Park BOT wastewater Expansion project for an undisclosed investment sum.
- The BOT project will add a capacity of 7,500 tpd for a concessionary period of 29 years, with base tariff of Rmb2.52/ton.
- Separately, 60% owned Ranhill Water (Hong Kong) was awarded two BOT projects at Yongfeng Industrial Park and Wanzai Industrial Park, with concession of 29 years.
- The Yongfeng plant will have a capacity of 10,000 tpd and base tariff at Rmb1.91/ton, while the Wanzai plant has 7,500 tpd and base tariff of Rmb2.52/ton.
- Last traded at 12.6x forward P/E.

*Manulife US REIT:
- 41-for-100 rights issue at US$0.695 each has been 1.34x subscribed.
- To recap, gross proceeds of US$208m will be used to part-finance the acquisition of its flagship office building in New Jersey.

*Alliance Mineral
- Disclosed that it has been approached by several parties who are interested in exploring potential transactions involving the group's ordinary shares.
- Group highlighted that such discussions are preliminary and non-binding in nature.

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