SG Market (24 Oct 17)

MARKET OVERVIEW
- Focus to remain centred on 3Q earnings of REITs, OCBC and some mid-cap property counters, as well as Sep industrial production data and 3Q private home prices.
- Technical indicators for the STI are in overbought territory and could take a breather towards its support at 3,320. Topside resistance at 3,355.

CORPORATE RESULTS
*Mapletree Logistics Trust
- 2QFY18 DPU grew 1.5% to 1.887¢, meeting expectations.
- Revenue and NPI rose 2.3% and 1.5% to $93.7m and $78.7m from stronger performance of its HK and China portfolios and accretive acquisitions completed last year, as well as a stronger AUD.
- Occupancy improved to 95.8% (+0.3ppt q/q), while aggregate leverage lowered to 33.7% (-5.3ppt q/q).
- Trades at annualised 2Q yield of 5.9% and 1.2x P/B.

*CapitaLand Retail China Trust
- 3Q17 missed estimates; DPU crept 0.4% higher to 2.37¢ as distributable income of $21.4m (+4.2%) was diluted by an enlarged unit base.
- Revenue jumped 10.5% to Rmb275m mainly on contribution from recently-acquired CapitaMall Xinnan in Sep '16 and rental growth from multi-tenanted malls.
- NPI rose at a slower pace to Rmb176.6m (+9.5%) on inclusion of property expenses at the new mall.
- Occupancy slipped slightly to 95.6% (2Q17: 96.2%), while aggregate leverage remained stable at 35.4% (+0.1ppt q/q).
- Trades at annualised 2Q yield of 5.6% and 1.03x P/B.

*Ascott REIT
- 3Q17 results in line even as DPU slumped 28% to 1.69¢ on an enlarged unit base (+30%) following the rights issue in Apr '17.
- Revenue inched up 2% to $126.9m from new acquisitions, namely, DoubleTree by Hilton Hotel New York - Times Square South and two serviced residence properties in Germany.
- On a same store basis, RevPAU held steady at $146 (+1%).
- Aggregate leverage reduced to 31.9% (-0.5ppt q/q).
- Trading at annualised 9M17 yield of 5.5% and 0.99x P/B.

*Sabana REIT
- 3Q17 DPU tumbled 25.5% to 0.79¢, from the enlarged unit base (+42%) and payment of management fees in cash.
- Gross revenue slid 9.4% to $20.8m amid conversion of 39 Ubi Road 1 from single to multi-tenanted, non-collection of revenue at two properties and weaker contribution from four properties.
- NPI saw a smaller decline to $13.4m (-3.7%) due to lower property tax, land rent, utilities, and marketing expenses, as well as lower impairment at 1 Tuas Avenue 4.
- Portfolio occupancy rose 1.1ppt q/q to 88.4%, while aggregate leverage reduced slightly to 36% (-1ppt q/q).
- Offers 3Q17 annualised yield of 6.7% and trades at 0.82x P/B.

*Wing Tai
- 1QFY18 net profit spiked 676% from a low base to $8.2m, boosted by a $16.7m disposal gain arising from Huai Hai project in Shanghai.
- Revenue slipped 4% to $67.1m on lesser units sold at Le Nouvel Ardmore in Singapore, Le Nouvel KLCC and Verticas Residences in Malaysia.
- Gross margin improved 4.3ppt to 49.2%.
- NAV/share at $4.05 translates to 0.57x P/B.

*Sing Investments
- 3Q17 net profit improved 25.9% to $5.2m, bringing 9M17 earnings to $16.8m (+73.4%).
- For the quarter, net interest income rose 17.7% to $11.3m despite a lower loan base, as funding costs lowered by 32.3%.
- Bottom line was marginally offset by lower fees and commissions (-21.9%).
- NAV/share at $2.10; last traded at 0.75x P/B.

POSITIVE NEWS
*Silverlake Axis
- Implementing its PROFIT retail automation solution for AEON Hong Kong.
- PROFIT offers end to end solution to the retail industry enabling retailers to significantly increase efficiency and improve customer service.
- The contract is expected to contribute positively to the financial results in the current and following financial years.
- Last traded at 19.3x forward P/E.

*Delong
- Guided for a significant jump in 3Q17 net profit, mainly due to a sharp increase in average selling prices of its steel products and tighter supplies in China.
- Results will be announced on 3 Nov '17.

*Nordic
- Clinched several contracts worth $5.1m from new and repeat customers in the oil & gas, infrastructure and petrochemical industries.
- Work scope includes the provision of labour and materials, service and maintenance.

NEGATIVE NEWS
*ST Engineering
- Aerospace arm clinched lesser new contracts worth $530m in 3Q17 (2Q17: $650m, 1Q17: $1.11b).
- Scope of work includes heavy airframe & engine maintenance, component repair & overhaul, freighter conversion.
- Trading at 21.1x forward P/E, above its 7-year historical average of 19.1x.

*Profit warnings
- MMP Resources
- Soilbuild Construction Group

NEUTRAL NEWS
*SIA
- Formalised order for 39 Boeing aircraft worth US$13.8b.
- The 20 777-9s and 19 787-10s will support growth and fleet modernisation over the next decade.
- Additionally, the agreement includes six options for each aircraft type, which if exercised will enlarge the deal to as many as 51 aircraft.
- Last traded at 0.91x P/B.

*Lippo Malls Indonesia Retail Trust
- Confirms media reports that the trust manager is seeking views of investment banks on fund raising options, including a rights issue.
- Additionally, the manager is considering other means of equity fund raising and is still at a preliminary stage.

*Roxy-Pacific
- Entered into a conditional agreement to acquire a freehold residential site at Dunearn Court for $36.3m.
- Total land area of 19,203sq ft and has a gross plot ratio of 1.4.

*IX biopharma
- Granted a European patent for its WaferiX drug delivery technology, allowing the group to obtain validation and coverage in the EU.
- Apart from EU, it has also secured patents from nine other countries namely Singapore, Australia, New Zealand, Malaysia, Indonesia, South Korea, Japan, Canada and South Africa.
- The patent will expire in Oct 2030.

*Gaylin Holdings
- Proposed placement of 1.36b new shares at $0.05 apiece to a PE fund investor ShawKwei Asia Value Fund 2017.
- The new shares represent 75.64% of the enlarged share base and the investor intends to apply for a whitewash waiver to be exempted from a takeover offer.
- Proceeds of $68m intended for working capital and strengthening of capital base.