Thursday, October 26, 2017

SG Market (26 Oct 17)

- The overbought market is likely to consolidate recent gains as investors await details of ECB's taper plan today, which could commence in Jan '18 following a decade-long easy monetary policy.
- Technically, the STI could pull back from overbought levels to near term support at 3,320. Overhead resistance remains at 3,355.

- 3Q17 net profit of $1.06b (+12%) topped expectations.
- Net interest income spiked 12% to $1.38b, driven by 11% loan growth and improved NIM of 1.66% (3Q16: 1.62%, 2Q17: 1.65%).
- Non-interest income was relatively flat at $978m (+1%), as strong wealth management fees (+32%) and life insurance profits (+23%) and net gain from investment securities (+55%) was offset by weaker trading gains.
- Provisioning fell 6% to $156m on lower general allowances, with NPL ratio at 1.3% (3Q16: 1.2%, 2Q17: 1.3%) and Tier 1 CAR at 13.1%.
- NAV/share of $8.76 translates to 1.31x P/B.

- 1QFY18 net profit jumped 9.2% to $90.7m, meeting estimates.
- Revenue grew 7% to $204.5m spurred by increased takings from securities trading and clearing (+9%) as well as derivatives (+14%).
- Operating margin inched up 0.9ppt to 51.8% despite incurring higher expenses related to Baltic Exchange.
- Interim DPS of 5¢ maintained.
- Expects momentum in market activity to return to higher levels of past years, with IPOs to reach high-20s by end Dec from 18 ytd.
- Last traded at 21.8x FY18 P/E.

*Mapletree Commercial Trust
- 2QFY18 results met expectation with higher DPU of 2.24¢ (+9.3%).
- Gross revenue and NPI spiked to $107.2m (21.7%) and $84.4m (23.4%), respectively, thanks to full quarter contribution from Mapletree Business City I and increased takings from Vivocity.
- For 1HFY18, VivoCity achieved 1.1% growth in tenant sales, while shopper traffic held steady following AEI works.
- However, portfolio occupancy dipped 0.5ppt q/q to 97.6%, while aggregate leverage held steady at 36.4%.
- Last traded at annualised 2QFY18 yield of 5.3% and 1.2x P/B.

- 2QFY18 DPU slumped 7.3% to 2.55¢, at the lower end of expectations.
- Gross revenue slipped 1.3% to $29.5m due to lower rental and recoveries from 20 Gul Way as four phases of the property reverted to multi-tenancy leases.
- On a flip side, NPI inched up 0.7% to $19.4m on lower property tax and land rent expenses on certain properties.
- Occupancy contracted to 88.8% (1QFY18: 91%), while aggregate leverage expanded to 37.3% (1QFY18: 36.3%).
- Currently trades at annualised 2QFY18 yield of 7% and 1.08x P/B.

*Keppel Corp
- Divesting its entire 100% stake in Keppel China Marina, which has a 80% JV that owns and develops an integrated residential cum marina development in Zhongshan, China, for Rmb2.9b.
- The sale is expected to yield a net gain of $290m and raise its NAV/share by 2.5% to $6.50.
- Trades at 16.5x forward P/E.

*Sembcorp Industries
- Developing and operating two grid-tied rooftop solar energy systems in Changi and Seletar for a combined project cost of $5.4m.
- Both photovoltaic systems have capacity of 4.1MW, with construction targeted for completion by Feb and Apr next year.
- Last traded at 15.3x forward P/E.

*Sino Grandness
- Disclosed that the group's Garden Fresh loquat juices have been procured by China Southern Airlines and will be served at its premium lounge for business and first class travellers at Shenzhen airport.
- Group's Grandness-branded canned fruits have also been procured for a third consecutive year for Air China, China Southwest Airlines and Sichuan Airlines.
- Last traded at 3.4x trailing P/E.

*Tung Lok Restaurants
- Profit warning for 1HFY18 due to a drop in sales as a result of the challenging economic environment.
- Results slated to be released on or before 14 Nov.
- Counter is loss-making and valued at 4.05x P/B.

- Acquired 30% stakes in two property development/ management firms for a combined Rmb1.64b.
- The firms are Hangzhou Kesheng Property (Rmb515.6m) and Hangzhou Keyi Property Development (Rmb1,124m).
- Trades at 5.7x forward P/E and 0.85x P/B.

*Hong Leong Asia
- In response to the SGX trading query on the recent share price surge, the group cited reasons include:
1) The disposal of 60% interest in Copthorne Hotel Qingdao by subsidiary HL Global Enterprises; and
2) CIMB's coverage on group's subsidiary China Yuchai with an Add recommendation on 20 Oct.
- Counter trades at 0.7x P/B.

- Advised by legal advisors that recent originating summons from noteholder Ravi Murarka, requesting for his notes to be redeemed, is without basis.
- Ezion will thus apply to the High Court to strike-out the originating summons.

*Anchor Resources
- Entered into a MOU with Beijing Fuhaihua Import & Export Corp to sell 300-500 tonnes of semi-processed gold concentrated ore per month.
- Trades at 2x P/B.

*Jubilee Industries
- Terminated the agreement to acquire Pioneer Venture, Yumei Tech and Yumei REIT from Seah Chong Hoe for $6m.
- This came on the back of unsatisfactory results following its due diligence.

*Regal International
- Completed the acquisition of Malaysia-based Wisma Majuniaga for $3.7m, via the issuance of new shares.
- To recap, Wisma Majuniaga holds the development rights for a 1.35ha land consisting 515 residential/retail units in Samarahan District in Sarawak, Malaysia.
- Trades at 18.8x forward P/E.

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