SG Market (27 Oct 17)

MARKET OVERVIEW
- The market could extend its blue-chip rally on positive momentum as the 3Q earnings season gets underway, with robust Sep industrial production data providing more ballast to the economy.
- Technically, STI is hovering at its 3,355 resistance level with the next objective at 3,380 and downside support seen at 3,320.

CORPORATE RESULTS
*Suntec REIT
- 3Q17 DPU of 2.483¢ (-2.1%) was in line despite dilution from an enlarged unit base (+4.6%) arising from its bond conversion.
- Revenue (+10.6%) and NPI (+11.6%) were lifted mainly by full-quarter contribution from 177 Pacific Highway office building in Sydney, which opened in Aug '16.
- Occupancy at its office (98.6%, -0.1ppt q/q) and retail (98.8%, -0.2ppt q/q) portfolios slipped slightly.
- Aggregate leverage dipped 0.7ppt q/q to 35.4%.
- Trades at annualised 3Q yield of 5.1% and 0.91x P/B.

*Viva Industrial Trust
- 3Q17 DPU rose 5% to 1.9¢ despite a larger unit base (+11.7%). This brought 9M17 distribution to 5.615¢ (+8%), coming in at the higher end of estimates.
- For the quarter, gross revenue and NPI leapt to $28.3m (+16.8%) and $20.6m (+18.3%) on contribution from recently-acquired 6 Chin Bee Avenue, as well as higher takings at two business parks.
- Portfolio occupancy ticked up by 0.3ppt q/q to 90.9%, while aggregate leverage crept 0.5ppt q/q higher to 39.6%.
- Last traded at annualized 3Q yield of 7.9% and 1.2x P/B.

*CDL Hospitality Trusts
- Post rights 3Q17 DPS of 2.29¢ (-3%) came in below expectations.
- Revenue and NPI jumped to $54.8m (+20.7%) and $40.4m (+15.9%), mainly from maiden contributions from recently-acquired The Lowry Hotel in UK and Pullman Hotel Munich in Germany.
- But domestic RevPAR of $166 (-1.4%) remained under pressure from the competitive environment.
- Aggregate leverage fell to 33.3% (-5.4ppt q/q).
- Trades at annualised 3Q yield of 5.6% and 1.12x P/B.

*Sheng Siong
- 3Q17 net profit jumped 25.7% to $19.7m on better operating leverage. Excluding an one-off tax impact, its results would have met expectations,
- Revenue rose 4.2% to $210.9m on higher same store sales growth (+1.7%) and contribution from new stores.
- Operating margin widened to 10% (+0.6ppt) on lower distribution (-2.9%) and admin (-0.5%) expenses.
- Bottom line benefitted from a tax refund of $2.2m (3Q16: nil).
- Last traded at 21.1x forward P/E.

*Indofood Agri
- 3Q17 core net profit slumped 25.3% to Rp97b, in line with estimates.
- Revenue inched 4.6% higher to Rp3.72t on improved sales volume of palm products but offset by lower average selling prices in CPO (-3%) and palm kernel (-16%).
- EBITDA margin declined 4.5ppt to 21.2% due to higher fertilizer application and increased operating expenses (+24.3%).
- Bottom line was dragged by a negative Rp61.7b swing into FX loss, although partly mitigated by a spike in JV income of Rp70.5b (+51.9%) and lower associate loss of Rp2.6b (3Q16: Rp18.5b loss).
- NAV/share at $0.875.

*Yoma
- 2QFY18 net profit tumbled 56.8% to $3.7m, bringing 1HFY18 earnings of $6.4m to just 23% of FY18 street estimate.
- Quarter revenue jumped 32.9% to $33.1m, lifted by a spike in automotive & heavy equipment sales (+109.9%) and the consumer segment (+20.1%), while sale of residences & land development rights (-0.6%) and real estate rental and services (+0.9%) remained flattish.
- Gross margin improved 3.3ppt to 44.7% due to higher profitability achieved in StarCity Zone C and Zone B.
- Bottom line was partly weighed by absence of fair value gain (2QFY17: $14.7m), although partly offset by lower JV/ associate loss of $0.9m (2QFY17: $1.9m loss).
- NAV/share at $0.3789.

*Japfa
- 3Q17 results came below estimates as core net profit dived 71% to US$12.1m.
- Revenue grinded 3% higher to US$814.3m, bolstered by Indonesia animal protein (+5.8%), dairy (+26.7%), and consumer food (+10.5%) segments, but was doused by the continued decline in swine selling prices in Vietnam.
- Operating margin collapsed 6.5ppt to 6.9% due to weaker margins from poultry and beef businesses, absence of one-off gain from disposal of beef cattle business, and Vietnam swine prices remained below costs.
- Bottom line was further impacted by a US$2.9m jump in finance cost.
- Net gearing jumped to 0.68x from 0.45x in Dec '16.
- NAV/share at US$0.44.

*Tuan Sing
- 3Q17 net profit declined 9% to $5.9m, partially due to a $3.6m spike in finance cost.
- Revenue rose 12% to $101m, underpinned by stronger property (+18%) and industrial services (+16.1%) segments.
- Gross margin shrank 6.8ppt to 16.7% amid a shift in sales mix.
- Bottom line was also hurt by higher distribution cost stemming from the launch of Kandis Residence.
- Last traded at 0.57x P/B.

*Samudera Shipping
- 3Q17 results turned around to net profit of US$0.5m (3Q16: US$3.8m loss).
- Revenue jumped 14.2% to US$69.7m as improvement from container shipping (+18%) led by higher volume handled was outweighed by weakness in bulk & tanker business (-13.8%) due to a shrinking fleet.
- Gross profit margin expanded to 5.8ppt from breakeven, amid higher container freight rates and tanker charter rates.
- Bottom line was also helped by absence of a US$2.4m provision.
- Net gearing was pared 0.11x from 0.12x in Dec '16.
- Last traded at 0.38x P/B.

POSITIVE NEWS
*Starburst
- Awarded a contract worth $6.6m in the Middle East to undertake ballistic protection works to a firearm training facility.
- Work is expected to begin in Jun '18 and be completed in Sep '19.
- Last traded at 3.2x P/B.

*Ley Choon
- Secured contracts worth $2.6m for closed-circuit television survey of sewers and resurfacing of roadworks.
- Trades at 2.1x trailing P/E and 1.46x P/B.

NEUTRAL NEWS
*Unusual
- Signed letters of intent with RINGLING Bros and Feld Entertainment to jointly present 48 "Disney On Ice" shows across South Korea and Taiwan.
- 12 "Disney on Ice "Let's Party" shows may take place in Oct 18, while 36 "Disney On Ice 'Frozen'" shows may take place in 3Q19.

*Spackman Entertainment
- Completed acquisition of South-Korean based motion picture production start-up Take Pictures, via the issue of 54.1m shares.

*Samudera Shipping
- Disposing two vessels for US$9.2m, and expected to result in a net gain of US$0.8m.
- Proceeds will be used for working capital and future business expansion.

*Yuuzoo
-Issued 10m drawdown shares at $0.058 each to GEM Global Yield Fund, which has committed $30m capital earlier.
- Proceeds earmarked for business development and growth.