Tuesday, October 31, 2017

SG Market (31 Oct 17)

- The market could pull back on some profit-taking ahead of a slate of economic data and appointment of a new Fed chief.
- Apple component supplier, Hi-P could be supported by the strong demand for iPhone X.
- Technical indicators suggest the STI is overbought with downside support at 3,320 and immediate resistance at 3,380.

*Ascendas REIT
- 2QFY18 DPU inched up 1.1% to 4.059¢, meeting estimates, despite a larger unit base (+3.9%).
- Gross revenue and NPI rose 5.1% and 5.3% to $215.8m and $160.5m, respectively, benefitted from new Singapore and Australia acquisitions, higher portfolio occupancy and positive rental reversion of 3.1% across all segments.
- Occupancy rate ticked up 0.4ppt q/q to 92%, while aggregate leverage stood at 33.1%.
- Trading at annualised 2Q yield of 6% and 1.27x P/B.

*Hutchison Port
- 3Q17 net profit sank 37.1% to HK$270.4m, missing expectations, dragged by a 37% spike in finance cost and share of loss at newly acquired Huizhou port.
- Revenue slipped 1.3% to HK$3.2b as higher container throughput voume (+12.8%) were eclipsed by lower average revenue per TEU in both HK and China terminals on more concessions offered and revision on tariffs following consolidation of some liners.
- Trades at 6.3% FY18 forward yield and 0.74x P/B.

- 3Q17 net profit dived 82% to $1.5m, amid lower revenue of $60.2m (-34%) from a broad-based reduction across property development (-39%), hotel ownership (-5%) and property investment (-11%).
- However, gross margin widened 9ppt to 29% on a write-back of an over-provision of development cost.
- Bottom line was also weighed by a $3.5m provision to be written off from the sale of Goulburn Street building in Sydney, as well as a $3.5m drop in associate profit.
- Net gearing crept up q/q from 0.95x to 0.98x.
- Adjusted NAV/unit at $0.8231.

- Received TOP for the greenfield build-to-suit development at 51 Marsiling Road.
- The 231,738 sf gfa property will be fully leased to Beyonics Intl in 1QFY19 for 10 years, with annual rental escalations and first year NPI of $3.5m.
- MKE last had a Buy with TP of $1.60.

*Singapore Myanmar Investco
- Entered into an exclusive 3-year dealer agreement with Sanya Intl, to distribute heavy equipment in Myanmar.
- Counter is loss-making and trades at 3.7x P/B.

- In response to the SGX trading query, group cited it is exploring potential exits of some of its portfolio companies.
- Separately, group will adopt a dividend payout policy, consisting 90% of dividend payments received from "Most Valuable Portfolio Company".
- Further, the policy will provide a 40% payout ratio of net proceeds received in FY18/19 from exit events.

*Luzhou Bio-Chem
- Expects to report a 3QFY17 loss.
- Results slated to be released on or before 14 Nov.

- Proposed JV with AirAsia to provide airport services and ground handling services in Malaysia.
- The deal will consist of a share swap agreement between their subsidiaries, namely Ground Team Red Holdings (GTRH) and SATS Ground Services (SGS).
- In addition, SATS would acquire another 38.6% equity stake in GTRH for $119m.
- Upon completion, SATS will effectively hold 60% stake in SGS and 49% stake in GTRH.
- Last traded at 21.2x forward P/E.

*Halcyon Agri
- Acquired a 25% stake in transportation company Jadeblue Connection for US$1.8m.
- The deal gives Halcyon Agri the right to use Jadeblue's principal asset, a 2010 Citation Sovereign 680 aircraft, for 75 days/year.
- Last traded at 7.8x trailing P/E.

*Spackman Entertainment
- Recently-acquired film production firm, Studio Take, will commence production on a new film, Damaged.
- Filming is expected to be completed by end Dec '17 with expected release by 2H18.
- Damaged joins a growing pipeline of films (currently includes Zip Cinema-produced Sovereign Default) that Spackman will be releasing in 2H18.

*Hong Leong Asia
- Undertaking a restructuring exercise of the consumer products unit Xinfei.
- The exercise will include the cessation of manufacturing and production activities at Xinfei, and explore strategic opportunities with business partners using Xinfei's trademark and intellectual property.

*Nam Cheong
- Granted a six-month moratorium extention by the Singapore High Court on certain legal proceedings against the group.
- This allows Nam Cheong to proceed with debt restructuring under a scheme of arrangement.

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