MARKET OVERVIEW
- Trading in the market could be muted ahead of OPEC's decision on another extension to its output curb agreement, and a widely anticipated US tax reform vote later today.
- Technically, STI sees underlying support at 3,390, with topside resistance at 3,460.
POSITIVE NEWS
*Chip Eng Seng
- Acquiring 245-room Mercure & Ibis Styles Grosvenor Hotel in Adelaide, Australia, and adjoining commercial properties at 72 and 74-78 Hindley Street, for A$43m.
- This lifts its rapidly growing hospitality portfolio to four, of which two are in Australia.
- Last traded at 16.8x forward P/E.
*Cosco Shipping Intl Singapore
- 51% owned Cosco Shipyard delivered a 9,785 dwt subsea support vessel to Maersk Supply Service AS.
- The vessel, MAERSK INVOLVER, measures 11 meters high, 27 meters wide, and 137m long.
- Counter is loss-making and valued at 4.4x P/B.
*Soilbuild Construction
- Awarded contract in Myanmar worth US$3.9m ($5.3m) for civil work and superstructure work of a food service distribution centre in Thilawa Special Economic Zone.
- The project is expected to commence in Dec and is slated to complete within 7 months.
- This brought order book to $508m (3Q17: $502.7m).
- Trades at 16.8x forward P/E.
*Acromec
- Secured a $7.5m contract to construct an integrated laboratory facility for a biopharmaceutical MNC.
- Project involves consolidating various existing laboratories with a new laboratory which requires highly stringent industry standards.
- The facility is located at Science Park, Singapore, with a gross lettable area of 3,100 sqm.
- Project is slated to complete by 30 Apr '18.
- Loss-making and trades at 3.9x P/B.
*Azeus Systems
- Secured a HK$15m (US$1.9m) project from the Hong Kong government to carry out platform migration works for a critical database system in a key government agency.
- Works are expected to commence in Nov '17 and be completed over the next 13 months, followed by a six-month nursing period.
- This lifted contract value secured year-to-date to HK$127.9m (US$16.4m).
- Loss-making and last traded at 0.9x P/B.
*Thakral Corp.
- 50% owned Thakral Japan Properties invested in two Japanese properties in Osaka.
- First is R Hotel Inn Kita Umeda, a 120-room business hotel in the heart of the city.
- Second is Namba retail redevelopment site, with gross area of 237 sqm and development plans for a 3-storey retail building, which has been pre-leased to a retail chain in Japan.
- Construction for the second property is expected to commence in Mar '18, and complete within a year.
- Last traded at 1.8x trailing P/E.
NEUTRAL NEWS
*SGX
- Proposed improvements to back-end clearing and settlement processes, shortening settlement cycle to two days from three days and eliminating time lag between money and securities settlement.
- The bourse aim to introduce the changes by 2H18.
- Trades at 21.5x forward P/E.
*Keppel T&T
- Undertaking a strategic review of its China logistics portfolio.
- In relation, group appointed Evercore Asia (Singapore) as its financial adviser for the review.
- Trades at 16.5x forward P/E and 1.11x P/B.
*Fraser Centrepoint
- Entered into a conditional agreement to acquire 94.8% of German company, greenfield Logistikpark Freiberg GmbH, for €32.44m.
- The firm holds freehold interest in a new logistics warehouse located in industrial estate Logistikpark Freiberg, Baden-Württemberg in Germany.
- It has a gross lettable area of 21,071 sqm and is leased on a long-term basis to be used as a warehousing facility for a leading company in the automotive industry.
- Trades at 10.6x forward P/E.
*Thai Bev
- Acquired 49% stake in Vietnam F&B Alliance Investment for 98m dong from a third party shareholder.
- The company was incorporated on 27 Sep for the purpose of management consultancy and investment holdings activities.
- Last traded at 20.7x forward P/E.
*Wilmar / Perennial Real Estate
- Wilmar acquired 51.7m Perennial shares at $0.8808 apiece, 4.2% above last closing price, raising its stake to 20% from 16.89%.
- The vendor was Wilmar co-founder and deputy chairman Martua Sitorus, whose stake in Perennial was pared to 3.32% from 6.42%.
*No Signboard
- F&B operator will make its trading debut on Catalist board at 9am today.
- IPO of 65.7m shares, comprising 63.2m placement and 2.5m public shares, at $0.28 each were 23.6x subscribed.
- Cornerstone investors include Lion Global Investors, JPMorgan Asset Management and Asian Opportunities Absolute Return Master Fund.
- Net proceeds of $18.7m will be used to build a new brewery in Indonesia, grow its Draft Denmark beer brand, as well as to open two Chinese casual dining restaurants.
- At $0.28, the counter is valued at FY16 P/E of 16.6x.
*Cromwell European REIT
- Trading debut at 12pm today for the European REIT with a portfolio across industrial, commercial and retail properties.
- IPO of 428.5m units, comprising 392.2m placement and 36.7m public units, at €0.55 each.
- The public tranche was 3.1x subscribed but no figure was disclosed for its placement tranche.
- Notable investors consist of DBS Bank (Treasury investments), Temasek-back SeaTown Master Fund and UBS Asset Management (HK), while cornerstone investors include Cerberus.
- Total proceeds will be used to acquire 60 properties across Denmark, France, Germany and the Netherlands from the four funds managed by Cromwell Property, and 14 Italian properties from independent third parties.
- At €0.55, the REIT offers projected FY18/19 distribution yield of 7.8%/8%, and P/B at 1.04.
*First REIT
- Extended the build-operate-transfer agreement for the land on which Siloam Hospitals Kupang & Lippo Plaza Kupang are located from 25 years to 30 years till 12 May 2041 for $5m.
- Offers 6.3% indicative yield and valued at 1.37x P/B.
Thursday, November 30, 2017
Wednesday, November 29, 2017
SG Market (29 Nov 17)
MARKET OVERVIEW
- Positive sentiment could spill over to the SG market following approval to advance the US tax bill by the Senate Budget Committee. This brings the bill a step closer to a floor vote, expected to take place on Thu.
- The STI sees immediate upside resistance at 3,460, with underlying support at 3,390.
CORPORATE RESULTS
*Keong Hong
- 4QFY17 net profit leapt 213.5% to $53.4m, shored by a $49.8m revaluation gain.
- Revenue soared 70.9% to $97.7m on increased construction revenue from existing projects and variation orders, as well as final billings for completed projects.
- However, gross margin shrank 5.9ppts to 11.6% on higher cost of sales (+83.2%).
- Order book shrank to $344m (FY16: $351m).
- Lowered final DPS to 1.75¢ (4Q16: 3¢), bringing FY17 total DPS to 2¢ (FY16: 8¢)
- Trades at 2x trailing P/E.
POSITIVE NEWS
*CapitaLand Retail China Trust (CRCT)/ CapitaLand
- Formed a 51:49 JV to acquire shopping mall Rock Square in Guangzhou, China, at market value of Rmb3.36b ($688.9m).
- The five-storey mall with NLA of 53,107 sqm has committed occupancy of 96.4%.
- To fund the deal, CRCT issued 64.4m new units at $1.612 and raised aggregate gross proceeds of $103.8m.
- CRCT's pro-forma FY16 DPU is expected to dip 0.3% to 10.02¢, implying a distribution yield of 6%.
*Lian Beng
- Won a $136.8m contract from UVD Projects to develop a condominium.
- Contract period is for 38 months and works will commence in Dec '17.
- Group expects the new contract to contribute positively to FY5/18 results.
- Construction order book lifted to $836m (Aug '17: $661m).
- Last traded at 7.5x trailing P/E.
*Jumbo
- Opened its fifth Jumbo Seafood outlet in China, located in downtown Shanghai at the upscale L'Avenue Mall in Hongqiao.
- The outlet has a floor space of 820 sqm and seating capacity of 212 pax.
- Last traded at 20.9x forward P/E.
*Wee Hur
- Acquiring a 1,038 sqm freehold site with an existing heritage building at 183-189 A'Beckett Street, Melbourne, Australia, for A$35m.
- Group plans to redevelop the property into a 900-bed purpose-built student accommodation, as the location is just a 10-minute walk away from Uni. of Melbourne, and Royal Melbourne Institute of Technology.
- Construction expected to commence in 4Q18.
- Trades at 17.9x trailing P/E.
*Centurion
- Successfully closed its private fund, Centurion US Student Housing Fund, with an aggregate committed capital of US$89.5m and has been fully drawn down.
- The fund was raised to acquire 6 student accommodation in the US to mainly cater to first-tier universities.
- The proposed acquisition is slated to complete by end-2017 and will be accretive to earnings.
- The fund marks Centurion's maiden foray into the US and is in line its asset-light strategy.
- Last traded at 9.7x forward P/E.
NEGATIVE NEWS
*Noble
- In another attack, Iceberg Research cited that Noble's balance sheet is still unreliable, despite making billions in impairment.
- An open letter to the commodity trader's creditors warned that Noble's restructuring plan would not work as the group will continue to burn cash, and does not address the fundamental weakness that led to its collapse.
- Further, Iceberg requested creditors to further investigate Noble's recent $25m investment in Toronto-listed Mkango Resources, given its market cap of $11.6m and seemingly residential premise as its head office.
- Separately, Noble proposed a sale of four dry bulkers just slightly above book cost at US$95m.
- The counter last traded at 0.15x P/B.
NEUTRAL NEWS
*Sabana REIT
- Entered into a facility agreement with UOB for a $30m secured four-year term loan facility.
- The loan facility will be utilised to repay existing borrowings and for working capital purposes.
- Offers 7.7% yield and valued at 0.72x P/B.
- Positive sentiment could spill over to the SG market following approval to advance the US tax bill by the Senate Budget Committee. This brings the bill a step closer to a floor vote, expected to take place on Thu.
- The STI sees immediate upside resistance at 3,460, with underlying support at 3,390.
CORPORATE RESULTS
*Keong Hong
- 4QFY17 net profit leapt 213.5% to $53.4m, shored by a $49.8m revaluation gain.
- Revenue soared 70.9% to $97.7m on increased construction revenue from existing projects and variation orders, as well as final billings for completed projects.
- However, gross margin shrank 5.9ppts to 11.6% on higher cost of sales (+83.2%).
- Order book shrank to $344m (FY16: $351m).
- Lowered final DPS to 1.75¢ (4Q16: 3¢), bringing FY17 total DPS to 2¢ (FY16: 8¢)
- Trades at 2x trailing P/E.
POSITIVE NEWS
*CapitaLand Retail China Trust (CRCT)/ CapitaLand
- Formed a 51:49 JV to acquire shopping mall Rock Square in Guangzhou, China, at market value of Rmb3.36b ($688.9m).
- The five-storey mall with NLA of 53,107 sqm has committed occupancy of 96.4%.
- To fund the deal, CRCT issued 64.4m new units at $1.612 and raised aggregate gross proceeds of $103.8m.
- CRCT's pro-forma FY16 DPU is expected to dip 0.3% to 10.02¢, implying a distribution yield of 6%.
*Lian Beng
- Won a $136.8m contract from UVD Projects to develop a condominium.
- Contract period is for 38 months and works will commence in Dec '17.
- Group expects the new contract to contribute positively to FY5/18 results.
- Construction order book lifted to $836m (Aug '17: $661m).
- Last traded at 7.5x trailing P/E.
*Jumbo
- Opened its fifth Jumbo Seafood outlet in China, located in downtown Shanghai at the upscale L'Avenue Mall in Hongqiao.
- The outlet has a floor space of 820 sqm and seating capacity of 212 pax.
- Last traded at 20.9x forward P/E.
*Wee Hur
- Acquiring a 1,038 sqm freehold site with an existing heritage building at 183-189 A'Beckett Street, Melbourne, Australia, for A$35m.
- Group plans to redevelop the property into a 900-bed purpose-built student accommodation, as the location is just a 10-minute walk away from Uni. of Melbourne, and Royal Melbourne Institute of Technology.
- Construction expected to commence in 4Q18.
- Trades at 17.9x trailing P/E.
*Centurion
- Successfully closed its private fund, Centurion US Student Housing Fund, with an aggregate committed capital of US$89.5m and has been fully drawn down.
- The fund was raised to acquire 6 student accommodation in the US to mainly cater to first-tier universities.
- The proposed acquisition is slated to complete by end-2017 and will be accretive to earnings.
- The fund marks Centurion's maiden foray into the US and is in line its asset-light strategy.
- Last traded at 9.7x forward P/E.
NEGATIVE NEWS
*Noble
- In another attack, Iceberg Research cited that Noble's balance sheet is still unreliable, despite making billions in impairment.
- An open letter to the commodity trader's creditors warned that Noble's restructuring plan would not work as the group will continue to burn cash, and does not address the fundamental weakness that led to its collapse.
- Further, Iceberg requested creditors to further investigate Noble's recent $25m investment in Toronto-listed Mkango Resources, given its market cap of $11.6m and seemingly residential premise as its head office.
- Separately, Noble proposed a sale of four dry bulkers just slightly above book cost at US$95m.
- The counter last traded at 0.15x P/B.
NEUTRAL NEWS
*Sabana REIT
- Entered into a facility agreement with UOB for a $30m secured four-year term loan facility.
- The loan facility will be utilised to repay existing borrowings and for working capital purposes.
- Offers 7.7% yield and valued at 0.72x P/B.
Tuesday, November 28, 2017
SG Market (28 Nov 17)
MARKET OVERVIEW
- Oil-related counters will be in focus over the next two days ahead of the OPEC meeting in Vienna this Thu, with the oil production alliance anticipated to announce its decision whether to extend production cuts beyond Mar '18.
- Technically, underlying support for the STI is at 3,390, with topside resistance at 3,460.
CORPORATE RESULTS
*IHH Healthcare
- 3Q17 missed as net profit slumped 53% to RM82.1m, bringing 9M17 core net profit to RM413.4m (-36%), dragged by start-up costs and depreciation from the opening of two new hospitals.
- However, quarter's revenue grew 15% to RM2.8b on organic growth from existing operations and ramp-up of recently-opened hospitals, as well as new contributions from Tokuda and City Clinic in Bulgaria.
- EBITDA margin narrowed 2.3ppt to 20.1% on higher start-up, operating and staff expenses.
- MKE believes start-up costs, particularly at Gleneagles HK, have stabilised and new hospitals are gaining traction on patient visits.
- Hence, the house has upgraded to a BUY with higher TP of RM6.30 from RM6.08.
*Cogent Holdings
- 3Q17 net profit slipped 6% to $7.4m, bringing 9M17 earnings of $23.7m (+1%) to 73% of estimates.
- Quarter's revenue climbed 4% to $35.3m on higher volume handled within the container depot and transportation segments.
- But, operating margin narrowed 1.7ppt to 28.1% amid a shift in sales mix towards the lower margin container segment and higher fuel costs.
- Bottom line was also dragged by higher taxes (+14%).
- Stock supported by buy-out offer price of $1.02.
- NAV/share at $0.2823.
POSITIVE NEWS
*Ying Li
- Proposed divestment of Ying Li International Commercial Centre project in Chongqing to China Evergrande Group for Rmb3.29b ($672m).
- The consideration includes the transfer of a separate land parcel that Ying Li is still in progress of acquiring.
- The 320,000 sqm gfa mixed development is located in Chongqing's CBD of Jiefangbei and is priced at 2.04x P/B.
- Proceeds earmarked to pursue new ventures and/or investment opportunities in Tier 1 and fast-growing Tier 2 cities in China.
- Upon completion, Ying Li will net a disposal gain of Rmb343m ($70m) and pro forma NTA/share is expected to jump 6.6% to Rmb2.09.
- Trades at pro forma P/B of 0.35x.
*Boustead Projects
- Secured two contracts from repeat clients worth $67m.
- The first contract involves the design and building of a logistics facility in Singapore, slated to complete by 2019.
- Second contract requires the design and building of a power solutions manufacturing facility expansion in Vietnam, with expected completion in 2018.
- Group's order book lifted to $242m from $175m as at 8 Nov '17.
- Last traded at 7.8x forward P/E.
*Vard
- Secured contracts from Nowegian food producer Cermaq Norway for the design and construction of two offshore fish farming operation platforms.
- The platforms are scheduled for delivery in 2Q and 3Q18.
- Counter is loss-making and trades at 0.8x P/B.
*UnUsUal/ Imperium Crown
- Imperium signed non-binding MOU with concert & entertainment event organiser UnUsUal, to commence discussions on possible collaborations for the former's Wonder Stone Park (WSP).
- Imperium has a 50-year operating right to WSP, as well as a hotel in the park, which is located in commercial precinct in Feixian County, Linyi City, Shandong, China.
NEUTRAL NEWS
*Soilbuild REIT
- Expanding investment mandate from being Singapore-centric to business space and industrial properties in Australia.
- Offers indicative yield of 8.6% and trades at 0.9x P/B.
*Wilmar
- Converting a portion of its existing revolving credit facility of US$150m with ING Bank into a sustainability performance-linked loan.
- If performance milestones across environmental, social and governance aspects are met, interest rate for the loan will be reduced in the following year.
- Progress on the milestones will be measured by Sustainalytics.
- Last traded at 13.7x forward P/E and 0.96x P/B.
*Samurai 2K Aerosol
- Proposed placement of 10m new shares (9.1% enlarged share capital) at $1.008 apiece to placement agent UOB Kay Hian.
- Net proceeds of $9.6m are intended for business development and expansion.
- Pro-forma 1HFY3/18 EPS would be reduced by 9% to 5.86sen.
*QT Vascular
- Entered into an agreement with four individual bondholders to partially repay a sum of US$1.36m in cash and shares.
- These bondholders will accept a cash payment of US$0.34m and 42.2m new shares at an issue price of 1.08¢.
- The remaining outstanding amount of US$1.02m will be payable by 31 Jan 2018, bearing interest of 8% p.a from 1 Oct 2017.
- The group will continue to negotiate for settlement with other bondholders holding the remaining par value of US$2.555m.
- Oil-related counters will be in focus over the next two days ahead of the OPEC meeting in Vienna this Thu, with the oil production alliance anticipated to announce its decision whether to extend production cuts beyond Mar '18.
- Technically, underlying support for the STI is at 3,390, with topside resistance at 3,460.
CORPORATE RESULTS
*IHH Healthcare
- 3Q17 missed as net profit slumped 53% to RM82.1m, bringing 9M17 core net profit to RM413.4m (-36%), dragged by start-up costs and depreciation from the opening of two new hospitals.
- However, quarter's revenue grew 15% to RM2.8b on organic growth from existing operations and ramp-up of recently-opened hospitals, as well as new contributions from Tokuda and City Clinic in Bulgaria.
- EBITDA margin narrowed 2.3ppt to 20.1% on higher start-up, operating and staff expenses.
- MKE believes start-up costs, particularly at Gleneagles HK, have stabilised and new hospitals are gaining traction on patient visits.
- Hence, the house has upgraded to a BUY with higher TP of RM6.30 from RM6.08.
*Cogent Holdings
- 3Q17 net profit slipped 6% to $7.4m, bringing 9M17 earnings of $23.7m (+1%) to 73% of estimates.
- Quarter's revenue climbed 4% to $35.3m on higher volume handled within the container depot and transportation segments.
- But, operating margin narrowed 1.7ppt to 28.1% amid a shift in sales mix towards the lower margin container segment and higher fuel costs.
- Bottom line was also dragged by higher taxes (+14%).
- Stock supported by buy-out offer price of $1.02.
- NAV/share at $0.2823.
POSITIVE NEWS
*Ying Li
- Proposed divestment of Ying Li International Commercial Centre project in Chongqing to China Evergrande Group for Rmb3.29b ($672m).
- The consideration includes the transfer of a separate land parcel that Ying Li is still in progress of acquiring.
- The 320,000 sqm gfa mixed development is located in Chongqing's CBD of Jiefangbei and is priced at 2.04x P/B.
- Proceeds earmarked to pursue new ventures and/or investment opportunities in Tier 1 and fast-growing Tier 2 cities in China.
- Upon completion, Ying Li will net a disposal gain of Rmb343m ($70m) and pro forma NTA/share is expected to jump 6.6% to Rmb2.09.
- Trades at pro forma P/B of 0.35x.
*Boustead Projects
- Secured two contracts from repeat clients worth $67m.
- The first contract involves the design and building of a logistics facility in Singapore, slated to complete by 2019.
- Second contract requires the design and building of a power solutions manufacturing facility expansion in Vietnam, with expected completion in 2018.
- Group's order book lifted to $242m from $175m as at 8 Nov '17.
- Last traded at 7.8x forward P/E.
*Vard
- Secured contracts from Nowegian food producer Cermaq Norway for the design and construction of two offshore fish farming operation platforms.
- The platforms are scheduled for delivery in 2Q and 3Q18.
- Counter is loss-making and trades at 0.8x P/B.
*UnUsUal/ Imperium Crown
- Imperium signed non-binding MOU with concert & entertainment event organiser UnUsUal, to commence discussions on possible collaborations for the former's Wonder Stone Park (WSP).
- Imperium has a 50-year operating right to WSP, as well as a hotel in the park, which is located in commercial precinct in Feixian County, Linyi City, Shandong, China.
NEUTRAL NEWS
*Soilbuild REIT
- Expanding investment mandate from being Singapore-centric to business space and industrial properties in Australia.
- Offers indicative yield of 8.6% and trades at 0.9x P/B.
*Wilmar
- Converting a portion of its existing revolving credit facility of US$150m with ING Bank into a sustainability performance-linked loan.
- If performance milestones across environmental, social and governance aspects are met, interest rate for the loan will be reduced in the following year.
- Progress on the milestones will be measured by Sustainalytics.
- Last traded at 13.7x forward P/E and 0.96x P/B.
*Samurai 2K Aerosol
- Proposed placement of 10m new shares (9.1% enlarged share capital) at $1.008 apiece to placement agent UOB Kay Hian.
- Net proceeds of $9.6m are intended for business development and expansion.
- Pro-forma 1HFY3/18 EPS would be reduced by 9% to 5.86sen.
*QT Vascular
- Entered into an agreement with four individual bondholders to partially repay a sum of US$1.36m in cash and shares.
- These bondholders will accept a cash payment of US$0.34m and 42.2m new shares at an issue price of 1.08¢.
- The remaining outstanding amount of US$1.02m will be payable by 31 Jan 2018, bearing interest of 8% p.a from 1 Oct 2017.
- The group will continue to negotiate for settlement with other bondholders holding the remaining par value of US$2.555m.
Monday, November 27, 2017
SG Market (27 Nov 17)
MARKET OVERVIEW
- The market may gyrate within range, as investors monitor global markets for fresh directional cues including US Black Friday weekend retail sales, extension of OPEC production cut (30 Nov), and ongoing deleveraging concerns in China.
- Technically, underlying support for the STI is at 3,390, with topside resistance at 3,460.
CORPORATE RESULTS
*Jumbo
- FY17 results missed as net profit slipped 6.7% to $14.5m, as expenses rose at a faster pace from business expansion.
- Revenue grew 6.1% to $145.1m on increased contributions across Singapore and China outlets.
- Gross margin held steady at 63.3% (+0.1ppt).
- Bottom line was also weighed by lower government grants from a reduced wage credit scheme payout.
- Lowered final DPS to 0.5¢ (FY16: 1¢), but maintained special DPS of 0.7¢, bringing full-year payout to 1.7¢ (unch).
- Trades at 19.3x forward P/E.
*Kimly
- 4QFY17 underlying net profit slipped 2% to $5m, dragging FY17 earnings to $21.4m (-12%).
- Full-year revenue rose 11.6% to $192.1m on increased takings from coffee shops, drinks and food stalls, as well as sub-leasing of stalls and cleaning services provided.
- Gross margin dipped 1.6ppt to 20% amid higher staff costs and lease expenses for the newer coffee shops and food stalls.
- Bottom line was also hurt by lower government subsidies for wages, higher interest costs and a spike in taxes following a corporate restructuring for its recent IPO.
- Declared final DPS of 0.68¢, bringing full-year payout to 0.96¢ (FY16: nil).
- Trading at 18.4x trailing P/E.
POSITIVE NEWS
*Health Management International (HMI)
- Issued 16.9m new shares at $0.65 each to Temasek-backed Heliconia via a private placement.
- The issue price is 3% discount to last closing price of $0.67 and the placement represents 2% stake in the enlarged share capital of HMI.
- The group hopes to leverage on Heliconia's network and has earmarked net proceeds of $11m for business expansion and growing its existing operation.
- Trades at 28.4x forward P/E.
*Federal International
- Secured contract worth US$3.3m for the charter of its 1,200 HP land drilling rig.
- The rig will be deployed for drilling of six wells in Gn Parakasak Field, Banten Province in Indonesia.
- The charter period of the rig for each well is 50 days, and is expected to commence in Apr 2018.
- Trades at 8.8x trailing P/E and 0.7x P/B.
*TTJ
- Secured new contracts and lifted its total order book from $152m (as at 25 Sep) to $170m.
- New contracts are mainly from existing clients involving the supply, fabrication and installation of structural steelworks to various projects.
- Last traded at 11.8x trailing P/E.
NEUTRAL NEWS
*ST Engineering
- The JV between ST Aerospace resources and Wings Capital Partners has been wound up.
- To recap, the termination of JV was announced back in Aug 2015 and was due to differing views on strategic focus and operational plans.
- Trades at 20.9x forward P/E.
*Keppel Infrastructure Trust
- Undertaking a strategic review of its interest in Basslink undersea electricity and telecommunications interconnector between Tasmania and mainland Australia (Victoria).
- The Basslink interconnector is owned and operated by KIT, and has a 25-year term Basslink Services Agreement with an entity of the State of Tasmania since Apr '06.
- Since Jul '09, the Basslink telecommunications network has also provided wholesale telecommunications services between Hobart, Tasmania and Melbourne through the Basslink interconnector.
- Offers indicative yield of 6.5% and 1.89x P/B.
*Noble Group
- Proposed disposal of Noble Americas South Bend Ethanol (NASBE) for ~US$17m.
- Long-stop date for the deal on 13 Dec '17.
- NASBE owns and operates an ethanol production plant in South Bend, Indiana in US.
- Upon completion, pro forma NTA/share will be reduced 6.3% to US$0.75, implying P/B valuation of 0.17x.
*Sabana REIT
- Updated that talks with ESR-REIT has ended.
- Moving forward, the REIT will focus on three key initiatives to improve performance:
1) Rejuvenate portfolio through selective divestments and active asset management;
2) Renewal of senior leadership;
3) Enhancing the Board of Directors;
- At $0.43, REIT offers annualised 3Q17 yield of 7.3% and trades at 0.75x P/B.
*Tiong Seng
- Completed its acquisition of Sloane Court Hotel and an adjoining site at Balmoral Road.
- To recap, the sites, with an area of 3,617.9sm and gross plot ratio of 1.6, was acquired at $80.5m and will be redeveloped into a 12 storey condominium consisting of 80 units.
- Trades at 6.95x trailing P/E.
*Sri Trang
- Acquired a production line of medical examination gloves and industrial gloves in Surat Thani province for Bt840m.
- The line has a capacity of producing 2,000m pieces of gloves per year and the acquisition is slated to complete by 2Q18.
- The acquisition is aiming to serve the growing global demand for medical and industrial gloves.
- The market may gyrate within range, as investors monitor global markets for fresh directional cues including US Black Friday weekend retail sales, extension of OPEC production cut (30 Nov), and ongoing deleveraging concerns in China.
- Technically, underlying support for the STI is at 3,390, with topside resistance at 3,460.
CORPORATE RESULTS
*Jumbo
- FY17 results missed as net profit slipped 6.7% to $14.5m, as expenses rose at a faster pace from business expansion.
- Revenue grew 6.1% to $145.1m on increased contributions across Singapore and China outlets.
- Gross margin held steady at 63.3% (+0.1ppt).
- Bottom line was also weighed by lower government grants from a reduced wage credit scheme payout.
- Lowered final DPS to 0.5¢ (FY16: 1¢), but maintained special DPS of 0.7¢, bringing full-year payout to 1.7¢ (unch).
- Trades at 19.3x forward P/E.
*Kimly
- 4QFY17 underlying net profit slipped 2% to $5m, dragging FY17 earnings to $21.4m (-12%).
- Full-year revenue rose 11.6% to $192.1m on increased takings from coffee shops, drinks and food stalls, as well as sub-leasing of stalls and cleaning services provided.
- Gross margin dipped 1.6ppt to 20% amid higher staff costs and lease expenses for the newer coffee shops and food stalls.
- Bottom line was also hurt by lower government subsidies for wages, higher interest costs and a spike in taxes following a corporate restructuring for its recent IPO.
- Declared final DPS of 0.68¢, bringing full-year payout to 0.96¢ (FY16: nil).
- Trading at 18.4x trailing P/E.
POSITIVE NEWS
*Health Management International (HMI)
- Issued 16.9m new shares at $0.65 each to Temasek-backed Heliconia via a private placement.
- The issue price is 3% discount to last closing price of $0.67 and the placement represents 2% stake in the enlarged share capital of HMI.
- The group hopes to leverage on Heliconia's network and has earmarked net proceeds of $11m for business expansion and growing its existing operation.
- Trades at 28.4x forward P/E.
*Federal International
- Secured contract worth US$3.3m for the charter of its 1,200 HP land drilling rig.
- The rig will be deployed for drilling of six wells in Gn Parakasak Field, Banten Province in Indonesia.
- The charter period of the rig for each well is 50 days, and is expected to commence in Apr 2018.
- Trades at 8.8x trailing P/E and 0.7x P/B.
*TTJ
- Secured new contracts and lifted its total order book from $152m (as at 25 Sep) to $170m.
- New contracts are mainly from existing clients involving the supply, fabrication and installation of structural steelworks to various projects.
- Last traded at 11.8x trailing P/E.
NEUTRAL NEWS
*ST Engineering
- The JV between ST Aerospace resources and Wings Capital Partners has been wound up.
- To recap, the termination of JV was announced back in Aug 2015 and was due to differing views on strategic focus and operational plans.
- Trades at 20.9x forward P/E.
*Keppel Infrastructure Trust
- Undertaking a strategic review of its interest in Basslink undersea electricity and telecommunications interconnector between Tasmania and mainland Australia (Victoria).
- The Basslink interconnector is owned and operated by KIT, and has a 25-year term Basslink Services Agreement with an entity of the State of Tasmania since Apr '06.
- Since Jul '09, the Basslink telecommunications network has also provided wholesale telecommunications services between Hobart, Tasmania and Melbourne through the Basslink interconnector.
- Offers indicative yield of 6.5% and 1.89x P/B.
*Noble Group
- Proposed disposal of Noble Americas South Bend Ethanol (NASBE) for ~US$17m.
- Long-stop date for the deal on 13 Dec '17.
- NASBE owns and operates an ethanol production plant in South Bend, Indiana in US.
- Upon completion, pro forma NTA/share will be reduced 6.3% to US$0.75, implying P/B valuation of 0.17x.
*Sabana REIT
- Updated that talks with ESR-REIT has ended.
- Moving forward, the REIT will focus on three key initiatives to improve performance:
1) Rejuvenate portfolio through selective divestments and active asset management;
2) Renewal of senior leadership;
3) Enhancing the Board of Directors;
- At $0.43, REIT offers annualised 3Q17 yield of 7.3% and trades at 0.75x P/B.
*Tiong Seng
- Completed its acquisition of Sloane Court Hotel and an adjoining site at Balmoral Road.
- To recap, the sites, with an area of 3,617.9sm and gross plot ratio of 1.6, was acquired at $80.5m and will be redeveloped into a 12 storey condominium consisting of 80 units.
- Trades at 6.95x trailing P/E.
*Sri Trang
- Acquired a production line of medical examination gloves and industrial gloves in Surat Thani province for Bt840m.
- The line has a capacity of producing 2,000m pieces of gloves per year and the acquisition is slated to complete by 2Q18.
- The acquisition is aiming to serve the growing global demand for medical and industrial gloves.
Friday, November 24, 2017
SG Market (24 Nov 17)
MARKET OVERVIEW
- Reduced liquidity and profit-taking activity ahead of the weekend could lead to a dip on the STI, particularly after deleveraging concerns in China unsettled investors in Asia yesterday.
- Technically, underlying support for the STI is at 3,390, with topside resistance at 3,460.
CORPORATE RESULTS
*Thai Beverage
- FY17 core earnings climbed 4.6% to Bt26.2b, in line with expectations.
- Revenue was flat at Bt190b as improved sales in spirits (+2.6%) were doused by weakness in beer (-4.7%) and non-alcoholic beverages (-0.9%) segments.
- Core EBITDA margin widened to 19.3% (+0.7ppt) amid a turnaround in the non-alcoholic beverages segment to positive EBITDA margin of 1.2% (FY16: -4.1%).
- Headline net profit jumped 38% to Bt34.5b, mainly boosted by fair value gain arising from its stake in Vinamilk.
- Raised final DPS to Bt0.47 (4QFY16: Bt0.40), bringing full-year payout to Bt0.67 (FY16: Bt0.60).
- Trades at 19.9x forward P/E.
NEGATIVE NEWS
*Natural Cool
- To dispose a property with land area of 2,091.5 sqm at 38 Lok Yang Way for $4.2m.
- The property was previously used for operations prior to the relocation of manufacturing activities to Malaysia.
- The sale will incur a disposal loss of $1.95m, while net proceeds of $4.1m will be used to reduce bank borrowings.
- Last traded at 0.89x P/B.
*Dukang Distillers
- Expects a significant decrease in production by 60%-70% for 2QFY18 and 3QFY18.
- This is due to targeted stop-work orders from the government amid the winter-heating season, to cut emissions of industrial pollutants in various industries.
- Baijiu production is expected to gradually recover from 15 Mar '18.
NEUTRAL NEWS
*Keppel Corp
- Entered conditional JV agreement with KPN Land to acquire two prime sites in Bangkok's CBD for Bt2.2b ($90m).
- Subsequently, the 49:51 JV partners plan to develop two premium freehold condominiums projects with an estimated total cost of $233m.
- Construction for both developments is expected to commence around 3Q18.
- Trades at 16.1x forward P/E.
*MindChamps
- Trading debut at 9am today for the operator and franchisor of premium preschool centres.
- IPO of 30.45m shares, comprising 28.45m placement and 2m public shares, at $0.83 each were 21.4x subscribed (excluding reserved shares of 2.4m).
- Notable investors with >5% enlarged share base include ICH Capital, Island Asset Management, JF Asset Management and SUTL Holdings, while cornerstone investors include CFCG Investment Partners, Hillhouse Funds and Target Asset Management.
- IPO net proceeds of $46.2m will be used to fund expansion plans, partial repayment of an acquisition loan and working capital.
- At $0.83, the counter trades at a pro forma FY16 P/E of 32.2x.
*Ascendas India Trust
- Proposed acquisition of six warehouses at the Arshiya Free Trade Warehousing Zone near Mumbai, India, for $112.5m.
- The warehouses with total leasable area of 832,249 sf have a future redevelopment potential of 2.8m sf.
- Properties are close to full occupancy, with tenants that include DHL Logistics, Huawei and Cisco Systems.
- Upon completion, pro forma FY3/17 DPU is expected to rise 3.5% to 5.89¢, implying distribution yield of 5.1%.
*Olam
- Issued 524,847 new shares in relation to a warrant exercise at US$1.09 each.
- 57.7m outstanding warrants remains, which expires on 29 Jan 2018.
- Last traded at 15.7x forward P/E and 1.3x P/B.
*ValueMax
- Injected an additional $1m in subsidiary ValueMax Pawnshop (JP), lifting its paid-up capital to $5m.
- Trades at 0.94x P/B.
*QT Vascular
- Issued 21.6m new shares to GEM Global at $0.0108 each, representing a 10% discount to last closing price of $0.012.
- Fund raised will be used for working capital purpose.
*Fuji Offset Plate Manufacturing
- To sell a vacant industrial land in Taman Gembira, Johor Bahru in Malaysia, for RM3.5m (1.59x P/B)
- The sale is expected to net disposal gain of $0.4m.
- Reduced liquidity and profit-taking activity ahead of the weekend could lead to a dip on the STI, particularly after deleveraging concerns in China unsettled investors in Asia yesterday.
- Technically, underlying support for the STI is at 3,390, with topside resistance at 3,460.
CORPORATE RESULTS
*Thai Beverage
- FY17 core earnings climbed 4.6% to Bt26.2b, in line with expectations.
- Revenue was flat at Bt190b as improved sales in spirits (+2.6%) were doused by weakness in beer (-4.7%) and non-alcoholic beverages (-0.9%) segments.
- Core EBITDA margin widened to 19.3% (+0.7ppt) amid a turnaround in the non-alcoholic beverages segment to positive EBITDA margin of 1.2% (FY16: -4.1%).
- Headline net profit jumped 38% to Bt34.5b, mainly boosted by fair value gain arising from its stake in Vinamilk.
- Raised final DPS to Bt0.47 (4QFY16: Bt0.40), bringing full-year payout to Bt0.67 (FY16: Bt0.60).
- Trades at 19.9x forward P/E.
NEGATIVE NEWS
*Natural Cool
- To dispose a property with land area of 2,091.5 sqm at 38 Lok Yang Way for $4.2m.
- The property was previously used for operations prior to the relocation of manufacturing activities to Malaysia.
- The sale will incur a disposal loss of $1.95m, while net proceeds of $4.1m will be used to reduce bank borrowings.
- Last traded at 0.89x P/B.
*Dukang Distillers
- Expects a significant decrease in production by 60%-70% for 2QFY18 and 3QFY18.
- This is due to targeted stop-work orders from the government amid the winter-heating season, to cut emissions of industrial pollutants in various industries.
- Baijiu production is expected to gradually recover from 15 Mar '18.
NEUTRAL NEWS
*Keppel Corp
- Entered conditional JV agreement with KPN Land to acquire two prime sites in Bangkok's CBD for Bt2.2b ($90m).
- Subsequently, the 49:51 JV partners plan to develop two premium freehold condominiums projects with an estimated total cost of $233m.
- Construction for both developments is expected to commence around 3Q18.
- Trades at 16.1x forward P/E.
*MindChamps
- Trading debut at 9am today for the operator and franchisor of premium preschool centres.
- IPO of 30.45m shares, comprising 28.45m placement and 2m public shares, at $0.83 each were 21.4x subscribed (excluding reserved shares of 2.4m).
- Notable investors with >5% enlarged share base include ICH Capital, Island Asset Management, JF Asset Management and SUTL Holdings, while cornerstone investors include CFCG Investment Partners, Hillhouse Funds and Target Asset Management.
- IPO net proceeds of $46.2m will be used to fund expansion plans, partial repayment of an acquisition loan and working capital.
- At $0.83, the counter trades at a pro forma FY16 P/E of 32.2x.
*Ascendas India Trust
- Proposed acquisition of six warehouses at the Arshiya Free Trade Warehousing Zone near Mumbai, India, for $112.5m.
- The warehouses with total leasable area of 832,249 sf have a future redevelopment potential of 2.8m sf.
- Properties are close to full occupancy, with tenants that include DHL Logistics, Huawei and Cisco Systems.
- Upon completion, pro forma FY3/17 DPU is expected to rise 3.5% to 5.89¢, implying distribution yield of 5.1%.
*Olam
- Issued 524,847 new shares in relation to a warrant exercise at US$1.09 each.
- 57.7m outstanding warrants remains, which expires on 29 Jan 2018.
- Last traded at 15.7x forward P/E and 1.3x P/B.
*ValueMax
- Injected an additional $1m in subsidiary ValueMax Pawnshop (JP), lifting its paid-up capital to $5m.
- Trades at 0.94x P/B.
*QT Vascular
- Issued 21.6m new shares to GEM Global at $0.0108 each, representing a 10% discount to last closing price of $0.012.
- Fund raised will be used for working capital purpose.
*Fuji Offset Plate Manufacturing
- To sell a vacant industrial land in Taman Gembira, Johor Bahru in Malaysia, for RM3.5m (1.59x P/B)
- The sale is expected to net disposal gain of $0.4m.
Thursday, November 23, 2017
SG Market (23 Nov 17)
MARKET OVERVIEW
- Market sentiment could be buoyed by firmer oil prices and dovish FOMC minutes.
- Additionally, Singapore's economy outperformed in 3Q with GDP growth of 5.2% (est: 5%), which prompted an upgrade to the official full-year growth forecast to 3-3.5%, from 2-3% previously.
- Technically, topside resistance for STI is seen at 3,460, with underlying support now at 3,390.
SECTOR WATCH
*Telco
- New entrant MyRepublic is targeting to launch its mobile services in 1Q18, although a slight delay from its year-end launch previously.
- This adds to increased competition in the domestic mobile space, which will also see the entry of TPG in the coming months.
- MKE has a NEGATIVE view on the sector with Singtel (HOLD, TP $3.87) as its preferred pick, with SELLs on StarHub (TP $2.17) and M1 (TP $1.59).
CORPORATE RESULTS
*Sen Yue
- Turned around to FY9/17 net profit of $2.2m (FY16: $0.9m loss), partially helped by a $2m drop in FX loss.
- Revenue jumped 36% to $207.2m, as stronger commodities segment was driven by higher sales demand from China, while other business segments were stable.
- Gross margin widened 0.5ppt to 8.3% on cost control measures.
- Trades at 13.4x trailing P/E.
POSITIVE NEWS
*Hong Leong Asia
- 40.2% owned China Yuchai received its first order from Beijing Automotive Group (BAIC) for 600 units of YC4Y20 engines.
- The engines will be used to power BAIC's Beiqi B40L SUVs that will be launched in China in Jan '18.
- Last traded at 0.7x P/B.
NEGATIVE NEWS
*Profit warnings
- Acromec
- LHN
- MS Holdings
*Mary Chia
- Will not be proceeding with a further appeal against the court's decision on its dismissal order, over a lawsuit filed by JV partner Slim Beauty House.
- Accordingly, costs adding up to $0.7m will be incurred, which is expected to have a material impact on FY3/18 earnings.
NEUTRAL NEWS
*AIMS AMP Capital Industrial REIT
- 42.1m new units will be issued at the low end of its asking price range at $1.305 apiece.
- Given the strong demand, the upsize option was triggered and the offer size was raised from $50m to $55m.
- Net proceeds of $53.4m will be used for debt repayment and future expansion opportunities.
- Offers 5.3% indicative yield.
- MKE last had a BUY with TP of $1.60.
*Chip Eng Seng
- Entered into a 70:30 JV with Sirona Lyall Street to acquire two properties in South Perth, Australia, for A$10.9m.
- The adjoining properties located at 31 Labouchere Road and 24 Lyall Street have an aggregate site area of 2,024 sqm, and will be redeveloped into a mixed use development.
- Last traded at 17x forward P/E and 0.76x P/B.
*Pavillon Holdings
- Entered into an equity transfer agreement with Inner Mongolia Jiangmeng Culture and Arts to sell 40% stake in Tianjin Binhai New Area Changjiang Cultural Assets Trading Center for Rmb4.1m.
- Net proceed of $0.8m received will be used for working capital, strategic investment or acquisitions.
- Market sentiment could be buoyed by firmer oil prices and dovish FOMC minutes.
- Additionally, Singapore's economy outperformed in 3Q with GDP growth of 5.2% (est: 5%), which prompted an upgrade to the official full-year growth forecast to 3-3.5%, from 2-3% previously.
- Technically, topside resistance for STI is seen at 3,460, with underlying support now at 3,390.
SECTOR WATCH
*Telco
- New entrant MyRepublic is targeting to launch its mobile services in 1Q18, although a slight delay from its year-end launch previously.
- This adds to increased competition in the domestic mobile space, which will also see the entry of TPG in the coming months.
- MKE has a NEGATIVE view on the sector with Singtel (HOLD, TP $3.87) as its preferred pick, with SELLs on StarHub (TP $2.17) and M1 (TP $1.59).
CORPORATE RESULTS
*Sen Yue
- Turned around to FY9/17 net profit of $2.2m (FY16: $0.9m loss), partially helped by a $2m drop in FX loss.
- Revenue jumped 36% to $207.2m, as stronger commodities segment was driven by higher sales demand from China, while other business segments were stable.
- Gross margin widened 0.5ppt to 8.3% on cost control measures.
- Trades at 13.4x trailing P/E.
POSITIVE NEWS
*Hong Leong Asia
- 40.2% owned China Yuchai received its first order from Beijing Automotive Group (BAIC) for 600 units of YC4Y20 engines.
- The engines will be used to power BAIC's Beiqi B40L SUVs that will be launched in China in Jan '18.
- Last traded at 0.7x P/B.
NEGATIVE NEWS
*Profit warnings
- Acromec
- LHN
- MS Holdings
*Mary Chia
- Will not be proceeding with a further appeal against the court's decision on its dismissal order, over a lawsuit filed by JV partner Slim Beauty House.
- Accordingly, costs adding up to $0.7m will be incurred, which is expected to have a material impact on FY3/18 earnings.
NEUTRAL NEWS
*AIMS AMP Capital Industrial REIT
- 42.1m new units will be issued at the low end of its asking price range at $1.305 apiece.
- Given the strong demand, the upsize option was triggered and the offer size was raised from $50m to $55m.
- Net proceeds of $53.4m will be used for debt repayment and future expansion opportunities.
- Offers 5.3% indicative yield.
- MKE last had a BUY with TP of $1.60.
*Chip Eng Seng
- Entered into a 70:30 JV with Sirona Lyall Street to acquire two properties in South Perth, Australia, for A$10.9m.
- The adjoining properties located at 31 Labouchere Road and 24 Lyall Street have an aggregate site area of 2,024 sqm, and will be redeveloped into a mixed use development.
- Last traded at 17x forward P/E and 0.76x P/B.
*Pavillon Holdings
- Entered into an equity transfer agreement with Inner Mongolia Jiangmeng Culture and Arts to sell 40% stake in Tianjin Binhai New Area Changjiang Cultural Assets Trading Center for Rmb4.1m.
- Net proceed of $0.8m received will be used for working capital, strategic investment or acquisitions.
Wednesday, November 22, 2017
SG Market (22 Nov 17)
MARKET OVERVIEW
- The market could continue on its upward move as investors position into banks, property developers and tech manufacturers, ahead of the anticipated positive release for the 3Q final GDP data tomorrow.
- Technically, topside resistance for STI is seen at 3,460, with underlying support now at 3,390.
POSITIVE NEWS
*Keppel Corp
- 24.5% owned PT Purimas Straits Resort will divest a 20.5ha site in West Bali's Tanah Lot district.
- The divestment will result in a net divestment gain of $17.6m, which is slated to complete by end-2017.
- Trades at 15.9x forward P/E.
*Viva Industrial Trust
- Singapore centric business park and industrial property trust will be included in the MSCI Singapore Small Cap Index as of the close of 30 Nov.
- Offers 7.44% indicative yield and trades at 1.27x P/B.
- MKE has a BUY with TP of $1.00.
NEGATIVE NEWS
*Envictus
- Warned of a FY17 net loss as operating losses were exacerbated by a full impairment of RM32.9m for its investment in Yamada Green Resources.
- Last traded at 0.43x P/B.
*Swing Media
- High Court of the Hong Kong Special Administrative Region has ordered the group to wind up.
- The official receiver of Hong Kong Special Administrative Region will be constituted as the provisional liquidator of the company.
- Counter has been suspended since 11 Jul.
NEUTRAL NEWS
*Sembcorp Industries
- To acquire an additional 3.7% stake in Vietnam Singapore Industrial Park (VSIP) for US$6.9m, lifting its stake from 92.9% to 96.6%.
- VSIP represents the Singapore consortium which holds a 51% stake in Vietnam Singapore Industrial Park JVCo, the developer of industrial park projects in Vietnam.
- Trades at 15.1x forward P/E.
*AIMS AMP REIT
- Launched private placement of new units between $1.305 and $1.345 each.
- Proceeds to be used mainly to repay debt and for asset enhancement initiatives.
- Offers 7.3% yield and trades at 1.03x P/B.
- MKE last had a BUY with TP of $1.60.
*Lum Chang
- Completed its collective acquisition of freehold residential property One Tree Hill Gardens for $65m, or a land rate of $1,664 psf.
- The 39,063 sf site could be redeveloped into 10 semi-detached homes plus three bungalows.
- Last traded at 7.2x trailing P/E.
*Olam
- Issued 994,919 new shares in relation to a warrant exercise at US$1.09 each.
- 58.2m outstanding warrants remains, which expires on 29 Jan 2018.
- Last traded at 15.7x forward P/E.
*Gallant Venture
- To issue 513m new shares (10.63% of issued share capital) to three placees at $0.133 each.
- Net proceeds of $68.2m intended to fund business expansion and working capital.
- Trades at 15.8x trailing P/E.
*Singapore Kitchen Equipment
- Proposed placement of 5m new shares (3.33% enlarged share capital) at $0.20 apiece to Ascapia Capital.
- Ascapia Capital is a fund backed by Asian family offices and high net worth individuals, and it focuses on investment in emerging Asian countries.
- Net proceeds of $0.98m earmarked for business expansion and working capital.
- Trades at 9.8x trailing P/E.
*Raffles United
- Established a 51% owned subsidiary, PT Radiant Thompson Indonesia (RTI), with a paid-up capital of Rp2.5b.
- RTI will be in the business of trading in bearing products in Indonesia.
- The market could continue on its upward move as investors position into banks, property developers and tech manufacturers, ahead of the anticipated positive release for the 3Q final GDP data tomorrow.
- Technically, topside resistance for STI is seen at 3,460, with underlying support now at 3,390.
POSITIVE NEWS
*Keppel Corp
- 24.5% owned PT Purimas Straits Resort will divest a 20.5ha site in West Bali's Tanah Lot district.
- The divestment will result in a net divestment gain of $17.6m, which is slated to complete by end-2017.
- Trades at 15.9x forward P/E.
*Viva Industrial Trust
- Singapore centric business park and industrial property trust will be included in the MSCI Singapore Small Cap Index as of the close of 30 Nov.
- Offers 7.44% indicative yield and trades at 1.27x P/B.
- MKE has a BUY with TP of $1.00.
NEGATIVE NEWS
*Envictus
- Warned of a FY17 net loss as operating losses were exacerbated by a full impairment of RM32.9m for its investment in Yamada Green Resources.
- Last traded at 0.43x P/B.
*Swing Media
- High Court of the Hong Kong Special Administrative Region has ordered the group to wind up.
- The official receiver of Hong Kong Special Administrative Region will be constituted as the provisional liquidator of the company.
- Counter has been suspended since 11 Jul.
NEUTRAL NEWS
*Sembcorp Industries
- To acquire an additional 3.7% stake in Vietnam Singapore Industrial Park (VSIP) for US$6.9m, lifting its stake from 92.9% to 96.6%.
- VSIP represents the Singapore consortium which holds a 51% stake in Vietnam Singapore Industrial Park JVCo, the developer of industrial park projects in Vietnam.
- Trades at 15.1x forward P/E.
*AIMS AMP REIT
- Launched private placement of new units between $1.305 and $1.345 each.
- Proceeds to be used mainly to repay debt and for asset enhancement initiatives.
- Offers 7.3% yield and trades at 1.03x P/B.
- MKE last had a BUY with TP of $1.60.
*Lum Chang
- Completed its collective acquisition of freehold residential property One Tree Hill Gardens for $65m, or a land rate of $1,664 psf.
- The 39,063 sf site could be redeveloped into 10 semi-detached homes plus three bungalows.
- Last traded at 7.2x trailing P/E.
*Olam
- Issued 994,919 new shares in relation to a warrant exercise at US$1.09 each.
- 58.2m outstanding warrants remains, which expires on 29 Jan 2018.
- Last traded at 15.7x forward P/E.
*Gallant Venture
- To issue 513m new shares (10.63% of issued share capital) to three placees at $0.133 each.
- Net proceeds of $68.2m intended to fund business expansion and working capital.
- Trades at 15.8x trailing P/E.
*Singapore Kitchen Equipment
- Proposed placement of 5m new shares (3.33% enlarged share capital) at $0.20 apiece to Ascapia Capital.
- Ascapia Capital is a fund backed by Asian family offices and high net worth individuals, and it focuses on investment in emerging Asian countries.
- Net proceeds of $0.98m earmarked for business expansion and working capital.
- Trades at 9.8x trailing P/E.
*Raffles United
- Established a 51% owned subsidiary, PT Radiant Thompson Indonesia (RTI), with a paid-up capital of Rp2.5b.
- RTI will be in the business of trading in bearing products in Indonesia.
Tuesday, November 21, 2017
SG Market (21 Nov 17)
MARKET OVERVIEW
- Economists' upward revisions on the 3Q final GDP estimate ahead of its release this Thu could lift the STI higher, anticipating that the domestic economy is growing at its fastest pace over more than three years.
- Technically, the STI could test the immediate topside resistance at 3,390, while underlying support remains at 3,320.
POSITIVE NEWS
*ST Engineering
- Awarded a 15-year contract by Gulf Air, Bahrain's national carrier, to provide MRO services for its new fleet of Boeing 787 aircraft.
- Last traded at 21.1x forward P/E.
*Yanlord
- Sold out all 636 apartment units at Oasis New Island Gardens Phase 3 in Nanjing on the first day of its sales launch.
- Contracted pre-sales of Rmb2.59b was derived from the launch for the 72,000 sqm gfa sold at an average Rmb36,000 psm.
- This will add to the group's total pre-sales pending recognition of Rmb24.68b as at 30 Sep '17.
- Last traded at 0.75x P/B.
*Wilmar
- To purchase edible oil facilities in Kuantan, Malaysia, from Cargill for an undisclosed amount.
- The acquisition includes a palm oil refinery and a neighbouring storage facility, and would strengthen Wilmar's sales and distribution network in Malaysia and serve as a strategic location for regional exports.
- Transfer of ownership is expected to occur by end-2018.
- Last traded at 13.5x forward P/E and 0.95x P/B.
*DeClout
- To collaborate with early stage venture capital Gobi Singapore to accelerate the growth of Southeast Asian start-ups in their portfolios.
- Gobi Singapore has been an active VC in the region with a portfolio of 42 companies across Southeast Asia, ranging from seed to growth stage investments.
- The strategic partnership with Gobi will allow portfolio companies to achieve their optimal potential through incubation and fund-raising facilitation capabilities.
- Trades at 38.7x trailing P/E.
*Cheung Woh Technologies
- Proposed disposal of 31.34% stake in Jiangsu Tysan Precision Engineering (JTPE) for Rmb68m ($13.95m), or 0.94x P/B.
- The sale of stake in the Chinese firm that manufactures seat recliners and seat tract adjusters comes amid apparent intensifying competition in the Chinese automotive industry.
*Ezion
- Obtained majority vote in favour of Ezion's proposal to push out maturity dates and reduce coupon rates on notes issued under the $1.5b multicurrency debt issuance programme.
- The positive development will pave the way for lenders to approve a six-year refinancing deal to bolster balance sheet for the group.
NEGATIVE NEWS
*New Wave Holdings
- Updated that it did not receive any bids at the close of the public tender exercise for the en-bloc sale of Jalan Besar Plaza.
- But, there was a letter dated 10 Nov '17 from a developer expressing interest to acquire the property.
- The collective sale committee of the property still has 10 weeks to enter into a private contract.
- Trades at 13.9x trailing P/E.
*Attilan
- Court has granted the group to convene a meeting with its scheme creditors by 28 Feb 2018.
- No action or proceeding shall continue or commence against the group until 31 Mar 2018.
- The counter has been suspended since 12 Jun.
NEUTRAL NEWS
*Poh Tiong Choon
- The consortium led by the group's chairman has received 90.17% valid acceptances for its $1.30/share buyout offer.
- Accordingly, the offeror will exercise its right to compulsorily acquire all the remaining shares.
*TSH Corporation
- Seeking SGX's approval for a further extension of time to enter into a definitive agreement for proposed acquisition by 28 Feb 2018.
- To recap, the acquisition consists of four freehold commercial properties located in Brisbane, Australia, for a total amount of A$13.2m.
- Economists' upward revisions on the 3Q final GDP estimate ahead of its release this Thu could lift the STI higher, anticipating that the domestic economy is growing at its fastest pace over more than three years.
- Technically, the STI could test the immediate topside resistance at 3,390, while underlying support remains at 3,320.
POSITIVE NEWS
*ST Engineering
- Awarded a 15-year contract by Gulf Air, Bahrain's national carrier, to provide MRO services for its new fleet of Boeing 787 aircraft.
- Last traded at 21.1x forward P/E.
*Yanlord
- Sold out all 636 apartment units at Oasis New Island Gardens Phase 3 in Nanjing on the first day of its sales launch.
- Contracted pre-sales of Rmb2.59b was derived from the launch for the 72,000 sqm gfa sold at an average Rmb36,000 psm.
- This will add to the group's total pre-sales pending recognition of Rmb24.68b as at 30 Sep '17.
- Last traded at 0.75x P/B.
*Wilmar
- To purchase edible oil facilities in Kuantan, Malaysia, from Cargill for an undisclosed amount.
- The acquisition includes a palm oil refinery and a neighbouring storage facility, and would strengthen Wilmar's sales and distribution network in Malaysia and serve as a strategic location for regional exports.
- Transfer of ownership is expected to occur by end-2018.
- Last traded at 13.5x forward P/E and 0.95x P/B.
*DeClout
- To collaborate with early stage venture capital Gobi Singapore to accelerate the growth of Southeast Asian start-ups in their portfolios.
- Gobi Singapore has been an active VC in the region with a portfolio of 42 companies across Southeast Asia, ranging from seed to growth stage investments.
- The strategic partnership with Gobi will allow portfolio companies to achieve their optimal potential through incubation and fund-raising facilitation capabilities.
- Trades at 38.7x trailing P/E.
*Cheung Woh Technologies
- Proposed disposal of 31.34% stake in Jiangsu Tysan Precision Engineering (JTPE) for Rmb68m ($13.95m), or 0.94x P/B.
- The sale of stake in the Chinese firm that manufactures seat recliners and seat tract adjusters comes amid apparent intensifying competition in the Chinese automotive industry.
*Ezion
- Obtained majority vote in favour of Ezion's proposal to push out maturity dates and reduce coupon rates on notes issued under the $1.5b multicurrency debt issuance programme.
- The positive development will pave the way for lenders to approve a six-year refinancing deal to bolster balance sheet for the group.
NEGATIVE NEWS
*New Wave Holdings
- Updated that it did not receive any bids at the close of the public tender exercise for the en-bloc sale of Jalan Besar Plaza.
- But, there was a letter dated 10 Nov '17 from a developer expressing interest to acquire the property.
- The collective sale committee of the property still has 10 weeks to enter into a private contract.
- Trades at 13.9x trailing P/E.
*Attilan
- Court has granted the group to convene a meeting with its scheme creditors by 28 Feb 2018.
- No action or proceeding shall continue or commence against the group until 31 Mar 2018.
- The counter has been suspended since 12 Jun.
NEUTRAL NEWS
*Poh Tiong Choon
- The consortium led by the group's chairman has received 90.17% valid acceptances for its $1.30/share buyout offer.
- Accordingly, the offeror will exercise its right to compulsorily acquire all the remaining shares.
*TSH Corporation
- Seeking SGX's approval for a further extension of time to enter into a definitive agreement for proposed acquisition by 28 Feb 2018.
- To recap, the acquisition consists of four freehold commercial properties located in Brisbane, Australia, for a total amount of A$13.2m.
Monday, November 20, 2017
SG Market (20 Nov 17)
MARKET OVERVIEW
- The market is likely to stay range-bound ahead of the slew of macro data to be released this week, including the US FOMC meeting minutes and UK budget statement on Wed, as well as the domestic official 3Q GDP this Thu.
- Technically, the STI could test the immediate topside resistance at 3,390, while underlying support remains at 3,320.
MACRO WATCH
*Economy
- PM Lee cited the Singapore economy could expand by more than 3% this year, above the 2-3% official forecast range.
- The buoyant economy is looking up, underpinned by low unemployment rates and higher wages, as well as improved productivity.
POSITIVE NEWS
*Jardine C&C
- Acquired an additional 16.5m (1.1% share capital) Vinamilk shares via the market.
- This lifted Jardine C&C's stake to 10%.
- The acquisition is in line with the group's strategy to increase its exposure in Vietnam.
- Last traded at 14.5x forward P/E.
*AusGroup
- Existing JV with Meisei Industrial has been awarded a A$67m contract extension by JKC Australia LNG.
- Trades at 3.6x trailing P/E.
*Enviro-Hub
- To sell 51% owned F2S1 Investments to PE fund Gaw Capital Partners for $342m.
- Upon completion, net proceeds will be used to pare outstanding borrowings from $430.9m to $130.1m, with pro forma gearing reduced from 4.49x to 1.36x.
- Last traded at 0.83x P/B.
*TA Corp
- 80% owned TK Modular received in-principle acceptance from Building and Construction Authority (BCA) to use its steel prefabricated prefinished volumetric construction (PPVC) system for building projects in Singapore.
- BCA encourages the use of PPVC to speed up construction and productivity in terms of labour and time saving.
NEGATIVE NEWS
*StarHub
- CEO Tan Tong Hai is stepping down from his position, effective from 1 May 2018, amid pressure in the domestic telecom sector.
- StarHub is in the process of searching for a new CEO globally.
- Current price offers an indicative yield of 6% and implies 17.4x forward P/E.
- MKE last had a Sell with TP of $2.17.
*Olam
- Disclosed that its free float will fall below 10% to 9.31%, following the exercise of 91.3m warrants into new shares at $1.09.
- There are 59.2m similar warrants remaining and can be exercised by 29 Jan '18. Assuming all are exercised, Olam's free float is expected to be back above 10%.
- Under SGX ruling, the regulator could suspend trading when the public float falls below the 10% mark. If that occurs, SGX may allow Olam to restore the float to the minimum threshold in a period of three months or longer.
- Trading at 15.6x forward P/E and 1.3x P/B.
*TT International
- Scheme creditors have agreed to extend its due payments to 18 Feb 2018.
- The counter has been suspended since 4 Aug.
*Hoe Leong
- Malayan Banking has made a claim against Hoe Leong in Singapore High Court in relation to a sum of $0.4m owed by the group.
- Last traded at 1.54x P/B.
NEUTRAL NEWS
*GuocoLand
*GuocoLand
- Undertaking an internal restructuring exercise to consolidate certain hotels under the group to promote business efficacy and enhance synergy.
- One hotel in Singapore (Sofitel Singapore City Centre) and two hotels in Malaysia (Thistle Johor Bahru and Thistle Port Dickson) will be consolidated under a wholly-owned business unit, GuocoLand Hotels.
- The group will have to pay an aggregate RM224m to acquire the two hotels in Malaysia as they are held under GuocoLand Malaysia. - Effective stake in the Johor hotel will be raised to 70%, while Port Dickson will be up to 100%.
- Maybank KE last had a Buy with TP of 2.90.
*Noble Group
- To acquire 49% stake in rare earths project, Songwe Hill, undertaken by Toronto-listed Mkango Resources for £14m ($25m).
- The proposed investment will bolster the group's position in the rare earths sector both upstream and downstream.
- Last traded at 0.31x P/B.
*TIH
- Updated that the discussion on a potential transaction that would involve the change in control of the company is still on-going.
- Last traded at 0.98x P/B.
*Arion Entertainment
- Entered into non-binding MOU to acquire certain cyber security assets from Bio-Nexus.
- Israel based Bio-Nexus is engaged in the development, manufacture and design of mobile workflow engine data transmission in a mobile environment.
- Discussions are on-going and yet to be materialised.
- Counter is loss-making and trades at 3.54x P/B.
- The market is likely to stay range-bound ahead of the slew of macro data to be released this week, including the US FOMC meeting minutes and UK budget statement on Wed, as well as the domestic official 3Q GDP this Thu.
- Technically, the STI could test the immediate topside resistance at 3,390, while underlying support remains at 3,320.
MACRO WATCH
*Economy
- PM Lee cited the Singapore economy could expand by more than 3% this year, above the 2-3% official forecast range.
- The buoyant economy is looking up, underpinned by low unemployment rates and higher wages, as well as improved productivity.
POSITIVE NEWS
*Jardine C&C
- Acquired an additional 16.5m (1.1% share capital) Vinamilk shares via the market.
- This lifted Jardine C&C's stake to 10%.
- The acquisition is in line with the group's strategy to increase its exposure in Vietnam.
- Last traded at 14.5x forward P/E.
*AusGroup
- Existing JV with Meisei Industrial has been awarded a A$67m contract extension by JKC Australia LNG.
- Trades at 3.6x trailing P/E.
*Enviro-Hub
- To sell 51% owned F2S1 Investments to PE fund Gaw Capital Partners for $342m.
- Upon completion, net proceeds will be used to pare outstanding borrowings from $430.9m to $130.1m, with pro forma gearing reduced from 4.49x to 1.36x.
- Last traded at 0.83x P/B.
*TA Corp
- 80% owned TK Modular received in-principle acceptance from Building and Construction Authority (BCA) to use its steel prefabricated prefinished volumetric construction (PPVC) system for building projects in Singapore.
- BCA encourages the use of PPVC to speed up construction and productivity in terms of labour and time saving.
NEGATIVE NEWS
*StarHub
- CEO Tan Tong Hai is stepping down from his position, effective from 1 May 2018, amid pressure in the domestic telecom sector.
- StarHub is in the process of searching for a new CEO globally.
- Current price offers an indicative yield of 6% and implies 17.4x forward P/E.
- MKE last had a Sell with TP of $2.17.
*Olam
- Disclosed that its free float will fall below 10% to 9.31%, following the exercise of 91.3m warrants into new shares at $1.09.
- There are 59.2m similar warrants remaining and can be exercised by 29 Jan '18. Assuming all are exercised, Olam's free float is expected to be back above 10%.
- Under SGX ruling, the regulator could suspend trading when the public float falls below the 10% mark. If that occurs, SGX may allow Olam to restore the float to the minimum threshold in a period of three months or longer.
- Trading at 15.6x forward P/E and 1.3x P/B.
*TT International
- Scheme creditors have agreed to extend its due payments to 18 Feb 2018.
- The counter has been suspended since 4 Aug.
*Hoe Leong
- Malayan Banking has made a claim against Hoe Leong in Singapore High Court in relation to a sum of $0.4m owed by the group.
- Last traded at 1.54x P/B.
NEUTRAL NEWS
*GuocoLand
*GuocoLand
- Undertaking an internal restructuring exercise to consolidate certain hotels under the group to promote business efficacy and enhance synergy.
- One hotel in Singapore (Sofitel Singapore City Centre) and two hotels in Malaysia (Thistle Johor Bahru and Thistle Port Dickson) will be consolidated under a wholly-owned business unit, GuocoLand Hotels.
- The group will have to pay an aggregate RM224m to acquire the two hotels in Malaysia as they are held under GuocoLand Malaysia. - Effective stake in the Johor hotel will be raised to 70%, while Port Dickson will be up to 100%.
- Maybank KE last had a Buy with TP of 2.90.
*Noble Group
- To acquire 49% stake in rare earths project, Songwe Hill, undertaken by Toronto-listed Mkango Resources for £14m ($25m).
- The proposed investment will bolster the group's position in the rare earths sector both upstream and downstream.
- Last traded at 0.31x P/B.
*TIH
- Updated that the discussion on a potential transaction that would involve the change in control of the company is still on-going.
- Last traded at 0.98x P/B.
*Arion Entertainment
- Entered into non-binding MOU to acquire certain cyber security assets from Bio-Nexus.
- Israel based Bio-Nexus is engaged in the development, manufacture and design of mobile workflow engine data transmission in a mobile environment.
- Discussions are on-going and yet to be materialised.
- Counter is loss-making and trades at 3.54x P/B.
Friday, November 17, 2017
SG Market (17 Nov 17)
MARKET OVERVIEW
- The market could recoup some losses after a 5-day losing streak as Wall Street cheered the House passage of Trump's tax cut bill.
- Technically, underlying support for the STI lies at 3,320 with upside resistance at 3,390.
SECTOR WATCH
*Property
- MKE stays Positive on the property sector even after its strong 30% ytd rally. We believe the sector is in the early stages of a recovery and recent share-price weakness on the back of profit-taking should be an opportunity to raise exposure.
- Three things to watch for the next potential leg up are 1) RNAV upgrades from accretive land deals; 2) lower home vacancies; and 3) a recovery in residential rents, with tailwinds stemming from accelerated enbloc demolitions.
- Top picks are UOL (TP: $9.85), City Dev (TP: $13.80) and GuocoLand (TP: $2.90).
POSITIVE NEWS
*Genting Hong Kong
- Disposing 5m Norwegian Cruise Line shares via a secondary public offering.
- The sale would raise US$270.1m and result in a US$57.4m gain.
- Upon completion of deal, the group's stake in NCL would be reduced to 5.64% from 7.83%.
- Last traded at 0.45x P/B
*Talkmed
- Entered three-year management and license agreements with Beijing New Hope Hospital (BNH) to provide management services for the Singapore Cancer Centre clinic at Beijing Parkway Jingshun Hospital and other oncology medical services set up by BNH in China.
- Management fee will be 4% of the clinic's EBITDA.
- License fee will be 1.5% of clinic's net revenue.
- Trades at 28.8x forward P/E.
*Pollux Properties
- Completed the acquisition of Pollux Alpha Investment (PAI) from Pollux Holdings for $145m.
- To recap, PAI is a property investment company, which owns several commercial and residential properties located in prime locations in Singapore, including the iconic MacDonald House in Orchard Road.
- The acquisition would enable the group to expand its investment portfolio and have a greater financial capacity to seek opportunities in Singapore and the region.
- Last traded at 0.49x P/B.
*Hatten Land
- Acquired two land parcels in Klebang, Melaka, for a combined RM108.6m
- The two integrated projects is near to new township developments, and will expand the group's land asset portfolio to seven integrated mixed-use developments and a retail mail.
- Acquisition will be funded via an issue of 140.16m shares at $0.25 each (29% premium to last close).
- Post-completion, pro forma NTA/share will increase to RM0.2213 from RM0.165.
- Trades at 7.7x forward P/E.
NEUTRAL NEWS
*Spackman Entertainment
- Invested KRW250m ($309,000) for a 20% stake in The Makers Studio, a South Korean film production company.
- The start-up firm was set up by three Korean entertainment industry veterans and has plans to produce and release four films in 2018-2020.
*Nam Cheong
- Application by key subsidiaries to restructure their debts under a scheme of arrangement has been granted by High Court of Malaysia.
- The group has been ordered to convene a meeting between Nam Cheong Dockyard and Nam Cheong Int'l and their respective creditors to consider and approve the scheme of arrangement within 90 days from 15 Nov 2017.
- The shipbuilder has suspended trading since 21 Jul 2017.
*HL Global
- Agreed with Natural Apex to extend the current long-stop date for the disposal of LKN Investment from 16 Nov to 23 Nov.
- Trades at 76.9x trailing P/E.
*Raffles Education
- Oei Hong Leong and Oei Hong Leong Art Museum have withdrawn their requisition notice to oust the group's founder, chairman and chief executive Chew Hua Seng.
- The loss-making group is trading at 0.59x P/B.
*Amplefield
- Proposed a renounceable non-underwritten 3-for-1 rights issue at $0.05 each, attached with two detachable warrants with exercise price of $0.05 apiece.
- Maximum proceeds from the rights of $51.3m will be used to repay debt of $22.6m and for working capital purposes.
- The market could recoup some losses after a 5-day losing streak as Wall Street cheered the House passage of Trump's tax cut bill.
- Technically, underlying support for the STI lies at 3,320 with upside resistance at 3,390.
SECTOR WATCH
*Property
- MKE stays Positive on the property sector even after its strong 30% ytd rally. We believe the sector is in the early stages of a recovery and recent share-price weakness on the back of profit-taking should be an opportunity to raise exposure.
- Three things to watch for the next potential leg up are 1) RNAV upgrades from accretive land deals; 2) lower home vacancies; and 3) a recovery in residential rents, with tailwinds stemming from accelerated enbloc demolitions.
- Top picks are UOL (TP: $9.85), City Dev (TP: $13.80) and GuocoLand (TP: $2.90).
POSITIVE NEWS
*Genting Hong Kong
- Disposing 5m Norwegian Cruise Line shares via a secondary public offering.
- The sale would raise US$270.1m and result in a US$57.4m gain.
- Upon completion of deal, the group's stake in NCL would be reduced to 5.64% from 7.83%.
- Last traded at 0.45x P/B
*Talkmed
- Entered three-year management and license agreements with Beijing New Hope Hospital (BNH) to provide management services for the Singapore Cancer Centre clinic at Beijing Parkway Jingshun Hospital and other oncology medical services set up by BNH in China.
- Management fee will be 4% of the clinic's EBITDA.
- License fee will be 1.5% of clinic's net revenue.
- Trades at 28.8x forward P/E.
*Pollux Properties
- Completed the acquisition of Pollux Alpha Investment (PAI) from Pollux Holdings for $145m.
- To recap, PAI is a property investment company, which owns several commercial and residential properties located in prime locations in Singapore, including the iconic MacDonald House in Orchard Road.
- The acquisition would enable the group to expand its investment portfolio and have a greater financial capacity to seek opportunities in Singapore and the region.
- Last traded at 0.49x P/B.
*Hatten Land
- Acquired two land parcels in Klebang, Melaka, for a combined RM108.6m
- The two integrated projects is near to new township developments, and will expand the group's land asset portfolio to seven integrated mixed-use developments and a retail mail.
- Acquisition will be funded via an issue of 140.16m shares at $0.25 each (29% premium to last close).
- Post-completion, pro forma NTA/share will increase to RM0.2213 from RM0.165.
- Trades at 7.7x forward P/E.
NEUTRAL NEWS
*Spackman Entertainment
- Invested KRW250m ($309,000) for a 20% stake in The Makers Studio, a South Korean film production company.
- The start-up firm was set up by three Korean entertainment industry veterans and has plans to produce and release four films in 2018-2020.
*Nam Cheong
- Application by key subsidiaries to restructure their debts under a scheme of arrangement has been granted by High Court of Malaysia.
- The group has been ordered to convene a meeting between Nam Cheong Dockyard and Nam Cheong Int'l and their respective creditors to consider and approve the scheme of arrangement within 90 days from 15 Nov 2017.
- The shipbuilder has suspended trading since 21 Jul 2017.
*HL Global
- Agreed with Natural Apex to extend the current long-stop date for the disposal of LKN Investment from 16 Nov to 23 Nov.
- Trades at 76.9x trailing P/E.
*Raffles Education
- Oei Hong Leong and Oei Hong Leong Art Museum have withdrawn their requisition notice to oust the group's founder, chairman and chief executive Chew Hua Seng.
- The loss-making group is trading at 0.59x P/B.
*Amplefield
- Proposed a renounceable non-underwritten 3-for-1 rights issue at $0.05 each, attached with two detachable warrants with exercise price of $0.05 apiece.
- Maximum proceeds from the rights of $51.3m will be used to repay debt of $22.6m and for working capital purposes.
Thursday, November 16, 2017
SG Market (16 Nov 17)
MARKET OVERVIEW
- The market has begaun its long overdue correction as investors take profit after the corporate earnings season and head into the year-end lull period.
- Oil stocks could come under pressure as crude prices tumbled overnight after a US oil inventory report showed higher production and IEA cut its forecast for crude demand next year.
- Technically, the STI could consolidate towards the underlying support at 3,355, with topside resistance at 3,460.
SECTOR WATCH
*Property
- Developers sold 758 units in Oct (-40% y/y, +15% m/m) due to fewer sale launches.
- Including ECs, 969 new homes were sold (-37% y/y, +7% m/m).
- The slower sales is in line with Maybank KE expectations as developers hold back on launches in a bid to raise prices to maximise returns.
- The house remains positive on the property developers. Preferred picks are City Dev (TP $13.60), UOL (TP $9.80) and GuocoLand (TP $2.90).
POSITIVE NEWS
*SIA
- Lifted group passenger load factor of 80.8% (+4.1ppt) in Oct as traffic growth (+8.3%) outpaced capacity expansion (+2.8%).
- Cargo load factor improved 1.6ppt to 67.8% on higher cargo carriage (+1.8%).
- Notably, subsidiaries SilkAir (+6.5ppt to 73.8%) and Scoot (+9.1ppt to 95.8%) also notched markedly higher load factors.
- Parent carrier load factor rose 2.8ppt to 80.2% across routes to East Asia (+3.4ppt), Americas (+4ppt), Europe (+2.3ppt), South West Pacific (+0.3ppt), West Asia and Africa (+5.7ppt).
- Last traded at 0.95x P/B.
*CapitaLand
- Acquired Viet Hung Phu Real Estate Business Investment Joint Stock Company (VHP) for US$38.9m ($53.5m).
- VHP owns a 14,474 sqm land plot in District 4, Ho Chi Minh City, which is slated for a residential development.
- Trades at 33% discount to its RNAV/share of $5.25.
NEUTRAL NEWS
*Noble Group
- The struggling commodity trader is reorganising its rare earths and special ores & metal businesses into two distinct operating entities, Kalon Resources, and Talaxis, for growth.
- But the group continues to fight for survival as liquidity and credit constraints crimp its trading business.
- Last traded at 0.23x P/B.
*Darco Water
- Proposed placement of 1.5m new shares (2.62% existing share capital) at $0.60 each to controlling shareholder Robert Stone, which will raise his stake to 18.13% from 15.99%.
- Net proceeds of $0.88m will be used to invest in public-private partnership water infrastructure projects.
*MMP Resources
- Proposed issue of 12.5% convertible bonds due 2021 for $100k and placement of 7.99m new shares at 0.54¢ each.
- Aggregate proceeds of $114.5k from structured debt specialist fund, Maiora Asset Management, will be used for investment purposes.
*shopper360
- Entered into a 60:40 JV with Pahtama Group.
- The move will help expand its marketing services in the retail and consumer goods industries in Myanmar.
*Marco Polo Marine
- Obtained majority support of 89.81% in favour for the redemption of $50m 5.75% notes using cash and equity swap.
- The approval will give Marco Polo the green light to proceed with the redemption of $71,736 per note, comprising cash of $35,868 and an 1.025m shares at 3.5¢ each, to be made in Jan 2018.
- This will pave way for further refinancing and debt restructuring, involving a $60m equity fund raising via new shares and rights issues and settling trade debt via instalments and share issuance.
*Envictus International
- Proposed to acquire Motivage from the group's own Deputy CEO Khor Sin Kok and his sister Khor Guat Bee for RM24m.
- The Malaysian target is licensed to manufacture sweetened condensed milk and various other related dairy products.
- Motivage recorded a net loss of RM0.22m in FY9/17.
- The consideration implies 1.11x P/B, and will be funded via cash (RM5m) and an issue of 15.8m new shares at $0.3913 apiece.
- Last traded at 0.44x P/B.
*Olam
- Issued 82,766 new shares in relation to a warrant exercise at US$1.09 each.
- 150m outstanding warrants remains, which expires on 29 Jan 2018.
- Trades at 16.5x forward P/E and 1.3x P/B.
*Second Chance Properties
- Issued 26,000 new shares in relation to a warrant exercise at $0.25 each.
- 747m outstanding warrants remains, which expires on 23 Jan 2020.
- Counter trades at 20.2x trailing P/E and 0.74x P/B.
- The market has begaun its long overdue correction as investors take profit after the corporate earnings season and head into the year-end lull period.
- Oil stocks could come under pressure as crude prices tumbled overnight after a US oil inventory report showed higher production and IEA cut its forecast for crude demand next year.
- Technically, the STI could consolidate towards the underlying support at 3,355, with topside resistance at 3,460.
SECTOR WATCH
*Property
- Developers sold 758 units in Oct (-40% y/y, +15% m/m) due to fewer sale launches.
- Including ECs, 969 new homes were sold (-37% y/y, +7% m/m).
- The slower sales is in line with Maybank KE expectations as developers hold back on launches in a bid to raise prices to maximise returns.
- The house remains positive on the property developers. Preferred picks are City Dev (TP $13.60), UOL (TP $9.80) and GuocoLand (TP $2.90).
POSITIVE NEWS
*SIA
- Lifted group passenger load factor of 80.8% (+4.1ppt) in Oct as traffic growth (+8.3%) outpaced capacity expansion (+2.8%).
- Cargo load factor improved 1.6ppt to 67.8% on higher cargo carriage (+1.8%).
- Notably, subsidiaries SilkAir (+6.5ppt to 73.8%) and Scoot (+9.1ppt to 95.8%) also notched markedly higher load factors.
- Parent carrier load factor rose 2.8ppt to 80.2% across routes to East Asia (+3.4ppt), Americas (+4ppt), Europe (+2.3ppt), South West Pacific (+0.3ppt), West Asia and Africa (+5.7ppt).
- Last traded at 0.95x P/B.
*CapitaLand
- Acquired Viet Hung Phu Real Estate Business Investment Joint Stock Company (VHP) for US$38.9m ($53.5m).
- VHP owns a 14,474 sqm land plot in District 4, Ho Chi Minh City, which is slated for a residential development.
- Trades at 33% discount to its RNAV/share of $5.25.
NEUTRAL NEWS
*Noble Group
- The struggling commodity trader is reorganising its rare earths and special ores & metal businesses into two distinct operating entities, Kalon Resources, and Talaxis, for growth.
- But the group continues to fight for survival as liquidity and credit constraints crimp its trading business.
- Last traded at 0.23x P/B.
*Darco Water
- Proposed placement of 1.5m new shares (2.62% existing share capital) at $0.60 each to controlling shareholder Robert Stone, which will raise his stake to 18.13% from 15.99%.
- Net proceeds of $0.88m will be used to invest in public-private partnership water infrastructure projects.
*MMP Resources
- Proposed issue of 12.5% convertible bonds due 2021 for $100k and placement of 7.99m new shares at 0.54¢ each.
- Aggregate proceeds of $114.5k from structured debt specialist fund, Maiora Asset Management, will be used for investment purposes.
*shopper360
- Entered into a 60:40 JV with Pahtama Group.
- The move will help expand its marketing services in the retail and consumer goods industries in Myanmar.
*Marco Polo Marine
- Obtained majority support of 89.81% in favour for the redemption of $50m 5.75% notes using cash and equity swap.
- The approval will give Marco Polo the green light to proceed with the redemption of $71,736 per note, comprising cash of $35,868 and an 1.025m shares at 3.5¢ each, to be made in Jan 2018.
- This will pave way for further refinancing and debt restructuring, involving a $60m equity fund raising via new shares and rights issues and settling trade debt via instalments and share issuance.
*Envictus International
- Proposed to acquire Motivage from the group's own Deputy CEO Khor Sin Kok and his sister Khor Guat Bee for RM24m.
- The Malaysian target is licensed to manufacture sweetened condensed milk and various other related dairy products.
- Motivage recorded a net loss of RM0.22m in FY9/17.
- The consideration implies 1.11x P/B, and will be funded via cash (RM5m) and an issue of 15.8m new shares at $0.3913 apiece.
- Last traded at 0.44x P/B.
*Olam
- Issued 82,766 new shares in relation to a warrant exercise at US$1.09 each.
- 150m outstanding warrants remains, which expires on 29 Jan 2018.
- Trades at 16.5x forward P/E and 1.3x P/B.
*Second Chance Properties
- Issued 26,000 new shares in relation to a warrant exercise at $0.25 each.
- 747m outstanding warrants remains, which expires on 23 Jan 2020.
- Counter trades at 20.2x trailing P/E and 0.74x P/B.
Wednesday, November 15, 2017
SG Market (15 Nov 17)
MARKET OVERVIEW
- The market could pull back further on deteriorating momentum indicators, nagging doubts about the US tax reform bill as well as worries about an oil glut.
- Technically, STI sees underlying support at 3,355, with topside resistance at 3,460.
CORPORATE RESULTS
*SingPost
- Posted lower 2QFY17 net profit of $28.5m (-9.5%) in absence of one-off gain but core earnings was up 1.9% to $27.6m, in line with estimates.
- Revenue grew 10.2% to $354.7m on the back of stronger postal (+16.9%) and logistics (+7.6%) performances, particularly from Alibaba volumes and e-commerce deliveries, partially offset by e-commerce (-0.8%) due to persistent weakness in TradeGlobal.
- Core operating profit fell 14.1% on depressed postal margin, while logistics was hit by a $5m bad debt provision but e-commerce loss narrowed.
- Interim DPS slashed to 0.5¢ (2QFY17: 1¢).
- Trades at 26x forward P/E.
*Olam
- 3Q17 net profit rose 17.5% to $24.1m, falling within the 5-10% full-year earnings range for the Sep quarter.
- Revenue jumped 41.7% to $6.71b on higher overall trading volume (+54.3%).
- But, EBITDA margin narrowed to 3.6% (-0.7ppt) on pressure in its cocoa business.
- Adjusted gearing stayed relatively stable at 0.80x (2Q17: 0.81x).
- Trading at FY18e P/E of 16.2x and 1.14x P/B.
*Wheelock Properties
- 3Q17 net profit surged 72.1% to $48.8m, boosted by a $10.8m write-back in value of the fully-sold The Panorama condo development.
- This brought 9M17 earnings to $95.3m (+27.5%), surpassing full-year estimate.
- For the quarter, revenue grew 19.7% to $182.7m on increased contribution from property development (+23.4%), although pared by reduced income from property investment (-4.4%) and investment (-33.3%) segments.
- Gross margin contracted to 14.5% (-5.8ppt) on the shift in revenue mix.
- Bottom line lifted by higher associate income of $8.6m (+47.3%) and a tax credit of $7.8m (3Q17: $3.7m expense).
- Last traded at 0.77x P/B.
*Boustead Singapore
- 2QFY18 net profit fell 7% to $7.1m, missing estimates.
- Revenue declined 8% to $104.9m on weakness in energy-related engineering (-11%) and real estate solutions (-19%), which outweighed growth in geo-spatial technology (+23%).
- Gross margin expanded to 38.9% (+7ppt) on a shift in revenue mix but operating level suffered a negative FX swing of $2.6m to $1.8m loss.
- Associates/JVs turned around to $0.3m profit (2QFY17: $0.6m loss).
- Bottom line was pressured by higher tax of $4.3m (+40%).
- Doubled interim DPS to 1¢.
- Last traded at 14.7x forward P/E.
*Tat Hong
- 2QFY18 net loss narrowed to $2.8m (2QFY17: $5.4m) on reduced minority interest of $0.2m (2QFY17: $1.1m).
- Revenue grew 13% to $124.3m on the back of higher takings from tower crane rental (+11%), Australia general equipment rental (+34%) and distribution (+25%), but pared by lower contribution from crane rentals (-6%).
- Gross margin contracted to 28.7% (-2.5ppt) on a shift in revenue mix.
- Bottom line was impacted by a $4.3m negative swing to FX loss of $0.8m.
- Trades at 0.61x P/B.
*Hong Leong Asia
- 3Q17 net loss deepened to $17.6m (+26.2%), bringing 9M17 loss to $45.6m (-6.4%).
- Revenue for the quarter grew 16.1% to $963.2m on increased contribution from diesel engine unit China Yuchai (+26.8%), but was dragged by declines in building materials (-12.2%) and consumer products (-24.5%).
- Gross margin contracted to 18.7% (-1.7ppt) on weaker profitability across all three units.
- Bottom line was further afflicted by higher general & admin (+62.1%) and finance (+55.9%) expenses.
- Last traded at 0.7x P/B.
*Straco
- 3Q17 net profit fell 6.1% to $21.3m, bringing 9M17 earnings to $41.7m.
- For the quarter, revenue dipped 3.2% to $46.1m on weakness at Underwater World Xiamen, which outweighed higher takings at Shanghai Ocean Aquarium, Lixing Cable Car and Singapore Flyer.
- Overall visitorship to its attractions slipped 5.1%.
- Operating margin narrowed 1.8ppt to 68.4% in absence of a sales tax reversal.
- However, net cash position increased to $136.2m (2Q17: $103.6m), or 15.8¢/share.
- Trades at 15.7x trailing P/E.
*Spackman Entertainment
- Sank into 3Q17 net loss of US$0.8m (3Q16: US$1.5m profit), as revenue tumbled 35% to $1.7m on lower revenue recognition for the production of Golden Slumber.
- Top line was partially cushioned by new contribution from equipment leasing business that was acquired in Mar '17.
- Gross margin spiked 31.7ppt to 36.1%, mainly from the new business.
- However, bottom line was impacted by higher opex from the consolidation, absence of gain on disposal of subsidiaries (3Q16: $2.1m), external compensation for film loss of $0.5m, as well as an adverse FX swing of $0.15m.
- NAV/share at US$0.053.
- Last traded at 9.8x trailing P/E.
*GSS Energy
- 3Q17 net profit surged 44.7% to $2.1m, albeit from 3Q16's low base of $1.5m. This brought 9M17 net profit to $3.9m (-65.4%).
- 9M17 revenue grew 26.9% to $70.2m on higher orders from existing and new customers in its precision engineering business.
- However, gross margin contracted 2.3ppt to 21.7% on product mix changes and pricing challenges.
- YTD earnings was impacted by the absence of a disposal gain (9M16: $6.1m), as well as lower government compensation (-46%).
- Group updated that it has commenced drilling of the first production well at its Trembul Operation area.
- Trades at 14.3x trailing P/E.
*Rotary Engineering
- 3Q17 net profit jumped 29% from a low base to $1.6m, bringing 9M17 earning to $6.4m (+70%).
- Quarter revenue surged 43% to $75.2m on newly secured projects, but gross margin contracted 7.4ppt to 18.4%.
- Bottom line was buoyed by lower admin costs (-29%) and depreciation charges (-30%), although partly weighed by an adverse $1.8m swing into FX loss of $0.8m.
- Order book rose slightly to $474.8m (2Q17: $463.2m).
- Currently awaiting shareholders' approval on its proposed exit offer at $0.46/share.
- Trades at 17.8x trailing P/E.
*Fu Yu
- 3Q17 net profit tanked 56% to $0.8m, weighed by an adverse FX swing of $1.6m, JV loss of $0.2m and higher taxes.
- Revenue rose 4.5% to $50.2m, bolstered by growth in Singapore and Malaysia operations, while China held steady.
- Gross margin expanded 2.2ppt to 16.8% on lower depreciation and headcount.
- Maintained interim DPS of 0.25¢.
- Trading at 21.1x trailing P/E.
*ISDN
- 3Q17 met estimates as net profit soared 4.3x to $3m, helped by lesser professional expenses incurred for its HK listing.
- Revenue grew 8% to $76.7m, as sales of motion control solutions were buoyed by greater demand from existing and new customers in China and Singapore.
- Gross margin widened 1ppt to 25%.
- Bottom line was partly lifted by a new source of sales commission.
- Trades at 9.4x forward P/E.
*Uni-Asia Group
- 3Q17 results missed as it barely broke even with net profit of US$0.03m, although turning around from 3Q16 loss of US$0.8m.
- Revenue grew 11% to US$25.4m on improved vessel charter rates, greater number of rooms under hotel portfolio and higher investment returns.
- Operating margin expanded 6ppt to 9.9% on improved operating leverage.
- Last traded at 6.4x forward P/E.
*Dukang Distillers
- Slumped deeper into 1QFY18 net losses of Rmb25.8m (1QFY17: Rmb3.6m loss), as revenue dived 88.2% to Rmb20.1m.
- Weak sales were mainly due to lower ASPs across premium (-53.2%) and regular (-34.5%) baijiu segments, as well as an overall tumble in sales volume to 603 tons (1QFY17: 4,800 tons).
- Accordingly, gross margin crumbled to 16.9% (-14.4ppt).
- Bottom line was further impacted by lower associate contribution of Rmb0.06m (-88.3%), although pared by tax credit of Rmb0.4m (1QFY17: Rmb3.1m expense).
- Last traded at 0.08x P/B.
*Swee Hong
- 1QFY18 net profit dwindled 98% to $0.4m, mainly on the absence of a one-off scheme creditors' write-off (1QFY17: $22.4m).
- Revenue rose 14% to $14.2m on contribution of construction for a new road between MacRitchie Viaduct and Adam Flyover.
- However, gross margin slumped 22.6ppt to 8.7% on the absence of write-back of project costs provision on the Nee Soon tunnelling project.
- The 30% decline in admin expense of $0.7m was due to the reclassification of staff cost to cost of works.
- Bottom line was dragged further by finance cost of $0.2m (1QFY17: $2,000 income).
- Trading at 10.8x trailing P/E.
*Nam Cheong
- Dived to 3Q17 net loss of RM48.7m (2Q16: RM0.7m profit), mainly from a FX loss of RM15.4m and a spike in finance costs to RM27.4m (3Q16: RM4.7m).
- Revenue spiked to RM79.1m on sale and delivery of one vessel and higher contribution from the vessel chartering revenue arising from the addition of three vessels in the chartering fleet.
- Gross margin was lifted to 4.9% (+1.9ppt) on a turnaround into profitability for the vessel chartering unit.
- Bottom line was also impacted by restructuring expenses of RM2.6m.
- Net debt of RM1.67b are entirely short term and due within 12 months.
- Negative equity/share at RM0.35.
POSITIVE NEWS
*Net Pacific Financial
- Its intermediary for its Australia loan portfolio has entered into a conditional agreement to convert $5m worth of loans into shares of an Australian-based company.
- The Australian-based property development company is seeking to list on Australian Securities Exchange.
- The conversion is expected to positively impact FY17 EPS and NTA/share.
- Last traded at 12.7x trailing P/E.
NEUTRAL NEWS
*Fraser Hospitality Trust
- Partially prepaid $110m out of the $615m facility agreement under the $500m 5-year term loan facility granted.
- Prepayment was funded through the issue of $120m, 3.08% fixed rate notes due 2024.
- As such, $110m of debt maturing in July 2019 has been extended to 2024 with the weighted average debt maturity increasing to 2.74 years from 1.95 years.
- Offers annualized 4QFY17 yield of 6.6%, and trades at 0.95x P/B.
*Cityneon
- Incorporated a subsidiary, Cityneon Korea, in Jeju, South Korea with paid up capital of 600m won.
- Business comprises 1) design and construction of buildings and theme parks, 2) events and exhibition works, 3) project management, consultancy and R&D.
- Trades at 16.9x forward P/E.
*Elipsiz
- Approached by a third party to explore a possible transaction involving the shares of the group.
- To date, no agreement has been materialised.
- Last traded at 16.5x trailing P/E and 1x P/B.
- The market could pull back further on deteriorating momentum indicators, nagging doubts about the US tax reform bill as well as worries about an oil glut.
- Technically, STI sees underlying support at 3,355, with topside resistance at 3,460.
CORPORATE RESULTS
*SingPost
- Posted lower 2QFY17 net profit of $28.5m (-9.5%) in absence of one-off gain but core earnings was up 1.9% to $27.6m, in line with estimates.
- Revenue grew 10.2% to $354.7m on the back of stronger postal (+16.9%) and logistics (+7.6%) performances, particularly from Alibaba volumes and e-commerce deliveries, partially offset by e-commerce (-0.8%) due to persistent weakness in TradeGlobal.
- Core operating profit fell 14.1% on depressed postal margin, while logistics was hit by a $5m bad debt provision but e-commerce loss narrowed.
- Interim DPS slashed to 0.5¢ (2QFY17: 1¢).
- Trades at 26x forward P/E.
*Olam
- 3Q17 net profit rose 17.5% to $24.1m, falling within the 5-10% full-year earnings range for the Sep quarter.
- Revenue jumped 41.7% to $6.71b on higher overall trading volume (+54.3%).
- But, EBITDA margin narrowed to 3.6% (-0.7ppt) on pressure in its cocoa business.
- Adjusted gearing stayed relatively stable at 0.80x (2Q17: 0.81x).
- Trading at FY18e P/E of 16.2x and 1.14x P/B.
*Wheelock Properties
- 3Q17 net profit surged 72.1% to $48.8m, boosted by a $10.8m write-back in value of the fully-sold The Panorama condo development.
- This brought 9M17 earnings to $95.3m (+27.5%), surpassing full-year estimate.
- For the quarter, revenue grew 19.7% to $182.7m on increased contribution from property development (+23.4%), although pared by reduced income from property investment (-4.4%) and investment (-33.3%) segments.
- Gross margin contracted to 14.5% (-5.8ppt) on the shift in revenue mix.
- Bottom line lifted by higher associate income of $8.6m (+47.3%) and a tax credit of $7.8m (3Q17: $3.7m expense).
- Last traded at 0.77x P/B.
*Boustead Singapore
- 2QFY18 net profit fell 7% to $7.1m, missing estimates.
- Revenue declined 8% to $104.9m on weakness in energy-related engineering (-11%) and real estate solutions (-19%), which outweighed growth in geo-spatial technology (+23%).
- Gross margin expanded to 38.9% (+7ppt) on a shift in revenue mix but operating level suffered a negative FX swing of $2.6m to $1.8m loss.
- Associates/JVs turned around to $0.3m profit (2QFY17: $0.6m loss).
- Bottom line was pressured by higher tax of $4.3m (+40%).
- Doubled interim DPS to 1¢.
- Last traded at 14.7x forward P/E.
*Tat Hong
- 2QFY18 net loss narrowed to $2.8m (2QFY17: $5.4m) on reduced minority interest of $0.2m (2QFY17: $1.1m).
- Revenue grew 13% to $124.3m on the back of higher takings from tower crane rental (+11%), Australia general equipment rental (+34%) and distribution (+25%), but pared by lower contribution from crane rentals (-6%).
- Gross margin contracted to 28.7% (-2.5ppt) on a shift in revenue mix.
- Bottom line was impacted by a $4.3m negative swing to FX loss of $0.8m.
- Trades at 0.61x P/B.
*Hong Leong Asia
- 3Q17 net loss deepened to $17.6m (+26.2%), bringing 9M17 loss to $45.6m (-6.4%).
- Revenue for the quarter grew 16.1% to $963.2m on increased contribution from diesel engine unit China Yuchai (+26.8%), but was dragged by declines in building materials (-12.2%) and consumer products (-24.5%).
- Gross margin contracted to 18.7% (-1.7ppt) on weaker profitability across all three units.
- Bottom line was further afflicted by higher general & admin (+62.1%) and finance (+55.9%) expenses.
- Last traded at 0.7x P/B.
*Straco
- 3Q17 net profit fell 6.1% to $21.3m, bringing 9M17 earnings to $41.7m.
- For the quarter, revenue dipped 3.2% to $46.1m on weakness at Underwater World Xiamen, which outweighed higher takings at Shanghai Ocean Aquarium, Lixing Cable Car and Singapore Flyer.
- Overall visitorship to its attractions slipped 5.1%.
- Operating margin narrowed 1.8ppt to 68.4% in absence of a sales tax reversal.
- However, net cash position increased to $136.2m (2Q17: $103.6m), or 15.8¢/share.
- Trades at 15.7x trailing P/E.
*Spackman Entertainment
- Sank into 3Q17 net loss of US$0.8m (3Q16: US$1.5m profit), as revenue tumbled 35% to $1.7m on lower revenue recognition for the production of Golden Slumber.
- Top line was partially cushioned by new contribution from equipment leasing business that was acquired in Mar '17.
- Gross margin spiked 31.7ppt to 36.1%, mainly from the new business.
- However, bottom line was impacted by higher opex from the consolidation, absence of gain on disposal of subsidiaries (3Q16: $2.1m), external compensation for film loss of $0.5m, as well as an adverse FX swing of $0.15m.
- NAV/share at US$0.053.
- Last traded at 9.8x trailing P/E.
*GSS Energy
- 3Q17 net profit surged 44.7% to $2.1m, albeit from 3Q16's low base of $1.5m. This brought 9M17 net profit to $3.9m (-65.4%).
- 9M17 revenue grew 26.9% to $70.2m on higher orders from existing and new customers in its precision engineering business.
- However, gross margin contracted 2.3ppt to 21.7% on product mix changes and pricing challenges.
- YTD earnings was impacted by the absence of a disposal gain (9M16: $6.1m), as well as lower government compensation (-46%).
- Group updated that it has commenced drilling of the first production well at its Trembul Operation area.
- Trades at 14.3x trailing P/E.
*Rotary Engineering
- 3Q17 net profit jumped 29% from a low base to $1.6m, bringing 9M17 earning to $6.4m (+70%).
- Quarter revenue surged 43% to $75.2m on newly secured projects, but gross margin contracted 7.4ppt to 18.4%.
- Bottom line was buoyed by lower admin costs (-29%) and depreciation charges (-30%), although partly weighed by an adverse $1.8m swing into FX loss of $0.8m.
- Order book rose slightly to $474.8m (2Q17: $463.2m).
- Currently awaiting shareholders' approval on its proposed exit offer at $0.46/share.
- Trades at 17.8x trailing P/E.
*Fu Yu
- 3Q17 net profit tanked 56% to $0.8m, weighed by an adverse FX swing of $1.6m, JV loss of $0.2m and higher taxes.
- Revenue rose 4.5% to $50.2m, bolstered by growth in Singapore and Malaysia operations, while China held steady.
- Gross margin expanded 2.2ppt to 16.8% on lower depreciation and headcount.
- Maintained interim DPS of 0.25¢.
- Trading at 21.1x trailing P/E.
*ISDN
- 3Q17 met estimates as net profit soared 4.3x to $3m, helped by lesser professional expenses incurred for its HK listing.
- Revenue grew 8% to $76.7m, as sales of motion control solutions were buoyed by greater demand from existing and new customers in China and Singapore.
- Gross margin widened 1ppt to 25%.
- Bottom line was partly lifted by a new source of sales commission.
- Trades at 9.4x forward P/E.
*Uni-Asia Group
- 3Q17 results missed as it barely broke even with net profit of US$0.03m, although turning around from 3Q16 loss of US$0.8m.
- Revenue grew 11% to US$25.4m on improved vessel charter rates, greater number of rooms under hotel portfolio and higher investment returns.
- Operating margin expanded 6ppt to 9.9% on improved operating leverage.
- Last traded at 6.4x forward P/E.
*Dukang Distillers
- Slumped deeper into 1QFY18 net losses of Rmb25.8m (1QFY17: Rmb3.6m loss), as revenue dived 88.2% to Rmb20.1m.
- Weak sales were mainly due to lower ASPs across premium (-53.2%) and regular (-34.5%) baijiu segments, as well as an overall tumble in sales volume to 603 tons (1QFY17: 4,800 tons).
- Accordingly, gross margin crumbled to 16.9% (-14.4ppt).
- Bottom line was further impacted by lower associate contribution of Rmb0.06m (-88.3%), although pared by tax credit of Rmb0.4m (1QFY17: Rmb3.1m expense).
- Last traded at 0.08x P/B.
*Swee Hong
- 1QFY18 net profit dwindled 98% to $0.4m, mainly on the absence of a one-off scheme creditors' write-off (1QFY17: $22.4m).
- Revenue rose 14% to $14.2m on contribution of construction for a new road between MacRitchie Viaduct and Adam Flyover.
- However, gross margin slumped 22.6ppt to 8.7% on the absence of write-back of project costs provision on the Nee Soon tunnelling project.
- The 30% decline in admin expense of $0.7m was due to the reclassification of staff cost to cost of works.
- Bottom line was dragged further by finance cost of $0.2m (1QFY17: $2,000 income).
- Trading at 10.8x trailing P/E.
*Nam Cheong
- Dived to 3Q17 net loss of RM48.7m (2Q16: RM0.7m profit), mainly from a FX loss of RM15.4m and a spike in finance costs to RM27.4m (3Q16: RM4.7m).
- Revenue spiked to RM79.1m on sale and delivery of one vessel and higher contribution from the vessel chartering revenue arising from the addition of three vessels in the chartering fleet.
- Gross margin was lifted to 4.9% (+1.9ppt) on a turnaround into profitability for the vessel chartering unit.
- Bottom line was also impacted by restructuring expenses of RM2.6m.
- Net debt of RM1.67b are entirely short term and due within 12 months.
- Negative equity/share at RM0.35.
POSITIVE NEWS
*Net Pacific Financial
- Its intermediary for its Australia loan portfolio has entered into a conditional agreement to convert $5m worth of loans into shares of an Australian-based company.
- The Australian-based property development company is seeking to list on Australian Securities Exchange.
- The conversion is expected to positively impact FY17 EPS and NTA/share.
- Last traded at 12.7x trailing P/E.
NEUTRAL NEWS
*Fraser Hospitality Trust
- Partially prepaid $110m out of the $615m facility agreement under the $500m 5-year term loan facility granted.
- Prepayment was funded through the issue of $120m, 3.08% fixed rate notes due 2024.
- As such, $110m of debt maturing in July 2019 has been extended to 2024 with the weighted average debt maturity increasing to 2.74 years from 1.95 years.
- Offers annualized 4QFY17 yield of 6.6%, and trades at 0.95x P/B.
*Cityneon
- Incorporated a subsidiary, Cityneon Korea, in Jeju, South Korea with paid up capital of 600m won.
- Business comprises 1) design and construction of buildings and theme parks, 2) events and exhibition works, 3) project management, consultancy and R&D.
- Trades at 16.9x forward P/E.
*Elipsiz
- Approached by a third party to explore a possible transaction involving the shares of the group.
- To date, no agreement has been materialised.
- Last traded at 16.5x trailing P/E and 1x P/B.
Tuesday, November 14, 2017
SG Market (14 Nov 17)
MARKET OVERVIEW
- Attention could rotate to small and mid-caps and plantation stocks as blue chips take a break and 3Q results season winds to a close. Oil-related names could come into focus after OPEC lowered its production projection next year, amid increased demand for crude.
- Technically, topside resistance for STI remains at 3,460, with underlying support at 3,355.
CORPORATE RESULTS
*Wilmar
- 3Q17 core net profit slid 15.9% to US$323.7m, missing estimates.
- Revenue inched up 0.4% to US$11.13b on growth in oilseeds & grains (+17%), but weighed by tropical oils (-2%) and sugar (-41%) units.
- EBITDA margin narrowed to 6.8% (-0.4ppt) as positive crush margins were negated by reduced downstream profitability and higher costs associated with the sugar marketing programme in Australia.
- Headline net profit of US$370m (-5.7%) was supported by higher non-operating items (+586.9%) arising from higher dividend income.
- Trading at 14x forward P/E.
*Golden Agri
- 3Q17 core net profit inched 3% higher to US$79.5m, topping estimates.
- However, revenue slipped 2.9% to US$1.78b, as lower average CPO price of US$663/MT (-2%) overshadowed higher palm production of 739,000 tonnes (+18%).
- EBITDA margin expanded 1.1ppt to 10.1% on improved production yield in the upstream segment.
- Trading at 17.5x FY18 P/E.
*First Resources
- 3Q17 net profit dropped 11% to US$31.9m, bringing 9M17 earnings of US$103.5m (+53.7%) to 68% of FY17 estimate.
- Revenue fell 9.3% to US$137.4m due to lower ASP and sales volumes.
- Accordingly, EBITDA margin narrowed 0.8ppt to 50.3%.
- Bottom line was dragged by higher selling and distribution costs due to increased freight charges and export taxes, but was partially offset by a swing into FX gain of US$1.7m (2Q16: US$0.4m loss) and lower finance expense (-23.7%).
- Trading at 14.8x forward P/E.
- Maybank KE retains Hold with TP of $2.04.
*Yanlord Land
- 3Q17 net profit rose 11% to Rmb627.5m, lifting 9M17 earnings of Rmb2.02b (+76%) to 63% of FY17 estimate.
- This was despite a 32% drop in revenue to Rmb3.76b on lower gfa delivered, partly offset against an increase in average selling price per square metre.
- Consequently, gross margin expanded 14.5ppt to 41.8%.
- Bottom line was lifted by a turnaround at JV/associate into profitability to Rmb145.7m (3Q16: Rmb13.5m loss), but partly offset by FX loss of Rmb37.3m (3Q16: Rmb9.6m loss).
- Trading at 5.3x forward P/E.
*United Engineers
- 3Q17 net profit slid 9% to $10.1m but still ahead of estimates.
- Revenue jumped 41% to $143m on increased property sales in Singapore and revenue recognition for The Manhattan in Malaysia.
- But, bottom line was dragged by share of JV/associate loss of $0.8m (3Q16: $0.7m income, increased distribution cost (+20%) and higher impairment loss to the Shenyang Orchard Summer Palace project but was shored by lowered finance costs (-53%).
- Trading at 21.8x forward P/E.
*Health Management Int'l
- 1QFY18 met expectations as core net profit more than doubled to RM15.9m (+117%), following acquisition of remaining stakes in two key hospitals.
- Revenue climbed 7% to RM117m on higher patient loads (+5.4%) and average bill sizes for both outpatient (+12.2%) and inpatient (+3.6%).
- EBITDA margin improved 0.9ppt to 24.5%.
- But, bottom line was pared by higher FX loss, depreciation costs, finance expenses and absence of RM0.5m associate profit.
- Net gearing was reduced to 0.3x from 0.5x in Jun '17.
- Last traded at 28.4x FY18 P/E.
*Hong Fok
- 3Q17 net loss deepened to $3.8m (3Q16: $0.8 loss), hurt by pre-opening cost of 610-room Yotel Singapore Orchard Road and higher finance expense.
- Revenue jumped 45 % to $20.2m on the sale of two residential units in Singapore.
- EBIT margin shrank 19.8ppt to 8.2%, partially on cost of the two development properties.
- Trading at 9.4x trailing P/E and 0.4x P/B.
*China Everbright Water
- 3Q17 met estimates as net profit jumped 35% to HK$122.8m.
- Revenue jumped 35% to HK$746.1m, mainly on higher construction revenue attributable to the sponge city construction project, the river-basin ecological restoration project and upgrades to several wastewater treatment plants.
- But, gross margin contracted to 39.8% (-0.4ppt) on a change in revenue mix.
- Bottom line was impacted by higher net finance expenses (+9.4%), taxes (+76%) and minority interests (+160%).
- Trading at 13.9x forward P/E.
*China Sunsine
- 3Q17 net profit grew 7% to Rmb77.6m, bringing 9M17 net profit to Rmb209.3m (+35%) in line with the street's expectations.
- Quarter revenue gained 16% to Rmb634.4m on higher ASPs (+25%) despite lower sales volume (-7.3%), as production was affected by rigorous environmental inspections.
- Gross margin contracted to 26.8% (-1.4ppt) on an increase in raw material prices.
- Bottom line was impacted by FX loss of Rmb10.6m (3Q16: Rmb3.7m gain).
- Notably, expected expansion in production capacity has been delayed to FY18 as management awaits regulatory approvals.
- Trading at 9.2x forward P/E.
*Ying Li
- 3Q17 net profit leapt to Rmb17.2m (3Q16: Rmb7k), bringing 9M17 earnings to Rmb33m (+51.3%).
- Revenue rose 25.3% to Rmb314.6m, mainly on stronger property sales (+31%) including the on-going handover of residential units at San Ya Wan Phase 2 and commercial units at Ying Li Int'l Electrical & Hardware Centre Phase 1A and 2A.
- Gross margin expanded 6.2ppt to 30.2% as revenue mix tilted more towards property sales from rental income.
- Bottom line was bolstered by lower selling expenses and higher interest income.
- Trades at 19.1x trailing P/E and 0.4x P/B.
*CWG International
- 3Q17 net loss narrowed to Rmb24.9m (3Q16: Rmb53.3m loss) on revenue growth of 63% to Rmb193m.
- This brought 9M17 net loss to Rmb63.7m (9M16: Rmb107.5m loss).
- For the quarter, top line growth was attributable to higher ASPs (+250% to Rmb30,648/sqm) mainly due to sales of Uptown Roseville in Sydney, Australia, but was partially pared by lower GFA sold (-50.4% to 5,819sqm).
- Gross margin improved to 37.7% (+0.6ppt) on the change in project mix.
- Bottom line was supported by Rmb11.6m positive FX swing, but offset by higher admin (+92%) and net finance costs (+31%).
- Last traded at 2.8x trailing P/E and 0.31x P/B.
*Avi-Tech
- 1QFY18 results missed expectations despite a 16.6% increase in net profit to $1.7m.
- Revenue jumped 31.3% to $11.1m, bolstered by improved takings for manufacturing & PCBA services (+61%), while burn-in services, and engineering services stayed stable.
- However, gross margin contracted 3.1ppt to 26.4% on the shift in revenue mix.
- Bottom line growth pared by $0.1m inventory provision, absence of $0.1m gain on fixed asset disposal, and $0.1m of FX loss, but buttressed by lower taxes.
- Last traded at 10.5x FY18 P/E.
*Koh Brothers
- 3Q17 net profit surged to $5.1m from a low base, lifted by an $11.6m disposal gain of a JV. This brought 9M17 net profit to $7.7m (+21%).
- Quarter revenue grew 41% to $89.8m on higher contract revenue (+72.8%), mainly from the construction and building materials division.
- However, gross margin contracted to 2% (-6.1ppt) on a shift in sales mix.
- Bottom line was also shored by stronger contributions from associates and JVs (+15%), as well as a $5.2m (3Q16: $1.1m provision) write back of impairment on loans to JVs.
- Scrapped special dividend-in-specie of shares in Koh Brothers Eco Engineering.
- Last traded at 0.58x P/B.
*ValueMax
- 3Q17 net profit rose 8.7% to $4.5m, as revenue climbed 7.6% to $64.4m on broad-based growth across trading in pre-owned jewellery and gold, as well as pawnbroking and moneylending.
- Accordingly, gross margin inched 0.9ppt to 17.3%.
- However, bottom line was impacted by an 89% spike in tax.
- Trading at 0.99x P/B.
*Moya
- 3Q17 results met estimates as net profit surged 137% from a low base to $5.5m, upon consolidation of newly-acquired Acuatico.
- Revenue spiked to $45.8m (3Q16: $4.9m) attributed to sale of water at Acuatico, as well as a higher construction revenue from BOT projects in Indonesia.
- Gross margin expanded to 41.5% (+28.6ppt) following the consolidation of Acuatico.
- Aside to the jump in operating expenses (+17.5x) stemming from the consolidation, bottom line was impacted by one-off expenses of $0.5m related to the acquisition, although partially mitigated by FX gains of $2.2m (3Q16: $0.4m loss).
- Net gearing stood at 2.37x (2Q17: 2.4x).
- Trading at 10.1x FY18 P/E.
*Sinarmas Land
- 3Q17 net profit ticked up 0.7% to $17.6m, bringing 9M17 earnings to $117.8m, or 71% of FY17 estimate.
- Revenue surged 36.8% to $199.6m on higher sales of land parcels, larger number of residential units handed over to homebuyers, as well as recognised revenue from apartments in BSD City, Indonesia.
- Bottom line was dragged by impairment loss on properties held for sales of $11.7m, FX loss of $4.3m and share of loss from JV of $6.2m.
- Trading at 10.8x forward P/E.
*Accordia Golf Trust
- Disappointing 2QFY18 results as it swung into distributable loss of ¥323m (2QFY17: ¥497m income) on an unsually large repayment of membership deposit and payment of upfront borrowing fee.
- This dragged 1HFY18 distributable income to ¥1.47b (-27.3%) and reduced semi-annual DPS to 1.65¢ (-32.7%).
- For 2Q, revenue edged up 3.1% to ¥13.38b on a 4.8% increase in visitors.
- Operating margin widened 1.4ppt to 18.3%, attributable to higher course utilisation rate of 80.4% (+3.2ppt).
- Loan-to-value ratio ticked 0.3ppt lower q/q to 28.7%.
- Trades at 4.3% annualised 1HFY18 yield and 0.84x P/B.
*Metro Holdings
- Sank to a 2QFY18 net loss of $13.6m (2QFY17: $16.4m profit) due to associate/ JV loss of $9.5m (2QFY17: $12.5m profit), impacted by ABSD charge of $27.7m for residential development, The Crest.
- Revenue rose 6.8% to $30.2m on firmer retail business (+7.1%), while property segment stayed muted.
- Gross margin collapsed 4.6ppt to 1.2%.
- Bottom line was also hurt by absence of $3.3m of investment distribution and $2.4m of FX gain, as well as $2.3m loss on dilution of interest in an associate.
- Last traded at 15x trailing P/E and 0.76x P/B.
*Geo Energy
- 3Q17 net profit rose 16% to US$8.6m, bringing 9M17 earnings of US$33.2m (+344%) to 69% of full-year estimate.
- For the quarter, revenue jumped 32% to US$74.8m on higher coal ASPs (+24.4%) and sales volume (+4.5%), and additional $0.9m contribution from the newer coal mining management services business.
- Gross cash profit margin improved 1ppt to 27.7%.
- Bottom line growth was slowed by higher staff costs, depreciation, and one-off reversal of amortisation of deferred stripping costs.
- Proposed interim DPS of 1¢ (3Q16: nil).
- NAV/share at US$0.1202 ($0.1634).
*Sing Myanmar
- 1HFY18 net loss widened to US$4.1m, weighed by losses at both continuing operations (US$2.1m loss) and discontinued operations (US$2.1m loss).
- Revenue rose 20.9% to US$11.6m, underpinned by firmer sales from duty free & fashion retail at Yangon International Airport new terminal and higher turnover from construction services.
- Gross margin expanded 5.5ppt to 26.6% on increased contribution from the higher-margin retail business.
- But, bottom line was impacted by the stubbornly high fixed overhead cost, weighed by a write-back of over-accrual bonus, increased legal costs and finance expenses, as well as FX loss.
- Trading at 3.25x P/B.
*Mermaid Maritime
- Swung to a 3Q17 net loss of US$2m (3Q16: US$7.5m profit), dragging 9M17 earnings to US$2.3m (-86%).
- Quarter's revenue tumbled 41.8% to US$30.2m on reduced subsea income due to day rate reduction, lower utilization of vessels, and a decline in other non-vessel projects.
- Gross margin shrank 15.6ppt to 8.9%.
- Bottom line was pummelled by a $0.9m drop in profits of associates/JVs.
- Last traded at 14.7x forward P/E and 0.5x P/B.
*Golden Energy And Resources
- 3Q17 net profit jumped 46.6% to US$9.9m, bringing 9M17 net profit to US$40.7m.
- Quarter revenue surged 83.7% to US$179.3m on stronger takings in coal mining (+77.7%) and trading (+187.3%), with the former led by increased selling prices (+25.3%).
- Accordingly, gross margin expanded to 41.1% (+0.7ppt).
- However, bottom line was hit by higher taxes (+232.5%), although partly mitigated by $4.6m (3Q16: nil) writeback in tax provision and lower finance costs (-43.2%).
- Declared interim DPS of 0.21¢ (3Q16: nil).
- NAV/share at US$0.1395.
*China Star Food
- 2QFY18 swung to net loss of Rmb4.6m, dragging 1HFY18 net loss to Rmb12.8m.
- Revenue tumbled 85.5% to Rmb17.5m as contribution only started in mid-Sep in Zilaohu factory following the group's production halt previously.
- Gross margin contracted to 24.7% (-21ppt) on change in channel management strategy and higher cost of sales (+80%) from subcontracting bulk of its production.
- Marketing and distribution cost slumped to Rmb2.5m as a result of the shift in channel management strategy.
- China Star Food is currently trading at ()x FY17 P/E.
*Sapphire
- 3Q17 net profit surged 31.1% to Rmb17.6m, bringing 9M17 earnings to $38m (+3.5%).
- Revenue grew 2.6% to Rmb369.5m on the back of the commencement of construction phase of several projects and the higher number of ongoing projects in China.
- Bottom line was dragged by higher staff costs (+56.9%) and distribution costs (+123.4%) but partially mitigated by a Rmb4.4m disposal gain from a subsidiary.
- Trading at 9x trailing P/E.
*Grand Banks Yachts
- 1QFY18 net profit tripled to $0.6m, albeit from 1QFY17's low base of $0.2m.
- Revenue jump 63.6% to $21.3m, driven by sales of three traded-in boats and one inventory boat, as well as more yachts reaching milestones for revenue recognition.
- Gross margin was stable at 17.2% (-0.1ppt).
- Bottom line was boosted by operating leverage.
- Orderbook increased to $38.6m from $36.8m in Jun '17.
- NAV/share at $0.2494.
*Zhongmin Baihui Retail
- 3Q17 net profit declined 20.4% to Rmb9.8m, bringing 9M17 earnings to Rmb49.8m (-42.6%).
- Quarter's revenue grew 17% to Rmb241.8m mainly due to a larger store network, which boosted direct sales (+21.5%) and commissions from concessionaire sales (+11.6%) .
- Gross margin contracted to 27.1% (-4ppt) on lower margin from its direct sales activities due to higher sales promotion.
- Bottom line was further hit by higher selling & distribution (+7%) and admin (+19.2%) expenses.
- Scrapped its third interim DPS of 1¢.
- NAV/share at Rmb0.8489.
*Wee Hur
- 3Q17 net profit plunged 51% to $4.4m in the absence of $1.5m FV gain on FX forwards, a $4m adverse FX swing, and higher taxes.
- Revenue grew 31% to $51.9m, mainly due to higher contributions from its construction business.
- Gross margin widened to 20.1% (+5ppt).
- Construction order book depleted to $304m from $360m in Jun '17.
- Last traded at 0.75x P/B.
*Midas
- 3Q17 net profit increased 6.6% to Rmb24.1m on revenue growth of 11.5% to Rmb458.5m. This brought 9M17 net profit to Rmb108.3m (+111.3%).
- Quarter's revenue growth was mainly due to firmer sales of its aluminium alloy extruded products (+16.9%), but partly offset by lower turnover from aluminium alloy stretched plates (-1.8%).
- Gross margin expanded to 28.2% (+3.6ppt) on the shift in product mix.
- Bottom line growth was slowed by lower contributions from its associate, CRRC Nanjing Puzhen Rail Transport (-40.4%), and a spike in finance costs (+47.6%).
- NAV/share at Rmb2.13.
NEGATIVE NEWS
*AGV
- Expects a 2H17 and FY17 loss, due to a decline in tonnage of services achieved and other income, coupled with higher costs.
- Trading at 27.6x trailing P/E.
POSITIVE NEWS
*HMI
- To issue 16.9m new ordinary shares, representing 2% stake of HMI, to Temasek's subsidiary Heliconia Capital for $11m.
- With the share placement, HMI hopes to leverage on Heliconia's network and resources to facilitate regional expansion.
- Net proceeds raised will be used for existing business and its expansion plan.
- Trading at 28.4x forward P/E.
*Sembcorp Marine
- Reached an undisclosed settlement with Marco Polo Marine, in relation to the termination of the US$214.3m rig construction project.
- Last traded at 67.2x forward P/E.
*Sembcorp Industries
- Emerged as the winning bidder in India's 250MW wind power tender.
- The project is expected to be developed in phases with full commission by 1H19. The project will have a 25-year long-term power purchase agreement.
- No other financial details were disclosed.
- Trading at 15.3x forward P/E.
*Trendlines
- Sold its subsidiary, MitrAssist Medical, to Wai Tech (Hong Kong) at US$1.15m.
- The exit results in a total gain of US$0.65m for Trendlines.
- Last traded at 0.76x P/B.
NEUTRAL NEWS
*Darco
- Entered share placement agreement with Sofos Infrastructure Investment Fund for issuance of up to 3.5m new ordinary shares for $2m.
- Placement price of $0.60 represents a 7.1% premium to closing price on 10 Nov and transaction represents 5.75% of the enlarged share capital of Darco.
- Proposed placement is to raise fund for the investment in public-private partnership water infrastructure projects.
- Last traded at 8.7x trailing P/E and 1.2x P/B.
- Attention could rotate to small and mid-caps and plantation stocks as blue chips take a break and 3Q results season winds to a close. Oil-related names could come into focus after OPEC lowered its production projection next year, amid increased demand for crude.
- Technically, topside resistance for STI remains at 3,460, with underlying support at 3,355.
CORPORATE RESULTS
*Wilmar
- 3Q17 core net profit slid 15.9% to US$323.7m, missing estimates.
- Revenue inched up 0.4% to US$11.13b on growth in oilseeds & grains (+17%), but weighed by tropical oils (-2%) and sugar (-41%) units.
- EBITDA margin narrowed to 6.8% (-0.4ppt) as positive crush margins were negated by reduced downstream profitability and higher costs associated with the sugar marketing programme in Australia.
- Headline net profit of US$370m (-5.7%) was supported by higher non-operating items (+586.9%) arising from higher dividend income.
- Trading at 14x forward P/E.
*Golden Agri
- 3Q17 core net profit inched 3% higher to US$79.5m, topping estimates.
- However, revenue slipped 2.9% to US$1.78b, as lower average CPO price of US$663/MT (-2%) overshadowed higher palm production of 739,000 tonnes (+18%).
- EBITDA margin expanded 1.1ppt to 10.1% on improved production yield in the upstream segment.
- Trading at 17.5x FY18 P/E.
*First Resources
- 3Q17 net profit dropped 11% to US$31.9m, bringing 9M17 earnings of US$103.5m (+53.7%) to 68% of FY17 estimate.
- Revenue fell 9.3% to US$137.4m due to lower ASP and sales volumes.
- Accordingly, EBITDA margin narrowed 0.8ppt to 50.3%.
- Bottom line was dragged by higher selling and distribution costs due to increased freight charges and export taxes, but was partially offset by a swing into FX gain of US$1.7m (2Q16: US$0.4m loss) and lower finance expense (-23.7%).
- Trading at 14.8x forward P/E.
- Maybank KE retains Hold with TP of $2.04.
*Yanlord Land
- 3Q17 net profit rose 11% to Rmb627.5m, lifting 9M17 earnings of Rmb2.02b (+76%) to 63% of FY17 estimate.
- This was despite a 32% drop in revenue to Rmb3.76b on lower gfa delivered, partly offset against an increase in average selling price per square metre.
- Consequently, gross margin expanded 14.5ppt to 41.8%.
- Bottom line was lifted by a turnaround at JV/associate into profitability to Rmb145.7m (3Q16: Rmb13.5m loss), but partly offset by FX loss of Rmb37.3m (3Q16: Rmb9.6m loss).
- Trading at 5.3x forward P/E.
*United Engineers
- 3Q17 net profit slid 9% to $10.1m but still ahead of estimates.
- Revenue jumped 41% to $143m on increased property sales in Singapore and revenue recognition for The Manhattan in Malaysia.
- But, bottom line was dragged by share of JV/associate loss of $0.8m (3Q16: $0.7m income, increased distribution cost (+20%) and higher impairment loss to the Shenyang Orchard Summer Palace project but was shored by lowered finance costs (-53%).
- Trading at 21.8x forward P/E.
*Health Management Int'l
- 1QFY18 met expectations as core net profit more than doubled to RM15.9m (+117%), following acquisition of remaining stakes in two key hospitals.
- Revenue climbed 7% to RM117m on higher patient loads (+5.4%) and average bill sizes for both outpatient (+12.2%) and inpatient (+3.6%).
- EBITDA margin improved 0.9ppt to 24.5%.
- But, bottom line was pared by higher FX loss, depreciation costs, finance expenses and absence of RM0.5m associate profit.
- Net gearing was reduced to 0.3x from 0.5x in Jun '17.
- Last traded at 28.4x FY18 P/E.
*Hong Fok
- 3Q17 net loss deepened to $3.8m (3Q16: $0.8 loss), hurt by pre-opening cost of 610-room Yotel Singapore Orchard Road and higher finance expense.
- Revenue jumped 45 % to $20.2m on the sale of two residential units in Singapore.
- EBIT margin shrank 19.8ppt to 8.2%, partially on cost of the two development properties.
- Trading at 9.4x trailing P/E and 0.4x P/B.
*China Everbright Water
- 3Q17 met estimates as net profit jumped 35% to HK$122.8m.
- Revenue jumped 35% to HK$746.1m, mainly on higher construction revenue attributable to the sponge city construction project, the river-basin ecological restoration project and upgrades to several wastewater treatment plants.
- But, gross margin contracted to 39.8% (-0.4ppt) on a change in revenue mix.
- Bottom line was impacted by higher net finance expenses (+9.4%), taxes (+76%) and minority interests (+160%).
- Trading at 13.9x forward P/E.
*China Sunsine
- 3Q17 net profit grew 7% to Rmb77.6m, bringing 9M17 net profit to Rmb209.3m (+35%) in line with the street's expectations.
- Quarter revenue gained 16% to Rmb634.4m on higher ASPs (+25%) despite lower sales volume (-7.3%), as production was affected by rigorous environmental inspections.
- Gross margin contracted to 26.8% (-1.4ppt) on an increase in raw material prices.
- Bottom line was impacted by FX loss of Rmb10.6m (3Q16: Rmb3.7m gain).
- Notably, expected expansion in production capacity has been delayed to FY18 as management awaits regulatory approvals.
- Trading at 9.2x forward P/E.
*Ying Li
- 3Q17 net profit leapt to Rmb17.2m (3Q16: Rmb7k), bringing 9M17 earnings to Rmb33m (+51.3%).
- Revenue rose 25.3% to Rmb314.6m, mainly on stronger property sales (+31%) including the on-going handover of residential units at San Ya Wan Phase 2 and commercial units at Ying Li Int'l Electrical & Hardware Centre Phase 1A and 2A.
- Gross margin expanded 6.2ppt to 30.2% as revenue mix tilted more towards property sales from rental income.
- Bottom line was bolstered by lower selling expenses and higher interest income.
- Trades at 19.1x trailing P/E and 0.4x P/B.
*CWG International
- 3Q17 net loss narrowed to Rmb24.9m (3Q16: Rmb53.3m loss) on revenue growth of 63% to Rmb193m.
- This brought 9M17 net loss to Rmb63.7m (9M16: Rmb107.5m loss).
- For the quarter, top line growth was attributable to higher ASPs (+250% to Rmb30,648/sqm) mainly due to sales of Uptown Roseville in Sydney, Australia, but was partially pared by lower GFA sold (-50.4% to 5,819sqm).
- Gross margin improved to 37.7% (+0.6ppt) on the change in project mix.
- Bottom line was supported by Rmb11.6m positive FX swing, but offset by higher admin (+92%) and net finance costs (+31%).
- Last traded at 2.8x trailing P/E and 0.31x P/B.
*Avi-Tech
- 1QFY18 results missed expectations despite a 16.6% increase in net profit to $1.7m.
- Revenue jumped 31.3% to $11.1m, bolstered by improved takings for manufacturing & PCBA services (+61%), while burn-in services, and engineering services stayed stable.
- However, gross margin contracted 3.1ppt to 26.4% on the shift in revenue mix.
- Bottom line growth pared by $0.1m inventory provision, absence of $0.1m gain on fixed asset disposal, and $0.1m of FX loss, but buttressed by lower taxes.
- Last traded at 10.5x FY18 P/E.
*Koh Brothers
- 3Q17 net profit surged to $5.1m from a low base, lifted by an $11.6m disposal gain of a JV. This brought 9M17 net profit to $7.7m (+21%).
- Quarter revenue grew 41% to $89.8m on higher contract revenue (+72.8%), mainly from the construction and building materials division.
- However, gross margin contracted to 2% (-6.1ppt) on a shift in sales mix.
- Bottom line was also shored by stronger contributions from associates and JVs (+15%), as well as a $5.2m (3Q16: $1.1m provision) write back of impairment on loans to JVs.
- Scrapped special dividend-in-specie of shares in Koh Brothers Eco Engineering.
- Last traded at 0.58x P/B.
*ValueMax
- 3Q17 net profit rose 8.7% to $4.5m, as revenue climbed 7.6% to $64.4m on broad-based growth across trading in pre-owned jewellery and gold, as well as pawnbroking and moneylending.
- Accordingly, gross margin inched 0.9ppt to 17.3%.
- However, bottom line was impacted by an 89% spike in tax.
- Trading at 0.99x P/B.
*Moya
- 3Q17 results met estimates as net profit surged 137% from a low base to $5.5m, upon consolidation of newly-acquired Acuatico.
- Revenue spiked to $45.8m (3Q16: $4.9m) attributed to sale of water at Acuatico, as well as a higher construction revenue from BOT projects in Indonesia.
- Gross margin expanded to 41.5% (+28.6ppt) following the consolidation of Acuatico.
- Aside to the jump in operating expenses (+17.5x) stemming from the consolidation, bottom line was impacted by one-off expenses of $0.5m related to the acquisition, although partially mitigated by FX gains of $2.2m (3Q16: $0.4m loss).
- Net gearing stood at 2.37x (2Q17: 2.4x).
- Trading at 10.1x FY18 P/E.
*Sinarmas Land
- 3Q17 net profit ticked up 0.7% to $17.6m, bringing 9M17 earnings to $117.8m, or 71% of FY17 estimate.
- Revenue surged 36.8% to $199.6m on higher sales of land parcels, larger number of residential units handed over to homebuyers, as well as recognised revenue from apartments in BSD City, Indonesia.
- Bottom line was dragged by impairment loss on properties held for sales of $11.7m, FX loss of $4.3m and share of loss from JV of $6.2m.
- Trading at 10.8x forward P/E.
*Accordia Golf Trust
- Disappointing 2QFY18 results as it swung into distributable loss of ¥323m (2QFY17: ¥497m income) on an unsually large repayment of membership deposit and payment of upfront borrowing fee.
- This dragged 1HFY18 distributable income to ¥1.47b (-27.3%) and reduced semi-annual DPS to 1.65¢ (-32.7%).
- For 2Q, revenue edged up 3.1% to ¥13.38b on a 4.8% increase in visitors.
- Operating margin widened 1.4ppt to 18.3%, attributable to higher course utilisation rate of 80.4% (+3.2ppt).
- Loan-to-value ratio ticked 0.3ppt lower q/q to 28.7%.
- Trades at 4.3% annualised 1HFY18 yield and 0.84x P/B.
*Metro Holdings
- Sank to a 2QFY18 net loss of $13.6m (2QFY17: $16.4m profit) due to associate/ JV loss of $9.5m (2QFY17: $12.5m profit), impacted by ABSD charge of $27.7m for residential development, The Crest.
- Revenue rose 6.8% to $30.2m on firmer retail business (+7.1%), while property segment stayed muted.
- Gross margin collapsed 4.6ppt to 1.2%.
- Bottom line was also hurt by absence of $3.3m of investment distribution and $2.4m of FX gain, as well as $2.3m loss on dilution of interest in an associate.
- Last traded at 15x trailing P/E and 0.76x P/B.
*Geo Energy
- 3Q17 net profit rose 16% to US$8.6m, bringing 9M17 earnings of US$33.2m (+344%) to 69% of full-year estimate.
- For the quarter, revenue jumped 32% to US$74.8m on higher coal ASPs (+24.4%) and sales volume (+4.5%), and additional $0.9m contribution from the newer coal mining management services business.
- Gross cash profit margin improved 1ppt to 27.7%.
- Bottom line growth was slowed by higher staff costs, depreciation, and one-off reversal of amortisation of deferred stripping costs.
- Proposed interim DPS of 1¢ (3Q16: nil).
- NAV/share at US$0.1202 ($0.1634).
*Sing Myanmar
- 1HFY18 net loss widened to US$4.1m, weighed by losses at both continuing operations (US$2.1m loss) and discontinued operations (US$2.1m loss).
- Revenue rose 20.9% to US$11.6m, underpinned by firmer sales from duty free & fashion retail at Yangon International Airport new terminal and higher turnover from construction services.
- Gross margin expanded 5.5ppt to 26.6% on increased contribution from the higher-margin retail business.
- But, bottom line was impacted by the stubbornly high fixed overhead cost, weighed by a write-back of over-accrual bonus, increased legal costs and finance expenses, as well as FX loss.
- Trading at 3.25x P/B.
*Mermaid Maritime
- Swung to a 3Q17 net loss of US$2m (3Q16: US$7.5m profit), dragging 9M17 earnings to US$2.3m (-86%).
- Quarter's revenue tumbled 41.8% to US$30.2m on reduced subsea income due to day rate reduction, lower utilization of vessels, and a decline in other non-vessel projects.
- Gross margin shrank 15.6ppt to 8.9%.
- Bottom line was pummelled by a $0.9m drop in profits of associates/JVs.
- Last traded at 14.7x forward P/E and 0.5x P/B.
*Golden Energy And Resources
- 3Q17 net profit jumped 46.6% to US$9.9m, bringing 9M17 net profit to US$40.7m.
- Quarter revenue surged 83.7% to US$179.3m on stronger takings in coal mining (+77.7%) and trading (+187.3%), with the former led by increased selling prices (+25.3%).
- Accordingly, gross margin expanded to 41.1% (+0.7ppt).
- However, bottom line was hit by higher taxes (+232.5%), although partly mitigated by $4.6m (3Q16: nil) writeback in tax provision and lower finance costs (-43.2%).
- Declared interim DPS of 0.21¢ (3Q16: nil).
- NAV/share at US$0.1395.
*China Star Food
- 2QFY18 swung to net loss of Rmb4.6m, dragging 1HFY18 net loss to Rmb12.8m.
- Revenue tumbled 85.5% to Rmb17.5m as contribution only started in mid-Sep in Zilaohu factory following the group's production halt previously.
- Gross margin contracted to 24.7% (-21ppt) on change in channel management strategy and higher cost of sales (+80%) from subcontracting bulk of its production.
- Marketing and distribution cost slumped to Rmb2.5m as a result of the shift in channel management strategy.
- China Star Food is currently trading at ()x FY17 P/E.
*Sapphire
- 3Q17 net profit surged 31.1% to Rmb17.6m, bringing 9M17 earnings to $38m (+3.5%).
- Revenue grew 2.6% to Rmb369.5m on the back of the commencement of construction phase of several projects and the higher number of ongoing projects in China.
- Bottom line was dragged by higher staff costs (+56.9%) and distribution costs (+123.4%) but partially mitigated by a Rmb4.4m disposal gain from a subsidiary.
- Trading at 9x trailing P/E.
*Grand Banks Yachts
- 1QFY18 net profit tripled to $0.6m, albeit from 1QFY17's low base of $0.2m.
- Revenue jump 63.6% to $21.3m, driven by sales of three traded-in boats and one inventory boat, as well as more yachts reaching milestones for revenue recognition.
- Gross margin was stable at 17.2% (-0.1ppt).
- Bottom line was boosted by operating leverage.
- Orderbook increased to $38.6m from $36.8m in Jun '17.
- NAV/share at $0.2494.
*Zhongmin Baihui Retail
- 3Q17 net profit declined 20.4% to Rmb9.8m, bringing 9M17 earnings to Rmb49.8m (-42.6%).
- Quarter's revenue grew 17% to Rmb241.8m mainly due to a larger store network, which boosted direct sales (+21.5%) and commissions from concessionaire sales (+11.6%) .
- Gross margin contracted to 27.1% (-4ppt) on lower margin from its direct sales activities due to higher sales promotion.
- Bottom line was further hit by higher selling & distribution (+7%) and admin (+19.2%) expenses.
- Scrapped its third interim DPS of 1¢.
- NAV/share at Rmb0.8489.
*Wee Hur
- 3Q17 net profit plunged 51% to $4.4m in the absence of $1.5m FV gain on FX forwards, a $4m adverse FX swing, and higher taxes.
- Revenue grew 31% to $51.9m, mainly due to higher contributions from its construction business.
- Gross margin widened to 20.1% (+5ppt).
- Construction order book depleted to $304m from $360m in Jun '17.
- Last traded at 0.75x P/B.
*Midas
- 3Q17 net profit increased 6.6% to Rmb24.1m on revenue growth of 11.5% to Rmb458.5m. This brought 9M17 net profit to Rmb108.3m (+111.3%).
- Quarter's revenue growth was mainly due to firmer sales of its aluminium alloy extruded products (+16.9%), but partly offset by lower turnover from aluminium alloy stretched plates (-1.8%).
- Gross margin expanded to 28.2% (+3.6ppt) on the shift in product mix.
- Bottom line growth was slowed by lower contributions from its associate, CRRC Nanjing Puzhen Rail Transport (-40.4%), and a spike in finance costs (+47.6%).
- NAV/share at Rmb2.13.
NEGATIVE NEWS
*AGV
- Expects a 2H17 and FY17 loss, due to a decline in tonnage of services achieved and other income, coupled with higher costs.
- Trading at 27.6x trailing P/E.
POSITIVE NEWS
*HMI
- To issue 16.9m new ordinary shares, representing 2% stake of HMI, to Temasek's subsidiary Heliconia Capital for $11m.
- With the share placement, HMI hopes to leverage on Heliconia's network and resources to facilitate regional expansion.
- Net proceeds raised will be used for existing business and its expansion plan.
- Trading at 28.4x forward P/E.
*Sembcorp Marine
- Reached an undisclosed settlement with Marco Polo Marine, in relation to the termination of the US$214.3m rig construction project.
- Last traded at 67.2x forward P/E.
*Sembcorp Industries
- Emerged as the winning bidder in India's 250MW wind power tender.
- The project is expected to be developed in phases with full commission by 1H19. The project will have a 25-year long-term power purchase agreement.
- No other financial details were disclosed.
- Trading at 15.3x forward P/E.
*Trendlines
- Sold its subsidiary, MitrAssist Medical, to Wai Tech (Hong Kong) at US$1.15m.
- The exit results in a total gain of US$0.65m for Trendlines.
- Last traded at 0.76x P/B.
NEUTRAL NEWS
*Darco
- Entered share placement agreement with Sofos Infrastructure Investment Fund for issuance of up to 3.5m new ordinary shares for $2m.
- Placement price of $0.60 represents a 7.1% premium to closing price on 10 Nov and transaction represents 5.75% of the enlarged share capital of Darco.
- Proposed placement is to raise fund for the investment in public-private partnership water infrastructure projects.
- Last traded at 8.7x trailing P/E and 1.2x P/B.
Monday, November 13, 2017
SG Market (13 Nov 17)
MARKET OVERVIEW
- The market might take a pause after Wall Street's wobble last Fri, snapping an eight-week winning streak, while as investors digest the last batch of 3Q results this week, which will include Wilmar, Golden Agri and Sing Post.
- Technically, topside resistance for STI remains at 3,460, with underlying support at 3,355.
SECTOR WATCH
*Property
- Sales launch of Parc Botannia in Sengkang over the weekend saw sustained sales momentum.
- 70:30 JV between developers Sing Holdings and Wee Hur achieved a respectable average selling price of $1,270 psf for the 230 units sold.
- The healthy take-up underpins Maybank KE's Positive view on the Singapore residential sector.
- Among property counters, the house has Buy ratings on UOL (TP: $9.43), City Dev (TP: $12.05), GuocoLand (TP: $2.75) and Ho Bee Land (TP: $3.00).
CORPORATE RESULTS
*ComfortDelGro
- 3Q17 net profit reversed 8.2% to $80.1m, dented by private hire players, but met estimates.
- Revenue slipped 2.4% to $991.4m, on a smaller operating taxi fleet in Singapore and lower rentals from China, while bus and rail segments improved on transition to the bus contracting model and higher ridership, respectively.
- EBITDA margin narrowed 0.6ppt to 21.6% on higher staff costs (+3.3%).
- Bottom line was also weighed by unfavorable FX translation effects of $5.3m.
- Management is optimistic on its public transport business in Singapore and Australia, but is downbeat on the taxi and and related segments.
- Uber tie-up could be finalised this month. Maybank KE maintains Buy with TP of $2.40.
*UMS
- 3Q17 net profit doubled to $13.6m, blowing past expectations.
- Revenue surged 51% to $39.3m on solid sales of semiconductor systems (+61%) and components (+44%).
- Gross material margin improved 2ppt to 59% on higher proportion of component sales.
- Bottom line was also helped by lower depreciation (-23%).
- Maintained interim DPS of 1¢.
- Management is upbeat on strong order pipeline and expects cost savings from the migration of domestic production to Penang.
- Last traded at 13.1x forward P/E.
*Silverlake Axis
- 1QFY18 net profit plunged 81% to RM31.7m on absence of disposal gain from sale of shares in associate Global InfoTech (1QFY17: RM143.7m).
- Revenue declined 10% to RM114m on weaker contributions from software licensing (-86%) and software project services (-50%), as recently won contracts are still in early stages.
- Gross margin shrank 6ppt to 52% amid lower proportion of higher margin projects.
- Management expects project related licensing and services business to pick up in 2HFY18.
- Proposed interim DPS of 0.3¢ (1QFY17: 0.5¢) and special DPS of 0.5¢ (1QFY17: nil).
- Trades at 18.5x forward P/E.
*Asian Pay TV Trust
- 3Q17 DPU of 1.625¢ (unch) was in line with estimates.
- Revenue rose 6.5% to $84.5m mainly on positive FX effects. In constant TWD terms, contribution from all three segments improved across basic cable TV (+7.7%), broadband (+1.7%) and premium digital cable TV (+3.4%).
- EBITDA margin inched up 1.3ppt to 60.1%.
- Reaffirmed guidance for FY17 DPU of 6.5¢, implying 10.8% yield.
- NAV/unit at $0.85.
*HRnetGroup
- 3Q17 net profit jumped 20.2% to $10.7m, as revenue rose 7% to $97.5m on strong growth in flexible staffing business in Singapore.
- Gross margin contracted 1.9ppt to 35.3%, while operating margin held relatively steady at 14% (-0.2ppt).
- Updated that M&A work is on track and management expects to announce to series of further new projects.
- Trades at 20.1x forward P/E.
*Q&M
- 3Q17 net profit jumped 28% to $3.6m, buoyed by absence of portion to non-controlling interests (3Q16: $1.2m).
- However, revenue slumped 29.4% to $27.5m, mainly from the deconsolidation of Aoxin from a subsidiary to an associate in Apr '17, as well as lower takings from dental clinics (-11.8%) and dental equipment & supplies distribution (-54.6%).
- EBIT margin inched up 1.7ppt to 13.5%, lifted by new contribution from Aoxin of $0.7m.
- Trades at 32.5x forward P/E.
*QAF
- 3Q17 net profit plunged 62% to $7.4m, on flat revenue of $212m as higher bakery turnover in Philippines was offset by lower takings at Australian meat production unit due to reduced ASP from stiff competition.
- Operating margin shrank 5.9ppt to 3.6% on a broad-based cost increase, led by higher advertising and promotion expenses from the Philippines bakery business.
- Bottom line was dragged by $0.8m professional fees and $0.6m of doubtful debts.
- Trades at 7.9x trailing P/E.
*Cordlife
- Turned around to 1QFY18 net profit of $0.6m (1QFY17: $0.6m loss), thanks to absence of finance expenses (1QFY16: $1m) upon full redemption of its debt.
- Revenue climbed 13.2% to $16.6m from an increase in newborn deliveries (+6.3% to 6,700) as well as lower discounts given in India and Philippines.
- Consequently, gross margin expanded to 66.3% (+1.5ppt).
- Trades at 1.65x P/B.
*Straits Trading
- 3Q17 net profit declined 29.4% to $11.9m on a 2.7x jump in taxes to $2.6m.
- Revenue grew 16.5% to $132.1m on higher contribution from resources (+19.1%), but pared by weakness in real estate (-36.8%).
- Bottom line was impacted by a drop in other sources of income (-16%) from lower dividend income and reduced FV gains (-51.2%).
- Trades at 17.1x forward P/E.
*Haw Par
- 3Q17 net profit slipped 4.1% to $40.5m, dragged by a spike in expenses (+31.7%) from increased marketing activities and a negative $1.9m swing into FX loss of $1.5m.
- Revenue rose 7.4% to $53.4m, lifted by improved sales for Tiger Balm products.
- However, gross margin contracted 1.4ppt to 63.7%.
- Last traded at 18.8x forward P/E.
*Bukit Sembawang
- 2QFY18 net profit halved to $17.2m, dragging 1HFY18 earnings to $23.1m (-64%).
- Quarter revenue of $31.9m (-56%) was weighed by lower progressive revenue recognition from development projects.
- Gross margin narrowed 1ppt to 62.8%.
- Bottom line was buttressed by a lower effective tax rate of 6.6% (2QFY17: 17.6%).
- Trades at 1.25x P/B.
*GK Goh
- 3Q17 net profit grew 32% to $5.1m on improved operating margin (+4ppt to 9.9%).
- Revenue slipped 2% to $20.3m as growth in corporate services revenue (+6%) was negated by declines in investment (-8%) and other (-84%) income.
- Bottom line was further shored up by lower finance costs (-10%) and higher contributions from associates (+7%).
- Trades at 8.3x trailing P/E and 0.84x P/B.
*Hong Leong Finance
- 3Q17 net profit soared 84.2% to $23.6m, bringing 9M17 earnings of $60.9m (+58.7%) to 80% of FY17 estimate.
- Net interest income surged 48% to $47.4m on the back of higher loan yield and lower interest expense (-29.9%), albeit on a reduced loan base.
- Bottom line was dragged by the provision of doubtful debts and wealth management product of $2.8m (3Q16: $0.7m reversal).
- Last traded at 16x forward P/E and 0.71x P/B.
*KSH
- 2QFY18 net profit slumped 48.9% to $4.1m on a 42.7% drop in associate/JV contribution.
- This brought 1HFY18 net profit of $10.1m (-44.3%) to just 25% of full year estimate.
- For the quarter, revenue dived 64.1% to $24.5m on weakness in construction (-65.6%), partially caused by project delays.
- Operating margin inched 2.5ppt higher to 11.5% from a sharper decline in cost of construction (-68.9%).
- Shaved interim DPS to 1¢ (2QFY17: 1.25¢).
- Construction order book at $600m, while attributable share of progress billings from associates and JVs stood at $126.8m.
- Separately, KSH announced a LOI from 35%-owned Rio Casa Venture, for a $266.3m construction contract.
- The contract entails construction of 9 blocks of apartments and 22 units of strata landed houses. Construction on the showflat is expected to commence by end Dec '17 with the main development to commence by Nov '18 for 40 months.
- Trades at 13.2x forward P/E.
*Tiong Seng
- 3Q17 net profit spiked to $5.3m (3Q16: $1.9m) on improved operating leverage, and elevated 9M17 earnings to $19.6m (+94%).
- 9M17 revenue grinded up 1% to $554.2m as solid improvement in core construction business (+22%) was doused by weaker property development sales (-79%).
- Gross margin narrowed 3.3ppt to 4.1% on a shift in project mix.
- Bottom line was lifted by $3.5m drop in net finance cost, $2.3m positive swing in JV contribution, as well as lower selling and other expenses.
- Construction order book depleted to $636.9m from $730m in 2Q17.
- Trades at 7.2x trailing P/E.
*Stamford Land
- 2QFY18 net profit soared 68% to $9.9m, on a 2.8x leap in revenue to $135.3m, underpinned sale settlement of 131 apartments at Macquarie Park Village and firmer hospitality takings amid a stronger AUD.
- Operating margin narrowed 3.7ppt to 12.6%, as the lower margin property development business accounted for higher proportion of sales.
- Bottom line growth was eased by a $2.4m adverse FX swing and higher effective tax rate of 30% (2QFY17: 18.9%).
- Trades at 10.8x trailing P/E and 0.88x P/B.
*Yeo Hiap Seng
- 3Q17 net profit slumped 64.9% to $1.8m, as revenue slipped 7.4% to $87.7m on weakness in the F&B segment due to general market weakness, competitive pricing and sales disruption in Cambodia as new distributors ramp up sales.
- Gross margin contracted 6.4ppt to 31.2%
- Bottom line was further weighed by higher admin expenses (+25.3%), although offset by disposal gain of $4.1m.
- Trades at 4.8x trailing P/E.
*Neo Group
- Fell into 2QFY18 net loss of $0.5m (2QFY17: $3m profit) on absence of $1.8m disposal gain.
- Revenue grew 27.5% to $45.3m on stronger contributions from food retail (+14.4%), food manufacturing (+2.8%), supplies & trading (+270.5%), but partially pared by lower takings from food catering (-1.9%).
- Bottom line was further impacted by higher purchases (+62.5%) and staff costs (+13.6%).
- Trades at 22x forward P/E.
*Willas-Array
- 1HFY18 net profit leapt 312.8% from a low base to HK$60.2m, bolstered by a positive HK$15.3 swing into FX gain of HK$10m due to the stronger CNY against USD, as well as a reversal of doubtful debt of HK$3m.
- Revenue jumped 13.8% to HK$2.35b on strong demand industrial (+33%), automotive (+24.4%), electronic manufacturing services (+52.7%) and home appliance (+16%), but was partially offset by weakness in the dealer segment (-13.8%).
- Gross profit widened to 8.4% (+1ppts) on a shift in mix towards higher-margin products.
- Bottom line was partially offset by higher distribution costs (+22.1%) and staff cost (+3.2%).
- Trades at 4.9x trailing P/E.
*PEC
- 1QFY18 net profit inched 2% higher to $1.4m, despite a 2% slip in revenue to $81.3m following substantial completion of projects in FY17.
- However, gross margin expanded to 24.1% (+3.7ppts) due to higher-margin maintenance projects.
- But, bottom line was partially weighed by a negative FX swing of $2.4m into loss of $0.5m.
- Trades at 10.9x trailing P/E.
*ISOTeam
- 1QFY18 net profit surged 54.6% from a low base to $1.5m, supported by lower admin expense (-12.9%) due to reduced staff cost.
- Revenue jumped 20.9% to $25.1m on higher takings from addition & alteration (+34.9%) and repairs & redecoration (+62.7%), but was partially offset by a slump in coating & painting (-32.5%).
- Gross margin contracted to 17.7% (-4.8ppt) from the shift to lower-margin work.
- Trades at 7.2x forward P/E.
*Dasin Retail Trust
- 3Q17 DPU of 2.23¢ was 12% above IPO forecast, lifting 9M17 DPU to 5.23¢.
- Revenue and NPI of $18.7m and $15.9m exceeded estimates by 21% and 25% due to higher takings from newly-acquired Shiqi Metro Mall, increased turnover rent from the initial portfolio and the recognition of future rent escalations on straight-line basis for leases.
- Portfolio remains fully occupied, while aggregate leverage stayed flattish at 31.5% (-0.3ppt q/q).
- Trades at an annualised 3Q yield of 11.2% and 0.53x P/B.
*Sino Grandness
- 3Q17 net profit jumped 16.3% to Rmb193.3m, lifted by other operating income and absence of negative fair value change of convertible bonds.
- Revenue rose 10.8% to Rmb1.23b on higher takings from beverage (+12.9%) and domestic canned products (+14.3%), but partly offset by a slip in overseas sales (-1.3%).
- Gross margin contracted to 36.8% (-4.5ppt) on higher cost of raw materials.
- Notably, despite improved sales, operating cash flow was significantly weaker with an outflow of Rmb234.9m (3Q16: Rmb13.2m inflow).
- Nevertheless, management still remains cautiously optimistic on its prospects.
- Trades at 3.6x trailing P/E.
*Lum Chang
- 1QFY18 net profit surged 186% from a low base to $2.7m, mainly due to increased government grants (+521%).
- However, revenue slumped 44% to $57.3m on lower sales from substantially completed construction projects as well as fewer ongoing ones.
- Gross margin more than doubled to 19.3% (+10.3ppt) on cost savings derived from two substantially completed projects.
- Bottom line was aided by lower FX losses (-64%), but pared by increased JV loss of $0.3m (1QFY17: $19,000 loss) and higher taxes (+50%).
- Outstanding order book stood at $542.6m.
- Trades at 7.3x trailing P/E.
*Aspen Group
- 3Q17 net profit of RM24.9m (3Q16: RM1.1m) brought 9M17 earnings to RM43.4m, or 56% of full-year estimate.
- Quarter's revenue rose 6x to RM137.9m, bolstered by on-going projects Tri Pinnacle, Vervea, Vertu Resort, as well as land sale for a private medical centre in Aug '17.
- Gross margin widened 3ppt to 40%.
- Bottom line was boosted by RM1.3m of positive swing in net finance income following a debt restructuring for its recent IPO, but was pared by RM7m of listing expenses.
- Total unbilled sales of RM1.015b as at Sep '17.
- Last traded at 6.8x forward P/E.
*PACC Offshore
- Narrowed 3Q17 net loss to US$9.8m (3Q16: US$12.9m loss) mainly on a turnaround in JV contribution to US$11.8m (3Q16: US$0.2m loss).
- Revenue jumped 27% to US$52.8m from better contributions from offshore supply vessels (+25%), offshore accommodation (+53%) and harbour services and emergency response (+7%) segments, but was partially pared by lower takings from the transportation & installation (-37%) unit.
- Fell deeper into gross loss of US$4.3m (3Q16: US$1.4m loss) due to higher operating expenses stemming from POSH Arcadia, while POSH Xanadu and two light construction vessels remained idle.
- Bottom line was pressured by higher taxes (+504%).
- Trades at 0.72x P/B.
*Mewah International
- 3Q17 net profit leapt 27.4% to US$13.4m, shored by US$4.9m gain from fixed asset disposal and a US$1.3m drop in impairment loss.
- However, revenue slipped 2.4% to US$739m, as weaker sales volumes in the bulk segment (-21.8%) outweighed Ramadan-driven volume in the consumer segment (+46.6%). Overall average selling prices rose 7%.
- Operating margin narrowed 0.4ppt to 4.8%.
- Proposed an interim DPS of 1¢ (3Q16: nil).
- Trades at 12.8x trailing P/E.
*Sri Trang Agro-Industry
- Turned around to 3Q17 net profit of Bt166.7m (3Q16: Bt90.8m loss), lifted mainly by a surge in other gains to Bt253.1m (3Q16: Bt43.9m) and FV gain of Bt47.9m (3Q16: nil).
However, revenue slipped 5.6% to Bt18.22b from lesser sales volume (-20%), despite stronger ASP (+9.6%) of natural rubber.
- Gross margin improved 1.8ppt to 7.2%.
- Bottom line was partially pared by weaker associate/ JV contribution (-26.2%) and higher net finance costs (+132%).
- NAV/share at Bt14.9395.
*GSH
- 3Q17 net profit of $2.1m (3Q16: $0.1m) was partly boosted by $1.2m of profits from new associate Henan Zhongyuan, a food logistics hub.
- Revenue slid 26% to $20.9m, following the development completion of GSH Plaza, which outweighed progressive revenue from Eaton Residences project in Malaysia and improved taking from the hospitality segment.
- Gross margin widened 19ppt to 71% on the change in revenue mix.
- Bottom line also benefitted from lower distribution and finance expenses, as well as lower fair value loss.
- Trades at 14.9x trailing P/E.
*Top Global
- Slumped deeper into 3Q17 net loss of $1.5m (3Q16: $0.1m loss) on weaker gross margin (-6.1ppt to 13.7%).
- Revenue grew 27% to $51.6m on higher takings from property development (+31%), hospitality (+45%) and golf & country club (+4%), which curtailed weakness in rental income (-83%).
- Bottom line was hit by higher distribution expenses (+45%) and other losses of $1.7m (3Q16: $0.1m), partially mitigated by dividend income of $2.3m (3Q16: nil) and forfeited deposits of $0.4m (3Q16: nil).
- Trades at 0.37x P/B.
*Samurai 2K Aerosol
- 1HFY18 net profit jumped more than 4x to RM6.4m (1HFY17: RM1.5m) on lower effective tax rate of 19.6% (1HFY17: 43%).
- Revenue doubled to RM34.5m on higher sales volume across Indonesia, Malaysia and other ASEAN countries, resulting from enhanced marketing initiatives.
- Gross margin contracted 1.3ppt to 44.9% amid lower ASP in Indonesia and higher raw material costs.
- Trades at 142.1x forward P/E.
POSITIVE NEWS
*STE
- Clinched a contract from Quality Liquefied Natural Gas Transport to build America's first offshore LNG Articulated Tug and Barge (ATB) unit.
- The ATB tug will have 5,100 horsepower and is designed to carry 4,000 m3 of LNG.
- Expected delivery date is 1Q20.
- Trading at 21.5x forward P/E.
*Zico Holdings
- Granted new capital markets license by the Securities Commission of Malaysia to conduct corporate finance advisory.
- Last traded at 47.9x trailing P/E.
NEUTRAL NEWS
*Vard
- Received voluntary delisting from controlling shareholder Fincantieri at $0.25/share.
- Fincantieri owns 79.34% of share capital and intends to exercise its right of compulsory acquisition if it crosses the 90% threshold.
- The offer price implies at 0.8x P/B.
*SPH
- To acquire another 4.84% of MindChamps Preschool for $3.96m, raising its stake to 26.84%.
- MindChamps owns and/or franchise the operation of infant care centres and preschools.
- Trades at 20.5x forward P/E and 3.3% indicative yield.
*Sunpower
- To acquire 85% stake in Qingdao Xinyuan Thermal Power for Rmb212.5m.
- The acquisition would bring in recurring income for the group and is in line with the group's expansion plan into green investments.
- Trades at 14.9x trailing P/E.
*Federal International
- Entered into a 50:50 JV with KLSE-listed Destine to tender for oil & gas projects in South Asia and South-East Asia.
- Trades at 9x trailing P/E.
- The market might take a pause after Wall Street's wobble last Fri, snapping an eight-week winning streak, while as investors digest the last batch of 3Q results this week, which will include Wilmar, Golden Agri and Sing Post.
- Technically, topside resistance for STI remains at 3,460, with underlying support at 3,355.
SECTOR WATCH
*Property
- Sales launch of Parc Botannia in Sengkang over the weekend saw sustained sales momentum.
- 70:30 JV between developers Sing Holdings and Wee Hur achieved a respectable average selling price of $1,270 psf for the 230 units sold.
- The healthy take-up underpins Maybank KE's Positive view on the Singapore residential sector.
- Among property counters, the house has Buy ratings on UOL (TP: $9.43), City Dev (TP: $12.05), GuocoLand (TP: $2.75) and Ho Bee Land (TP: $3.00).
CORPORATE RESULTS
*ComfortDelGro
- 3Q17 net profit reversed 8.2% to $80.1m, dented by private hire players, but met estimates.
- Revenue slipped 2.4% to $991.4m, on a smaller operating taxi fleet in Singapore and lower rentals from China, while bus and rail segments improved on transition to the bus contracting model and higher ridership, respectively.
- EBITDA margin narrowed 0.6ppt to 21.6% on higher staff costs (+3.3%).
- Bottom line was also weighed by unfavorable FX translation effects of $5.3m.
- Management is optimistic on its public transport business in Singapore and Australia, but is downbeat on the taxi and and related segments.
- Uber tie-up could be finalised this month. Maybank KE maintains Buy with TP of $2.40.
*UMS
- 3Q17 net profit doubled to $13.6m, blowing past expectations.
- Revenue surged 51% to $39.3m on solid sales of semiconductor systems (+61%) and components (+44%).
- Gross material margin improved 2ppt to 59% on higher proportion of component sales.
- Bottom line was also helped by lower depreciation (-23%).
- Maintained interim DPS of 1¢.
- Management is upbeat on strong order pipeline and expects cost savings from the migration of domestic production to Penang.
- Last traded at 13.1x forward P/E.
*Silverlake Axis
- 1QFY18 net profit plunged 81% to RM31.7m on absence of disposal gain from sale of shares in associate Global InfoTech (1QFY17: RM143.7m).
- Revenue declined 10% to RM114m on weaker contributions from software licensing (-86%) and software project services (-50%), as recently won contracts are still in early stages.
- Gross margin shrank 6ppt to 52% amid lower proportion of higher margin projects.
- Management expects project related licensing and services business to pick up in 2HFY18.
- Proposed interim DPS of 0.3¢ (1QFY17: 0.5¢) and special DPS of 0.5¢ (1QFY17: nil).
- Trades at 18.5x forward P/E.
*Asian Pay TV Trust
- 3Q17 DPU of 1.625¢ (unch) was in line with estimates.
- Revenue rose 6.5% to $84.5m mainly on positive FX effects. In constant TWD terms, contribution from all three segments improved across basic cable TV (+7.7%), broadband (+1.7%) and premium digital cable TV (+3.4%).
- EBITDA margin inched up 1.3ppt to 60.1%.
- Reaffirmed guidance for FY17 DPU of 6.5¢, implying 10.8% yield.
- NAV/unit at $0.85.
*HRnetGroup
- 3Q17 net profit jumped 20.2% to $10.7m, as revenue rose 7% to $97.5m on strong growth in flexible staffing business in Singapore.
- Gross margin contracted 1.9ppt to 35.3%, while operating margin held relatively steady at 14% (-0.2ppt).
- Updated that M&A work is on track and management expects to announce to series of further new projects.
- Trades at 20.1x forward P/E.
*Q&M
- 3Q17 net profit jumped 28% to $3.6m, buoyed by absence of portion to non-controlling interests (3Q16: $1.2m).
- However, revenue slumped 29.4% to $27.5m, mainly from the deconsolidation of Aoxin from a subsidiary to an associate in Apr '17, as well as lower takings from dental clinics (-11.8%) and dental equipment & supplies distribution (-54.6%).
- EBIT margin inched up 1.7ppt to 13.5%, lifted by new contribution from Aoxin of $0.7m.
- Trades at 32.5x forward P/E.
*QAF
- 3Q17 net profit plunged 62% to $7.4m, on flat revenue of $212m as higher bakery turnover in Philippines was offset by lower takings at Australian meat production unit due to reduced ASP from stiff competition.
- Operating margin shrank 5.9ppt to 3.6% on a broad-based cost increase, led by higher advertising and promotion expenses from the Philippines bakery business.
- Bottom line was dragged by $0.8m professional fees and $0.6m of doubtful debts.
- Trades at 7.9x trailing P/E.
*Cordlife
- Turned around to 1QFY18 net profit of $0.6m (1QFY17: $0.6m loss), thanks to absence of finance expenses (1QFY16: $1m) upon full redemption of its debt.
- Revenue climbed 13.2% to $16.6m from an increase in newborn deliveries (+6.3% to 6,700) as well as lower discounts given in India and Philippines.
- Consequently, gross margin expanded to 66.3% (+1.5ppt).
- Trades at 1.65x P/B.
*Straits Trading
- 3Q17 net profit declined 29.4% to $11.9m on a 2.7x jump in taxes to $2.6m.
- Revenue grew 16.5% to $132.1m on higher contribution from resources (+19.1%), but pared by weakness in real estate (-36.8%).
- Bottom line was impacted by a drop in other sources of income (-16%) from lower dividend income and reduced FV gains (-51.2%).
- Trades at 17.1x forward P/E.
*Haw Par
- 3Q17 net profit slipped 4.1% to $40.5m, dragged by a spike in expenses (+31.7%) from increased marketing activities and a negative $1.9m swing into FX loss of $1.5m.
- Revenue rose 7.4% to $53.4m, lifted by improved sales for Tiger Balm products.
- However, gross margin contracted 1.4ppt to 63.7%.
- Last traded at 18.8x forward P/E.
*Bukit Sembawang
- 2QFY18 net profit halved to $17.2m, dragging 1HFY18 earnings to $23.1m (-64%).
- Quarter revenue of $31.9m (-56%) was weighed by lower progressive revenue recognition from development projects.
- Gross margin narrowed 1ppt to 62.8%.
- Bottom line was buttressed by a lower effective tax rate of 6.6% (2QFY17: 17.6%).
- Trades at 1.25x P/B.
*GK Goh
- 3Q17 net profit grew 32% to $5.1m on improved operating margin (+4ppt to 9.9%).
- Revenue slipped 2% to $20.3m as growth in corporate services revenue (+6%) was negated by declines in investment (-8%) and other (-84%) income.
- Bottom line was further shored up by lower finance costs (-10%) and higher contributions from associates (+7%).
- Trades at 8.3x trailing P/E and 0.84x P/B.
*Hong Leong Finance
- 3Q17 net profit soared 84.2% to $23.6m, bringing 9M17 earnings of $60.9m (+58.7%) to 80% of FY17 estimate.
- Net interest income surged 48% to $47.4m on the back of higher loan yield and lower interest expense (-29.9%), albeit on a reduced loan base.
- Bottom line was dragged by the provision of doubtful debts and wealth management product of $2.8m (3Q16: $0.7m reversal).
- Last traded at 16x forward P/E and 0.71x P/B.
*KSH
- 2QFY18 net profit slumped 48.9% to $4.1m on a 42.7% drop in associate/JV contribution.
- This brought 1HFY18 net profit of $10.1m (-44.3%) to just 25% of full year estimate.
- For the quarter, revenue dived 64.1% to $24.5m on weakness in construction (-65.6%), partially caused by project delays.
- Operating margin inched 2.5ppt higher to 11.5% from a sharper decline in cost of construction (-68.9%).
- Shaved interim DPS to 1¢ (2QFY17: 1.25¢).
- Construction order book at $600m, while attributable share of progress billings from associates and JVs stood at $126.8m.
- Separately, KSH announced a LOI from 35%-owned Rio Casa Venture, for a $266.3m construction contract.
- The contract entails construction of 9 blocks of apartments and 22 units of strata landed houses. Construction on the showflat is expected to commence by end Dec '17 with the main development to commence by Nov '18 for 40 months.
- Trades at 13.2x forward P/E.
*Tiong Seng
- 3Q17 net profit spiked to $5.3m (3Q16: $1.9m) on improved operating leverage, and elevated 9M17 earnings to $19.6m (+94%).
- 9M17 revenue grinded up 1% to $554.2m as solid improvement in core construction business (+22%) was doused by weaker property development sales (-79%).
- Gross margin narrowed 3.3ppt to 4.1% on a shift in project mix.
- Bottom line was lifted by $3.5m drop in net finance cost, $2.3m positive swing in JV contribution, as well as lower selling and other expenses.
- Construction order book depleted to $636.9m from $730m in 2Q17.
- Trades at 7.2x trailing P/E.
*Stamford Land
- 2QFY18 net profit soared 68% to $9.9m, on a 2.8x leap in revenue to $135.3m, underpinned sale settlement of 131 apartments at Macquarie Park Village and firmer hospitality takings amid a stronger AUD.
- Operating margin narrowed 3.7ppt to 12.6%, as the lower margin property development business accounted for higher proportion of sales.
- Bottom line growth was eased by a $2.4m adverse FX swing and higher effective tax rate of 30% (2QFY17: 18.9%).
- Trades at 10.8x trailing P/E and 0.88x P/B.
*Yeo Hiap Seng
- 3Q17 net profit slumped 64.9% to $1.8m, as revenue slipped 7.4% to $87.7m on weakness in the F&B segment due to general market weakness, competitive pricing and sales disruption in Cambodia as new distributors ramp up sales.
- Gross margin contracted 6.4ppt to 31.2%
- Bottom line was further weighed by higher admin expenses (+25.3%), although offset by disposal gain of $4.1m.
- Trades at 4.8x trailing P/E.
*Neo Group
- Fell into 2QFY18 net loss of $0.5m (2QFY17: $3m profit) on absence of $1.8m disposal gain.
- Revenue grew 27.5% to $45.3m on stronger contributions from food retail (+14.4%), food manufacturing (+2.8%), supplies & trading (+270.5%), but partially pared by lower takings from food catering (-1.9%).
- Bottom line was further impacted by higher purchases (+62.5%) and staff costs (+13.6%).
- Trades at 22x forward P/E.
*Willas-Array
- 1HFY18 net profit leapt 312.8% from a low base to HK$60.2m, bolstered by a positive HK$15.3 swing into FX gain of HK$10m due to the stronger CNY against USD, as well as a reversal of doubtful debt of HK$3m.
- Revenue jumped 13.8% to HK$2.35b on strong demand industrial (+33%), automotive (+24.4%), electronic manufacturing services (+52.7%) and home appliance (+16%), but was partially offset by weakness in the dealer segment (-13.8%).
- Gross profit widened to 8.4% (+1ppts) on a shift in mix towards higher-margin products.
- Bottom line was partially offset by higher distribution costs (+22.1%) and staff cost (+3.2%).
- Trades at 4.9x trailing P/E.
*PEC
- 1QFY18 net profit inched 2% higher to $1.4m, despite a 2% slip in revenue to $81.3m following substantial completion of projects in FY17.
- However, gross margin expanded to 24.1% (+3.7ppts) due to higher-margin maintenance projects.
- But, bottom line was partially weighed by a negative FX swing of $2.4m into loss of $0.5m.
- Trades at 10.9x trailing P/E.
*ISOTeam
- 1QFY18 net profit surged 54.6% from a low base to $1.5m, supported by lower admin expense (-12.9%) due to reduced staff cost.
- Revenue jumped 20.9% to $25.1m on higher takings from addition & alteration (+34.9%) and repairs & redecoration (+62.7%), but was partially offset by a slump in coating & painting (-32.5%).
- Gross margin contracted to 17.7% (-4.8ppt) from the shift to lower-margin work.
- Trades at 7.2x forward P/E.
*Dasin Retail Trust
- 3Q17 DPU of 2.23¢ was 12% above IPO forecast, lifting 9M17 DPU to 5.23¢.
- Revenue and NPI of $18.7m and $15.9m exceeded estimates by 21% and 25% due to higher takings from newly-acquired Shiqi Metro Mall, increased turnover rent from the initial portfolio and the recognition of future rent escalations on straight-line basis for leases.
- Portfolio remains fully occupied, while aggregate leverage stayed flattish at 31.5% (-0.3ppt q/q).
- Trades at an annualised 3Q yield of 11.2% and 0.53x P/B.
*Sino Grandness
- 3Q17 net profit jumped 16.3% to Rmb193.3m, lifted by other operating income and absence of negative fair value change of convertible bonds.
- Revenue rose 10.8% to Rmb1.23b on higher takings from beverage (+12.9%) and domestic canned products (+14.3%), but partly offset by a slip in overseas sales (-1.3%).
- Gross margin contracted to 36.8% (-4.5ppt) on higher cost of raw materials.
- Notably, despite improved sales, operating cash flow was significantly weaker with an outflow of Rmb234.9m (3Q16: Rmb13.2m inflow).
- Nevertheless, management still remains cautiously optimistic on its prospects.
- Trades at 3.6x trailing P/E.
*Lum Chang
- 1QFY18 net profit surged 186% from a low base to $2.7m, mainly due to increased government grants (+521%).
- However, revenue slumped 44% to $57.3m on lower sales from substantially completed construction projects as well as fewer ongoing ones.
- Gross margin more than doubled to 19.3% (+10.3ppt) on cost savings derived from two substantially completed projects.
- Bottom line was aided by lower FX losses (-64%), but pared by increased JV loss of $0.3m (1QFY17: $19,000 loss) and higher taxes (+50%).
- Outstanding order book stood at $542.6m.
- Trades at 7.3x trailing P/E.
*Aspen Group
- 3Q17 net profit of RM24.9m (3Q16: RM1.1m) brought 9M17 earnings to RM43.4m, or 56% of full-year estimate.
- Quarter's revenue rose 6x to RM137.9m, bolstered by on-going projects Tri Pinnacle, Vervea, Vertu Resort, as well as land sale for a private medical centre in Aug '17.
- Gross margin widened 3ppt to 40%.
- Bottom line was boosted by RM1.3m of positive swing in net finance income following a debt restructuring for its recent IPO, but was pared by RM7m of listing expenses.
- Total unbilled sales of RM1.015b as at Sep '17.
- Last traded at 6.8x forward P/E.
*PACC Offshore
- Narrowed 3Q17 net loss to US$9.8m (3Q16: US$12.9m loss) mainly on a turnaround in JV contribution to US$11.8m (3Q16: US$0.2m loss).
- Revenue jumped 27% to US$52.8m from better contributions from offshore supply vessels (+25%), offshore accommodation (+53%) and harbour services and emergency response (+7%) segments, but was partially pared by lower takings from the transportation & installation (-37%) unit.
- Fell deeper into gross loss of US$4.3m (3Q16: US$1.4m loss) due to higher operating expenses stemming from POSH Arcadia, while POSH Xanadu and two light construction vessels remained idle.
- Bottom line was pressured by higher taxes (+504%).
- Trades at 0.72x P/B.
*Mewah International
- 3Q17 net profit leapt 27.4% to US$13.4m, shored by US$4.9m gain from fixed asset disposal and a US$1.3m drop in impairment loss.
- However, revenue slipped 2.4% to US$739m, as weaker sales volumes in the bulk segment (-21.8%) outweighed Ramadan-driven volume in the consumer segment (+46.6%). Overall average selling prices rose 7%.
- Operating margin narrowed 0.4ppt to 4.8%.
- Proposed an interim DPS of 1¢ (3Q16: nil).
- Trades at 12.8x trailing P/E.
*Sri Trang Agro-Industry
- Turned around to 3Q17 net profit of Bt166.7m (3Q16: Bt90.8m loss), lifted mainly by a surge in other gains to Bt253.1m (3Q16: Bt43.9m) and FV gain of Bt47.9m (3Q16: nil).
However, revenue slipped 5.6% to Bt18.22b from lesser sales volume (-20%), despite stronger ASP (+9.6%) of natural rubber.
- Gross margin improved 1.8ppt to 7.2%.
- Bottom line was partially pared by weaker associate/ JV contribution (-26.2%) and higher net finance costs (+132%).
- NAV/share at Bt14.9395.
*GSH
- 3Q17 net profit of $2.1m (3Q16: $0.1m) was partly boosted by $1.2m of profits from new associate Henan Zhongyuan, a food logistics hub.
- Revenue slid 26% to $20.9m, following the development completion of GSH Plaza, which outweighed progressive revenue from Eaton Residences project in Malaysia and improved taking from the hospitality segment.
- Gross margin widened 19ppt to 71% on the change in revenue mix.
- Bottom line also benefitted from lower distribution and finance expenses, as well as lower fair value loss.
- Trades at 14.9x trailing P/E.
*Top Global
- Slumped deeper into 3Q17 net loss of $1.5m (3Q16: $0.1m loss) on weaker gross margin (-6.1ppt to 13.7%).
- Revenue grew 27% to $51.6m on higher takings from property development (+31%), hospitality (+45%) and golf & country club (+4%), which curtailed weakness in rental income (-83%).
- Bottom line was hit by higher distribution expenses (+45%) and other losses of $1.7m (3Q16: $0.1m), partially mitigated by dividend income of $2.3m (3Q16: nil) and forfeited deposits of $0.4m (3Q16: nil).
- Trades at 0.37x P/B.
*Samurai 2K Aerosol
- 1HFY18 net profit jumped more than 4x to RM6.4m (1HFY17: RM1.5m) on lower effective tax rate of 19.6% (1HFY17: 43%).
- Revenue doubled to RM34.5m on higher sales volume across Indonesia, Malaysia and other ASEAN countries, resulting from enhanced marketing initiatives.
- Gross margin contracted 1.3ppt to 44.9% amid lower ASP in Indonesia and higher raw material costs.
- Trades at 142.1x forward P/E.
POSITIVE NEWS
*STE
- Clinched a contract from Quality Liquefied Natural Gas Transport to build America's first offshore LNG Articulated Tug and Barge (ATB) unit.
- The ATB tug will have 5,100 horsepower and is designed to carry 4,000 m3 of LNG.
- Expected delivery date is 1Q20.
- Trading at 21.5x forward P/E.
*Zico Holdings
- Granted new capital markets license by the Securities Commission of Malaysia to conduct corporate finance advisory.
- Last traded at 47.9x trailing P/E.
NEUTRAL NEWS
*Vard
- Received voluntary delisting from controlling shareholder Fincantieri at $0.25/share.
- Fincantieri owns 79.34% of share capital and intends to exercise its right of compulsory acquisition if it crosses the 90% threshold.
- The offer price implies at 0.8x P/B.
*SPH
- To acquire another 4.84% of MindChamps Preschool for $3.96m, raising its stake to 26.84%.
- MindChamps owns and/or franchise the operation of infant care centres and preschools.
- Trades at 20.5x forward P/E and 3.3% indicative yield.
*Sunpower
- To acquire 85% stake in Qingdao Xinyuan Thermal Power for Rmb212.5m.
- The acquisition would bring in recurring income for the group and is in line with the group's expansion plan into green investments.
- Trades at 14.9x trailing P/E.
*Federal International
- Entered into a 50:50 JV with KLSE-listed Destine to tender for oil & gas projects in South Asia and South-East Asia.
- Trades at 9x trailing P/E.
Friday, November 10, 2017
SG Market (10 Nov 17)
MARKET OVERVIEW
- Some profit-taking is likely following the overnight tumble on Wall Street on fears that the promised tax cuts could be delayed till 2019 and as the market rally extends into overbought territory amid a flood of corporate results.
- Technically, topside resistance for STI is seen at 3,460, with underlying support at 3,355.
CORPORATE RESULTS
*City Dev
- 3Q17 net profit dipped 8.3% to $156.1m, missing estimates as it was affected by lumpy recognition of project sales and disposal items.
- Revenue fell 6.5% to $863.1m due to lower contributions from property development (-21.8%) and rental properties (-3.3%) partially mitigated by increased hotel takings (+5%) due to recent acquisitions of The Lowry Hotel and Grand Millennium Auckland.
- Bottom line was hurt by the absence of one-off gain (3Q16: $49.5m), but was partially offset by a disposal gain of $38.6m from sale of an office building in Osaka.
- Trades at 12% discount to RNAV/share of $13.80.
*UOL
- 3Q17 core net profit grew 8% to $90.9m as higher minority interests (+391%) pared top line growth of 37% to $537.9m.
- This brought 9M17 core net profit to $270.5m (+8%) or 73% of the street's FY17 forecast.
- For the quarter, revenue growth was contributed by the consolidation of UIC. Excluding that, contributions from property development slipped 3% following completion of Riverbank@Fernvale in Mar '17 while hotel operations grew 5% from new contribution from Pac Pacific Melbourne acquired in Jul '17.
- Gross margin slipped to 31% (-2ppt) on accelerated depreciation expenses for Pan Pacific Orchard, which is due for redevelopment in 2Q18.
- Headline bottom line surged 7.1x due to FV gain of $542.1m on consolidation of UIC following the 4.23% stake acquisition from Haw Par.
- Trades at 20% discount to RNAV/share of $10.95.
- Maybank KE maintains Buy and raised TP by 12% to $9.85.
*GLP
- 2QFY18 net profit (ex-revaluation) jumped 40.6% to US$100.7m, bringing 1HFY18 core earnings to 59% of full-year consensus estimate.
- Quarter revenue rose 31.9% to US$281.7m, underpinned by fee income from financial services in China, rental growth as well as completion and stabilisation of China development projects.
- New and renewal leases grew 39% to 4.6m sqm, while rental growth remained strong with 4.6% increase in same-property income and 10.4% hike on renewal leases.
- Average lease ratio was stable at 91% (+1ppt).
- 1HFY18 development starts and completions were on track, at 25% and 49% of FY18 targets.
- Total fund management AUM stood at US$39b, of which 73% has been invested.
- Supported by buyout offer price of $3.38 against NAV/share of $2.62.
*SATS
- 2QFY18 core net profit rose 5% to $65.2m, bolstered by better performance of Indonesian and Indian associates.
- However, revenue slipped 0.8% to $434.8m on weaker takings from food solutions (-3.1%) as TFK in Japan declined 13% after Delta cut flights and Vietnam Air switched caterers.
- Bottom line was impacted by weaker operating margin of 14.1% (-0.4ppt) on higher licence fees (+24.2%) and other costs (+7.4%) consisting of fuel costs, FX losses and lower grants received.
- Maintains interim DPS of $0.06.
- Trades at 21.2x forward P/E.
*NetLink NBN Trust
- 1QFY18 net profit of $13m met expectations, but 4.9% above IPO forecast due to lower-than-expected operating expenses (-2.3%).
- Revenue was 1.2% below forecasts from lower installation revenue as the rate of migration, by non-fibre subscribers to fibre, was slower-than-expected.
- This was partially offset by higher-than-expected monthly recurring residential and non-residential connection revenue.
- EBITDA margin was 2.3ppt higher-than-expected at 72.2% on lower staff (-14%) and amortisation (-10%) costs.
- Net gearing at 14%.
- NAV/unit at $0.80.
*Frasers Centrepoint
- FY17 core net profit of $488.2m (+1.7%) met consensus estimate. Including fair value gain of $215.3m and other one-offs, headline net profit rose 15.4% to $689.1m.
- Revenue grew 17% to $4.03b, mainly due to the sale of two student accommodation and several residential projects in Australia, sale settlements of two Chinese projects and Vauxhall Sky Gardens project in UK.
- Gross margin narrowed 0.6ppt to 29.4%.
- Bottom line was bolstered by a $31.3m positive FX swing, $21.2m drop in net interest expenses, and $13.8m increase in associates/JV income.
- Net gearing held steady q/q at 0.7x.
- Final DPS of 6.2¢ maintained.
- Last traded at 0.83x P/B.
*Yangzijiang
- 3Q17 net profit surged 2.1x to Rmb866m, ahead of expectations, on fair value gains of investments at associates and absence of impairment loss.
- Revenue rose 13% to Rmb4.38b on higher volume of shipbuilding activities (+4%) and stronger trading business (+45%).
- But, gross margin contracted 7ppt to 15.4% due to stronger CNY against USD and increased raw material costs.
- Secured orders for 59 new vessels ytd worth US$1.59b, almost double that of 2016.
- Order book expanded to US$4.3b (2Q17: US$4b).
- Trades at 12.6x forward P/E.
*Noble Group
- Racked up another massive net loss of US$1.17b for 3Q17 as guided, mainly from asset sales and impairments.
- This took its 9M17 loss to a whopping US$3.05b.
- 3Q17 revenue fell 18% to US$1.46b as liquidity and credit constraints disrupted its trading business, leading to a 26% drop in volumes.
- Notably, operating cash flow turned positive US$295m but adjusted net debt/capital blew up to 73% and questions remain on how the group is going to deal with its US$3.7b net debt.
- Last traded at 0.25x P/B but risks further asset write-offs.
*Ho Bee Land
- 3Q17 results beat as net profit doubled to $54.4m.
- However, revenue slid 6.9% to $43.7m on lower sales recognition from two Australian residential development projects in Melbourne and Gold Coast, which outweighed growth in rental income.
- Bottom line was boosted by stronger associates & JV contributions from two China projects in Shanghai and Tangshan, and Eporo Tower in Melbourne.
- Last traded at a steep 39% discount to Maybank KE's RNAV/share of $4.23.
- House rates Buy with TP of $3.00.
*Fragrance Group
- 3Q17 net profit jumped 35% to $4.2m, as revenue soared 69.6% to $55.9m.
- Top line was bolstered by City Gate project in property development (59% to $45.1m), higher occupancy achieved from property investment (+23% to $5.8m), and $5.1m (3Q16: nil) contribution from hotel business.
- However, gross margin compressed 7.2ppt to 32.4% as profitability narrowed for the property development segment.
- Bottom line growth was also pared by substantial commission expenses for development projects and leasing of properties.
- Net gearing crept up to 0.9x from 0.8x in Jun '17.
- Last traded at 1.04 P/B.
*Banyan Tree
- Swung into 3Q17 net profit of $20.1m (3QFY16: $10.8m loss), mainly boosted by divestment gain arising from partial sale of hotels and assets in China.
- Revenue climbed 9% higher to $68.3m on completion of Cassia Bintan (Phase 1) and sold units progressively handed over.
- Overall unrecognised property sales stood at $132.4m (3Q16: $84.5m), of which 17% will be recognised in 4Q17.
- Over the next 12 months, group expects to open eight new resorts and 11 spas under management.
- NAV/share at $0.73.
*SBS Transit
- 3Q17 net profit surged 42% to $11.1m on improved operating leverage.
- Revenue rose 7.4% to $295m on higher contribution from bus services, following the transition to the bus contracting model and improved ridership from rail services.
- EBITDA margin expanded 2ppt to 13%, helped by lower other operating costs.
- Trades at 18.6x trailing P/E.
*SIIC Environment
- 3Q17 net profit grew 17.2% to Rmb110.2m, bringing 9M17 earnings of Rmb350.2m (+23%) to 70% of full year forecast.
- Quarter revenue more than tripled to Rmb1.36b on growth across construction (+16.1x to Rmb731.5m), operating & maintenance (+77.6% to Rmb385m) and finance income from concessions (+215% to Rmb180.7m).
- Gross margin declined to 25.6% (-20.2ppt) on the shift in sales mix.
- Bottom line was hit by higher finance costs (+269%) and weaker associate/ JV contributions (-25.6%).
- Last traded at 12.2x forward P/E.
*Food Empire
- 3Q17 results blew past expectations as net profit jumped 26.8% to US$7.4m, on a turnaround in associate income to US$0.2m (3Q16: US$0.7m loss).
- Revenue edged 2.7% higher to US$70.1m on improved sales in Russia (+2.1%), Indochina (+1.5%) and others (+34%) partially pared by weakness in Ukraine (-3.5%) and Kazakhstan (-29.2%).
- Operating margin expanded to 13.2% (+1.6ppt) on lower selling & distribution expenses (-16.5%).
- Bottom line was bolstered by a US$0.3m swing to FX gain of US$0.1m, but pared by higher taxes (+73.7%).
- Trades at 16.2x forward P/E.
*Memtech
- 3Q17 net profit jumped 26.5% to US$3.9m, with 9M17 net profit of US$10.4m (+360.7%) still ahead of expectations.
- However, quarter revenue slipped 0.5% to US$46.2m on weakness in consumer electronics (-8.8%) and telecommunication (-24.9%) segments, mitigated by growth in automotive (+17.3%) and industrial & medical (+11.8%) segments.
- Gross margin expanded to 18.4% (+0.7ppt) on increased automation and change in sales mix.
- Bottom line was boosted by lower sales & marketing expenses (-19%) and higher other operating income (+87.8%) on government incentives & subsidies.
- Trades at 11.1x forward P/E.
*Courts Asia
- 2QFY18 net profit crashed 74.7% to $1.5m, bringing 1HFY18 net profit of $7.6m (-49%) to just 29% of FY18 forecast.
- For the quarter, revenue slipped 1.4% to $176.5m as growth in sales from Singapore (+5.9%) was negated by a 19.7% decline in Malaysia on the weaker MYR as well as lower sale of goods and earned service charge income.
- Gross margin contracted to 34.2% (-1.7ppt) on promotions and lower credit sales in Singapore, but was offset by higher margins in Malaysia and Indonesia.
- Bottom line was hit by higher opex (+2.6%) and increased provisions for doubtful debts of $6.8m (+31.8%).
- Trades at 7.5x forward P/E.
*Vard
- 3Q17 net loss narrowed to NOK8m (3Q16: NOK80m loss), dragging 9M17 loss to NOK102m (9M16: NOK96m loss), vs full year loss estimate of NOK167m.
- Revenue improved 33% to NOK2.01b on high activity level at the Romanian and Vietnamese yards due to rapid progress on module carrier vessels projects for Topaz Energy and Marine and Kazmortransflot, and the ongoing construction on all six expedition cruise vessels contracted in 2016.
- EBITDA margin improved to 2.7% (+0.5ppt y/y, -0.1ppt q/q).
- Order book stood at NOK12b (2Q17: NOK12.88b).
- NAV/share at $0.32.
*Hyflux
- 3Q17 net profit collapsed to $0.5m (3Q16: $41.1m), dragging 9M17 earnings to $24.1m (-76%).
- Quarter revenue plunged 61% to $98m on lower EPC activities at TuasOne waste-to-energy project and Qurayyat Independent Water project in Oman.
- Bottom line would have been further hit if the $26.6m loss from the planned partial divestment of Tuaspring plant (announced Feb '17) is accounted for.
- Trades at 0.63x P/B.
*KrisEnergy
- 3Q17 net loss narrowed to US$25.6m (3Q16: US$31.6m loss).
- Revenue slipped 12% to US$39m on reduced sale of crude oil (-11%) and gas (-23%) due to lower production from the Wassana oil field in the Gulf of Thailand, but partly pared by higher ASPs.
- However, EBITDAX jumped 66% to US$7m, thanks to a 20% drop in adjusted operating cost.
- Notably, operating cash flow improved to US$12m (3Q16: US$4m).
- Trades at 0.45x P/B.
*CNMC Goldmine
- 3Q17 net profit slumped 45.8% to barely US$1m, shored up by a US$0.9m tax credit (3Q16: US$0.3m expense) on a partial reversal of deferred tax liability.
- For the quarter, revenue tumbled 44.3% to US$4.7m due to lower production volume of gold (-41.3%) and average realised gold price (-5.2%).
- Notably, group fell into an operating loss of US$22,673 (3Q16: US$2.2m profit), as all-in costs more than doubled to US$1,546/oz due to reduced production and sales volume of fine gold stemming from lower ore grades, as well as capex for the construction of a carbon-in-leach plant.
- Trading at hefty 71.1x forward P/E.
*Nordic Group
- Respectable 3Q17 results as net profit rose 23% to $4.4m, on a 25% growth in revenue to $26.8m from improved takings in both maintenance services (+83%) ad project services (+4%).
- Gross margin widened by 3ppt to 34% on a shift to higher-margin maintenance services.
- However, bottom line was slightly impacted by higher admin expense of $3.2m (+17%).
- Order book stood at $99.4m, providing revenue visibility up to FY2020.
- Trades at 15.5x trailing P/E.
*Singapore Shipping
- 2QFY18 net profit edged up to US$2.3m (+4.1%) on reduced operating costs, which lifted 1HFY18 earnings to US$4.9m (+27%).
- For the quarter, revenue slipped 3% to US$11.2m, mainly weighed by agency and logistics (-9.5%) segment, while ship owning (-0.5%) business stayed muted.
- Operating margin improved 1.4ppt to 27.6% on cost controls.
- Bottom line was also helped by a $0.1m dip in finance costs.
- Net gearing was stable at 0.75x as compared to 1QFY18.
- Last traded at 9.7x trailing P/E.
*APAC Realty
- 3Q17 net profit rose 7.2% to $5.5m, as revenue of $105.5m (+30.3%) on higher brokerage income due to increased market transactions for new home sales (+54% to $30.8m), as well as resale and rental of properties (+23.2% to $72.3m).
- Gross margin narrowed 1.3ppt to 12.9%, while growth in bottom line was also slowed by $1.1m of IPO expenses.
- Trades at 4.1x trailing P/E.
*Asia Enterprises
- 3Q17 net profit surged 69% from a low base to $0.3m, as revenue jumped 48% to $9.4m on increased ASP of steel products and higher sales volume to customers in O&M and construction sectors.
- Consequently, gross margin expanded to 25.4% (+0.5ppts).
- NAV/share at $0.271.
*Tiong Woon
- Swung to 1QFY18 net loss of $1.4m (1QFY17: $1.5m profit) amid a $1.2m drop in disposal gain and $0.9m adverse FX swing.
- Revenue tumbled to $23.5m (-32%) from fewer heavy lift and haulage projects and the substantial completion of an engineering services project in the Middle East.
- Gross margin held steady at 22%.
- Net gearing stood unchanged q/q at 0.46x.
- NAV/share at $1.0584.
*TA Corp
- 3Q17 net loss shrank to $4.2m (3Q16: $10m loss), bringing 9M17 losses to $15.2m (9M16: -$9.8m).
- 9M17 revenue rose 14.8% to $159m on broad-based growth across property development (+12%), real estate investment (+142%), construction (+6%) and lubricant & tyre distribution (+35%) businesses.
- Gross margin held at 18.7%.
- But, 9M17 bottom line was hit hard by $6.7m increase in fair value loss of investment properties and a $1.8m jump in provision for doubtful receivables.
- Net gearing increased to 1.57x from 1.49x in Jun '17.
- Construction order book depleted to $96m from $129m in Jun '17.
- Last traded at 0.58x P/B.
*The Trendlines
- 3Q17 net profit spiked 91.2% from a low base to US$3m, supported by lower operating, general and admin expenses (-10.8%).
- Revenue jumped 65.7% to US$6.8m mostly on fair value gains (+717%) in portfolio companies, as well as higher services income to portfolio companies (+22.6%).
- Bottom line was pared by a leap in tax expense to US$1.1m (3Q16: US$0.1m).
- Trades at 0.8x P/B.
*SUTL Enterprise
- 3Q17 net profit expanded 30% to $0.7m on lower staff (-1%) and utilities (-32%) expenses, which brought 9M17 net profit to $2.1m (+13%).
- For the quarter, revenue inched 1% higher to $6.5m on increased takings from membership related and management fees (+3%) and other income (+19%), but offset by weaker sales of goods & services (-1%).
- Pretax margin improved to 12.7% (-2.3ppt).
- Net cash position grew to $42.9m (2Q17: $41.8m), representing $0.497/share.
- Trades at 16.6x forward P/E and 1.15x P/B.
*GCCP Resources
- Turned around to 3Q17 net profit of RM0.3m (3Q16: RM2.2m loss).
- Revenue surged 2.6x to RM9.1m, underpinned by higher sales of crushed calcium carbonate stones of ground calcium carbonate (GCC), and precipitated calcium carbonate grades from the Hyper Act Quarries and Gridland Quarry.
- Gross margin expanded 5ppt to 50% on economies of scale from increased production of GCC limestone at Hyper Act Quarries.
- NAV/share at RM0.07.
*New Silkroutes
- 1QFY18 net loss deepened to US$0.6m (1QFY17: US$0.1m loss), despite a doubling in revenue to US$149.3m.
- The jump in top line was attributable to increased oil trades and contribution from newly acquired healthcare subsidiaries.
- However, gross margin nearly halved to 1.3% (-1.1ppt) on weak margin from the oil trading business.
- Bottom line was further impacted by higher personnel expenses (+110%) and other operating expenses (+206%).
- Trades at 1.05x P/B.
POSITIVE NEWS
*Sembcorp Marine
- Signed letter of intent with Statoil Petroleum worth US$490m, for EPC of newbuild FPSO hull and living quarters for the Johan Castberg field development.
- Trades at hefty 67.1x forward P/E.
*HRnet
- To acquire PT Rimbun Job Agency for the establishment of a new brand, HRnet Rimbun, to provide professional recruitment services in Jakarta.
- Jakarta will be the 11th Asian growth city for the group.
- Consideration price has yet to be finalised.
- Trades at 20.2x forward P/E.
NEGATIVE NEWS
*Profit warnings
- Hor Kew
- Hiap Seng Engineering
NEUTRAL NEWS
*Maxi-Cash
- Proposed renounceable non-underwritten 1-for-10 rights issue at $0.16 each.
- Estimated net proceeds of $14.4m earmarked for secured lending business ($10m) and the remaining for working capital.
*Jason Marine
- To grant a convertible loan of up to $0.75m to risk analytics solution provider Sense Infosys (SIS).
- The loan will enable SIS to further develop its business, while presenting an opportunity for the Jason Marine to further its stake in a complementary business with promising prospects.
- Some profit-taking is likely following the overnight tumble on Wall Street on fears that the promised tax cuts could be delayed till 2019 and as the market rally extends into overbought territory amid a flood of corporate results.
- Technically, topside resistance for STI is seen at 3,460, with underlying support at 3,355.
CORPORATE RESULTS
*City Dev
- 3Q17 net profit dipped 8.3% to $156.1m, missing estimates as it was affected by lumpy recognition of project sales and disposal items.
- Revenue fell 6.5% to $863.1m due to lower contributions from property development (-21.8%) and rental properties (-3.3%) partially mitigated by increased hotel takings (+5%) due to recent acquisitions of The Lowry Hotel and Grand Millennium Auckland.
- Bottom line was hurt by the absence of one-off gain (3Q16: $49.5m), but was partially offset by a disposal gain of $38.6m from sale of an office building in Osaka.
- Trades at 12% discount to RNAV/share of $13.80.
*UOL
- 3Q17 core net profit grew 8% to $90.9m as higher minority interests (+391%) pared top line growth of 37% to $537.9m.
- This brought 9M17 core net profit to $270.5m (+8%) or 73% of the street's FY17 forecast.
- For the quarter, revenue growth was contributed by the consolidation of UIC. Excluding that, contributions from property development slipped 3% following completion of Riverbank@Fernvale in Mar '17 while hotel operations grew 5% from new contribution from Pac Pacific Melbourne acquired in Jul '17.
- Gross margin slipped to 31% (-2ppt) on accelerated depreciation expenses for Pan Pacific Orchard, which is due for redevelopment in 2Q18.
- Headline bottom line surged 7.1x due to FV gain of $542.1m on consolidation of UIC following the 4.23% stake acquisition from Haw Par.
- Trades at 20% discount to RNAV/share of $10.95.
- Maybank KE maintains Buy and raised TP by 12% to $9.85.
*GLP
- 2QFY18 net profit (ex-revaluation) jumped 40.6% to US$100.7m, bringing 1HFY18 core earnings to 59% of full-year consensus estimate.
- Quarter revenue rose 31.9% to US$281.7m, underpinned by fee income from financial services in China, rental growth as well as completion and stabilisation of China development projects.
- New and renewal leases grew 39% to 4.6m sqm, while rental growth remained strong with 4.6% increase in same-property income and 10.4% hike on renewal leases.
- Average lease ratio was stable at 91% (+1ppt).
- 1HFY18 development starts and completions were on track, at 25% and 49% of FY18 targets.
- Total fund management AUM stood at US$39b, of which 73% has been invested.
- Supported by buyout offer price of $3.38 against NAV/share of $2.62.
*SATS
- 2QFY18 core net profit rose 5% to $65.2m, bolstered by better performance of Indonesian and Indian associates.
- However, revenue slipped 0.8% to $434.8m on weaker takings from food solutions (-3.1%) as TFK in Japan declined 13% after Delta cut flights and Vietnam Air switched caterers.
- Bottom line was impacted by weaker operating margin of 14.1% (-0.4ppt) on higher licence fees (+24.2%) and other costs (+7.4%) consisting of fuel costs, FX losses and lower grants received.
- Maintains interim DPS of $0.06.
- Trades at 21.2x forward P/E.
*NetLink NBN Trust
- 1QFY18 net profit of $13m met expectations, but 4.9% above IPO forecast due to lower-than-expected operating expenses (-2.3%).
- Revenue was 1.2% below forecasts from lower installation revenue as the rate of migration, by non-fibre subscribers to fibre, was slower-than-expected.
- This was partially offset by higher-than-expected monthly recurring residential and non-residential connection revenue.
- EBITDA margin was 2.3ppt higher-than-expected at 72.2% on lower staff (-14%) and amortisation (-10%) costs.
- Net gearing at 14%.
- NAV/unit at $0.80.
*Frasers Centrepoint
- FY17 core net profit of $488.2m (+1.7%) met consensus estimate. Including fair value gain of $215.3m and other one-offs, headline net profit rose 15.4% to $689.1m.
- Revenue grew 17% to $4.03b, mainly due to the sale of two student accommodation and several residential projects in Australia, sale settlements of two Chinese projects and Vauxhall Sky Gardens project in UK.
- Gross margin narrowed 0.6ppt to 29.4%.
- Bottom line was bolstered by a $31.3m positive FX swing, $21.2m drop in net interest expenses, and $13.8m increase in associates/JV income.
- Net gearing held steady q/q at 0.7x.
- Final DPS of 6.2¢ maintained.
- Last traded at 0.83x P/B.
*Yangzijiang
- 3Q17 net profit surged 2.1x to Rmb866m, ahead of expectations, on fair value gains of investments at associates and absence of impairment loss.
- Revenue rose 13% to Rmb4.38b on higher volume of shipbuilding activities (+4%) and stronger trading business (+45%).
- But, gross margin contracted 7ppt to 15.4% due to stronger CNY against USD and increased raw material costs.
- Secured orders for 59 new vessels ytd worth US$1.59b, almost double that of 2016.
- Order book expanded to US$4.3b (2Q17: US$4b).
- Trades at 12.6x forward P/E.
*Noble Group
- Racked up another massive net loss of US$1.17b for 3Q17 as guided, mainly from asset sales and impairments.
- This took its 9M17 loss to a whopping US$3.05b.
- 3Q17 revenue fell 18% to US$1.46b as liquidity and credit constraints disrupted its trading business, leading to a 26% drop in volumes.
- Notably, operating cash flow turned positive US$295m but adjusted net debt/capital blew up to 73% and questions remain on how the group is going to deal with its US$3.7b net debt.
- Last traded at 0.25x P/B but risks further asset write-offs.
*Ho Bee Land
- 3Q17 results beat as net profit doubled to $54.4m.
- However, revenue slid 6.9% to $43.7m on lower sales recognition from two Australian residential development projects in Melbourne and Gold Coast, which outweighed growth in rental income.
- Bottom line was boosted by stronger associates & JV contributions from two China projects in Shanghai and Tangshan, and Eporo Tower in Melbourne.
- Last traded at a steep 39% discount to Maybank KE's RNAV/share of $4.23.
- House rates Buy with TP of $3.00.
*Fragrance Group
- 3Q17 net profit jumped 35% to $4.2m, as revenue soared 69.6% to $55.9m.
- Top line was bolstered by City Gate project in property development (59% to $45.1m), higher occupancy achieved from property investment (+23% to $5.8m), and $5.1m (3Q16: nil) contribution from hotel business.
- However, gross margin compressed 7.2ppt to 32.4% as profitability narrowed for the property development segment.
- Bottom line growth was also pared by substantial commission expenses for development projects and leasing of properties.
- Net gearing crept up to 0.9x from 0.8x in Jun '17.
- Last traded at 1.04 P/B.
*Banyan Tree
- Swung into 3Q17 net profit of $20.1m (3QFY16: $10.8m loss), mainly boosted by divestment gain arising from partial sale of hotels and assets in China.
- Revenue climbed 9% higher to $68.3m on completion of Cassia Bintan (Phase 1) and sold units progressively handed over.
- Overall unrecognised property sales stood at $132.4m (3Q16: $84.5m), of which 17% will be recognised in 4Q17.
- Over the next 12 months, group expects to open eight new resorts and 11 spas under management.
- NAV/share at $0.73.
*SBS Transit
- 3Q17 net profit surged 42% to $11.1m on improved operating leverage.
- Revenue rose 7.4% to $295m on higher contribution from bus services, following the transition to the bus contracting model and improved ridership from rail services.
- EBITDA margin expanded 2ppt to 13%, helped by lower other operating costs.
- Trades at 18.6x trailing P/E.
*SIIC Environment
- 3Q17 net profit grew 17.2% to Rmb110.2m, bringing 9M17 earnings of Rmb350.2m (+23%) to 70% of full year forecast.
- Quarter revenue more than tripled to Rmb1.36b on growth across construction (+16.1x to Rmb731.5m), operating & maintenance (+77.6% to Rmb385m) and finance income from concessions (+215% to Rmb180.7m).
- Gross margin declined to 25.6% (-20.2ppt) on the shift in sales mix.
- Bottom line was hit by higher finance costs (+269%) and weaker associate/ JV contributions (-25.6%).
- Last traded at 12.2x forward P/E.
*Food Empire
- 3Q17 results blew past expectations as net profit jumped 26.8% to US$7.4m, on a turnaround in associate income to US$0.2m (3Q16: US$0.7m loss).
- Revenue edged 2.7% higher to US$70.1m on improved sales in Russia (+2.1%), Indochina (+1.5%) and others (+34%) partially pared by weakness in Ukraine (-3.5%) and Kazakhstan (-29.2%).
- Operating margin expanded to 13.2% (+1.6ppt) on lower selling & distribution expenses (-16.5%).
- Bottom line was bolstered by a US$0.3m swing to FX gain of US$0.1m, but pared by higher taxes (+73.7%).
- Trades at 16.2x forward P/E.
*Memtech
- 3Q17 net profit jumped 26.5% to US$3.9m, with 9M17 net profit of US$10.4m (+360.7%) still ahead of expectations.
- However, quarter revenue slipped 0.5% to US$46.2m on weakness in consumer electronics (-8.8%) and telecommunication (-24.9%) segments, mitigated by growth in automotive (+17.3%) and industrial & medical (+11.8%) segments.
- Gross margin expanded to 18.4% (+0.7ppt) on increased automation and change in sales mix.
- Bottom line was boosted by lower sales & marketing expenses (-19%) and higher other operating income (+87.8%) on government incentives & subsidies.
- Trades at 11.1x forward P/E.
*Courts Asia
- 2QFY18 net profit crashed 74.7% to $1.5m, bringing 1HFY18 net profit of $7.6m (-49%) to just 29% of FY18 forecast.
- For the quarter, revenue slipped 1.4% to $176.5m as growth in sales from Singapore (+5.9%) was negated by a 19.7% decline in Malaysia on the weaker MYR as well as lower sale of goods and earned service charge income.
- Gross margin contracted to 34.2% (-1.7ppt) on promotions and lower credit sales in Singapore, but was offset by higher margins in Malaysia and Indonesia.
- Bottom line was hit by higher opex (+2.6%) and increased provisions for doubtful debts of $6.8m (+31.8%).
- Trades at 7.5x forward P/E.
*Vard
- 3Q17 net loss narrowed to NOK8m (3Q16: NOK80m loss), dragging 9M17 loss to NOK102m (9M16: NOK96m loss), vs full year loss estimate of NOK167m.
- Revenue improved 33% to NOK2.01b on high activity level at the Romanian and Vietnamese yards due to rapid progress on module carrier vessels projects for Topaz Energy and Marine and Kazmortransflot, and the ongoing construction on all six expedition cruise vessels contracted in 2016.
- EBITDA margin improved to 2.7% (+0.5ppt y/y, -0.1ppt q/q).
- Order book stood at NOK12b (2Q17: NOK12.88b).
- NAV/share at $0.32.
*Hyflux
- 3Q17 net profit collapsed to $0.5m (3Q16: $41.1m), dragging 9M17 earnings to $24.1m (-76%).
- Quarter revenue plunged 61% to $98m on lower EPC activities at TuasOne waste-to-energy project and Qurayyat Independent Water project in Oman.
- Bottom line would have been further hit if the $26.6m loss from the planned partial divestment of Tuaspring plant (announced Feb '17) is accounted for.
- Trades at 0.63x P/B.
*KrisEnergy
- 3Q17 net loss narrowed to US$25.6m (3Q16: US$31.6m loss).
- Revenue slipped 12% to US$39m on reduced sale of crude oil (-11%) and gas (-23%) due to lower production from the Wassana oil field in the Gulf of Thailand, but partly pared by higher ASPs.
- However, EBITDAX jumped 66% to US$7m, thanks to a 20% drop in adjusted operating cost.
- Notably, operating cash flow improved to US$12m (3Q16: US$4m).
- Trades at 0.45x P/B.
*CNMC Goldmine
- 3Q17 net profit slumped 45.8% to barely US$1m, shored up by a US$0.9m tax credit (3Q16: US$0.3m expense) on a partial reversal of deferred tax liability.
- For the quarter, revenue tumbled 44.3% to US$4.7m due to lower production volume of gold (-41.3%) and average realised gold price (-5.2%).
- Notably, group fell into an operating loss of US$22,673 (3Q16: US$2.2m profit), as all-in costs more than doubled to US$1,546/oz due to reduced production and sales volume of fine gold stemming from lower ore grades, as well as capex for the construction of a carbon-in-leach plant.
- Trading at hefty 71.1x forward P/E.
*Nordic Group
- Respectable 3Q17 results as net profit rose 23% to $4.4m, on a 25% growth in revenue to $26.8m from improved takings in both maintenance services (+83%) ad project services (+4%).
- Gross margin widened by 3ppt to 34% on a shift to higher-margin maintenance services.
- However, bottom line was slightly impacted by higher admin expense of $3.2m (+17%).
- Order book stood at $99.4m, providing revenue visibility up to FY2020.
- Trades at 15.5x trailing P/E.
*Singapore Shipping
- 2QFY18 net profit edged up to US$2.3m (+4.1%) on reduced operating costs, which lifted 1HFY18 earnings to US$4.9m (+27%).
- For the quarter, revenue slipped 3% to US$11.2m, mainly weighed by agency and logistics (-9.5%) segment, while ship owning (-0.5%) business stayed muted.
- Operating margin improved 1.4ppt to 27.6% on cost controls.
- Bottom line was also helped by a $0.1m dip in finance costs.
- Net gearing was stable at 0.75x as compared to 1QFY18.
- Last traded at 9.7x trailing P/E.
*APAC Realty
- 3Q17 net profit rose 7.2% to $5.5m, as revenue of $105.5m (+30.3%) on higher brokerage income due to increased market transactions for new home sales (+54% to $30.8m), as well as resale and rental of properties (+23.2% to $72.3m).
- Gross margin narrowed 1.3ppt to 12.9%, while growth in bottom line was also slowed by $1.1m of IPO expenses.
- Trades at 4.1x trailing P/E.
*Asia Enterprises
- 3Q17 net profit surged 69% from a low base to $0.3m, as revenue jumped 48% to $9.4m on increased ASP of steel products and higher sales volume to customers in O&M and construction sectors.
- Consequently, gross margin expanded to 25.4% (+0.5ppts).
- NAV/share at $0.271.
*Tiong Woon
- Swung to 1QFY18 net loss of $1.4m (1QFY17: $1.5m profit) amid a $1.2m drop in disposal gain and $0.9m adverse FX swing.
- Revenue tumbled to $23.5m (-32%) from fewer heavy lift and haulage projects and the substantial completion of an engineering services project in the Middle East.
- Gross margin held steady at 22%.
- Net gearing stood unchanged q/q at 0.46x.
- NAV/share at $1.0584.
*TA Corp
- 3Q17 net loss shrank to $4.2m (3Q16: $10m loss), bringing 9M17 losses to $15.2m (9M16: -$9.8m).
- 9M17 revenue rose 14.8% to $159m on broad-based growth across property development (+12%), real estate investment (+142%), construction (+6%) and lubricant & tyre distribution (+35%) businesses.
- Gross margin held at 18.7%.
- But, 9M17 bottom line was hit hard by $6.7m increase in fair value loss of investment properties and a $1.8m jump in provision for doubtful receivables.
- Net gearing increased to 1.57x from 1.49x in Jun '17.
- Construction order book depleted to $96m from $129m in Jun '17.
- Last traded at 0.58x P/B.
*The Trendlines
- 3Q17 net profit spiked 91.2% from a low base to US$3m, supported by lower operating, general and admin expenses (-10.8%).
- Revenue jumped 65.7% to US$6.8m mostly on fair value gains (+717%) in portfolio companies, as well as higher services income to portfolio companies (+22.6%).
- Bottom line was pared by a leap in tax expense to US$1.1m (3Q16: US$0.1m).
- Trades at 0.8x P/B.
*SUTL Enterprise
- 3Q17 net profit expanded 30% to $0.7m on lower staff (-1%) and utilities (-32%) expenses, which brought 9M17 net profit to $2.1m (+13%).
- For the quarter, revenue inched 1% higher to $6.5m on increased takings from membership related and management fees (+3%) and other income (+19%), but offset by weaker sales of goods & services (-1%).
- Pretax margin improved to 12.7% (-2.3ppt).
- Net cash position grew to $42.9m (2Q17: $41.8m), representing $0.497/share.
- Trades at 16.6x forward P/E and 1.15x P/B.
*GCCP Resources
- Turned around to 3Q17 net profit of RM0.3m (3Q16: RM2.2m loss).
- Revenue surged 2.6x to RM9.1m, underpinned by higher sales of crushed calcium carbonate stones of ground calcium carbonate (GCC), and precipitated calcium carbonate grades from the Hyper Act Quarries and Gridland Quarry.
- Gross margin expanded 5ppt to 50% on economies of scale from increased production of GCC limestone at Hyper Act Quarries.
- NAV/share at RM0.07.
*New Silkroutes
- 1QFY18 net loss deepened to US$0.6m (1QFY17: US$0.1m loss), despite a doubling in revenue to US$149.3m.
- The jump in top line was attributable to increased oil trades and contribution from newly acquired healthcare subsidiaries.
- However, gross margin nearly halved to 1.3% (-1.1ppt) on weak margin from the oil trading business.
- Bottom line was further impacted by higher personnel expenses (+110%) and other operating expenses (+206%).
- Trades at 1.05x P/B.
POSITIVE NEWS
*Sembcorp Marine
- Signed letter of intent with Statoil Petroleum worth US$490m, for EPC of newbuild FPSO hull and living quarters for the Johan Castberg field development.
- Trades at hefty 67.1x forward P/E.
*HRnet
- To acquire PT Rimbun Job Agency for the establishment of a new brand, HRnet Rimbun, to provide professional recruitment services in Jakarta.
- Jakarta will be the 11th Asian growth city for the group.
- Consideration price has yet to be finalised.
- Trades at 20.2x forward P/E.
NEGATIVE NEWS
*Profit warnings
- Hor Kew
- Hiap Seng Engineering
NEUTRAL NEWS
*Maxi-Cash
- Proposed renounceable non-underwritten 1-for-10 rights issue at $0.16 each.
- Estimated net proceeds of $14.4m earmarked for secured lending business ($10m) and the remaining for working capital.
*Jason Marine
- To grant a convertible loan of up to $0.75m to risk analytics solution provider Sense Infosys (SIS).
- The loan will enable SIS to further develop its business, while presenting an opportunity for the Jason Marine to further its stake in a complementary business with promising prospects.
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