Tuesday, November 7, 2017

SG Market (07 Nov 17)

- Tech manufacturers could enjoy further momentum on positive 3Q results from Venture and Hi-P, while oil-related stocks could be lifted by the 3% surge in crude prices to a 2-year high on the political turmoil in Saudi Arabia.
- Momentum indicators for the STI look to be turning south, underlying support at 3,320 and topside resistance at 3,460.

*Genting Singapore
- 3Q17 net profit of $143.8m (+35$) beat estimates.
- Revenue rose 8% to $629.9m on stronger VIP and premium mass business volume, higher daily visitorship and spending at its attractions and healthy hotel occupancy.
- Adjusted EBITDA jumped 37% to $320.1m, underpinned by improved operating margin of 50.8% (+10.6ppts) and reduced provisions from a more measured credit policy.
- Last traded at 24.6x forward P/E.

- Record 3Q17 net profit of $38.4m (+25%) topped estimates, boosted by improved operating leverage.
- Revenue climbed 6.2% to $411.3m, while gross margin widened 2.4ppt to 16.5% on better product mix and operating efficiency.
- Raised interim DPS to 2¢ (3Q16: 0.4¢), bringing 9M17 payout to 21¢ (9M16: 0.4¢).
- Guided for higher 4Q17 top and bottom lines on both y/y and q/q basis.
- Trades at 15.8x FY18e P/E.

*Ascendas Hospitality Trust
- 2QFY18 DPS climbed 2.9% to 1.42¢, bringing 1HFY18 DPS of 2.73 (+2.2%) to 47% of FY18 estimate.
- Quarter revenue rose 5.2% to $58.4m while NPI inched 0.8% higher to $24.5m, from improved operational performance for Australian properties and further bolstered by the stronger AUD, but was partly offset by weaker JPY against SGD.
- Australia RevPAR of A$148 (+4.2%) was lifted by increased conferences and events, while China RevPAR of Rmb389 (+4.6%) was driven by higher demand. Japan RevPAR inched up 1.6% to ¥9,974 on higher room rates.
- Aggregate leverage remained steady at 32.6% (-0.1ppt q/q).
- Expanded its investment scope to a global basis from just Asia, Australia and New Zealand.
- Last traded at an annualised 2Q yield of 6.42% and 1.0x P/B.

*Hock Lian Seng
- 9M17 results lagged as net profit plunged 55.8% to $8.3m from an absence of JV income (9M16: $10.7m).
- This brought 9M17 earnings to 53% of FY17 estimate.
- Revenue jumped 18.6% to $100.6m on contribution from civil engineering works for the Changi Airport JV project, while gross margin was relatively flattish at 11% (-0.4ppt).
- Order book contracted to $830m (2Q17: $890m).
- Last traded at 1.4x P/B.

- 2QFY18 net profit surged 469.5% from a low base to US$5.3m, boosted by stronger contributions from the core chartering & brokerage services.
- Revenue slumped 24.8% to US$41.2m on lower utilisation of certain vessels, but was partially mitigated by the commencement of new contracts with a key Middle Eastern client.
- Gross margin expanded 1.8ppt to 25.3% on a shift towards higher margin chartering & brokerage services.
- Bottom line was further aided by other income of US$1.8m (2QFY17: US$0.7m), a positive US$0.9m swing into profitability at associate/ JV and lower taxes (-53%).
- Order book stood at US$950m to be fulfilled over the next eight years.
- Lowered the pricing of its proposed 1-for-1 rights-cum-detachable warrants issue to 1.6¢/share (prior: 2¢), with reduced exercise price of $0.016 (prior: $0.02).
- Last traded at 0.27x P/B.

*Nera Telecommunications
- Turned in 3Q17 net profit of $2m (3Q16: $1.3m loss) on improved gross margin.
- Revenue grew 24.9% to $42.2m on improved contribution from both network infrastructure (+21%) and wireless infrastructure network (+30.8%) businesses.
- Gross margin expanded 9.7ppt to 28.5% on better profitability from equipment sales and higher write back from project closure.
- However, group did not declare a special DPS this year (3Q16: $0.15).
- Trades at 18.6x trailing P/E and 1.99x P/B.

*Far East Orchard
- 3Q17 net profit dived 72.1% to $2.9m, bringing 9M17 earnings to just $9.5m (-85.2%).
- Quarter revenue slumped 20.7% to $36.3m on weaker performance of two hospitality assets in Perth, Australia, as well as the completion of certain lease agreements.
- Gross margin held relatively steady at 29.7% (-0.9ppt).
- Bottom line was weighed by lower FX gain of $0.5m (3Q16: $3.6m) and a drop in JV contribution to $1.6m (-77.8%) due to the TOP of property development project RiverTrees Residences last year.
- Last traded at 0.53x P/B.

*Kingsmen Creatives
- 3Q17 net profit grew 33.4% on a low base to $0.8m on a turnaround in associate contribution to $68,000 (3Q16: $0.9m loss).
- However, revenue slipped 10.1% to $69.1m on weakness across retail & corporate interiors (-20.8%), research & design (-6.8%) and alternative marketing (-10.7%) units, but partly mitigated by stable takings in exhibitions & thematic (+2.7%) segment.
- Gross margin grew to 23.7% (+0.7ppt) on a shift in sales mix.
- Bottom line was impacted by higher FX losses of $0.3m (3Q16: $89,000 loss).
- Trades at 9.3x trailing P/E.

*Soo Kee
- 3Q17 net profit leapt 137% from a low base to $0.56m on higher gross material margin, which helped cushion 9M17 earnings to $2.8m (-17.4%).
- However, quarter revenue slumped 22.3% to $38.7m on lower turnover from precious metal retailer and solutions provider, SK Bullion.
- Gross material margin expanded 8.5ppt to 35.4% on a shift in product mix.
- Bottom line was shored by lower finance cost, as well as absence of FX and fixed asset disposal loss.
- Net gearing crept up to 0.65x from 0.62x in Jun '17.
- Last traded at 11.3x trailing P/E and 1.37x P/B.

- Marks its foray into Taiwan.
- Group will enter a 51:49 JV with Baipin Co to establish at least eight franchised Jumbo Seafood outlets across the country.
- Baipin was founded by F&B industry veteran Henry Tseng, who also brought in several Michelin-starred restaurants into Taiwan, including TimHoWan, Tsuta and Hawker Chan.
- Total capital contribution for the JVCo is expected to be NT$50m ($2.3m).
- Trades at 23.1x forward P/E.

*TEE International
- Proposed to acquire 50.1% stake in local waste management and environmental solutions provider, Chiang Kiong Group, for $9.3m (6.2x FY16 P/E).
- The remaining 49.9% stake will be acquired by two independent business associates of TEE for $9.2m.
- Post-deal, TEE's FY5/17 pro forma loss would be narrowed to $0.2m (prior: $1.6m loss).
- The deal is expected to complete by 29 Dec '17.

*King Wan
- Secured $24.1m worth of new mechanical and electrical projects in Singapore.
- Major projects involve supply and installation of plumbing, sanitary, fire hydrant system and air-conditioning at Defu Industrial City and Bedok Food City.
- Projects are scheduled to be completed by 2020.
- Current order book stood at $168.9m.

*G. K. Goh
- Proposed to divest EUN Holdings to PE firm Stonepeak Infrastructure Partners for US$79m.
- The disposal is expected to net a gain of $60m, of which 15% is earmarked for reinvestment into Stonepeak.

*Anchor Resources
- Signed non-binding MOU with Tianjin Universal-Link Enterprise to sell 300-500 tonnes/month of semi-processed gold concentrated ore.
- Ore price will be based on prevailing gold price on the London Bullion Market.
- Definitive agreement to be signed upon receipt of all approvals from relevant authorities, including export approvals.

*Profit warnings:
- ASL Marine
- Weiye

- Entered into a 20:70:10 with TSky Development and Seacare Property Development to redevelop two plots of land at 17 Balmoral Road.

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