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.