Thursday, November 16, 2017

SG Market (16 Nov 17)

- 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.

- 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).

- 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.

- 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.

*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.

- 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.

- 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.

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