Wednesday, December 20, 2017

Merry Xmas

Merry Xmas & a Happy New Year.

Sharing will resume on 2 Jan 2018.

Tuesday, December 19, 2017

SG Market (19 Dec 17)

- Risk-on mood could spill over to the SG market, on optimism that the US tax bill could be passed in the near term.
- Technically, the STI sees downside support at 3,390, with upside resistance at 3,475.

- Singapore Changi Airport welcomed a record 60m passengers ytd, surpassing 2016's 58.7m.
- This would be positive for airport operator SATS.

*Keppel Corp
- Acquiring two prime sites (13ha & 6ha) in Ho Chi Minh City to build 1,549 homes with total development cost of US$297m.
- One 13-ha site in the city south will be developed into 220 landed homes and a 1.029-unit condominium with GFA of 36,110 sqm and 141,540 sqm respectively and will cost US$235m.
- The other 6-ha plot located in District 9 will have 300 homes with GFA of 55,000 sqm, costing US$62m.
- The two projects add to its pipeline of over 20,000 homes in Vietnam.
- The group sold 1,010 homes in 9M17, four times the number it sold in the same period last year, and has received positive response for Tilia Residences, Phase 2 of Empre City, which was launched un Julu and has sold more than 90% out of 472 units launched as at Sep.
- Last traded at 15.1x forward P/E.

*Citic Envirotech
- Secured an EPC contract worth Rmb130m in Xiangban City, Fujian Province, China.
- The project involves the upgrading and expansion of an existing conventional wastewater treatment plant by 12.5% to 90,000 m3/day, and improving water quality to Grade 1A from 1B, and is slated to be completed by Jun '18.
- Trades at 17.1x forward P/E.

- Updated that its Royal Wharf project in UK achieved its 1,000-unit handover milestone.
- The 3,385-unit development is ~90% sold and Oxley expects to hand over another 400 units by 30 Jun '18.
- Trades at 25% discount to its RNAV/share at $0.84.

- Entered franchise agreement with Ho Sing Food to establish and operate JUMBO Seafood restaurants in Taiwan.
- The franchise agreement has an initial term of 10 years, with the franchisee targeting eight outlets across Taiwan.
- The group also updated that its first JUMBO Seafood outlet in Taiwan was opened three days back.
- Trades at 21.3x forward P/E.

- Signed master franchise agreement with Evergrande Group in Vietnam to open 20 PreSchool and Reading centres in the country.
- Trades at FY16 P/E of 29.9x.

- Secured a NOK2.7b contract for the design and construction of one luxury polar expedition cruise vessel for French cruise company PONANT.
- The hull will be built at Vard Tulcea in Romania, with delivery scheduled in 2Q21 from Vard Søviknes in Norway.
- Last traded at 0.82x P/B.

- Entered term sheet to dispose five of its wholly-owned subsidiaries (known as STI Group) to Shanghai Pudong Science and Technology, for $100m collectively.
- The sale price is subject to net debt and net working capital adjustments, and both parties have 60 days exclusivity period for negotiation.
- At $0.088, ASTI has a market cap of $60m and trades at 51.8x forward P/E and 0.93x P/B.

*China Sports International
- Received statutory demand from legal advisor RHT Corporate Advisory in relation to the group's outstanding professional fee of $0.051m.
- RHT may commence winding up proceedings against the group if it fails to pay the due payment within three weeks.

*First Ship Lease Trust
- In negotiations with lenders of its US$480m term syndicated loan facility to extend the maturity date by one year.
- The group currently has US$165.6m outstanding loan under the syndicated loan facility.
- While majority of the lenders have indicated their support for the extension, consensus from all lenders is required for the approval.
- Last traded at 0.19x P/B.

- Issued 698,991 new shares in relation to a warrant exercise at US$1.09 each.
- 55m outstanding warrants remains, which expires on 29 Jan 2018.

Monday, December 18, 2017

SG Market (18 Dec 17)

- The market could trudge higher this week as key lawmakers pledged support for the US tax cut bill, bringing it a step closer for President Trump to sign it into law before Christmas.
- Technically, the STI sees downside support at 3,390, with upside resistance at 3,475.

- Developers moved 785 new homes in Nov (-8.7% y/y, +3.6% m/m) on fewer sale launches.
- Including ECs, 933 units were sold (-16% y/y, -3.7% m/m).
- The slower sales were in line with MKE expectations that developers would hold back launches in a bid to raise prices to maximise returns.
- We are Positive on the property developers and maintain UOL (TP: $9.80) as the top pick, along with City Dev (TP: $13.60), GuocoLand (TP: $2.90) and Bukit Sembawang (TP: $8.25).

- MAS has introduced The Credit Limit Management Measure, which will take effect on 1 Jan 2018.
- The new rule to encourage financial prudence will cap additional unsecured credit for individuals whose outstanding unsecured debts exceed 6x monthly income.
- Impact is minimal as consumer credit formed less than 8.8% of total loans.
- MKE remains Neutral on the sector and prefer UOB (Buy, TP $27.10) over DBS (Hold, TP $22.75) and OCBC (Hold, TP $12.00).

- Nov group passenger load factor climbed to 80.7% (+3.5ppt) as traffic growth (+7.6%) outpaced capacity expansion (+3%).
- Cargo load factor rose 4ppt to 70.4% on higher traffic (+7.1%) due to improving regional demand.
- Subsidiary carriers SilkAir (+3.3ppt to 73.9%) and Scoot (+5.2ppt to 86.3%) also notched better load factors.
- Parent airline load factor rose 3.1ppt to 80%, on improvement across routes to East Asia (+4ppt), Americas (+3.3ppt), Europe (+1.9ppt), South West Pacific (+3.9ppt), West Asia and Africa (+1.6ppt).
- Last traded at 21.8x forward P/E and 0.92x P/B.

- Acquiring enterprise solutions provider D'Crypt for up to $122m, to enhance its capabilities in cyber security and Internet of Things.
- D' Çrypt engages in cryptographic technology and specialises in encrypted communications, high performance computing, secure IoT and vulnerability and threat analysis.
- It serves clients in the military, security and government sectors.
- The purchase will be conducted in 2 tranches - 65% stake by Feb '18 on milestone achievements and the remaining 35% in 1H21 upon meeting profitability thresholds.
- Trades at 17.9x forward P/E and offers 5.8% indicative yield.

- Serviced residence unit, The Ascott, has secured contracts to manage two properties in the heart of Accra in its first foray into Africa.
- The 220-unit Ascott 1 Oxford Street Accra will open in phases from 2019, while the 40-unit Kwarleyz Residence will open in 4Q 2018.
- Ascott added a record of over 21,000 units in 18 new cities across nine countries in 2017.

- Entered a non-binding term sheet to acquire Scorpio East Properties from SGX-listed KOP for $2.9m.
- Scorpio East owns a leasehold property at 25 Tai Seng Ave with a lot area of 2,571 sqm.
- The group intends to use the building to expand its office space as a creative design suite, as well as derive rental revenue from remaining units.
- The group is also seeking future collaboration with KOP for its expansion in the entertainment and media industry.
- Upon completion, FY16 pro forma EPS is expected to rise 4.3% to 2.92¢.
- Separately, Cityneon signed a term sheet with South Korean firm Fabulous Inc to set up an interactive, exterior digital media signage board at Cityneon's Las Vegas Marvel's Avengers S.T.A.T.I.O.N. exhibition at Treasure Island.

- To divest its entire 50% stake in JVCo Ocean Latitude for US$1.1m.
- The JVCo owns a liquefied gas carrier vessel and will be disposed due to the challenging operating environment.
- GKE's shareholder loan of US$4.4m will be repaid in four quarterly instalments upon completion.
- The group will incur a net loss of $6.9m from the divestment.
- Loss-making and trades at 0.75x P/B.

*Clearbridge Health
- Healthcare company will make its trading debut on SGX Catalist board at 9am today.
- IPO of 88m shares solely comprises a placement tranche at $0.28 each.
- Substantial investors include Coop International and two individuals.
- Net proceeds of $21.4m will be used for the expansion of its medical clinics business and group laboratory test unit, as well as for working capital purposes.

Friday, December 15, 2017

SG Market (15 Dec 17)

- Mounting worries of a delay on the US tax bill could cap any upside on the SG market, as profit-taking activity continues amid lower liquidity towards the end of the year.
- Technically, the STI is trading just above its near-term support at 3,430 (20-dma), with the next at 3,390. Upside resistance remains at 3,475.

- Over the past weeks the Apple Store order status for the iPhone X has gone from a 3-4 week wait to available for pick-up today.
- There has yet to be indications on incumbents' re-contracting efforts, and could be an upside risk to MKE's FY17E forecasts.
- Still, the negative view on the domestic telecom space is predicated on the thesis that the incumbents would become more aggressive with handset subsidies to re-contract postpaid subscribers before TPG Telecom gets off the ground.
- MKE has Sells on both M1 (TP $1.59) and StarHub (TP $2.17), with a Hold rating on Singtel (TP $3.87).

*Frasers Commercial Trust (FCOT)
- 50:50 JV with Frasers Centrepoint to acquire Farnborough Business Park (FBP) in the UK for £174.6m.
- The 46.5 ha freehold business park in the west of London has a total net lettable area of 555,000 sf with WALE of 8.3 years and 98.1% occupancy.
- Accordingly, FCOT will expand its investment mandate to Europe, beyond existing markets Singapore and Australia.
- The REIT offers an indicative yield of 6.7% and trades at 0.9x P/B.

- Made three property acquisitions totalling $1.09b.
- Deals include a CBD commercial building Chevron House ($660m, or $2,526 psf), the collective sale of residential development Vista Park ($418m, or $1,096 psf ppr) and a stake in a residential project in Dong Nai province in Vietnam ($16.2m).
- Oxley trades at 1.81x P/B.

*TMC Education
- Mandatory unconditional cash offer at 6.75¢/share, following a management stake buyout of 51% by hotelier and property magnate Koh Wee Meng.
- The offer price is final and the offeror intends to maintain the listing of the education provider.
- Firm is loss-making and the offer price translates to 0.89x P/B.

*Zhongmin Baihui Retail
- Diluting its stake in a 51% JV which will operate and manage the retail component at Changsha Mingfa International City in China.
- Group formed a separate 48:52 JV with Chongqing Sasseur Outlets Commercial Management, to take over its earlier 51% stake for Rmb9.5m.
- The move reduces its effective stake to 24.5%.
- Operations at the 200,000 sqm gfa shopping centre is expected to commence by end-2018.
- Last traded at 14.8x trailing P/E.

*Viva Industrial Trust
- The right of first refusal granted by Kim Seng Holdings (KSH) to income-producing properties has ended, following its cessation as a shareholder in the REIT manager.
- Offers an attractive 7.9% indicative yield and valued at 1.2x P/B.

Thursday, December 14, 2017

SG Market (14 Dec 17)

- The 25bps interest rate hike by the Fed was in line with expectations, while the dovish statement by Fed chief Janet Yellen could encourage some risk-taking in hopes of a stronger Capricorn effect.
- Technically, the STI is approaching the upper end of its uptrend channel at 3,475, with underlying support at 3,390.

- Collective sales maintain its strong momentum with hotly-contested tenders at two private residential developments Derby Court and Parkway Mansion.
- Derby Court saw a top bid of $73.9m ($1,390 psf ppr) from Roxy-Pacific, amongst seven bidders, 19% above owners' reserve price.
- Parkway Mansions' sale price of $147m ($1,536 psf ppr) was 6.5% above the guide price, and was sold to a consortium led by privately-owned Sustained Land.
- MKE maintains positive on the property developers and reiterates UOL (TP: $9.80) as its top pick, along with City Dev (TP: $13.60), GuocoLand (TP: $2.90) and Bukit Sembawang (TP: $8.25).

- 36.5% owned Bharti Airtel is divesting 20% stake in wholly-owned pay TV operator Bharti Telemedia for US$350m to global PE firm Warburg Pincus.
- Bharti Telemedia is one of the largest direct-to-home paid TV service providers in India, with 14m subscribers and ~US$550m in annual revenue.
- The move frees up capital to bolster its balance sheet.
- Singtel offers 4.6% indicative yield and trades at 27.7x forward P/E.

- Top bidder for the collective sale tender of freehold residential development Derby Court in Novena, Singapore, for $73.9m.
- The site has a land area of 18,506 sf and gross plot ratio of 2.872, which translates to $1,390 psf ppr.
- Trades at 1.3x P/B.

*SIIC Environment
- 91.2% owned subsidiary was awarded the HuangQiao Industrial BOT wasterwater treatment project in Taixin City, Jiangsu Province in China.
- The plant has a design capacity of 20,000 tpd and a base tariff of Rmb5.83/ton, with a concessionary period of 30 years.
- Project also includes a reclaimed water facility with a design capacity of 6,000 tpd and tariff of Rmb2.5/ton.
- The project will have an initial guaranteed minimum treatment volume of 17,000 tpd and subsequently increased to 20,000 tpd in the fourth year onwards.

*GSS Energy
- Struck oil in its Trembul operating area in Central Java, Indonesia.
- At a depth of 1,255 metres, eight columns of hydrocarbon (2 gas and 6 oil zones) bearing sandstone reservoir with 37m of total net pay zone were confirmed.
- Indo state-owned energy firm Pertamina, which holds an 11% economic interest in the site, has agreed to commence commercialisation of the gas zones.
- Management hopes to produce ~200 barrels of oil per day by 3Q18.
- Trades at 12.8x trailing P/E.

*CWG International
- 95.8%-owned Bluesky Parramatta is disposing a land plot at 14-20 Parkes Street Harris Park, Australia, for A$40m.
- Total land area of the plot is 2,878 sqm, with a plot ratio of 8:1.
- The sale would result in an estimated gain of A$9m.
- Trades at 3.8x trailing P/E and 0.64x P/B.

- Ceased operations at Feng Tai mine after its exploration licence expired on 12 Dec.
- The group has submitted an application for the licence renewal.

*Far East Group
- To dispose a warehouse and land located at 13th Mile Sungai Besi Road in Selangor, Malaysia, for RM11.5m.
- Upon completion, disposal gain of $2.5m is expected, with FY16 pro forma NTA/share to rise 12% to $0.2115.

- Issued 264,642 new shares in relation to a warrant exercise at US$1.09 each.
- 55.7m outstanding warrants remains, which expires on 29 Jan 2018.

Wednesday, December 13, 2017

SG Market (13 Dec 17)

- Stock prices could nudge higher as Wall Street pushed to fresh records from banking gains but sentiment remained wary of the impending Fed rate hike tonight and signs of more tightening in 2018 as well as upcoming policy stance of ECB at a central bank meeting on Thu.
- Technically, the STI is approaching the upper end of its uptrend channel at 3,475, with underlying support at 3,390.

- Retail sales dipped 0.1% (est: +1%) in Oct, marking its second straight decline in seven months, on weaker takings from computer & telecom equipment (-23.4%) and food retailers (-3.9%).
- Stripping out motor vehicles, consumer spending grew a slower 0.8% against 3.3% expansion in Sep.
- Bright spots were in supermarkets (+7.2%), which bodes well for Dairy Farm and Sheng Siong.

*Vibrant Group
- 2QFY18 net profit plunged 60% to $3.6m due to a higher cost base from the consolidation of Blackgold Int'l as well as absence of disposal gain and lower fair value gains.
- Revenue surged 284% to $172.7m lifted by the acquisition, but gross margin shrank 22.4ppt to 11.6% amid markedly lower profitability at the new commodity logistics and trading entity.
- Bottom line was also dragged by lower associate contribution of $1.1m (-71%)'following the disposal of property investment arm Plaza Ventures in Apr '17.
- Trades at 2.1x trailing P/E and 0.6x P/B.

- Appeal for the Brazilian tax claim has been upheld by the authorities and the long-standing overhang is now over.
- The NOK200m claim dated since Aug '14 relates to transfer pricing of goods and services delivered from the group's Norwegian entities to Vard Niterói in FY10.
- No provision had been made for the tax claim. Thus the decision will not have any impact on its financials.
- Counter is loss-making and last traded at 0.81x P/B.

*Ley Choon
- Secured new contract worth $19.6m from PUB for the supply and laying of steel potable water pipelines around Singapore.
- Project to commence in 2018 for a 24-month period.
- Last traded at 2.4x trailing P/E and 1.28x P/B.

*TA Corp
- Awarded main contract worth $180m by JTC for building development.
- Contract period lasts 28 months and work is slated to commence by 26 Dec.
- Loss-making and trades at 0.61x P/B.

*Lippo Malls Trust
- Granted an extension of master leases over certain areas of Lippo Mall Kemang (carpark, casual leasing space and Avenue of the Stars) to three lessees for two years to 16 Dec '19.
- Trades at 8.3% indicative yield and 1.17x P/B.

- Acquired Wayco Manufacturing, a Malaysian-based producer of haircare, cosmetics and other homecare chemical products, for $3.5m.
- The consideration translates to an annualised 1H17 P/E of 32.9x and 1.39x P/B.
- Wayco owns three production facilities in Johor Bahru and Selangor and the acquisition will enable the group to diversify into the beauty/wellness industry.
- Post-acquisition, pro forma FY17 EPS is expected to rise 3.6% to 1.43¢.
- Continuing operations are loss-making and trades at 1.45x P/B.

*Jubilee Industries
- Acquiring a 70% stake in Honfoong Plastic Industries for $3.5m via $1m cash and 55.6m new shares at 4.5¢ each.
- Honfoong manufactures plastic moulding, PCB assembly, tooling finishing and plastic precision engineering parts.
- Adding the 93 plastic injection machines from Hanfoong's plant in Batam to the 32 new machines at its Johor Baru facilities, the group plans to expand its production capacity from 26 units currently to 150 in FY3/18.

- Received Rmb160m from People's Government of Laiyuan County for the cessation of operations of Laiyuan County Aoyu Steel, as part of China's effort to reduce capacity in steelmaking.
- The compensation is part of the Rmb968m consideration due, with the outstanding amount at Rmb600m.
- Trades at 1x trailing P/E and 0.31x P/B.

Tuesday, December 12, 2017

SG Market (12 Dec 17)

- Market might take cue from fresh record gains on Wall Street as investors position in banks ahead of the impending Fed rate hike tomorrow.
- Technically, the next resistance for the STI is at 3,550, with 3,390 as the underlying support.

*Keppel Corp
- Secured projects from repeat customers, Petrobras and SOFEC, worth a combined value of $130m.
- Works include installation of equipment and cables for the hull of FPSO P-69, as well as fabrication of a turret mooring system for a newbuild FLNG vessel.
- Last traded at 15.9x forward P/E.

*China Everbright Water
- Won the bid for the Rmb70m Dezhou waste water pipeline network BOT project in Shandong, China, with concession period of 22 years.
- This is the first public-private-partnership project implemented by Lingcheng district government.
- Trades at 12.9x forward P/E.

*KSH/ Lian Beng
- 48%/ 42% owned Development 24 is acquiring 12 freehold properties at Lorong 24 Geylang Singapore for $60m.
- The properties are sited on 26,188 sf of land area and can be redeveloped into an 8-storey residential project with max gfa of 73,325 sf.
- KSH trades at 10.6x forward P/E, while Lian Beng is valued at 7.1x trailing P/E.

- Purchasing all eight freehold residential units at 21 Meyappa Chettiar Road in Singapore for $21.5m.
- The group intends to redevelop the property that is sited on residential land area of 898.1 sqm.
- Trades at 11.2x forward P/E and 1.78x P/B.

*TEE Intl
- Awarded new engineering contracts worth $65m between Sep and Nov '17.
- Works include sub-contracts from Dragages Singapore for the air-conditioning and mechanical ventilation system and building management system, as well as electrical works for the commercial development at Market Street, slated to be completed by end-2020.
- This brought total outstanding order book to $318m.

- Signed a master franchise agreement with Myanmar firm Passion Capital Venture (PCV).
- PCV intends to launch 10 MindChamps PreSchool centres and five MindChamps Reading Centres with the first centre expected to be completed in Yangon in Aug '18.

*Sapphire Corp
- Secured three new rail transit contracts worth Rmb280m in Chengdu.
- Projects include construction of two tunnels of close to 3km, as well as certain open cut earthworks worth Rmb253m, and the supervision of construction across 25km of tracks worth Rmb27m.
- Projects are slated to complete between 31 Dec 2018 and 31 Dec 2020.
- Order book remained unchanged at Rmb3.4b.
- Last traded at 7.4x trailing P/E.

*First Ship Lease Trust
- Sold 14-year old containership FSL Santos for US$6.2m, netting a disposal gain of US$0.8m.
- Net proceeds will be used to repay outstanding debt.
- Loss-making and valued at 0.18x P/B.

- Acquring 3.45% of stapled securities in ASX-listed Cromwell Property Group (CPG) for A$59.1m.
- CPG is the sponsor of SGX-listed Cromwell European REIT, of which SingHaiyi's non-executive director, Gordon Tang, and managing director, Celine Tang, also hold a combined 13.9% interest.
- Pro forma FY3/17 EPS is expected to rise 14.4% to 1.24¢.

*Top Global
- Acquired 32.5% stake in 5Footway Founders for $0.8m, raising its total stake to 83.75%.
- The target is in the business of hospitality management for hostels, hotels, and service apartments across China, Japan, and Singapore.
- Loss-making and trades at 0.29x P/B.

- Proposed a 2-for-1 renounceable non-underwritten rights issue at $0.045 each (36.6% discount to last close).
- Maximum net proceeds of $5.9m earmarked to finance the redevelopment of recently-acquired land at 17 Balmoral Road and working capital.

*Asia Fashion
- Proposed 1-for-1 renounceable non-underwritten rights issue at $0.112 each (6.7% discount to last close).
- Maximum net proceeds of $9.4m intended for potential projects or investments and working capital.

Monday, December 11, 2017

SG Market (11 Dec 17)

- Market could track Wall Street higher following a solid US payrolls report, which cemented prospects for a third Fed rate hike on Wed.
- This would likely continue to support the rally in bank shares. Other key events to watch include the policy meetings of BoE and ECB this week.
- Technically, overhead resistance for STI lies at 3,460, with 3,390 providing the underlying support.

- To acquire 51% stake in Uber's car rental subsidiary Lion City Rentals (LCR) in Singapore for $295m.
- The consideration values the target at around 0.9x P/B, based on an NAV of $642m, made out of 12,450 vehicles.
- LCR has a fleet of 14,000 private vehicles and Comfort has agreed to pay for more vehicles when utilisation increases.
- This is expected to enable the group's taxi drivers to receive ride requests on Uber's app, while the ride-hailing company may benefit from the group's fleet management capabilities.
- Comfort last traded at 13.2x FY18e P/E, and offers dividend yield of 5.7%.
- MKE reiterates Buy, with TP of $2.40.

*City Dev
- Raised offer price for Millenium & Copthorne Hotels (M&C) by 12% to £6.20, valuing the hotel group at £2,014m, 0.76x P/B.
- City Dev has committed not to sell or repurpose any of its hotels for at least 3 years (prior: 1 year).
- Offer is conditional on securing acceptance from more than half of the shares not owned by the group. Group has plans to delist M&C.
- MKE views the offer favourably, as it would improve recurring income, and allow City Dev to increase stake in an asset rich company with latent value that can be unlocked in the medium term.
- The house reiterates Buy with TP of $13.80.

- 36m new shares offered at HK$3.18 apiece for a dual listing in Hong Kong attracted strong investor demand.
- The public tranche of 6m shares was 18.76x subscribed, while the remaining placement tranche was also oversubscribed.
- Trading on the HK stock exchange is expected to start on 12 Dec '17 (Tue), 9.30am.

- Soft opening of Mercure Singapore on Stevens, located near Scotts Road and Orchard Road shopping belts.
- Mecure Singapore on Stevens is next to its sister hotel Novotel Singapore, and comprises of 518 guestrooms.
- The development of the two hotels marks Oxley's maiden venture into hotel development.

*Halcyon Agri
- Entered into a conditional agreement to acquire 80% stake of a crumb factory in Bintan, Indonesia, for an undisclosed amount.
- However, the 80% stake has a NAV of US$0.6m as at 31 Dec '16.
- The crumb factory has a licensed capacity of 60,000 cubic metric tonnes per annum and is an approved supplier to major tyre manufacturers including Goodyear, Bridgestone, Cooper Tires and Michelin.

*Asia Fashion
- Terminated its proposed placement of 145m new shares at HK$0.90 each as the group is reconsidering other funding options.

Friday, December 8, 2017

SG Market (08 Dec 17)

- Market could stay soft on profit-taking and lack of fresh impetus ahead of a key US jobs report.
- Technically, the STI is struggling near 3,390 with next level of support at 3,340, while short term resistance is re-calibrated at 3,420.

*Stamford Tyres
- 2QFY18 net profit grew 10.4% to $1.6m, on higher revenue of $59m (+2.3%) due to improved sales in Australia and SE Asia markets.
- Gross margin held steady at 26.1% (2QFY17: 26%).
- Bottom line was partially pared by FX loss of $0.5m (2QFY17: $0.7m gain) and higher operating lease rental (+21.4%), but mitigated by stronger JV contribution of $0.8m (+82.7%) and lower tax (-24.5%).
- Last traded at 9.1x trailing P/E.

*Halcyon Agri
- Acquiring four Indonesian crumb rubber factories in West Kalimantan for $105.3m.
- The factories produce various grades of Standard Indonesian Rubber and have an annual capacity of 132,000 tonnes.
- The deal will raise Halcyon's total processing capacity to 1.55m tonnes p.a, propelling it to be the largest crumb rubber producer and exporter in Indonesia.
- Trades at 5.5x trailing P/E.

*CSC Holdings
- Secured foundation contracts for Kim Chuan Depot Extension and Keppel MRT station and its associated tunnels, on Circle Line 6.
- The new projects are slated to be completed by early-2019 and mid-2019, respectively.
- This brought aggregate value of transport infrastructure contracts secured to more than $70m, since the start of FY3/18.
- Loss-making and trades at 0.46x P/B.

- Discussions between controlling shareholder Bevrian and an undisclosed third party, involving a possible share transaction has fallen through.
- Trades at 16.2x trailing P/E and 0.98x P/B.

- Partnering EBD in a $10m training and tech programme to upskill staff and develop technology-enablers.
- The innovation push will focus on data analytics, digital marketing, digital product management.
- MKE last had a Hold rating and TP $3.75.

*Noble Group
- Plans to sell Noble Americas ethanol unit to Mercuria for US$20m.
- This will result in a book loss of US$60.3m and reduce pro forma 9M17 NAV/share to US$0.75 from US$0.80.
- Valuations are meaningless as the group is loss-making and book cost of assets appear inflated.

*Straits Trading
- Acquiring an 11-storey office building at 45 St Georges Terrace, Perth, Australia, for A$54.2m ($55.7m).
- The property in Perth CBD is well-positioned to benefit from the rejuvenation of the city centre.
- Last traded at 15.1x trailing P/E and 0.68x P/B.

- Completed the divestment of 23 Woodlands Terrace for $17.7m or 2.8% above its book value as at 31 Dec.
- Offers 6.9% indicative yield and trades at 0.9x P/B.

*Geo Energy
- Lifted moratorium on 117m consideration shares (8.8% share capital) owned by International Resources Investment, which was previously issued in relation to the acquisition of Fortune Coal Resources.
- The move is to enable the vendor to collateralise the shares for other investments and businesses.
- Initial moratorium period was supposed to run until 23 Jun '20.
- Trades at 4.7x forward P/E.

- Acquiring an industrial strata unit located at Tradehub 21 for $1.5m.
- The double-storey terrace factory has a built-in area of 2,927sf and will used as its corporate office, following the sale of 5 Second Chin Bee Road.
- Trades at 15.3x trailing P/E.

*Neo Group
- 51%-owned Gourmetz has expanded into canteen operation, on top of food catering for the childcare and elderly care market.
- Trades at 23.7x forward P/E.

*Hoe Leong
- Granted moratorium to halt any creditor action against the group and its relevant subsidiaries, with the effect till 31 Jul '18 and 31 Jan '18 respectively. (

Thursday, December 7, 2017

SG Market (07 Dec 17)

- Market may see more profit-taking after Nov's strong rally, weighed by major US policy shift to recognise Jerusalem as Israel's capital, while investors await new details on the final tax bill from Congress.
- Following yesterday's 1.2% decline, underlying support for STI lies at 3,390 with overhead resistance remaining at 3,420.

- Achieved higher Nov securities turnover of $28.5b (+3% y/y, +19% m/m), with daily average of $1.3b (-3% y/y, +13% m/m).
- Total derivatives volume rose to 18m contracts (+9% y/y, +21% m/m), while commodities derivatives volume totalled 1.4m contracts (+42% y/y, +9% m/m).
- There were three new mainboard and two Catalist listings raising a total of $1.55b and 80 new bond listings raising $30b.
- Trading at 21.6x forward P/E and 3.7% dividend yield.

*Sembcorp Marine
- Secured a US$490m EPC contract from Statoil Petroleum for a newbuild FPSO's hull and living quarters.
- The contract is scheduled for completion in 1Q20.
- Excluding the nine rigs sold to Borr Drilling for $1.77b, this brings its ytd order flow to $932m.

- Will mark its 11th Marvel Avengers S.T.A.T.I.O.N exhibition when its third travelling set embarks on a tour to Norrköping, Sweden from Jun till Aug '18 after its stop in Moscow, Russia.
- Currently trades at 15.2x forward P/E.

- Day-old chick (DOC) and broiler chicken prices saw a sequential m/m rebound although y/y prices are still mixed.
- Nov ASPs of broiler and DOC hit Rp17,295 (+10.6% y/y, +11.7% m/m) and Rp4,445 (-6.3% y/y, +9.8% m/m) respectively.
- Price action might be due to recent culling efforts by the government to bring down supply levels.
- Trading at 8.3x forward P/E.

*Samurai 2K Aerosol
- Awarded the sole and exclusive distributorship of its products to Genesis GD in Cambodia till Apr '19, subject to renewal on a yearly basis.
- The move follows success in Indonesia, Malaysia, Thailand, Vietnam and Philippines.

*First Sponsor/City Developments
- To partner Tai Tak to acquire the 300-room Le Meridien Frankfurt Hotel in Germany for €85.0 million (S$135.9 million).
- First Sponsor will hold a 50% stake while City Dev and Tai Tak will hold a 25%-stake each in the partnership.
- The hotel currently has a lease expiry date of 31 May 2050 with a renewal option of five years. The partners are hoping to leverage on an inflow of business travellers following Brexit.
- MKE last had a Buy and TP of $13.60 on CIT, which is currently trading at 15% discount to RNAV.

- To acquire a 60% stake in Xingtai Degui Nano Material Technology from Guo Zhimin for Rmb6m.
- The firm is involved in the trading of limestone and lime and performs R&D on nanocalcium carbonate. It is currently constructing two production plants in Xingtai, China, which would have a combined annual lime processing capacity of 0.4m tonnes.
- The acquisition will ensure stable supply of limestone or lime and reduce cost of raw materials for its steel production.

- Reached an out-of-court settlement with China Construction (CC) in relation to a $4.7m suit claiming wrongful cancellation of a piling subcontract.

*Interra Resources
- 60% owned Goldpetrol Joint Operating is acquiring 11 patents from Chengdu North Petroleum Exploration & Development Technology for US$5.8m.
- The patents will be used to acquire production capabilities in order to enhance oil production in the Chauk and Yenangyaung field in Myanmar.

Wednesday, December 6, 2017

SG Market (06 Dec 17)

- Stock prices are expected to drift amid a lack of fresh leads as traders close off their positions in typically quiet year end trading.
- Recent price action on the STI suggests the index has reached a near-term top and could consolidate lower towards the underlying support at 3,390, while topside resistance remains at 3,460.

- Two 99-year leasehold sites on the reserve list of the Government Land Sales programme were snapped up.
- Frasers Centrepoint beat 9 other bidders for the former Zouk site at Jiak Kim Street with an aggressive bid of $955.4m, or $1,732.55 psf ppr, topping the Martin Modern site won by GuocoLand in Jun last year by 40%.
- Allgreen Holdings trumped 6 others to a residential plot at Fourth Avenue in Bukit Timah with a top bid of $553m or $1,540 psr ppr.
- MKE remains bullish on property developers and tags UOL (TP $9.80) as its top pick, along with City Dev (TP $13.60) and GuocoLand (TP $2.90).

*Del Monte
- Swung into 2QFY18 net loss of US$2.8m (2QFY17: US$20m profit), dragged by one-off expenses arising from shutdowns and divestment of $13.1m.
- Excluding the one-offs, net profit of US$10.2m (2QFY17: US$20.8m) still missed estimates.
- Revenue dipped 1.8% to US$624.7m on weaker sale in US due to unfavourable pricing in foodservice and USDA.
- Gross margin shrank to 20.6% (-2.5ppt) due to higher trade promotion spending, while underlying EBITDA slumped 26.7% to US$52.2m from higher capex spending.
- Expects to remain profitable for 2HFY18 on a recurring basis.
- Trades at 13.1x forward P/E.

*Sembcorp Marine
- Signed a Letter of Intent with Shell for the construction of hull and topside as well as the integration of the Vito floating production unit.
- Final contract award will be dependent on Shell and its partners the sanctioning of the project.
- Last traded at 43.4x FY18 P/E.

*Mapletree Logistics Trust
- To divest warehouse Senai-UPS in Johor, Malaysia for Rm28m ($9.2m), 37% premium over the latest valuation as at 31 Oct '17.
- The property has a gfa of 11,494 sqm and was under-occupied at 51% since early-2015.
- Offers 5.3% indicative yield and valued at 1.24x P/B.

- To dispose commercial investment property, The Woodgrove, for $55.9m.
- The property with a strata floor area of 5,144 sqm has an unexpired lease term of 78 years.
- Net gain upon disposal of $22m is expected to lift pro forma EPS to 10.95¢ from 3.84¢.
- Trades at 3.2 trailing P/E and 0.46x P/B.

- Received Letter of Award for the redevelopment of freehold property at 38 Genting Lane.
- The site with land area of 2,103sqm will be redeveloped into an 8-storey industrial building with a gfa of 5,259 sqm.
- Project cost is estimated at $9.3m and construction will take 24 months to complete.
- Last traded at 19.8x trailing P/E and 0.65x P/B.

*Lippo Malls Trust
- National Land Authority has extended the strata ownership titles for four units at Mall WTC Matahari for 20 years until Apr '38.
- Offers 8.3% indicative yield and valued at 1.17x P/B.

- Established a $500m multicurrency debt issuance programme.
- Net proceeds arising from the programme will be used for general corporate purposes, including M&A, refinancing of borrowings and working capital and capex requirements.
- Trades at 31.3x forward P/E.

*Alliance Mineral Assets
- Updated that 40m shares (7.2% share capital) belonging to CEO Tjandra Pramoko and his wife were seized on court order, following non-payment of a $5.5m personal debt owed to Jonathan Lim Keng Hock.
- This is the second time shares have been seized following the first incident in Jul '17, and would create a major overhang in the stock.
- Separately, group announced positive exploration results at Bald Hill Project, its joint project with Tawana Resources.

*Debao Property Development
- A subsidiary received a winding-up petition, presented by Gabungan Tiasa to Malaysia High Court, in relation to Rm14.6m allegedly owed.
- Petition is scheduled for case management and hearing on 12 Dec '17 and 25 Jan '18.

Tuesday, December 5, 2017

SG Market (05 Dec 17)

- Strong signs of broader-based growth in the manufacturing sector and heightened probability of a US tax bill could provide some support to recent market weakness.
- Technically, underlying support for the STI lies at 3,390, with overhead resistance at 3,460.

- Nov PMI came in at 52.9, up from 52.6 in previous month, marking its 15th consecutive month of expansion in manufacturing and highest reading since Dec '09.
- The key leading indicator was fuelled by higher factory activity across most sectors.
- Upbeat data lends credence to Maybank KE's bullish view of the economy, which is anticipated to grow 3.4% in 2017, surpassing the official GDP growth forecast of 2-3% range.

- Portfolio company, Magdent, raised US$1.75m from three angel investors.
- Magdent developed a technology that uses electromagnetic fields to stimulate, accelerate and improve bone formation and quality, and to prevent bone infection, leading to more successful dental implant procedures.
- Trades at 12.1x forward P/E and 0.71x P/B.

- Entered into a VND417.8b ($24.8m) contract with Sing Viet City to undertake earthworks on a 63.8 ha land in Ho Chi Minh City.
- Works expected to commence in Dec and be completed by Sep '18.
- Controlling shareholder Yap Teiong Choo owns 97% of Sing Viet City.
- The loss-making group trades at 0.41x P/B.

*New SGX Watchlist entrants:
- Interra Resources
- ISR Capital
- Global Yellow Pages

- Disposed Q&M Medical Aesthetic & Laser Centre to Dr Li Jingxiang for $0.24m.
- Net liability of the entity was $1.42m as at Sep '17.
- Trades at 31.3x forward P/E.

*Hong Leong Asia
- Completed the disposal of Rex Plastics at reduced price of RM7.54m (from RM10.8m).
- This was due to changes arising from inventory stock.
- The loss-making group trades at 0.62x P/B.

*Lian Beng/KSH Holdings
- Acquired 42% stake in Development 24 from KSH for $0.42m, or 1x P/B.
- Development 24 is engaged in property development and investment holding.

*CWG Int'l
- Incorporated three 60% owned subsidiaries for the purpose of holding specific property development projects.

*Indiabulls Properties Trust
- Exercised its right of compulsory acquisition after it received 99.66% acceptances following its voluntary conditional cash offer at $0.90/unit.

*China Great Land
- Seeking shareholders' approval on expanding its core business to include environmental solutions.
- Management believes that the diversification could enable the group to tap in a new market and boost its income stream.
- The proposal arose from increasing awareness of the negative impact of pollution in China, as well as a weak core business in concrete piles due to the challenging operating environment.

Monday, December 4, 2017

SG Market (04 Nov 17)

- Investors may start the week on a cautious note on fresh US political concerns, after ex-national security adviser is reported to testify that President Trump has directed him to make contact with Russians during the 2016 election campaign.
- Technically, STI sees underlying support at 3,390, with topside resistance at 3,460.

- Enbloc wave continues following the purchase of two separate freehold sites in Bukit Timah by Allgreen Properties.
- Both collective sale tenders at Royalville and Crystal Tower were competitive, sold at $477.4m ($1,960 psf ppr) and $180.7m ($1,840 psf ppr), respectively.
- MKE maintains positive on the property developers and reiterates UOL (TP: $9.80) as its top pick, along with City Dev (TP: $13.60) and GuocoLand (TP: $2.90).

- 19 IPOs in the first 11 months this year have raised $4.6b, twice the amount in 2016.
- The listings added $8.3b in market cap to the bourse, compared to the 16 firms that added $4.4b last year.
- SGX last traded at 21.7x forward P/E, an attractive 54% discount to peer HK Exchanges & Clearing.

- Acquiring a freehold commercial and retail building in Melbourne CBD for A$33m.
- The six-storey property with net lettable area of 4,504 sqm will be redeveloped into a mixed-use development comprising hotel and retail units.
- Last traded at 18.6x trailing P/E and 1.27x P/B.

*Boustead Projects
- Clinched a contract from Ballore Logistics Singapore for the design and build of a five-storey ramp-up eco-sustainable logistics facility in Singapore.
- Construction for the new building is expected to complete in 2019.
- This marks the fourth logistics project secured in FY3/18 and raises order book to $300m from $242m on 27 Nov '17.
- Trades at 7.8x forward P/E.

- Secured contracts worth an aggregate NOK700m for the design and construction of seven stern trawlers.
- Delivery for the vessels scheduled between 1Q19 and 4Q19.
- Counter is loss-making and trades at 0.83x P/B.

*Thai Beverage
- Completed the acquisition of 252 KFC stores in Thailand, as well as the properties and assets used for operations for Bt11.4b.
- The acquisition is part of the group's strategy to expand into food business.
- Last traded at 20.4x forward P/E.

*Sing Post
- Introduced higher rates for international small packets delivery services.
- The increase will come into effect in 2018 and is due to higher rates charged by the UN agency that sets the rules for international mail exchanges among its 192 member countries.
- The new rates reflect rising volumes of e-commerce packets and the higher cost of delivery.
- Last traded at 25.6x forward P/E.

*G. K. Goh
- Interest in associate Habitat Assets has been diluted to 36.09% from 37.66%, as the latter issued 4.8m new redeemable preference shares to a third party for A$4.8m.
- Trades at 8.5x trailing P/E and 0.86x P/B.

*Soilbuild REIT
- Received claim on insurance guarantee amounting to $1.7m, equivalent to around four months' rent from a tenant NK Ingredients.

Friday, December 1, 2017

SG Market (01 Dec 17)

- The market could be buoyed by the record Wall Street close as the US Senate is set to vote on a tax reform bill, while OPEC and its allies agreed to a further extension till end-2018 for oil production cuts.
- Technically, underlying support for the STI remains at 3,390, with topside resistance at 3,460.

- Oct loans expanded 6.8% to $649.6b (Sep: +6.2%), bringing 10M17 loans growth to 6%.
- Growth was spurred by increased loans to businesses of 9% (Sep: +8%) and consumer of 3.8% (Sep: +3.6%).
- Positive loan momentum should be sustained as the economy picks up and on improved buying sentiment in the Singapore property market.
- Maybank KE maintains Neutral on Singapore banks with preference for UOB (Buy, TP: $27.10), followed by DBS (Hold, TP: $22.75) and OCBC (Hold, TP: $12.00).

- MAS flags risks from excessive exuberance in the property market, following the en-bloc rage and rising land prices.
- Concerns stem from a potential supply-demand mismatch, with anticipated new supply from government land sales sites to outstrip demand from slower population growth in the next 1-2 years.
- MKE is positive on the sector with preference for UOL (Buy, TP: $9.85), City Dev (Buy, TP: $13.80) and GuocoLand (Buy, TP: $2.90).

- Received sales orders worth $76m for delivery in 1H18.
- As a gauge for end-Nov '16, the group received sales orders worth $53m for delivery in 1H17.
- Last traded at 7.9x forward P/E.

*Citic Envirotech
- 34.9% owned Jiangyin Longyun Wastewater Treatment acquired an industrial transfer-operate-transfer wastewater treatment plant in Jiangyin City, Jiangsu Province in China, for Rmb25.8m.
- The 15-year service concession project has a capacity of 10,000m3/day.
- Last traded at 16.6x forward P/E.

*SIIC Environment
- Proposed two acquisitions which will lift treatment capacity for new projects secured to-date by 28% to 787,500 tpd.
1) 75.5% owned SIIC Environment Holdings (Weifang) to spend Rmb108.5m to acquire Dalian Ziguang Water Treatment, in charge of the Tiger Beach water treatment project in Dalian, China, and is currently upgrading its capacity by 12.5% to 90,000 tpd, and from grade 1B to 1A.
2) SIIC will also make a Rmb97m acquisition for an effective 86.5% stake in Dalian Ziguang Lingshui Waste Water Treatment that is in charge of the Lingshui River treatment project, currently upgrading its capacity by 33% to 80,000 tpd, and from grade 1B to 1A.
- Trades at 11.8x forward P/E.

*Golden Energy and Resources
- Investing A$67.86m to subscribe for a 10% stake in ASX-listed Westgold Resources
- The investment will help the group gain exposure to the counter-cyclical gold mining sector in Australia.
- Last traded at 9.6x trailing P/E.

*Duty Free Intl
- Received bills of demand from Royal Malaysian Customs of Perak, demanding aggregate payment of RM41.6m including custom and excise duties, sales taxes and GST.
- The demand stems from non-compliance of a duty-free shop located at the border of Perintah Tetap Kastam Bil 55.
- Group and its advisors believe there is no legal basis and will be defending against the allegations.
- Separately, substantial shareholder Heinemann Asia Pacific exercised the second tranche of its call option for €9.85m, to acquire an additional 5% in key operating subsidiary, DFZ Capital, to 15%.
- Trades at 15.8x forward P/E.

- FTSE Russell announced that there will be no changes to STI constituents in the Dec '17 quarterly review.
- STI reserve list, ranked according market cap, comprises Venture, Suntec REIT, Mapletree Commercial Trust, Keppel REIT, and Sembcorp Marine.
- Next review will take place in Mar '18.

- Included on the FTSE ST Large & Mid Cap Index and the FTSE ST Mid Cap Index.
- Trades at 10.8x forward P/E.

- Issued 589,589 new shares in relation to a warrant exercise at US$1.09 each.
- 57m outstanding warrants remains, which expires on 29 Jan 2018.
- Trades at 16x forward P/E and 1.33x P/B.

*Marco Polo
- Singapore Court has approved the group's restructuring plan, which calls for a write-off on $258m in debts, and $60m fresh equity injection.
- Following the approval and sanction orders, Marco Polo will now need to seek shareholders' approval.