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.

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