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 NiterĂ³i 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.

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