MARKET OVERVIEW
- The market could see further profit taking following the biggest selloff in Wall Street in 8 months, pressured by a spike in US Treasury bond yields, which could signal an acceleration in interest rate increases this year.
- Technically, the STI sees support at 3,510, with topside resistance at 3,640.
CORPORATE RESULTS
*CapitaLand Retail China Trust
- Flat 4Q17 DPU of 2.37¢ was in line with estimates, as higher distributable income (+6.8%) from a capital distribution was diluted by an enlarged unit base.
- For the quarter, revenue and NPI fell to Rmb264.8m (-3.9%) and Rmb161.4m (-4.6%) due to loss of contribution from CapitaMall Anzhen following its divestment, and lower takings at CapitaMall Grand Canyon due to disruptions to trading activities arising from an operational review by the authorities leading up to the 19th National Congress.
- Occupancy maintained at 95.4% (-0.2ppt q/q), while aggregate leverage lowered to 28.4% (-7ppt q/q).
- Trades at FY18 yield of 6.3% and 1.06x P/B.
*OUE Hospitality Trust
- 4Q17 DPS fell 6.6% to 1.27¢ due to absence of income support and higher interest expenses.
- This brought FY17 payout to 5.14¢ (+11.5%), meeting expectations.
- Revenue for the quarter rose 1.8% $33.8m on higher master lease income from Mandarin Orchard due to better RevPAR (+2.3%), banquet and F&B sales, but NPI slipped 1.1% to $29.2m on higher land rent and property tax for Crowne Plaza Changi Airport.
- Aggregate leverage jumped 7ppt q/q to 38.8%, with WALE shortened to 3.8 years (3Q17: 3.9 years).
- Offers annualised 4Q yield of 5.7% and trades at 1.16x P/B.
*MTQ
- 3QFY18 net loss contracted to $3.9m (3QFY17: $4.4m loss), helped mainly by reduced staff costs (-16%).
- Revenue declined 10% to $28.2m, while gross margin was relatively unchanged at 16.3% (-0.7ppt).
- Bottom line was pressured by a swing into JV loss of $0.2m (3QFY17: $0.2m profit).
- Separately, MTQ proposed a renounceable underwritten 2-for-5 rights issue at $0.20 each to raise up a minimum $12.1m for working capital and debt repayment.
- Additionally, entitled shareholders will receive one free detachable warrant for every four rights shares, with an exercise price at $0.22 apiece.
- NAV/share at $0.52.
POSTIVE NEWS
*CityDev
- Emerged as top bidder for 2 of 3 private housing sites in state tenders.
- It lodged the highest bid of $212.2m or $1,722 psf ppr for a Handy Road plot, comparable to the price paid by Frasers Centrepoint for the Jiak Kim Street site last month, and $472.4m or $800 psf ppr for a West Coast Vale site, which is 35% higher than the price paid by China Construction for the nearby Twin Vew site in Feb '17 but is in line current land rates.
- MKE views these deals positively as the group continues to ride on the recovering housing market by adding c.860 units to its inventory.
- Buy with TP of $13.80.
*SingMedical
- Entered in to 20:80 JV with CHA SMG (Australia) to explore business opportunities in Australia.
*Sunpower
- Won a Rmb30.9m contract to provide flue gas desulphurization EPC services to repeat customer Qinghai Damei Coal Industry.
- This is expected to have a positive impact on Sunpower's FY18 results upon completion.
- Trades at 7.3x trailing P/E.
*CFM Holdings
- Guided for an improvement in 1HFY18 financials due to increased sales from higher demand for metal stamping operations and cleanroom products, as well as lower depreciation expenses, reduced staff costs and professional expenses.
- Last traded at 0.61x P/B.
NEGATIVE NEWS
*Noble Group
- Credit rating agencies S&P and Moody's both downgraded Noble's ratings following its proposed debt restructuring.
- S&P has slashed long-term corporate credit rating to CC from CCC- and gave it a negative outlook, while Moody's cut its rating to Ca from Caa3, highlighting a high level of uncertainty on the group's ability to turn around its operations and return to profitability.
*QAF
- Disclosed that an ammonia leak has occurred at its F&B products warehouse at Fishery Port Road.
- A stop work order has since been issued by regulators until certain rectification measures are taken.
NEUTRAL NEWS
*First Resources
- 4Q17 FFB harvest rose 2.6% to 885,617 tonnes despite a dip in yield to 5.1 tonnes/ha (-5.6%).
- CPO production slipped 1% to 203,383 tonnes, with extraction rates declining 0.3ppt to 22.1%.
- MKE last had a HOLD with TP of $2.04.
*SingPost
- 50% owned Rotterdam Harbour and its 51:49 JV partner Tomas Kovanda have sold their entire stake in loss-making FPS Famous Pacific Shipping for €1.
- As part of the consideration, the purchaser will also repay an inter-company debt of €0.135m to Rotterdam Harbour.
- FPS provides container consolidation shipments and services and has a negative carrying value of €7,380 on Rotterdam Harbour's books.
*Rex International
- 90% owned Lime Petroleum is divesting its 20% participating interest in license PL762 located in the Norwegian Sea for an undisclosed sum.
- The non-core asset sale is part of group's strategy to focus on areas close to infrastructure in the North Sea.
*Marco Polo Marine
- To resume trading on 2 Feb following completion of its debt restructuring.
*Hong Leong Asia
- Set up 51:49 JV company with Malaysian-based Sunway Construction Group to manufacture and sell precast concrete components.
- This is to capitalise on the Singapore government's encouragement to use precast components in construction projects.
*BM Mobility
- 65% owned Estar Investments is acquiring 99.9992% stake in Malaysian-based Wanted Marketing Communications from Ng Heok Seong and Abdul Halim Bin Abdul Aziz for RM0.85m, or 2.12x P/B.
- The target is an authorised sales agent for electric bike manufacturer Treelektrik, and also has a 75% interest in UniRide Ecotour, which has the rights to provide a car sharing programme to four universities in Malaysia.
Wednesday, January 31, 2018
Tuesday, January 30, 2018
SG Market (30 Jan 18)
MARKET OVERVIEW
- Market could pull back after US stocks suffered worst one-day fall in five months as Treasury yields hit their highest levels since 2014 and a gauge of investor anxiety spiked nearly 25% ahead of President Trump's official State of the Union address, Fed's monetary policy meeting and a host of earnings from high profile tech companies.
- Technically, the STI is expected to range trade between 3,510 and 3,640 in the near term.
CORPORATE RESULTS
*Starhill Global REIT
- 2QFY18 DPU slid 7% to 1.17¢ (-7%), dragging 1HFY18 DPU to 2.37¢ (-7.4%), below estimates.
- For the quarter, revenue and NPI of $52.5m (-3%) and $40.5m (-2.2%) fell on weaker contributions from offices and Myer Centre Adelaide, AEI disruption at Plaza Arcade in Perth due to AEI and higher witholding taxes for its Malaysian and Australian properties.
- Portfolio occupancy rose 0.7ppt q/q to 94.1%, while aggregate leverage dipped 0.1ppt to 35.3%.
- Trading at annualised 2Q yield of 6% and 0.85x P/B.
*Ascendas India Trust
- 3QFY18 DPU of Rs0.79 (1.64¢, +15%) brought 9MFY18 payout to Rs2.10 (4.45¢, 7%), meeting estimates.
- Property income of Rs2.22b (+18%) and NPI of Rs1.56b (+23%) were buoyed by new acquisitions BlueRidge 2, aVance 4 and Atria at the V, incremental leasing at Victor, as well as positive rental reversion.
- Portfolio occupancy expanded 1ppt to 94%, while aggregate leverage ticked up 1ppt q/q to 31%.
- Trades at annualised 3QFY18 yield of 5.8% and 1.11x P/B.
POSITIVE NEWS
*Ascendas Hospitality Trust (AHT)
- To divest Novotel Sanyuan and Ibis Beijing Sanyuan for Rmb1.16b, or a NPI yield of 3.3%.
- The sale price of the hotels exceeds the latest independent valuation of Rmb574m by 101.5% and AHT is estimated to net a divestment gain of $112.7m.
- Proceeds earmarked to repay debt, which will significantly reduce aggregate leverage from 32.2% to 23.6%.
- Following sale completion expected in 1H18, AHT will no longer have any properties in China.
- Post-sale pro forma NAV expected to be lifted by 10.9% to $1.02/unit.
*Noble Group
- Reached an in-principle agreement with several senior creditors representing 30% of its total US$3.4b senior debt instruments, for a debt restructuring deal that could reduce the borrowings by half.
- The deal involves swapping existing debt for a combination of new debt instruments and equity in the restructured group.
- This will result in senior creditors owning a 70% stake in the new holding co., while management will own 20%. Existing shareholders' stake will be diluted to 10%.
- Existing perpetual holders for the US$400m securities will need to take a 96.25% haircut to exchange their existing perps for an aggregate of up to US$15m in value.
- Senior creditors in agreement will also support a three-year committed trade finance and hedging facility of up to US$700m on competitive market terms for Noble's commodity trading business.
- The proposed restructuring is subject to other senior debt holders voting in favour as well as regulatory and shareholder approval.
*Mencast
- Received an undisclosed amount of grant from Spring Singapore in connection with its incubation programme.
- The programme aims to support startups in the energy technology, life and agricultural sciences, nanotechnology and/or industrial IT sectors.
- Trades at 0.51x P/B.
*Marco Polo Marine
- Completed its debt restructuring exercise ahead of its 1H18 targeted schedule.
- 3,183.6m new shares, representing 90.44% of enlarged share capital, were allotted, with the bulk (60.87%) to nine investors at 2.8¢ apiece, and the remaining to entitled creditors and noteholders at 3.5¢ each.
- Trading remains suspended until further notice.
*Raffles United
- Expects a turnaround into profitability for FY17 (FY16: net loss) due to higher revenue and lower operating expenses, as well as non-recurring losses from assets disposal.
- Last traded at 0.62x P/B.
NEGATIVE NEWS
*New Wave Holdings
- No sale agreement has been reached with any shortlisted potential purchasers after the close of the en-bloc public tender exercise for Jalan Besar Plaza on 10 Nov '17.
- Another tender could be launched again in Apr '18.
*Sapphire Corp.
- Ceased the potential stake sale by substantial shareholders Li Xiaobo (17.33%) and Wang Heng (27.96%) to HK-listed Hong Kong International Construction Investment Management.
*Swiber
- Divested its 50%-stake in loss-making Swiwar Offshore to Warden marine for $1.
- Group expects to record divestment loss of $5.6m.
*Profit warnings
- Procurri
- Gaylin Holdings
NEUTRAL NEWS
*China Kangda Food
- Divesting Jilin Kangda Foods and Laiwu Kangda Feeds for Rmb41m.
- The deal is expected to record a gain of Rmb3.5m, with proceeds for working capital.
- Market could pull back after US stocks suffered worst one-day fall in five months as Treasury yields hit their highest levels since 2014 and a gauge of investor anxiety spiked nearly 25% ahead of President Trump's official State of the Union address, Fed's monetary policy meeting and a host of earnings from high profile tech companies.
- Technically, the STI is expected to range trade between 3,510 and 3,640 in the near term.
CORPORATE RESULTS
*Starhill Global REIT
- 2QFY18 DPU slid 7% to 1.17¢ (-7%), dragging 1HFY18 DPU to 2.37¢ (-7.4%), below estimates.
- For the quarter, revenue and NPI of $52.5m (-3%) and $40.5m (-2.2%) fell on weaker contributions from offices and Myer Centre Adelaide, AEI disruption at Plaza Arcade in Perth due to AEI and higher witholding taxes for its Malaysian and Australian properties.
- Portfolio occupancy rose 0.7ppt q/q to 94.1%, while aggregate leverage dipped 0.1ppt to 35.3%.
- Trading at annualised 2Q yield of 6% and 0.85x P/B.
*Ascendas India Trust
- 3QFY18 DPU of Rs0.79 (1.64¢, +15%) brought 9MFY18 payout to Rs2.10 (4.45¢, 7%), meeting estimates.
- Property income of Rs2.22b (+18%) and NPI of Rs1.56b (+23%) were buoyed by new acquisitions BlueRidge 2, aVance 4 and Atria at the V, incremental leasing at Victor, as well as positive rental reversion.
- Portfolio occupancy expanded 1ppt to 94%, while aggregate leverage ticked up 1ppt q/q to 31%.
- Trades at annualised 3QFY18 yield of 5.8% and 1.11x P/B.
POSITIVE NEWS
*Ascendas Hospitality Trust (AHT)
- To divest Novotel Sanyuan and Ibis Beijing Sanyuan for Rmb1.16b, or a NPI yield of 3.3%.
- The sale price of the hotels exceeds the latest independent valuation of Rmb574m by 101.5% and AHT is estimated to net a divestment gain of $112.7m.
- Proceeds earmarked to repay debt, which will significantly reduce aggregate leverage from 32.2% to 23.6%.
- Following sale completion expected in 1H18, AHT will no longer have any properties in China.
- Post-sale pro forma NAV expected to be lifted by 10.9% to $1.02/unit.
*Noble Group
- Reached an in-principle agreement with several senior creditors representing 30% of its total US$3.4b senior debt instruments, for a debt restructuring deal that could reduce the borrowings by half.
- The deal involves swapping existing debt for a combination of new debt instruments and equity in the restructured group.
- This will result in senior creditors owning a 70% stake in the new holding co., while management will own 20%. Existing shareholders' stake will be diluted to 10%.
- Existing perpetual holders for the US$400m securities will need to take a 96.25% haircut to exchange their existing perps for an aggregate of up to US$15m in value.
- Senior creditors in agreement will also support a three-year committed trade finance and hedging facility of up to US$700m on competitive market terms for Noble's commodity trading business.
- The proposed restructuring is subject to other senior debt holders voting in favour as well as regulatory and shareholder approval.
*Mencast
- Received an undisclosed amount of grant from Spring Singapore in connection with its incubation programme.
- The programme aims to support startups in the energy technology, life and agricultural sciences, nanotechnology and/or industrial IT sectors.
- Trades at 0.51x P/B.
*Marco Polo Marine
- Completed its debt restructuring exercise ahead of its 1H18 targeted schedule.
- 3,183.6m new shares, representing 90.44% of enlarged share capital, were allotted, with the bulk (60.87%) to nine investors at 2.8¢ apiece, and the remaining to entitled creditors and noteholders at 3.5¢ each.
- Trading remains suspended until further notice.
*Raffles United
- Expects a turnaround into profitability for FY17 (FY16: net loss) due to higher revenue and lower operating expenses, as well as non-recurring losses from assets disposal.
- Last traded at 0.62x P/B.
NEGATIVE NEWS
*New Wave Holdings
- No sale agreement has been reached with any shortlisted potential purchasers after the close of the en-bloc public tender exercise for Jalan Besar Plaza on 10 Nov '17.
- Another tender could be launched again in Apr '18.
*Sapphire Corp.
- Ceased the potential stake sale by substantial shareholders Li Xiaobo (17.33%) and Wang Heng (27.96%) to HK-listed Hong Kong International Construction Investment Management.
*Swiber
- Divested its 50%-stake in loss-making Swiwar Offshore to Warden marine for $1.
- Group expects to record divestment loss of $5.6m.
*Profit warnings
- Procurri
- Gaylin Holdings
NEUTRAL NEWS
*China Kangda Food
- Divesting Jilin Kangda Foods and Laiwu Kangda Feeds for Rmb41m.
- The deal is expected to record a gain of Rmb3.5m, with proceeds for working capital.
Monday, January 29, 2018
SG Market (29 Jan 18)
MARKET OVERVIEW
- The market could consolidate its gains before resuming its uptrend as investors look to US President Trump's State of the Union address and key results from Starhill Global, OUE-HT, OUE-CT, CRCT, SIA Engineering and SingPost this week.
- Technically, the STI is expected to range trade between 3,510 and 3,640 in the near term.
CORPORATE RESULTS
*Tuan Sing
- 4Q17 headline net profit soared 298% to $49.7m, boosted by a $44.9m fair value gain on investment properties.
- Excluding that, net profit of $8.3m (-22.2%) brought FY17 core earnings to $21.4m (-31.8%), below the sole street estimate.
- For the quarter, revenue slipped 4% to $98m mainly due to reduced contributions from the industrial services (-18.7%) segment.
- Gross margin inched 1.3ppt higher to 20.5% amid a shift in sales mix.
- Bottom line was weighed by increased finance costs arising from higher investment property loans taken up for the acquisition of commercial property 896 Dunearn Road and notes issued.
- Trades at a 42% discount to its NAV/share of $0.83.
*Micro-Mechanics
- 2QFY18 net profit of $3.9m (+16%) brought 1HFY18 earnings to $9.1m (+34.6%), below expectations.
- For the quarter, revenue climbed 10.3% to $15.6m on higher sales in Singapore, Philippines, US and China.
- Gross margin widened 0.7ppt to 56.1% on higher capacity utilization of 62% (2QFY17: 56%).
- Declared higher interim DPS of 4¢ (1HFY17: 3¢).
- Trades at 15.1x forward P/E and 3.7% dividend yield.
POSITIVE NEWS
*Roxy-Pacific
- 40:45:15 JV with Tong Eng Group and Kim Seng Holdings s acquiring the freehold residential site at 20-unit Wilshire in Farrer Road for $98.8m.
- Based on the land area of 39,130 sf and plot ratio of 1.6, the sale price translates to $1,536 psf ppr for the condo.
- This is the eight residential site the group has snapped up in the last six months, which totalled $494.7m, and can yield 580 new homes when redeveloped.
- Trades at a 40.3% discount to its RNAV/share of $0.98.
*Courage Investment
- Expected to turn around to profitability in FY17 due to a reversal of impairment loss on its vessels, as well as fair value gain on investment property and positive operating results of its property business and investments.
- Expects to announce FY17 results before the end-Mar.
NEGATIVE NEWS
*CityDev
- Attempt to take London-listed 65.2% owned Millennium & Copthorne Hotels failed, after it secured only 47.14% in acceptances.
- The privatisation deal was thwarted by funds including International Value Advisers, MSD Partners and Classic Fund Management, which rejected the lowball offer.
- MKE last had a Buy with TP of $13.80 on the counter.
*Rex Intl
- Received a letter from the solicitors of Hibiscus Petroleum, which alleges that a prior witness statement provided by Rex's director, Karl Lidgren, in Feb '16 was false and misleading.
- The prior statement was in relation to the valuation of Lime Norway.
- The group does not accept the allegation and will provide updates upon any material developments.
- Trades at 0.55x P/B.
*KS Energy
- The Singapore High Court has granted leave to strategic investor Actis Excalibur to bring a derivative action against the group's executive chairman and chief executive Kris Taenar Wiluan, as well as director Richard James Wiluan.
- The action was taken on behalf of KS Distribution and its subsidiaries.
- The Wiluans were alleged to be in a position of conflict in relation to transactions entered between KS Distribution entities and certain companies connected to them.
- Further announcements will be made when developments should arise.
NEUTRAL NEWS
*UOB
- Acquired a 10.29% stake (362.2m shares at 3.5¢ apiece) in Marco Polo Marine following a court-sanctioned refinancing and debt restructuring exercise.
- Trades at 1.4x P/B, below peers DBS and OCBC, both at 1.47x.
*Viva Industrial Trust/ ESR-REIT
- Viva is in merger talks with Warburg Pincus' industrial landlord, ESR-REIT.
- Bloomberg cited that a deal could be struck as soon as the next few weeks.
- Notably, Chinese property tycoon Tong Jinquan is the largest investor in both industrial REITs.
*ISDN
- Set up 30% owned C&I Singapore Renewable and Innovative Tech, following its intention to cooperate with Comtec Solar Systems in the energy industry.
- The associate will engage in R&D of blockchain tech for application to the distribution of solar-generated energy.
- The new technology is expected to provide a more efficient and decentralised platform for the trading and distribution of solar-generated energy.
- Last traded at 7.9x forward P/E.
*Olam
- Issued 7.9mnew shares in relation to a warrant exercise at US$1.09 each.
- 3.2m outstanding warrants remains, which expires on 29 Jan 2018.
- The market could consolidate its gains before resuming its uptrend as investors look to US President Trump's State of the Union address and key results from Starhill Global, OUE-HT, OUE-CT, CRCT, SIA Engineering and SingPost this week.
- Technically, the STI is expected to range trade between 3,510 and 3,640 in the near term.
CORPORATE RESULTS
*Tuan Sing
- 4Q17 headline net profit soared 298% to $49.7m, boosted by a $44.9m fair value gain on investment properties.
- Excluding that, net profit of $8.3m (-22.2%) brought FY17 core earnings to $21.4m (-31.8%), below the sole street estimate.
- For the quarter, revenue slipped 4% to $98m mainly due to reduced contributions from the industrial services (-18.7%) segment.
- Gross margin inched 1.3ppt higher to 20.5% amid a shift in sales mix.
- Bottom line was weighed by increased finance costs arising from higher investment property loans taken up for the acquisition of commercial property 896 Dunearn Road and notes issued.
- Trades at a 42% discount to its NAV/share of $0.83.
*Micro-Mechanics
- 2QFY18 net profit of $3.9m (+16%) brought 1HFY18 earnings to $9.1m (+34.6%), below expectations.
- For the quarter, revenue climbed 10.3% to $15.6m on higher sales in Singapore, Philippines, US and China.
- Gross margin widened 0.7ppt to 56.1% on higher capacity utilization of 62% (2QFY17: 56%).
- Declared higher interim DPS of 4¢ (1HFY17: 3¢).
- Trades at 15.1x forward P/E and 3.7% dividend yield.
POSITIVE NEWS
*Roxy-Pacific
- 40:45:15 JV with Tong Eng Group and Kim Seng Holdings s acquiring the freehold residential site at 20-unit Wilshire in Farrer Road for $98.8m.
- Based on the land area of 39,130 sf and plot ratio of 1.6, the sale price translates to $1,536 psf ppr for the condo.
- This is the eight residential site the group has snapped up in the last six months, which totalled $494.7m, and can yield 580 new homes when redeveloped.
- Trades at a 40.3% discount to its RNAV/share of $0.98.
*Courage Investment
- Expected to turn around to profitability in FY17 due to a reversal of impairment loss on its vessels, as well as fair value gain on investment property and positive operating results of its property business and investments.
- Expects to announce FY17 results before the end-Mar.
NEGATIVE NEWS
*CityDev
- Attempt to take London-listed 65.2% owned Millennium & Copthorne Hotels failed, after it secured only 47.14% in acceptances.
- The privatisation deal was thwarted by funds including International Value Advisers, MSD Partners and Classic Fund Management, which rejected the lowball offer.
- MKE last had a Buy with TP of $13.80 on the counter.
*Rex Intl
- Received a letter from the solicitors of Hibiscus Petroleum, which alleges that a prior witness statement provided by Rex's director, Karl Lidgren, in Feb '16 was false and misleading.
- The prior statement was in relation to the valuation of Lime Norway.
- The group does not accept the allegation and will provide updates upon any material developments.
- Trades at 0.55x P/B.
*KS Energy
- The Singapore High Court has granted leave to strategic investor Actis Excalibur to bring a derivative action against the group's executive chairman and chief executive Kris Taenar Wiluan, as well as director Richard James Wiluan.
- The action was taken on behalf of KS Distribution and its subsidiaries.
- The Wiluans were alleged to be in a position of conflict in relation to transactions entered between KS Distribution entities and certain companies connected to them.
- Further announcements will be made when developments should arise.
NEUTRAL NEWS
*UOB
- Acquired a 10.29% stake (362.2m shares at 3.5¢ apiece) in Marco Polo Marine following a court-sanctioned refinancing and debt restructuring exercise.
- Trades at 1.4x P/B, below peers DBS and OCBC, both at 1.47x.
*Viva Industrial Trust/ ESR-REIT
- Viva is in merger talks with Warburg Pincus' industrial landlord, ESR-REIT.
- Bloomberg cited that a deal could be struck as soon as the next few weeks.
- Notably, Chinese property tycoon Tong Jinquan is the largest investor in both industrial REITs.
*ISDN
- Set up 30% owned C&I Singapore Renewable and Innovative Tech, following its intention to cooperate with Comtec Solar Systems in the energy industry.
- The associate will engage in R&D of blockchain tech for application to the distribution of solar-generated energy.
- The new technology is expected to provide a more efficient and decentralised platform for the trading and distribution of solar-generated energy.
- Last traded at 7.9x forward P/E.
*Olam
- Issued 7.9mnew shares in relation to a warrant exercise at US$1.09 each.
- 3.2m outstanding warrants remains, which expires on 29 Jan 2018.
Friday, January 26, 2018
SG Market (26 Jan 18)
MARKET OVERVIEW
- Likely to see further profit-taking as sentiment is spooked by talk of a potential trade war between US and China and mixed signals on the direction for USD.
- O&G names are likely to also see pressure after bellwether Keppel Corp reported worse-than-expected 4Q results.
- Technically, underlying support for the STI lies at 3,510, with topside resistance at 3,640.
CORPORATE RESULTS
*Keppel Corp
- 4Q17 swung into a net loss of $492.8m (4Q16: $143.1m profit), hurt by a $618.7m financial penalty and related costs, which dragged FY17 earnings to $216.7m (-72%).
- Excluding the one-off charge, net profit of $835.4m (+7%) came in 5% below consensus estimate.
- In 4Q, O&M bled $217m loss after booking additional provision for Sete Brasil projects ($81m) and asset impairment ($54m).
- Order book still weak at $3.9b.
- Property was biggest earner at $287m, mainly boosted by fair value gains ($178m).
- Higher final DPS of 14¢ (4Q16: 12¢) brought full year payout to 22¢ (FY16: 20¢).
- Trades at 16.3x forward P/E.
*Ascendas REIT
- 3QFY18 DPU dipped 0.6% to 3.97¢ due to a one-off property tax refund last year and larger unit base.
- This brought 9MFY18 payout to 12.078¢ (+1.6%), meeting estimates.
- For the quarter, gross revenue and NPI rose 4.1% and 1.7% to $217.3m and $157.6m, from newly acquired in Singapore and Australia.
- Overall portfolio occupancy declined 1.8ppt q/q to 90.2%, while rental reversion was up 3.1%.
- Aggregate leverage climbed 2.1ppt q/q to 35.2%.
- Trades at annualised 3QFY18 yield of 5.8% and 1.33x P/B.
- MKE keeps Buy with TP of $3.05.
*ParkwayLife REIT
- 4Q17 DPU of 3.38¢ (+10.6%) was boosted by divestment gain of 0.23¢, lifting FY17 payout to 13.35¢ (+10.2%), in line with estimates.
- For the quarter, gross revenue (-0.2%) and NPI (+0.2%) of $27.5m and $25.7m, respectively, were relatively flat as JPY depreciation was offset by higher rents received from SG properties.
- Aggregate leverage was stable at 36.4% (-0.9ppt q/q).
- Trades at annualised 4Q yield of 5.1% and 1.69x P/B.
*Mapletree Greater China Commercial Trust
- 3QFY18 DPU climbed 5.1% to 1.868¢, due to lower finance costs (-8.9%).
- This brought 9MFY18 payout to 5.582¢ (+3.6%) or 75% of FY18 street expectations.
- Quarter gross revenue edged higher by 0.7% from higher rental rates at all three properties, as well as stronger HKD and CNY against SGD.
- NPI, however, stagnated at $71.4m due to higher property expenses (+3.8%) associated mainly with Festival Walk in Hong Kong.
- Portfolio occupancy fell 1.3ppt q/q to 96.9%, while aggregate leverage edged higher to 39.3% (+0.8ppt q/q).
- Last traded at annualised 3Q yield of 5.9% and 1.03x P/B.
*Frasers Logistics & Industrial Trust
- 1QFY18 results came slightly below expectations, as DPU climbed 3.4% to 1.80¢.
- Revenue and adjusted NPI grew to A$42.4m (+7%) and A$33.4m (+9%), lifted by several properties acquired since Nov '16, and two development properties in Australia achieving practical completion in Oct-Nov '17.
- Portfolio occupancy was stable at 99.4%, while aggregate leverage rose 1.6ppt q/q to 30.9%.
- Trading at annualised 1QFY18 yield of 6.2% and 1.27x P/B.
*Viva Industrial Trust
- 4Q17 DPU rose 5.5% to 1.857¢ and lifted FY17 payout to 7.472¢ (+7.4%), meeting estimate.
- Quarter's revenue and NPI jumped to $28.3m (+11%) and $20.6m (+14%) respectively, largely boosted by 6 Chin Bee Avenue, a warehouse acquired in Jan '17, as well as higher contribution from crown jewel Viva Business Park.
- Portfolio occupancy dipped 0.3ppt q/q to 90.6%, while aggregate leverage ticked up 0.2ppt to 39.8%.
- Trading at annualised 4Q yield of 7.9% and 1.23x P/B.
*CDL Hospitality Trusts
- Post-rights 4Q17 DPS of 2.83 (-5.7%) met expectations.
- Revenue jumped 14.3% to $55.2m on new contributions from recently-acquired The Lowry Hotel in UK and Pullman Hotel Munich in Germany.
- NPI grew at a slower 7.8% to $40.6m on higher expenses at its Japan, New Zealand properties, as well as negative contribution from the Dhevanafushi Maldives Luxury Resort.
- Notably, domestic RevPAR improved 1.1% to $155 despite strong supply.
- Aggregate leverage fell to 32.6% (-0.7ppt).
- Trades at annualised 4Q DPS of 6.2% and 1.19x P/B.
*Ascott Residence Trust
- 4Q17 DPU was flat at 2.04¢ despite the enlarged unitbase (+30%) post-rights, as distributable income of $43.9m (+30%) was boosted by partial distributions of divestment gains.
- This brought FY17 DPU to 7.09¢ (-12%), meeting estimates.
- For the quarter, revenue and gross profit both grew 6% to $134.5m and $61.8m, respectively, lifted by inorganic growth from the New York hotel and two German serviced residences.
- Portfolio RevPAU increased 5% to $155.
- However, aggregate leverage jumped to 34.5% (+2.6ppt q/q).
- Trading at an annualised 4Q yield of 6.5% and 1x P/B.
*Sabana REIT
- 4Q17 DPU lowered 5.7% to 0.83¢ due to an enlarged unit base (+24.5%) and cash payment of management fees.
- Gross revenue slid 9.5% to $20.4m due to absence of income from properties located at 1 Tuas Avenue 4 and 6 Woodlands Loop and weaker contribution from five properties.
- NPI saw a smaller decline to $13.7m (-1.3%) from a net reversal of impairment losses and lower property expenses.
- Portfolio occupancy slipped 3ppt q/q to 85.4%, while aggregate leverage rose to 38.2% (+2.2ppt q/q).
- Trades at annualised 4Q yield of 8% and 0.77x P/B.
POSITIVE NEWS
*PEC
- Awarded $40m worth of new engineering and construction projects for local and overseas petrochemical clients.
- Projects are expected to be completed by end-2018.
- Trades at 10.9x trailing P/E.
NEGATIVE NEWS
*Heatec Jietong
- Warned of a net loss for FY17 due to lower sales from the piping and heat exchanger segments, and a loss on liquidation of $1m upon winding up of 72.5%-owned Heatec Chariot Envirobotics.
NEUTRAL
*Ying Li
- Substantial shareholder China Everbright acquired 153.4m shares on 23 Jan via a married deal at $0.135 apiece.
- This lifted its stake from 22.92% to 28.92% and will remain as the second largest shareholder.
- The counter trades at 0.54x P/B.
*Moya Holdings
- Controlling shareholder Tamaris Infrastructure acquired 200m shares on 25 Jan at $0.10 apiece from second largest shareholder Moya Holding Co.
- This raised Tamaris' stake from 61.8% to 68.9%, while Moya Holding Co was reduced from 17.4% to 10.21%.
- Trades at 32.2x trailing P/E.
*Hup Steel
- Rented out its industrial building at 6 Kim Chuan Drive for 5 years from Jan '18, and will receive rental income for FY18.
*Datapulse Technology
- Engaged Ernst and Young Solutions LLP to conduct a strategic review on its newly-acquired hair and homecare chemical manufacturer Wayco manufacturing.
*Olam
- Issued 1.4m new shares in relation to a warrant exercise at US$1.09 each.
- 11.1m outstanding warrants remains, which expires on 29 Jan 2018.
- Likely to see further profit-taking as sentiment is spooked by talk of a potential trade war between US and China and mixed signals on the direction for USD.
- O&G names are likely to also see pressure after bellwether Keppel Corp reported worse-than-expected 4Q results.
- Technically, underlying support for the STI lies at 3,510, with topside resistance at 3,640.
CORPORATE RESULTS
*Keppel Corp
- 4Q17 swung into a net loss of $492.8m (4Q16: $143.1m profit), hurt by a $618.7m financial penalty and related costs, which dragged FY17 earnings to $216.7m (-72%).
- Excluding the one-off charge, net profit of $835.4m (+7%) came in 5% below consensus estimate.
- In 4Q, O&M bled $217m loss after booking additional provision for Sete Brasil projects ($81m) and asset impairment ($54m).
- Order book still weak at $3.9b.
- Property was biggest earner at $287m, mainly boosted by fair value gains ($178m).
- Higher final DPS of 14¢ (4Q16: 12¢) brought full year payout to 22¢ (FY16: 20¢).
- Trades at 16.3x forward P/E.
*Ascendas REIT
- 3QFY18 DPU dipped 0.6% to 3.97¢ due to a one-off property tax refund last year and larger unit base.
- This brought 9MFY18 payout to 12.078¢ (+1.6%), meeting estimates.
- For the quarter, gross revenue and NPI rose 4.1% and 1.7% to $217.3m and $157.6m, from newly acquired in Singapore and Australia.
- Overall portfolio occupancy declined 1.8ppt q/q to 90.2%, while rental reversion was up 3.1%.
- Aggregate leverage climbed 2.1ppt q/q to 35.2%.
- Trades at annualised 3QFY18 yield of 5.8% and 1.33x P/B.
- MKE keeps Buy with TP of $3.05.
*ParkwayLife REIT
- 4Q17 DPU of 3.38¢ (+10.6%) was boosted by divestment gain of 0.23¢, lifting FY17 payout to 13.35¢ (+10.2%), in line with estimates.
- For the quarter, gross revenue (-0.2%) and NPI (+0.2%) of $27.5m and $25.7m, respectively, were relatively flat as JPY depreciation was offset by higher rents received from SG properties.
- Aggregate leverage was stable at 36.4% (-0.9ppt q/q).
- Trades at annualised 4Q yield of 5.1% and 1.69x P/B.
*Mapletree Greater China Commercial Trust
- 3QFY18 DPU climbed 5.1% to 1.868¢, due to lower finance costs (-8.9%).
- This brought 9MFY18 payout to 5.582¢ (+3.6%) or 75% of FY18 street expectations.
- Quarter gross revenue edged higher by 0.7% from higher rental rates at all three properties, as well as stronger HKD and CNY against SGD.
- NPI, however, stagnated at $71.4m due to higher property expenses (+3.8%) associated mainly with Festival Walk in Hong Kong.
- Portfolio occupancy fell 1.3ppt q/q to 96.9%, while aggregate leverage edged higher to 39.3% (+0.8ppt q/q).
- Last traded at annualised 3Q yield of 5.9% and 1.03x P/B.
*Frasers Logistics & Industrial Trust
- 1QFY18 results came slightly below expectations, as DPU climbed 3.4% to 1.80¢.
- Revenue and adjusted NPI grew to A$42.4m (+7%) and A$33.4m (+9%), lifted by several properties acquired since Nov '16, and two development properties in Australia achieving practical completion in Oct-Nov '17.
- Portfolio occupancy was stable at 99.4%, while aggregate leverage rose 1.6ppt q/q to 30.9%.
- Trading at annualised 1QFY18 yield of 6.2% and 1.27x P/B.
*Viva Industrial Trust
- 4Q17 DPU rose 5.5% to 1.857¢ and lifted FY17 payout to 7.472¢ (+7.4%), meeting estimate.
- Quarter's revenue and NPI jumped to $28.3m (+11%) and $20.6m (+14%) respectively, largely boosted by 6 Chin Bee Avenue, a warehouse acquired in Jan '17, as well as higher contribution from crown jewel Viva Business Park.
- Portfolio occupancy dipped 0.3ppt q/q to 90.6%, while aggregate leverage ticked up 0.2ppt to 39.8%.
- Trading at annualised 4Q yield of 7.9% and 1.23x P/B.
*CDL Hospitality Trusts
- Post-rights 4Q17 DPS of 2.83 (-5.7%) met expectations.
- Revenue jumped 14.3% to $55.2m on new contributions from recently-acquired The Lowry Hotel in UK and Pullman Hotel Munich in Germany.
- NPI grew at a slower 7.8% to $40.6m on higher expenses at its Japan, New Zealand properties, as well as negative contribution from the Dhevanafushi Maldives Luxury Resort.
- Notably, domestic RevPAR improved 1.1% to $155 despite strong supply.
- Aggregate leverage fell to 32.6% (-0.7ppt).
- Trades at annualised 4Q DPS of 6.2% and 1.19x P/B.
*Ascott Residence Trust
- 4Q17 DPU was flat at 2.04¢ despite the enlarged unitbase (+30%) post-rights, as distributable income of $43.9m (+30%) was boosted by partial distributions of divestment gains.
- This brought FY17 DPU to 7.09¢ (-12%), meeting estimates.
- For the quarter, revenue and gross profit both grew 6% to $134.5m and $61.8m, respectively, lifted by inorganic growth from the New York hotel and two German serviced residences.
- Portfolio RevPAU increased 5% to $155.
- However, aggregate leverage jumped to 34.5% (+2.6ppt q/q).
- Trading at an annualised 4Q yield of 6.5% and 1x P/B.
*Sabana REIT
- 4Q17 DPU lowered 5.7% to 0.83¢ due to an enlarged unit base (+24.5%) and cash payment of management fees.
- Gross revenue slid 9.5% to $20.4m due to absence of income from properties located at 1 Tuas Avenue 4 and 6 Woodlands Loop and weaker contribution from five properties.
- NPI saw a smaller decline to $13.7m (-1.3%) from a net reversal of impairment losses and lower property expenses.
- Portfolio occupancy slipped 3ppt q/q to 85.4%, while aggregate leverage rose to 38.2% (+2.2ppt q/q).
- Trades at annualised 4Q yield of 8% and 0.77x P/B.
POSITIVE NEWS
*PEC
- Awarded $40m worth of new engineering and construction projects for local and overseas petrochemical clients.
- Projects are expected to be completed by end-2018.
- Trades at 10.9x trailing P/E.
NEGATIVE NEWS
*Heatec Jietong
- Warned of a net loss for FY17 due to lower sales from the piping and heat exchanger segments, and a loss on liquidation of $1m upon winding up of 72.5%-owned Heatec Chariot Envirobotics.
NEUTRAL
*Ying Li
- Substantial shareholder China Everbright acquired 153.4m shares on 23 Jan via a married deal at $0.135 apiece.
- This lifted its stake from 22.92% to 28.92% and will remain as the second largest shareholder.
- The counter trades at 0.54x P/B.
*Moya Holdings
- Controlling shareholder Tamaris Infrastructure acquired 200m shares on 25 Jan at $0.10 apiece from second largest shareholder Moya Holding Co.
- This raised Tamaris' stake from 61.8% to 68.9%, while Moya Holding Co was reduced from 17.4% to 10.21%.
- Trades at 32.2x trailing P/E.
*Hup Steel
- Rented out its industrial building at 6 Kim Chuan Drive for 5 years from Jan '18, and will receive rental income for FY18.
*Datapulse Technology
- Engaged Ernst and Young Solutions LLP to conduct a strategic review on its newly-acquired hair and homecare chemical manufacturer Wayco manufacturing.
*Olam
- Issued 1.4m new shares in relation to a warrant exercise at US$1.09 each.
- 11.1m outstanding warrants remains, which expires on 29 Jan 2018.
Wednesday, January 24, 2018
SG Market (24 Jan 18)
MARKET OVERVIEW
- The local market could continue to hum along with the global rally, while sustained crude prices and optimism over a revival of new orders is triggering a raft of re-rating in offshore marine stocks.
- Technically, the STI has broken above the 3,550 resistance and is headed towards the next objective at 3,640. Underlying support now lies at 3,510.
CORPORATE RESULTS
*M1
- 4Q17 net profit of $31m (-2.5%) brought FY17 earnings to $132.5m (-11.5%), in line with estimates.
- Operating revenue dipped 2.1% to $307.2m on weak handset sales but service revenue improved 7% from increased post-paid mobile customers and fixed services turnover.
- Competition is expected to intensify this year with anticipated entry of new telecom operators.
- Declared a higher final DPS of 6.2¢ (4Q16: 5.9¢), taking full year payout to 11.4¢ (FY16: 12.9¢).
- Trades at 14.7x FY18e P/E.
- MKE maintains Sell with TP of $1.63.
*CapitaLand Mall Trust
- 4Q17 DPU of 2.9¢ (+0.7%) brought FY17 payout to 11.16¢, meeting estimates.
- Quarter revenue inched up 1.8% to $172.4m while NPI rose 2.6% to $119.3m on higher occupancy for Bugis Junction and The Atrium@Orchard, albeit dented by lower rentals at Bedok Mall.
- FY17 shopper traffic dipped 0.3% (9M17: +0.2%), while tenant sales was flat.
- Portfolio occupancy inched up 0.2ppt q/q to 99.2%, while aggregate leverage lowered to 34.2% (-0.5ppt q/q).
- Trades at annualised 4Q yield of 5.7% and 1.05x P/B.
*Frasers Centrepoint Trust (FCT)
- 1QFY18 DPU of 3¢ (+3.8%) was in line.
- Revenue and NPI jumped 8.7% and 7.7% to $47.9m and $34.5m, respectively, on higher contributions from Northpoint City North Wing (post AEI), Causeway Point and Changi City Point.
- Occupancy climbed to 92.6% (+0.6ppt q/q), while rental reversion moderated from +8.3% to +1%.
- Aggregate leverage held steady at 29.4% (+0.4ppt q/q).
- Within retail REIT space, MKE perfers FCT for its visible growth drivers and potential acquisition catalysts.
- Trades at an annualised 1Q yield of 5.2% and 1.1x P/B.
- MKE has a Buy with revised TP of $2.55.
*Suntec REIT
- 4QFY17 DPU of 2.604¢ (+0.3%) met expectations, and was supported by higher capital distribution (+19.7%).
- This brought FY17 payout of 10.01¢ (flat) in line with estimates.
- Gross revenue and NPI slipped to $87.3m (-1.8%) and $59.4m (-2.2%), respectively, due to lower contribution from Suntec Singapore convention centre and the office segment.
- Office committed occupancy rose 0.7ppt q/q to 99.7%, while retail occupancy held steady at 98.8%.
- Aggregate leverage eased 0.4ppt q/q to 36.4%.
- Trades at 4Q annualised yield of 4.8% and 1x P/B.
*Mapletree Industrial Trust
- 3QFY18 DPU of 2.88¢ (+1.8%) took 9MFY18 payout to 8.8¢ (+3.4%) or 74% of full year consensus estimate.
- For the quarter, revenue and NPI jumped to $91.5m (+8.3%) and $70.9m (+11.7%), driven by its build-to-suit project for HP Singapore although portfolio occupancy was lower.
- Average passing monthly rents of Singapore properties inched 1.5% higher to $1.97 psf.
- Portfolio occupancy was steady at 90.5% (+0.1ppt q/q), while aggregate leverage expanded 3.8ppt q/q to 33.8%.
- Last traded at an annualised 3Q yield of 5.6% and 1.46x P/B.
*Keppel REIT
- 4Q17 DPU slipped 3.4% to 1.43¢, weighed by reduced rental support and higher borrowing cost.
- This took FY17 DPU to 5.70¢ (-10.5%), at the lower end of street estimates.
- Quarter rental revenue inched 1.3% higher to $38.6m from increased contributions from Bugis Junction (+4.7%), Ocean Financial Centre (13.9%) and 8 Exhibition Street (+12.3%).
- NPI surged 15.3% to $36.2m on a lower property tax (-13.1%).
- Portfolio occupancy ticked up 0.1ppt q/q to 99.7%, while aggregate leverage eased to 38.7% (+0.1ppt q/q).
- Trades at 4Q17 annualised yield of 4.3% and 0.94x P/B.
*Fortune REIT
- FY17 DPU of HK$0.5078 (+3.1%) came in line with estimates, in tandem with a 3.8% increase in distributable income to HK$970.8m.
- Revenue grew 2.8% to HK$2.03b on a positive 12.8% rental reversion, while NPI climbed 3.3% to HK$1.46b on lower electricity consumption.
- Portfolio occupancy expanded to 98.1% (1H17: 96.6%), while aggregate leverage slipped to 27.4% (1H17: 28.4%).
- Trades at 5.2% FY17 yield and 0.7x P/B.
POSITIVE NEWS
*Frasers Commercial Trust
- Private placement of 55.6m new units at $1.48 each, priced at the top end of its $1.44-$1.48 range.
- The placement was over five times subscribed.
- Net proceeds of $98.5m will be used to partially fund the proposed acquisition of a 50% interest in Farnborough Business Park in UK.
- At $1.55, the REIT trades at an annualised 1Q yield of 6.2% and 1x P/B.
*Clearbridge Health
- Assigned as the exclusive distributor for MILS International's proprietary diagnostic tests in 11 countries, including Singapore, India, Indonesia, Malaysia, the Philippines, Korea, Taiwan, Thailand, Vietnam, Australia and Hong Kong.
- The distributor rights is valid for two years.
- Tests are able to provide health reports to guide individuals to take preventive measures and address lifestyle disorders.
- MILS is an institution of research and medical examination headquartered in Japan, and focuses on diagnosing metabolic diseases in the early stages.
*China Everbright Water
- Received a provincial government subsidy of Rmb41.1m for its Zhenjiang Sponge City Public-Private Partnership project.
- The project commenced in 2016 with a total investment cost of Rmb2.585b, of which Rmb1.2b is subsidized by the Chinese government and remaining Rmb1.385b from a JV with Zhenjiang Waterworks Corp.
- All construction works of the project are expected to complete this year.
- Last traded at 14.1x forward P/E.
*China Kunda Technology
- Expected to report a significant jump in 3QFY18 net profit due to higher-than-expected disposal income of automobile moulds.
- 3QFY18 results to be announced before 14 Feb '18.
NEUTRAL NEWS
*KSH/ Oxley/ Lian Beng/ Heeton
- The consortium will subscribe to a 72.5% stake in Hebei Yue Zhi Real Estate Development, to kickstart its land in Gaobeidian, Hebei.
- The remaining 27.5% will be held by Beijing Jia Hua Hong Yuan Investment (22.5%) and Gaobeidian City Lei Hua Yi Wei Sport Development (5%).
- Within the 72.5% stake, KSH has the majority 22.5%, with the remaining 50% owned by a JV between Oxley (55%), Lian Beng (20%), Heeton (15%) and an undisclosed party.
*Metro
- Entered into 50:50 JV with Lee Kim Tah Group to acquire a freehold office property in London at 5 Chancery Lane for £80.8m.
- The office building has 84.836 sf of office and ancillary facilities across eight storeys and is located in a central and tradition office location.
- The property is fully leased until 2023 and produces annual rental income of £4m, or £47.2 psf, reflecting an initial gross yield of 4.95%.
- Last traded at 14.6x trailing P/E.
*Acromec
- Proposed placement of 16m new shares (13.1% existing share capital) at $0.24 apiece to seven subscribers.
- Net proceeds of $3.8m will be used for working capital.
*Olam
- Issued 1.35m new shares in relation to a warrant exercise at US$1.09 each.
- 14.6m outstanding warrants remains, which expires on 29 Jan 2018.
- The local market could continue to hum along with the global rally, while sustained crude prices and optimism over a revival of new orders is triggering a raft of re-rating in offshore marine stocks.
- Technically, the STI has broken above the 3,550 resistance and is headed towards the next objective at 3,640. Underlying support now lies at 3,510.
CORPORATE RESULTS
*M1
- 4Q17 net profit of $31m (-2.5%) brought FY17 earnings to $132.5m (-11.5%), in line with estimates.
- Operating revenue dipped 2.1% to $307.2m on weak handset sales but service revenue improved 7% from increased post-paid mobile customers and fixed services turnover.
- Competition is expected to intensify this year with anticipated entry of new telecom operators.
- Declared a higher final DPS of 6.2¢ (4Q16: 5.9¢), taking full year payout to 11.4¢ (FY16: 12.9¢).
- Trades at 14.7x FY18e P/E.
- MKE maintains Sell with TP of $1.63.
*CapitaLand Mall Trust
- 4Q17 DPU of 2.9¢ (+0.7%) brought FY17 payout to 11.16¢, meeting estimates.
- Quarter revenue inched up 1.8% to $172.4m while NPI rose 2.6% to $119.3m on higher occupancy for Bugis Junction and The Atrium@Orchard, albeit dented by lower rentals at Bedok Mall.
- FY17 shopper traffic dipped 0.3% (9M17: +0.2%), while tenant sales was flat.
- Portfolio occupancy inched up 0.2ppt q/q to 99.2%, while aggregate leverage lowered to 34.2% (-0.5ppt q/q).
- Trades at annualised 4Q yield of 5.7% and 1.05x P/B.
*Frasers Centrepoint Trust (FCT)
- 1QFY18 DPU of 3¢ (+3.8%) was in line.
- Revenue and NPI jumped 8.7% and 7.7% to $47.9m and $34.5m, respectively, on higher contributions from Northpoint City North Wing (post AEI), Causeway Point and Changi City Point.
- Occupancy climbed to 92.6% (+0.6ppt q/q), while rental reversion moderated from +8.3% to +1%.
- Aggregate leverage held steady at 29.4% (+0.4ppt q/q).
- Within retail REIT space, MKE perfers FCT for its visible growth drivers and potential acquisition catalysts.
- Trades at an annualised 1Q yield of 5.2% and 1.1x P/B.
- MKE has a Buy with revised TP of $2.55.
*Suntec REIT
- 4QFY17 DPU of 2.604¢ (+0.3%) met expectations, and was supported by higher capital distribution (+19.7%).
- This brought FY17 payout of 10.01¢ (flat) in line with estimates.
- Gross revenue and NPI slipped to $87.3m (-1.8%) and $59.4m (-2.2%), respectively, due to lower contribution from Suntec Singapore convention centre and the office segment.
- Office committed occupancy rose 0.7ppt q/q to 99.7%, while retail occupancy held steady at 98.8%.
- Aggregate leverage eased 0.4ppt q/q to 36.4%.
- Trades at 4Q annualised yield of 4.8% and 1x P/B.
*Mapletree Industrial Trust
- 3QFY18 DPU of 2.88¢ (+1.8%) took 9MFY18 payout to 8.8¢ (+3.4%) or 74% of full year consensus estimate.
- For the quarter, revenue and NPI jumped to $91.5m (+8.3%) and $70.9m (+11.7%), driven by its build-to-suit project for HP Singapore although portfolio occupancy was lower.
- Average passing monthly rents of Singapore properties inched 1.5% higher to $1.97 psf.
- Portfolio occupancy was steady at 90.5% (+0.1ppt q/q), while aggregate leverage expanded 3.8ppt q/q to 33.8%.
- Last traded at an annualised 3Q yield of 5.6% and 1.46x P/B.
*Keppel REIT
- 4Q17 DPU slipped 3.4% to 1.43¢, weighed by reduced rental support and higher borrowing cost.
- This took FY17 DPU to 5.70¢ (-10.5%), at the lower end of street estimates.
- Quarter rental revenue inched 1.3% higher to $38.6m from increased contributions from Bugis Junction (+4.7%), Ocean Financial Centre (13.9%) and 8 Exhibition Street (+12.3%).
- NPI surged 15.3% to $36.2m on a lower property tax (-13.1%).
- Portfolio occupancy ticked up 0.1ppt q/q to 99.7%, while aggregate leverage eased to 38.7% (+0.1ppt q/q).
- Trades at 4Q17 annualised yield of 4.3% and 0.94x P/B.
*Fortune REIT
- FY17 DPU of HK$0.5078 (+3.1%) came in line with estimates, in tandem with a 3.8% increase in distributable income to HK$970.8m.
- Revenue grew 2.8% to HK$2.03b on a positive 12.8% rental reversion, while NPI climbed 3.3% to HK$1.46b on lower electricity consumption.
- Portfolio occupancy expanded to 98.1% (1H17: 96.6%), while aggregate leverage slipped to 27.4% (1H17: 28.4%).
- Trades at 5.2% FY17 yield and 0.7x P/B.
POSITIVE NEWS
*Frasers Commercial Trust
- Private placement of 55.6m new units at $1.48 each, priced at the top end of its $1.44-$1.48 range.
- The placement was over five times subscribed.
- Net proceeds of $98.5m will be used to partially fund the proposed acquisition of a 50% interest in Farnborough Business Park in UK.
- At $1.55, the REIT trades at an annualised 1Q yield of 6.2% and 1x P/B.
*Clearbridge Health
- Assigned as the exclusive distributor for MILS International's proprietary diagnostic tests in 11 countries, including Singapore, India, Indonesia, Malaysia, the Philippines, Korea, Taiwan, Thailand, Vietnam, Australia and Hong Kong.
- The distributor rights is valid for two years.
- Tests are able to provide health reports to guide individuals to take preventive measures and address lifestyle disorders.
- MILS is an institution of research and medical examination headquartered in Japan, and focuses on diagnosing metabolic diseases in the early stages.
*China Everbright Water
- Received a provincial government subsidy of Rmb41.1m for its Zhenjiang Sponge City Public-Private Partnership project.
- The project commenced in 2016 with a total investment cost of Rmb2.585b, of which Rmb1.2b is subsidized by the Chinese government and remaining Rmb1.385b from a JV with Zhenjiang Waterworks Corp.
- All construction works of the project are expected to complete this year.
- Last traded at 14.1x forward P/E.
*China Kunda Technology
- Expected to report a significant jump in 3QFY18 net profit due to higher-than-expected disposal income of automobile moulds.
- 3QFY18 results to be announced before 14 Feb '18.
NEUTRAL NEWS
*KSH/ Oxley/ Lian Beng/ Heeton
- The consortium will subscribe to a 72.5% stake in Hebei Yue Zhi Real Estate Development, to kickstart its land in Gaobeidian, Hebei.
- The remaining 27.5% will be held by Beijing Jia Hua Hong Yuan Investment (22.5%) and Gaobeidian City Lei Hua Yi Wei Sport Development (5%).
- Within the 72.5% stake, KSH has the majority 22.5%, with the remaining 50% owned by a JV between Oxley (55%), Lian Beng (20%), Heeton (15%) and an undisclosed party.
*Metro
- Entered into 50:50 JV with Lee Kim Tah Group to acquire a freehold office property in London at 5 Chancery Lane for £80.8m.
- The office building has 84.836 sf of office and ancillary facilities across eight storeys and is located in a central and tradition office location.
- The property is fully leased until 2023 and produces annual rental income of £4m, or £47.2 psf, reflecting an initial gross yield of 4.95%.
- Last traded at 14.6x trailing P/E.
*Acromec
- Proposed placement of 16m new shares (13.1% existing share capital) at $0.24 apiece to seven subscribers.
- Net proceeds of $3.8m will be used for working capital.
*Olam
- Issued 1.35m new shares in relation to a warrant exercise at US$1.09 each.
- 14.6m outstanding warrants remains, which expires on 29 Jan 2018.
Tuesday, January 23, 2018
SG Market (23 Jan 18)
MARKET OVERVIEW
- Market sentiment is expected to stay buoyant as momentum continued to be supported up by the record-breaking runs in US and HK, as well as upwardly revised IMF global growth forecast.
- Technically, the STI has broken above the 3,550 resistance and is headed towards the next objective at 3,640. Underlying support now lies at 3,510.
CORPORATE RESULTS
*Mapletree Logistics Trust
- 3QFY18 results in line as DPU rose 2% to 1.907¢ despite an enlarged unit base (+22.3%).
- This brought 9MFY18 payout to 5.681¢ (+1.8%).
- Gross revenue grew 2.8% to $98.2m while NPI rose 3.9% to $83m, on higher contributions from existing HK and Australian properties, but was partially pared by absence of rentals from three divested assets and one of two blocks under development at Ouluo Logistic Centre.
- Portfolio occupancy expanded to 96.2% (+0.4ppt q/q), while aggregate leverage jumped 4.1ppt q/q to 37.8%.
- Trades at an annualised 3QFY18 yield of 5.7% and 1.29x P/B.
*Keppel DC REIT
- 4Q17 DPU of 1.75¢ (+33.6%) was boosted by a one-time capital distribution.
- This brought full-year DPU to 7.12¢, meeting forecast.
- Gross revenue of $36.8m (+37.2%) and NPI of $32.6m (+30.9%) were lifted by recent data centre acquisitions in Dublin, Milan, Cardiff and Singapore (90%), as well as higher variable income from KDC Singapore 1.
- Portfolio occupancy dipped 1.8ppt q/q to 92.6%, while aggregate leverage expanded 3.8ppt to 32.1%.
- Trades at 4.8% FY17 yield and 1.5x P/B.
*Frasers Commercial Trust
- 1QFY18 DPU slipped 4% to 2.4¢, in line with estimates.
- Revenue of 35.3m (-11%) and NPI of $26.7m (-15%) were weighed by lower occupancy rates for Alexandra Technopark, China Square Central, 55 Market Street and Central Park, and further impacted by a weaker AUD.
- Portfolio occupancy inched up 0.7ppt q/q to 86.6%, while aggregate leverage was stable at 34.8% (+0.1ppt q/q).
- Trades at annualised 1Q yield of 6.2% and 1x P/B.
*Keppel Infrastructure Trust
- Flat 4Q17 DPU of 0.93¢ brought FY17 DPU to 3.72¢ (unch), meeting expectations.
- Quarter's revenue edged 3.9% higher to $158.1m on stronger takings from City Gas (+8.4%) and Basslink (+10.1%) partially offset by weaker contributions from concessions (-3.6%) and Keppel Merlimau Cogen (-1.8%).
- Aggregate leverage stood at 39.9% (+0.2ppt q/q).
- Notably, NAV declined 1.6% to $0.299 due to distributions as well as marked-to-market valuations of derivative financial instruments.
- Trades at 6.4% FY17 yield and 1.96x P/B.
POSITIVE NEWS
*Singtel
- Sold a 14.14% direct stake in data centre services provider CS Loxinfo for 654m baht ($27m).
- The sale was to 23.3% owned Thai associate Advanced Info Service following its tender offer in CS Loxinfo.
- Trades at 15x P/E and 4.8% indicative yield.
*AEM
- Lifted FY17 net profit guidance from at least $32m to $35-$37m, due to higher sales, better product mix and operational efficiency.
- Results slated to be released 23 Feb.
- Further, group guided for FY18 revenue of at least $255m and $42m in operating profit.
- Counter is a core constituent of the Market Insight growth basket.
- Last traded at 9.1x forward P/E.
*Metro
- Divesting its entire 30% interest in Nanchang Top Spring to H-Change Real Estate for Rmb627.7m.
- Nanchang Top Spring is the developer of Nanchang Fashion Mark, a mixed development comprising residential, office and retail components located at Hong Gu Tan CBD in Nanchang city in China.
- The divestment is expected to result in a divestment gain of $8.6m.
- Trades at 14.6x trailing P/E.
*Spackman Entertainment
- Top-tier Korean actress Son Ye-jin and rising star Wi Ha-jun, both represented by Spackman's associate, are set to star in a 16-episode Korean drama "Pretty Sister Who Buys Me Food".
- The drama with an undisclosed budget will be aired in Mar '18 and will mark the return of one of the highest paid actress to TV since 2013.
- Trades at 17x forward P/E.
*Lum Chang
- Awarded construction contract worth $136.9m by PSA.
- Project involves PSA Singapore's corporate headquarters and alternation works at the existing Pasir Panjang Terminal Building 3.
- Contract period is 26 months, bringing order book to $679.5m.
- Trades at 7.2x trailing P/E.
*Ley Choon
- Awarded $6m contract from PUB Singapore for the supply and laying of NEWater mains.
- Last traded at 2.8x trailing P/E.
NEUTRAL NEWS
*Zico
- Proposed 50% stake acquisition of immigration service provider Fragomen Malaysia.
- Consideration will be equal to 50% of 1.03x of total billing revenue of Fragomen.
- Management believes that acquisition will enlarge its income base and complement its existing business.
- Last traded at 42.2x trailing P/E.
- Market sentiment is expected to stay buoyant as momentum continued to be supported up by the record-breaking runs in US and HK, as well as upwardly revised IMF global growth forecast.
- Technically, the STI has broken above the 3,550 resistance and is headed towards the next objective at 3,640. Underlying support now lies at 3,510.
CORPORATE RESULTS
*Mapletree Logistics Trust
- 3QFY18 results in line as DPU rose 2% to 1.907¢ despite an enlarged unit base (+22.3%).
- This brought 9MFY18 payout to 5.681¢ (+1.8%).
- Gross revenue grew 2.8% to $98.2m while NPI rose 3.9% to $83m, on higher contributions from existing HK and Australian properties, but was partially pared by absence of rentals from three divested assets and one of two blocks under development at Ouluo Logistic Centre.
- Portfolio occupancy expanded to 96.2% (+0.4ppt q/q), while aggregate leverage jumped 4.1ppt q/q to 37.8%.
- Trades at an annualised 3QFY18 yield of 5.7% and 1.29x P/B.
*Keppel DC REIT
- 4Q17 DPU of 1.75¢ (+33.6%) was boosted by a one-time capital distribution.
- This brought full-year DPU to 7.12¢, meeting forecast.
- Gross revenue of $36.8m (+37.2%) and NPI of $32.6m (+30.9%) were lifted by recent data centre acquisitions in Dublin, Milan, Cardiff and Singapore (90%), as well as higher variable income from KDC Singapore 1.
- Portfolio occupancy dipped 1.8ppt q/q to 92.6%, while aggregate leverage expanded 3.8ppt to 32.1%.
- Trades at 4.8% FY17 yield and 1.5x P/B.
*Frasers Commercial Trust
- 1QFY18 DPU slipped 4% to 2.4¢, in line with estimates.
- Revenue of 35.3m (-11%) and NPI of $26.7m (-15%) were weighed by lower occupancy rates for Alexandra Technopark, China Square Central, 55 Market Street and Central Park, and further impacted by a weaker AUD.
- Portfolio occupancy inched up 0.7ppt q/q to 86.6%, while aggregate leverage was stable at 34.8% (+0.1ppt q/q).
- Trades at annualised 1Q yield of 6.2% and 1x P/B.
*Keppel Infrastructure Trust
- Flat 4Q17 DPU of 0.93¢ brought FY17 DPU to 3.72¢ (unch), meeting expectations.
- Quarter's revenue edged 3.9% higher to $158.1m on stronger takings from City Gas (+8.4%) and Basslink (+10.1%) partially offset by weaker contributions from concessions (-3.6%) and Keppel Merlimau Cogen (-1.8%).
- Aggregate leverage stood at 39.9% (+0.2ppt q/q).
- Notably, NAV declined 1.6% to $0.299 due to distributions as well as marked-to-market valuations of derivative financial instruments.
- Trades at 6.4% FY17 yield and 1.96x P/B.
POSITIVE NEWS
*Singtel
- Sold a 14.14% direct stake in data centre services provider CS Loxinfo for 654m baht ($27m).
- The sale was to 23.3% owned Thai associate Advanced Info Service following its tender offer in CS Loxinfo.
- Trades at 15x P/E and 4.8% indicative yield.
*AEM
- Lifted FY17 net profit guidance from at least $32m to $35-$37m, due to higher sales, better product mix and operational efficiency.
- Results slated to be released 23 Feb.
- Further, group guided for FY18 revenue of at least $255m and $42m in operating profit.
- Counter is a core constituent of the Market Insight growth basket.
- Last traded at 9.1x forward P/E.
*Metro
- Divesting its entire 30% interest in Nanchang Top Spring to H-Change Real Estate for Rmb627.7m.
- Nanchang Top Spring is the developer of Nanchang Fashion Mark, a mixed development comprising residential, office and retail components located at Hong Gu Tan CBD in Nanchang city in China.
- The divestment is expected to result in a divestment gain of $8.6m.
- Trades at 14.6x trailing P/E.
*Spackman Entertainment
- Top-tier Korean actress Son Ye-jin and rising star Wi Ha-jun, both represented by Spackman's associate, are set to star in a 16-episode Korean drama "Pretty Sister Who Buys Me Food".
- The drama with an undisclosed budget will be aired in Mar '18 and will mark the return of one of the highest paid actress to TV since 2013.
- Trades at 17x forward P/E.
*Lum Chang
- Awarded construction contract worth $136.9m by PSA.
- Project involves PSA Singapore's corporate headquarters and alternation works at the existing Pasir Panjang Terminal Building 3.
- Contract period is 26 months, bringing order book to $679.5m.
- Trades at 7.2x trailing P/E.
*Ley Choon
- Awarded $6m contract from PUB Singapore for the supply and laying of NEWater mains.
- Last traded at 2.8x trailing P/E.
NEUTRAL NEWS
*Zico
- Proposed 50% stake acquisition of immigration service provider Fragomen Malaysia.
- Consideration will be equal to 50% of 1.03x of total billing revenue of Fragomen.
- Management believes that acquisition will enlarge its income base and complement its existing business.
- Last traded at 42.2x trailing P/E.
Monday, January 22, 2018
SG Market (22 Jan 18)
MARKET OVERVIEW
- The market could consolidate at current levels as the 4Q corporate results season gets underway with REITs and Keppel units in focus, while investors look to Dec industrial production data for fresh direction.
- Technically, the STI could face some short term hurdle at the 3,550 resistance area, before heading for the next objective at 3,640, while downside support lies at 3,470.
CORPORATE EARNINGS
SGX
- Flat 2QFY18 net profit of $88.4m (+0.1%) met street estimates.
- Revenue grew 2.7% to $205m as a decline in equities and fixed income (-4%) business was offset by increased derivatives (+11%) and market data and connectivity (+4%) fees.
- Securities average daily traded value rose 4% to $1.14b on total value of $71.6b (+3%).
- Operating margin narrowed to 50.1% (-1.2ppt) on higher staff costs (+9.4%) and technology expenses (+8.9%).
- Interim DPS maintained at 5¢.
- Plans to introduce dual-class shares to attract new tech IPOs, with first listing after Jun.
- Last traded at 23.1x forward P/E.
POSITIVE NEWS
*ST Engineering
- Electronic unit clinched new contracts worth $742m in 4Q17 (3Q17: $585m).
- These comprise contracts such as rail electronics & intelligent transportation, satellite & broadband communications, as well as advanced electronics and ICT solutions.
- This brought FY17 new electronics orders to $2.24b (FY16: $2.33b).
- Trading at 21.3x forward P/E and offers 4.5% dividend yield.
*Roxy-Pacific
- Entered conditional agreement to purchase residential project Kismis View for $102.8m via a 60:40 JV with Tong Eng Group.
- Pricing for the 99-year 90,863 sf residential site translates to $855 psf ppr.
- Trades at 1.31x P/B.
NEGATIVE NEWS
*Food Empire
- Expected to incur a 4Q17 loss due to a US$10m write down on 22.8% owned Caffe Bene.
- Coffee Bene is currently in the midst of court proceedings to secure a corporate rehabilitation process due to excessive debts.
- Last traded at 15x forward P/E.
NEUTRAL NEWS
*Cogent/ Cosco Shipping
- Cash offer of $1.02/share by Cosco Shipping has attained 98.31% of total acceptances.
- A compulsory acquisition for Cogent's remaining shares will be made by Cosco.
*Rotary Eng
- Joint cash offer of $0.46/share by its controlling family and the Oman government has attained 86.3% in total acceptances as at 19 Jan.
- The offer will close on 24 Jan, 5.30pm.
*Olam
- Issued 706,432 new shares in relation to a warrant exercise at US$1.09 each.
- 18.2m outstanding warrants remains, which expires on 29 Jan 2018.
- The market could consolidate at current levels as the 4Q corporate results season gets underway with REITs and Keppel units in focus, while investors look to Dec industrial production data for fresh direction.
- Technically, the STI could face some short term hurdle at the 3,550 resistance area, before heading for the next objective at 3,640, while downside support lies at 3,470.
CORPORATE EARNINGS
SGX
- Flat 2QFY18 net profit of $88.4m (+0.1%) met street estimates.
- Revenue grew 2.7% to $205m as a decline in equities and fixed income (-4%) business was offset by increased derivatives (+11%) and market data and connectivity (+4%) fees.
- Securities average daily traded value rose 4% to $1.14b on total value of $71.6b (+3%).
- Operating margin narrowed to 50.1% (-1.2ppt) on higher staff costs (+9.4%) and technology expenses (+8.9%).
- Interim DPS maintained at 5¢.
- Plans to introduce dual-class shares to attract new tech IPOs, with first listing after Jun.
- Last traded at 23.1x forward P/E.
POSITIVE NEWS
*ST Engineering
- Electronic unit clinched new contracts worth $742m in 4Q17 (3Q17: $585m).
- These comprise contracts such as rail electronics & intelligent transportation, satellite & broadband communications, as well as advanced electronics and ICT solutions.
- This brought FY17 new electronics orders to $2.24b (FY16: $2.33b).
- Trading at 21.3x forward P/E and offers 4.5% dividend yield.
*Roxy-Pacific
- Entered conditional agreement to purchase residential project Kismis View for $102.8m via a 60:40 JV with Tong Eng Group.
- Pricing for the 99-year 90,863 sf residential site translates to $855 psf ppr.
- Trades at 1.31x P/B.
NEGATIVE NEWS
*Food Empire
- Expected to incur a 4Q17 loss due to a US$10m write down on 22.8% owned Caffe Bene.
- Coffee Bene is currently in the midst of court proceedings to secure a corporate rehabilitation process due to excessive debts.
- Last traded at 15x forward P/E.
NEUTRAL NEWS
*Cogent/ Cosco Shipping
- Cash offer of $1.02/share by Cosco Shipping has attained 98.31% of total acceptances.
- A compulsory acquisition for Cogent's remaining shares will be made by Cosco.
*Rotary Eng
- Joint cash offer of $0.46/share by its controlling family and the Oman government has attained 86.3% in total acceptances as at 19 Jan.
- The offer will close on 24 Jan, 5.30pm.
*Olam
- Issued 706,432 new shares in relation to a warrant exercise at US$1.09 each.
- 18.2m outstanding warrants remains, which expires on 29 Jan 2018.
Friday, January 19, 2018
SG Market (19 Jan 18)
MARKET OVERVIEW
- The market could pull back further on profit-taking as sentiment turned wary after the STI index touched a new 10-year high in yesterday's session.
- Investors will look towards a slew of corporate results from REITs and Keppel group of companies next week before taking further bets.
- Technically, the STI exhibited a bearish engulfing pattern yesterday, suggesting that a short term correction may be underway. Downside support lies at 3,470 with topside resistance at 3,560.
CORPORATE RESULTS
*Cache Logistics Trust
- 4Q17 DPU slid 9.8% y/y but was up 3.6% q/q to 1.597¢ on a post-rights unit base (+19%). This brought FY17 DPU to 6.583¢ (-10.9%), in line with estimates.
- For the quarter, revenue and NPI rose to $29.6m (+8.5%) and $23.5m (+10.2%), respectively, lifted by the rental top-up for 51 Alps Ave following settlement of the legal suit in Oct '17, as well as higher contribution from the Australian portfolio.
- Portfolio occupancy slipped 0.6ppt q/q to 96.6%, with WALE of 3.4 years.
- Aggregate leverage fell 7.3ppt q/q to 36.3%, while average debt cost of 3.56% (+0.1% q/q) and tenor of 2 years held steady.
- Trades at annualised 4Q yield of 7.3% and 1.2x P/B.
- MKE has a Hold with TP of $0.90.
*Oxley
- 2QFY18 net profit slumped 45% to $68m, dragged by lower recognition of development sales.
- This brought 1HFY18 earnings to $116.8m (-11%), making up 66% of the street's sole full year forecast.
- For the quarter, revenue of $406.1m (-33%) was derived from ongoing development of Royal Wharf in London, as well as The Rise @ Oxley-Residences in Singapore, rental income from investment properties and contributions from hotel operations.
- Gross margin shrank to 17% from 33.3% in 2Q16 due to the mismatch between sales recognition and costs incurred.
- Bottom line was shored by a turnaround in associate/JV profit of $60.6m (2QFY17: $4.5m loss).
- Total unbilled contract value amounted to $1.78b, comprising mainly of projects overseas (92%.
- Raised interim DPS to 0.72¢ (2QFY17: 0.5¢) and proposed a 1-for-5 bonus share issue.
- Trades at 20% discount to street RNAV/share of $0.84.
POSITIVE NEWS
*CapitaLand
- Signed MOU with the district government of Wuchang in China, for a joint development of a prime site in the city.
- The potential scale of the integrated development is expected to surpass all its existing properties in central China and will deepen its presence in core city clusters in the mainland.
- MKE has a Hold with TP of $3.75.
*SATS
- 47.1%-owned HK JVCo, Pan Asia Pacific Aviation Services, is issuing new shares constituting a 15% stake to Hong Kong Airlines for HK$45.2-HK$55.2m ($7.7m-$9.4m).
- Upon completion, SATS' stake will be pared to 40%.
- Hong Kong Airlines is expected to help strengthen the JVCo's growth path with its fleet of 35 aircraft.
*Cache Logistics Trust
- Divesting Hi-Speed Logistics Centre at 40 Alps Avenue for $73.8m, 7% above market valuation.
- The 309,000 sf gfa property is multi-tenanted with occupancy of 74% and has a remaining land lease of 47.6 years.
- The sale will yield a gain of $2.3m but is expected to shave off pro forma FY17 DPU by 0.8% to 6.683¢.
- Proceeds will be used to reduce debt and reinvest in better performing assets.
*BreadTalk
- Assigned a master franchise to Som Datt Group (SDG) to establish the BreadTalk bakery chain in Delhi and National Capital Region in India.
- SDG is an Indian infrastructure and construction conglomerate.
- The flagship store in Delhi is expected to open in 3Q18.
- Last traded at 30.7x forward P/E.
*Sunpower
- Secured a supply contract worth Rmb40.4m from Xinjiang Tianye Hyuihe New Materials to provide hydrogenation reactors for a syngas-to-ethylene glycol project.
- The supply contract is expected to contribute to FY18 results on product delivery.
- Trades at 6.8x trailing P/E.
*Katrina Group
- Intends to open two new outlets at Marina One (So Pho) and West Mall (Streats) by the end-Jan.
- Also signed letters of offer to open two more outlets in Jewel Changi Airport (So Pho) and Tampines One (Streats).
- The outlet expansion builds on three previously opened restaurants in Singapore and one in Shanghai, China.
*Rex International
- 87.84%-owned Lime Petroleum AS (LPA) has been awarded a new offshore E&P licence (PL818B) in Norway.
- It is an extension of its existing licence (PL818) and both are held by operator Aker BP (40%), LPA (30%) and Statoil (30%).
- The two North Sea licenses have exploration potential, with principal prospect Orkja area between them.
- PL818B is also near Johan Sverdrup, one of the five largest oil fields on Norwegian continental shelf and adjacent to producing fields.
- Drilling decisions is expected in summer 2018 with possible drilling to commence in 2019.
POSITIVE NEWS
*Alliance Mineral
- Substantial shareholder Living Waters Mining Australia (LWMA), owned by CEO Tjandra Pramoko and his wife, has agreed to sell 19m shares (3.42% stake) to a private investor.
- Post-sale, LWMA will hold 67.1m shares or 12.08% stake, just under Burwill (13.47%).
- The group updated that LWMA has fully repaid all debts owed to Jonathan Lim and Grande Pacific, and the injunction order on 46.1m frozen shares has been discharged.
NEUTRAL NEWS
*Venture Corp
- Acquiring a freehold property on 9.64 acres of land at 481 Cottonwood Drive, US, for US$29.37m.
- The industrial building has a built-up area of ~182,405 sf, which will be refurbished as the group's cluster of excellence, to develop an ecosystem that can foster innovation and collaboration with its business partners.
- The deal is expected to complete by 9 Feb '18.
- Trades at 20.1x forward P/E.
*Full Apex
- Plans to expand into upstream industries through its US$3b investment in a petrochemical & chemical fibre integrated project in the Jazan Economic City, Saudi Arabia.
- The initial stage of the project, costing US$1.04b, will produce a PET upstream product, purified terephthalic acid as well as PET.
- Group is currently considering various financing methods for the project including a loan from a Saudi development fund, as well as strategic partners.
- Expects to commence construction in 2018 with production in 2020.
*Golden Energy and Resources
- 70%-owned Indo-listed PT Golden Energy Mines (GEMS) recorded 5.5mt coal output in 4Q17, bringing full-year output of 15.6mt to 8.3% above its target.
- However, trading in GEMS may be suspended before Feb '18 as its free float is below the regulatory requirement.
- The group is in the midst of exploring opportunities to meet the requirement.
*FSL Trust
- Sold its older 1,221 TEU containership vessel FSL Busan for US$6.2m.
- Net proceeds will be used to repay its outstanding loan, reducing its debt under syndicated loan facility to US$132m.
- Post disposal, the group will record a disposal gain of US$0.75m in 1Q18.
- The market could pull back further on profit-taking as sentiment turned wary after the STI index touched a new 10-year high in yesterday's session.
- Investors will look towards a slew of corporate results from REITs and Keppel group of companies next week before taking further bets.
- Technically, the STI exhibited a bearish engulfing pattern yesterday, suggesting that a short term correction may be underway. Downside support lies at 3,470 with topside resistance at 3,560.
CORPORATE RESULTS
*Cache Logistics Trust
- 4Q17 DPU slid 9.8% y/y but was up 3.6% q/q to 1.597¢ on a post-rights unit base (+19%). This brought FY17 DPU to 6.583¢ (-10.9%), in line with estimates.
- For the quarter, revenue and NPI rose to $29.6m (+8.5%) and $23.5m (+10.2%), respectively, lifted by the rental top-up for 51 Alps Ave following settlement of the legal suit in Oct '17, as well as higher contribution from the Australian portfolio.
- Portfolio occupancy slipped 0.6ppt q/q to 96.6%, with WALE of 3.4 years.
- Aggregate leverage fell 7.3ppt q/q to 36.3%, while average debt cost of 3.56% (+0.1% q/q) and tenor of 2 years held steady.
- Trades at annualised 4Q yield of 7.3% and 1.2x P/B.
- MKE has a Hold with TP of $0.90.
*Oxley
- 2QFY18 net profit slumped 45% to $68m, dragged by lower recognition of development sales.
- This brought 1HFY18 earnings to $116.8m (-11%), making up 66% of the street's sole full year forecast.
- For the quarter, revenue of $406.1m (-33%) was derived from ongoing development of Royal Wharf in London, as well as The Rise @ Oxley-Residences in Singapore, rental income from investment properties and contributions from hotel operations.
- Gross margin shrank to 17% from 33.3% in 2Q16 due to the mismatch between sales recognition and costs incurred.
- Bottom line was shored by a turnaround in associate/JV profit of $60.6m (2QFY17: $4.5m loss).
- Total unbilled contract value amounted to $1.78b, comprising mainly of projects overseas (92%.
- Raised interim DPS to 0.72¢ (2QFY17: 0.5¢) and proposed a 1-for-5 bonus share issue.
- Trades at 20% discount to street RNAV/share of $0.84.
POSITIVE NEWS
*CapitaLand
- Signed MOU with the district government of Wuchang in China, for a joint development of a prime site in the city.
- The potential scale of the integrated development is expected to surpass all its existing properties in central China and will deepen its presence in core city clusters in the mainland.
- MKE has a Hold with TP of $3.75.
*SATS
- 47.1%-owned HK JVCo, Pan Asia Pacific Aviation Services, is issuing new shares constituting a 15% stake to Hong Kong Airlines for HK$45.2-HK$55.2m ($7.7m-$9.4m).
- Upon completion, SATS' stake will be pared to 40%.
- Hong Kong Airlines is expected to help strengthen the JVCo's growth path with its fleet of 35 aircraft.
*Cache Logistics Trust
- Divesting Hi-Speed Logistics Centre at 40 Alps Avenue for $73.8m, 7% above market valuation.
- The 309,000 sf gfa property is multi-tenanted with occupancy of 74% and has a remaining land lease of 47.6 years.
- The sale will yield a gain of $2.3m but is expected to shave off pro forma FY17 DPU by 0.8% to 6.683¢.
- Proceeds will be used to reduce debt and reinvest in better performing assets.
*BreadTalk
- Assigned a master franchise to Som Datt Group (SDG) to establish the BreadTalk bakery chain in Delhi and National Capital Region in India.
- SDG is an Indian infrastructure and construction conglomerate.
- The flagship store in Delhi is expected to open in 3Q18.
- Last traded at 30.7x forward P/E.
*Sunpower
- Secured a supply contract worth Rmb40.4m from Xinjiang Tianye Hyuihe New Materials to provide hydrogenation reactors for a syngas-to-ethylene glycol project.
- The supply contract is expected to contribute to FY18 results on product delivery.
- Trades at 6.8x trailing P/E.
*Katrina Group
- Intends to open two new outlets at Marina One (So Pho) and West Mall (Streats) by the end-Jan.
- Also signed letters of offer to open two more outlets in Jewel Changi Airport (So Pho) and Tampines One (Streats).
- The outlet expansion builds on three previously opened restaurants in Singapore and one in Shanghai, China.
*Rex International
- 87.84%-owned Lime Petroleum AS (LPA) has been awarded a new offshore E&P licence (PL818B) in Norway.
- It is an extension of its existing licence (PL818) and both are held by operator Aker BP (40%), LPA (30%) and Statoil (30%).
- The two North Sea licenses have exploration potential, with principal prospect Orkja area between them.
- PL818B is also near Johan Sverdrup, one of the five largest oil fields on Norwegian continental shelf and adjacent to producing fields.
- Drilling decisions is expected in summer 2018 with possible drilling to commence in 2019.
POSITIVE NEWS
*Alliance Mineral
- Substantial shareholder Living Waters Mining Australia (LWMA), owned by CEO Tjandra Pramoko and his wife, has agreed to sell 19m shares (3.42% stake) to a private investor.
- Post-sale, LWMA will hold 67.1m shares or 12.08% stake, just under Burwill (13.47%).
- The group updated that LWMA has fully repaid all debts owed to Jonathan Lim and Grande Pacific, and the injunction order on 46.1m frozen shares has been discharged.
NEUTRAL NEWS
*Venture Corp
- Acquiring a freehold property on 9.64 acres of land at 481 Cottonwood Drive, US, for US$29.37m.
- The industrial building has a built-up area of ~182,405 sf, which will be refurbished as the group's cluster of excellence, to develop an ecosystem that can foster innovation and collaboration with its business partners.
- The deal is expected to complete by 9 Feb '18.
- Trades at 20.1x forward P/E.
*Full Apex
- Plans to expand into upstream industries through its US$3b investment in a petrochemical & chemical fibre integrated project in the Jazan Economic City, Saudi Arabia.
- The initial stage of the project, costing US$1.04b, will produce a PET upstream product, purified terephthalic acid as well as PET.
- Group is currently considering various financing methods for the project including a loan from a Saudi development fund, as well as strategic partners.
- Expects to commence construction in 2018 with production in 2020.
*Golden Energy and Resources
- 70%-owned Indo-listed PT Golden Energy Mines (GEMS) recorded 5.5mt coal output in 4Q17, bringing full-year output of 15.6mt to 8.3% above its target.
- However, trading in GEMS may be suspended before Feb '18 as its free float is below the regulatory requirement.
- The group is in the midst of exploring opportunities to meet the requirement.
*FSL Trust
- Sold its older 1,221 TEU containership vessel FSL Busan for US$6.2m.
- Net proceeds will be used to repay its outstanding loan, reducing its debt under syndicated loan facility to US$132m.
- Post disposal, the group will record a disposal gain of US$0.75m in 1Q18.
Thursday, January 18, 2018
SG Market (18 Jan 18)
MARKET OVERVIEW
- The market is likely to to be swept up by bullish sentiment after Wall Street continued to break new records with the rally sustained by a confluence of positive factors.
- Technically, STI could test its upside resistance is at 3,550, while downside support remains at 3,470.
CORPORATE RESULTS
*Soilbuild REIT
- 4Q17 DPU fell 11.9% to 1.383¢, bringing FY17 DPU of 5.712¢ (-6.2%) in line with estimates.
- For the quarter, revenue declined 4.3% to $20.7m due to lower contribution from 72 Loyang Way, but partially mitigated by higher takings from NK Ingredients, KTL, Solaris and West Park BizCentral.
- NPI slid 6% to $17.6m on higher property expenses incurred at 72 Loyang Way.
- Completed 120,000 sf of renewals and secured 90,000 sf of new leases in 4Q17 despite soft leasing environment but suffered negative rental reversions of 15.7% for new and renewal leases.
- Occupancy rate weakened to 92.7% (-1.4ppt), while aggregate leverage stayed at 40.6% (3Q17: 37.9%).
- Trades at 8.1% FY17 yield and 1.1x P/B.
*First REIT
- 4Q17 DPU inched up 0.9% to 2.15¢, bringing FY17 distribution to 8.57¢ (+1.2%), meeting estimates.
- Gross revenue of $28.6m (+5.8%) and NPI of $28m (+4.9%) was lifted by full contribution from three recently acquired hospitals in Buton, Yogjakarta and Labuan Bajo, as well as from existing properties.
- Aggregate leverage stood at 33.6% (+1ppt q/q) with interest cover of 5.5x.
- Trades at annualised 4Q17 yield of 6.1% and 1.38x P/B.
POSITIVE NEWS
*ST Engineering
- Aerospace unit clinched new contracts worth $510m in 4Q17 (3Q17: $530m).
- New contracts involve services ranging from airframe maintenance and landing gears repair to pilot training.
- This brought FY17 aerospace orders to $2.8b (FY16: $2.57b).
- Trading at 21.2x forward P/E and 4.5% dividend yield.
*UMS/ JEP
- Bought another 22% stake in SGX-listed precision machining firm JEP Holdings after earlier purchase of 7.5% stake to bring its overall shareholding to 29.5% for $28.2m or 6.55¢ each.
- The move is aimed at diversifying beyond semiconductors into the aerospace industry.
- UMS trades at 11.7x forward P/E and 4.9% yield.
*Vibropower
- Updated that its suspended coal-mine methane power plant in Shanxi, China, has resumed its operations to supply electricity to the power grid in Jan '18.
- Trades at 8.7x trailing P/E.
*Creative
- Group's Super X-Fi technology was awarded the "Best of CES 2018 Award" at the world's largest consumer electronics show.
- Many audiophiles were blown away by the game-changing product, which brings audio from a high-end multi-speaker system to a headphone.
NEGATIVE NEWS
*Vashion Group
- Group's HK subsidiary received three arbitration orders pertaining to guarantee agreements it allegedly entered with two private individuals.
- The guarantees were made, unknown to management, on Rmb25m worth of loans.
*InnoPac
- Disposing its entire 35% stake in Malaysia-based Trackplus for $1m, or 35% below book value as at 31 Dec '16.
- Trackplus engages in commercial and residential property development for a 7,863 sqm land plot in Shah Alam, Selangor.
- Post disposal, FY16 pro forma loss per share is expected to widen 12.5% to 0.09¢.
NEUTRAL NEWS
*OCBC
- Acquired an additional 18.51% interest in Maxwealth Fund Management Company for Rmb61.5m.
- The deal was priced at book value and lifted OCBC's stake from 10% to 28.51%.
- The remaining 71.49% interest is held by Bank of Ningbo, which is also an associate of OCBC.
- Trades at 1.48x P/B.
*Food Empire
- Spending US$41.3m to expand its coffee manufacturing facility in India.
- Funds comprise internal resources (27%) and debt (73%).
*Soo Kee
- Terminated the MOU to set up a 55:45 JV with major Chinese gold jewellery manufacturer and distributor Global Crown, to make inroads into the HK and China market.
- Instead, Soo Kee is acquiring 100% interest in Diamond Avenue, a dormant entity from Global Crown, for HK$0.105m, representing 0.08x P/B.
- Group believes the new acquisition will still help to pave way into the growing bridal jewellery market in China.
- Last traded at 13.3x trailing P/E.
- The market is likely to to be swept up by bullish sentiment after Wall Street continued to break new records with the rally sustained by a confluence of positive factors.
- Technically, STI could test its upside resistance is at 3,550, while downside support remains at 3,470.
CORPORATE RESULTS
*Soilbuild REIT
- 4Q17 DPU fell 11.9% to 1.383¢, bringing FY17 DPU of 5.712¢ (-6.2%) in line with estimates.
- For the quarter, revenue declined 4.3% to $20.7m due to lower contribution from 72 Loyang Way, but partially mitigated by higher takings from NK Ingredients, KTL, Solaris and West Park BizCentral.
- NPI slid 6% to $17.6m on higher property expenses incurred at 72 Loyang Way.
- Completed 120,000 sf of renewals and secured 90,000 sf of new leases in 4Q17 despite soft leasing environment but suffered negative rental reversions of 15.7% for new and renewal leases.
- Occupancy rate weakened to 92.7% (-1.4ppt), while aggregate leverage stayed at 40.6% (3Q17: 37.9%).
- Trades at 8.1% FY17 yield and 1.1x P/B.
*First REIT
- 4Q17 DPU inched up 0.9% to 2.15¢, bringing FY17 distribution to 8.57¢ (+1.2%), meeting estimates.
- Gross revenue of $28.6m (+5.8%) and NPI of $28m (+4.9%) was lifted by full contribution from three recently acquired hospitals in Buton, Yogjakarta and Labuan Bajo, as well as from existing properties.
- Aggregate leverage stood at 33.6% (+1ppt q/q) with interest cover of 5.5x.
- Trades at annualised 4Q17 yield of 6.1% and 1.38x P/B.
POSITIVE NEWS
*ST Engineering
- Aerospace unit clinched new contracts worth $510m in 4Q17 (3Q17: $530m).
- New contracts involve services ranging from airframe maintenance and landing gears repair to pilot training.
- This brought FY17 aerospace orders to $2.8b (FY16: $2.57b).
- Trading at 21.2x forward P/E and 4.5% dividend yield.
*UMS/ JEP
- Bought another 22% stake in SGX-listed precision machining firm JEP Holdings after earlier purchase of 7.5% stake to bring its overall shareholding to 29.5% for $28.2m or 6.55¢ each.
- The move is aimed at diversifying beyond semiconductors into the aerospace industry.
- UMS trades at 11.7x forward P/E and 4.9% yield.
*Vibropower
- Updated that its suspended coal-mine methane power plant in Shanxi, China, has resumed its operations to supply electricity to the power grid in Jan '18.
- Trades at 8.7x trailing P/E.
*Creative
- Group's Super X-Fi technology was awarded the "Best of CES 2018 Award" at the world's largest consumer electronics show.
- Many audiophiles were blown away by the game-changing product, which brings audio from a high-end multi-speaker system to a headphone.
NEGATIVE NEWS
*Vashion Group
- Group's HK subsidiary received three arbitration orders pertaining to guarantee agreements it allegedly entered with two private individuals.
- The guarantees were made, unknown to management, on Rmb25m worth of loans.
*InnoPac
- Disposing its entire 35% stake in Malaysia-based Trackplus for $1m, or 35% below book value as at 31 Dec '16.
- Trackplus engages in commercial and residential property development for a 7,863 sqm land plot in Shah Alam, Selangor.
- Post disposal, FY16 pro forma loss per share is expected to widen 12.5% to 0.09¢.
NEUTRAL NEWS
*OCBC
- Acquired an additional 18.51% interest in Maxwealth Fund Management Company for Rmb61.5m.
- The deal was priced at book value and lifted OCBC's stake from 10% to 28.51%.
- The remaining 71.49% interest is held by Bank of Ningbo, which is also an associate of OCBC.
- Trades at 1.48x P/B.
*Food Empire
- Spending US$41.3m to expand its coffee manufacturing facility in India.
- Funds comprise internal resources (27%) and debt (73%).
*Soo Kee
- Terminated the MOU to set up a 55:45 JV with major Chinese gold jewellery manufacturer and distributor Global Crown, to make inroads into the HK and China market.
- Instead, Soo Kee is acquiring 100% interest in Diamond Avenue, a dormant entity from Global Crown, for HK$0.105m, representing 0.08x P/B.
- Group believes the new acquisition will still help to pave way into the growing bridal jewellery market in China.
- Last traded at 13.3x trailing P/E.
Wednesday, January 17, 2018
SG Market (17 Jan 18)
MARKET OVERVIEW
- Some profit-taking activity could occur after Wall Street indices retreated from a record intra-day high, while the STI has hit its immediate resistance level at 3,550.
- Downside support for STI remains at 3,470, while the next upside resistance is at 3,570.
CORPORATE RESULTS
*ESR-REIT (former Cambridge REIT)
- 4Q17 DPU slumped 6.7% to 0.929¢, partially dragged by an enlarged unitbase.
- This took FY17 DPU to 3.853¢ (-7.7%), in line with estimates.
- For the quarter, gross revenue slipped 2.2% to $27.2m amid income loss from a lease expiry at 3 Pioneer Sector 3 as well as the impact from two divested properties.
- NPI, however, inched 1.2% higher to $19.9m on reduced property expenses.
- Portfolio occupancy improved 1.9ppt q/q to 93%, while aggregate leverage rose to 39.6% (+2.9ppt q/q).
- Offers 6.7% yield and trades at 0.97x P/B.
POSITIVE NEWS
*Mapletree Greater China Commercial Trust
- Expanded its investment mandate to include Japan, beyond its current region in Greater China.
- The expansion is aimed at improving unitholder distributions and better diversify its portfolio returns.
- Offers an indicative yield of 5.9% and trades at 1x P/B.
*Sysma
- Awarded a $5m contract to build a house for the group's Deputy CEO and an immediate family member of the controlling shareholder.
- The project shall be completed 16 months following issuance of the BCA approval.
- Trades at 5.4x trailing P/E and 0.88x P/B.
*Hyflux
- SEPCOIII Electric was ordered to pay Hyflux US$2.7m in interest and US$4.2m in arbitration costs following settlement of a dispute.
- To recap, the dispute arose out of a contract involving EPC work for a desalination facility in Salalah, Oman.
- This brought total payment to US$23m, of which US$16.1m had been paid under the interim award in Sep '17.
NEGATIVE NEWS
*First Ship lease Trust
- Disposed a 20,938 DWT chemical tanker, FSL Tokyo, for US$13.8m.
- An impairment charge of US$9m in 4Q17 will be recorded post-disposal.
- Proceeds from the sale will be used to reduce outstanding debt.
*LCT Holdings
- Guided for a 2Q18 loss due to increased maintenance cost for an investment property in Xi'an, China.
- Results slated to be released on or before 14 Feb.
NEUTRAL NEWS
*UMS/ JEP
- Acquired 109m shares (7.48% share capital) in JEP via the market at $5.7m, or 5.23¢ apiece.
- Separately, JEP saw four married trades totalling 320m shares at 7¢ each.
*Top Global
- Aborting its proposed acquisition of the property at 273 & 275 South Bridge Road, as the proposed change of use of the 2nd to 4th floor into a hotel or hostel could not be fulfilled.
- As such, the group has received a deposit refund of $0.3m.
*First REIT
- Secured up to $400m in syndicated secured financing facilities from OCBC.
- The facilities consist of 3/4/5-year SGD term loan facilities and a 3-year dual currency revolving credit facility in SGD or USD, for up to $100m each.
- Loans facilities will be used to partially refinance outstanding bank loans, fund property investments and working capital.
- Offers indicative yield of 6.1% and trades at 1.4x P/B.
- Some profit-taking activity could occur after Wall Street indices retreated from a record intra-day high, while the STI has hit its immediate resistance level at 3,550.
- Downside support for STI remains at 3,470, while the next upside resistance is at 3,570.
CORPORATE RESULTS
*ESR-REIT (former Cambridge REIT)
- 4Q17 DPU slumped 6.7% to 0.929¢, partially dragged by an enlarged unitbase.
- This took FY17 DPU to 3.853¢ (-7.7%), in line with estimates.
- For the quarter, gross revenue slipped 2.2% to $27.2m amid income loss from a lease expiry at 3 Pioneer Sector 3 as well as the impact from two divested properties.
- NPI, however, inched 1.2% higher to $19.9m on reduced property expenses.
- Portfolio occupancy improved 1.9ppt q/q to 93%, while aggregate leverage rose to 39.6% (+2.9ppt q/q).
- Offers 6.7% yield and trades at 0.97x P/B.
POSITIVE NEWS
*Mapletree Greater China Commercial Trust
- Expanded its investment mandate to include Japan, beyond its current region in Greater China.
- The expansion is aimed at improving unitholder distributions and better diversify its portfolio returns.
- Offers an indicative yield of 5.9% and trades at 1x P/B.
*Sysma
- Awarded a $5m contract to build a house for the group's Deputy CEO and an immediate family member of the controlling shareholder.
- The project shall be completed 16 months following issuance of the BCA approval.
- Trades at 5.4x trailing P/E and 0.88x P/B.
*Hyflux
- SEPCOIII Electric was ordered to pay Hyflux US$2.7m in interest and US$4.2m in arbitration costs following settlement of a dispute.
- To recap, the dispute arose out of a contract involving EPC work for a desalination facility in Salalah, Oman.
- This brought total payment to US$23m, of which US$16.1m had been paid under the interim award in Sep '17.
NEGATIVE NEWS
*First Ship lease Trust
- Disposed a 20,938 DWT chemical tanker, FSL Tokyo, for US$13.8m.
- An impairment charge of US$9m in 4Q17 will be recorded post-disposal.
- Proceeds from the sale will be used to reduce outstanding debt.
*LCT Holdings
- Guided for a 2Q18 loss due to increased maintenance cost for an investment property in Xi'an, China.
- Results slated to be released on or before 14 Feb.
NEUTRAL NEWS
*UMS/ JEP
- Acquired 109m shares (7.48% share capital) in JEP via the market at $5.7m, or 5.23¢ apiece.
- Separately, JEP saw four married trades totalling 320m shares at 7¢ each.
*Top Global
- Aborting its proposed acquisition of the property at 273 & 275 South Bridge Road, as the proposed change of use of the 2nd to 4th floor into a hotel or hostel could not be fulfilled.
- As such, the group has received a deposit refund of $0.3m.
*First REIT
- Secured up to $400m in syndicated secured financing facilities from OCBC.
- The facilities consist of 3/4/5-year SGD term loan facilities and a 3-year dual currency revolving credit facility in SGD or USD, for up to $100m each.
- Loans facilities will be used to partially refinance outstanding bank loans, fund property investments and working capital.
- Offers indicative yield of 6.1% and trades at 1.4x P/B.
Tuesday, January 16, 2018
SG Market (16 Jan 18)
MARKET OVERVIEW
- The broader market may enter a consolidation phase after a heady start to the year as investors await 4Q17 results season kicking off with REITs this week.
- Technically, underlying support for the STI lies at 3,470 with topside resistance at 3,550.
SECTOR WATCH
*Property
- Developers sold 10,700 private homes in 2017 (+23%), its highest since 2013.
- MKE sees more upside in 2018 as households displaced by enbloc sales seek out replacement homes.
- While recent uptick in mortgage rates may be a slight dampener, affordability remains healthy.
- Potential catalysts would come from new launches and price hikes.
- Positive on developer stocks as Singapore's property market continues its cyclical upturn.
- Best large cap picks - UOL (TP: $9.85), City Dev (TP: $13.80); preferred mid-caps - GuocoLand (TP: $2.95), Bukit Sembawang (TP: $8.25).
POSITIVE NEWS
*SIA
- Dec group passenger load factor climbed to 84.7% (+1.8ppt) as traffic growth (+5.1%) outpaced capacity expansion (+2.9%).
- Cargo load factor also improved 1.9ppt to 66.8% as increase in traffic (+4.3%) outstripped capacity (+1.5%).
- Subsidiary carriers SilkAir (+1.1ppt to 76.6%) and Scoot (+1ppt to 88.7%) notched higher load factors.
- Parent airline load factor rose 2ppt to 84.4% across routes to East Asia (+0.2ppt), Americas (+1.6ppt), Europe (+3.7ppt), South West Pacific (+3.3ppt), West Asia and Africa (+0.3ppt).
- Last traded at 0.97x P/B.
*Starhub/SPH
- Extended their strategic partnership for another two years, and will explore new collaboration in healthcare, retail and education.
- Both companies will continue to work alongside on advertising sales, content creation and distribution, as well as data analytics and marketing.
- Further, they will jointly create services in sectors other than the media industry.
- Under the renewed agreement, both parties will explore working together on the Internet of Things, including connected buildings and smart retail.
*Frasers Centrepoint
- Secured over 70% pre-commitments for 663,000 sf office building, Frasers Tower in CBD.
- Two anchor tenants, Microsoft Singapore and French O&G major Total Oil, will occupy a combined 232,000 sf of space. Other tenants include Sumitomo, Fonterra, Pcific Life and serviced office provider The Executive Centre.
- Additionally, close to 50% of its retail podium has also been successfully leased.
- The development is slated to be completed in 2Q18.
*AIMS AMP REIT
- Divesting its property at 10 Soon Lee Road for $8.2m, or 28% above its last valuation.
- The property has NLA of 7,224.2 sqm with land lease tenure of less than 24 years, and contributes 0.8% of FY17's gross rental income.
- Post-divestment and recent private placement, pro-forma FY17 aggregate leverage will fall 4ppt to 33.3%.
- Trades at indicative yield of 5.6% and P/B of 1.0x.
NEUTRAL NEWS
*iFAST
- Raised its stake in Pecuniam from 21.42% to 24.98% following a rights issue for $0.8m.
- Pecuniam has an effective 74.99% stake in iFAST Financial India, which is engaged in the distribution of investment products including mutual funds in India.
- Net proceeds for will be used for working capital and business growth.
- Trades at 27.9x forward P/E.
*HG Metal
- Renewed lease for the amalgamated site at 28 Jalan Buroh Road.
- Granted a three-year development period by JTC, starting from 2 Jan, to further invest in the construction and installation of plant and machinery at the property.
- Upon fulfilment of capex spending, JTC will grant renewal for a further 20-year term commencing from Aug '19.
- Trades at 0.47x P/B.
*Silverlake
- Sold 2m shares in Global Infotech (GIT) via secondary market on Shenzhen Stock Exchange for Rmb23.6m.
- To recap, the group is selling up to 19m shares in the China-based company to monetise its investment progressively.
- The estimated loss on disposal is Rmb4.1m and net proceeds will be used for working capital purposes, special dividend, reduction of borrowings and other opportunities.
- Trades at 17.2x forward P/E.
- The broader market may enter a consolidation phase after a heady start to the year as investors await 4Q17 results season kicking off with REITs this week.
- Technically, underlying support for the STI lies at 3,470 with topside resistance at 3,550.
SECTOR WATCH
*Property
- Developers sold 10,700 private homes in 2017 (+23%), its highest since 2013.
- MKE sees more upside in 2018 as households displaced by enbloc sales seek out replacement homes.
- While recent uptick in mortgage rates may be a slight dampener, affordability remains healthy.
- Potential catalysts would come from new launches and price hikes.
- Positive on developer stocks as Singapore's property market continues its cyclical upturn.
- Best large cap picks - UOL (TP: $9.85), City Dev (TP: $13.80); preferred mid-caps - GuocoLand (TP: $2.95), Bukit Sembawang (TP: $8.25).
POSITIVE NEWS
*SIA
- Dec group passenger load factor climbed to 84.7% (+1.8ppt) as traffic growth (+5.1%) outpaced capacity expansion (+2.9%).
- Cargo load factor also improved 1.9ppt to 66.8% as increase in traffic (+4.3%) outstripped capacity (+1.5%).
- Subsidiary carriers SilkAir (+1.1ppt to 76.6%) and Scoot (+1ppt to 88.7%) notched higher load factors.
- Parent airline load factor rose 2ppt to 84.4% across routes to East Asia (+0.2ppt), Americas (+1.6ppt), Europe (+3.7ppt), South West Pacific (+3.3ppt), West Asia and Africa (+0.3ppt).
- Last traded at 0.97x P/B.
*Starhub/SPH
- Extended their strategic partnership for another two years, and will explore new collaboration in healthcare, retail and education.
- Both companies will continue to work alongside on advertising sales, content creation and distribution, as well as data analytics and marketing.
- Further, they will jointly create services in sectors other than the media industry.
- Under the renewed agreement, both parties will explore working together on the Internet of Things, including connected buildings and smart retail.
*Frasers Centrepoint
- Secured over 70% pre-commitments for 663,000 sf office building, Frasers Tower in CBD.
- Two anchor tenants, Microsoft Singapore and French O&G major Total Oil, will occupy a combined 232,000 sf of space. Other tenants include Sumitomo, Fonterra, Pcific Life and serviced office provider The Executive Centre.
- Additionally, close to 50% of its retail podium has also been successfully leased.
- The development is slated to be completed in 2Q18.
*AIMS AMP REIT
- Divesting its property at 10 Soon Lee Road for $8.2m, or 28% above its last valuation.
- The property has NLA of 7,224.2 sqm with land lease tenure of less than 24 years, and contributes 0.8% of FY17's gross rental income.
- Post-divestment and recent private placement, pro-forma FY17 aggregate leverage will fall 4ppt to 33.3%.
- Trades at indicative yield of 5.6% and P/B of 1.0x.
NEUTRAL NEWS
*iFAST
- Raised its stake in Pecuniam from 21.42% to 24.98% following a rights issue for $0.8m.
- Pecuniam has an effective 74.99% stake in iFAST Financial India, which is engaged in the distribution of investment products including mutual funds in India.
- Net proceeds for will be used for working capital and business growth.
- Trades at 27.9x forward P/E.
*HG Metal
- Renewed lease for the amalgamated site at 28 Jalan Buroh Road.
- Granted a three-year development period by JTC, starting from 2 Jan, to further invest in the construction and installation of plant and machinery at the property.
- Upon fulfilment of capex spending, JTC will grant renewal for a further 20-year term commencing from Aug '19.
- Trades at 0.47x P/B.
*Silverlake
- Sold 2m shares in Global Infotech (GIT) via secondary market on Shenzhen Stock Exchange for Rmb23.6m.
- To recap, the group is selling up to 19m shares in the China-based company to monetise its investment progressively.
- The estimated loss on disposal is Rmb4.1m and net proceeds will be used for working capital purposes, special dividend, reduction of borrowings and other opportunities.
- Trades at 17.2x forward P/E.
Monday, January 15, 2018
SG Market (15 Jan 18)
MARKET OVERVIEW
- The market could push higher, powered by Wall Street's record showing last Fri as well as prospect of rosy global growth. Key data to look out for this week include S'pore's NODX for Dec and China's 4Q GDP.
- Technically, the STI sees support at 3,470 and topside resistance at 3,550.
CORPORATE RESULTS
*SPH
- 1QFY18 operating results met estimates, with net profit of $60.4m (+32%) boosted by divestment gains.
- Revenue of $258.8m (-7%) was weighed by weak core media business (-13.9%) amid falling takings from ads and circulation, although cushioned by property (+1.2%) and other businesses (+48.2%).
- This was mitigated by slightly improved operating margin of 26.2% (+0.8ppt) from lower expenses including newsprint, staff bonuses, depreciation, retrenchment costs, as well as gains from an associate's IPO.
- Bottom line was also helped by lower taxes, helped by prior over-provision.
- Trades at 19.9x forward P/E.
*Lian Beng
- 2QFY18 net profit slumped 43.2% to $3.2m, bringing 1HFY18 earnings lower to $12.2m (-33.7%).
- This came on the back of reduced 1HFY18 revenue of $87.6m (-27%), as increased contribution from investment holdings was offset by the weakness in the construction segment.
- Gross margin contracted 2.2ppt to 22.3% on a shift in sales mix.
- Bottom line was dragged by higher distribution expenses (+74.5%) and finance costs (+70.7%), as well as income from associates/ JVs (-31.6%).
- Construction order book surged to $972m (1QFY18: $661m), providing sales visibility through FY2022.
- Last traded at 8.1x trailing P/E and 0.64x P/B.
*GKE
- 2QFY18 net loss sank deeper to $7.9m (2QFY17: $0.6m loss), mainly hurt by a $6.2m impairment loss of a JV-owned liquefied gas carrier vessel.
- Revenue surged 51.8% to $18.1m on new takings at port operations from recently-acquired TNS Ocean Lines and higher contribution from freight forwarding business and sale of ready-mix concrete.
- Gross margin widened 1.3ppt to 16.3%.
- Loss-making and trades at 0.98x P/B.
POSITIVE NEWS
*Sunpower
- Clinched a Rmb107m contract to provide EPC services for a flare gas recovery system to Zhejiang Petrochemical.
- Work is expected to complete by end FY18.
- Trades at 7.1x trailing P/E.
*800 Super
- Awarded a public waste collection contract worth $193.5m by NEA.
- Work involves the collection of refuse from domestic and trade premises in Pasir Ris-Bedok precinct.
- The contract will take effect from 1 Jul '18 to 31 Oct '25.
- Last traded at 13.8x trailing P/E.
*Hong Leong Asia
- 40.2% owned China Yuchai launched 14 new engines compliant with China's more stringent National VI emission standards.
- The move is in line with its key strategy for the group to create a technological edge and market leadership for commercial vehicle engines in China.
- Last traded at 0.67x P/B.
NEUTRAL NEWS
*RHT Health Trust
- Extended the exclusivity period for talks with controlling unitholder, Fortis Healthcare, in relation to the proposed disposal of its entire asset portfolio, by 60 days.
- The proposed Rs46.5b sale would translate to at least $0.90/unit (post-debt), subject to completion of fund-raising by Fortis and regulatory approval.
*Nordic
- Disposed property at 42 Tech Park Crescent for $3.4m.
- The non-core property sits on a land area of 926.4 sqm.
- Proceeds from the disposal will be used to repay bank borrowings and improve overall cash position.
- Trades at 15.4x trailing P/E.
*Tiong Seng
- Raised its effective stake in Tianjin Zizhulin Guangang Property by 5.5ppts to 69.5% for Rmb38.4m, representing 1.76x P/B.
- Last traded at 7.1x trailing P/E.
*k1 Ventures
- Proposed voluntary liquidation and subsequent delisting, following the disposal of substantially all its assets and property.
- The liquidation will require 75% shareholders' approval at an EGM.
*Olam
- Issued 665,490 new shares in relation to a warrant exercise at US$1.09 each.
- 29.1m outstanding warrants remains, which expires on 29 Jan 2018.
- The market could push higher, powered by Wall Street's record showing last Fri as well as prospect of rosy global growth. Key data to look out for this week include S'pore's NODX for Dec and China's 4Q GDP.
- Technically, the STI sees support at 3,470 and topside resistance at 3,550.
CORPORATE RESULTS
*SPH
- 1QFY18 operating results met estimates, with net profit of $60.4m (+32%) boosted by divestment gains.
- Revenue of $258.8m (-7%) was weighed by weak core media business (-13.9%) amid falling takings from ads and circulation, although cushioned by property (+1.2%) and other businesses (+48.2%).
- This was mitigated by slightly improved operating margin of 26.2% (+0.8ppt) from lower expenses including newsprint, staff bonuses, depreciation, retrenchment costs, as well as gains from an associate's IPO.
- Bottom line was also helped by lower taxes, helped by prior over-provision.
- Trades at 19.9x forward P/E.
*Lian Beng
- 2QFY18 net profit slumped 43.2% to $3.2m, bringing 1HFY18 earnings lower to $12.2m (-33.7%).
- This came on the back of reduced 1HFY18 revenue of $87.6m (-27%), as increased contribution from investment holdings was offset by the weakness in the construction segment.
- Gross margin contracted 2.2ppt to 22.3% on a shift in sales mix.
- Bottom line was dragged by higher distribution expenses (+74.5%) and finance costs (+70.7%), as well as income from associates/ JVs (-31.6%).
- Construction order book surged to $972m (1QFY18: $661m), providing sales visibility through FY2022.
- Last traded at 8.1x trailing P/E and 0.64x P/B.
*GKE
- 2QFY18 net loss sank deeper to $7.9m (2QFY17: $0.6m loss), mainly hurt by a $6.2m impairment loss of a JV-owned liquefied gas carrier vessel.
- Revenue surged 51.8% to $18.1m on new takings at port operations from recently-acquired TNS Ocean Lines and higher contribution from freight forwarding business and sale of ready-mix concrete.
- Gross margin widened 1.3ppt to 16.3%.
- Loss-making and trades at 0.98x P/B.
POSITIVE NEWS
*Sunpower
- Clinched a Rmb107m contract to provide EPC services for a flare gas recovery system to Zhejiang Petrochemical.
- Work is expected to complete by end FY18.
- Trades at 7.1x trailing P/E.
*800 Super
- Awarded a public waste collection contract worth $193.5m by NEA.
- Work involves the collection of refuse from domestic and trade premises in Pasir Ris-Bedok precinct.
- The contract will take effect from 1 Jul '18 to 31 Oct '25.
- Last traded at 13.8x trailing P/E.
*Hong Leong Asia
- 40.2% owned China Yuchai launched 14 new engines compliant with China's more stringent National VI emission standards.
- The move is in line with its key strategy for the group to create a technological edge and market leadership for commercial vehicle engines in China.
- Last traded at 0.67x P/B.
NEUTRAL NEWS
*RHT Health Trust
- Extended the exclusivity period for talks with controlling unitholder, Fortis Healthcare, in relation to the proposed disposal of its entire asset portfolio, by 60 days.
- The proposed Rs46.5b sale would translate to at least $0.90/unit (post-debt), subject to completion of fund-raising by Fortis and regulatory approval.
*Nordic
- Disposed property at 42 Tech Park Crescent for $3.4m.
- The non-core property sits on a land area of 926.4 sqm.
- Proceeds from the disposal will be used to repay bank borrowings and improve overall cash position.
- Trades at 15.4x trailing P/E.
*Tiong Seng
- Raised its effective stake in Tianjin Zizhulin Guangang Property by 5.5ppts to 69.5% for Rmb38.4m, representing 1.76x P/B.
- Last traded at 7.1x trailing P/E.
*k1 Ventures
- Proposed voluntary liquidation and subsequent delisting, following the disposal of substantially all its assets and property.
- The liquidation will require 75% shareholders' approval at an EGM.
*Olam
- Issued 665,490 new shares in relation to a warrant exercise at US$1.09 each.
- 29.1m outstanding warrants remains, which expires on 29 Jan 2018.
Friday, January 12, 2018
SG Market (12 Jan 18)
MARKET OVERVIEW
- Tech names and oil-related counters could resume their upward momentum following yet another record run on Wall Street as crude prices surge to 3-year highs.
- Any profit-taking would be cushioned by optimism over the global economic recovery.
- Technically, the STI is likely to enter a consolidation phase with near-term support at 3,470 and topside resistance at 3,550.
SECTOR WATCH
*Construction
- BCA is projecting total value of construction contracts to pick up to $26b-31b this year after dipping to $24.5b in 2017, 13% short of forecast.
- 60% or $16b-19b will come from public projects (2017: $15.5b) and the rest will be from the private sector, fuelled by en bloc projects.
- Still, many construction firms expect the sector to remain lacklustre and would take time for job volume and demand to recover to sustainable levels.
CORPORATE RESULT
*k1 Ventures
- Fell into a 2QFY18 net loss of $3.1m (2QFY17: $6.6m profit) following the disposal of Guggenheim in Nov '17.
- Revenue slumped 56.9% to $1.5m on reduced investment income.
- Bottom line was dragged by a negative $5.6m swing into FX loss of $0.5m, but partly shored by a FX translation gain of $1.6m arising from liquidation of subsidiaries.
- NAV/share shrank 51.3% to $0.37.
POSITIVE NEWS
*Tat Hong
- Received a pre-conditional privatisation offer of $0.50/share from THSC Investments, jointly owned by Tat Hong's controlling Ng family (68.8%) and StanChart Private Equity (31.2%).
- THSC has obtained an irrevocable undertaking for 59.74% of the total shares.
- Cash offer values the loss-making crane supplier at 0.64x P/B.
*HRnetGroup
- Buying 51% into REForce (Shanghai) Human Resources Management Consulting at a yet-to-be-disclosed sum.
- Additionally, HRnetGroup will extend a Rmb3m shareholders' loan to REForce for operation and expansion purposes.
- The acquisition will take place in tranches across FY17-19, with the consideration based on a tiered multiple on REForce's future net profit.
*SingHaiyi
- A 50:50 JV with a private vehicle of controlling shareholder Gordon Tang was awarded the tender for residential property Park West for $840.9m.
- The JVCo intends to apply for a lease top-up for the site at a differential premium of $146m.
- Accordingly, the collective sale for the 99-year leasehold estate is priced at $850 psf ppr.
NEUTRAL NEWS
*SGX
- Seeking feedback on whether to retain its quarterly reporting requirement for companies above $75m market cap.
- Currently, 70% of ListCos are above the market cap threshold, and the bourse is suggesting to lift the threshold to the $150m mark.
*AGV
- Entered into a MOU with Myanmar-based construction company Myat Mi Ba (MMB) to incorporate an 80:20 JVCo to provide hot dip galvanising services in Myanmar.
- The agreement includes the option for MMB to acquire 25% stake of JVCo from the group after two years.
- Both parties will attempt to negotiate and execute the agreement by 31 Mar.
*Y Ventures
- Placing out 5m shares (2.4% of enlarged share capital) at $0.24 each to strategic investor R3 Asset Management.
- The placement price translates to a 14.3% discount from the last closing price.
- Net proceed of $1.2m will be used for working capital.
- Both parties also signed a non-binding MOU in which R3 will introduce new retail brand, strategic alliances and possible acquisition targets that synergise with the group's analytics and e-commerce distribution network.
- Tech names and oil-related counters could resume their upward momentum following yet another record run on Wall Street as crude prices surge to 3-year highs.
- Any profit-taking would be cushioned by optimism over the global economic recovery.
- Technically, the STI is likely to enter a consolidation phase with near-term support at 3,470 and topside resistance at 3,550.
SECTOR WATCH
*Construction
- BCA is projecting total value of construction contracts to pick up to $26b-31b this year after dipping to $24.5b in 2017, 13% short of forecast.
- 60% or $16b-19b will come from public projects (2017: $15.5b) and the rest will be from the private sector, fuelled by en bloc projects.
- Still, many construction firms expect the sector to remain lacklustre and would take time for job volume and demand to recover to sustainable levels.
CORPORATE RESULT
*k1 Ventures
- Fell into a 2QFY18 net loss of $3.1m (2QFY17: $6.6m profit) following the disposal of Guggenheim in Nov '17.
- Revenue slumped 56.9% to $1.5m on reduced investment income.
- Bottom line was dragged by a negative $5.6m swing into FX loss of $0.5m, but partly shored by a FX translation gain of $1.6m arising from liquidation of subsidiaries.
- NAV/share shrank 51.3% to $0.37.
POSITIVE NEWS
*Tat Hong
- Received a pre-conditional privatisation offer of $0.50/share from THSC Investments, jointly owned by Tat Hong's controlling Ng family (68.8%) and StanChart Private Equity (31.2%).
- THSC has obtained an irrevocable undertaking for 59.74% of the total shares.
- Cash offer values the loss-making crane supplier at 0.64x P/B.
*HRnetGroup
- Buying 51% into REForce (Shanghai) Human Resources Management Consulting at a yet-to-be-disclosed sum.
- Additionally, HRnetGroup will extend a Rmb3m shareholders' loan to REForce for operation and expansion purposes.
- The acquisition will take place in tranches across FY17-19, with the consideration based on a tiered multiple on REForce's future net profit.
*SingHaiyi
- A 50:50 JV with a private vehicle of controlling shareholder Gordon Tang was awarded the tender for residential property Park West for $840.9m.
- The JVCo intends to apply for a lease top-up for the site at a differential premium of $146m.
- Accordingly, the collective sale for the 99-year leasehold estate is priced at $850 psf ppr.
NEUTRAL NEWS
*SGX
- Seeking feedback on whether to retain its quarterly reporting requirement for companies above $75m market cap.
- Currently, 70% of ListCos are above the market cap threshold, and the bourse is suggesting to lift the threshold to the $150m mark.
*AGV
- Entered into a MOU with Myanmar-based construction company Myat Mi Ba (MMB) to incorporate an 80:20 JVCo to provide hot dip galvanising services in Myanmar.
- The agreement includes the option for MMB to acquire 25% stake of JVCo from the group after two years.
- Both parties will attempt to negotiate and execute the agreement by 31 Mar.
*Y Ventures
- Placing out 5m shares (2.4% of enlarged share capital) at $0.24 each to strategic investor R3 Asset Management.
- The placement price translates to a 14.3% discount from the last closing price.
- Net proceed of $1.2m will be used for working capital.
- Both parties also signed a non-binding MOU in which R3 will introduce new retail brand, strategic alliances and possible acquisition targets that synergise with the group's analytics and e-commerce distribution network.
Thursday, January 11, 2018
SG Market (11 Jan 18)
MARKET OVERVIEW
- Investor fervour will likely be tempered today after US stocks retreated for the first time in 2018 over worries that China would halt its US Treasury purchases, driving bond yields sharply higher, and the uncertain future of NAFTA.
- But rising interest rates would widen interest spreads for banks, thus sustaining the rally in bank shares.
- Technically, the STI is overdue for a correction after an impressive start to the year. Near-term support is at 3,470 with topside resistance at 3,550.
CORPORATE RESULTS
*DFI Int'l
- 3QFY18 net profit slumped 84.7% to RM3.3m on a RM17.1m swing to FX loss of RM7.5m due to the stronger ringgit.
- This brought 9MFY18 net profit to RM32.4m (-41%) or 51% of consensus forecast.
- Revenue was almost flat at RM133.5m (+0.4%) on change in sales mix despite some improvement in certain products.
- Declared third interim DPS of 1¢, bringing 9MFY18 payout to 1.85¢ (9MFY17: 2.5¢).
- Trades at 16.5x forward P/E.
POSITIVE NEWS
*OUE Lippo Healthcare
- Placing out 562.5m new shares at $0.14 apiece to Tokyo-listed Itochu Corp, giving it a 25.3% stake.
- Intends to leverage on Itochu's brand name and strategic partnerships as well as business network and investments in healthcare-related businesses.
- Net proceeds of $77.5m will be used for development of its healthcare business and general working capital purposes.
- Trades at 2.2x P/B.
*Sanli Environmental
- Secured $10m worth of contracts from both the public and private sectors, comprising EPC and operations & maintenance works.
- This would bring its order book to $114.3m.
- Trades at trailing P/E of 11.5x.
*LHN
- Obtained the lease to manage its second overseas car park in Tsim Sha Tsui, Kowloon, HK. The 2-year lease for the 30 car park lots will commence from 4 Jan.
- It also secured a contract to license 10 car parks from JTC totalling 4,802 lots in Bedok, Kampong Ubi and Kaki Bukit industrial areas. The 3-year contract commenced from 1 Jan with an option to renew annually for another three years.
- The contracts bring its total car park portfolio to 54 (prior: 43).
NEGATIVE
*Noble
- Reportedly exiting the oil trading business after shuttering its London and Singapore oil trading desks due to heavy losses and debt load of US$3.5b as at Dec '17.
- The closures follow the sale of its larger US oil trading business to Vitol for US$580m.
- Currently trades at 0.3x P/B but balance sheet may be overstated.
*IEV
- Received a letter from Pertamina to terminate the operations cooperation agreement in Pabuaran operation area (KSO) and to disburse US$2.3m of bank guarantees.
- Termination was due to the group's inability to fulfil certain conditions, such as failure to complete a US$18.6m work programme by 11 Dec '17.
- The group intends to exit the Exploration & Production sector due to prolonged low oil prices, and focus on offshore engineering sector.
- Warned of significant FY17 impairment losses on assets related to KSO.
- Separately, it is disposing its corporate HQ at PJX-HM Shah Tower in Malaysia for RM9.2m, and is expected to incur a disposal loss of RM0.66m.
- The property is being divested for cost savings, as it has excess office space beyond the group's needs.
- RM6.7m from proceeds will be used to repay debt for interest savings, while remaining will be to strengthen working capital.
NEUTRAL NEWS
*Yangzijiang Shipbuilding
- Established a JVCo with several strategic partners to lease and charter vessels.
- It will own a 49.45% stake in the JVCo with the remaining held by its partners.
*Libra
- Entered supplement agreement with vendors in relation to its acquisition of YC Capital Consolidated.
- Agreement includes the revision of acquisition price to $12m from $15m via an issuance of the new shares at $0.128 each.
- The group will also pay up to $2m worth of shares if YC Capital's FY18 net profit is at least RM8m.
- Investor fervour will likely be tempered today after US stocks retreated for the first time in 2018 over worries that China would halt its US Treasury purchases, driving bond yields sharply higher, and the uncertain future of NAFTA.
- But rising interest rates would widen interest spreads for banks, thus sustaining the rally in bank shares.
- Technically, the STI is overdue for a correction after an impressive start to the year. Near-term support is at 3,470 with topside resistance at 3,550.
CORPORATE RESULTS
*DFI Int'l
- 3QFY18 net profit slumped 84.7% to RM3.3m on a RM17.1m swing to FX loss of RM7.5m due to the stronger ringgit.
- This brought 9MFY18 net profit to RM32.4m (-41%) or 51% of consensus forecast.
- Revenue was almost flat at RM133.5m (+0.4%) on change in sales mix despite some improvement in certain products.
- Declared third interim DPS of 1¢, bringing 9MFY18 payout to 1.85¢ (9MFY17: 2.5¢).
- Trades at 16.5x forward P/E.
POSITIVE NEWS
*OUE Lippo Healthcare
- Placing out 562.5m new shares at $0.14 apiece to Tokyo-listed Itochu Corp, giving it a 25.3% stake.
- Intends to leverage on Itochu's brand name and strategic partnerships as well as business network and investments in healthcare-related businesses.
- Net proceeds of $77.5m will be used for development of its healthcare business and general working capital purposes.
- Trades at 2.2x P/B.
*Sanli Environmental
- Secured $10m worth of contracts from both the public and private sectors, comprising EPC and operations & maintenance works.
- This would bring its order book to $114.3m.
- Trades at trailing P/E of 11.5x.
*LHN
- Obtained the lease to manage its second overseas car park in Tsim Sha Tsui, Kowloon, HK. The 2-year lease for the 30 car park lots will commence from 4 Jan.
- It also secured a contract to license 10 car parks from JTC totalling 4,802 lots in Bedok, Kampong Ubi and Kaki Bukit industrial areas. The 3-year contract commenced from 1 Jan with an option to renew annually for another three years.
- The contracts bring its total car park portfolio to 54 (prior: 43).
NEGATIVE
*Noble
- Reportedly exiting the oil trading business after shuttering its London and Singapore oil trading desks due to heavy losses and debt load of US$3.5b as at Dec '17.
- The closures follow the sale of its larger US oil trading business to Vitol for US$580m.
- Currently trades at 0.3x P/B but balance sheet may be overstated.
*IEV
- Received a letter from Pertamina to terminate the operations cooperation agreement in Pabuaran operation area (KSO) and to disburse US$2.3m of bank guarantees.
- Termination was due to the group's inability to fulfil certain conditions, such as failure to complete a US$18.6m work programme by 11 Dec '17.
- The group intends to exit the Exploration & Production sector due to prolonged low oil prices, and focus on offshore engineering sector.
- Warned of significant FY17 impairment losses on assets related to KSO.
- Separately, it is disposing its corporate HQ at PJX-HM Shah Tower in Malaysia for RM9.2m, and is expected to incur a disposal loss of RM0.66m.
- The property is being divested for cost savings, as it has excess office space beyond the group's needs.
- RM6.7m from proceeds will be used to repay debt for interest savings, while remaining will be to strengthen working capital.
NEUTRAL NEWS
*Yangzijiang Shipbuilding
- Established a JVCo with several strategic partners to lease and charter vessels.
- It will own a 49.45% stake in the JVCo with the remaining held by its partners.
*Libra
- Entered supplement agreement with vendors in relation to its acquisition of YC Capital Consolidated.
- Agreement includes the revision of acquisition price to $12m from $15m via an issuance of the new shares at $0.128 each.
- The group will also pay up to $2m worth of shares if YC Capital's FY18 net profit is at least RM8m.
Wednesday, January 10, 2018
SG Market (10 Jan 18)
MARKET OVERVIEW
- Expect rotational play into oil-related counters after WTI crude oil topped US$63/bbl for the first time since 2014, while tech manufacturers could come under pressure, weighed by the pullback in global semiconductor stocks.
- Technically, the STI has extended into overbought territory with short-term support at 3,470 and topside resistance at 3,550.
CORPORATE RESULTS
*HC Surgical Specialists (HSP SP)
- 1HFY18 net profit jumped to $2.5m (1HFY17: $0.1m), helped mainly by the absence of IPO expense and a newly-acquired associate.
- Revenue of $7.7m (+80%) was lifted by full six-month contribution from M&As.
- However, interim DPS was slashed to 1.1¢ (1HFY17: 1.8¢).
- Trades at 69.9x trailing P/E.
POSITIVE NEWS
*Tuan Sing
- Booked $44.5m in fair value gain for FY17 (FY16: $2.3m) following its annual revaluation of investment properties.
- For context, 9M17 and FY16 net profit were $13.1m and $33.6m respectively.
- Trades at forward P/E of 22.6x and pre-adjusted P/B of 0.61x.
*Hiap Tong
- Awarded a 5-year extension to a lifting services contract with ExxonMobil Asia from 1 Jan.
- Work entails the provision of crane rental and lifting services.
- The contract value will depend on the amount and scope of work to be carried out.
- Trades at 7.4x trailing P/E.
*Alpha Energy
- 36.2% owned Brooks Range Petroleum achieved a peak average of 1,292 bbls/day in production from its Southern Miluvearch Unit in Alaska, US.
- The unit is estimated to have 33.3m bbls of oil reserve.
NEUTRAL NEWS
*Spackman Entertainment
- Slated to release Golden Slumber in Korean theatres on 14 Feb.
- To recap, the estimated total production budget for the film was set at 10b won (US$8.7m).
- Trades at 14.8x forward P/E.
- Expect rotational play into oil-related counters after WTI crude oil topped US$63/bbl for the first time since 2014, while tech manufacturers could come under pressure, weighed by the pullback in global semiconductor stocks.
- Technically, the STI has extended into overbought territory with short-term support at 3,470 and topside resistance at 3,550.
CORPORATE RESULTS
*HC Surgical Specialists (HSP SP)
- 1HFY18 net profit jumped to $2.5m (1HFY17: $0.1m), helped mainly by the absence of IPO expense and a newly-acquired associate.
- Revenue of $7.7m (+80%) was lifted by full six-month contribution from M&As.
- However, interim DPS was slashed to 1.1¢ (1HFY17: 1.8¢).
- Trades at 69.9x trailing P/E.
POSITIVE NEWS
*Tuan Sing
- Booked $44.5m in fair value gain for FY17 (FY16: $2.3m) following its annual revaluation of investment properties.
- For context, 9M17 and FY16 net profit were $13.1m and $33.6m respectively.
- Trades at forward P/E of 22.6x and pre-adjusted P/B of 0.61x.
*Hiap Tong
- Awarded a 5-year extension to a lifting services contract with ExxonMobil Asia from 1 Jan.
- Work entails the provision of crane rental and lifting services.
- The contract value will depend on the amount and scope of work to be carried out.
- Trades at 7.4x trailing P/E.
*Alpha Energy
- 36.2% owned Brooks Range Petroleum achieved a peak average of 1,292 bbls/day in production from its Southern Miluvearch Unit in Alaska, US.
- The unit is estimated to have 33.3m bbls of oil reserve.
NEUTRAL NEWS
*Spackman Entertainment
- Slated to release Golden Slumber in Korean theatres on 14 Feb.
- To recap, the estimated total production budget for the film was set at 10b won (US$8.7m).
- Trades at 14.8x forward P/E.
Tuesday, January 9, 2018
SG Market (09 Jan 18)
MARKET OVERVIEW
- The market could creep higher as investors take stock of the strong gains that marked the start of 2018 and await macro data releases from China and US this week and ahead of 4Q earnings season, which kicks off later in the month.
- Technically, the STI has extended into overbought territory with short-term support at 3,470 and topside resistance at 3,550.
CORPORATE RESULTS
*Cheung Woh Tech
- Dipped into a 3QFY18 net loss of $0.4m, overturning a profit of $0.3m profit a year ago.
- Turnover grew 5.8% to $21.5m from higher sales of hard disk drive components and baseplates, while demand for air-combs declined.
- But gross margin of 8.9% (-7.8ppt) was compressed by higher material and labour costs.
- Bottom line was further pressured by higher distribution & selling (+36%) and finance (+27.9%) expenses, but partially mitigated by increased sales of scrap metal (+38.4%) and a positive $1.6m swing to FX gain of $0.2m.
- NAV/share at $0.3292.
POSITIVE NEWS
*Manufacturing Integration Tech
- To dispose its semiconductor equipment business to China Fortune-Tech Capital for an unspecified amount, but not >13x FY17 P/E.
- Upon completion, group will focus on its remaining contract equipment manufacturing and customised automation business.
- Company is loss-making and trades at 1.28x P/B.
*Sarine Technologies
- Introduced DiaExpert Edge, an upgrade to existing or new DiaExpert platforms.
- The new system shortens time and improves accuracy of rough stone modelling and planning, thereby enhancing the yield of polished stones.
- Management believes it has an estimated addressable market of several thousands to 10,000 systems, at an expected ASP of ~US$6,000.
- Trades at 18.2x forward P/E.
*Jiutian Chemical
- 74% owned Anyang Jiujiu has commenced the commercial production of sodium hydrosulfite.
- The factory has received approval to operate under a temporary production permit, with regular production permit slated to be granted in 1Q18.
- The commercial production of sodium hydrosulfite for its capacity of 140,000 tons and other feedstocks would make the subsidiary the most integrated and second largest manufacturer in China.
*TIH
- Proposed voluntary unconditional privatisation offer at $0.57/share by Kaiser Union, owned by Lippo China Resources and Alexandra Road.
- The offer will be paid partially in cash ($0.125/share), and the issue of a three-year unsecured 2.25% note at par ($0.445).
*Ley Choon
- Secured $10.4m contract from PUB Singapore for the replacement of water mains for network renewal.
- Trades at 2.6x trailing P/E.
NEGATIVE NEWS
*SGX
- Total Dec securities market turnover dropped to $19.2b (-8% y/y, -33% m/m), in a seasonally weak month as daily average value fell below $1b to $959m (-4% y/y, -26% m/m).
- Total derivatives volume totalled 15.6m contracts (+18% y/y, -13% m/m), while commodities derivatives volume was 1.1m (-6% y/y, -21% m/m).
- There were two Catalist listings and 150 new bond listings, which raised $24.6m and $50.2b, respectively.
- Trading at 21.9x forward P/E.
NEUTRAL NEWS
*ST Engineering
- Injected an additional US$1.5m into subsidiary Total Engine Asset Management, bringing total investment to US$16.5m.
- The 50% owned firm is intended to support the expansion of the group's engine leasing business.
- Trades at 21.5x forward P/E.
*Neo Group
- Incorporated 70% owned subsidiary, Kim's Paradise, which specialises in confinement and nutrition meals that focus on wellness and healing.
- The group expects to reap operational synergies through tapping on its existing customer base and cost savings through resource sharing.
- Last traded at 23x forward P/E.
*Singapore eDevelopment
- Appointed Dr Roscoe M. Moore Jr as Senior Scientific Adviser to support its research of a new universal therapeutic drug platform, Linebacker, to combat a range of diseases including Alzheimer's, diabetes and cancer.
- Dr Moore is a public health expert who served under former US Presidents in various public health departments.
*Adventus
- Entered into a 51% Vietnamese JV with Panthera Company and two individuals for $56.1b dong (US$2.5m) to develop a resort.
- The project is sited on a land area of 11,797.6 sqm at Khoi Xuyen Trung, Quang Nam Province in Vietnam.
- The JV enables an entry into the Vietnamese hospitality sector.
- The market could creep higher as investors take stock of the strong gains that marked the start of 2018 and await macro data releases from China and US this week and ahead of 4Q earnings season, which kicks off later in the month.
- Technically, the STI has extended into overbought territory with short-term support at 3,470 and topside resistance at 3,550.
CORPORATE RESULTS
*Cheung Woh Tech
- Dipped into a 3QFY18 net loss of $0.4m, overturning a profit of $0.3m profit a year ago.
- Turnover grew 5.8% to $21.5m from higher sales of hard disk drive components and baseplates, while demand for air-combs declined.
- But gross margin of 8.9% (-7.8ppt) was compressed by higher material and labour costs.
- Bottom line was further pressured by higher distribution & selling (+36%) and finance (+27.9%) expenses, but partially mitigated by increased sales of scrap metal (+38.4%) and a positive $1.6m swing to FX gain of $0.2m.
- NAV/share at $0.3292.
POSITIVE NEWS
*Manufacturing Integration Tech
- To dispose its semiconductor equipment business to China Fortune-Tech Capital for an unspecified amount, but not >13x FY17 P/E.
- Upon completion, group will focus on its remaining contract equipment manufacturing and customised automation business.
- Company is loss-making and trades at 1.28x P/B.
*Sarine Technologies
- Introduced DiaExpert Edge, an upgrade to existing or new DiaExpert platforms.
- The new system shortens time and improves accuracy of rough stone modelling and planning, thereby enhancing the yield of polished stones.
- Management believes it has an estimated addressable market of several thousands to 10,000 systems, at an expected ASP of ~US$6,000.
- Trades at 18.2x forward P/E.
*Jiutian Chemical
- 74% owned Anyang Jiujiu has commenced the commercial production of sodium hydrosulfite.
- The factory has received approval to operate under a temporary production permit, with regular production permit slated to be granted in 1Q18.
- The commercial production of sodium hydrosulfite for its capacity of 140,000 tons and other feedstocks would make the subsidiary the most integrated and second largest manufacturer in China.
*TIH
- Proposed voluntary unconditional privatisation offer at $0.57/share by Kaiser Union, owned by Lippo China Resources and Alexandra Road.
- The offer will be paid partially in cash ($0.125/share), and the issue of a three-year unsecured 2.25% note at par ($0.445).
*Ley Choon
- Secured $10.4m contract from PUB Singapore for the replacement of water mains for network renewal.
- Trades at 2.6x trailing P/E.
NEGATIVE NEWS
*SGX
- Total Dec securities market turnover dropped to $19.2b (-8% y/y, -33% m/m), in a seasonally weak month as daily average value fell below $1b to $959m (-4% y/y, -26% m/m).
- Total derivatives volume totalled 15.6m contracts (+18% y/y, -13% m/m), while commodities derivatives volume was 1.1m (-6% y/y, -21% m/m).
- There were two Catalist listings and 150 new bond listings, which raised $24.6m and $50.2b, respectively.
- Trading at 21.9x forward P/E.
NEUTRAL NEWS
*ST Engineering
- Injected an additional US$1.5m into subsidiary Total Engine Asset Management, bringing total investment to US$16.5m.
- The 50% owned firm is intended to support the expansion of the group's engine leasing business.
- Trades at 21.5x forward P/E.
*Neo Group
- Incorporated 70% owned subsidiary, Kim's Paradise, which specialises in confinement and nutrition meals that focus on wellness and healing.
- The group expects to reap operational synergies through tapping on its existing customer base and cost savings through resource sharing.
- Last traded at 23x forward P/E.
*Singapore eDevelopment
- Appointed Dr Roscoe M. Moore Jr as Senior Scientific Adviser to support its research of a new universal therapeutic drug platform, Linebacker, to combat a range of diseases including Alzheimer's, diabetes and cancer.
- Dr Moore is a public health expert who served under former US Presidents in various public health departments.
*Adventus
- Entered into a 51% Vietnamese JV with Panthera Company and two individuals for $56.1b dong (US$2.5m) to develop a resort.
- The project is sited on a land area of 11,797.6 sqm at Khoi Xuyen Trung, Quang Nam Province in Vietnam.
- The JV enables an entry into the Vietnamese hospitality sector.
Monday, January 8, 2018
SG Market (08 Jan 18)
MARKET OVERVIEW
- Market rally could take a short pause to digest the sharp gains since start of the year, with only US and China inflation data due this week, although sentiment remains largely supportive.
- Technically, the STI has extended into overbought territory with short-term support at 3,470 and topside resistance at 3,550.
CORPORATE RESULTS
*SPH REIT
- Stable 1QFY18 DPU of 1.34¢ met expectations.
- Gross revenue of $53.5m (+1.7%) and NPI of $42.2m (+1.9%) were buoyed by higher rental income from Paragon and The Clementi Mall.
- While both properties continued to enjoy full occupancy, negative rental reversions were recorded at Paragon (-10.6%) and The Clementi Mall (-9.8%) for new and renewed lease, representing 3.7% of portfolio NLA.
- WALE ast at Nov '17 was 2.1 years, with 13.3% of NLA due for expiry in FY18.
- Aggregate leverage stayed at 25.4% with average tenor of 1.8 years.
- Trades at an annualised 1QFY18 yield of 5% and 1.14x P/B.
POSITIVE NEWS
*Mapletree Logistics Trust
- Acquiring the remaining 38% stake in HK logistics property, Shatin No 3 for HK$677m.
- The property, with NLA of 39,125 sqm, will be enhanced and re-positioned to generate higher yield and capital value.
- Post-completion, MLT's aggregate leverage is expected to rise to 39% (2QFY18: 33.7%).
- MKE has a Hold with TP of $1.25.
*NetLink Trust
- DBS raised its stake to 27.18% from 26.9% after acquiring 11m shares via the open market at an average price of $0.83.
- Trades at FY18 indicative yield of 5.3% and 1.04x P/B.
*Vard
- Secured a construction contract for one car-and passenger ferry for Boreal for an undisclosed sum.
- Boreal is a leading nationwide public transport provider in Norway.
- The hull will be built by Vard Braila in Romania and slated for delivery in 3Q19.
- Trades at 0.8x P/B.
NEGATIVE NEWS
*TEE Int'l/ TEE Land
- TEE Int'l issued profit warning of 2QFY18 and 1HFY18 loss on impairment losses totalling $8m stemming from the proposed disposal of TEE Land's 31.9% owned Thai associate, Chewathai, as well as unsold units at TEE Land's The Peak @ Cairnhill I.
*Alliance Mineral
- Updated that it has not received a loan advance of A$4.8m from HK-listed Burwill on 31 Dec '17 under a binding term sheet and letter of variation signed in Oct '17.
- Discussions with Burwill are ongoing since mid-Dec '17 over the timing and terms of the loan.
- Does not expect the matter to results in any material impact on its operations.
NEUTRAL NEWS
*BRC Asia
- Proposed private placement of 37m new shares (19.49% existing share capital) to 15 investors at $1.27 apiece.
- Net proceeds of $46.9m earmarked for strategic investments and working capital.
*Hyflux
- Filed a Notice of Arbitration to commence proceedings against Mitsubishi Heavy Industries Environmental & Chemical Engineering in relation to a waste-to-energy plant sub-contract dispute.
- Trades at 0.53x P/B.
*Raffles Education
- To transfer its Hong Kong listing from GEM to the mainboard.
*Vallianz
- Exercised its right to defer distribution for its US$22.5m 4% senior perpetual securities, of which the payment was due on 5 Jan '18.
- Market rally could take a short pause to digest the sharp gains since start of the year, with only US and China inflation data due this week, although sentiment remains largely supportive.
- Technically, the STI has extended into overbought territory with short-term support at 3,470 and topside resistance at 3,550.
CORPORATE RESULTS
*SPH REIT
- Stable 1QFY18 DPU of 1.34¢ met expectations.
- Gross revenue of $53.5m (+1.7%) and NPI of $42.2m (+1.9%) were buoyed by higher rental income from Paragon and The Clementi Mall.
- While both properties continued to enjoy full occupancy, negative rental reversions were recorded at Paragon (-10.6%) and The Clementi Mall (-9.8%) for new and renewed lease, representing 3.7% of portfolio NLA.
- WALE ast at Nov '17 was 2.1 years, with 13.3% of NLA due for expiry in FY18.
- Aggregate leverage stayed at 25.4% with average tenor of 1.8 years.
- Trades at an annualised 1QFY18 yield of 5% and 1.14x P/B.
POSITIVE NEWS
*Mapletree Logistics Trust
- Acquiring the remaining 38% stake in HK logistics property, Shatin No 3 for HK$677m.
- The property, with NLA of 39,125 sqm, will be enhanced and re-positioned to generate higher yield and capital value.
- Post-completion, MLT's aggregate leverage is expected to rise to 39% (2QFY18: 33.7%).
- MKE has a Hold with TP of $1.25.
*NetLink Trust
- DBS raised its stake to 27.18% from 26.9% after acquiring 11m shares via the open market at an average price of $0.83.
- Trades at FY18 indicative yield of 5.3% and 1.04x P/B.
*Vard
- Secured a construction contract for one car-and passenger ferry for Boreal for an undisclosed sum.
- Boreal is a leading nationwide public transport provider in Norway.
- The hull will be built by Vard Braila in Romania and slated for delivery in 3Q19.
- Trades at 0.8x P/B.
NEGATIVE NEWS
*TEE Int'l/ TEE Land
- TEE Int'l issued profit warning of 2QFY18 and 1HFY18 loss on impairment losses totalling $8m stemming from the proposed disposal of TEE Land's 31.9% owned Thai associate, Chewathai, as well as unsold units at TEE Land's The Peak @ Cairnhill I.
*Alliance Mineral
- Updated that it has not received a loan advance of A$4.8m from HK-listed Burwill on 31 Dec '17 under a binding term sheet and letter of variation signed in Oct '17.
- Discussions with Burwill are ongoing since mid-Dec '17 over the timing and terms of the loan.
- Does not expect the matter to results in any material impact on its operations.
NEUTRAL NEWS
*BRC Asia
- Proposed private placement of 37m new shares (19.49% existing share capital) to 15 investors at $1.27 apiece.
- Net proceeds of $46.9m earmarked for strategic investments and working capital.
*Hyflux
- Filed a Notice of Arbitration to commence proceedings against Mitsubishi Heavy Industries Environmental & Chemical Engineering in relation to a waste-to-energy plant sub-contract dispute.
- Trades at 0.53x P/B.
*Raffles Education
- To transfer its Hong Kong listing from GEM to the mainboard.
*Vallianz
- Exercised its right to defer distribution for its US$22.5m 4% senior perpetual securities, of which the payment was due on 5 Jan '18.
Friday, January 5, 2018
SG Market (05 Jan 18)
MARKET OVERVIEW
- Expect the early 2018 rally, which was led mainly by the banks and property developers, to spill over to the broader market after US markets set new index landmarks on tax reform and upbeat global economic data.
- Technically, the STI has broken above 3,500 and heading towards the post-financial crisis high of 3,550 set in Apr 2015. Downside support is now at 3,470.
POSITIVE NEWS
*CapitaLand
- Serviced residence unit The Ascott sealed contracts to manage nine properties with >2,000 units in China, exceeding its 20,000 target for 2020 and on track to achieve its global portfolio target of 80,000 units in 2018.
- Separately, the group is reconstituting its China mall portfolio and divesting stakes in 20 malls across 19 cities at an agreed value of Rmb8,365m.
- This is expected to generate a sale proceeds of $660m and net gain of $75m. Impact on recurring income is limited as these 20 malls accounted for only 4% and 7% of total and China mall valuation.
- Post divestment, its shopping mall network in China will comprise 49 assets, of which 45 are located in 1st and 2nd tier cities.
- Trades at 30.6% discount to its RNAV/share of $5.27.
*Sunpower
- Awarded an EPC contract worth Rmb35m from Yangquan Coal Industry Group.
- Contract marks its foray into the flue gas desulphurisation market and is due to be completed by end FY18.
- Last traded at 15.3x trailing P/E.
*Nordic Group
- Clinched contracts totalling $20.6m from new and repeat customers in the marine, O&G, infrastructure and petrochemical industries.
- Works scheduled to be completed by Jan '21.
- Last traded at 15.3x trailing P/E.
*ASTI
- Substantial shareholder Soh Pock Kheng acquired 6.4m shares at an average $0.086 apiece between 18 Dec '17 and 4 Jan '18.
- This raised his stake from 7.026% to 8%.
- Last traded at 48.2x trailing P/E and 0.87x P/B.
NEUTRAL NEWS
*Straits Trading
- Investing ¥9b ($106.5m) in Savills IM Japan Residential Fund.
- The fund seeks to maximise income and long-term capital appreciation through the acquisition of residential properties in the Greater Tokyo area and other key markets in Japan.
- Trades at 14.8x trailing P/E and 0.67x P/B.
*Citic Envirotech
- Acquiring the remaining 15% stake in United Envirotech Water (Changyi) for Rmb32.5m.
- The target owns and operates five industrial wastewater treatment plants with total design capcity of 200,000 m3/day in Changyi City, Shandong, China.
- Last traded at 17.2x forward P/E.
*Clearbridge Health
- To acquire a 65%-stake in Philippines-based Marzan Health Care for Php69.6m ($$1.9m).
- Marzan owns and operates a medical centre in Manila, offering a wide range of services including pathology, imaging diagnostics, dental care and renal care.
- The acquisition will be done via six tranches, of which the last two are subject to a profit guarantee of Php3.6m and Php3.5m in 2019 and 2020.
- Additionally, it intends to subscribe for Php25m in preferred shares, which will have a fixed dividend rate of 2% above the prime lending rate.
*Sarine Technologies
- Planning to initiate legal action against a manufacturer in Surat, India, for fraudulent use of the group's Galaxy inclusion mapping technology and systems.
- The manufacturer allegedly under-reported rough stone weights and underpaid amounts owed to the group for scanning of rough stones.
- Identity of the manufacturer will be disclosed upon filing of legal actions in a few weeks' time.
- Trades at 17.9x forward P/E.
- Expect the early 2018 rally, which was led mainly by the banks and property developers, to spill over to the broader market after US markets set new index landmarks on tax reform and upbeat global economic data.
- Technically, the STI has broken above 3,500 and heading towards the post-financial crisis high of 3,550 set in Apr 2015. Downside support is now at 3,470.
POSITIVE NEWS
*CapitaLand
- Serviced residence unit The Ascott sealed contracts to manage nine properties with >2,000 units in China, exceeding its 20,000 target for 2020 and on track to achieve its global portfolio target of 80,000 units in 2018.
- Separately, the group is reconstituting its China mall portfolio and divesting stakes in 20 malls across 19 cities at an agreed value of Rmb8,365m.
- This is expected to generate a sale proceeds of $660m and net gain of $75m. Impact on recurring income is limited as these 20 malls accounted for only 4% and 7% of total and China mall valuation.
- Post divestment, its shopping mall network in China will comprise 49 assets, of which 45 are located in 1st and 2nd tier cities.
- Trades at 30.6% discount to its RNAV/share of $5.27.
*Sunpower
- Awarded an EPC contract worth Rmb35m from Yangquan Coal Industry Group.
- Contract marks its foray into the flue gas desulphurisation market and is due to be completed by end FY18.
- Last traded at 15.3x trailing P/E.
*Nordic Group
- Clinched contracts totalling $20.6m from new and repeat customers in the marine, O&G, infrastructure and petrochemical industries.
- Works scheduled to be completed by Jan '21.
- Last traded at 15.3x trailing P/E.
*ASTI
- Substantial shareholder Soh Pock Kheng acquired 6.4m shares at an average $0.086 apiece between 18 Dec '17 and 4 Jan '18.
- This raised his stake from 7.026% to 8%.
- Last traded at 48.2x trailing P/E and 0.87x P/B.
NEUTRAL NEWS
*Straits Trading
- Investing ¥9b ($106.5m) in Savills IM Japan Residential Fund.
- The fund seeks to maximise income and long-term capital appreciation through the acquisition of residential properties in the Greater Tokyo area and other key markets in Japan.
- Trades at 14.8x trailing P/E and 0.67x P/B.
*Citic Envirotech
- Acquiring the remaining 15% stake in United Envirotech Water (Changyi) for Rmb32.5m.
- The target owns and operates five industrial wastewater treatment plants with total design capcity of 200,000 m3/day in Changyi City, Shandong, China.
- Last traded at 17.2x forward P/E.
*Clearbridge Health
- To acquire a 65%-stake in Philippines-based Marzan Health Care for Php69.6m ($$1.9m).
- Marzan owns and operates a medical centre in Manila, offering a wide range of services including pathology, imaging diagnostics, dental care and renal care.
- The acquisition will be done via six tranches, of which the last two are subject to a profit guarantee of Php3.6m and Php3.5m in 2019 and 2020.
- Additionally, it intends to subscribe for Php25m in preferred shares, which will have a fixed dividend rate of 2% above the prime lending rate.
*Sarine Technologies
- Planning to initiate legal action against a manufacturer in Surat, India, for fraudulent use of the group's Galaxy inclusion mapping technology and systems.
- The manufacturer allegedly under-reported rough stone weights and underpaid amounts owed to the group for scanning of rough stones.
- Identity of the manufacturer will be disclosed upon filing of legal actions in a few weeks' time.
- Trades at 17.9x forward P/E.
Thursday, January 4, 2018
SG Market (04 Jan 18)
MARKET OVERVIEW
- The market could extend its 5-day winning streak as investors cheer strong US and Singapore manufacturing data, higher oil prices and continued strength in technology shares.
- Technically, the STI could test the upside resistance at 3,470, with the next objective at 3,550 set in Apr 2015. Downside support lies at 3,380.
MACRO WATCH
*Economy
- Dec PMI came in at 52.8 (Nov: 52.9) marking its 16th consecutive month of expansion and capping a year of strong growth for the manufacturing sector.
- The marginally lower reading from a near 8-year high in Nov due to slower pace of expansion in new orders, exports, factory output and inventory, particularly for the electronics sector.
POSITIVE NEWS
*Venture Corp
- Joining the benchmark STI tomorrow, replacing GLP following its privatisation.
- Trades at prospective 17.5x FY18e P/E.
- The street is outright bullish on the electronics contract manufacturer with 7 straight buy calls and consensus TP of $23.60.
*Perennial Real Estate/BreadTalk/ Wilmar
- Established a 45%-owned JV, Perennial HC Holdings, with first close of US$500m and target fund size of up to US$1.2b.
- The JVCo will acquire and develop large-scale healthcare integrated mixed-used developments which are linked to high speed railway stations in China.
- Remaining stakes in the JVCo are held by Shun Tak Holdings (30%), Bangkok Bank (10%), BreadTalk (5%), Kuok Khoon Hong (4%), S1F (4%) and Wilmar (2%).
- Separately, Perennial reached a settlement agreement with Chesham Properties (owned by Pontiac Land's Kwee family), either party to purchase the other partner's joint stake in the The Capitol Singapore commercial project within 19 weeks.
*The Trendlines
- Portfolio company S.T Stent has received regulatory clearance from the US FDA to market its composite sinus stent.
- The product is targeted at patients suffering from chronic sinusitis, and could also be used for nose job failures, chronic allergic rhinitis and an alternative to sinuplasty.
- Last traded at 12.9x forward P/E and 0.75x P/B.
NEGATIVE NEWS
*Cheung Woh Technologies
- Issued profit warning for a 3QFY17 net loss on missed production targets.
- The miss was due to machinery down-time and repairs, as well as production disruptions caused by Typhoon Hato, which damaged some machines.
- Results slated to be released on or before 12 Jan.
NEUTRAL NEWS
*Ziwo
- Changed its name to "BM Mobility".
- To recap, the company intends to exit its loss-making raw material production business in China, and pursue more green-energy projects in China and Southeast Asia.
*Olam
- Issued 2.97m new shares in relation to a warrant exercise at US$1.09 each.
- Outstanding 47.1m warrants expires on 29 Jan 2018.
- The market could extend its 5-day winning streak as investors cheer strong US and Singapore manufacturing data, higher oil prices and continued strength in technology shares.
- Technically, the STI could test the upside resistance at 3,470, with the next objective at 3,550 set in Apr 2015. Downside support lies at 3,380.
MACRO WATCH
*Economy
- Dec PMI came in at 52.8 (Nov: 52.9) marking its 16th consecutive month of expansion and capping a year of strong growth for the manufacturing sector.
- The marginally lower reading from a near 8-year high in Nov due to slower pace of expansion in new orders, exports, factory output and inventory, particularly for the electronics sector.
POSITIVE NEWS
*Venture Corp
- Joining the benchmark STI tomorrow, replacing GLP following its privatisation.
- Trades at prospective 17.5x FY18e P/E.
- The street is outright bullish on the electronics contract manufacturer with 7 straight buy calls and consensus TP of $23.60.
*Perennial Real Estate/BreadTalk/ Wilmar
- Established a 45%-owned JV, Perennial HC Holdings, with first close of US$500m and target fund size of up to US$1.2b.
- The JVCo will acquire and develop large-scale healthcare integrated mixed-used developments which are linked to high speed railway stations in China.
- Remaining stakes in the JVCo are held by Shun Tak Holdings (30%), Bangkok Bank (10%), BreadTalk (5%), Kuok Khoon Hong (4%), S1F (4%) and Wilmar (2%).
- Separately, Perennial reached a settlement agreement with Chesham Properties (owned by Pontiac Land's Kwee family), either party to purchase the other partner's joint stake in the The Capitol Singapore commercial project within 19 weeks.
*The Trendlines
- Portfolio company S.T Stent has received regulatory clearance from the US FDA to market its composite sinus stent.
- The product is targeted at patients suffering from chronic sinusitis, and could also be used for nose job failures, chronic allergic rhinitis and an alternative to sinuplasty.
- Last traded at 12.9x forward P/E and 0.75x P/B.
NEGATIVE NEWS
*Cheung Woh Technologies
- Issued profit warning for a 3QFY17 net loss on missed production targets.
- The miss was due to machinery down-time and repairs, as well as production disruptions caused by Typhoon Hato, which damaged some machines.
- Results slated to be released on or before 12 Jan.
NEUTRAL NEWS
*Ziwo
- Changed its name to "BM Mobility".
- To recap, the company intends to exit its loss-making raw material production business in China, and pursue more green-energy projects in China and Southeast Asia.
*Olam
- Issued 2.97m new shares in relation to a warrant exercise at US$1.09 each.
- Outstanding 47.1m warrants expires on 29 Jan 2018.
Wednesday, January 3, 2018
SG Market (03 Jan 18)
MARKET OVERVIEW
- The market could extend its fine start to the year, with technology stocks in the limelight after S&P 500 and Nasdaq notched fresh records, while investors look to Dec PMI for further direction.
- Technically, STI is testing its immediate resistance at 3,430 with the next objective at 3,470, while downside support is at 3,380.
POSITIVE NEWS
*DBS
- Inked a 15-year regional tie-up with general insurer Chubb to distribute the latter's products to SME clients across Singapore, HK, China and Taiwan.
- Last traded at 1.39x P/B and MKE has a Hold with TP of $22.75.
*StarHub
- BlackRock emerged as a substantial shareholder, raising its stake to 5% from 4.99%, following the purchase of 52,700 shares in the open market at $2.91 each.
- Trades at 17.8x forward P/E and 5.9% dividend yield.
*Roxy-Pacific
- Obtained consent from all proprietors at freehold residential development Derby Court.
- To recap, Roxy emerged the top bidder for the collective sale tender of the condominium located 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.
- Last traded at 2.96x forward P/E and 1.3x P/B.
*Manufacturing Integration Tech
- Secured new orders totalling $14.2m for its semiconductor equipment and contract equipment manufacturing services.
- Most of these orders are expected to complete by 1H18.
- Counter is loss-making and trades at 1.21x P/B.
*Addvalue Technologies
- Obtained type approval for the sales of mobile satellite terminal, Thuraya Atlas IP, in Russia.
- The launch of the product in Russia's maritime market is expected to commence in the next 2-3 months.
- Company believes the addressable market size is estimated to be ~2,000 vessels.
- Counter is loss-making and trades at 3.26x P/B.
*IPS Securex
- Received a letter of award for the provision of CCTV upgrading work in Singapore worth $0.6m.
- Works slated to complete by 30 Jun '18.
NEGATIVE NEWS
*Singtel
- Selling 0.15m shares in ACPL Marine for $15m, paring its stake to 16.67% from 41.67%.
- The entity owns and charters maintenance-cum-laying cableships and Singtel is estimated to record a divestment gain of $8.1m.
- Trades at 14.9x forward P/E and offers an indicative 4.9% yield.
*SIIC Environment
- Substantial shareholder Value Partners disposed 626,100 shares at an average $0.5169 apiece via the market, paring its stake from 11.01% to 10.99%.
NEUTRAL NEWS
*Cosco Shipping/ Cogent
- The $1.02/share privatisation offer for Cogent has been deemed unconditional following the receipt of 92.05% in valid acceptances.
- Cosco Shipping intends to exercise its right of compulsory acquisition.
- The offer will remain open for acceptance until 19 Jan.
*HC Surgical Specialists (HCSS)
- Proposed to acquire a 51% stake in general practitioner HMC Medical for $0.67m.
- As at Jun '17, the clinic has a net liability of $0.15m and made an adjusted net profit for $0.026m for the trailing 12 months.
- Vendors Dr. Chee Hsing Gary Andrew and Dr. Lee Peng Khow will continue to helm operations for 3.5 years.
- Following 42 months into the employment contract, the vendors will have an option to repurchase the sale shares for a nominal sum of $2.
- Last traded at 67.5x trailing P/E.
- The market could extend its fine start to the year, with technology stocks in the limelight after S&P 500 and Nasdaq notched fresh records, while investors look to Dec PMI for further direction.
- Technically, STI is testing its immediate resistance at 3,430 with the next objective at 3,470, while downside support is at 3,380.
POSITIVE NEWS
*DBS
- Inked a 15-year regional tie-up with general insurer Chubb to distribute the latter's products to SME clients across Singapore, HK, China and Taiwan.
- Last traded at 1.39x P/B and MKE has a Hold with TP of $22.75.
*StarHub
- BlackRock emerged as a substantial shareholder, raising its stake to 5% from 4.99%, following the purchase of 52,700 shares in the open market at $2.91 each.
- Trades at 17.8x forward P/E and 5.9% dividend yield.
*Roxy-Pacific
- Obtained consent from all proprietors at freehold residential development Derby Court.
- To recap, Roxy emerged the top bidder for the collective sale tender of the condominium located 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.
- Last traded at 2.96x forward P/E and 1.3x P/B.
*Manufacturing Integration Tech
- Secured new orders totalling $14.2m for its semiconductor equipment and contract equipment manufacturing services.
- Most of these orders are expected to complete by 1H18.
- Counter is loss-making and trades at 1.21x P/B.
*Addvalue Technologies
- Obtained type approval for the sales of mobile satellite terminal, Thuraya Atlas IP, in Russia.
- The launch of the product in Russia's maritime market is expected to commence in the next 2-3 months.
- Company believes the addressable market size is estimated to be ~2,000 vessels.
- Counter is loss-making and trades at 3.26x P/B.
*IPS Securex
- Received a letter of award for the provision of CCTV upgrading work in Singapore worth $0.6m.
- Works slated to complete by 30 Jun '18.
NEGATIVE NEWS
*Singtel
- Selling 0.15m shares in ACPL Marine for $15m, paring its stake to 16.67% from 41.67%.
- The entity owns and charters maintenance-cum-laying cableships and Singtel is estimated to record a divestment gain of $8.1m.
- Trades at 14.9x forward P/E and offers an indicative 4.9% yield.
*SIIC Environment
- Substantial shareholder Value Partners disposed 626,100 shares at an average $0.5169 apiece via the market, paring its stake from 11.01% to 10.99%.
NEUTRAL NEWS
*Cosco Shipping/ Cogent
- The $1.02/share privatisation offer for Cogent has been deemed unconditional following the receipt of 92.05% in valid acceptances.
- Cosco Shipping intends to exercise its right of compulsory acquisition.
- The offer will remain open for acceptance until 19 Jan.
*HC Surgical Specialists (HCSS)
- Proposed to acquire a 51% stake in general practitioner HMC Medical for $0.67m.
- As at Jun '17, the clinic has a net liability of $0.15m and made an adjusted net profit for $0.026m for the trailing 12 months.
- Vendors Dr. Chee Hsing Gary Andrew and Dr. Lee Peng Khow will continue to helm operations for 3.5 years.
- Following 42 months into the employment contract, the vendors will have an option to repurchase the sale shares for a nominal sum of $2.
- Last traded at 67.5x trailing P/E.
Tuesday, January 2, 2018
SG Market (02 Jan 18)
MARKET OVERVIEW
- The market could resume its uptrend on the first trading session of the year on bargain hunting following some profit-taking activity in the last two weeks of 2017.
- Technically, STI looks to be supported at 3,360, with immediate resistance at 3,430.
SECTOR WATCH
*Economy
- Singapore economy grew 3.1% in 4Q17, lifted again by the manufacturing sector (+6.2%).
- This was higher than street estimate of 2.6% but moderated from 5.4% expansion in the preceding quarter.
- MKE is forecasting GDP growth of 2.5% in 2018.
*Banks
- Domestic bank lending climbed 7.1% to $653.7b in Nov (Oct: +6.8%), propped up by business sector (+8.8%, Oct: +9%) and consumer loans (+3.8%, Oct: +3.8%).
- Maybank KE is Neutral on Singapore banks with preference for UOB (Buy, TP $27.10) over DBS (Hold, TP $22.75) and OCBC (Hold, TP $12.00).
POSITIVE NEWS
*SATS
- 49:51 JVCo, Mumbai Cargo Service Center Airport, won a cargo handling concession contract in Chhatrapati Shivaji International Airport in Mumbai, India.
- The concession will commence in Apr '18 and run for 18 years.
- Trades at 23.1x forward P/E.
*Chip Eng Seng
- Proposed US$19.7m investment for an effective 60% stake in a real estate development project in Ho Chi Minh City, Vietnam.
- The mixed project sited on a land area of 4,829 sqm and located in District 5 is known as Soai Kinh Lam Apartment - Commerce Centre.
- Trades at 17.7x forward P/E.
NEUTRAL NEWS
*CapitaLand
- Divesting interests in six Indian malls and their property manager for 1.6b rupees ($32.7m).
- The transaction is slated to be completed in 1Q18.
- Trades at 33% discount to its RNAV/share of $5.27.
*GP Industries
- Disposing two industrial complexes in Huizhou, China, for Rmb121.3m ($24.8m).
- The assets span 29,186 sqm of build-up area and group expects to reap a net gain of $15.9m.
- Last traded at 18.7x trailing P/E and 1.04x P/B.
*Global Yellow Pages
- Entered into a conditional agreement to subscribe 50.1% stake of FundPlaces for up to $2m.
- FundPlaces leverages on block chain technology to operate an online platform, allowing investors to build a diversified real estate investment portfolio across the world.
- The strategic investment would enable the group to leverage on its platform for its property development projects.
- Last traded at 0.5x P/B.
*Halcyon Agri
- Extended the deadline for its proposed acquisition of four rubber processing factories in West Kalimantan, Indonesia, to 12 Jan.
- If completed, 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.
*Far East Group
- Completed the acquisition and partial leaseback of a property at 51 Ubi Ave 3.
- Group also extended the deadline of the option-to-purchase for its proposed disposal of Third Lok Yang property to 28 Feb from 31 Dec '17.
- Trades at 0.36x P/B.
*Union Gas
- Signed a non-binding MOU to acquire certain assets from Semgas Supply.
- Assets include the business of retail distribution of bottled LPG cylinders and sale of LPG-related accessories to domestic households in Singapore.
- The acquisition will allow the group to expand its retail LPG distribution network and customer base.
- The market could resume its uptrend on the first trading session of the year on bargain hunting following some profit-taking activity in the last two weeks of 2017.
- Technically, STI looks to be supported at 3,360, with immediate resistance at 3,430.
SECTOR WATCH
*Economy
- Singapore economy grew 3.1% in 4Q17, lifted again by the manufacturing sector (+6.2%).
- This was higher than street estimate of 2.6% but moderated from 5.4% expansion in the preceding quarter.
- MKE is forecasting GDP growth of 2.5% in 2018.
*Banks
- Domestic bank lending climbed 7.1% to $653.7b in Nov (Oct: +6.8%), propped up by business sector (+8.8%, Oct: +9%) and consumer loans (+3.8%, Oct: +3.8%).
- Maybank KE is Neutral on Singapore banks with preference for UOB (Buy, TP $27.10) over DBS (Hold, TP $22.75) and OCBC (Hold, TP $12.00).
POSITIVE NEWS
*SATS
- 49:51 JVCo, Mumbai Cargo Service Center Airport, won a cargo handling concession contract in Chhatrapati Shivaji International Airport in Mumbai, India.
- The concession will commence in Apr '18 and run for 18 years.
- Trades at 23.1x forward P/E.
*Chip Eng Seng
- Proposed US$19.7m investment for an effective 60% stake in a real estate development project in Ho Chi Minh City, Vietnam.
- The mixed project sited on a land area of 4,829 sqm and located in District 5 is known as Soai Kinh Lam Apartment - Commerce Centre.
- Trades at 17.7x forward P/E.
NEUTRAL NEWS
*CapitaLand
- Divesting interests in six Indian malls and their property manager for 1.6b rupees ($32.7m).
- The transaction is slated to be completed in 1Q18.
- Trades at 33% discount to its RNAV/share of $5.27.
*GP Industries
- Disposing two industrial complexes in Huizhou, China, for Rmb121.3m ($24.8m).
- The assets span 29,186 sqm of build-up area and group expects to reap a net gain of $15.9m.
- Last traded at 18.7x trailing P/E and 1.04x P/B.
*Global Yellow Pages
- Entered into a conditional agreement to subscribe 50.1% stake of FundPlaces for up to $2m.
- FundPlaces leverages on block chain technology to operate an online platform, allowing investors to build a diversified real estate investment portfolio across the world.
- The strategic investment would enable the group to leverage on its platform for its property development projects.
- Last traded at 0.5x P/B.
*Halcyon Agri
- Extended the deadline for its proposed acquisition of four rubber processing factories in West Kalimantan, Indonesia, to 12 Jan.
- If completed, 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.
*Far East Group
- Completed the acquisition and partial leaseback of a property at 51 Ubi Ave 3.
- Group also extended the deadline of the option-to-purchase for its proposed disposal of Third Lok Yang property to 28 Feb from 31 Dec '17.
- Trades at 0.36x P/B.
*Union Gas
- Signed a non-binding MOU to acquire certain assets from Semgas Supply.
- Assets include the business of retail distribution of bottled LPG cylinders and sale of LPG-related accessories to domestic households in Singapore.
- The acquisition will allow the group to expand its retail LPG distribution network and customer base.
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