Friday, January 5, 2018

SG Market (05 Jan 18)

- 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.

- 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.

- 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.

- 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.

*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.

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