Tuesday, January 9, 2018

SG Market (09 Jan 18)

- 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.

*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.

*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.

- 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.

- 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.

*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.

- 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.

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