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.