Monday, January 29, 2018

SG Market (29 Jan 18)

- 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.

*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.

- 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.

- 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.

- 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.

- 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.

- 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.

- 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.

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