Thursday, February 1, 2018

SG Market (01 Feb 18)

- Market sentiment is likely to remain edgy after the Fed left benchmark interest rates unchanged but signalled an acceleration of rate hikes this year due to rising inflation.
- Technically, the STI is expected to range trade between 3,640 and 3,510.

*OUE Commercial Trust
- 4Q17 DPU of 1.14¢ (-3.4%) was diluted by a larger unit base (+18.7%) following a private placement in Mar '17 and redemption of convertible perpetual preferred units (CPPU) in Nov/Dec '17.
- This brought FY17 distribution payout to 4.67¢ (-9.8%), in line with estimates.
- Revenue for the quarter slipped 2.3% to $44m from reduced rental income and one-off income, while NPI fell at a slower pace to $34.7m (-0.3%) on lower operating cost (-8.9%).
- Overall portfolio occupancy dipped 0.2ppt q/q to 96.8%, while aggregate leverage crept up to 37.3% (+0.4ppt q/q).
- Trades at an annualised 4Q yield of 6.1% and 0.82x P/B.

*AEM Holdings
- Acquiring Finland-based Afore Oy, a micro-electro-mechanical systems (MEMS) test solutions provider for €7.58m, representing 10.6x P/E and 5.4x P/B.
- Purchase consideration will be satisfied by way of cash (65.6%) and 0.87m new AEM shares at $4.89/share.
- Under moratorium, 1/3 of the consideration shares can be sold after 12 months, 1/3 after 24 months and remaining shares after 36 months.
- Afore will provide the group with high performance test capabilities and solutions in MEMS, a strategic high-growth semiconductor end-market forecasted to reach US$22b in 2021.
- AEM intends to leverage on its business synergies with Afore to expand its product and customer profile in the semiconductor and industrial sectors.

*Cache Logistics Trust
- Proposed acquisition of 9 Australian logistics properties in the states of Victoria, New South Wales and Queensland for A$191m.
- With gross lettable area of 142,103 sqm and 98.1% occupancy, the portfolio is priced at an initial net property yield is 6.4%.
- This makes it the REIT's largest Australian acquisition, which will increase portfolio valuation by 15.6%, with Australian assets constituting 28%.
- Post deal, leverage is expected to climb 3ppt to 39.3%.
- Trades at a forward 7.4% yield and 1.21x P/B.

*Chip Eng Seng
- Awarded a $168m design and build contract by HDB.
- The initial design phase of the project in at Sengkang will take 10 months to complete with construction taking 32 months thereafter.
- Trades at 18.4x forward P/E.

*mm2 Asia
- To spin-off its 51% owned VFX studio, Vividthree Productions, on the Catalist board.
- Group believes the spin-off will allow Vividthree to be an independent entity and raise funds required for new growth prospects.
- Trades at 21.3x forward P/E.

*Singapore Medical Group
- 20%-owned JVCo, CHA SMG (Australia), will acquire a 65% stake in Australia-based IVF specialist group CFC Global for an undisclosed amount.
- CFC Global has seven clinics in Australia and holds more than 10% market share across the states of Queensland, Victoria and South Australia.
- Counter last traded at 30.3x forward P/E.

- Acquired Australia-based Corporate Counsel for A$2.3m ($2.2m).
- Corporate Counsel engages in the business of providing corporate secretarial and corporate governance services to private and listed companies in Melbourne.
- The acquisition enables the group to expand its presence in Melbourne.
- Post-acquisition, pro-forma FY16 EPS would increase 6.4% to 3.98¢.

*Noble Group
- Defended its debt rescue plan amid criticism by one of its biggest shareholders that it enriches management.
- Separately, Fitch downgrades Noble's issuer default rating to `C' from `CC' on its debt restructuring proposal.

*Profit warnings
- Genting HK
- KLW Holdings
- Eindec
- Singapore eDevelopment

- Seeking listing rule changes for mineral, oil and gas companies to align with industry developments.
- The proposals include updates on approval plans and development time-lines as well as simplified Qualified Person's Report that is more investor friendly.

*Keppel Corp
- Signed a non-binding MOU with global leading smart energy management company, Envision, to explore new and clean energy, and smart cities.
- Group intends to leverage Envision's technologies and expertise in the Internet of Things (IoT) and ecosystem of energy solutions to advance its integrated urban development and operations.
- Partnership will see the group integrate into Envision's EnOS, an open source energy IoT platform into the group's development worldwide, driven by sensors, applications, AI and data analytics technology.
- EnOS covers many domains including wind and solar energy generation, energy storage and network, smart buildings and electric vehicle charging.

*Rotary Engineering
- The $0.46/share privatisation offer by controlling shareholders has closed with the offeror attaining a 95.3% stake.
- Offeror intends to exercise its right to compulsorily acquire all remaining shares.

*Asia-Pacific Strategic/ IPC Corp
- AP Strat intends to acquire a 46.9% stake in IPC from Oei Hong Leong and several other individuals, via an issue of 133 shares for each IPC share.
- AP Strat believes IPC will complement its recently-acquired Huzhou entities based in China.

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