Monday, February 5, 2018

SG Market (05 Feb 18)

- Trading is likely to turn jittery after the sell-off on Wall Street last Fri capped its worst week in two years as strong US jobs and wage data stoked inflation fears and worries that the Fed might raise interest rates faster than expected.
- Notable results this week include HPHT, NetLink NBN, Yoma (5 Feb), Manulife (6 Feb), DBS, Singtel (8 Feb).
- Technically, if the 3,510 level on the STI is broken, the next support would be at 3,470.

- Jan manufacturing PMI rose for the 17th straight month to 53.1 (est: 52.6, Dec: 52.8), its highest reading since Dec '09.
- This was attributed to faster expansion in factory output, new orders, exports and inventory.
- Electronics PMI expanded for the 18th consecutive month but slowed for the second month in a row to 52.9 (Dec: 53.2) as order backlog contracted for the first time in 13 months.

*SIA Engineering
- 3QFY18 net profit of $54.8m (+4.2%) was lifted by associates and JVs (+29.1%) on stronger takings from its repair and overhaul centres.
- However, revenue dipped 0.5% to $271m on reduced fleet management revenue, while operating margin narrowed to 6.7% due to FX swing.
- This took 9MFY18 core earnings to $129.1m (+2.4%), broadly in line with estimates.
- MKE maintains Hold with TP of $3.50.

- 2QFY18 net profit slid 15% to US$11.6m due to higher operating cost and taxes in the hotel segment.
- This took 1HFY18 earning to US$29m (+18%), making up 31% of full year forecast.
- For the quarter, revenue climbed 2% to US$88.7m mainly from the stronger GBP and AUD against USD, while gross margin slipped 1.6ppt to 59.2%.
- Management remains cautious on the outlook of the UK hotel industry. Refurbishment and re-branding of The Cumberland Hotel into Hard Rock Hotel London will impact rooms available for rent.
- Trades at 9.2x forward P/E.

*Hwa Hong
- Turned around to 4Q17 net profit of $1.5m (4Q16: $1.1m loss), bringing FY17 net profit to $7.4m (+13.1%).
- Revenue for the quarter soared 89.9% from a low base to $5.4m, boosted by higher rental income (+10.5%) and investments (+$2.4m), mainly due to higher gains from share trading activities.
- Gross margin expanded to 76.4% (+6.2ppt) on a shift in sales mix.
- Bottom line was further supported by stronger associates/JV contributions of $1m (+484%).
- Maintained final DPS of 1¢ and declared a special DPS of 0.1¢ (4Q16: nil).
- NAV/share at $0.3019.

*QT Vascular
- Entered into a term sheet with a multinational corporation with the intention to sell its coronary assets.

- 60:40 JVCo between Vibrant and Figtree has secured 100% of all available leases in Phase 2 of Fervent High Tech Industrial Park in Changshu, China.
- The JVCo acquired the 50-year leasehold 76,533 sqm industrial land in Changsu Economic Development Zone in Jiangsu Province for the development of build-to-suit (BTS) industrial factories.
- The BTS development is scheduled to be completed by 2Q19.

*Thai Bev
- Moody's has downgraded its credit rating to Baa3 from Baa2, with outlook slashed to negative from stable.
- The downgrade reflects the substantial jump in debt to fund its 27% interest in Vietnamese brewery Sabeco.
- While synergies from the acquisition are evident, Moody's believes that such synergies will only materialise in the longer term.

*Profit warnings
- ASL Marine
- Ntegrator

- Subscribing for Bharti Airtel's proposed preferential share allotment for Rs26.5b ($555.6m).
- Post-subscription, Singtel's economic interest in Airtel will increase to 39.5% from 38.6%.

*Spackman Entertainment
- Intends to launch its own Korean entertainment utility tokens through an Initial Coin Offering (ICO).
- The upcoming cryptocurrency, K Coins, will be used to grant holders access to premium content, fan meetings, concerts and star merchandise.
- The proposed ICO will utilise blockchain technology to leverage on the group's content and talent management platform.

-Secured four contracts worth $17.2m, including a US$2m project that supplies spare parts and ECI equipment to Ministry of Defence of Myanmar.
- Additionally, one of the contracts is for the installation and maintenance works for broadband fibre network to a regional service provider for a three year period.

- The $0.195 apiece cash privatisation offer has received 89.08% of valid acceptances.
- Offer closes on 5 Mar, 5.30pm.

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