SG Market (26 Feb 18)

MARKET OVERVIEW
- The market could continue its uptrend following a positive close on Wall Street last Fri, while investors await a slew of Singapore economic data this week, including Jan industrial production and PMI for Feb.
- Technically, the STI is heading towards its near term objective at 3,575 with immediate support at 3,470.

CORPORATE RESULTS
*Genting Singapore
- 4Q17 net profit slid 17% to $132.8m but FY17 earnings of $601m (+78%) came in within expectations.
- Revenue for the quarter rose 4% to $580.1m on stronger slot and VIP volumes, despite lower hold rate, as well as improved leisure and hospitality segment, with daily average visitorship growing between 6-9%.
- Adjusted EBITDA rose 9% to $255.1m on record low provisions from a more measured credit policy.
- However, operating margin shrank 11.4ppt to 30.9% mainly on a negative FX swing to $1.5m loss (4Q16: $65.4m gain), as well as higher admin cost of $41m (+22%).
- Declared higher final DPS of 2¢ (+33.3%) to bring full-year payout to 3.5¢ (+16.7%).
- Optimistic that the Japan IR Execution Bill will be tabled in this year's Diet session, which will pave the way for the formal bidding process for Japan gaming licence.
- Trades at 20.6x forward P/E.

*Raffles Medical
- FY17 net profit of $70.8m (+0.8%) met estimates.
- Revenue was flat at $477.6m (+0.8%), as higher local patient load was offset by lower renewal of international healthcare plans by foreign patients.
- Operating margin narrowed marginally to 16.8% (-0.5ppt) on increased staff costs (+2.4%).
- Raised final DPS to 1.75¢ (+17%), bringing full year payout to 2.25¢ (+12.5%).
- Trades at 30.6x forward P/E.

*AEM Holdings
- 4Q17 net profit surged more than 11x to $9.7m (4Q16: $0.8m), boosting FY17 earnings of $31.5m (+576%) ahead of expectations.
- Revenue for the quarter jumped 202% to $59.1m on strong sales of test handlers and relevant consumables to its key semiconductor customer.
- Gross material margin widened 1ppt to 37.3% amid a favourable shift in sales mix, and change in pricing following a switch from SGD to USD billing.
- Net cash position improved to $46m (3Q17: $25m), accounting for 11% of market cap.
- Raised final DPS to 6.5¢ (4Q16: 1.3¢), bringing full-year payout to 12¢ (FY16: 1.8¢).
- Proposed a 3-for-1 bonus issue.
- Trading at 10.3x FY18e P/E.

*Asian Pay TV
- Flat 4Q17 DPU of 1.625¢ brought FY17 distribution payout to 6.5¢, meeting expectations.
- Revenue for the quarter rose 0.9% to $84.7m mainly on positive FX effects. In constant TWD terms, contribution from basic cable TV (+0.3%) improved, while broadband (-2.2%) and premium digital cable TV (-5.8%) declined.
- EBITDA margin widened to 61.1% (+1.6ppt).
- Reaffirmed FY17 DPU guidance of 6.5¢, implying 11.4% yield.
- NAV/unit at $0.83.

*HRnetGroup
- FY17 net profit crept up 0.6% to $41.3m, in line with estimates.
- Revenue rose 7.4% to $391.9m on strong growth in flexible staffing business in Singapore.
- Gross and operating margins both contracted 1.7ppt to 34.7% and 14.5%, respectively.
- Updated that M&A work is on track.
- Declared maiden final DPS of 2.3¢.
- Trades at 20.1x forward P/E.

*APAC Realty
- 4Q17 net profit jumped 59.7% from a low base to $7.9m, taking FY17 earnings to $25.9m (+63.1%), beating estimates.
- Revenue surged 62.5% to $79.8m on higher brokerage income from increased market transactions for new home sales (+162.9% to $46.8m), as well as resale and rental of properties (+34.9% to $80.7m).
- Gross margin narrowed 1.9ppt to 12.3% on higher pace of cost expansion (+66.1%) arising from higher headcount.
- Proposed maiden final DPS of 2¢.
- Trades at 14.1x forward P/E.

*CSE Global
- Sank to FY17 net loss of $45.1m (FY16: $21.2m profit), largely hurt by impairment of receivables ($11.2m) and goodwill ($27.9m), as well as a one-off settlement cost ($16.8m).
- Stripping out non-recurring items, core earnings tumbled 37.1% to $13.3m, but came ahead of estimates.
- Revenue rose 14% to $362.3m on firmer contributions from projects in Americas and Asia Pacific, but gross margin narrowed 5.7ppt to 26%.
- Proposed final DPS of 1¢ and a special DPS of 0.5¢, maintaining full-year payout at 2.75¢.
- FY17 new orders totalled $381.9m (+33.2%), although order book was depleted to $175m (3Q17: $207.6m).
- Trades at 0.82x P/B.

*BHG Retail REIT
- 4Q17 DPU edged up 0.8% to 1.32¢, bringing full-year DPU to 5.47¢ (+2.8%).
- For the quarter, gross revenue and NPI rose to $16.7m (+5.8%) and $11.1m (+8%), respectively, amid higher rental reversion and occupancy in its three multi-tenanted malls in China.
- Overall portfolio occupancy ticked up 0.7ppt q/q to 99.7%, with WALE of 7.1 years (3Q17: 8.2 years).
- Aggregate leverage pared down by 0.3ppt q/q to 32.2%, with average debt cost of 3.7% (3Q17: 3.66%).
- Offers 4Q annualised yield of 7% and trades at 0.91x P/B.

*Heeton
- FY17 net profit soared to $71m (+469%), boosted by fair value gain of investment properties of $36.5m and $28m disposal gain.
- However, revenue slid 15% to $57.1m due to lower sales recognition from residential project Onze@Tanjong Pagar.
- Bottom line was helped by absence of a divestment loss (FY16: $10.3m) and a lower effective tax rate, but pared by lower JV/ associate income (-40%).
- Maintained first and final DPS of 0.6¢, but proposed special payout of 0.4¢ (FY16: nil).
- Trades at 0.5x P/B.

*Yeo Hiap Seng
- 4Q17 net profit declined 25.6% to $7.7m, bringing FY17 net profit to $153.7m (FY16: $29m profit), which was lifted by a disposal gain of $138.4m.
- Core F&B revenue declined 8.2% to $84m due to general market weakness, competitive pricing and sales disruption in Cambodia.
- Gross profit for the F&B unit contracted a further 20.9% to $24.5m on higher costs of finished goods.
- Bottom line was further hit by lower FV gains on investment properties (-33.2%), although partially offset by a disposal gain of a China subsidiary for $3.4m.
- Maintained final DPS of 2¢, bringing FY17 payout to 4¢ (FY16: 2¢).
- Last traded at 4.6x trailing P/E.

*Tiong Seng
- FY17 net profit more than doubled to $30.9m, supported by reduced net finance costs (-37%) and lower effective tax rate of 24.4% (-10.7ppt).
- Revenue slipped 4% to $742.8m as growth in construction (+3%) was offset by lower sales of development properties (-35%) and rental income (-4%).
- Operating margin expanded to 6% (+1.9ppt) on the shift towards higher-margin construction business.
- Construction order book at $543.1m, providing sales visibility till 2020.
- Disclosed that ~$60.7m worth of development unit sales have yet to be recognised.
- Hiked first and final DPS to 1.5¢ (FY16: 0.8¢).
- Trades at 5.8x trailing P/E.

*HG Metal
- 4Q17 net profit sank to just $88,000 (4Q16: $0.8m profit) on nil associates contribution (4Q16: $0.5m).
- This brought FY17 net loss to $11.9m (FY16: $0.9m profit).
- Revenue for the quarter grew 17% to $42m as a 37% jump in ASPs more than offset a 14% decline in sales volume.
- Gross margin improved to 6.7% (+1.4ppt).
- Trades at 0.45x P/B.

*ValueMax
- FY17 net profit jumped 22.7% to $19.1m on improved operating leverage and higher associate contribution (+30.3%).
- Revenue slipped 5.5% to $239.4m due to weaker takings from retail and trading of pre-owned jewellery and gold business (-8.5%), although partially mitigated by a stronger pawnbroking (+8.9%) business.
- Gross margin expanded 3.4ppt to 17.6% on the shift in revenue mix.
- Hiked first and final DPS to 1.26¢ (FY16: 1.08¢).
- Trades at 8.4x trailing P/E and 0.92x P/B.

*GSH Corp
- 4Q17 net profit turnaround to $15.7m (4Q16: $3.7m loss), boosted by a negative goodwill of $11.7m arising from new associate Henan Zhongyuan.
- This brought FY17 earnings to $91m (4Q16: $3.6m loss).
- Revenue for the quarter surged 114% to $37.8m on higher progressive revenue recognition from Eaton Residences project in Malaysia, as well as improved takings from the hospitality segment.
- Gross margin improved 2ppt to 51% on the change in revenue mix.
- However, bottom line was partially offset by higher personnel expenses of $8.6m (+48.8%) and increased director remuneration of $1.6m (4Q16: $0.34m).
- Proposed final DPS of 1.25¢ (4Q16: nil), bringing total dividend payout to 2.25¢ (FY16: 1¢).
- Last traded at 10.7x trailing P/E.

*Kim Heng Offshore & Marine
- 4Q17 net loss contracted to $9m (4Q16: $12.9m loss), mainly on $4.6m drop in impairment of fixed assets.
- This brought full-year loss to $15.3m (FY16: $17.8m loss).
- Revenue for the quarter tumbled 30% to $5.2m on a revenue reversal stemming from a long overdue customer balance, and drop in turnover from equipment rental & material sales.
- Kim Heng barely broke even at the gross level (4Q16: 10%).
- Net gearing increased to 0.33x from 0.25x in 3Q17.
- Maintained first and final DPS of 0.07¢.
- Trades at 0.86x P/B.

*CNMC Goldmine
- Turned around to 4Q17 net profit of US$1.3m (4Q16: US$1.9m loss), helped mainly by non-core items.
- This brought FY17 earnings to US$2.8m (-69.4%).
- For the quarter, revenue slipped 6.2% to US$4.9m as higher ASP (+4.7%) was more than offset by a slump in sales volume (-10.4%).
- Swung into operating profit of US$1.5m (4Q16: US$2.3m loss) mainly from a US$3.1m swing to FX gain of US$0.7m as well as a reversal of performance bonus accruals.
- Slashed first and final DPS to 0.2¢ (FY16: 0.934¢).
- Trading at 9.3x forward P/E and 1.8x P/B.

*Jiutian Chemical
- 4Q17 net profit turnaround to Rmb28.1m (4Q16: $5.8m loss), bringing FY17 earnings to Rmb70.1m (FY16: Rmb0.4m).
- Revenue for the year jumped 59% to Rmb1.12b on higher sales volumes and selling prices of DMF and Methylamine, amid tighter industry supply arising from production stoppages by other producers due to environmental issues.
- Selling price of DMF surged 33% to Rmb5,527, while that for methylamine jumped 49% to Rmb7,558. Sales volume rose 8% and 16%, respectively.
- Accordingly, gross margin widened 7.6ppt to 13.2%.
- Bottom line was partially offset by decline in other income (-65% to Rmb3.3m) due to absence of one-off government grants, lower interest income and rental income.
- Trades at 9.7x trailing P/E.

POSITIVE NEWS
*SBS Transit
- Awarded a five-year contract by LTA to operate the Bukit Merah bus package, marking the second award for SBS Transit out of four sets of public bus services put up for tender under the bus contracting model.
- The contract can be extended by another two years.
- It comprises 18 bus services, including two cross-border services to Johor Bharu, and will commence in 4Q18.
- Last traded at 17.4x trailing P/E.

*Cordlife
- Partnered US-based PlumCare to offer genetic screening for disease management and prevention.
- Genetic testing service PlumCare™ DNA Advisor will soon be launched by Cordlife, to help families in Asia identify gene variants associated with increased risk of developing inherited conditions such as breast and ovarian cancer.

*MindChamps
- Acquired MindChamps PreSchool @ Woodlands for $1.3m.
- The deal was priced at 4.6x P/B and is in line with the group's M&A strategy.