SG Market (15 Mar 18)

MARKET OVERVIEW
- Rising worries on heightening trade tensions could result in a jump in volatility for the SG market, as investors steer clear of potential downside risks arising from increased protectionism.
- Technically, the STI sees its next objective at 3,575 with near-term support at 3,470.

ECONOMIC WATCH
*Economy
- Private-sector economists have raised Singapore's 2018 GDP growth forecast to 3.2%, against an earlier estimate of 3% made in Dec '17, and falls within the MTI's range between 1.5% and 3.5%.
- GDP growth is anticipated to moderate to 2.8% in 2019.

CORPORATE RESULTS
*Vibrant Group
- 3QFY4/18 net profit dived 89% to $0.15m amid higher attribution to minority interest.
- Revenue surged 231% to $177.3m from new contribution from recently-acquired Chinese coal producer Blackgold International.
- However, gross margin crumbled to 7.7% (-21.2ppt) due to the temporary shutdown of mining activities for maintenance work.
- Bottom line was boosted by $6.8m (3QFY17: nil) write backs on impairments partially pared by a 165.9% surge in net finance costs to $5.6m.
- Trades at 0.59x P/B.

*Khong Guan
- 1HFY18 net profit soared 733.68% to $0.8m albeit from a low base of $95,000.
- Revenue inched up 0.3% to $28.8m as declines in contributions from its Sabah operations (-1.6%), others (-18.3%) and investment trading (-52.3%) was mitigated by strength in its Penang operations (+15%).
- Bottom line was further boosted by a positive change to short-term investments to $0.6m (1HFY17: -$0.8m).
- Trades at 24.6x trailing P/E.

POSITIVE NEWS
*Keppel DC REIT
- Acquiring the remaining 999-year leasehold interest in Keppel DC Dublin 1 located at Dublin 24 for €30m ($48.1m).
- The longer tenure will allow the REIT to be more agile in its investment strategy and provide longer term certainty to its clients.
- Post-acquisition, the REIT will own leasehold interest in the data centre until end 2998, up from Apr 2041 currently.
- Transaction is slated to take place within 1H20.
- Offers an indicative yield of 5% and trades at 1.45x P/B.

*Spackman Entertainment
- Korean fantasy melodrama film, Be With You, grossed US$805.5k on the first day of its release, capturing 34.6% market share of Korea's box office revenue.
- The group is one of the major investors in the film and is co-presented by associate company Spackman Media Group.
- Potential income is expected from a multitude of direct and indirect channels including investment return, artists fees, and co-presenting fees.
- Trades at 6.9x forward P/E.

*Keong Hong
- Awarded a contract to erect a a building for the National Skin Centre.
- Also, group will reconstruct an existing 5-storey building for the National Healthcare Group Offices.
- No financial details were provided.
- Last traded at 2.2x trailing P/E.

NEGATIVE NEWS
*AA Group Holdings
- Charged with an offence under the Workplace Safety and Health Act for failure to ensure safety of workers from contractor Poh Huat Heng Corp. in carrying out painting works at a factory at 60 Benoi Road.
- Potential fine is expected to be $0.13m.
- Next court hearing is scheduled on 10 May '18.

*China Kangda Food Company
- Guided for FY17 loss due to an increase of mortality rate of chickens resulting from bad weather and higher admin cost arising from increased professional fees and employees' cost.

NEUTRAL NEWS
*Yanlord Land
- Credit rating firm S&P Global has upgraded Yanlord's long-term corporate credit rating to BB from BB-, due to its improving financial position, stemming from substantial margin expansion and prudent growth strategies.
- Last traded at 0.73x P/B.

*Oxley
- Proposed placement to fund project developments, working capital and general corporate purposes.
- Counter has requested for a trading halt.

*Straits Trading
- Acquiring an 86.8% economic interest in the pre-tax distributions from SIM Residence 2 GK through a silent partnership agreement for ¥989m ($12.2m).
- SIM is acquiring a 134-unit rental residential apartment in Saitama, Japan. The property has an NLA of 6,957 sqm and has secured a 5-year master lease.
- Trades at 0.62x P/B.