Monday, April 2, 2018

SG Market (02 Apr 18)

- Worries over intensifying trade war could return to the forefront as China rolls out new tariffs on meat, fruit and other US imports totalling 128 products, on retaliation against US taxes on steel and aluminium.
- Technically, the STI sees topside resistance at 3,440 and downside support at 3,370 (200MA).

*United Global
- Pheim Asset Management is acquiring 15m shares from Chairman and controlling shareholder, Wiranto, for $0.41/share.
- This represents a 4.7% stake in the company and Wiranto will retain 39.8% ownership.
- Separately, the group is setting up a 35:55:10 JV in Australia with PFR Management and DP United to import and distribute lubricant products.
- Trades at 10.6x trailing P/E.

- Japan Exchange Group (JPX), a shareholder of SGX, will be selling its 4.95% stake sequentially over three years.
- The shares were bought in Jun '07 to form a cooperative relationship with SGX.
- After reviewing the requirements under the Japan's Corporate Governance Code introduced in 2015, JPX concluded that it can maintain its relationship with SGX even without holding its shares.
- We retain BUY on SGX with TP of $8.73.

*Viva Industrial Trust/ ESR-REIT
- Updated that both industrial landlords have extended exclusive talks over a possible merger to 30 Apr '18.

*Top Glove
- Acquiring 85% stake in Duramedical for RM2.85m to diversify into medical related products.
- The target manufactures, sells, and exports rubber dental dams, exercise bands, and other rubber-related products.
- Deal is expected to be completed by 3Q18.
- Trades at 27.6x forward P/E.

*Noble Group
- Proposed disposal of a Kamsarmax dry bulk carrier for US$24m.
- The excess of the consideration over the book value as at 31 Dec '17 is ~US$0.2m.

- Proposed placement of 1,050m new shares (69.78% existing share capital) at 3.5¢ apiece to Asdew Acquisitions-controlled AOC Acquisitions (750m), Toh Bee Yong Bernard (200m) and Poh Boon Kher Melvin (100m).
- AOC Acquisitions is owned by Asdew Acquisitions (51%), Ching Chiat Kwong (15%), Low See Ching (15%), Han Seng Juan (9.5%) and Loh Kim Kang (9.5%).
- The 750m new shares issued to AOC Acquisition will be moratorised for one year from completion date.
- Net proceeds of $36.5m will be mainly used for partial cash redemption of outstanding notes.
- Trades at 3.9x trailing P/E and 2.15x P/B.

*Anchor Resources
- Proposed issue of guaranteed non-convertible bonds with principal amount of $1.5m due 2019 with 47m free warrants at an exercise price of 3.2¢ per share to two individuals.
- Also proposed an issuance of guaranteed non-convertible bonds with principal amount of $3.31m due 2019 with 90m free warrants at exercise price of $0.032 to an individual.
- Net proceeds will be used for working capital purposes and repayment of the 2017 bonds.
- Trades at 3.14x P/B.

*Boustead Projects
- Extended the completion date for the sale of a leasehold interest in the land and buildings at 25 Changi North Rise to FY3/19.
- The property has a net book value of $4.5m and net gain on disposal is $6m.
- Trades at 6.8x trailing P/E and 1.05x P/B.

- Updated that a heavy thunderstorm on 30 Mar caused extensive damage to its farm at 20 Murai Farmway.
- The bad weather damaged 13 of the Group's chicken sheds (which mainly housed its breeder and white egg layers chickens) and the egg production cum warehouse building, where the egg grader machine used for the sorting and packing of eggs is housed.
- The group is in the midst of assessing the damage and is working with its insurer to recover the loss of income and damage to the farm equipment.
- Trades at 13.8x trailing P/E and 0.86x P/B.

*KS Energy
- Independent auditors have highlighted the group's ability to continue as a going concern.
- Questions arise on the group's ability to secure a short term loan of $5.5m to meet the debt obligations due within the next 12 months, as well as its ability to complete the financing arrangement for the capital obligation of $253m for its newbuild contract due for delivery.
- Further, the group's expects to generate positive cash flow from existing and prospective rig charter contracts despite the challenging operating environment.
- Trades at 0.82x P/B.

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