Tuesday, April 10, 2018

SG Market (10 Apr 18)

MARKET OVERVIEW
- Sentiment remain cautious amid the tense stand-off between US and China over trade tariffs as traders await a keynote address by China President Xi at the Boao Forum today and the release of advance 1Q18 GDP growth as well as MAS policy statement later this week.
- Technically, the STI is likely to trade within its downward channel between 3,370 and 3,480 in the near term.

POSITIVE NEWS
*CapitaLand
- Serviced residence unit, The Ascott, tied up with developers in China, Japan and Thailand to manage apartments under development and future projects.
- It added 1,607 units to its portfolio in Jan and Feb and will sign management and lease agreements for a further 3,400 apartments across 14 properties in 10 cities this quarter.
- The group is on track to achieve its global target of 80,000 units this year and doubling it to 160,000 units by 2023.
- Trades at 0.83x P/B.

*Keppel Corp
- Secured a contract with Mitsui to build Singapore's first dual-fuel bunker tanker for Sinanju Tankers.
- The 7,990 dwt vessel is scheduled for delivery in 2H19, Sinanju and Mitsui will have an option for a second tanker within six months from the effective date of the first contract.
- Trades at 14.4x forward P/E and 1.23x P/B.

*Oxley
- Saw robust take-up over the weekend launch of the 170-unit The Verandah Residences, with 129 apartments (76%) sold at an average $1,815 psf.
- Demand for the freehold condo in Pasir Panjang was particularly strong for the one and two-bedders, with locals making up 85% of buyers.
- The site was purchased in Jul '17 for $121m, or $964 psf ppr, and the project is expected to be completed in 4Q23.

*MindChamps
- Setting up a fund with Temasek to invest in pre-school fund products, with schools to be run under the MindChamps brand.
- Palace Investments, an indirect wholly-owned unit of Temasek's Pavilion Capital, will commit US$50m to the fund and if returns exceed an undisclosed threshold, MindChamps will be entitled to a portion of the excess.
- MindChamps will own 70% of the fund, while Palace Investments will own 30% through convertible preference shares.

*Vard
- Secured a contract worth slightly below NOK400m for a stern trawler for repeat client, HAVFISK AS.
- The new vessel is scheduled for delivery in 1Q20.

NEGATIVE NEWS
*Dragon Group
- Independent auditor Ernst & Young has flagged uncertainty over the group's ability to continue as a going concern.
- Question arises on the group's ability to seek continual financial support from substantial shareholder, ASTI Holdings, to meet future cash obligations.

*Anchor Resources
- Independent auditor BDO highlighted uncertainty over the group's ability to continue as a going concern.
- The uncertainty is premised on the group's ability to generate sufficient operational cash flow.
- However, the Board remains confident that the group will be able to raise sufficient funds and improve cash flow to meet its operational needs for the next 12 months.
- Trades at 2.57x P/B.

*NauticAWT
- Independent auditor Deloitte & Touche has pointed out uncertainty over the group's ability to continue as a going concern.
- The validity of the concern is dependent on the successful completion of negotiations with third parties to dispose the group's interest in NauticAWT Energy and secure additional funding for operations, as well as its ability to generate sufficient operational cash flows from new contracts and continual support from existing bankers.

NEUTRAL NEWS
*Yanlord Land
- Partnered a consortium of developers to jointly acquire two adjacent land parcels in Bei Chen district in Tianjin, China, totalling Rmb7.55b.
- The group owns a 19.8% interest in Tianjin Hefa Property Development, which holds the development rights of the first site with maximum gfa of 250,446 sqm.
- Additionally, the group also owns a 16.5% stake in Tianjin Lianzhan Property Development, which has the development rights for the second land parcel which has a maximum gfa of 165,188 sqm.
- The sites are slated for mixed development and are well connected via key thoroughfares and metro stations.
- Trades at 0.69x P/B.

*The Trendlines
- Disclosed colostomy-device firm Stimatix GI as its reference for its "Most Valuable Portfolio Company" reported in financial statements and other reports.
- Stimatix sold its assets to B. Braun in Nov '14 and the non-disclosure agreement signed had previously prevented the release of the information.
- Product is scheduled to launch in mid '18, with the addressable market for stoma/ostomy care estimated to reach US$2.99b by 2022.
- B. Braun is required to pay royalty to Stimatix based on product sales.
- The group currently holds a 28.2% stake in Stimatix, which was valued at US$42.6m as at Dec '17.
- Counter trades at 8.9x forward P/E and 0.58x P/B.

*Mirach Energy
- Intends to diversify into new agricultural crops related business, in addition to the proposed new property business announced recently in Feb '18.
- The proposals are subject to shareholders' approval at the EGM.
- The group is likely to focus on Singapore, Malaysia, China and Southeast Asia for the initial investments.

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