Thursday, April 12, 2018

SG Market (12 Apr 18)

- Expect some profit-taking and risk aversion amid escalating global geopolitical tensions after US President Trump threatened missile strikes against Syria
- Oil-linked stocks could gain as crude surged 2% to a 3-year high of US$66.82/bbl.
- Technically, the STI has closed the breakdown gap at 3,485 but remains trapped within the broad downtrend channel between 3,375 and 3,520.

*SIA Engineering
- Signed an In-flight entertainment and connectivity maintenance agreement with Thales for an undisclosed sum, to support SIA's fleet of A350 XWB aircraft for an initial 10 years.
- Trades at 21.4x forward P/E with 4.1% dividend yield.
- MKE has a Hold with TP of $3.50.

*Kim Heng Offshore & Marine
- Secured a one-year charter contract for two anchor handling tug/supply vessels from a leading oil major in Malaysia for an undisclosed amount.
- Loss-making and trades at 0.84x P/B.

*Grand Banks Yachts
- Eastbay 44 luxury boat will make its debut at the 2018 Singapore Yacht Show on Apr 12-15.
- Since its European debut in Jan, it has sold 12 units of the latest Eastbay model.
- Trades at 47x trailing P/E and 1.21x P/B.

*ST Engineering
- Its aerospace arm secured $510m new contracts in 1Q18, ranging from heavy maintenance to engine wash.
- This is 54% lower than the orders won in 1Q17.
- Trades at 20.7x forward P/E with 4.1% dividend yield.
- MKE has a Buy with TP of $4.15.

*Silverlake Axis
- Sold 0.3m Global Infotech (GIT) shares for Rmb3.8m (RM2.3m) or Rmb11.20 each.
- To recap, the group intended to monetise up to 19.2m GIT shares after it ceased to be an associate.
- The transaction is estimated to book a net disposal loss of RM0.68m.
- Trades at 0.53x P/E.

*Lippo Malls Retail Trust
- New tax regulations are expected to negatively affect future DPU as service and utilities recovery charges will now be subject to 10% withholding tax.
- On a proforma basis, the new regulations would cut FY17 distributable income by 7% to $90.2m, while DPU would fall to 3.19¢ (-7.3%).
- This implies a pro forma yield of 8.4%. Last traded at 1.18x P/B.

- Received a letter of demand from Advanced Manufacturing Industry Investment Fund for the early redemption of a Rmb400m loan extended to subsidiary Jilin Midas Aluminium Industries.
- The loan was guaranteed by Midas, its former chairman Chen Wei Ping and third party North East Industries.
- If loan is not repiad within 90 working days, an additional penalty will be imposed. The group claims that it was previously unaware of the loan guarantee.
- Trading in the counter has been suspended since Feb 8.

*Lian Beng
- Spinning off the property development unit, SLB Development on Catalist board.
- SLB is offering 238m shares at $0.23 apiece, comprising 8m public shares and 230m placement shares.
- Post-IPO, the group will retain 73.9% interest in SLB.
- Net proceeds of $51.4m will go towards replenishing its land bank (32.9%), funding development projects and working capital purposes (33.6%), and the remaining will be used for loan repayment.
- SLB has 9 ongoing residential, mixed-use, industrial projects and 6 pipeline developments (Singapore: 5, China: 1) totalling 4.6m sf with gross development value of $892m and estimated development profit of $136m.
- IPO will close on 18 Apr and trading is slated to begin on 20 Apr.
- Lian Beng trades at 6.6x trailing P/E and 0.52x P/B.

- Daughter of co-founder and former finance director Ng Bie Tjin has proposed a cash distribution of 32¢ per share. This compares to a 1¢ special dividend declared by the company. Ng and her family vehicle Uniseraya Holdings own 16% of the group.
- The group is embroiled in high profile feud over its controversial business diversification and acquisition of Malaysian haircare products maker Wayco Manufacturing.
- An EGM has been requisitioned on Apr 20 to oust four directors appointed following the entry of new 29% shareholder, Ng Siew Hong last year.
- SGX has also questioned the board appointments, its hiring of an independent reviewer and corporate governance related to the Wayco acquisition.

*Tiong Seng
- Raised its effective interest in Tiong Seng (Tianjin) Project Management and Consultancy to 100% (prior: 99%) for Rmb1.4m.
- Additionally, the company formed a 26:30:22:22 JVCo with three other China-based partners to undertake prefabrication business in China.
- Trades at 5.5x trailing P/E.

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