Monday, April 16, 2018

SG Market (16 Apr 18)

- Stocks could creep higher over a softening in US-China trade war rhetoric, while traders remain relatively sanguine that a wider fall-out from the allied strike on Syria can be contained.
- Focus this week will be on China's 1Q GDP growth, retail sales and industrial production data as well as Singapore's NODX for Mar.
- Technically, the STI is approaching the topside of downtrend channel at 3,520, with support at 3,375.

*Hutchison Port Holdings Trust
- 1Q18 net profit slid 12.9% to HK$145.4m, accounting for 18% of full year consensus estimate.
- Revenue inched 3.5% higher to HK$2.67b on stronger container throughput at Yantian (+8.7%) and Kwai Tsing (+1%) terminals, but average revenue per TEU at its China terminals fell due to negative tariff revisions as well as unfavourable transhipment mix.
- Bottom line was eroded by higher finance costs and minority interests.
- Guides that cargo volumes would be hit by 2% if US slaps tariffs on China exports.
- Offers indicative 8.6% yield.

- 3QFY18 net profit slumped 81.7% to $1m, bringing 9MFY18 net profit to just $0.2m (-97.2%).
- Revenue jumped 51.2% to $18.4m from higher sales of goods (+116% to $7.2m) as well as increased installation, connection, delivery and usage of natural gas (+26.9% to $11.2m).
- But, bottom line was dragged by a $6.6m negative swing to FX loss of $0.7m, as well as higher raw materials and consumables used (+49.1% to $12.1m).
- NAV/share at $0.02.

- Group's proposed 1-for-10 bonus issue has been granted the approval in-principle by SGX.
- Books will close on 17 Apr for the bonus issue.
- Trades at 1.4x P/B.

*Kingsmen Creatives
- Awarded two contracts worth $22m, comprising of National Day Parade 2018 ($3m) and the National History Event ($19m).
- The contract for National Day Parade 2018 involves the building and fabrication of the temporary stage set infrastructure and supporting structures at The Float @ Marina Bay and is expected to complete by 2018.
- The work for National History Event is a project in 2019 which will showcase the history of Singapore.
- Offers an indicative 4.3% yield and trades at 12x trailing P/E.

*Hong Leong Asia
- Divesting consumer products unit, Xinfei, to undisclosed Chinese third-parties as part of the group's restructuring efforts.
- Xinfei has been loss-making since 2011 with FY17 loss of $120.7m, compared to group's net loss of $66.5m.

- Setting up a 49:51 JVCo with controlling shareholder and ED, Christian Kwok, to undertake the trading of luxury goods for retail.
- The JV will help provide the group with a new revenue stream and believed to improve its prospects.

*AnAn Intl
- The group has yet to receive the first instalment payment of US$14.4m from Shanghai Huaxin Group (Hong Kong), which was due on 11 Apr.
- To recap, Shanghai Huaxin Group (Hong Kong) has proposed an instalment payment plan for its outstanding trade payables of US$142.9m to the group on 1 Mar.

- Public float has been restored to 10.09% after the vendor sold 300m of his existing shares in the company (representing c. 6.33% stake).
- Hence, there will no longer be any trading suspension in the shares as previously expected.

*Metech International
- Mutually agreed to terminate its proposed $1m loan agreement with controlling shareholder, Simon Eng, after the group's short-term cash flow improved.

- Entered into a non-binding MOU (with 6-mth exclusivity period) for the prosposed acquisition of Liaoning Meal Plus Technology for Rmb4m.
- The target develops software and machinery for the F&B industry.
- The move is in line with the group's intention to expand its corporate accretion services and to broaden its revenue stream.

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