Thursday, April 19, 2018

SG Market (19 Apr 18)

- The market could be buoyed by the influx of fund flows arising from the stronger SGD following the tightening of monetary policy last Fri.
- Oil-linked counters could benefit as crude soared to a 3-year high as US stockpiles drop.
- Technically, the STI has broken above its downward trend channel since 24 Jan 2018 and could retest overhead resistances at 3,570 and 3,610.

*Keppel REIT
- 1Q18 results in line, even though DPU slipped 2.1% to 1.42¢.
- Gross revenue and NPI eased to $39.7m (-0.3%) and $31.2m (-0.6%), respectively, amid weaker contribution from 275 George Street.
- Portfolio committed occupancy dipped 0.3ppt q/q to 99.4%, while aggregate leverage ticked lower by 0.1ppt q/q to 38.6%.
- Offers annualised 1Q yield of 4.7%, and trades at 0.86x P/B.
- MKE has a Hold with TP of $1.19.

*CapitaLand Mall Trust (CT)/ Lian Beng
- CT will be divesting Sembawang Shopping Centre for $248m.
- The buyer is a 50:50 JV consisting Lian Beng and Apricot Capital, and the sale price for the 99% occupied, 206,087 sf, mall translates to $1,203 psf.
- Net sale proceeds for CT of $245.6m will be used to repay debt, finance capex or enhancement works and working capital.
- CT offers an indicative 5.5% yield and trades at 1.08x P/B.

*Courts Asia
- Issued a negative profit guidance for 4QFY18, due to a drop in sales for the group's Malaysia business.
- The slump followed the commencement of the consumer protection (credit sale) regulations in 2018, which capped interest rates at 15% per annum in Malaysia.
- Trades at 6.9x forward P/E.

*Noble Group
- Chairman Paul Brough wrote a letter to explain why the Board believes that the proposed restructuring is fair and reasonable, in order for the company to continue as a going concern.
- As the company is currently in default on about US$3.4b in debt obligations, it has entered into the restructuring agreement with an Ad Hoc Group of its creditors to contemplate a write down of US$1.8b of senior debt.
- In return, it was agreed with the Ad Hoc Group that shareholders will receive 15% of the common equity in the group post-restructuring.
- If approval is not obtained on the restructuring, the group is likely to enter into a formal insolvency or bankruptcy process, which is likely to result in negligible returns for both shareholders and perpetual securities holders.

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