Tuesday, May 8, 2018

SG Market (08 May 18)

- The market is exhibiting some technical weakness and could continue to drift downwards amid an uninspiring 1Q corporate results season so far.
- With crude staying above US$70/bbl, oil-linked counters may be in focus as investors weigh the repercussions of US exiting the Iran nuclear deal.
- Technically, the MACD on the STI is exhibiting a bearish crossover, suggesting some near term weakness. Immediate support for the key index lies at 3,500 with topside resistance at 3,640.

*Frasers Logistics & Industrial Trust
- 2QFY18 DPU grew 3.4% to 1.81c (+3.4%), in tandem with estimates and distributable income of A$25.9m (+3.2%) and a higher hedged exchange rate
- Gross revenue and NPI climbed 6.4% and 8.1% respectively to A$43.6m and A$33.4m on additional contributions from four completed industrial properties in Australia acquired in mid-2017 as well as Beaulieu and Stanley Black & Decker facilities completed in 4Q17.
- Three leases totalling 34,527 sqm in New South Wales and Victoria were signed during the quarter.
- Portfolio was 99.4% occupied with a WALE of 6.75 years, and minimal lease expiries (1.1%) in FY18.
- Aggregate leverage was 30.5% with weighted borrowing rate of 2.9%. 85% of total borrowings on fixed interest rates.
- Trades at annulaised 2QFY18 yield of 7.1% and 1.12x P/B.

- 1Q18 net proflt of $0.34m (-51%) appears to fall short of consensus estimate in a seasonally weak quarter.
- Revenue rose 36% to $6.0m, driven by the increased number of enrolled students following the acquisitions of four preschool centres in Australia in Nov '17.
- Gross margin narrowed by 1.8ppt to 57% due to a hike in staff cost, which resulted from the increased number of academic staff following the acquisition of the Australian company owned and operated centres.
- Bottom line was hit by higher admin expenses post listing as well as currency translation loss of $0.6m due to the weakening of AUD against SGD.
- Balance sheet remains healthy with a net cash position of $29.4m (12.2c/share)
- Trades at 32x trailing P/E.

*United Engineers
- 1Q18 net profit up 3% to $9m mainly due operating losses from its property development segment narrowing 81% to $0.5m while operating profit from its engineering and distribution business soared 200% to $2.7m.
- Revenue decreased 1% to $105m due to lower revenues from all segments (2%-11%) except engineering & distribution (+7%).
- Gross margin improved 1.3ppt to 43.9% amid a shift in revenue mix.
- On outlook, the group intends to embark on AEIs for its SG investment properties and make selective acquisitions if and when such opportunities arise.
- Trades at 0.86x P/B

*OKP Holdings
- 1Q18 net profit sank 43.7% to $2.8m due to a $1.9m drop in profits from associates/JVs amid completion of an exec. condo project.
- Revenue tumbled 22.7% to $22.9m, as higher recognition from maintenance projects failed to offset weakness in construction segment, particularly after the collapse of a viaduct along PIE in 2017.
- Gross margin widened 4.2ppt to 24.2% amid a shift in revenue mix.
- Bottom line was also hit by a higher effective tax rate of 15.7% (1Q17: 8.5%).
- Order book depleted to $249.4m (Dec '17: $268m).
- Trades at 0.85x P/B.

*Halcyon Agri
- 1Q18 net profit plunged 98.3% to $0.3m mainly due to a 52.7% drop in gross profit to US$22.8m partially offset by a 32% reduction in net finance costs to US$4.4m.
- Revenue fell 15.6% to US$429.9m from lower rubber prices (-20.1%), partially offset by higher sales volume (+5.6%).
- Consequently, gross margin narrowed 4.2ppt to 5.3%.
- For the remainder of 2018, management is focused on the integration of five newly acquired SIR factories
- Trades at 33x trailing P/E and 0.81x P/B

*Bumitama Agri
- 1Q18 net profit fell 16.8% to Rp271.8b, bringing earnings to 22% of full-year forecast.
- Revenue slid 9.1% to Rp1.91t as lower selling prices of CPO (-7.6%) and palm kernel (-21.5%) outweighed the increased volume of CPO (+3.2%) and palm kernel (+13.6%).
- Gross margin expanded 1.3ppt to 27.2% on lower costs of sales (-10.8%).
- Bottom line was dragged by FX loss of Rp15.9m (1Q17: 11.3m gain), higher finance costs (+22.2%), admin expenses (+8.8%)
- Trading at 1.7x P/B.

*Keppel DC Reit
- Acquiring a 99% interest in Kingsland Data Centre for $295.1m. The facility (to be renamed as Keppel DC Singapore 5) is located in Jurong and has 98,769 sf of NLA with a committed occupancy of 84.2%.
- Upon completion in 2Q18, the acquisition is expected to be DPU accretive and will further boost its footprint in Singapore to nearly 300,000 sf of aggregate lettable area.
- Separately, the private placement of 224m new Units at $1.353 apiece, which will raise gross proceeds of $303.1m was over 2x covered and saw strong participation from new and existing institutional, accredited and other investors.
- Based on the pro forma as at 1Q18, the REIT's aggregate leverage will improve from 37.4% to 32.1% following the transactions.
- Trades at 1Q18 annualised yield of 5.0% and 1.5x P/B

*China Everbright
- Secured Pulandian Project Phase II in Liaoning Province.
- Daily wastewater treatment capacity of 30,000 m3.
- BOT model with 20-year concession period on an estimated CAPEX commitment of Rmb82m.
- Expected to commence operation by end 2018.
- Trades at 13.8x trailing P/E.

Keppel Corp
- Divesting its 99.8%stake in Keppel Bay Property Development (Shenyang) to Shenyang Vanke Property Development for Rmb502m ($104.8m).
- Expected to reap net gain of ~Rmb176m.
- Divestment completion should take place by Jun.
- Trades at 12.8x P/E

*HC Surgical
- Acquires 51% stake in Jason Lim Endoscopy & Surgery (JLES) for $832k.
- $628k will be paid in cash while the remaining to be paid via 0.3m new shares at $0.68 apiece, a premium 0.7% to last close.
- Deal also comes with an agreement to buy remaining 49% stake at a valuation of 10x JLES's FY22 NPAT.
- Trades at 27.7x trailing P/E.

- Acquiring Chinensis Enterprise from Koh Chong Meng for $0.1m (2.6x P/B).
- Chinensis provides landscape planting, care and maintenance services.

*PACC offshore Services
- Has filed a Notice of Arbitration against Mexico under the Agreement between both countries on the Promotion and Reciprocal Protection of Investments.
- The arbitration is in relation to certain of the Group's investments in Mexico, specifically those made to charter certain vessels for use by PetrĂ³leos Mexicanos (Pemex), Mexico's state-owned oil company.
- Beginning in 2014, Mexico took actions, in violation of its obligations under Chapter II of the Bilateral Investment Treaty.
- These actions prevented the company from continuing to charter those vessels to Pemex, and thereby destroyed those investments that it made in Mexico.
- The Company is seeking compensation from Mexico for the value of those investments.

*Hiap Hoe
- Warned that it is expected to report a loss for 1Q18, primarily due to FX loss and the fair value changes in financial instruments.

No comments:

Post a Comment