SG Market (01 Jun 18)

MARKET OVERVIEW
- Expect another volatile session on Wall Street selldown after US imposed stiff tariffs on steel and aluminium imports from key allies, sparking trade war fears.
- Technically, the STI exhibited an engulfing long black candle and is in danger of breaking below its 200-dma support level at 3,422, which could signal a continuation of the downtrend in the near term.

POSITIVE NEWS
*Sembcorp Industries
- Acquired UK Power Reserve (UKPR), Britain's largest flexible distributed energy generator for £216m ($385m).
- UKPR owns and operates 533MW of projects across 32 locations in England and Wales, with another 480MW under development.
- The deal is in line with the group's strategy to position its energy portfolio towards developed markets, grow its merchant energy capabilities and support a renewable future to meet the needs of a fast-moving energy market.
- It will also give the group a wider foothold in UK's energy sector and transform its business from a centralised utilities provider to an integrated energy platform spanning gas, heat and power.
- Trades at 15.5x forward P/E and 0.88x P/B

*Sunpower
- Secured a Rmb105.2m manufacturing and services contract from Xinjiang Xinte Crystalline Silicon High-tech, a reputable polysilicon player.
- This brought total contract value from Xinjiang Xinte to Rmb185.2m within a month.
- The group will supply raw material towers and cold-hydraulic heat exchangers to Xinjiang Xinte's high-purity polysilicon plant upgrading project.
- The equipment will be delivered in 2018 and will have a positive impact on the group's FY18 results.
- Contract win adds to the existing record order book of Rmb2b as at end-Mar.
- Trades at 8.7x trailing P/E.

NEUTRAL NEWS
*ST Engineering
- Marine arm has formed 40:60 JV with Tuas Power to operate and maintain Singapore's fifth desalination plant in Jurong Island for a concession period of 25 years from 2020.
- Separately, it has set up a 40:60 EPC consortium for the preliminary design work for the plant.
- Trades at 17.9x forward P/E

*Chemical Industries
- Inked a MOU to form a 50:50 JV with Malaysia-based May Chemical for the storage, distribution and trading of chemicals.
- May Chemical is one of the largest independent traders/distributors of industrial and commercial chemicals in Malaysia (by volume and range), with its own logistics assets for distribution.
- The chemical trader has been in a long-term relationship with the group for more than 30 years.
- The JV setup is expected to be completed within 3 months.
- Trades at 8.4x trailing P/E.

*Perennial Real Estate
- Acquiring Sanctuary City for US$15.6 ($21m).
- Sanctuary City has entered 60:40 JV with Indonesia-based PT Cipta Harmoni Lestari to develop a residential project in Sentul City, Bogor, Indonesia.
- The 246,982 sqm land parcel will be developed into >1,700 residential units, including landed houses and condos, with a total GFA of at least 147,000 sqm.
- Sentul City is a large-scale master-planned township with 'back-to-nature' concept and numerous amenities to attract middle-to high-income residents working in Jakarta.
- Total development cost is over Rp1.6t ($153.4m) and the project would diversify the group's current portfolio, which is mainly in China and Singapore.
- Trades at 0.51x P/B.

*The Trendlines
- Partnering Brazil-based investment group Sirius VC for co-investing opportunities.
- Sirius VC will co-invest a minimum of $0.05m for each portfolio company identified by the group.
- The venture capitalist also provides clinical field trials, commercial opportunities and additional funding for the start-ups.
- Trades at 9.3x trailing P/E and 0.61x P/B.

*Singapore eDevelopment
- US subsidiary Global BioLife has developed a low glycemic index (GI), naturally modified sugar Laetose.
- The group has established a JV with Quality Ingredients to refine the invention and to create mass production process.
- The patent-pending alternative sugar has lesser calories counts and almost 50% lower GI than regular sugar and also assists in mitigating inflammatory responses.
- The group aims to license Laetose to a major company with the ability to infuse the product into multiple global products.
- Trades at 1.1x P/B.