Friday, June 8, 2018

SG Market (08 Jun 18)

- Market is likely to remain choppy as trade issues are likely to dominate ahead of contentious G-7 meeting but better China headlines.
- Tech and bank counters may come under pressure after US semicap equipment makers took a hit and 10Y Treasury yield tumbled 9bps to 2.89%.
- Technically, the STI could face some weakness with immediate resistance seen at 3,510 (near 50-dma) and underlying support at 3,428 (200-dma).

*Sunpower Group
- Secured two manufacturing & services contracts worth Rmb95.5m from Shandong NHU, a repeat customer, for the world's largest amino acid project.
- The group will start the supply of equipment in 2H18 and expects completion of delivery in early 2019 with positive impact on its FY18/19 performance.
- This is in addition to its existing record order book of Rmb2b as at end Mar.
- Trades at 7.4x forward P/E.

*Sembcorp Industries
- Sembcorp and Ascendas-Singbridge JV has formalised its 58:48 partnership with state government of Andhra Pradesh to co-master develop the 684-ha Amaravati Capital City Start-up Area in India.
- The development company Amaravati Development Partners (ADP) has signed a concession and development agreement with Andhra Pradesh government for development rights, licences and required authorisations for the development of the startup area.
- The startup area lies within the 20sq km Seed Development Area of Amaravati City and will be developed in phases over 15-20 years.
- Trades at 14.5x forward P/E.

*Addvalue Technologies
- Entered into an airtime service agreement global satellite company to provide enhanced data gathering services for its clients.
- In partnership with Inmarsat, the group is contracted to provide the customer with the inter-satellite data relay system (IDRS) airtime service until at least 2026.
- This is a follow-up from earlier major contract to design and supply IDRS terminals for the customer's multi-LEO satellite constellation, with delivery scheduled to commence in 2018.
- Both contracts are estimated to yield recurring annual revenues exceeding US$40m when fully deployed.
- Trades at 6x P/B

*Low Keng Huat
- Acquiring 67 Cairnhill Road and two adjacent plots for $100m, translating to $1,804 psf ppr.
- The 19,800 sf freehold site is adjacent to Cairnhill Mansion, which the group acquired in a $362m en bloc deal in Feb '18.
- Subject to approval from the strata title board, the group intends to redevelop the site and the Cairnhill Mansion plot into a 200-unit high-rise condo. The other option is to develop the property into a 55-unit project.
- Trades at 0.74x P/B.

*Sembcorp Marine
- Acquiring intellectual property (IP) rights of Norway's Sevan Marine ASA for US$28m.
- The group will further undertake to take over some of Sevan Marine's existing service contracts and engineering services to some contract partners.
- The litigation between SCM Group and Sevan Marine in the US Courts over the infringement of IP rights of SCM Group will be terminated subject to completion.
- Trades at 1.8x P/B

- Divesting 40% stake in PT Max Interactives Technologies (MIT) to PT Recapital Advisors for US$0.1m.
- Post-disposal, the group will own 60% of MIT.
- MIT has a net tangible liability value of $0.09m, and no valuation was carried out for the deal.
- Trades at 0.62x P/B.

*Manufacturing Integration Tech
- Entered into 2nd deed of undertaking with China FortuneTech Capital (CFTC) to extend exclusivity period for 1 more month to 7 Jul '18.
- To recap, the group had entered into a non-binding term sheets to dispose its semicon business to CFTC.
- Trades at 12.6x trailing P/E.

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