SG Market (14 Jun 18)

MARKET OVERVIEW
- Expect a rocky session after a slightly more hawkish Fed raised its lending rate by 25bps amid stronger economy and inflation and signalled a faster pace of hikes this year, while the ECB could begin the process to end QE today.
- Trade tensions could also rear its ugly head as US President Trump prepares to impose stiff tariffs on Chinese imports as soon as Fri or next week, which is likely to prompt retaliation from Beijing.
- Technically, the STI has broken beneath the crucial 200-dma at 3,430 and could head toward the next support at 3,340.

MACRO WATCH
*Property
- Freehold 60-unit Park House, located along Orchard Boulevard, has been sold to HK-listed Shun Tak Holdings in a public tender for $375.5m, or 22% above the reserve price.
- With a site area of 46,084 sf and plot ratio of 2.8, the sale price translates to a record $2,910 psf ppr, well above the previous peak of $2,526 achieved by Hampton Court in 2013.
- This would imply an estimated selling price of at least $4,000 psf and reinforces developer confidence in the high-end market.
- The latest transaction shows there is no letting up of the collective sale fever that started in May last year.
- Ytd, the 31 residential enbloc sales, with total transaction value of $9.67b, has already surpassed the 28 deals worth $8.25b closed for the whole of 2017.
- Bukit Sembawang (Buy, TP: $8.55), GuocoLand (Buy, TP: $3.00) and City Dev (Buy, TP: $14.20) offer the highest exposure to the high end market.

POSITIVE NEWS
*Keppel Corp
- Delivered another jack-up rig to Borr Drilling safely, on time without cost overrun.
- This marks the second order delivered to Borr (out of the five rigs previous built for Transocean), with another eight on order.
- Trades at 11.6x forward P/E.

*Envictus
- Inked an exclusive franchise agreement with US-based franchisor Cajun Global to develop 80 "Texas Chickens" restaurants in Indonesia over 10 years from 2018 to 2027.
- Territories include parts of West Java, Jakarta, Banten, Lampung, South Sumatra and Bengkulu.
- The business expansion is part of the group's growth strategy to increase presence in key markets in Asia, in addition to its existing Texas Chicken franchise in Malaysia (47 restaurants since 2013).
- Trades at 0.44x P/B.

*Tritech Group
- Awarded a $4.6m contract by the Changi Airport Group to provide soil investigation services for Terminal 5 building.
- The work will commence in Jun and will be completed in Apr 2020 (22 months). There is no defects liability period.
- Trades at 0.6x P/B

NEUTRAL NEWS
*China Everbright Water
- Acquiring national grade-A, Xuzhou Municipal Engineering Design Institute (one of the high-tech enterprises set up in Jiangsu) for Rmb82m.
- The institute mainly engages in the survey, mapping, design and consultation of infrastructure projects, as well as the consultation of project costs and management.
- The acquisition will complement and further improves the group's efficiency of its engineering design works as it seeks to reduce the relevant costs.
- With this new platform, CEW will also be able to undertake design projects relating to niche water services sector to create a new source of profit growth.
- Trades at 9.8x forward P/E

*Manulife US REIT
- Preferential offering was oversubscribed with valid acceptances and excess of provisional allotments of 182.9m and 47.8m new units respectively, raising gross proceeds of US$197.2m.
- To recap, the US office REIT held a 22-for-100 preferential offer at US$0.865 per unit.
- Offers DPU yield of 6.7% and 1.1x P/B.

*Declout
- 50.01% subsidiary, vCargo Cloud (VCC) signed a MOU with Kenya's National Chamber of Commerce and Industry (KNCCI) to roll out blockchain-based electronic certificates of origin (eCO).
- The instant verification of eCOs will significantly improve transparency, security and efficiency in authenticating trade documents.
- As the technology partner, VCC will tailor its platform specifically for KNCCI members to cater to their local business needs in achieving borderless commerce.
- VCC also intends to use Kenya as a springboard to launch its solution regionally to other East African countries i.e Burundi, Djibouti, Kenya, Rwanda and Uganda.
- Trades at 0.62x P/B