Wednesday, July 4, 2018

SG Market (04 Jul 18)

MARKET OVERVIEW
- Market sentiment remains fragile as investors anxiously await Fri's deadline when US tariffs on US$36b of Chinese imports will come into effect, with both sides showing no signs of backing down from the trade row.
- Meanwhile, oil briefly topped $75 a barrel for the first time since Nov '14 before pulling back.
- Technically, the STI could be drifting towards the crucial support level at 3,200 with immediate resistance at 3,280.

POSITIVE NEWS
*Frasers Logistics & Industrial Trust
- Divesting an industrial facility in Smeaton Grange, New South Wales to The Trust Company (Australia) for A$90.5m.
- This represents a 40.3% premium above the NAV of the property of A$64.5m and 39.2% premium over its purchase price of A$65m in 2016.
- FLT is expected to recognise an estimated net disposal gain of A$17.7m or 0.9¢/share.
- Net proceeds of A$82.2m may be distributed to unit holders or used towards funding potential acquisitions, reducing existing debt and/or other general corporate purposes.
- Trades at 6.7% yield and 1.17x P/B

*Vard
- Secured new contract for design and construction of a luxury expedition cruise vessel for Hapag-Lloyd Cruises.
- Delivery is scheduled from Vard Langsten in Norway in 2Q21 and the hull will be built in Romania.
- Trades at 0.87x P/B.

NEUTRAL NEWS
*mm2 Asia / SPH
- mm2 Asia and SPH are subscribing for 51/49 JV equity interests in AsiaOne Online for $1m.
- Both parties will jointly operate AsiaOne and introduce more Asian-focused lifestyle and entertainment content to the 23-year-old online news site.
- With the adoption of new technologies especially in the mobile space, the portal aims to venture into interactive digital editorial and video content creation to grow its audience both locally as well as regionally.
- mm2 and SPH trade at 19.9x and 15.2x and 19.9x forward P/Es respectively.

*SK Jewellery
- Opened its flagship Love & Co store in Bangkok, marking the group's first foray into Thailand under its bridal specialist brand, after its recent expansion into China.
- The store is located at CentralWorld, dubbed the largest lifestyle shopping destination in Bangkok.
- The group has upcoming store openings planned for the current fiscal year.
- Trades at 9.2x trailing P/E.

*Best World
- Held its 28th annual international convention on 23/24 Jun in Changsha, which was attended by over 5,000 participants from various parts of China, comprising distributors, their families and VIP customers.
- A new franchise wholesale segment was unveiled for China, which will replace its China export model from 2H18.
- To date, the group has signed 27 franchisees for key cities of Hunan, Guangdong, Zhejiang and Heilongjiang provinces.
- The group remains cautiously optimistic about profit growth for FY18.
- Trades at 12.7x forward P/E.

*Indofood Agri
- Its 50%-owned JVCo CMAA will issue new shares to JFLIM to acquire UVP for BRL75.9m (US$19.7m). Post dilution, the group will own 35% of CMAA.
- UVP is engaged in the cultivation and processing of sugar cane in Brazil for the production and marketing of ethanol and sugar. Currently it operates one factory in Minas Gerais with annual cane crushing capacity of 2.5m MT.
- The acquisition will enable CMAA to expand its sugar and ethanol footprint in Brazil and increase its annual cane crushing capacity from 5.8m MT to 8.3m MT.
- Trades at 6.8x forward P/E

*Chip Eng Seng
- Acquired a property at 51 Pirie Street in Adelaide, Australia for A$14.6m.
- The freehold site has a land size of 1,283 sqm and currently has a vacant office building on it.
- The group intends to redevelop the property into a hotel development.
- Trades at 0.66x P/B.

*Uni-Asia
- 69.57% owned United Wise Capital received Certificate of Completion from Hong Kong government for the property development project at 650 Cheung Sha Wan Road.
- Upon receipt of the certificate, the project company will be able to collect the balance due from buyers of the units.
- The group's proportionate share of the original investment and fair value in the project company is US$10.4m and US$20m respectively.
- Trades at 6.9x forward P/E.

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