Noble - The commodities trader is down 4.4% today, despite SGX filings revealing that Noble’s Chairman, Richard Elman, purchased a total of 4m shares last week - 3m shares @ $0.81 on 27 May and 1m shares @ $0.7879 on 29 May, raising his total stake from 20.96% to 21.01%.
Following the recent sell-down, valuations are undemanding, with Noble trading at 0.76x P/B, versus its 10-year historical average of 1.91x and 10-year low of 0.82x.
Overall, Maybank-KE opines that much of the stock’s negatives have been priced in, although earnings are expected to remain muted in the near term, due to still-weak demand for hard commodities and uncertain global economic growth.
Overall, the street has 7 Buy, 6 Hold and 1 Sell ratings on Noble with a consensus TP of $1.17.
Tuesday, June 2, 2015
Starhill Global
Starhill Global: ($0.875) Myer Centre Adelaide to drive FY16 NPI growth
Starhill recently completed its debt-funded $303m acquisition of Myer Centre Adelaide.
The 602,000 sf NLA property has both retail (84%) and office (16%) space with occupancy rates of 95% and 93%, respectively, and is the largest city mall along Adelaide’s prime CBD shopping belt.
In addition, the property has 114,000 sf of additional but not yet available retail space, which may provide for potential upside.
At 6.6% NPI yield on cost, Maybank-KE expects the property to generate $10.8m revenue this year (six months) and $20.6m in FY16, representing 13.1% of FY14's NPI.
Maybank-KE maintains its Buy call and lifts TP to $0.97 from $0.93, citing catalysts from favourable rent reviews for Ngee Ann City and Malaysian assets.
Starhill Global currently trades at an estimated 6.4% FY16 yield and 0.9x P/B.
Starhill recently completed its debt-funded $303m acquisition of Myer Centre Adelaide.
The 602,000 sf NLA property has both retail (84%) and office (16%) space with occupancy rates of 95% and 93%, respectively, and is the largest city mall along Adelaide’s prime CBD shopping belt.
In addition, the property has 114,000 sf of additional but not yet available retail space, which may provide for potential upside.
At 6.6% NPI yield on cost, Maybank-KE expects the property to generate $10.8m revenue this year (six months) and $20.6m in FY16, representing 13.1% of FY14's NPI.
Maybank-KE maintains its Buy call and lifts TP to $0.97 from $0.93, citing catalysts from favourable rent reviews for Ngee Ann City and Malaysian assets.
Starhill Global currently trades at an estimated 6.4% FY16 yield and 0.9x P/B.
Trek 2000
Trek 2000: (S$0.45) Exclusive digital platform provider for Kiteboard Tour Asia
Trek 2000's Cloudstringers platform will be used as the exclusive channel for photo and video coverage at events held by Kiteboard Tour Asia (KTA), which holds kitesurfing championships in Asia.
The organisation has guaranteed a minimum (free) sign-up of 150,000 users on the platform, which will store all digital content of the events and will be used for viewings and transactions.
While it is still early days, the collaboration is intended to drive traction to grow Cloudstringer's subscriber base, following the $0.4m investment by Panasonic in Dec '14 for the development of its Flucard ecosystem.
Strategically, Trek intends to further monetize its proprietary Flucard product beyond physical sales. Used with the Cloudstringers platform, users are able to seamlessly upload media straight from their digital camera onto the cloud-based platform.
Trek hopes for Cloudstringers to be the “eBay” for digital content.
Trek currently trades at 11.1x FY15E P/E and 2.3x P/B.
Trek 2000's Cloudstringers platform will be used as the exclusive channel for photo and video coverage at events held by Kiteboard Tour Asia (KTA), which holds kitesurfing championships in Asia.
The organisation has guaranteed a minimum (free) sign-up of 150,000 users on the platform, which will store all digital content of the events and will be used for viewings and transactions.
While it is still early days, the collaboration is intended to drive traction to grow Cloudstringer's subscriber base, following the $0.4m investment by Panasonic in Dec '14 for the development of its Flucard ecosystem.
Strategically, Trek intends to further monetize its proprietary Flucard product beyond physical sales. Used with the Cloudstringers platform, users are able to seamlessly upload media straight from their digital camera onto the cloud-based platform.
Trek hopes for Cloudstringers to be the “eBay” for digital content.
Trek currently trades at 11.1x FY15E P/E and 2.3x P/B.
RMG
RMG -Maybank-KE upgrades to the healthcare group to Buy from Hold with TP of $5.10.
The house believes that demand for quality healthcare in China is being fed by growing affluence and life expectancies, with a 2010 survey by the Economist Intelligence Unit suggesting that the quality of healthcare tops the concerns of the wealthier Chinese.
Chinese hospitals are currently overstretched, compounded by quality issues, which presents Raffles Medical with opportunity to plug the gap with its strong focus on service quality.
Maybank-KE opines that RMG can be considered an early entrant into an attractive industry, while lengthy bureaucratic processes and operation risks form high barriers to entry. The new Shanghai New Bund International Hospital will be the first to be developed and managed by a foreign-local JV in China.
Overall, the house is positive on RMG’s China expansion to meet growing demand, and believes that the group will be able to leverage its 15 years of expertise in hospital operations to break into China’s market. Other catalysts are expected from further developments in China and contributions from local expansion.
RMG trades at 33.9x forward P/E and has a net cash of $120.9m.
The house believes that demand for quality healthcare in China is being fed by growing affluence and life expectancies, with a 2010 survey by the Economist Intelligence Unit suggesting that the quality of healthcare tops the concerns of the wealthier Chinese.
Chinese hospitals are currently overstretched, compounded by quality issues, which presents Raffles Medical with opportunity to plug the gap with its strong focus on service quality.
Maybank-KE opines that RMG can be considered an early entrant into an attractive industry, while lengthy bureaucratic processes and operation risks form high barriers to entry. The new Shanghai New Bund International Hospital will be the first to be developed and managed by a foreign-local JV in China.
Overall, the house is positive on RMG’s China expansion to meet growing demand, and believes that the group will be able to leverage its 15 years of expertise in hospital operations to break into China’s market. Other catalysts are expected from further developments in China and contributions from local expansion.
RMG trades at 33.9x forward P/E and has a net cash of $120.9m.
Tat Hong
Tat Hong: Plunged into a 4Q15 net loss of $17.1m from a net profit of $4.2m, shrinking FY15 earnings to $4.9m (-85%). Revenue for the quarter fell 12% to $136.6m with lower contributions across all its business segments - crane (-20% to $46.4m), tower crane (-3% to $22.5m), general equipment (-23% to $11.0m) and distribution (-6% to $56.7m).
Key segments performance as follows:
1) Crane rental: Weighed by the disposal of Hup Hin Transport in Jul ‘14, completion of projects in Australia and Singapore, slowdown in Singapore’s construction industry, and reduced rental activity in overseas markets such as Papua New Guinea.
2) Tower Crane Rental: Revenue for the quarter inched lower, although FY15 revenue was up 8%, due to a larger fleet size and continued participation in infrastructure, large commercial and power plant projects in China.
3) General Equipment Rental: Lower public spending, lack of infrastructure projects, general weak market conditions in Australia, coupled with market competition, resulted in lower revenue for the division.
4) Distribution: Weighed by decline in demand in Singapore, Europe and Malaysia as well as a reduction in excavator sales in Indonesia, coupled with lower equipment sales in Australia.
Gross margin narrowed to 31.9% from 36.8% on lower utilisation rates of tower cranes during the Chinese New Year break, lower rental rates in Australia and higher crane operating and relocation costs.
Meanwhile, total operating expenses jumped 49% to $49.1m, due to impairments, barring which operating expenses would have been down 8%.
Going forward, Tat Hong guides that while demand remains positive in certain markets for the Crane Rental division, weakness in the Singapore and Australia markets will impact performance from the division. Meanwhile, the tower crane rental division is expected to maintain its growth momentum in FY16.
The general equipment rental division is expected to turn in a lacklustre performance due to the slow recovery of the Australian construction sector, while trading conditions for the distribution division should remain challenging due to generally weak demand for heavy equipment in the region.
DPS of 1¢ declared, taking FY15 payout to 1.5¢ (FY14: 2¢), representing a yield of 2.5%.
At the current price, Tat Hong trades at 0.6x P/B, with a net gearing of 0.77x.
Key segments performance as follows:
1) Crane rental: Weighed by the disposal of Hup Hin Transport in Jul ‘14, completion of projects in Australia and Singapore, slowdown in Singapore’s construction industry, and reduced rental activity in overseas markets such as Papua New Guinea.
2) Tower Crane Rental: Revenue for the quarter inched lower, although FY15 revenue was up 8%, due to a larger fleet size and continued participation in infrastructure, large commercial and power plant projects in China.
3) General Equipment Rental: Lower public spending, lack of infrastructure projects, general weak market conditions in Australia, coupled with market competition, resulted in lower revenue for the division.
4) Distribution: Weighed by decline in demand in Singapore, Europe and Malaysia as well as a reduction in excavator sales in Indonesia, coupled with lower equipment sales in Australia.
Gross margin narrowed to 31.9% from 36.8% on lower utilisation rates of tower cranes during the Chinese New Year break, lower rental rates in Australia and higher crane operating and relocation costs.
Meanwhile, total operating expenses jumped 49% to $49.1m, due to impairments, barring which operating expenses would have been down 8%.
Going forward, Tat Hong guides that while demand remains positive in certain markets for the Crane Rental division, weakness in the Singapore and Australia markets will impact performance from the division. Meanwhile, the tower crane rental division is expected to maintain its growth momentum in FY16.
The general equipment rental division is expected to turn in a lacklustre performance due to the slow recovery of the Australian construction sector, while trading conditions for the distribution division should remain challenging due to generally weak demand for heavy equipment in the region.
DPS of 1¢ declared, taking FY15 payout to 1.5¢ (FY14: 2¢), representing a yield of 2.5%.
At the current price, Tat Hong trades at 0.6x P/B, with a net gearing of 0.77x.
Jardine C&C
Jardine C&C: Counter may be affected by the new liquidity rules, released over the weekend by SGX and FTSE Russell.
Under new rules, index stocks must trade at least 0.1% of issued shares, up from 0.05%, based on median daily trade for 10 of 12 months under review. Further, companies already on the STI must trade 0.08%, up from 0.04% previously.
This may mean stocks with typically low turnover, such as Jardine Matheson and Jardine Strategic, may be at risk of being removed from the STI.
The new liquidity rule will be implemented following the Sep review.
Under new rules, index stocks must trade at least 0.1% of issued shares, up from 0.05%, based on median daily trade for 10 of 12 months under review. Further, companies already on the STI must trade 0.08%, up from 0.04% previously.
This may mean stocks with typically low turnover, such as Jardine Matheson and Jardine Strategic, may be at risk of being removed from the STI.
The new liquidity rule will be implemented following the Sep review.
SG Market (02 Jun 15)
Singapore shares may inch higher, after Wall Street kicked off the month of Jun with modest gains, but traders are likely to remain cautious ahead of a big week of economic news.
Regional markets are trading mixed this morning in Tokyo (+0.2%), Seoul (-0.3%) and Sydney (-0.8%).
From a chart perspective, technical resistance is tipped at 3,460, with underlying support at 3,360 (200-dma).
Stocks to watch:
*Tat Hong: Plunged into a 4Q15 net loss of $17.1m from a net profit of $4.2m, taking FY15 net profit to $4.9m (-85%). Revenue for the quarter fell 12% to $136.6m with lower contributions across all the group's segments, namely crane rental (-20%), tower crane rental (-3%), general equipment rental (-23%) and distribution (-6%). Gross margin shrank to 31.9% from 36.8%, attributable to lower utilisation rates of tower cranes during the lunar New Year break, lower rental rates in Australia and higher crane operating and relocation costs. Total operating expenses jumped 49% to $49.1m, due to impairments, excluding which total operating expenses for the quarter would have been down 8%. NAV/share at $1.03.
*Kingwan: Plunged into a 4Q15 net loss of $9.7m from a net profit of $2.1m, taking FY15 net profit to $17.1m (+154%). Revenue for the quarter advanced 15% to $23.8m, due to higher recognition of revenue from Mechanical and Electrical (M&E) contracts during the quarter. Gross margin improved to 13.5% from 17.1%. Bottom-line was largely weighed by a $12m impairment allowance made on loans to the group’s associate, Dalian Shicheng Property Development. The allowance was made in view of the continuing depressed real estate market in Dalian, China. Final DPS of 1¢ declared, taking FY15 payout to 1.7¢ per share (FY14: 2¢). NAV/share at $0.281.
*KSH: FY15 net profit fell 7% to $41.7m on revenue of $246.1m (-16%). The weaker top-line was weighed by a 16% drop in revenue from the construction business to $239.9m. Bottom-line was partly aided by a 38.6% rise in other income to $13.1m, mainly due to higher interest income. Meanwhile total operating expenses declined 14.2% to $239.5m, in line with the drop in revenue. NAV/share at $0.61.
*Elektromotive: FY15 net loss narrowed slightly to $2.7m from $2.9m, on revenue of $7.8m (+27.1%). Top-line was led by the electric vehicles charges equipment segment with revenue at $5.5m (+37.4%), with marginal positive contributions from both the advertisement (+6.1%) and circulation (+15.5%) segment. Total operating expenses rose 8.2% to $10.9m. NAV/share at 0.86 cents.
*Fabchem China: Swung back into a FY15 net profit of Rmb13.1m from a net loss of Rmb57.5m the previous year. Revenue declined 11% to Rmb349.8m, weighed by the industrial detonators (-18.1%) and ammonium nitrate (-56.7%) segments, but offset by higher contributions from the explosive devices (+12.6%) and industrial fuse and initiating explosive devices (+6.4%) segments. Gross margin expended by 6.9ppt to 30.9%, as the group was no longer affected by the temporary cease production directive which weighed on FY14, and also as a result of higher margin products. Bottom-line largely aided by the 85.8% reduction of other losses to $8.9m, due to lower write-offs. NAV/share at Rmb0.17.
*Ezra: Proposed 200-for-100 renounceable underwritten rights issue (US$150m) and issue of 5-year convertible bonds (US$150m) to raise up to US$300m. Rights issue price will be not more than 50% to the theoretical ex-rights price for each rights share. Ezra's founder and largest shareholder have undertaken to fully subscribe for their respective entitlements in aggregate of 24.7%, while the remaining 75.3% will be fully underwritten by Credit Suisse and DBS.
*ISOTeam: Secured five contracts worth an aggregate $24.8m, for repair and redecoration works for the period up to Feb ’17.
*Cache Logistics Trust: Divested the smallest property in its portfolio, Kim Heng Warehouse, for $9.7m. After completion, Cache will own 16 logistics warehouse properties (including the soon-to-complete build-to-suit logistics warehouse development for DHL Supply Chain Singapore) in Singapore, Australia and China with a total property value of ~$1.2b and a gfa of 6.7m sf.
*Otto Marine: Subsidiary Surf Subsea entered a US$20m loan agreement with OCBC, which comes with an option for OCBC to have a right to subscribe for new shares upon the listing of Surf Subsea or its investment vehicle up to the loan amount. In addition, another subsidiary Go Sirius entered into a US$34m credit facility agreement with OCBC.
*ZICO: Acquired business and management consultancy services firms, Finova Singapore and Finova Associates, for up to an aggregate US$6.6m ($8.8m), which includes an earn-out consideration equal or exceeding US$0.8m. Pro forma FY14 NTA/share is expected to be lowered to RM0.1482 (-20.7%), while earnings per share is expected to rise to RM0.0453 (+15.9%).
*Hyflux: Awarded a US$48m contract from state-owned Saline Water Conversion Corporation to design, build and supply 10 modular containerised desalination system units with a total designed capacity of 30,000 cubic metres per day to Saudi Arabia. The project is expected to be completed in ~eight months.
*Koyo International: Secured a $11.2m contract for air conditioning and mechanical ventilation services at various Ascendas Real Estate Investment Trust properties for a period of two years and, with an option to renew for another four years. Works scheduled to commence on 1 Jul ‘15.
*GSS Energy: JV with oil trading firm AFCO Energy, a subsidiary of FinCo Fuel Holding, to create a platform for marketing and distribution of mineral oil and crude oil products in Indonesia.
*SHC Capital Asia: To acquire China-based medical equipment manufacturer and supplier Tong Da Medical Device (TDMD) for $120m (10x FY14 core P/E), which will result in a RTO transaction.
Regional markets are trading mixed this morning in Tokyo (+0.2%), Seoul (-0.3%) and Sydney (-0.8%).
From a chart perspective, technical resistance is tipped at 3,460, with underlying support at 3,360 (200-dma).
Stocks to watch:
*Tat Hong: Plunged into a 4Q15 net loss of $17.1m from a net profit of $4.2m, taking FY15 net profit to $4.9m (-85%). Revenue for the quarter fell 12% to $136.6m with lower contributions across all the group's segments, namely crane rental (-20%), tower crane rental (-3%), general equipment rental (-23%) and distribution (-6%). Gross margin shrank to 31.9% from 36.8%, attributable to lower utilisation rates of tower cranes during the lunar New Year break, lower rental rates in Australia and higher crane operating and relocation costs. Total operating expenses jumped 49% to $49.1m, due to impairments, excluding which total operating expenses for the quarter would have been down 8%. NAV/share at $1.03.
*Kingwan: Plunged into a 4Q15 net loss of $9.7m from a net profit of $2.1m, taking FY15 net profit to $17.1m (+154%). Revenue for the quarter advanced 15% to $23.8m, due to higher recognition of revenue from Mechanical and Electrical (M&E) contracts during the quarter. Gross margin improved to 13.5% from 17.1%. Bottom-line was largely weighed by a $12m impairment allowance made on loans to the group’s associate, Dalian Shicheng Property Development. The allowance was made in view of the continuing depressed real estate market in Dalian, China. Final DPS of 1¢ declared, taking FY15 payout to 1.7¢ per share (FY14: 2¢). NAV/share at $0.281.
*KSH: FY15 net profit fell 7% to $41.7m on revenue of $246.1m (-16%). The weaker top-line was weighed by a 16% drop in revenue from the construction business to $239.9m. Bottom-line was partly aided by a 38.6% rise in other income to $13.1m, mainly due to higher interest income. Meanwhile total operating expenses declined 14.2% to $239.5m, in line with the drop in revenue. NAV/share at $0.61.
*Elektromotive: FY15 net loss narrowed slightly to $2.7m from $2.9m, on revenue of $7.8m (+27.1%). Top-line was led by the electric vehicles charges equipment segment with revenue at $5.5m (+37.4%), with marginal positive contributions from both the advertisement (+6.1%) and circulation (+15.5%) segment. Total operating expenses rose 8.2% to $10.9m. NAV/share at 0.86 cents.
*Fabchem China: Swung back into a FY15 net profit of Rmb13.1m from a net loss of Rmb57.5m the previous year. Revenue declined 11% to Rmb349.8m, weighed by the industrial detonators (-18.1%) and ammonium nitrate (-56.7%) segments, but offset by higher contributions from the explosive devices (+12.6%) and industrial fuse and initiating explosive devices (+6.4%) segments. Gross margin expended by 6.9ppt to 30.9%, as the group was no longer affected by the temporary cease production directive which weighed on FY14, and also as a result of higher margin products. Bottom-line largely aided by the 85.8% reduction of other losses to $8.9m, due to lower write-offs. NAV/share at Rmb0.17.
*Ezra: Proposed 200-for-100 renounceable underwritten rights issue (US$150m) and issue of 5-year convertible bonds (US$150m) to raise up to US$300m. Rights issue price will be not more than 50% to the theoretical ex-rights price for each rights share. Ezra's founder and largest shareholder have undertaken to fully subscribe for their respective entitlements in aggregate of 24.7%, while the remaining 75.3% will be fully underwritten by Credit Suisse and DBS.
*ISOTeam: Secured five contracts worth an aggregate $24.8m, for repair and redecoration works for the period up to Feb ’17.
*Cache Logistics Trust: Divested the smallest property in its portfolio, Kim Heng Warehouse, for $9.7m. After completion, Cache will own 16 logistics warehouse properties (including the soon-to-complete build-to-suit logistics warehouse development for DHL Supply Chain Singapore) in Singapore, Australia and China with a total property value of ~$1.2b and a gfa of 6.7m sf.
*Otto Marine: Subsidiary Surf Subsea entered a US$20m loan agreement with OCBC, which comes with an option for OCBC to have a right to subscribe for new shares upon the listing of Surf Subsea or its investment vehicle up to the loan amount. In addition, another subsidiary Go Sirius entered into a US$34m credit facility agreement with OCBC.
*ZICO: Acquired business and management consultancy services firms, Finova Singapore and Finova Associates, for up to an aggregate US$6.6m ($8.8m), which includes an earn-out consideration equal or exceeding US$0.8m. Pro forma FY14 NTA/share is expected to be lowered to RM0.1482 (-20.7%), while earnings per share is expected to rise to RM0.0453 (+15.9%).
*Hyflux: Awarded a US$48m contract from state-owned Saline Water Conversion Corporation to design, build and supply 10 modular containerised desalination system units with a total designed capacity of 30,000 cubic metres per day to Saudi Arabia. The project is expected to be completed in ~eight months.
*Koyo International: Secured a $11.2m contract for air conditioning and mechanical ventilation services at various Ascendas Real Estate Investment Trust properties for a period of two years and, with an option to renew for another four years. Works scheduled to commence on 1 Jul ‘15.
*GSS Energy: JV with oil trading firm AFCO Energy, a subsidiary of FinCo Fuel Holding, to create a platform for marketing and distribution of mineral oil and crude oil products in Indonesia.
*SHC Capital Asia: To acquire China-based medical equipment manufacturer and supplier Tong Da Medical Device (TDMD) for $120m (10x FY14 core P/E), which will result in a RTO transaction.
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