MARKET OVERVIEW
- Market could track Wall Street higher following a solid US payrolls report, which cemented prospects for a third Fed rate hike on Wed.
- This would likely continue to support the rally in bank shares. Other key events to watch include the policy meetings of BoE and ECB this week.
- Technically, overhead resistance for STI lies at 3,460, with 3,390 providing the underlying support.
POSITIVE NEWS
*ComfortDelGro
- To acquire 51% stake in Uber's car rental subsidiary Lion City Rentals (LCR) in Singapore for $295m.
- The consideration values the target at around 0.9x P/B, based on an NAV of $642m, made out of 12,450 vehicles.
- LCR has a fleet of 14,000 private vehicles and Comfort has agreed to pay for more vehicles when utilisation increases.
- This is expected to enable the group's taxi drivers to receive ride requests on Uber's app, while the ride-hailing company may benefit from the group's fleet management capabilities.
- Comfort last traded at 13.2x FY18e P/E, and offers dividend yield of 5.7%.
- MKE reiterates Buy, with TP of $2.40.
*City Dev
- Raised offer price for Millenium & Copthorne Hotels (M&C) by 12% to £6.20, valuing the hotel group at £2,014m, 0.76x P/B.
- City Dev has committed not to sell or repurpose any of its hotels for at least 3 years (prior: 1 year).
- Offer is conditional on securing acceptance from more than half of the shares not owned by the group. Group has plans to delist M&C.
- MKE views the offer favourably, as it would improve recurring income, and allow City Dev to increase stake in an asset rich company with latent value that can be unlocked in the medium term.
- The house reiterates Buy with TP of $13.80.
*Centurion
- 36m new shares offered at HK$3.18 apiece for a dual listing in Hong Kong attracted strong investor demand.
- The public tranche of 6m shares was 18.76x subscribed, while the remaining placement tranche was also oversubscribed.
- Trading on the HK stock exchange is expected to start on 12 Dec '17 (Tue), 9.30am.
NEUTRAL NEWS
*Oxley
- Soft opening of Mercure Singapore on Stevens, located near Scotts Road and Orchard Road shopping belts.
- Mecure Singapore on Stevens is next to its sister hotel Novotel Singapore, and comprises of 518 guestrooms.
- The development of the two hotels marks Oxley's maiden venture into hotel development.
*Halcyon Agri
- Entered into a conditional agreement to acquire 80% stake of a crumb factory in Bintan, Indonesia, for an undisclosed amount.
- However, the 80% stake has a NAV of US$0.6m as at 31 Dec '16.
- The crumb factory has a licensed capacity of 60,000 cubic metric tonnes per annum and is an approved supplier to major tyre manufacturers including Goodyear, Bridgestone, Cooper Tires and Michelin.
*Asia Fashion
- Terminated its proposed placement of 145m new shares at HK$0.90 each as the group is reconsidering other funding options.
Monday, December 11, 2017
Friday, December 8, 2017
SG Market (08 Dec 17)
MARKET OVERVIEW
- Market could stay soft on profit-taking and lack of fresh impetus ahead of a key US jobs report.
- Technically, the STI is struggling near 3,390 with next level of support at 3,340, while short term resistance is re-calibrated at 3,420.
CORPORATE RESULTS
*Stamford Tyres
- 2QFY18 net profit grew 10.4% to $1.6m, on higher revenue of $59m (+2.3%) due to improved sales in Australia and SE Asia markets.
- Gross margin held steady at 26.1% (2QFY17: 26%).
- Bottom line was partially pared by FX loss of $0.5m (2QFY17: $0.7m gain) and higher operating lease rental (+21.4%), but mitigated by stronger JV contribution of $0.8m (+82.7%) and lower tax (-24.5%).
- Last traded at 9.1x trailing P/E.
POSITIVE NEWS
*Halcyon Agri
- Acquiring four Indonesian crumb rubber factories in West Kalimantan for $105.3m.
- The factories produce various grades of Standard Indonesian Rubber and have an annual capacity of 132,000 tonnes.
- The deal will raise Halcyon's total processing capacity to 1.55m tonnes p.a, propelling it to be the largest crumb rubber producer and exporter in Indonesia.
- Trades at 5.5x trailing P/E.
*CSC Holdings
- Secured foundation contracts for Kim Chuan Depot Extension and Keppel MRT station and its associated tunnels, on Circle Line 6.
- The new projects are slated to be completed by early-2019 and mid-2019, respectively.
- This brought aggregate value of transport infrastructure contracts secured to more than $70m, since the start of FY3/18.
- Loss-making and trades at 0.46x P/B.
NEGATIVE NEWS
*Ellipsiz
- Discussions between controlling shareholder Bevrian and an undisclosed third party, involving a possible share transaction has fallen through.
- Trades at 16.2x trailing P/E and 0.98x P/B.
NEUTRAL NEWS
*CapitaLand
- Partnering EBD in a $10m training and tech programme to upskill staff and develop technology-enablers.
- The innovation push will focus on data analytics, digital marketing, digital product management.
- MKE last had a Hold rating and TP $3.75.
*Noble Group
- Plans to sell Noble Americas ethanol unit to Mercuria for US$20m.
- This will result in a book loss of US$60.3m and reduce pro forma 9M17 NAV/share to US$0.75 from US$0.80.
- Valuations are meaningless as the group is loss-making and book cost of assets appear inflated.
*Straits Trading
- Acquiring an 11-storey office building at 45 St Georges Terrace, Perth, Australia, for A$54.2m ($55.7m).
- The property in Perth CBD is well-positioned to benefit from the rejuvenation of the city centre.
- Last traded at 15.1x trailing P/E and 0.68x P/B.
*ESR REIT
- Completed the divestment of 23 Woodlands Terrace for $17.7m or 2.8% above its book value as at 31 Dec.
- Offers 6.9% indicative yield and trades at 0.9x P/B.
*Geo Energy
- Lifted moratorium on 117m consideration shares (8.8% share capital) owned by International Resources Investment, which was previously issued in relation to the acquisition of Fortune Coal Resources.
- The move is to enable the vendor to collateralise the shares for other investments and businesses.
- Initial moratorium period was supposed to run until 23 Jun '20.
- Trades at 4.7x forward P/E.
*Miyoshi
- Acquiring an industrial strata unit located at Tradehub 21 for $1.5m.
- The double-storey terrace factory has a built-in area of 2,927sf and will used as its corporate office, following the sale of 5 Second Chin Bee Road.
- Trades at 15.3x trailing P/E.
*Neo Group
- 51%-owned Gourmetz has expanded into canteen operation, on top of food catering for the childcare and elderly care market.
- Trades at 23.7x forward P/E.
*Hoe Leong
- Granted moratorium to halt any creditor action against the group and its relevant subsidiaries, with the effect till 31 Jul '18 and 31 Jan '18 respectively. (
- Market could stay soft on profit-taking and lack of fresh impetus ahead of a key US jobs report.
- Technically, the STI is struggling near 3,390 with next level of support at 3,340, while short term resistance is re-calibrated at 3,420.
CORPORATE RESULTS
*Stamford Tyres
- 2QFY18 net profit grew 10.4% to $1.6m, on higher revenue of $59m (+2.3%) due to improved sales in Australia and SE Asia markets.
- Gross margin held steady at 26.1% (2QFY17: 26%).
- Bottom line was partially pared by FX loss of $0.5m (2QFY17: $0.7m gain) and higher operating lease rental (+21.4%), but mitigated by stronger JV contribution of $0.8m (+82.7%) and lower tax (-24.5%).
- Last traded at 9.1x trailing P/E.
POSITIVE NEWS
*Halcyon Agri
- Acquiring four Indonesian crumb rubber factories in West Kalimantan for $105.3m.
- The factories produce various grades of Standard Indonesian Rubber and have an annual capacity of 132,000 tonnes.
- The deal will raise Halcyon's total processing capacity to 1.55m tonnes p.a, propelling it to be the largest crumb rubber producer and exporter in Indonesia.
- Trades at 5.5x trailing P/E.
*CSC Holdings
- Secured foundation contracts for Kim Chuan Depot Extension and Keppel MRT station and its associated tunnels, on Circle Line 6.
- The new projects are slated to be completed by early-2019 and mid-2019, respectively.
- This brought aggregate value of transport infrastructure contracts secured to more than $70m, since the start of FY3/18.
- Loss-making and trades at 0.46x P/B.
NEGATIVE NEWS
*Ellipsiz
- Discussions between controlling shareholder Bevrian and an undisclosed third party, involving a possible share transaction has fallen through.
- Trades at 16.2x trailing P/E and 0.98x P/B.
NEUTRAL NEWS
*CapitaLand
- Partnering EBD in a $10m training and tech programme to upskill staff and develop technology-enablers.
- The innovation push will focus on data analytics, digital marketing, digital product management.
- MKE last had a Hold rating and TP $3.75.
*Noble Group
- Plans to sell Noble Americas ethanol unit to Mercuria for US$20m.
- This will result in a book loss of US$60.3m and reduce pro forma 9M17 NAV/share to US$0.75 from US$0.80.
- Valuations are meaningless as the group is loss-making and book cost of assets appear inflated.
*Straits Trading
- Acquiring an 11-storey office building at 45 St Georges Terrace, Perth, Australia, for A$54.2m ($55.7m).
- The property in Perth CBD is well-positioned to benefit from the rejuvenation of the city centre.
- Last traded at 15.1x trailing P/E and 0.68x P/B.
*ESR REIT
- Completed the divestment of 23 Woodlands Terrace for $17.7m or 2.8% above its book value as at 31 Dec.
- Offers 6.9% indicative yield and trades at 0.9x P/B.
*Geo Energy
- Lifted moratorium on 117m consideration shares (8.8% share capital) owned by International Resources Investment, which was previously issued in relation to the acquisition of Fortune Coal Resources.
- The move is to enable the vendor to collateralise the shares for other investments and businesses.
- Initial moratorium period was supposed to run until 23 Jun '20.
- Trades at 4.7x forward P/E.
*Miyoshi
- Acquiring an industrial strata unit located at Tradehub 21 for $1.5m.
- The double-storey terrace factory has a built-in area of 2,927sf and will used as its corporate office, following the sale of 5 Second Chin Bee Road.
- Trades at 15.3x trailing P/E.
*Neo Group
- 51%-owned Gourmetz has expanded into canteen operation, on top of food catering for the childcare and elderly care market.
- Trades at 23.7x forward P/E.
*Hoe Leong
- Granted moratorium to halt any creditor action against the group and its relevant subsidiaries, with the effect till 31 Jul '18 and 31 Jan '18 respectively. (
Thursday, December 7, 2017
SG Market (07 Dec 17)
MARKET OVERVIEW
- Market may see more profit-taking after Nov's strong rally, weighed by major US policy shift to recognise Jerusalem as Israel's capital, while investors await new details on the final tax bill from Congress.
- Following yesterday's 1.2% decline, underlying support for STI lies at 3,390 with overhead resistance remaining at 3,420.
POSITIVE NEWS
*SGX
- Achieved higher Nov securities turnover of $28.5b (+3% y/y, +19% m/m), with daily average of $1.3b (-3% y/y, +13% m/m).
- Total derivatives volume rose to 18m contracts (+9% y/y, +21% m/m), while commodities derivatives volume totalled 1.4m contracts (+42% y/y, +9% m/m).
- There were three new mainboard and two Catalist listings raising a total of $1.55b and 80 new bond listings raising $30b.
- Trading at 21.6x forward P/E and 3.7% dividend yield.
*Sembcorp Marine
- Secured a US$490m EPC contract from Statoil Petroleum for a newbuild FPSO's hull and living quarters.
- The contract is scheduled for completion in 1Q20.
- Excluding the nine rigs sold to Borr Drilling for $1.77b, this brings its ytd order flow to $932m.
*Cityneon
- Will mark its 11th Marvel Avengers S.T.A.T.I.O.N exhibition when its third travelling set embarks on a tour to Norrköping, Sweden from Jun till Aug '18 after its stop in Moscow, Russia.
- Currently trades at 15.2x forward P/E.
*Japfa
- Day-old chick (DOC) and broiler chicken prices saw a sequential m/m rebound although y/y prices are still mixed.
- Nov ASPs of broiler and DOC hit Rp17,295 (+10.6% y/y, +11.7% m/m) and Rp4,445 (-6.3% y/y, +9.8% m/m) respectively.
- Price action might be due to recent culling efforts by the government to bring down supply levels.
- Trading at 8.3x forward P/E.
*Samurai 2K Aerosol
- Awarded the sole and exclusive distributorship of its products to Genesis GD in Cambodia till Apr '19, subject to renewal on a yearly basis.
- The move follows success in Indonesia, Malaysia, Thailand, Vietnam and Philippines.
NEUTRAL NEWS
*First Sponsor/City Developments
- To partner Tai Tak to acquire the 300-room Le Meridien Frankfurt Hotel in Germany for €85.0 million (S$135.9 million).
- First Sponsor will hold a 50% stake while City Dev and Tai Tak will hold a 25%-stake each in the partnership.
- The hotel currently has a lease expiry date of 31 May 2050 with a renewal option of five years. The partners are hoping to leverage on an inflow of business travellers following Brexit.
- MKE last had a Buy and TP of $13.60 on CIT, which is currently trading at 15% discount to RNAV.
*Delong
- To acquire a 60% stake in Xingtai Degui Nano Material Technology from Guo Zhimin for Rmb6m.
- The firm is involved in the trading of limestone and lime and performs R&D on nanocalcium carbonate. It is currently constructing two production plants in Xingtai, China, which would have a combined annual lime processing capacity of 0.4m tonnes.
- The acquisition will ensure stable supply of limestone or lime and reduce cost of raw materials for its steel production.
*CSC
- Reached an out-of-court settlement with China Construction (CC) in relation to a $4.7m suit claiming wrongful cancellation of a piling subcontract.
*Interra Resources
- 60% owned Goldpetrol Joint Operating is acquiring 11 patents from Chengdu North Petroleum Exploration & Development Technology for US$5.8m.
- The patents will be used to acquire production capabilities in order to enhance oil production in the Chauk and Yenangyaung field in Myanmar.
- Market may see more profit-taking after Nov's strong rally, weighed by major US policy shift to recognise Jerusalem as Israel's capital, while investors await new details on the final tax bill from Congress.
- Following yesterday's 1.2% decline, underlying support for STI lies at 3,390 with overhead resistance remaining at 3,420.
POSITIVE NEWS
*SGX
- Achieved higher Nov securities turnover of $28.5b (+3% y/y, +19% m/m), with daily average of $1.3b (-3% y/y, +13% m/m).
- Total derivatives volume rose to 18m contracts (+9% y/y, +21% m/m), while commodities derivatives volume totalled 1.4m contracts (+42% y/y, +9% m/m).
- There were three new mainboard and two Catalist listings raising a total of $1.55b and 80 new bond listings raising $30b.
- Trading at 21.6x forward P/E and 3.7% dividend yield.
*Sembcorp Marine
- Secured a US$490m EPC contract from Statoil Petroleum for a newbuild FPSO's hull and living quarters.
- The contract is scheduled for completion in 1Q20.
- Excluding the nine rigs sold to Borr Drilling for $1.77b, this brings its ytd order flow to $932m.
*Cityneon
- Will mark its 11th Marvel Avengers S.T.A.T.I.O.N exhibition when its third travelling set embarks on a tour to Norrköping, Sweden from Jun till Aug '18 after its stop in Moscow, Russia.
- Currently trades at 15.2x forward P/E.
*Japfa
- Day-old chick (DOC) and broiler chicken prices saw a sequential m/m rebound although y/y prices are still mixed.
- Nov ASPs of broiler and DOC hit Rp17,295 (+10.6% y/y, +11.7% m/m) and Rp4,445 (-6.3% y/y, +9.8% m/m) respectively.
- Price action might be due to recent culling efforts by the government to bring down supply levels.
- Trading at 8.3x forward P/E.
*Samurai 2K Aerosol
- Awarded the sole and exclusive distributorship of its products to Genesis GD in Cambodia till Apr '19, subject to renewal on a yearly basis.
- The move follows success in Indonesia, Malaysia, Thailand, Vietnam and Philippines.
NEUTRAL NEWS
*First Sponsor/City Developments
- To partner Tai Tak to acquire the 300-room Le Meridien Frankfurt Hotel in Germany for €85.0 million (S$135.9 million).
- First Sponsor will hold a 50% stake while City Dev and Tai Tak will hold a 25%-stake each in the partnership.
- The hotel currently has a lease expiry date of 31 May 2050 with a renewal option of five years. The partners are hoping to leverage on an inflow of business travellers following Brexit.
- MKE last had a Buy and TP of $13.60 on CIT, which is currently trading at 15% discount to RNAV.
*Delong
- To acquire a 60% stake in Xingtai Degui Nano Material Technology from Guo Zhimin for Rmb6m.
- The firm is involved in the trading of limestone and lime and performs R&D on nanocalcium carbonate. It is currently constructing two production plants in Xingtai, China, which would have a combined annual lime processing capacity of 0.4m tonnes.
- The acquisition will ensure stable supply of limestone or lime and reduce cost of raw materials for its steel production.
*CSC
- Reached an out-of-court settlement with China Construction (CC) in relation to a $4.7m suit claiming wrongful cancellation of a piling subcontract.
*Interra Resources
- 60% owned Goldpetrol Joint Operating is acquiring 11 patents from Chengdu North Petroleum Exploration & Development Technology for US$5.8m.
- The patents will be used to acquire production capabilities in order to enhance oil production in the Chauk and Yenangyaung field in Myanmar.
Wednesday, December 6, 2017
SG Market (06 Dec 17)
MARKET OVERVIEW
- Stock prices are expected to drift amid a lack of fresh leads as traders close off their positions in typically quiet year end trading.
- Recent price action on the STI suggests the index has reached a near-term top and could consolidate lower towards the underlying support at 3,390, while topside resistance remains at 3,460.
SECTOR WATCH
*Property
- Two 99-year leasehold sites on the reserve list of the Government Land Sales programme were snapped up.
- Frasers Centrepoint beat 9 other bidders for the former Zouk site at Jiak Kim Street with an aggressive bid of $955.4m, or $1,732.55 psf ppr, topping the Martin Modern site won by GuocoLand in Jun last year by 40%.
- Allgreen Holdings trumped 6 others to a residential plot at Fourth Avenue in Bukit Timah with a top bid of $553m or $1,540 psr ppr.
- MKE remains bullish on property developers and tags UOL (TP $9.80) as its top pick, along with City Dev (TP $13.60) and GuocoLand (TP $2.90).
CORPORATE RESULTS
*Del Monte
- Swung into 2QFY18 net loss of US$2.8m (2QFY17: US$20m profit), dragged by one-off expenses arising from shutdowns and divestment of $13.1m.
- Excluding the one-offs, net profit of US$10.2m (2QFY17: US$20.8m) still missed estimates.
- Revenue dipped 1.8% to US$624.7m on weaker sale in US due to unfavourable pricing in foodservice and USDA.
- Gross margin shrank to 20.6% (-2.5ppt) due to higher trade promotion spending, while underlying EBITDA slumped 26.7% to US$52.2m from higher capex spending.
- Expects to remain profitable for 2HFY18 on a recurring basis.
- Trades at 13.1x forward P/E.
POSITIVE NEWS
*Sembcorp Marine
- Signed a Letter of Intent with Shell for the construction of hull and topside as well as the integration of the Vito floating production unit.
- Final contract award will be dependent on Shell and its partners the sanctioning of the project.
- Last traded at 43.4x FY18 P/E.
*Mapletree Logistics Trust
- To divest warehouse Senai-UPS in Johor, Malaysia for Rm28m ($9.2m), 37% premium over the latest valuation as at 31 Oct '17.
- The property has a gfa of 11,494 sqm and was under-occupied at 51% since early-2015.
- Offers 5.3% indicative yield and valued at 1.24x P/B.
*Heeton
- To dispose commercial investment property, The Woodgrove, for $55.9m.
- The property with a strata floor area of 5,144 sqm has an unexpired lease term of 78 years.
- Net gain upon disposal of $22m is expected to lift pro forma EPS to 10.95¢ from 3.84¢.
- Trades at 3.2 trailing P/E and 0.46x P/B.
*Hupsteel
- Received Letter of Award for the redevelopment of freehold property at 38 Genting Lane.
- The site with land area of 2,103sqm will be redeveloped into an 8-storey industrial building with a gfa of 5,259 sqm.
- Project cost is estimated at $9.3m and construction will take 24 months to complete.
- Last traded at 19.8x trailing P/E and 0.65x P/B.
*Lippo Malls Trust
- National Land Authority has extended the strata ownership titles for four units at Mall WTC Matahari for 20 years until Apr '38.
- Offers 8.3% indicative yield and valued at 1.17x P/B.
*Q&M
- Established a $500m multicurrency debt issuance programme.
- Net proceeds arising from the programme will be used for general corporate purposes, including M&A, refinancing of borrowings and working capital and capex requirements.
- Trades at 31.3x forward P/E.
NEGATIVE NEWS
*Alliance Mineral Assets
- Updated that 40m shares (7.2% share capital) belonging to CEO Tjandra Pramoko and his wife were seized on court order, following non-payment of a $5.5m personal debt owed to Jonathan Lim Keng Hock.
- This is the second time shares have been seized following the first incident in Jul '17, and would create a major overhang in the stock.
- Separately, group announced positive exploration results at Bald Hill Project, its joint project with Tawana Resources.
*Debao Property Development
- A subsidiary received a winding-up petition, presented by Gabungan Tiasa to Malaysia High Court, in relation to Rm14.6m allegedly owed.
- Petition is scheduled for case management and hearing on 12 Dec '17 and 25 Jan '18.
- Stock prices are expected to drift amid a lack of fresh leads as traders close off their positions in typically quiet year end trading.
- Recent price action on the STI suggests the index has reached a near-term top and could consolidate lower towards the underlying support at 3,390, while topside resistance remains at 3,460.
SECTOR WATCH
*Property
- Two 99-year leasehold sites on the reserve list of the Government Land Sales programme were snapped up.
- Frasers Centrepoint beat 9 other bidders for the former Zouk site at Jiak Kim Street with an aggressive bid of $955.4m, or $1,732.55 psf ppr, topping the Martin Modern site won by GuocoLand in Jun last year by 40%.
- Allgreen Holdings trumped 6 others to a residential plot at Fourth Avenue in Bukit Timah with a top bid of $553m or $1,540 psr ppr.
- MKE remains bullish on property developers and tags UOL (TP $9.80) as its top pick, along with City Dev (TP $13.60) and GuocoLand (TP $2.90).
CORPORATE RESULTS
*Del Monte
- Swung into 2QFY18 net loss of US$2.8m (2QFY17: US$20m profit), dragged by one-off expenses arising from shutdowns and divestment of $13.1m.
- Excluding the one-offs, net profit of US$10.2m (2QFY17: US$20.8m) still missed estimates.
- Revenue dipped 1.8% to US$624.7m on weaker sale in US due to unfavourable pricing in foodservice and USDA.
- Gross margin shrank to 20.6% (-2.5ppt) due to higher trade promotion spending, while underlying EBITDA slumped 26.7% to US$52.2m from higher capex spending.
- Expects to remain profitable for 2HFY18 on a recurring basis.
- Trades at 13.1x forward P/E.
POSITIVE NEWS
*Sembcorp Marine
- Signed a Letter of Intent with Shell for the construction of hull and topside as well as the integration of the Vito floating production unit.
- Final contract award will be dependent on Shell and its partners the sanctioning of the project.
- Last traded at 43.4x FY18 P/E.
*Mapletree Logistics Trust
- To divest warehouse Senai-UPS in Johor, Malaysia for Rm28m ($9.2m), 37% premium over the latest valuation as at 31 Oct '17.
- The property has a gfa of 11,494 sqm and was under-occupied at 51% since early-2015.
- Offers 5.3% indicative yield and valued at 1.24x P/B.
*Heeton
- To dispose commercial investment property, The Woodgrove, for $55.9m.
- The property with a strata floor area of 5,144 sqm has an unexpired lease term of 78 years.
- Net gain upon disposal of $22m is expected to lift pro forma EPS to 10.95¢ from 3.84¢.
- Trades at 3.2 trailing P/E and 0.46x P/B.
*Hupsteel
- Received Letter of Award for the redevelopment of freehold property at 38 Genting Lane.
- The site with land area of 2,103sqm will be redeveloped into an 8-storey industrial building with a gfa of 5,259 sqm.
- Project cost is estimated at $9.3m and construction will take 24 months to complete.
- Last traded at 19.8x trailing P/E and 0.65x P/B.
*Lippo Malls Trust
- National Land Authority has extended the strata ownership titles for four units at Mall WTC Matahari for 20 years until Apr '38.
- Offers 8.3% indicative yield and valued at 1.17x P/B.
*Q&M
- Established a $500m multicurrency debt issuance programme.
- Net proceeds arising from the programme will be used for general corporate purposes, including M&A, refinancing of borrowings and working capital and capex requirements.
- Trades at 31.3x forward P/E.
NEGATIVE NEWS
*Alliance Mineral Assets
- Updated that 40m shares (7.2% share capital) belonging to CEO Tjandra Pramoko and his wife were seized on court order, following non-payment of a $5.5m personal debt owed to Jonathan Lim Keng Hock.
- This is the second time shares have been seized following the first incident in Jul '17, and would create a major overhang in the stock.
- Separately, group announced positive exploration results at Bald Hill Project, its joint project with Tawana Resources.
*Debao Property Development
- A subsidiary received a winding-up petition, presented by Gabungan Tiasa to Malaysia High Court, in relation to Rm14.6m allegedly owed.
- Petition is scheduled for case management and hearing on 12 Dec '17 and 25 Jan '18.
Tuesday, December 5, 2017
SG Market (05 Dec 17)
MARKET OVERVIEW
- Strong signs of broader-based growth in the manufacturing sector and heightened probability of a US tax bill could provide some support to recent market weakness.
- Technically, underlying support for the STI lies at 3,390, with overhead resistance at 3,460.
MACRO WATCH
*Economy
- Nov PMI came in at 52.9, up from 52.6 in previous month, marking its 15th consecutive month of expansion in manufacturing and highest reading since Dec '09.
- The key leading indicator was fuelled by higher factory activity across most sectors.
- Upbeat data lends credence to Maybank KE's bullish view of the economy, which is anticipated to grow 3.4% in 2017, surpassing the official GDP growth forecast of 2-3% range.
POSITIVE NEWS
*Trendlines
- Portfolio company, Magdent, raised US$1.75m from three angel investors.
- Magdent developed a technology that uses electromagnetic fields to stimulate, accelerate and improve bone formation and quality, and to prevent bone infection, leading to more successful dental implant procedures.
- Trades at 12.1x forward P/E and 0.71x P/B.
*Amplefield
- Entered into a VND417.8b ($24.8m) contract with Sing Viet City to undertake earthworks on a 63.8 ha land in Ho Chi Minh City.
- Works expected to commence in Dec and be completed by Sep '18.
- Controlling shareholder Yap Teiong Choo owns 97% of Sing Viet City.
- The loss-making group trades at 0.41x P/B.
NEGATIVE NEWS
*New SGX Watchlist entrants:
- Interra Resources
- ISR Capital
- Global Yellow Pages
NEUTRAL NEWS
*Q&M
- Disposed Q&M Medical Aesthetic & Laser Centre to Dr Li Jingxiang for $0.24m.
- Net liability of the entity was $1.42m as at Sep '17.
- Trades at 31.3x forward P/E.
*Hong Leong Asia
- Completed the disposal of Rex Plastics at reduced price of RM7.54m (from RM10.8m).
- This was due to changes arising from inventory stock.
- The loss-making group trades at 0.62x P/B.
*Lian Beng/KSH Holdings
- Acquired 42% stake in Development 24 from KSH for $0.42m, or 1x P/B.
- Development 24 is engaged in property development and investment holding.
*CWG Int'l
- Incorporated three 60% owned subsidiaries for the purpose of holding specific property development projects.
*Indiabulls Properties Trust
- Exercised its right of compulsory acquisition after it received 99.66% acceptances following its voluntary conditional cash offer at $0.90/unit.
*China Great Land
- Seeking shareholders' approval on expanding its core business to include environmental solutions.
- Management believes that the diversification could enable the group to tap in a new market and boost its income stream.
- The proposal arose from increasing awareness of the negative impact of pollution in China, as well as a weak core business in concrete piles due to the challenging operating environment.
- Strong signs of broader-based growth in the manufacturing sector and heightened probability of a US tax bill could provide some support to recent market weakness.
- Technically, underlying support for the STI lies at 3,390, with overhead resistance at 3,460.
MACRO WATCH
*Economy
- Nov PMI came in at 52.9, up from 52.6 in previous month, marking its 15th consecutive month of expansion in manufacturing and highest reading since Dec '09.
- The key leading indicator was fuelled by higher factory activity across most sectors.
- Upbeat data lends credence to Maybank KE's bullish view of the economy, which is anticipated to grow 3.4% in 2017, surpassing the official GDP growth forecast of 2-3% range.
POSITIVE NEWS
*Trendlines
- Portfolio company, Magdent, raised US$1.75m from three angel investors.
- Magdent developed a technology that uses electromagnetic fields to stimulate, accelerate and improve bone formation and quality, and to prevent bone infection, leading to more successful dental implant procedures.
- Trades at 12.1x forward P/E and 0.71x P/B.
*Amplefield
- Entered into a VND417.8b ($24.8m) contract with Sing Viet City to undertake earthworks on a 63.8 ha land in Ho Chi Minh City.
- Works expected to commence in Dec and be completed by Sep '18.
- Controlling shareholder Yap Teiong Choo owns 97% of Sing Viet City.
- The loss-making group trades at 0.41x P/B.
NEGATIVE NEWS
*New SGX Watchlist entrants:
- Interra Resources
- ISR Capital
- Global Yellow Pages
NEUTRAL NEWS
*Q&M
- Disposed Q&M Medical Aesthetic & Laser Centre to Dr Li Jingxiang for $0.24m.
- Net liability of the entity was $1.42m as at Sep '17.
- Trades at 31.3x forward P/E.
*Hong Leong Asia
- Completed the disposal of Rex Plastics at reduced price of RM7.54m (from RM10.8m).
- This was due to changes arising from inventory stock.
- The loss-making group trades at 0.62x P/B.
*Lian Beng/KSH Holdings
- Acquired 42% stake in Development 24 from KSH for $0.42m, or 1x P/B.
- Development 24 is engaged in property development and investment holding.
*CWG Int'l
- Incorporated three 60% owned subsidiaries for the purpose of holding specific property development projects.
*Indiabulls Properties Trust
- Exercised its right of compulsory acquisition after it received 99.66% acceptances following its voluntary conditional cash offer at $0.90/unit.
*China Great Land
- Seeking shareholders' approval on expanding its core business to include environmental solutions.
- Management believes that the diversification could enable the group to tap in a new market and boost its income stream.
- The proposal arose from increasing awareness of the negative impact of pollution in China, as well as a weak core business in concrete piles due to the challenging operating environment.
Monday, December 4, 2017
SG Market (04 Nov 17)
MARKET OVERVIEW
- Investors may start the week on a cautious note on fresh US political concerns, after ex-national security adviser is reported to testify that President Trump has directed him to make contact with Russians during the 2016 election campaign.
- Technically, STI sees underlying support at 3,390, with topside resistance at 3,460.
SECTOR WATCH
*Property
- Enbloc wave continues following the purchase of two separate freehold sites in Bukit Timah by Allgreen Properties.
- Both collective sale tenders at Royalville and Crystal Tower were competitive, sold at $477.4m ($1,960 psf ppr) and $180.7m ($1,840 psf ppr), respectively.
- MKE maintains positive on the property developers and reiterates UOL (TP: $9.80) as its top pick, along with City Dev (TP: $13.60) and GuocoLand (TP: $2.90).
POSITIVE NEWS
*SGX
- 19 IPOs in the first 11 months this year have raised $4.6b, twice the amount in 2016.
- The listings added $8.3b in market cap to the bourse, compared to the 16 firms that added $4.4b last year.
- SGX last traded at 21.7x forward P/E, an attractive 54% discount to peer HK Exchanges & Clearing.
*Roxy-Pacific
- Acquiring a freehold commercial and retail building in Melbourne CBD for A$33m.
- The six-storey property with net lettable area of 4,504 sqm will be redeveloped into a mixed-use development comprising hotel and retail units.
- Last traded at 18.6x trailing P/E and 1.27x P/B.
*Boustead Projects
- Clinched a contract from Ballore Logistics Singapore for the design and build of a five-storey ramp-up eco-sustainable logistics facility in Singapore.
- Construction for the new building is expected to complete in 2019.
- This marks the fourth logistics project secured in FY3/18 and raises order book to $300m from $242m on 27 Nov '17.
- Trades at 7.8x forward P/E.
*Vard
- Secured contracts worth an aggregate NOK700m for the design and construction of seven stern trawlers.
- Delivery for the vessels scheduled between 1Q19 and 4Q19.
- Counter is loss-making and trades at 0.83x P/B.
NEUTRAL NEWS
*Thai Beverage
- Completed the acquisition of 252 KFC stores in Thailand, as well as the properties and assets used for operations for Bt11.4b.
- The acquisition is part of the group's strategy to expand into food business.
- Last traded at 20.4x forward P/E.
*Sing Post
- Introduced higher rates for international small packets delivery services.
- The increase will come into effect in 2018 and is due to higher rates charged by the UN agency that sets the rules for international mail exchanges among its 192 member countries.
- The new rates reflect rising volumes of e-commerce packets and the higher cost of delivery.
- Last traded at 25.6x forward P/E.
*G. K. Goh
- Interest in associate Habitat Assets has been diluted to 36.09% from 37.66%, as the latter issued 4.8m new redeemable preference shares to a third party for A$4.8m.
- Trades at 8.5x trailing P/E and 0.86x P/B.
*Soilbuild REIT
- Received claim on insurance guarantee amounting to $1.7m, equivalent to around four months' rent from a tenant NK Ingredients.
- Investors may start the week on a cautious note on fresh US political concerns, after ex-national security adviser is reported to testify that President Trump has directed him to make contact with Russians during the 2016 election campaign.
- Technically, STI sees underlying support at 3,390, with topside resistance at 3,460.
SECTOR WATCH
*Property
- Enbloc wave continues following the purchase of two separate freehold sites in Bukit Timah by Allgreen Properties.
- Both collective sale tenders at Royalville and Crystal Tower were competitive, sold at $477.4m ($1,960 psf ppr) and $180.7m ($1,840 psf ppr), respectively.
- MKE maintains positive on the property developers and reiterates UOL (TP: $9.80) as its top pick, along with City Dev (TP: $13.60) and GuocoLand (TP: $2.90).
POSITIVE NEWS
*SGX
- 19 IPOs in the first 11 months this year have raised $4.6b, twice the amount in 2016.
- The listings added $8.3b in market cap to the bourse, compared to the 16 firms that added $4.4b last year.
- SGX last traded at 21.7x forward P/E, an attractive 54% discount to peer HK Exchanges & Clearing.
*Roxy-Pacific
- Acquiring a freehold commercial and retail building in Melbourne CBD for A$33m.
- The six-storey property with net lettable area of 4,504 sqm will be redeveloped into a mixed-use development comprising hotel and retail units.
- Last traded at 18.6x trailing P/E and 1.27x P/B.
*Boustead Projects
- Clinched a contract from Ballore Logistics Singapore for the design and build of a five-storey ramp-up eco-sustainable logistics facility in Singapore.
- Construction for the new building is expected to complete in 2019.
- This marks the fourth logistics project secured in FY3/18 and raises order book to $300m from $242m on 27 Nov '17.
- Trades at 7.8x forward P/E.
*Vard
- Secured contracts worth an aggregate NOK700m for the design and construction of seven stern trawlers.
- Delivery for the vessels scheduled between 1Q19 and 4Q19.
- Counter is loss-making and trades at 0.83x P/B.
NEUTRAL NEWS
*Thai Beverage
- Completed the acquisition of 252 KFC stores in Thailand, as well as the properties and assets used for operations for Bt11.4b.
- The acquisition is part of the group's strategy to expand into food business.
- Last traded at 20.4x forward P/E.
*Sing Post
- Introduced higher rates for international small packets delivery services.
- The increase will come into effect in 2018 and is due to higher rates charged by the UN agency that sets the rules for international mail exchanges among its 192 member countries.
- The new rates reflect rising volumes of e-commerce packets and the higher cost of delivery.
- Last traded at 25.6x forward P/E.
*G. K. Goh
- Interest in associate Habitat Assets has been diluted to 36.09% from 37.66%, as the latter issued 4.8m new redeemable preference shares to a third party for A$4.8m.
- Trades at 8.5x trailing P/E and 0.86x P/B.
*Soilbuild REIT
- Received claim on insurance guarantee amounting to $1.7m, equivalent to around four months' rent from a tenant NK Ingredients.
Friday, December 1, 2017
SG Market (01 Dec 17)
MARKET OVERVIEW
- The market could be buoyed by the record Wall Street close as the US Senate is set to vote on a tax reform bill, while OPEC and its allies agreed to a further extension till end-2018 for oil production cuts.
- Technically, underlying support for the STI remains at 3,390, with topside resistance at 3,460.
SECTOR WATCH
*Banks
- Oct loans expanded 6.8% to $649.6b (Sep: +6.2%), bringing 10M17 loans growth to 6%.
- Growth was spurred by increased loans to businesses of 9% (Sep: +8%) and consumer of 3.8% (Sep: +3.6%).
- Positive loan momentum should be sustained as the economy picks up and on improved buying sentiment in the Singapore property market.
- Maybank KE maintains Neutral on Singapore banks with preference for UOB (Buy, TP: $27.10), followed by DBS (Hold, TP: $22.75) and OCBC (Hold, TP: $12.00).
*Property
- MAS flags risks from excessive exuberance in the property market, following the en-bloc rage and rising land prices.
- Concerns stem from a potential supply-demand mismatch, with anticipated new supply from government land sales sites to outstrip demand from slower population growth in the next 1-2 years.
- MKE is positive on the sector with preference for UOL (Buy, TP: $9.85), City Dev (Buy, TP: $13.80) and GuocoLand (Buy, TP: $2.90).
POSITIVE NEWS
*AEM
- Received sales orders worth $76m for delivery in 1H18.
- As a gauge for end-Nov '16, the group received sales orders worth $53m for delivery in 1H17.
- Last traded at 7.9x forward P/E.
*Citic Envirotech
- 34.9% owned Jiangyin Longyun Wastewater Treatment acquired an industrial transfer-operate-transfer wastewater treatment plant in Jiangyin City, Jiangsu Province in China, for Rmb25.8m.
- The 15-year service concession project has a capacity of 10,000m3/day.
- Last traded at 16.6x forward P/E.
*SIIC Environment
- Proposed two acquisitions which will lift treatment capacity for new projects secured to-date by 28% to 787,500 tpd.
1) 75.5% owned SIIC Environment Holdings (Weifang) to spend Rmb108.5m to acquire Dalian Ziguang Water Treatment, in charge of the Tiger Beach water treatment project in Dalian, China, and is currently upgrading its capacity by 12.5% to 90,000 tpd, and from grade 1B to 1A.
2) SIIC will also make a Rmb97m acquisition for an effective 86.5% stake in Dalian Ziguang Lingshui Waste Water Treatment that is in charge of the Lingshui River treatment project, currently upgrading its capacity by 33% to 80,000 tpd, and from grade 1B to 1A.
- Trades at 11.8x forward P/E.
*Golden Energy and Resources
- Investing A$67.86m to subscribe for a 10% stake in ASX-listed Westgold Resources
- The investment will help the group gain exposure to the counter-cyclical gold mining sector in Australia.
- Last traded at 9.6x trailing P/E.
NEGATIVE NEWS
*Duty Free Intl
- Received bills of demand from Royal Malaysian Customs of Perak, demanding aggregate payment of RM41.6m including custom and excise duties, sales taxes and GST.
- The demand stems from non-compliance of a duty-free shop located at the border of Perintah Tetap Kastam Bil 55.
- Group and its advisors believe there is no legal basis and will be defending against the allegations.
- Separately, substantial shareholder Heinemann Asia Pacific exercised the second tranche of its call option for €9.85m, to acquire an additional 5% in key operating subsidiary, DFZ Capital, to 15%.
- Trades at 15.8x forward P/E.
NEUTRAL NEWS
*STI
- FTSE Russell announced that there will be no changes to STI constituents in the Dec '17 quarterly review.
- STI reserve list, ranked according market cap, comprises Venture, Suntec REIT, Mapletree Commercial Trust, Keppel REIT, and Sembcorp Marine.
- Next review will take place in Mar '18.
*Oxley
- Included on the FTSE ST Large & Mid Cap Index and the FTSE ST Mid Cap Index.
- Trades at 10.8x forward P/E.
*Olam
- Issued 589,589 new shares in relation to a warrant exercise at US$1.09 each.
- 57m outstanding warrants remains, which expires on 29 Jan 2018.
- Trades at 16x forward P/E and 1.33x P/B.
*Marco Polo
- Singapore Court has approved the group's restructuring plan, which calls for a write-off on $258m in debts, and $60m fresh equity injection.
- Following the approval and sanction orders, Marco Polo will now need to seek shareholders' approval.
- The market could be buoyed by the record Wall Street close as the US Senate is set to vote on a tax reform bill, while OPEC and its allies agreed to a further extension till end-2018 for oil production cuts.
- Technically, underlying support for the STI remains at 3,390, with topside resistance at 3,460.
SECTOR WATCH
*Banks
- Oct loans expanded 6.8% to $649.6b (Sep: +6.2%), bringing 10M17 loans growth to 6%.
- Growth was spurred by increased loans to businesses of 9% (Sep: +8%) and consumer of 3.8% (Sep: +3.6%).
- Positive loan momentum should be sustained as the economy picks up and on improved buying sentiment in the Singapore property market.
- Maybank KE maintains Neutral on Singapore banks with preference for UOB (Buy, TP: $27.10), followed by DBS (Hold, TP: $22.75) and OCBC (Hold, TP: $12.00).
*Property
- MAS flags risks from excessive exuberance in the property market, following the en-bloc rage and rising land prices.
- Concerns stem from a potential supply-demand mismatch, with anticipated new supply from government land sales sites to outstrip demand from slower population growth in the next 1-2 years.
- MKE is positive on the sector with preference for UOL (Buy, TP: $9.85), City Dev (Buy, TP: $13.80) and GuocoLand (Buy, TP: $2.90).
POSITIVE NEWS
*AEM
- Received sales orders worth $76m for delivery in 1H18.
- As a gauge for end-Nov '16, the group received sales orders worth $53m for delivery in 1H17.
- Last traded at 7.9x forward P/E.
*Citic Envirotech
- 34.9% owned Jiangyin Longyun Wastewater Treatment acquired an industrial transfer-operate-transfer wastewater treatment plant in Jiangyin City, Jiangsu Province in China, for Rmb25.8m.
- The 15-year service concession project has a capacity of 10,000m3/day.
- Last traded at 16.6x forward P/E.
*SIIC Environment
- Proposed two acquisitions which will lift treatment capacity for new projects secured to-date by 28% to 787,500 tpd.
1) 75.5% owned SIIC Environment Holdings (Weifang) to spend Rmb108.5m to acquire Dalian Ziguang Water Treatment, in charge of the Tiger Beach water treatment project in Dalian, China, and is currently upgrading its capacity by 12.5% to 90,000 tpd, and from grade 1B to 1A.
2) SIIC will also make a Rmb97m acquisition for an effective 86.5% stake in Dalian Ziguang Lingshui Waste Water Treatment that is in charge of the Lingshui River treatment project, currently upgrading its capacity by 33% to 80,000 tpd, and from grade 1B to 1A.
- Trades at 11.8x forward P/E.
*Golden Energy and Resources
- Investing A$67.86m to subscribe for a 10% stake in ASX-listed Westgold Resources
- The investment will help the group gain exposure to the counter-cyclical gold mining sector in Australia.
- Last traded at 9.6x trailing P/E.
NEGATIVE NEWS
*Duty Free Intl
- Received bills of demand from Royal Malaysian Customs of Perak, demanding aggregate payment of RM41.6m including custom and excise duties, sales taxes and GST.
- The demand stems from non-compliance of a duty-free shop located at the border of Perintah Tetap Kastam Bil 55.
- Group and its advisors believe there is no legal basis and will be defending against the allegations.
- Separately, substantial shareholder Heinemann Asia Pacific exercised the second tranche of its call option for €9.85m, to acquire an additional 5% in key operating subsidiary, DFZ Capital, to 15%.
- Trades at 15.8x forward P/E.
NEUTRAL NEWS
*STI
- FTSE Russell announced that there will be no changes to STI constituents in the Dec '17 quarterly review.
- STI reserve list, ranked according market cap, comprises Venture, Suntec REIT, Mapletree Commercial Trust, Keppel REIT, and Sembcorp Marine.
- Next review will take place in Mar '18.
*Oxley
- Included on the FTSE ST Large & Mid Cap Index and the FTSE ST Mid Cap Index.
- Trades at 10.8x forward P/E.
*Olam
- Issued 589,589 new shares in relation to a warrant exercise at US$1.09 each.
- 57m outstanding warrants remains, which expires on 29 Jan 2018.
- Trades at 16x forward P/E and 1.33x P/B.
*Marco Polo
- Singapore Court has approved the group's restructuring plan, which calls for a write-off on $258m in debts, and $60m fresh equity injection.
- Following the approval and sanction orders, Marco Polo will now need to seek shareholders' approval.
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