MARKET OVERVIEW
- The market continues to be driven by risk-off sentiment over concerns of the escalating US-China trade spat and its impact on global growth
- Oil-related counters may under come pressure as crude plunged 5% towards US$70/bbl, the most in two years despite a big US draw as Libyan production returned.
- Technically, the STI may re-test its 3,190-3,200 crucial support level, while upside remains capped at 3,280 in the near-term.
CORPORATE RESULTS
*SPH
- 3QFY18 net profit surged 64.3% to $47.4m, maily shored by lower impairment charges and higher investment income. This took 9MFY18 earnings of $148.1m to 68.4% of full-year consensus estimate.
- For the uuarter, revenue fell 3.8% to $250.1m as print media declined 8% to $167.9m despite digital business achieving better traction in circulation (+43.5%) and readership (37,000).
- Property sales dipped 2.4% to $60.1m on lower rental income from its retail assets but aged care and education businesses jumped 38.5% to $22m.
- Excluding impairment charges of $2.3m (-40.9%), core operating profit declined 7.4% to $66.7m but bottom line was boosted by net investment income of $21.9m (+87.4%).
- Following recent cooling measures, the group is monitoring the potential impact on The Woodleigh Residences, its JV project with Kajima Development.
- Looking ahead, the group is looking to sharpen digital capabilities and expand real estate asset management and aged care businesses overseas.
- Trades at 20.7x forward P/E and 3.3% yield.
*Duty Free Int'l
-1QFY19 net profit slumped 39.9% to RM9m on lower sales takings, partially offset by higher interest income and FX gain.
- Revenue fell 28.9% to RM117.4m due to supply shortage of certain popular products.
- Declared higher first interim DPS of 0.8¢(1QFY18: 0.35¢).
- Trades at 20.3x trailing P/E.
POSITIVE NEWS
*PACC Offshore
- Setting up a JV with Kerry TJ Logistics in Taiwan to provide an integrated solutions platform for offshore wind farm developers, EPCI contractors and wind turbine manufacturers.
- The JV aims to develop industry-first solutions platform integrating supply chain and marine solutions for the entire offshore renewables project life cycle.
- The partnership will leverage on POSH's specialised expertise in offshore marine operations and Kerry's local network and logistics knowhow.
- MOUs have been signed with Rolls-Royce to explore suitable designs for vessels specific to offshore wind operations and Macquarie Capital and Swancor to jointly explore collaboration opportunities in the Taiwan offshore wind market.
NEUTRAL NEWS
*Top Glove
- Updated that the High Court has set aside the ex-parte Mareva Order granted on 2 Jul '18 against Wong Chin Toh, Low Chin Guan, Adventa Capital and ACPL.
- Interparty hearing for both applications fixed on 19 Jul '18.
- Trades at 26.7x forward P/E.
*RH Petrogas
- Signed new 20-year terms production sharing contracts for Kepala Burug and Salawati Kepala Burung contract area.
- The group will hold 70% participating interest in the areas and each will be the operator for their respective blocks.
- Trades at 4.0x trailing P/E.
Thursday, July 12, 2018
Wednesday, July 11, 2018
SG Market (11 Jul 18)
MARKET OVERVIEW
- The stage is set for a volatile session as US prepares to hit China with tariffs on additional US$200b of Chinese imports as early as Sep, marking a sharp escalation of the trade war between the world's two largest economies.
- Technically, immediate resistance for STI lies at 3,280 with upside capped at 3,340, while crucial support at 3,190-3,200 remains intact.
CORPORATE RESULTS
*SPH REIT
- Flat 3QFY18 DPU of 1.37¢ was in line with expectations.
- Gross revenue and NPI dipped to $51.8m (-2.9%) and $40.6m (-3.8%) on lower rental income from Paragon mall.
- Portfolio was nearly full occupancy at 99.6%, but recorded 6% negative rental reversion for 9MFY18 (Paragon: -6.2%, Clementi Mall: +5.3%) though 3Q decline was more moderate than 1HFY18. Ytd shopper traffic was steady.
- WALE slipped to 1.9 years (2QFY18: 2.1 years), with 3.7% of NLA due to expire in rest of FY18 (2QFY18: 8.2%).
- Aggregate leverage stayed at 25.4% with average debt cost of 2.84%. This was prior to its $63.2m acquisition of The Rail Mall.
- Trades at an annualised 3QFY18 yield of 5.5% and 1.06x P/B.
POSITIVE NEWS
*Frasers Commercial Trust
- Divesting 55 Market Street, a 16-storey commercial property in Raffles Place for $216.8m or 44.5% premium above latest valuation of $150m and almost 3x the original purchase price of $72.5m in 2006.
- This translates to S$3,020 psf and represents an implied NPI yield of 1.7%.
- Expects to recognise an estimated net gain of $76.5m against $139m book value or 8.7¢/unit.
- Assuming all net divestment proceeds are used to repay existing debt, aggregate leverage would drop to 26.5% from 34.7%.
- Trades at 6.9% yield and 0.9x P/B
*Yongnam
- Secured four contracts worth $23.0m for projects in Singapore.
- Two contracts are for the supply, fabrication and delivery of structural steel kingposts for a new 12-storey block at Singapore General Hospital and a mixed development project in Bidadari.
- Two structural steelwork contracts are for the construction of an industrial development in Singapore, to be completed by the 1Q19.
- Trades at 0.5x P/B
NEUTRAL NEWS
*GuocoLand
- Exercised option to purchase freehold condo, 76-unit Casa Meyfort in East Coast in a $319.9m collective sale, which below $340m asking price.
- Inclusive of $57.8m development charge, the 85,249 sf site with plot ratio of 2.8x works out to be $1,582 psf ppr. This is 3-4% higher than the price paid for other freehold properties in the area (Amber Park: $1,515, Parkway Mansion: $1,539) and is also 23% higher than the land rate for 99-year Katong Park Towers.
- Based on ASP of $2,300 psf and no additional ABSD, MKE derives a development surplus of 2¢/share from this project.
- Ascribing a 0.55x P/RNAV, MKE has a Hold with TP of $2.00.
*SGX
- Launching SGX FlexC FX futures on 27 Aug to futurise OTC product offerings.
- This FX solution enables market participants to trade and clear customised FX futures on the OTC market in SGX's platform just like a standard SGX FX futures contract.
- With FX markets moving towards central clearing, this new feature will offer an effective way of enhancing operational efficiencies, lowering costs and counterparty credit risk.
- Trades at 20.6x forward P/E
*Hyflux
- Received LOI from Asia Water Development Engineering Company (AWDEC) to award a second contract for a seawater reverse osmosis desalination package in tBandar Abbas, Iran.
- This involves the design, manufacture and supply of another 200,000 m3/day desalination unit with similar specifications as the first plant and forms part of five desalination plants which AWDEC plans to build as part of the proposed Saghi Kosar Desalination and Power Plant in Bandar Abbas.
- Both parties will finalise details within two months.
- Counter remains suspended.
*Citic Envirotech
- Announced two initiative at the Singapore International Water Week, namely the launch of Singapore Envirotech Accelerator and the opening of US Reverse Osmosis and Nano-Filtration membrane manufacturing plant.
- For the former, the group has committed to investing $30m over four years and employing at least 35 technology personnel for Singapore Envirotech Accelerator.
- For the latter, the group has commenced the opening of a US$15m, 40,500 sq ft membrane manufacturing facility in Conroe, Texas, USA.
- Trades at 9.3x forward P/E
- The stage is set for a volatile session as US prepares to hit China with tariffs on additional US$200b of Chinese imports as early as Sep, marking a sharp escalation of the trade war between the world's two largest economies.
- Technically, immediate resistance for STI lies at 3,280 with upside capped at 3,340, while crucial support at 3,190-3,200 remains intact.
CORPORATE RESULTS
*SPH REIT
- Flat 3QFY18 DPU of 1.37¢ was in line with expectations.
- Gross revenue and NPI dipped to $51.8m (-2.9%) and $40.6m (-3.8%) on lower rental income from Paragon mall.
- Portfolio was nearly full occupancy at 99.6%, but recorded 6% negative rental reversion for 9MFY18 (Paragon: -6.2%, Clementi Mall: +5.3%) though 3Q decline was more moderate than 1HFY18. Ytd shopper traffic was steady.
- WALE slipped to 1.9 years (2QFY18: 2.1 years), with 3.7% of NLA due to expire in rest of FY18 (2QFY18: 8.2%).
- Aggregate leverage stayed at 25.4% with average debt cost of 2.84%. This was prior to its $63.2m acquisition of The Rail Mall.
- Trades at an annualised 3QFY18 yield of 5.5% and 1.06x P/B.
POSITIVE NEWS
*Frasers Commercial Trust
- Divesting 55 Market Street, a 16-storey commercial property in Raffles Place for $216.8m or 44.5% premium above latest valuation of $150m and almost 3x the original purchase price of $72.5m in 2006.
- This translates to S$3,020 psf and represents an implied NPI yield of 1.7%.
- Expects to recognise an estimated net gain of $76.5m against $139m book value or 8.7¢/unit.
- Assuming all net divestment proceeds are used to repay existing debt, aggregate leverage would drop to 26.5% from 34.7%.
- Trades at 6.9% yield and 0.9x P/B
*Yongnam
- Secured four contracts worth $23.0m for projects in Singapore.
- Two contracts are for the supply, fabrication and delivery of structural steel kingposts for a new 12-storey block at Singapore General Hospital and a mixed development project in Bidadari.
- Two structural steelwork contracts are for the construction of an industrial development in Singapore, to be completed by the 1Q19.
- Trades at 0.5x P/B
NEUTRAL NEWS
*GuocoLand
- Exercised option to purchase freehold condo, 76-unit Casa Meyfort in East Coast in a $319.9m collective sale, which below $340m asking price.
- Inclusive of $57.8m development charge, the 85,249 sf site with plot ratio of 2.8x works out to be $1,582 psf ppr. This is 3-4% higher than the price paid for other freehold properties in the area (Amber Park: $1,515, Parkway Mansion: $1,539) and is also 23% higher than the land rate for 99-year Katong Park Towers.
- Based on ASP of $2,300 psf and no additional ABSD, MKE derives a development surplus of 2¢/share from this project.
- Ascribing a 0.55x P/RNAV, MKE has a Hold with TP of $2.00.
*SGX
- Launching SGX FlexC FX futures on 27 Aug to futurise OTC product offerings.
- This FX solution enables market participants to trade and clear customised FX futures on the OTC market in SGX's platform just like a standard SGX FX futures contract.
- With FX markets moving towards central clearing, this new feature will offer an effective way of enhancing operational efficiencies, lowering costs and counterparty credit risk.
- Trades at 20.6x forward P/E
*Hyflux
- Received LOI from Asia Water Development Engineering Company (AWDEC) to award a second contract for a seawater reverse osmosis desalination package in tBandar Abbas, Iran.
- This involves the design, manufacture and supply of another 200,000 m3/day desalination unit with similar specifications as the first plant and forms part of five desalination plants which AWDEC plans to build as part of the proposed Saghi Kosar Desalination and Power Plant in Bandar Abbas.
- Both parties will finalise details within two months.
- Counter remains suspended.
*Citic Envirotech
- Announced two initiative at the Singapore International Water Week, namely the launch of Singapore Envirotech Accelerator and the opening of US Reverse Osmosis and Nano-Filtration membrane manufacturing plant.
- For the former, the group has committed to investing $30m over four years and employing at least 35 technology personnel for Singapore Envirotech Accelerator.
- For the latter, the group has commenced the opening of a US$15m, 40,500 sq ft membrane manufacturing facility in Conroe, Texas, USA.
- Trades at 9.3x forward P/E
Tuesday, July 10, 2018
SG Market (10 Jul 18)
MARKET OVERVIEW
- The market appears to be stabilising from recent selloff as US-China trade tensions take a temporary backseat despite no signs of near term resolution.
- Technically, the grossly oversold STI has bounced off the 3,190-3,200 support area with immediate resistance seen at 3,280, followed by 3,340.
POSITIVE NEWS
*Jumbo
- Entered into a franchise agreement with C J Seafood for the latter to operate a JUMBO Seafood restaurant in Bangkok.
- The agreement has an initial term of 10 years and may be renewed for a further 10 years.
- The first Bangkok outlet is slated to open by end 2018.
- Trades at 25.2x forward P/E
*Yanlord Land
- Acquired a 154,500 sqm GFA prime residential development site in Hangzhou for Rmb2.94m via public land auction.
- The site lies within the Zhijiang Resort Centre in Xihu district that has been earmarked b the government to be developed into a key cultural and lifestyle centre in Zhejiang Province.
- The deal reinforces the group's strategic focus to extend its footprint within the greater Hangzhou real estate market, which continues to witness strong demand for premium commercial and residential developments.
- Trades at 0.6x P/B.
NEUTRAL NEWS
*Oxley
- Updated that it sold 575 out of 800 units released at Riverfront Residences with majority of sales signed on 5 July, prior to implementation of new property curbs.
- On an aggregate basis, it achieved total sales of c$1b for the residential projects launched in Singapore so far.
- Management estimates Chevron House is worth $1.1b or $2,800 psf post-AEI. The bullish valuation arises from higher NLA (+13%) and unit value (+6%).
- If need be, it can potentially raise gearing from several assets for funds. For example, Chevron House and Stevens Road hotels has LTV of 68% and 57%.
*AIMS AMP Capital Industrial REIT
- Undertaking $13m asset enhancement initiative (AEI) at NorthTech light industrial building in Woodlands.
- Works include upgrades to passenger lift lobbies, toilets, drop-off area, external landscaping and installation of energy efficient fittings and will be completed in 2H18.
- AEI will not affect its rental income as the asset will remain operational, while works are ongoing.
- As at 30 Jun, NorthTech is fully occupied with a weighted-average-lease-expiry of 3.3 years.
- Offers 7.6x annualised 1Q yield and 1.0x P/B.
*Keppel Corp/ ST Engineering
- Both parties have inked a MOU to collaborate in the design and implementation of smart city masterplans and solutions in Keppel's developments, as well as third-party projects in Asia Pacific.
- Partnership will tap on expertise of Keppel Urban Solutions as an integrated master developer in sustainable urbanisation, targeting developments looking end-to-end services in smart city technologies.
*Duty Free
- Acquiring 70% of Brand Connect for US$2.8m or 2x P/B), to be funded from its internal resources.
- Brand Connect is in the marketing and distribution of alcohol and other beverage products across countries in the Asia Pacific region.
- The proposed acquisition will help to develop and grow the group's alcohol distribution business as well as to expand its market operations beyond the current sales channels in the duty free market of Malaysia to include the duty paid market across South East Asia.
- Trades at 17.85x trailing P/E
*UnUsUaL
- Acquiring 49% stake in Chinese film and concert company Beijing Wish for Rmb25.2m ($5.2m).
- Purchase will be funded y IPO proceeds and internal resources.
- Trades at 50.6x trailing P/E.
NEGATIVE NEWS
*Top Glove
- Alleged that there was an overstatement of plant, inventory and machinery (Rm74.4m) and overvaluation (Rm640.5m) in Aspion's acquisition price.
- The findings was based on an interim report by an independent accounting firm.
- To recap, the group acquired Aspion for Rm1.4b from Adventas Capital in Apr.
- As such, the group is suing Adventas Capital and two directors for up to Rm714.9m.
- However, litigation will not impact Aspion's business, which will continue as usual.
- Trades at 26.6x forward P/E.
*OKP
- The $94.6m contract to build the TPE-PIE Changi viaduct has been terminated by mutual agreement with LTA wef 6 July.
- No reasons were given for the termination but work has been stopped and one of its units has been charged in court in late May for its role in the fatal collapse of the road viaduct under construction in Jul 2017.
- Separately, its licence to operate a representative foreign construction service company in Jakarta has expired on 8 July and the group does not intend to renew it.
- Trades at 8.65x trailing P/E
*Propnex
- UOB Kay Hian, the stabilising manager for its IPO has ceased price stabilisation action after purchasing an aggregate of 8.5m shares at a price range of $0.56-0.635.
- Trades at 13.4x trailing P/E.
- The market appears to be stabilising from recent selloff as US-China trade tensions take a temporary backseat despite no signs of near term resolution.
- Technically, the grossly oversold STI has bounced off the 3,190-3,200 support area with immediate resistance seen at 3,280, followed by 3,340.
POSITIVE NEWS
*Jumbo
- Entered into a franchise agreement with C J Seafood for the latter to operate a JUMBO Seafood restaurant in Bangkok.
- The agreement has an initial term of 10 years and may be renewed for a further 10 years.
- The first Bangkok outlet is slated to open by end 2018.
- Trades at 25.2x forward P/E
*Yanlord Land
- Acquired a 154,500 sqm GFA prime residential development site in Hangzhou for Rmb2.94m via public land auction.
- The site lies within the Zhijiang Resort Centre in Xihu district that has been earmarked b the government to be developed into a key cultural and lifestyle centre in Zhejiang Province.
- The deal reinforces the group's strategic focus to extend its footprint within the greater Hangzhou real estate market, which continues to witness strong demand for premium commercial and residential developments.
- Trades at 0.6x P/B.
NEUTRAL NEWS
*Oxley
- Updated that it sold 575 out of 800 units released at Riverfront Residences with majority of sales signed on 5 July, prior to implementation of new property curbs.
- On an aggregate basis, it achieved total sales of c$1b for the residential projects launched in Singapore so far.
- Management estimates Chevron House is worth $1.1b or $2,800 psf post-AEI. The bullish valuation arises from higher NLA (+13%) and unit value (+6%).
- If need be, it can potentially raise gearing from several assets for funds. For example, Chevron House and Stevens Road hotels has LTV of 68% and 57%.
*AIMS AMP Capital Industrial REIT
- Undertaking $13m asset enhancement initiative (AEI) at NorthTech light industrial building in Woodlands.
- Works include upgrades to passenger lift lobbies, toilets, drop-off area, external landscaping and installation of energy efficient fittings and will be completed in 2H18.
- AEI will not affect its rental income as the asset will remain operational, while works are ongoing.
- As at 30 Jun, NorthTech is fully occupied with a weighted-average-lease-expiry of 3.3 years.
- Offers 7.6x annualised 1Q yield and 1.0x P/B.
*Keppel Corp/ ST Engineering
- Both parties have inked a MOU to collaborate in the design and implementation of smart city masterplans and solutions in Keppel's developments, as well as third-party projects in Asia Pacific.
- Partnership will tap on expertise of Keppel Urban Solutions as an integrated master developer in sustainable urbanisation, targeting developments looking end-to-end services in smart city technologies.
*Duty Free
- Acquiring 70% of Brand Connect for US$2.8m or 2x P/B), to be funded from its internal resources.
- Brand Connect is in the marketing and distribution of alcohol and other beverage products across countries in the Asia Pacific region.
- The proposed acquisition will help to develop and grow the group's alcohol distribution business as well as to expand its market operations beyond the current sales channels in the duty free market of Malaysia to include the duty paid market across South East Asia.
- Trades at 17.85x trailing P/E
*UnUsUaL
- Acquiring 49% stake in Chinese film and concert company Beijing Wish for Rmb25.2m ($5.2m).
- Purchase will be funded y IPO proceeds and internal resources.
- Trades at 50.6x trailing P/E.
NEGATIVE NEWS
*Top Glove
- Alleged that there was an overstatement of plant, inventory and machinery (Rm74.4m) and overvaluation (Rm640.5m) in Aspion's acquisition price.
- The findings was based on an interim report by an independent accounting firm.
- To recap, the group acquired Aspion for Rm1.4b from Adventas Capital in Apr.
- As such, the group is suing Adventas Capital and two directors for up to Rm714.9m.
- However, litigation will not impact Aspion's business, which will continue as usual.
- Trades at 26.6x forward P/E.
*OKP
- The $94.6m contract to build the TPE-PIE Changi viaduct has been terminated by mutual agreement with LTA wef 6 July.
- No reasons were given for the termination but work has been stopped and one of its units has been charged in court in late May for its role in the fatal collapse of the road viaduct under construction in Jul 2017.
- Separately, its licence to operate a representative foreign construction service company in Jakarta has expired on 8 July and the group does not intend to renew it.
- Trades at 8.65x trailing P/E
*Propnex
- UOB Kay Hian, the stabilising manager for its IPO has ceased price stabilisation action after purchasing an aggregate of 8.5m shares at a price range of $0.56-0.635.
- Trades at 13.4x trailing P/E.
Monday, July 9, 2018
SG Market (09 Jul 18)
MARKET OVERVIEW
- Expect market to languish as investors watch developments on the Sino-US trade war and property cooling measures weigh on risk sentiment.
- Key data to look out for include 2Q18 GDP growth (est: +4.1%, 1Q18: +4.4%) due on Fri and retail sales data for May (est: +1%, Apr: +0.4%) on Thu.
- Technically, the STI could hover around the 3,190-3,200 support area, with next level at 3,110. with upside capped at 3,280.
CORPORATE RESULTS
*Miyoshi
- 3QFY18 net profit surged 75% to $0.7m from a low base following its effort to streamline costs and improve capacity utilisation.
- However, revenue fell 10.7% to $12m, as data storage sales tumbled 42.4% due to fewer customer orders.
- This is in line with its strategy to move away from the data storage and focus on the consumer electronics and automotive business segments.
- Operating cash flow improved to $3m due to better working capital management. Balance sheet remains in a net cash position.
- Pending JTC approval, the proposed sales of its industrial property will provide the group with additional funds for business opportunities and reduce bank borrowings.
- Flushed with $6.8m proceeds from recent share placement, the group is negotiating to raise its stake in Core Power (Fujian) New Energy Automobile to gain greater exposure to China's electric car boom.
- Trades at 7.8x trailing P/E
POSITIVE NEWS
*Sunpower
- Completed acquisition of 71% stake in Xintai Zhengda Thermoelectric for Rmb66.5m, funded by internal resources, bank loans and convertible bonds issue.
- Xintai Zhengda has an exclusive centralised steam/electricity plant serving diverse industries and residents in Xintai City in Shandong province, China.
- Currently, Phase 1 of its new facilities is under construction with design capacities of 130t/h biomass boiler and 30MW electricity generator, two 130t/h coal-fired boilers and 18MW electricity generator.
- The existing facilities will remain in operation prior to the completion of the new facilities, fulfilling the requirements of current customers in the local area.
- Trades at 7.6x forward P/E.
NEUTRAL NEWS
*Hyflux
- Reached agreement with lender Maybank on the divestment process of Tuaspring Integrated Water and Power Project.
- The group has to find a buyer by 15 Oct and obtain approval from Maybank, PUB and High Court for the transaction by 11 Dec and shareholder nod by 4 Feb next year..
- Maybank will also become more involved in the sale process and appoint valuers for the plant, which has a book value of $1.3b.
- If the conditions are met, the bank, which is owed $518.4m, will refrain from starting enforcing proceedings against the group.
- Last traded at $0.21, the counter remains suspended.
*Noble
- Disposed entire 50% stake in Gas Natural Ganamax, a Mexican entity, for US$350,000.
- Expect market to languish as investors watch developments on the Sino-US trade war and property cooling measures weigh on risk sentiment.
- Key data to look out for include 2Q18 GDP growth (est: +4.1%, 1Q18: +4.4%) due on Fri and retail sales data for May (est: +1%, Apr: +0.4%) on Thu.
- Technically, the STI could hover around the 3,190-3,200 support area, with next level at 3,110. with upside capped at 3,280.
CORPORATE RESULTS
*Miyoshi
- 3QFY18 net profit surged 75% to $0.7m from a low base following its effort to streamline costs and improve capacity utilisation.
- However, revenue fell 10.7% to $12m, as data storage sales tumbled 42.4% due to fewer customer orders.
- This is in line with its strategy to move away from the data storage and focus on the consumer electronics and automotive business segments.
- Operating cash flow improved to $3m due to better working capital management. Balance sheet remains in a net cash position.
- Pending JTC approval, the proposed sales of its industrial property will provide the group with additional funds for business opportunities and reduce bank borrowings.
- Flushed with $6.8m proceeds from recent share placement, the group is negotiating to raise its stake in Core Power (Fujian) New Energy Automobile to gain greater exposure to China's electric car boom.
- Trades at 7.8x trailing P/E
POSITIVE NEWS
*Sunpower
- Completed acquisition of 71% stake in Xintai Zhengda Thermoelectric for Rmb66.5m, funded by internal resources, bank loans and convertible bonds issue.
- Xintai Zhengda has an exclusive centralised steam/electricity plant serving diverse industries and residents in Xintai City in Shandong province, China.
- Currently, Phase 1 of its new facilities is under construction with design capacities of 130t/h biomass boiler and 30MW electricity generator, two 130t/h coal-fired boilers and 18MW electricity generator.
- The existing facilities will remain in operation prior to the completion of the new facilities, fulfilling the requirements of current customers in the local area.
- Trades at 7.6x forward P/E.
NEUTRAL NEWS
*Hyflux
- Reached agreement with lender Maybank on the divestment process of Tuaspring Integrated Water and Power Project.
- The group has to find a buyer by 15 Oct and obtain approval from Maybank, PUB and High Court for the transaction by 11 Dec and shareholder nod by 4 Feb next year..
- Maybank will also become more involved in the sale process and appoint valuers for the plant, which has a book value of $1.3b.
- If the conditions are met, the bank, which is owed $518.4m, will refrain from starting enforcing proceedings against the group.
- Last traded at $0.21, the counter remains suspended.
*Noble
- Disposed entire 50% stake in Gas Natural Ganamax, a Mexican entity, for US$350,000.
Friday, July 6, 2018
SG Market (06 Jul 18)
MARKET OVERVIEW
- Market sentiment likely to be shaken by the surprise policy measures to cool the residential market and first wave of US tariffs on Chinese goods set to take effect at noon today, which could escalate into an all-out trade war.
- Technically, downside for the STI lies at the crucial support level of 3,200, with upside capped at 3,280.
MACRO WATCH
*Property
- The government has announced higher stamp duties and tighter loan limits for home purchases to check steep price increases.
- The move came after MAS warned of euphoria in the residential market as private home prices rebounded 9.1% from its 2Q17 trough and neared its 2013 peak.
- Wef 1 July, citizens and PRs will have to pay an additional 5% ABSD to 10% and 15% for their 2nd and successive residential properties, while foreigners will also pay 5% extra to 20% for any home purchase.
- Entities such as developers will be subject to ABSD of 25%, up from 15%, plus a new non-remittable 5% on any purchase for housing development.
- Loan-to-value limits will be lowered by 5ppt for all housing loans, except HDB loans.
- These latest measures are likely to dampen investment demand and transaction volume as well as returns for Singapore property developers as well as real estate agencies.
- While property related counters might suffer a knee-jerk reaction, weak share price performance of property counters in recent months suggests that downside risk could be limited.
POSITIVE NEWS
*Manufacturing Integration Technology
- Entered into a third deed of undertaking with China Fortune-Tech Capital (CFTC) to defer the exclusivity period and expiry date for the proposed disposal of its semiconductor equipment business to CFTC.
- Updated that significant progress towards signing a definitive agreement has been made.
- However, the parties require additional time to finalise the terms and for CFTC to prepare a suitable corporate structure in China for the proposed transaction.
- Trades at 11.5x trailing P/E.
*Trendlines
- Portfolio company ViAqua Therapeutics completed an investment in two milestones, led by Nutreco Investments.
- The funding is intended to complete the development of its first product and support test requirements for the registration stage.
- Additionally, ViAqua signed a joint development and marketing agreement with Nutreco's aquaculture division Skretting.
- Trades at 0.58x P/B.
NEUTRAL NEWS
*Ezion
- Entered into a 49:51% JV agreement with Alliance Offshore, a wholly-owned subsidiary of TSC Group (TSC) to cooperate in the ownership and operations of Liftboats, with the aim to become the world's largest owner and operator of Liftboats.
- TSC will provide necessary assistance to the JV Co to obtain the capital required for the acquisition of new Liftboats and working capital. Ezion will assist the JV Co in the marketing and operations of the Liftboats.
- TSC is about 52% indirectly-owned by China Merchants & Great Wall Ocean Strategy & Technology Fund (L.P.)
- The above mentioned investment was funded through internal resources.
- Trades at 1.16x P/B
*Natural Cool
- Acquiring a 51% stake in JAD Solutions for cash consideration of $1.5m, which will be entirely funded by its internal resources.
- JAD is a specialist mechanical and electrical systems contractor which is involved in providing consulting, design, construction, testing and certification of high containment facilities, and their maintenance.
- While FY17 is a loss-making year due to increased costs arising from its overseas expansion plan, the private company has subsequently ceased its overseas expansion efforts and is now refocusing in Singapore market.
- For the FP2018 based on its unaudited management accounts, JAD has successfully turnaround and reported a profit before tax of $84,000.
- Given the complementary nature of the business, the proposed acquisition is expected to lead to synergies that will result in better operational efficiency and increased cost savings for the group.
- Trades at 0.9x P/B.
- Market sentiment likely to be shaken by the surprise policy measures to cool the residential market and first wave of US tariffs on Chinese goods set to take effect at noon today, which could escalate into an all-out trade war.
- Technically, downside for the STI lies at the crucial support level of 3,200, with upside capped at 3,280.
MACRO WATCH
*Property
- The government has announced higher stamp duties and tighter loan limits for home purchases to check steep price increases.
- The move came after MAS warned of euphoria in the residential market as private home prices rebounded 9.1% from its 2Q17 trough and neared its 2013 peak.
- Wef 1 July, citizens and PRs will have to pay an additional 5% ABSD to 10% and 15% for their 2nd and successive residential properties, while foreigners will also pay 5% extra to 20% for any home purchase.
- Entities such as developers will be subject to ABSD of 25%, up from 15%, plus a new non-remittable 5% on any purchase for housing development.
- Loan-to-value limits will be lowered by 5ppt for all housing loans, except HDB loans.
- These latest measures are likely to dampen investment demand and transaction volume as well as returns for Singapore property developers as well as real estate agencies.
- While property related counters might suffer a knee-jerk reaction, weak share price performance of property counters in recent months suggests that downside risk could be limited.
POSITIVE NEWS
*Manufacturing Integration Technology
- Entered into a third deed of undertaking with China Fortune-Tech Capital (CFTC) to defer the exclusivity period and expiry date for the proposed disposal of its semiconductor equipment business to CFTC.
- Updated that significant progress towards signing a definitive agreement has been made.
- However, the parties require additional time to finalise the terms and for CFTC to prepare a suitable corporate structure in China for the proposed transaction.
- Trades at 11.5x trailing P/E.
*Trendlines
- Portfolio company ViAqua Therapeutics completed an investment in two milestones, led by Nutreco Investments.
- The funding is intended to complete the development of its first product and support test requirements for the registration stage.
- Additionally, ViAqua signed a joint development and marketing agreement with Nutreco's aquaculture division Skretting.
- Trades at 0.58x P/B.
NEUTRAL NEWS
*Ezion
- Entered into a 49:51% JV agreement with Alliance Offshore, a wholly-owned subsidiary of TSC Group (TSC) to cooperate in the ownership and operations of Liftboats, with the aim to become the world's largest owner and operator of Liftboats.
- TSC will provide necessary assistance to the JV Co to obtain the capital required for the acquisition of new Liftboats and working capital. Ezion will assist the JV Co in the marketing and operations of the Liftboats.
- TSC is about 52% indirectly-owned by China Merchants & Great Wall Ocean Strategy & Technology Fund (L.P.)
- The above mentioned investment was funded through internal resources.
- Trades at 1.16x P/B
*Natural Cool
- Acquiring a 51% stake in JAD Solutions for cash consideration of $1.5m, which will be entirely funded by its internal resources.
- JAD is a specialist mechanical and electrical systems contractor which is involved in providing consulting, design, construction, testing and certification of high containment facilities, and their maintenance.
- While FY17 is a loss-making year due to increased costs arising from its overseas expansion plan, the private company has subsequently ceased its overseas expansion efforts and is now refocusing in Singapore market.
- For the FP2018 based on its unaudited management accounts, JAD has successfully turnaround and reported a profit before tax of $84,000.
- Given the complementary nature of the business, the proposed acquisition is expected to lead to synergies that will result in better operational efficiency and increased cost savings for the group.
- Trades at 0.9x P/B.
Thursday, July 5, 2018
SG Market (05 Jul 18)
MARKET OVERVIEW
- Stocks are likely to drift with closure in US markets giving few leads but trade continues to be the main theme as China pressed Europe for anti-US alliance on trade ahead of US tariffs on Chinese imports kicking in on Fri.
- Meanwhile, PBOC has given assurances that the yuan would not be used in the tit-for-tat moves, which includes latest Chinese ban on chip sales by US tech firm, Micron.
- Technically, downside for the STI lies at the crucial support level of 3,200, with upside capped at 3,280.
MACRO WATCH
*Economy
- MAS expect the economy to expand 2.5-3.5% this year but cautions that tail risks from protectionism and inflation have grown significantly.
- The spillover effect from global trade conflict would impact Singapore given its position in the regional electronics production value chain as well as hub for air and sea transport and financial services.
- Bilateral trade between US and China indirectly contributes 1.1% of Singapore's GDP, while US-EU flows add another 0.5%.
*Property
- MAS warns developers, banks and home buyers to be wary about euphoria in the property market given the supply stream coming in the next few years.
- This comes after aggressive bidding by developers in both collective sale tenders and government land site bids, which is expected to double the available housing units in the near term.
- Prices of private homes have also surged 9.1% since the trough in 2Q17, while transactions have jumped 25% over the past 12 months.
POSITIVE NEWS
*Mapletree Logistics Trust
- Acquiring five logistics properties in Singapore from CWT for $778.3m, subject to approvals from JTC and CWT shareholders.
- With combined gfa of 3.2m sf (20% of portfolio), the modern purpose-built ramp-up warehouses are fully occupied and come with a sale-and-leaseback arrangement with built-in rental escalation of 1.5% and WALE of 8.7 years..
- The deal will be DPU accretive and expected to generate an initial NPI yield of 6.2%.
- The manager is reviewing various financing options from equity fund raising, potential divestments and/or debt.
- Trades at 6.4% yield and 1.1x P/B
*Koyo Int'l
- Awarded a $5.2m M&E maintenance contract by HDB.
- The 36-month contract will commence in Jul and will lift the group's current order book to $31.9m, with cmpletion till FY21.
- Trades at 17.9x trailing P/E
*DISA
- Disclosed combined code sales of $74,112 from PoSA and 3S for 4QFY18, which is a 138.5% increase.
- The improved performance was mainly due to increase in product categories from new suppliers and higher sales volume.
- Detailed 4QFY18 and FY6/18 will be released on or before 29 Aug '18.
- Loss-making and trades at 2.25x P/B.
NEUTRAL NEWS
*IREIT Global
- Tikehau Investment Management Asia Pacific (TIM AP) will be acquiring 4.52% of the shares of IREIT's manager from Dolphin Two, while parent Tikehau Capital will acquire an additional 4.39% of IREIT units.
- TIM AP holds 80% of the shares in the manager and Tikehau Capital holds 3.61% of IREIT units. Post transaction, TIM AP will control 84.52% of the manager, while Tikehau Capital will own 8% of IREIT.
- The increase in stakes reflects a greater alignment of interest with the unit holders and Tikehau Capital's commitment to grow the European-based trust.
- Looking ahead, IREIT will continue to leverage on Tikehau Capital's established footprint, proven track record and extensive network in Europe to deliver long-term stable returns to unit holders.
- Trades at yield of 7.6x and 1.1x P/B
NEGATIVE NEWS
*Ryobi
- Received letters of demand for the aggregate sum of S$23.2m from several banks but none have commenced legal proceedings against the group.
- It has appointed PWC as its independent financial advisor to establish the current financial position and work out a restructuring proposal with the banks.
- This may trigger cross default provisions in other banking facilities and project contracts.
- Trades at 0.47x P/B.
- Stocks are likely to drift with closure in US markets giving few leads but trade continues to be the main theme as China pressed Europe for anti-US alliance on trade ahead of US tariffs on Chinese imports kicking in on Fri.
- Meanwhile, PBOC has given assurances that the yuan would not be used in the tit-for-tat moves, which includes latest Chinese ban on chip sales by US tech firm, Micron.
- Technically, downside for the STI lies at the crucial support level of 3,200, with upside capped at 3,280.
MACRO WATCH
*Economy
- MAS expect the economy to expand 2.5-3.5% this year but cautions that tail risks from protectionism and inflation have grown significantly.
- The spillover effect from global trade conflict would impact Singapore given its position in the regional electronics production value chain as well as hub for air and sea transport and financial services.
- Bilateral trade between US and China indirectly contributes 1.1% of Singapore's GDP, while US-EU flows add another 0.5%.
*Property
- MAS warns developers, banks and home buyers to be wary about euphoria in the property market given the supply stream coming in the next few years.
- This comes after aggressive bidding by developers in both collective sale tenders and government land site bids, which is expected to double the available housing units in the near term.
- Prices of private homes have also surged 9.1% since the trough in 2Q17, while transactions have jumped 25% over the past 12 months.
POSITIVE NEWS
*Mapletree Logistics Trust
- Acquiring five logistics properties in Singapore from CWT for $778.3m, subject to approvals from JTC and CWT shareholders.
- With combined gfa of 3.2m sf (20% of portfolio), the modern purpose-built ramp-up warehouses are fully occupied and come with a sale-and-leaseback arrangement with built-in rental escalation of 1.5% and WALE of 8.7 years..
- The deal will be DPU accretive and expected to generate an initial NPI yield of 6.2%.
- The manager is reviewing various financing options from equity fund raising, potential divestments and/or debt.
- Trades at 6.4% yield and 1.1x P/B
*Koyo Int'l
- Awarded a $5.2m M&E maintenance contract by HDB.
- The 36-month contract will commence in Jul and will lift the group's current order book to $31.9m, with cmpletion till FY21.
- Trades at 17.9x trailing P/E
*DISA
- Disclosed combined code sales of $74,112 from PoSA and 3S for 4QFY18, which is a 138.5% increase.
- The improved performance was mainly due to increase in product categories from new suppliers and higher sales volume.
- Detailed 4QFY18 and FY6/18 will be released on or before 29 Aug '18.
- Loss-making and trades at 2.25x P/B.
NEUTRAL NEWS
*IREIT Global
- Tikehau Investment Management Asia Pacific (TIM AP) will be acquiring 4.52% of the shares of IREIT's manager from Dolphin Two, while parent Tikehau Capital will acquire an additional 4.39% of IREIT units.
- TIM AP holds 80% of the shares in the manager and Tikehau Capital holds 3.61% of IREIT units. Post transaction, TIM AP will control 84.52% of the manager, while Tikehau Capital will own 8% of IREIT.
- The increase in stakes reflects a greater alignment of interest with the unit holders and Tikehau Capital's commitment to grow the European-based trust.
- Looking ahead, IREIT will continue to leverage on Tikehau Capital's established footprint, proven track record and extensive network in Europe to deliver long-term stable returns to unit holders.
- Trades at yield of 7.6x and 1.1x P/B
NEGATIVE NEWS
*Ryobi
- Received letters of demand for the aggregate sum of S$23.2m from several banks but none have commenced legal proceedings against the group.
- It has appointed PWC as its independent financial advisor to establish the current financial position and work out a restructuring proposal with the banks.
- This may trigger cross default provisions in other banking facilities and project contracts.
- Trades at 0.47x P/B.
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.
- 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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