Raffles Medical:
- A foreign broker has slashed its rating for Raffles Medical from Buy to Hold, after it cited that growth in Singapore's private healthcare sector could come under pressure.- The brick wall on growth stems from reduced private demand on the back of close working relations between the Ministry of Health and the insurance industry.
- Additionally, the upcoming increase in MediShield Life Integrated Plan premiums next year will also likely to dampen demand for private healthcare services in favour of public hospitals.
- Further, the broker sees public hospitals serving a rising proportion of elderly patients, from the 90% historically.
- Lastly, there is potential cost escalation from the Raffles Hospital extension, with their Chinese venture ramp-up.
- Hence, the house lowers its FY16-18e earnings forecast by 7-18%, below consensus estimates, but maintains its TP of $1.60/share.
Thursday, November 17, 2016
SG Market (17 Nov 16)
Local stocks are expected to muddle along as investors weigh downbeat Oct NODX figures and await more clarity on US trade policies when president elect Donald Trump meets Japanese PM Shinzo Abe today.
Regional bourses had a lacklustre morning in Tokyo (-0.4%) and Sydney (-0.1%). Seoul will commence trading an hour later today owing to exams.STI failed to break above its 200-dma at 2,815 yesterday and is likely to inch towards its lower bound at 2,780.
Stocks to watch:
*Economy: Oct NODX slumped 12% (est: -3%, prior: -5%), dragged by a decline in both electronic (-6%) and non-electronic exports (-14.6%). Overall, shipments to top 10 markets fell, led by EU (-28.6%), Japan (-19.9%) and Indonesia (-13.1%).
*Telecom: IMDA has pre-qualified fibre service provider MyRepublic and Australian TPG Telecom to participate in the first of two spectrum auctions to be held and completed before year-end, which will pave the way for the entry of a fourth mobile operator. MKE maintains its negative view on the sector due to increased competition. M1 (Sell, TP of $1.90) will be most affected, while Singtel (Hold, TP: $3.68) is regionally more diversified and StarHub (Hold, TP: $3.50) is more focused on its enterprise business.
*Midas: 32.5% owned CRRC Nanjing Puzhen Rail Transport has secured four new metro train car supply contracts worth Rmb2.59b, with delivery slated between Aug ’17 and Mar ’19. With these orders, its JV would have accummulated Rmb7.17b of new projects YTD.
*Breadtalk: Disclosed that it has been in discussion with several third-parties to form a JV for a core business to be a franchisee and operator of an existing business in a new territory.
*Aspial: Proposed repurchase of up to $15m of its 4.5% notes due 2017 at 100.2% of principal amount from noteholders. The partial redemption will commence on 17 Nov - 2 Dec.
*Ramba: Spudded first oil from the Akatara Field of the Lemang block, South Sumatra.
*Resources Prima: Disclosed that Executive Chairman and CEO Agus Sugiono has been formally served with a notice of arbitration by Tan Kim Sing. Agus intends to seek legal advice and will defend against the claim.
*Acesian Partners: Client Takenaka Corp terminated the subcontract for works relating to the proposed development of Terminal 4 at Changi Airport.
*Asia Fashion: Entered into an agreement with G Music (HK) to organise and promote the Camomile Acoustic Night - Emi Fujiata Live in HK 2016 concert.
*Neo Group: Exiting its umisushi operations in Indonesia after ceasing renewal of its licence with PT Ubi Sushi Indonesia. Separately, it established a 51:49 JV with Gomtz to cater and manufacture cooked-food preparations.
*Swiber: Under probe by the Commercial Affairs Department for possible regulatory breaches under the Securities and Futures Act.
*Jason Holdings: Faced winding up action from creditor ANZ Bank for failing to meet a $1.7m repayment claim. The application is fixed for hearing on 2 Dec and ANZ has proposed the appointment of Nexia TS Risk Advisory as the liquidator.
Regional bourses had a lacklustre morning in Tokyo (-0.4%) and Sydney (-0.1%). Seoul will commence trading an hour later today owing to exams.STI failed to break above its 200-dma at 2,815 yesterday and is likely to inch towards its lower bound at 2,780.
Stocks to watch:
*Economy: Oct NODX slumped 12% (est: -3%, prior: -5%), dragged by a decline in both electronic (-6%) and non-electronic exports (-14.6%). Overall, shipments to top 10 markets fell, led by EU (-28.6%), Japan (-19.9%) and Indonesia (-13.1%).
*Telecom: IMDA has pre-qualified fibre service provider MyRepublic and Australian TPG Telecom to participate in the first of two spectrum auctions to be held and completed before year-end, which will pave the way for the entry of a fourth mobile operator. MKE maintains its negative view on the sector due to increased competition. M1 (Sell, TP of $1.90) will be most affected, while Singtel (Hold, TP: $3.68) is regionally more diversified and StarHub (Hold, TP: $3.50) is more focused on its enterprise business.
*Midas: 32.5% owned CRRC Nanjing Puzhen Rail Transport has secured four new metro train car supply contracts worth Rmb2.59b, with delivery slated between Aug ’17 and Mar ’19. With these orders, its JV would have accummulated Rmb7.17b of new projects YTD.
*Breadtalk: Disclosed that it has been in discussion with several third-parties to form a JV for a core business to be a franchisee and operator of an existing business in a new territory.
*Aspial: Proposed repurchase of up to $15m of its 4.5% notes due 2017 at 100.2% of principal amount from noteholders. The partial redemption will commence on 17 Nov - 2 Dec.
*Ramba: Spudded first oil from the Akatara Field of the Lemang block, South Sumatra.
*Resources Prima: Disclosed that Executive Chairman and CEO Agus Sugiono has been formally served with a notice of arbitration by Tan Kim Sing. Agus intends to seek legal advice and will defend against the claim.
*Acesian Partners: Client Takenaka Corp terminated the subcontract for works relating to the proposed development of Terminal 4 at Changi Airport.
*Asia Fashion: Entered into an agreement with G Music (HK) to organise and promote the Camomile Acoustic Night - Emi Fujiata Live in HK 2016 concert.
*Neo Group: Exiting its umisushi operations in Indonesia after ceasing renewal of its licence with PT Ubi Sushi Indonesia. Separately, it established a 51:49 JV with Gomtz to cater and manufacture cooked-food preparations.
*Swiber: Under probe by the Commercial Affairs Department for possible regulatory breaches under the Securities and Futures Act.
*Jason Holdings: Faced winding up action from creditor ANZ Bank for failing to meet a $1.7m repayment claim. The application is fixed for hearing on 2 Dec and ANZ has proposed the appointment of Nexia TS Risk Advisory as the liquidator.
Wednesday, November 16, 2016
MM2 Asia
MM2 Asia:
- 1HFY17 net profit nearly doubled to $7.8m (+95%), meeting 43% of full year consensus forecast.
- Revenue surged 175.6% to $35m, boosted by the consolidation of newly acquired businesses in concert production as well as cinemas.
- Despite the slightly below par performance, management shared that its 2HFY17 could see an uptick in its core business- Recently, mm2 announced three major acquisitions that are aligned to its strategy of developing media platforms with good content.
- While its forward P/E of 26.1x is arguably not cheap, the media company is set on a growth trajectory that could justify the steeper valuations.
The street has 2 Buy and 1 Hold ratings on the stock with a mean TP of $0.51.
- 1HFY17 net profit nearly doubled to $7.8m (+95%), meeting 43% of full year consensus forecast.
- Revenue surged 175.6% to $35m, boosted by the consolidation of newly acquired businesses in concert production as well as cinemas.
- Despite the slightly below par performance, management shared that its 2HFY17 could see an uptick in its core business- Recently, mm2 announced three major acquisitions that are aligned to its strategy of developing media platforms with good content.
- While its forward P/E of 26.1x is arguably not cheap, the media company is set on a growth trajectory that could justify the steeper valuations.
The street has 2 Buy and 1 Hold ratings on the stock with a mean TP of $0.51.
SG Market (16 Nov 16)
Oil-linked counters may see some interest following the sharp upswing crude prices from renewed efforts to shore up proposed production cuts, although investors remained wary about US president-elect Trump's incoming policies.
Regional bourses opened higher in Tokyo (+1%), Seoul (+0.8%) and Sydney (+0.2%).Technically, STI is hovering below its 200-dma at 2,815 with downside risk at 2,780.
Stocks to watch:
*Property: Non-landed private home sales (excluding ECs) spiked to 1,252 units in Oct (+146% y/y, +128% m/m), sparked by new launches by CDL (Forest Woods) and MCC Land (The Alps Residences). Last month's sales were the highest so far this year, and the best showing since Jul '15 (1,655 units).
*SIA: Group pax load factor slipped 2.1ppts to 76.7% in Oct as traffic (+0.8%) lagged capacity increase (+3.6%), with load factors declining across all regions due to softer demand amidst a competitive landscape. Cargo load factor grew to 66.2% (+1.2ppts) from higher carriage (+7.7%), on capacity growth of 5.7%. Subsidiary carriers Scoot (-10.1ppts to 75.1%), TigerAir (-0.7ppts to 79.1%) and SilkAir (-0.7ppts to 67.3) also recorded lower load factors. MKE last had a Hold call with TP of $9.70.
*SembCorp Marine: Disposing its entire 30% direct interest in Cosco Shipyard Group to China Ocean Shipping for Rmb1.06b ($220.68m), or 1.2x P/B. While the group will realise a net gain of $48.3m, this was against an earlier impairment of $171m made in FY15. Apart from improving liquidity, this divestment also removes any overhang of further writedowns/ losses to be incurred at the associate level. MKE maintains Sell with TP of $1.00.
*Rickmers Maritime: Failure to make an interest payment of $4.3m on its US$100m, 8.45% notes maturing in May '17 within the next five business days would trigger a default and affect its ability to continue as a going concern. It joins a growing list of debt-laden offshore marine companies such as Swiber, Technics Oil & Gas and Swissco, which are currently under judicial management, or about to file for one.
*GLP: Signed 204,000 sqm (2.2m sf) of leases in China, Japan, US and Brazil, with third party logistics service providers servicing the pharmaceutical, auto parts and consumer goods industries.
*CapitaLand: Serviced residence arm Ascott has added 10,000 units of apartment units across 51 properties in 2016, bringing its portfolio to 52,000 units globally.
*Silverlake: Intends to sell up to 20.8m shares of Global InfoTech (GIT) on ChiNext in the Shenzhen Stock Exchange from 6 Dec till Jun '17. According to Bloomberg, Silverlake's cost per share was Rmb27.04, above GIT's last closing price of Rmb24.51.
*Ramba Energy: Received forestry lease permit to explore and produce oil at Akatara Field in Lemang block, Sumatra. Initial production is expected to commence on 16 Nov, which is estimated to yield ~500bpd from the Akatara-2 well.
*TEE Land: Based on a preliminary assessment, the group disclosed that none of its two properties- Workotel and Thistle Guest House in Christchurch, New Zealand, suffered visible damage from the recent earthquake.
*AnnAik: 60% owned ChangXing HengYi Wastewater Treatment has entered into a built-operate-transfer water treatment project with the municipal government of Lijiaxiang in China. Total investment for the plant is estimated to be Rmb10m, with daily treatment capacity of 10,000 MT.
*Ley Choon: Re-applying for a proposed transfer to the SGX Catalist Board.
Regional bourses opened higher in Tokyo (+1%), Seoul (+0.8%) and Sydney (+0.2%).Technically, STI is hovering below its 200-dma at 2,815 with downside risk at 2,780.
Stocks to watch:
*Property: Non-landed private home sales (excluding ECs) spiked to 1,252 units in Oct (+146% y/y, +128% m/m), sparked by new launches by CDL (Forest Woods) and MCC Land (The Alps Residences). Last month's sales were the highest so far this year, and the best showing since Jul '15 (1,655 units).
*SIA: Group pax load factor slipped 2.1ppts to 76.7% in Oct as traffic (+0.8%) lagged capacity increase (+3.6%), with load factors declining across all regions due to softer demand amidst a competitive landscape. Cargo load factor grew to 66.2% (+1.2ppts) from higher carriage (+7.7%), on capacity growth of 5.7%. Subsidiary carriers Scoot (-10.1ppts to 75.1%), TigerAir (-0.7ppts to 79.1%) and SilkAir (-0.7ppts to 67.3) also recorded lower load factors. MKE last had a Hold call with TP of $9.70.
*SembCorp Marine: Disposing its entire 30% direct interest in Cosco Shipyard Group to China Ocean Shipping for Rmb1.06b ($220.68m), or 1.2x P/B. While the group will realise a net gain of $48.3m, this was against an earlier impairment of $171m made in FY15. Apart from improving liquidity, this divestment also removes any overhang of further writedowns/ losses to be incurred at the associate level. MKE maintains Sell with TP of $1.00.
*Rickmers Maritime: Failure to make an interest payment of $4.3m on its US$100m, 8.45% notes maturing in May '17 within the next five business days would trigger a default and affect its ability to continue as a going concern. It joins a growing list of debt-laden offshore marine companies such as Swiber, Technics Oil & Gas and Swissco, which are currently under judicial management, or about to file for one.
*GLP: Signed 204,000 sqm (2.2m sf) of leases in China, Japan, US and Brazil, with third party logistics service providers servicing the pharmaceutical, auto parts and consumer goods industries.
*CapitaLand: Serviced residence arm Ascott has added 10,000 units of apartment units across 51 properties in 2016, bringing its portfolio to 52,000 units globally.
*Silverlake: Intends to sell up to 20.8m shares of Global InfoTech (GIT) on ChiNext in the Shenzhen Stock Exchange from 6 Dec till Jun '17. According to Bloomberg, Silverlake's cost per share was Rmb27.04, above GIT's last closing price of Rmb24.51.
*Ramba Energy: Received forestry lease permit to explore and produce oil at Akatara Field in Lemang block, Sumatra. Initial production is expected to commence on 16 Nov, which is estimated to yield ~500bpd from the Akatara-2 well.
*TEE Land: Based on a preliminary assessment, the group disclosed that none of its two properties- Workotel and Thistle Guest House in Christchurch, New Zealand, suffered visible damage from the recent earthquake.
*AnnAik: 60% owned ChangXing HengYi Wastewater Treatment has entered into a built-operate-transfer water treatment project with the municipal government of Lijiaxiang in China. Total investment for the plant is estimated to be Rmb10m, with daily treatment capacity of 10,000 MT.
*Ley Choon: Re-applying for a proposed transfer to the SGX Catalist Board.
Tuesday, November 15, 2016
Sinarmas Land
Sinarmas Land's 3Q16 net profit tumbled 62.6% to $17.4m, due to negative leverage as well as absence of negative goodwill.
Revenue fell 23.6% to $145.9m, from lower commercial and industrial land sales. This was partially offset by leasing income from Alphabeta building in London (acquired 4Q15), as well as higher leasing income from Indonesia investment properties.
Gross margin inched up 0.1ppt to 72.5% on the back of lower industrial land cost.
Despite the revenue decline, operating expenses rose 5.2% to $61m, weighing on bottom line. This was exacerbated by the absence of $30.6m negative goodwill as well as a 85.6% reduction in FX gain to $1.6m.
But contributions from JVs and associates jumped to $5m (3Q15: $0.3m).
Net gearing stood at 15.8% (-2.8ppt q/q).
Sinarmas Land is a proxy to the favourable long-term outlook of the Indonesia property sector.
Subsidiary Bumi Serpong Damai will be jointly developing a 19-ha mixed use project in BSD city in West Jakarta. The project is expected to commence in FY17 and will comprise 1,000 landed houses and shop houses.
Maybank KE notes that investor interest has been building up for JSE-listed Bumi Serpong Damai given government and central bank support to drive pre-sales for low-to-mid end properties in the longer run.
Meanwhile, Sinarmas' projects would also likely be a beneficiary of the Indonesia tax amnesty programme, as repatriated assets can be invested in land and buildings, with the exception of subsidised housing.
Sinarmas Land is currently trading at 1x P/B.
Revenue fell 23.6% to $145.9m, from lower commercial and industrial land sales. This was partially offset by leasing income from Alphabeta building in London (acquired 4Q15), as well as higher leasing income from Indonesia investment properties.
Gross margin inched up 0.1ppt to 72.5% on the back of lower industrial land cost.
Despite the revenue decline, operating expenses rose 5.2% to $61m, weighing on bottom line. This was exacerbated by the absence of $30.6m negative goodwill as well as a 85.6% reduction in FX gain to $1.6m.
But contributions from JVs and associates jumped to $5m (3Q15: $0.3m).
Net gearing stood at 15.8% (-2.8ppt q/q).
Sinarmas Land is a proxy to the favourable long-term outlook of the Indonesia property sector.
Subsidiary Bumi Serpong Damai will be jointly developing a 19-ha mixed use project in BSD city in West Jakarta. The project is expected to commence in FY17 and will comprise 1,000 landed houses and shop houses.
Maybank KE notes that investor interest has been building up for JSE-listed Bumi Serpong Damai given government and central bank support to drive pre-sales for low-to-mid end properties in the longer run.
Meanwhile, Sinarmas' projects would also likely be a beneficiary of the Indonesia tax amnesty programme, as repatriated assets can be invested in land and buildings, with the exception of subsidised housing.
Sinarmas Land is currently trading at 1x P/B.
China Everbright Water
China Everbright Water's (CEW) 3Q16 net profit crept up 3% to HK$91.1m, bringing 9M16 net profit to HK$271.7m (-9%), or 61% of full year street forecast.
For the quarter, revenue of HK$553.5m (+35%) was boosted by the expansion and upgrading of several BOT projects under construction.
Gross margin fell 7ppt to 40% due to higher construction mix.
There was a five-fold jump in other income to HK$38.2m, mainly from VAT refund. However, this was negated by 1) admin expenses of HK$64m (+28%) due to business expansion and FX loss of HK$7m on USD borrowings, and 2) finance costs of HK$57.9m (+300%), due to higher borrowing balances.
Operating cash flow was still a negative HK$75m (9M16: -HK$180.8m) but is a marked improvement from the HK$190.3m outflow in 3Q15. Nevertheless, net gearing was stable at 43% (-0.1ppt q/q)
CEW secured eight environmental water projects in Shandong and Jiangsu in 9M16. Looking ahead, it plans to expand into other areas, including integrated environmental water services, industrial waste water treatment, river-basin ecological repair, and river training.
CEW is currently trading at 16.8x FY16e consensus P/E.
The street has 5 Buy and 1 Hold calls on CEW with mean TP of $0.67. CEW is a constituent of the Market Insight Growth portfolio.
For the quarter, revenue of HK$553.5m (+35%) was boosted by the expansion and upgrading of several BOT projects under construction.
Gross margin fell 7ppt to 40% due to higher construction mix.
There was a five-fold jump in other income to HK$38.2m, mainly from VAT refund. However, this was negated by 1) admin expenses of HK$64m (+28%) due to business expansion and FX loss of HK$7m on USD borrowings, and 2) finance costs of HK$57.9m (+300%), due to higher borrowing balances.
Operating cash flow was still a negative HK$75m (9M16: -HK$180.8m) but is a marked improvement from the HK$190.3m outflow in 3Q15. Nevertheless, net gearing was stable at 43% (-0.1ppt q/q)
CEW secured eight environmental water projects in Shandong and Jiangsu in 9M16. Looking ahead, it plans to expand into other areas, including integrated environmental water services, industrial waste water treatment, river-basin ecological repair, and river training.
CEW is currently trading at 16.8x FY16e consensus P/E.
The street has 5 Buy and 1 Hold calls on CEW with mean TP of $0.67. CEW is a constituent of the Market Insight Growth portfolio.
Centurion
Centurion's 3Q16 net profit rose 6% to $7.8m, bringing 9M16 earnings to $26m (-2%), or 73% of full year consensus estimate.
For the quarter, revenue climbed 14% to $28.1m, boosted by 18% increase in accommodation segment, due to ramp-up at Weslite Woodlands (TOP: Jul '15, occupancy 75%) and maiden contributions from ASPRI-Westlite Papan (TOP: May '16, occupancy: 20%). This was offset by reduced contributions from its optical disc business.
Gross margin shrank 6ppt to 60%, hurt by operating loss at ASPRI-Westlite Papan. Bottom line was also weighed by higher finance cost of $5.7m (+23%), due to increased borrowings to finance ASPRI-Weslite Papan, as well as UK Braemar.
Net gearing was steady q/q at 54%.
Centurion currently has 22 worker and student dormitories, totalling 64,408 beds across four countries.
In Singapore, Centurion has managed to maintain above-average occupancy rates despite a slowing economy, particularly in the O&M sector. It is currently in the midst of extension discussions with authorities, regarding Westlite Tuas (expiry: Apr '17).
In Nov, its appeal to increase bed capacity at Westlite Toh Guan has been rejected by URA. Accordingly, capacity at the dormitory will be reduced by 808 beds. This would result in a maximum impact of up to $2m/year or 5.9% of FY15 net profit.
In Malaysia, the government had showed signs of relaxing the foreign labour hiring freeze in certain sectors, including manufacturing. Although management acknowledges a challenging outlook, it is optimistic of long term prospects.
Management is sanguine about the prospects of its student accommodation business, and now has 10 student dormitories across UK, Australia and Singapore, following the acquisition of four assets in Jul '16. Despite the Brexit outcome, its UK accommodation assets are operating at close to full occupancy.
Centurion is currently trading undemanding 6.8x FY16E consensus P/E and 0.6x P/B. The street also sees a 6% indicative yield for the counter.
For the quarter, revenue climbed 14% to $28.1m, boosted by 18% increase in accommodation segment, due to ramp-up at Weslite Woodlands (TOP: Jul '15, occupancy 75%) and maiden contributions from ASPRI-Westlite Papan (TOP: May '16, occupancy: 20%). This was offset by reduced contributions from its optical disc business.
Gross margin shrank 6ppt to 60%, hurt by operating loss at ASPRI-Westlite Papan. Bottom line was also weighed by higher finance cost of $5.7m (+23%), due to increased borrowings to finance ASPRI-Weslite Papan, as well as UK Braemar.
Net gearing was steady q/q at 54%.
Centurion currently has 22 worker and student dormitories, totalling 64,408 beds across four countries.
In Singapore, Centurion has managed to maintain above-average occupancy rates despite a slowing economy, particularly in the O&M sector. It is currently in the midst of extension discussions with authorities, regarding Westlite Tuas (expiry: Apr '17).
In Nov, its appeal to increase bed capacity at Westlite Toh Guan has been rejected by URA. Accordingly, capacity at the dormitory will be reduced by 808 beds. This would result in a maximum impact of up to $2m/year or 5.9% of FY15 net profit.
In Malaysia, the government had showed signs of relaxing the foreign labour hiring freeze in certain sectors, including manufacturing. Although management acknowledges a challenging outlook, it is optimistic of long term prospects.
Management is sanguine about the prospects of its student accommodation business, and now has 10 student dormitories across UK, Australia and Singapore, following the acquisition of four assets in Jul '16. Despite the Brexit outcome, its UK accommodation assets are operating at close to full occupancy.
Centurion is currently trading undemanding 6.8x FY16E consensus P/E and 0.6x P/B. The street also sees a 6% indicative yield for the counter.
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