MARKET OVERVIEW
- The market is likely to head higher following the dramatic easing of geopolitical tensions in Korea, 10Y US Treasury yield dipping back below 3% as well as solid 1Q18 earnings from DBS, the first of the three banks to report results.
- Technically, - Technically, the STI could attempt re-test the last high of 3,610. Downside support is at 3,510.
CORPORATE RESULTS
*DBS Group
- 1Q18 net profit surge 26% to a quarterly record of $1.52b, clearly beating estimates on broad-based growth in loans and non-interest income.
- Net interest income rose 16% to $2.13b as loans grew 10% (+16% in constant currency terms) on stronger property and consumer loans.
- Net interest margin widened to 1.83% (+9bps) on higher SGD, USD and HKD interest rates
- Non-interest income climbed 17% to $1.23b from higher wealth management (+49%) and brokerage (+29%) as well as net trading income (+36%).
- A positive jaw led to a 1.6ppt drop in cost-income ratio to 41.6%.
- Total allowances shrank 18% to $164m with NPL ratio at 1.6% as new non-performing asset formation at a four-year low.
- CET1 capital remained at 14% (4Q17: 13.9%)
- ROE of 13.1% was the highest in a decade.
- Trades at 1.6x P/B.
- MKE maintains Hold with TP of $29.66.
*Sheng Siong
- 1Q18 net profit rose 6.6% to $18.3m, in line with estimates.
- Revenue grew 5.1% to $228.3m on contribution from higher same store sales (+5.6%) and seven new stores (+6.7%).
- Gross margin improved to 26.2% (+1ppt) on favourable sales mix of fresh products and suppliers' rebates.
- Bottom line was weighed admin costs of $38.3m (+11.8%) due to higher headcount and bonus provision.
- Trades at 21x forward P/E.
- MKE has a Buy with TP of $1.20
*Raffles Medical
- 1Q18 net profit edged up 1.7% to $15.8m, meeting street tempered expectations.
- Revenue grew $120.2m (+4.6%) on increased patient loads as well as a new contract to provide air borders screening services.
- Operating margin held steady at 15.7% as staff cost control (+3.9%) was offset by higher inventories and consumables used (+11.9%).
- Raffles Hospital Extension has been completed and its specialist centre opened on 22 Jan.
- Trades at 31.6x forward P/E.
- MKE last had a Hold with TP of $1.13
*CDL Hospiality Trusts
- 1Q18 DPS of 2.17¢ (+7.4%) was in line with estimates as the Singapore portfolio recorded an improved performance despite a competititve landscape.
- Revenue and NPI was up 11.6% and 5.4% to $51.8m and $37.8 respectively, mainly due to inorganic growth from The Lowry Hotel in Manchester, UK and Pullman Hotel Munich in Germany
- RevPAR for the Singapore hotels improved 0.8% to $161 in 1Q18 although average occupany rate dipped 0.8ppt to 87.6%.
- Leverage of 33.2% gives it a regulatory debt headroom of $608m.
- Trades at annualised 1Q yield of 5% and 1.1x P/B
*Oxley
- 3Q18 net profit declined 33% to $30.6m on revenue of $238.8m (-38%), bringing 9M18 earnings to 75% of full year estimates.
- Gross margin narrowed by 8.7ppt to 15.1%, due to recognition of construction costs in relation to certain plots in The Royal Wharf Phase 1A and 1B, as well as certain expenses incurred on investment properties and hotel operations.
- The Group had total unbilled contract value of $1.57b, of which $0.14b was attributable to the projects in Singapore and remaining $1.43b was attributable to overseas projects.
- Net gearing increased to 2.4x due to the Group's higher capital needs in asset acquisition and upcoming projects.
- Trades at almost 47% discount to RNAV.
*Manulife US REIT
- 1Q18 results missed, as headline DPU slid 8.5% to 1.51US¢ on a rights-enlarged unit base (+65%).
- Post adjustment for rights, DPU slipped 0.7% on weaker occupancies in Figueroa and Michelson against 1Q17.
- Revenue and NPI surged to US$31.2m (+57%) and US$19.7m (+54%), on contributions from two newly acquired properties, Plaza and Exchange.
- Overall portfolio occupancy ticked lower by 0.1ppt q/q to 95.8%.
- Aggregate leverage edged up 0.4ppt q/q to 34.1%.
- Pending unitholders' approval on 15 May '18 for the acquisition of two sponsor's assets for US$387m (28% of total asset).
- Offers annualised 1Q yield of 6.4%, and last traded at 1.16x P/B.
*Micro-Mechanics
- 3QFY18 net profit jumped 18.7% to $4.1m, lifting 9MFY18 earnings to $13.2m (+29.2%), below expecatations at 66% of full year estimates.
- Revenue for the quarter rose 13% to $16.1m on higher sales in China, the Philippines, and US.
- Gross margin narrowed 1.6ppt to 55.8% on higher production headcount, and higher depreciation for additional machines.
- Bottom line was helped by absence of $0.18m FX loss and operating cost controls.
- Trading at 12.4x forward P/E.
*iFast
- 1Q18 net profit leapt 52.6% to $2.8m, meeting expectations.
- Revenue rose 40.1% to $31m as AUA increased 24.8% to hit a record $8.07b for both B2C and B2B business divisions.
- However, China operation incurred steeper loss of $1.2m (+22.8% y/y, +1.1% q/q) as it is still in gestation stage of building its brand and business in the new market.
- Going forward, increasing focus will be channelled towards gaining scale as a platform, while continuing to improve its service offerings
- Overall, the group expects to perform better in 2018
- Declared a higher first interim DPS of 0.75¢ (1Q17: 0.68¢)
- Trades at 22x forward P/E.
*Tuan Sing
- 1Q18 net profit jumped 53% to $8.2m, boosted by disposal gain of $3.9m. Excluding the one-off item, earnings of of $4.2m (-20.7%) would have come in below estimates.
- Revenue edged up 2% to $76.5m on higher contributions from its industrial services segment (+16.9%), partially offset by lower sales of residential development projects (-12.1%).
- Gross margin expanded to 21.7% (+1.2ppt) on the change in sales mix.
- Bottom line was hit by higher admin expenses (+9% to $6.2m) and finance costs (+66% to $10.1m) despite stronger contributions from 44.5%-owned Gultech (+16% to $4.2m).
- Trades at 49% discount to NAV/share of $0.836.
*GL
- 9MFY18 net profit surged 83% to US$53m on higher other income of US$28.7m (9MFY17: US$2.4m) , mainly from compensation from a compulsory acquisition of a hotel, and recovery of a writted off loan.
- Revenue grinded 4% higher to US$259.4m, helped by stronger GBP and AUD against USD during the period, as well as higher oil prices.
- Gross margin ticked up 0.7ppt to 59.6%.
- NAV/share at US$0.882.
*Jiutian Chemical
- 1Q18 net profit more than tripled to Rmb23.4m (1Q17: Rmb6.2m) on operating leverage.
- Revenue rose 20% to Rmb326m as higher ASPs of DMF (+11%) and Methylamine (+37%) were partially offset by lower sales volume of 9% and 1% respectively.
- Consequently, gross margin fattened to 17% (+9ppt).
- Bottom line was supported by slower growth in distribution (+8%) and admin (+7%) expenses, although this was partially pared by losses form its associate of Rmb8.7m (1Q17: Rmb0.3m profit).
POSITIVE NEWS
*Mapletree Industrial Trust
- Executed a novation agreement in respect of an OTP for an industrial property located at 7 Tai Seng Drive with its Sponsor, Mapletree Investments and the vendor of the Property, Mapletree Logistics Trust (MLT)
- MIT has also signed an agreement to lease (ATL) with an established information and communication technology company. The long-term lease commitment from a high-quality tenant will further enhance the portfolio resilience.
- It has a GFA of about 256,600 sf on a land area of about 96,500 sf. The site is zoned for Business 2 use with its land lease tenure of 30 years commencing from 16 March 1993 and an option to extend for an additional 30 years.
- Pursuant to the ATL, MIT will be undertaking upgrading works to increase the power capacity and floor loading capacity, and to provide additional telecommunication infrastructure as well as space for mechanical and electrical equipment.
- When completed in the 2H of 2019, the Property will be fully leased to the Tenant for an initial term of 25 years with annual rental escalations and an option to renew exercisable by the Tenant for the remaining land lease tenure.
- Assuming the cost of the proposed acquisition and upgrading works of $95m are fully funded by debt, the aggregate leverage ratio is expected to increase from 33.1% (as at 31 March 2018) to 34.6%.
- Trades at annualised yield of 5.8% and 1.37x P/B
*Vard Holdings
- Has been selected by Prysmian Group for the design and construction of one cable laying vessel. The contract value, including owner supplied special equipment, amounts to €170m (NOK1.6b).
- The vessel is scheduled for delivery from Vard Brattvaag in Norway, in 4Q 2020. Several of the Group's specialized subsidiaries are also involved in the project through deliveries of equipment and solutions.
- Trades at 0.86x P/B
*BreadTalk
- Set up a 50.5% owned JV with Din Tai Fung Restaurant (15%), and several other partners to operate the Din Tai Fung brand of restaurants in UK.
- First outlet is scheduled to open by end 2018 in Covent Garden, London, with a second restaurant at Centre Point in the pipeline.
*SIA Engineering
- Entered into a non-binding LOI with Cebu Air, Inc to further collaborate to expand maintenance, repair and overhaul (MRO) services in the Philippines.
- Both companies will explore the feasibility of potential growth opportunities for its two JV companies in the Philippines through the expansion of line maintenance operations, growth of hangar facilities and expansion of training academy services.
- It is expected that these growth opportunities will have an estimated investment value of US$15m to US$20m and is likely to generate employment in the Philippines.
- Trades at about 21x P/E and 2.5x P/B
NEUTRAL NEWS
* Keppel Corp
- Signed a non-binding MOU with Filinvest Development Corporation to develop solutions for sustainable urbanisation in the country.
- Will explore cooperation opportunities in developing and enhancing urban solutions for Filinvest's development portfolio.
- The partnership seeks to leverage the strengths of Keppel Urban Solutions, an end-to-end integrated master developer of urban developments that brings together the Keppel's diverse capabilities in energy, property, infrastructure, data centres and connectivity to create highly liveable, smart and sustainable communities.
- Trades at 13x P/E and 1.3x P/B
*Frasers Property
- Entered into a conditional share purchase agreement with Tran Thai Lands Company Limited to acquire 24m shares, representing 75% of the issued share capital of Phu An Khang Real Estate Joint Stock Company (PAK).
- It is intended that PAK will undertake the development of a residential-cum-commercial project on a mixed-use development plot in District 2, Ho Chi Minh City, Vietnam to be held by PAK.
- The aggregate consideration of VND 408.6b ($23.89m) implies a purchase valuation of 0.75x P/B, based on PAK's unaudited proforma NAV of VND544.8b (S$31.86m) upon completion of the proposed acquisition.
- The Consideration will be fully satisfied in cash on the occurrence of stipulated events and will be funded by the Group's internal cash resources and/or external bank borrowings
- Trades at 0.8x P/B.
*Ascendas Hospitality Trust
- Acquiring KY-Heritage Hotel Dondaemun, a freehold 215-room four-star hotel in Seoul, for 73b won ($90.1m).
- The consideration is at a 3.2% discount to the latest valuation of the hotel and translates to a pro-forma NPI yield of 4.1%.
- The acquisition is expected to be fully funded by debt, and complete by Jun '18.
- Pro-forma 9MFY18 DPS is expected to increase 0.01¢ to 4.15¢.
- Offers an annualised 9MFY18 yield of 6.9%.
*Koh Brothers
- Entered into a JV with FEC Properties to jointly acquire and redevelop two freehold residential sites through the special purpose entity, FEC Skypark (FECS)
- Its 20% stake in the Total Land Acquisition Cost is $81,464,360, which the group will fund its investment in FECS by internal resources and external borrowings.
- FECS intends to redevelop the Estoril Site and the Hollandia Site into a single residential project with a combined GFA of 22,500 sqm.
- The latest JV will allow the Group to expand its development portfolio in Singapore.
- Trades at 0.5x P/B
NEGATIVE NEWS
*Hai Leck
- Warned of a net loss for 3QFY18 but is expected to remain profitable for 9MFY18.
- Expected loss is due to lower revenue arising from market conditions.
Monday, April 30, 2018
Friday, April 27, 2018
SG Market (27 Apr 18)
MARKET OVERVIEW
- The market could creep higher as US stocks after blowout earnings from Facebook lifted the broader technology sector, while bond yields pulled back below the critical 3% level.
- Technically, the STI could re-test the last high of 3,610. Downside support is at 3,510.
CORPORATE RESULTS
*Mapletree Logistics Trust
- 4QFY18 DPU rose 4.1% to 1.937¢ despite an enlarged unit base (+22.3%). This brought FY18 payout of 7.618¢ (+2.4%) in line with with estimates.
- For the quarter, gross revenue and NPI grew 11.4% and 13.7% to $107.4m and $91.3m from organic growth, newly acquired HK property and completed redevelopment of Mapletree Pioneer Logistics.
- Achieved FY18 average rental reversion of 2.6%.
- Portfolio occupancy improved to 96.6% (+0.4ppt q/q) on higher occupancies in Singapore, South Korea and China.
- Aggregate leverage held steady at 37.7%, with average debt tenor of 4.5 years and stable interest rate of 2.4%.
- Separately, MLT is acquiring a 50% interest in 11 logistics properties in China for Rmb985.3m ($205.3m) from its sponsor, Mapletree Investments.
- The implied NPI yield of 6.4% is higher than the average 6.2% yield of MLT's existing China portfolio.
- The acquisition will double its footprint in China to 8.8m sf and increase its e-commerce revenue exposure from 18% to 42%.
- To be funded with equity and debt, the deal is expected to be DPU-accretive and will extend the WALE of its China portfolio to 2.7 years.
- Trades at an annualised 4Q yield of 6.1% and 1.1x P/B.
- MKE last has a Hold with TP of $1.25
*Yangzijiang
- 1Q18 net profit met estimates despite slipping 11% to Rmb595.1m, hurt by a FX loss of Rmb141m and a fair value loss of Rmb57m on financial assets.
- Revenue grew 6% to Rmb4963.3m, largely driven by its trading business (+7.6%) and investment in financial assets (+45.3%), while core shipbuilding (+1.5%) worked on larger containerships but delivered fewer vessels.
- Gross margin for shipbuilding sharnk to 17% (-6ppt) due to appreciation of yuan against USD and increase in raw material prices.
- Ytd, the group secured new orders for nine vessels with total contract value of US$268m and order book stood at US$4.5b comprising 121 vessels.
- Balance sheet remained in a net cash position.
- Trades at 9.6x forward P/E and 0.84x P/B
*GuocoLand
- 3QFY18 net profit climbed 7% to $31.5m due to $8m share of losses absorbed by minority interests.
- This brought 9MFY18 net profit to $240.1m (+114%), which came in at 67% of full-year consensus forecast.
- For the quarter, revenue fell 15% to $230.6m on weaker sales recognition of Singapore residential projects due to lower inventory of completed unsold units.
- Gross margin edged higher to 26% (+3ppt) on the change in revenue mix.
- Drop in other income to $6.4m (-61%) arising from FX and fair value changes of currency hedges was matched by the jump in contributions from associates/JVs to $12m (+481%).
- Trades at about 40% discount to RNAV/share.
- MKE last had a Buy with TP of $3.00
*CapitaLand Retail China Trust
- 1Q18 DPU edged up 0.4% to 2.75¢ on an expanded unit base (+9.1%), topping street estimates.
- Gross revenue and NPI slid 7.9% and 7.7% to $55.4m and $37.2m respectively due to divestment of CapitaMall Anzhen in Jul '17 and lower income from CapitaMall Grand Canyon, which was affected by disruptions to trading activities, and lower occupancy at CapitaMall Minzhonglequan.
- Portfolio occupancy slipped to 94.9% (-0.5ppt q/q), while aggregate leverage surged to 32.5% (+4.1ppt q/q) after it drew down on debt for the Rock Square acquisition.
- Trades at annualised 1Q yield of 7.2% and 0.95x P/B.
*Starhill Global
- 3QFY18 DPU declined 7.6% to 1.09cts, missing estimates, mainly due to lower NPI and higher withholding taxes.
- Gross revenue dropped 3% to $51.7m on weaker contributions from its office portfolio, asset redevelopment works at Plaza Arcade in Perth and lower income from Myer Centre Adelaide.
- NPI also dipped 2.3% to $40.3m, largely in line with the lower revenue but partially offset by lower expenses mainly from its China property.
- Aggregate leverage stood at 35.3% with average debt maturity of 3.8 years and no refinancing requirement until Jun '19.
- Trades at annualised 3Q yield of 6% and x 0.78x P/B.
- MKE maintains Sell with TP of $0.60
*Ho Bee Land
- 1Q18 net profit of $49.4m (-12.3%) met expectations.
- Revenue grew 14.8% to $48.7m on higher rental income (+6.1% to $37.8m) as well as sale of development properties (+60.5% to $10.9m).
- Sold a small development site in Gold Coast for A%5.5m against acquisition cost of A$2.9m.
- Bottom line was dragged by absence of disposal gains of $7.8mfrom sale of Rose Court as well as lower contributions from associates -12.7% to $28.5m) and JVs (-6.7% to $1.7m).
- Trading at 0.53x P/B and 0.54x P/RNAV.
- MKE has Buy and raises TP to $3.30 from $3.15
*Soilbuild Construction
- 1Q18 net profit slumped 64.3% to $0.1m on lower sales and tax swing.
- Revenue slid 40.4% to $39.7m following the completion of major projects in Singapore, while existing ones have not reached advanced stages.
- However, gross margin expanded to 6.3% (+2.3ppt) on additional contract revenue on two HDB projects as well as other cost savings.
- Bottom line was hit by FX loss of $0.4m (1Q17: $0.1m).
- Trades at 1.2x P/B.
*Hong Leong Finance
- 1Q18 net profit jumped 57% to $25.9m, beating consensus estimates.
- Net interest income grew 37% to $49.7m on the back of higher loan yield and lower interest expenses (-14.3%) amid a larger customer loan base (+9.7%).
- Bottom line was further supported by slower growth in operating expenses of $22m (+4.5%).
- Trading at 0.7x P/B.
POSITIVE NEWS
*Lee Metal
- Received a voluntary conditional cash offer from BRC Asia at $0.42 apiece, subject to the Offeror receiving valid acceptances of more than 50% by the closing date
- The Lee family has given their undertakings to accept the offer, comprising 48.06% of the entire issued Shares.
- Upon completion, the Offeror may undertake a strategic and operational review of the group with a view to realising synergies, economies of scale, cost
efficiencies and growth potential.
- The Offeror will also consider delisting the Company from the SGX-ST in the event it achieves the requisite acceptances exceeding 90% of the total number of issued Shares.
*SIA Engineering
- Signed $484m services agreement with SilkAir for Boeing 737 MAX aircraft for a term of 12+5 years.
- Support covers a wide range of maintenance, repair and overhaul, as well as support services.
- The group currently has existing services agreement with SIlkAir for its Airbus A320 and Boeing 737-800 aircraft.
*Cosco Shipping
- Guided for a turnaround for its upcoming 1Q18 result, mainly contributed by recently acquired Cogent and PT Ocean Global Shipping.
- Earnings will be released on 15 May.
*TTJ
- The structural steel specialist secured a series of new contracts, boosting order book to $217m from $136m as at 7 Mar '18.
*Pacific Radiance
- In-principle support from major lenders and anchor investors on the broad term of restructuring, but subject to necessary approvals.
- These comprises of debt forgiveness, debt-to-equity conversion, in consideration of impairment that the group will make on its asset.
- Equity injection from investors will be used to pare down debt and future working capital requirement.
NEUTRAL NEWS
*SembCorp Industries
- Inked a MOU with People's Committee of Quang Ngai Province (Quang Ngai PC) for the development of a 750-megawatt gas-fired power project in Dung Quat Economic Zone, Vietnam.
*Metech Intl
- Entered into a non-binding MOU with TES-USA, a subsidiary of TES-AMM (Singapore) in the United States, to co-operate in the recycling of Lithium-ion Batteries (LIBs) in the country.
- The group will deploy its five strategic locations in the United States to collect and process the LIBs using the processing technology supplied by TES-AMM.
- TES-AMM will also use its global customer network to increase the collection of LIBs in the United States.
- Management is confident that the synergy from the collaboration will lead to positive commercial results.
NEGATIVE NEWS
*Valuetronics
- Share price slumped by 17.8% to close at $0.74, dropping alongside its lighting customer Philips Lighting after the latter reported 1Q18 earnings which missed consensus estimates on weakness in the Home Segment, where the smart LED lights are reported under.
- In the Home segment, sales fell 6.4% on a comparable basis to EUR92m, due to lower than expected sales at their trade partners in the fourth quarter, most notably in the US. This resulted in lower sales in 1Q18 to allow for inventory reduction.
- This will likely have a negative knock-on effect on Valuetronics, who supplies smart LED bulbs to Philips Lighting (contributes around 31% of revenue by FY19).
- Trades at 9x P/E. MKE maintains Buy with TP of $1.25
- The market could creep higher as US stocks after blowout earnings from Facebook lifted the broader technology sector, while bond yields pulled back below the critical 3% level.
- Technically, the STI could re-test the last high of 3,610. Downside support is at 3,510.
CORPORATE RESULTS
*Mapletree Logistics Trust
- 4QFY18 DPU rose 4.1% to 1.937¢ despite an enlarged unit base (+22.3%). This brought FY18 payout of 7.618¢ (+2.4%) in line with with estimates.
- For the quarter, gross revenue and NPI grew 11.4% and 13.7% to $107.4m and $91.3m from organic growth, newly acquired HK property and completed redevelopment of Mapletree Pioneer Logistics.
- Achieved FY18 average rental reversion of 2.6%.
- Portfolio occupancy improved to 96.6% (+0.4ppt q/q) on higher occupancies in Singapore, South Korea and China.
- Aggregate leverage held steady at 37.7%, with average debt tenor of 4.5 years and stable interest rate of 2.4%.
- Separately, MLT is acquiring a 50% interest in 11 logistics properties in China for Rmb985.3m ($205.3m) from its sponsor, Mapletree Investments.
- The implied NPI yield of 6.4% is higher than the average 6.2% yield of MLT's existing China portfolio.
- The acquisition will double its footprint in China to 8.8m sf and increase its e-commerce revenue exposure from 18% to 42%.
- To be funded with equity and debt, the deal is expected to be DPU-accretive and will extend the WALE of its China portfolio to 2.7 years.
- Trades at an annualised 4Q yield of 6.1% and 1.1x P/B.
- MKE last has a Hold with TP of $1.25
*Yangzijiang
- 1Q18 net profit met estimates despite slipping 11% to Rmb595.1m, hurt by a FX loss of Rmb141m and a fair value loss of Rmb57m on financial assets.
- Revenue grew 6% to Rmb4963.3m, largely driven by its trading business (+7.6%) and investment in financial assets (+45.3%), while core shipbuilding (+1.5%) worked on larger containerships but delivered fewer vessels.
- Gross margin for shipbuilding sharnk to 17% (-6ppt) due to appreciation of yuan against USD and increase in raw material prices.
- Ytd, the group secured new orders for nine vessels with total contract value of US$268m and order book stood at US$4.5b comprising 121 vessels.
- Balance sheet remained in a net cash position.
- Trades at 9.6x forward P/E and 0.84x P/B
*GuocoLand
- 3QFY18 net profit climbed 7% to $31.5m due to $8m share of losses absorbed by minority interests.
- This brought 9MFY18 net profit to $240.1m (+114%), which came in at 67% of full-year consensus forecast.
- For the quarter, revenue fell 15% to $230.6m on weaker sales recognition of Singapore residential projects due to lower inventory of completed unsold units.
- Gross margin edged higher to 26% (+3ppt) on the change in revenue mix.
- Drop in other income to $6.4m (-61%) arising from FX and fair value changes of currency hedges was matched by the jump in contributions from associates/JVs to $12m (+481%).
- Trades at about 40% discount to RNAV/share.
- MKE last had a Buy with TP of $3.00
*CapitaLand Retail China Trust
- 1Q18 DPU edged up 0.4% to 2.75¢ on an expanded unit base (+9.1%), topping street estimates.
- Gross revenue and NPI slid 7.9% and 7.7% to $55.4m and $37.2m respectively due to divestment of CapitaMall Anzhen in Jul '17 and lower income from CapitaMall Grand Canyon, which was affected by disruptions to trading activities, and lower occupancy at CapitaMall Minzhonglequan.
- Portfolio occupancy slipped to 94.9% (-0.5ppt q/q), while aggregate leverage surged to 32.5% (+4.1ppt q/q) after it drew down on debt for the Rock Square acquisition.
- Trades at annualised 1Q yield of 7.2% and 0.95x P/B.
*Starhill Global
- 3QFY18 DPU declined 7.6% to 1.09cts, missing estimates, mainly due to lower NPI and higher withholding taxes.
- Gross revenue dropped 3% to $51.7m on weaker contributions from its office portfolio, asset redevelopment works at Plaza Arcade in Perth and lower income from Myer Centre Adelaide.
- NPI also dipped 2.3% to $40.3m, largely in line with the lower revenue but partially offset by lower expenses mainly from its China property.
- Aggregate leverage stood at 35.3% with average debt maturity of 3.8 years and no refinancing requirement until Jun '19.
- Trades at annualised 3Q yield of 6% and x 0.78x P/B.
- MKE maintains Sell with TP of $0.60
*Ho Bee Land
- 1Q18 net profit of $49.4m (-12.3%) met expectations.
- Revenue grew 14.8% to $48.7m on higher rental income (+6.1% to $37.8m) as well as sale of development properties (+60.5% to $10.9m).
- Sold a small development site in Gold Coast for A%5.5m against acquisition cost of A$2.9m.
- Bottom line was dragged by absence of disposal gains of $7.8mfrom sale of Rose Court as well as lower contributions from associates -12.7% to $28.5m) and JVs (-6.7% to $1.7m).
- Trading at 0.53x P/B and 0.54x P/RNAV.
- MKE has Buy and raises TP to $3.30 from $3.15
*Soilbuild Construction
- 1Q18 net profit slumped 64.3% to $0.1m on lower sales and tax swing.
- Revenue slid 40.4% to $39.7m following the completion of major projects in Singapore, while existing ones have not reached advanced stages.
- However, gross margin expanded to 6.3% (+2.3ppt) on additional contract revenue on two HDB projects as well as other cost savings.
- Bottom line was hit by FX loss of $0.4m (1Q17: $0.1m).
- Trades at 1.2x P/B.
*Hong Leong Finance
- 1Q18 net profit jumped 57% to $25.9m, beating consensus estimates.
- Net interest income grew 37% to $49.7m on the back of higher loan yield and lower interest expenses (-14.3%) amid a larger customer loan base (+9.7%).
- Bottom line was further supported by slower growth in operating expenses of $22m (+4.5%).
- Trading at 0.7x P/B.
POSITIVE NEWS
*Lee Metal
- Received a voluntary conditional cash offer from BRC Asia at $0.42 apiece, subject to the Offeror receiving valid acceptances of more than 50% by the closing date
- The Lee family has given their undertakings to accept the offer, comprising 48.06% of the entire issued Shares.
- Upon completion, the Offeror may undertake a strategic and operational review of the group with a view to realising synergies, economies of scale, cost
efficiencies and growth potential.
- The Offeror will also consider delisting the Company from the SGX-ST in the event it achieves the requisite acceptances exceeding 90% of the total number of issued Shares.
*SIA Engineering
- Signed $484m services agreement with SilkAir for Boeing 737 MAX aircraft for a term of 12+5 years.
- Support covers a wide range of maintenance, repair and overhaul, as well as support services.
- The group currently has existing services agreement with SIlkAir for its Airbus A320 and Boeing 737-800 aircraft.
*Cosco Shipping
- Guided for a turnaround for its upcoming 1Q18 result, mainly contributed by recently acquired Cogent and PT Ocean Global Shipping.
- Earnings will be released on 15 May.
*TTJ
- The structural steel specialist secured a series of new contracts, boosting order book to $217m from $136m as at 7 Mar '18.
*Pacific Radiance
- In-principle support from major lenders and anchor investors on the broad term of restructuring, but subject to necessary approvals.
- These comprises of debt forgiveness, debt-to-equity conversion, in consideration of impairment that the group will make on its asset.
- Equity injection from investors will be used to pare down debt and future working capital requirement.
NEUTRAL NEWS
*SembCorp Industries
- Inked a MOU with People's Committee of Quang Ngai Province (Quang Ngai PC) for the development of a 750-megawatt gas-fired power project in Dung Quat Economic Zone, Vietnam.
*Metech Intl
- Entered into a non-binding MOU with TES-USA, a subsidiary of TES-AMM (Singapore) in the United States, to co-operate in the recycling of Lithium-ion Batteries (LIBs) in the country.
- The group will deploy its five strategic locations in the United States to collect and process the LIBs using the processing technology supplied by TES-AMM.
- TES-AMM will also use its global customer network to increase the collection of LIBs in the United States.
- Management is confident that the synergy from the collaboration will lead to positive commercial results.
NEGATIVE NEWS
*Valuetronics
- Share price slumped by 17.8% to close at $0.74, dropping alongside its lighting customer Philips Lighting after the latter reported 1Q18 earnings which missed consensus estimates on weakness in the Home Segment, where the smart LED lights are reported under.
- In the Home segment, sales fell 6.4% on a comparable basis to EUR92m, due to lower than expected sales at their trade partners in the fourth quarter, most notably in the US. This resulted in lower sales in 1Q18 to allow for inventory reduction.
- This will likely have a negative knock-on effect on Valuetronics, who supplies smart LED bulbs to Philips Lighting (contributes around 31% of revenue by FY19).
- Trades at 9x P/E. MKE maintains Buy with TP of $1.25
Thursday, April 26, 2018
SG Market (26 Apr 18)
MARKET OVERVIEW
- The market could be choppy as benchmark US 10Y Treasury yields extend climb beyond 3%, while local corporate earnings were mixed.
- Technically, the STI is likely to consolidate at current levels, with immediate resistance at 3,610 and downside support at 3,510.
CORPORATE RESULTS
*Venture Corp
- 1Q18 net profit surged 72.2% to $83.7m but still trailed bullish street forecasts, coming in at 19% of full-year consensus estimate.
- Revenue edged up 1.5% to $856m but would have been up 9.1% in USD terms.
- Wider net margin of 9.8% (+4ppt) was achieved through favourable product mix and strong cost control.
- CEO refutes short seller report on slowing IQOS smokeless device sales by Philip Morris and reaffirms its broad-based growth across 150 customers.
- Last traded at 14.4x forward P/E.
- MKE believes share price correction is overdone and reiterates Buy but lowered TP by 8% to $28.83.
*Sembcorp Marine
- 1Q18 net profit plunged 85.7% to $5.3m on lack of one-off gains, making up merely 8% of the full-year estimates.
- Revenue jumped 58.3% to $1.18b, largely buttressed by the delivery of 2 jack-ups to Borr Drilling and 1 jack-up to BOTL, which offset weaker contributions from offshore platforms.
- Margins remained slim at 3.7% (gross) and 1.7% (operating).
- Bottom line was impacted by the absence of disposal gain ($46.8m) arising from the divestment of 30% equity interest in Cosco Shipyard in Jan '17.
- Secured $476m of new orders, taking net orderbook (excluding Stete Basil drillships) to $4.59b (+3% q/q).
- Management caution that industry outlook is still challenging despite improvement in E&P capex spending as it takes time to translate to new orders.
- Trades at 1.9x P/B.
*Mapletree Greater China Commercial Trust
- 4QFY18 DPU slipped 2.8% to 1.904¢, bringing FY18 payout to 7.481¢, in line with estimates.
- For the quarter, gross revenue and NPI fell 5.5% and 6% to $89.6m and $72.9m respectively on the weaker HKD as well as the absence of reversal in VAT.
- Distributable income of $53.8m (-1.7%) fell at a slower pace due to lower finance costs (-6.1%).
- Portfolio occupancy climbed 1.6ppt q/q to 98.5%, while aggregate leverage fell to 36.2% (-3.1ppt q/q).
- Proposed equity fund raising comprising via private placement of 311.6m new units at $1.06 each.
- Gross prceeds of $330.3m will be used to part finance the acquisition of 98.5% effective interest in a portfolio of six freehold commercial real estate assets in Tokyo, Chiba and Yokohama.
- Trades at 6.7% annualised 4QFY18 yield and 0.8x P/B.
*China Sunsine
- 1Q18 net profit soared jumped 161% to to Rmb149.5m, reaching 40% of full-year consensus estimate.
- Revenue grew 49% to Rmb856.9m on higher sales volume (+11.4%) as well as ASPs (+33.9%).
- Consequently, gross profit margin widened to 34.9% (+10.5ppt).
- Bottom line was partially pared by higher FX loss of Rmb13.5m (1Q17: Rmb1.3m).
- Trades at 8.9x FY18e P/E vs Shenzhen-listed peer Yanggu Huatai's 14.5x.
*Duty Free Int'l
- 4QFY18 net profit tumbled 47.8% to RM9.3m in absence of $4m fair value gain on option, and higher FX loss of RM4.5m (4QFY17: RM1.5m).
- This dragged FY18 earnings to RM41.7m (-42.7%).
- Revenue for the quarter climbed 13.8% to RM170.8m on stronger demand for its products and favourable sales mix.
- Gross material margin narrowed 5.5ppt to 29.2%.
- Last traded at 18.1x trailing P/E.
*Duty Free Int'l
- 4QFY18 net profit tumbled 47.8% to RM9.3m in absence of $4m fair value gain on option, and higher FX loss of RM4.5m (4QFY17: RM1.5m).
- This dragged FY18 earnings to RM41.7m (-42.7%).
- Revenue for the quarter climbed 13.8% to RM170.8m on stronger demand for its products and favourable sales mix.
- Gross material margin narrowed 5.5ppt to 29.2%.
- Last traded at 18.1x trailing P/E.
POSITIVE NEWS
*MindChamps
- Signed agreement to acquire four more early learning centres in Sydney, Australia.
- Upon completion, the group will have eight MindChamps Early Learning centres and two MindChamps Reading & Writing centres in the country.
- Its unique proprietary 3 Minds education approach will then be offered to over 500 Australian kids.
*Swee Hong
- Secured $11.3m worth of contracts with the PUB for work in respect of proposed sewers in Punggol North Area.
*Perennial
- Global provider of flexible workspace solution IWG has leased 35,000sf of space at TripleOne Somerset to operate its flagship co-working facility.
- The largest, two-floor facility will commence operation in mid '19.
- TripeOne Somerset is undergoing a $120m enhancement initiative to augment its retail offerings, including the addition of 32,000sf of medical suites.
- New two-storey retail podium is expected to receive TOP by 2H18 and is slated to be completed by '19.
- Trades at 0.52x P/B.
NEUTRAL NEWS
*Clearbridge Health
- Partnering A*STAR's Genome Institute of Singapore to offer Prosigna Breast Cancer Prognostic Gene Signature Assay to patients in Singapore.
- This is a genomic analysis procedure to better help doctors diagnose the risk of cancel relapse.
- Loss-making and trades at 4.24x P/B.
*Sapphire Corp
- Signed a MOU with Haitong Singapore to explore capital markets opportunities in the region, namely in corporate finance and investment, by leveraging on Haitong's suite of financial services and geographical network.
- Both parties will establish a cooperation mechanism to facilitate information exchange and resource sharing as new investment opportunities arise.
- The partnership is expected to benefit the group's infrastructure unit, Ranken by aiding its evaluation of long-term infrastructure projects, namely in urban rail transit projects, water environmental improvement projects, and other business opportunities.
*Keppel Corp
- Signed MOU with the MPA of Singapore and the Technology Centre for Offshore and Marine to jointly develop autonomous vessels for a variety of applications, including undertaking harbour operations such as channelling, berthing, mooring and towing operations.
- Keppel O&M will use its remote vessel monitoring and analytics programme, VesselCare, as the base platform in the initial phase to develop autonomous vessels. VesselCare is able to perform data consolidation, condition based monitoring and maintenance, mining and analytics of vessels.
*CNMC Goldmine
- Entered into a JV agreement with Yayasan Kelantan Darulnaim (YAKIN) to carry out exploration works within a 1,550ha site in Mukim Kalai, Daerah Batu Melintang, Kelantan.
- YAKIN will apply for a mining lease upon request by KelGold to carry out mining operations.
- The group has commenced exploration works at the site and both parties will enter into a mining agreement upon the issuance of mining lease.
- The group will pay RM0.1m to YAKIN upon signing the JVA and remaining payment is calculated based on RM500/ha of land.
*Healthway Medical
- Inked a non-binding MOU with UMP Healthcare to develop Care Alliance Network for selected corporate and individual customers in Hong Kong, Singapore, Beijing and Shanghai.
- Healthcare service providers can make their clinical facilities and services available through the network.
- The network is a partnership, which caters to growing affluent customers in the region seeking differentiated healthcare services overseas
- Both parties will also work together to explore cross-selling opportunities.
*AP Oil Int'l
- Appointed as an architect and project manager for JTC's premise at 18, Pioneer Sector 1, Jurong.
- Work involves the reconstruction of jetty and office building, additional warehouse
- The market could be choppy as benchmark US 10Y Treasury yields extend climb beyond 3%, while local corporate earnings were mixed.
- Technically, the STI is likely to consolidate at current levels, with immediate resistance at 3,610 and downside support at 3,510.
CORPORATE RESULTS
*Venture Corp
- 1Q18 net profit surged 72.2% to $83.7m but still trailed bullish street forecasts, coming in at 19% of full-year consensus estimate.
- Revenue edged up 1.5% to $856m but would have been up 9.1% in USD terms.
- Wider net margin of 9.8% (+4ppt) was achieved through favourable product mix and strong cost control.
- CEO refutes short seller report on slowing IQOS smokeless device sales by Philip Morris and reaffirms its broad-based growth across 150 customers.
- Last traded at 14.4x forward P/E.
- MKE believes share price correction is overdone and reiterates Buy but lowered TP by 8% to $28.83.
*Sembcorp Marine
- 1Q18 net profit plunged 85.7% to $5.3m on lack of one-off gains, making up merely 8% of the full-year estimates.
- Revenue jumped 58.3% to $1.18b, largely buttressed by the delivery of 2 jack-ups to Borr Drilling and 1 jack-up to BOTL, which offset weaker contributions from offshore platforms.
- Margins remained slim at 3.7% (gross) and 1.7% (operating).
- Bottom line was impacted by the absence of disposal gain ($46.8m) arising from the divestment of 30% equity interest in Cosco Shipyard in Jan '17.
- Secured $476m of new orders, taking net orderbook (excluding Stete Basil drillships) to $4.59b (+3% q/q).
- Management caution that industry outlook is still challenging despite improvement in E&P capex spending as it takes time to translate to new orders.
- Trades at 1.9x P/B.
*Mapletree Greater China Commercial Trust
- 4QFY18 DPU slipped 2.8% to 1.904¢, bringing FY18 payout to 7.481¢, in line with estimates.
- For the quarter, gross revenue and NPI fell 5.5% and 6% to $89.6m and $72.9m respectively on the weaker HKD as well as the absence of reversal in VAT.
- Distributable income of $53.8m (-1.7%) fell at a slower pace due to lower finance costs (-6.1%).
- Portfolio occupancy climbed 1.6ppt q/q to 98.5%, while aggregate leverage fell to 36.2% (-3.1ppt q/q).
- Proposed equity fund raising comprising via private placement of 311.6m new units at $1.06 each.
- Gross prceeds of $330.3m will be used to part finance the acquisition of 98.5% effective interest in a portfolio of six freehold commercial real estate assets in Tokyo, Chiba and Yokohama.
- Trades at 6.7% annualised 4QFY18 yield and 0.8x P/B.
*China Sunsine
- 1Q18 net profit soared jumped 161% to to Rmb149.5m, reaching 40% of full-year consensus estimate.
- Revenue grew 49% to Rmb856.9m on higher sales volume (+11.4%) as well as ASPs (+33.9%).
- Consequently, gross profit margin widened to 34.9% (+10.5ppt).
- Bottom line was partially pared by higher FX loss of Rmb13.5m (1Q17: Rmb1.3m).
- Trades at 8.9x FY18e P/E vs Shenzhen-listed peer Yanggu Huatai's 14.5x.
*Duty Free Int'l
- 4QFY18 net profit tumbled 47.8% to RM9.3m in absence of $4m fair value gain on option, and higher FX loss of RM4.5m (4QFY17: RM1.5m).
- This dragged FY18 earnings to RM41.7m (-42.7%).
- Revenue for the quarter climbed 13.8% to RM170.8m on stronger demand for its products and favourable sales mix.
- Gross material margin narrowed 5.5ppt to 29.2%.
- Last traded at 18.1x trailing P/E.
*Duty Free Int'l
- 4QFY18 net profit tumbled 47.8% to RM9.3m in absence of $4m fair value gain on option, and higher FX loss of RM4.5m (4QFY17: RM1.5m).
- This dragged FY18 earnings to RM41.7m (-42.7%).
- Revenue for the quarter climbed 13.8% to RM170.8m on stronger demand for its products and favourable sales mix.
- Gross material margin narrowed 5.5ppt to 29.2%.
- Last traded at 18.1x trailing P/E.
POSITIVE NEWS
*MindChamps
- Signed agreement to acquire four more early learning centres in Sydney, Australia.
- Upon completion, the group will have eight MindChamps Early Learning centres and two MindChamps Reading & Writing centres in the country.
- Its unique proprietary 3 Minds education approach will then be offered to over 500 Australian kids.
*Swee Hong
- Secured $11.3m worth of contracts with the PUB for work in respect of proposed sewers in Punggol North Area.
*Perennial
- Global provider of flexible workspace solution IWG has leased 35,000sf of space at TripleOne Somerset to operate its flagship co-working facility.
- The largest, two-floor facility will commence operation in mid '19.
- TripeOne Somerset is undergoing a $120m enhancement initiative to augment its retail offerings, including the addition of 32,000sf of medical suites.
- New two-storey retail podium is expected to receive TOP by 2H18 and is slated to be completed by '19.
- Trades at 0.52x P/B.
NEUTRAL NEWS
*Clearbridge Health
- Partnering A*STAR's Genome Institute of Singapore to offer Prosigna Breast Cancer Prognostic Gene Signature Assay to patients in Singapore.
- This is a genomic analysis procedure to better help doctors diagnose the risk of cancel relapse.
- Loss-making and trades at 4.24x P/B.
*Sapphire Corp
- Signed a MOU with Haitong Singapore to explore capital markets opportunities in the region, namely in corporate finance and investment, by leveraging on Haitong's suite of financial services and geographical network.
- Both parties will establish a cooperation mechanism to facilitate information exchange and resource sharing as new investment opportunities arise.
- The partnership is expected to benefit the group's infrastructure unit, Ranken by aiding its evaluation of long-term infrastructure projects, namely in urban rail transit projects, water environmental improvement projects, and other business opportunities.
*Keppel Corp
- Signed MOU with the MPA of Singapore and the Technology Centre for Offshore and Marine to jointly develop autonomous vessels for a variety of applications, including undertaking harbour operations such as channelling, berthing, mooring and towing operations.
- Keppel O&M will use its remote vessel monitoring and analytics programme, VesselCare, as the base platform in the initial phase to develop autonomous vessels. VesselCare is able to perform data consolidation, condition based monitoring and maintenance, mining and analytics of vessels.
*CNMC Goldmine
- Entered into a JV agreement with Yayasan Kelantan Darulnaim (YAKIN) to carry out exploration works within a 1,550ha site in Mukim Kalai, Daerah Batu Melintang, Kelantan.
- YAKIN will apply for a mining lease upon request by KelGold to carry out mining operations.
- The group has commenced exploration works at the site and both parties will enter into a mining agreement upon the issuance of mining lease.
- The group will pay RM0.1m to YAKIN upon signing the JVA and remaining payment is calculated based on RM500/ha of land.
*Healthway Medical
- Inked a non-binding MOU with UMP Healthcare to develop Care Alliance Network for selected corporate and individual customers in Hong Kong, Singapore, Beijing and Shanghai.
- Healthcare service providers can make their clinical facilities and services available through the network.
- The network is a partnership, which caters to growing affluent customers in the region seeking differentiated healthcare services overseas
- Both parties will also work together to explore cross-selling opportunities.
*AP Oil Int'l
- Appointed as an architect and project manager for JTC's premise at 18, Pioneer Sector 1, Jurong.
- Work involves the reconstruction of jetty and office building, additional warehouse
Wednesday, April 25, 2018
SG Market (25 Apr 18)
MARKET OVERVIEW
- The market could come under pressure after US stocks tumbled more than 1% as 10-year Treasury yield broke above the psychological 3% mark for the first time since Jan 2014, reigniting worries that higher borrowing costs could slow the economy and hurt corporate earnings later this year.
- Technically, the STI is poised for a pullback from overbought levels and could find support at 3,510.
CORPORATE RESULTS
* Frasers Centrepoint Trust
- 2QFY18 DPU of 3.10¢ (+2.0%) brought 1HFY18 payout of 6.10¢ (+2.9%) to 50% of full-year consensus forecast
- For the quarter, gross revenue and NPI rose 6.3% and 6.9% to $48.6m and $34.8m on a 31.7% jump in contribution from Northpoint City North Wing after the completion of AEI works.
- 37 leases accounting for 6.2% of total NLA were renewed with positive rental reversion of 9.1%.
- Portfolio occupancy increased 1.4ppt q/q to 94.0%, lifted by significant improvement at Northpoint City North Wing.
- Aggregate leverage was stable at 29.2% with debt maturity of 2.5 years and all-in cost of borrowings of 2.4%.
- Trades at annualised 2Q yield of 5.6% and 1.1x P/B.
- MKE last had a Buy with TP of $2.55
*Suntec REIT
- 1Q18 DPU of 2.433¢ (+0.3%) was supported by higher capital distribution of 0.244¢ (+106.8%), in line with estimates.
- Gross revenue and NPI climbed 2.6% and 1.9% to $90.7m and $63m on higher convention and retail takings but partially offset by lower contribution from its offices.
- Office committed occupancy slipped 0.6ppt q/q to 99.1%, while retail committed occupancy dipped 0.4ppt to 98.4%.
- Aggregate leverage remained at 36.6% (+0.2ppt).
- Trades at annualised 1Q yield of 5.2% and 0.9x P/B.
*Mapletree Commercial Trust
- 4QFY18 DPU of 2.27¢ (+0.4%) brought FY18 payout to 9.04¢ (+4.9%), meeting 102% of full-year estimate.
- For the quarter, gross revenue and NPI edged up to $108.9m (+1.3%) and $84.3m (+1.2%) on higher contributions and step-up rents from VivoCity, Mapletree Business City I and BoA-ML HarbourFront (MLHF).
- But tenant sales dipped 0.9% on slower shopper traffic (-2.2%) at VivioCity.
- Achieved overall occupancy of 96.1% (+1.5ppt q/q) but committed occupancy rose even higher to 99.5% (+0.8ppt), while WALE was 2.7 years (office: 3.2 years, retail: 2.1 years)
- Aggregate leverage eased 1.8ppt q/q to 34.5%, with lower all-in interest costs of 2.66% (-7ppt) and debt tenor of 4 years.
- Trades at annualised 4Q yield of 5.7% and 1.1x P/B.
- MKE upgrades to Hold with upwardy revised TP of $1.50.
*AEM Holdings
- 1Q18 net profit almost doubled to $8.2m on strong sales and margin expansion, meeting 19% of full-year estimate, with seasonally stronger 2Q and 3Q expected.
- Revenue surged 56% to $65.7m amid continued robust sales of test handlers and consumables to its key semiconductor client.
- Gross material margin expanded 5.9ppt to 34.1% on cost reduction initiatives.
- Reaffirmed guidance of at least $255m in revenue and $42m in pretax operating profit for FY18.
- Last traded at 9.9x forward P/E.
POSITIVE NEWS
*EC World REIT
- Sponsor Forchn Holdings has signed a framework agreement with YCH Group on three strategic initiatives to access the untapped market opportunities in Asia Pacific.
- Firstly, EC World will have exclusive rights to an acquisition portfolio of 13 YCH logistics real estate assets, totalling >280,000 sqm of GFA with estimated value of $400m.
- Secondly, Forchn and YCH will launch an US$150m private equity fund in 2H18, which aims to capitalise on the development and acquisition of logistic assets in key cities along the Belt Road countries.
- Finally, both companies will leverage on each other's competencies to capture opportunities in Southeast Asia.
- Trades at 8.2% indicative yield.
*Darco Water
- Signed an exclusive distribution agreement with Aquaporin A/S in Malaysia to distribute products using Aquaporin Inside® Forward Osmosis Technology in Malaysia and Singapore.
- This marks Aquaporin's first exclusive distribution agreement signed in Malaysia. The group is confident of capturing market share in the growing demand for osmosis-based solutions due to favourable government policy.
- Trades at 45.6x P/E and 1.0x P/B.
*Silverlake Axis
- Secured a new core banking system contract with a large ASEAN banking institution for an undisclosed sum.
- Contract involves the deployment of its flagship core banking solution (Silverlake Axis Integrated Banking, SIBS) and digital solutions.
- First phase will see the rollout of the bank's new ATM switch, retail payments platform and mobile banking.
- The next phase will be the migration of the bank's legacy core banking systems to the SIBS.
- Trades at forward P/E of 22.4x.
NEUTRAL NEWS
*IHH Healthcare
- Issued a third letter to Fortis outlining a proposal with a binding clause for initial equity capital injection of Rp6.5b, and following a due diligence exercise, a further Rp33.5b for a 33% stake.
- The deadline for the revised proposal is 4 May.
- Maybank KE views deal positively as it would help boost IHH's FY18e EBITDA and earnings by 4%/2.6%. However, the transaction would also push net gearing to 14% (FY17: 3%).
- MKE last had a Buy with TP of RM7.00.
NEGATIVE NEWS
*Venture Corp
- Share price fell 8.5% yesterday in wake of a short-seller's report dated 24 Apr
- In short, the house claims that IQOS makes up 30% of revenue and warns that 1Q sales orders have plunged by 50% from initial 2018 forecasts.
- The street is estimating that IQOS forms 3-20% of Venture's revenue.
- The group is reporting 1Q18 results on 25 Apr.
- For now, MKE believes the contract manufacturer has multifaceted growth drivers from a diverse range of customers.
*Asian Pay TV
- The stock slumped 8.7% in unusually heavy volume over the past three trading days to a 12-month low of $0.47 following reports that the Taiwanese cable TV operator is embroiled in a content fee dispute.
- Among the cable operators involved in the dispute, five belong to Taiwan Broadband Communications (TBC), which is owned by APTT. Notably, TBC only airs FTV News out of the 175 channels its carries.
- Another possible reason for the sell-down could relate to forced sale of shares owned by restricted persons, ie mainland Chinese who are forbidden to invest in the cable TV industry in Taiwan.
- APTT has guided that it will maintain its 2017 distribution of 6.5¢ for this year, which implies an attractive 13.8% yield at current price.
- The trust will report its 2Q18 results on 14 May.
*Midas
- Received another two letters of demand for outstanding payments unknown to the group's board of directors.
- The outstanding payments amounted to Rmb87.3m and US$6.9m.
- The market could come under pressure after US stocks tumbled more than 1% as 10-year Treasury yield broke above the psychological 3% mark for the first time since Jan 2014, reigniting worries that higher borrowing costs could slow the economy and hurt corporate earnings later this year.
- Technically, the STI is poised for a pullback from overbought levels and could find support at 3,510.
CORPORATE RESULTS
* Frasers Centrepoint Trust
- 2QFY18 DPU of 3.10¢ (+2.0%) brought 1HFY18 payout of 6.10¢ (+2.9%) to 50% of full-year consensus forecast
- For the quarter, gross revenue and NPI rose 6.3% and 6.9% to $48.6m and $34.8m on a 31.7% jump in contribution from Northpoint City North Wing after the completion of AEI works.
- 37 leases accounting for 6.2% of total NLA were renewed with positive rental reversion of 9.1%.
- Portfolio occupancy increased 1.4ppt q/q to 94.0%, lifted by significant improvement at Northpoint City North Wing.
- Aggregate leverage was stable at 29.2% with debt maturity of 2.5 years and all-in cost of borrowings of 2.4%.
- Trades at annualised 2Q yield of 5.6% and 1.1x P/B.
- MKE last had a Buy with TP of $2.55
*Suntec REIT
- 1Q18 DPU of 2.433¢ (+0.3%) was supported by higher capital distribution of 0.244¢ (+106.8%), in line with estimates.
- Gross revenue and NPI climbed 2.6% and 1.9% to $90.7m and $63m on higher convention and retail takings but partially offset by lower contribution from its offices.
- Office committed occupancy slipped 0.6ppt q/q to 99.1%, while retail committed occupancy dipped 0.4ppt to 98.4%.
- Aggregate leverage remained at 36.6% (+0.2ppt).
- Trades at annualised 1Q yield of 5.2% and 0.9x P/B.
*Mapletree Commercial Trust
- 4QFY18 DPU of 2.27¢ (+0.4%) brought FY18 payout to 9.04¢ (+4.9%), meeting 102% of full-year estimate.
- For the quarter, gross revenue and NPI edged up to $108.9m (+1.3%) and $84.3m (+1.2%) on higher contributions and step-up rents from VivoCity, Mapletree Business City I and BoA-ML HarbourFront (MLHF).
- But tenant sales dipped 0.9% on slower shopper traffic (-2.2%) at VivioCity.
- Achieved overall occupancy of 96.1% (+1.5ppt q/q) but committed occupancy rose even higher to 99.5% (+0.8ppt), while WALE was 2.7 years (office: 3.2 years, retail: 2.1 years)
- Aggregate leverage eased 1.8ppt q/q to 34.5%, with lower all-in interest costs of 2.66% (-7ppt) and debt tenor of 4 years.
- Trades at annualised 4Q yield of 5.7% and 1.1x P/B.
- MKE upgrades to Hold with upwardy revised TP of $1.50.
*AEM Holdings
- 1Q18 net profit almost doubled to $8.2m on strong sales and margin expansion, meeting 19% of full-year estimate, with seasonally stronger 2Q and 3Q expected.
- Revenue surged 56% to $65.7m amid continued robust sales of test handlers and consumables to its key semiconductor client.
- Gross material margin expanded 5.9ppt to 34.1% on cost reduction initiatives.
- Reaffirmed guidance of at least $255m in revenue and $42m in pretax operating profit for FY18.
- Last traded at 9.9x forward P/E.
POSITIVE NEWS
*EC World REIT
- Sponsor Forchn Holdings has signed a framework agreement with YCH Group on three strategic initiatives to access the untapped market opportunities in Asia Pacific.
- Firstly, EC World will have exclusive rights to an acquisition portfolio of 13 YCH logistics real estate assets, totalling >280,000 sqm of GFA with estimated value of $400m.
- Secondly, Forchn and YCH will launch an US$150m private equity fund in 2H18, which aims to capitalise on the development and acquisition of logistic assets in key cities along the Belt Road countries.
- Finally, both companies will leverage on each other's competencies to capture opportunities in Southeast Asia.
- Trades at 8.2% indicative yield.
*Darco Water
- Signed an exclusive distribution agreement with Aquaporin A/S in Malaysia to distribute products using Aquaporin Inside® Forward Osmosis Technology in Malaysia and Singapore.
- This marks Aquaporin's first exclusive distribution agreement signed in Malaysia. The group is confident of capturing market share in the growing demand for osmosis-based solutions due to favourable government policy.
- Trades at 45.6x P/E and 1.0x P/B.
*Silverlake Axis
- Secured a new core banking system contract with a large ASEAN banking institution for an undisclosed sum.
- Contract involves the deployment of its flagship core banking solution (Silverlake Axis Integrated Banking, SIBS) and digital solutions.
- First phase will see the rollout of the bank's new ATM switch, retail payments platform and mobile banking.
- The next phase will be the migration of the bank's legacy core banking systems to the SIBS.
- Trades at forward P/E of 22.4x.
NEUTRAL NEWS
*IHH Healthcare
- Issued a third letter to Fortis outlining a proposal with a binding clause for initial equity capital injection of Rp6.5b, and following a due diligence exercise, a further Rp33.5b for a 33% stake.
- The deadline for the revised proposal is 4 May.
- Maybank KE views deal positively as it would help boost IHH's FY18e EBITDA and earnings by 4%/2.6%. However, the transaction would also push net gearing to 14% (FY17: 3%).
- MKE last had a Buy with TP of RM7.00.
NEGATIVE NEWS
*Venture Corp
- Share price fell 8.5% yesterday in wake of a short-seller's report dated 24 Apr
- In short, the house claims that IQOS makes up 30% of revenue and warns that 1Q sales orders have plunged by 50% from initial 2018 forecasts.
- The street is estimating that IQOS forms 3-20% of Venture's revenue.
- The group is reporting 1Q18 results on 25 Apr.
- For now, MKE believes the contract manufacturer has multifaceted growth drivers from a diverse range of customers.
*Asian Pay TV
- The stock slumped 8.7% in unusually heavy volume over the past three trading days to a 12-month low of $0.47 following reports that the Taiwanese cable TV operator is embroiled in a content fee dispute.
- Among the cable operators involved in the dispute, five belong to Taiwan Broadband Communications (TBC), which is owned by APTT. Notably, TBC only airs FTV News out of the 175 channels its carries.
- Another possible reason for the sell-down could relate to forced sale of shares owned by restricted persons, ie mainland Chinese who are forbidden to invest in the cable TV industry in Taiwan.
- APTT has guided that it will maintain its 2017 distribution of 6.5¢ for this year, which implies an attractive 13.8% yield at current price.
- The trust will report its 2Q18 results on 14 May.
*Midas
- Received another two letters of demand for outstanding payments unknown to the group's board of directors.
- The outstanding payments amounted to Rmb87.3m and US$6.9m.
Asian Pay TV
Asian Pay TV (APTT) slumped 8.7% in unusually heavy volume over the past three trading days to a 12-month low of $0.47 following reports that the Taiwanese cable TV operator is embroiled in a content fee dispute.
According to the Taiwanese press, 24 cable TV operators in Taiwan has failed to reach an agreement on content royalty fees with Formosa TV, which has allowed them to broadcast three of its channels, FTV News, FTV One and FTV Taiwan only until Apr 30.
This is the third extension the network has granted cable TV operators since their contracts expired at the end of last year and the parties will have until the end of the month to negotiate a deal.
Among the cable operators involved in the dispute, five belong to Taiwan Broadband Communications (TBC), which is owned by APTT. Notably, TBC only airs FTV News and refuse to pay royalties for the other two channels that it does not carry.
The National Communications Commission has weighed on the matter and advised cable operators to see the value of having high-quality programmes in their channel lineup, which would in turn attract more subscribers. As such, they should pay the channel operators reasonable fees.
As the row is not specific to TBC and pertains to just one channel out of the more than 175 channels it offers on its cable TV platforms, we do not see any significant impact on APTT.
Another possible reason for the sell-down could relate to forced sale of shares owned by restricted persons, ie mainland Chinese who are forbidden to invest in the cable TV industry in Taiwan. However, the latest filing on 2 Apr only show the transfer of 17,000 units by such holders. Therefore, this argument can be ruled out. There is also no disclosure on any significant change in shareholding ownership.
As for any issues relating to its cable TV licences, TBC's operators were granted three-year extensions in 2017 and 2018 after the group fulfilled the requirement to digitise all five franchise areas and switched off analogue TV broadcasting.
APTT has also guided that it will maintain its 2017 distribution of 6.5¢ for this year, which implies an attractive 13.8% yield at current price. The trust will report its 2Q18 results on 14 May.
According to the Taiwanese press, 24 cable TV operators in Taiwan has failed to reach an agreement on content royalty fees with Formosa TV, which has allowed them to broadcast three of its channels, FTV News, FTV One and FTV Taiwan only until Apr 30.
This is the third extension the network has granted cable TV operators since their contracts expired at the end of last year and the parties will have until the end of the month to negotiate a deal.
Among the cable operators involved in the dispute, five belong to Taiwan Broadband Communications (TBC), which is owned by APTT. Notably, TBC only airs FTV News and refuse to pay royalties for the other two channels that it does not carry.
The National Communications Commission has weighed on the matter and advised cable operators to see the value of having high-quality programmes in their channel lineup, which would in turn attract more subscribers. As such, they should pay the channel operators reasonable fees.
As the row is not specific to TBC and pertains to just one channel out of the more than 175 channels it offers on its cable TV platforms, we do not see any significant impact on APTT.
Another possible reason for the sell-down could relate to forced sale of shares owned by restricted persons, ie mainland Chinese who are forbidden to invest in the cable TV industry in Taiwan. However, the latest filing on 2 Apr only show the transfer of 17,000 units by such holders. Therefore, this argument can be ruled out. There is also no disclosure on any significant change in shareholding ownership.
As for any issues relating to its cable TV licences, TBC's operators were granted three-year extensions in 2017 and 2018 after the group fulfilled the requirement to digitise all five franchise areas and switched off analogue TV broadcasting.
APTT has also guided that it will maintain its 2017 distribution of 6.5¢ for this year, which implies an attractive 13.8% yield at current price. The trust will report its 2Q18 results on 14 May.
Tuesday, April 24, 2018
SG Market (24 Apr 18)
MARKET OVERVIEW
- The market could be range bound after US stocks ended mixed weighed by technology and commodities. The dollar rallied to its highest level in more than 3 months as the US 10Y Treasury flirted with the 3% level and reignited worries about higher interest rates.
- Technically, the overbought STI is likely to consolidate below its last peak of 3,610 before resuming its uptrend. Downside support lies at at 3,510.
CORPORATE RESULTS
* CapitaLand Commerical Trust
- 1Q18 DPU of 2.12¢ was up 7.6% after adjusting for an enlarged unit base and on adjusted basis and came in within market expectations.
- Gross revenue and NPI climbed 7.7% and 10.5% to $96.4m and $77.2m, due to higher income from CapitaGreen, Capital Tower and Six Battery Road, as well as a full quarter contribution from Asia Square Tower 2.
- Signed 96,000 sf of leases during the quarter, of which 37% are new leases but average office rent eased 0.4% q/q to $9.70 psf. Only 5% or 173,000 sf left to renew in FY18.
- Portfolio committed occupancy was stable at 97.3% with WALE of 5.7 years.
- Aggregate leverage ticked up 0.6ppt q/q to 37.9% with slightly higher average cost of debt of 2.7% and longer debt tenor of 3.9 years.
- Trades at annualised 1Q yield of 4.8% and 1.0x P/B.
- MKE last had a Hold with TP of $1.80,
*Ascendas REIT
- 4QFY18 DPU edged up 1.5% to 3.91¢, despite larger unit base. This brought FY18 payout to 15.988¢ (+1.6%), meeting estimates.
- For the quarter, gross revenue of $215.7m (+3.3%) was bolstered by 100 Wickham Street in Brisbane, acuired in Dec '17.
- NPI grew at a slower pace to $157.9m (+2.5%) on higher operating expenses of $57.9m (+5.6%) in absence of one-off property tax refund arising from retrospective downward revisions of annual property values.
- Rental reversion of -6.8% was dragged by a single property lease but was up 0.7% for the full year.
- Portfolio occupancy ticked up 0.4ppt q/q to 91.5%, while rental reversion was up 0.7%.
- Aggregate leverage eased 0.8ppt q/q to 34.4%.
- Trades at annualised 4Q yield of 5.8% and 1.3x P/B.
- MKE has a Buy with TP of $3.05.
*Mapletree Industrial Trust
- 4QFY18 DPU rose 2.4% to 2.95¢, bringing FY18 payut to 11.75¢ (+3.2%), in line with estimates.
- For the quarter, both gross revenue and NPI grew 2.9% to $90.4m and $67.9m respectively underpinned by driven by contribution from its HP BTS project and recently acquired 40% interest in 14 US data centres.
- Portfolio occupancy dipped 0.5ppt q/q to 90%, dragged by its Singapore portfolio.
- Aggregate leverage was 33.1% with the weighted average all-in funding cost at 2.9%.
- Trades at 5.8% annualised 4QFY18 yield and 1.37x P/B
*Sunningdale
- 1Q18 headline net profit plunged 75% to $1.9m on higher FX loss of $5.2m (1Q17: $2.1m).
- Excluding one-off items, core earnings fell 25.5% to $7.1m, below consensus estimates.
- Revenue slid 1.6% to $168.9m, as weakness in consumer/IT segment (-12%) eroded growth in automotive (+2.9%), healthcare (+3.1%), and mould fabrication (+11.5%) divisions.
- Gross margin narrowed 2.3ppt to 12.7% as utilisation levels were dragged by consumer/IT business.
- Management expects to ramp up new consumer/IT projects in 2H18.
- Trades at 8x forward P/E.
*Cheung Woh
- 4QFY18 net loss deepened to $8.9m (4QFY17: -$1.8m), partly on impairment (-$3.3m) and write-off (-$1.6m) of fixed assets.
- This pummelled FY18 net loss to $16.8m (FY17: $3.6m profit).
- Revenue for the quarter slipped 1.7% to $20.7m on weaker sales of precision metal stamping components.
- Incurred a gross loss of $1.2m (4QFY17: $0.1m profit) amid higher direct costs of labour and overheads, as well as a change in useful life of some manufacturing tools.
- Bottom line was also hit by a $0.5m disposal loss, and an adverse $0.6m swing in associates' contribution.
- No final DPS declared (FY17: 0.4¢).
- Last traded at 0.53x P/B.
*Sabana REIT
- 1Q18 DPU was flat at 0.88¢ on lower distributable income of $9.2m (-0.8%).
- Gross revenue slid 4.4% to $21m due to lower occupancy of certain multi-tenanted properties and non-contribution from the vacant 1 Tuas Avenue 4.
- However, NPI grew 9.4% to $14.6m on reversal of impairment loss from 6 Woodlands Loop arising from the recovery of rental arrears, lower impairment loss from 1 Tuas Avenue 4 and reduced expenses following divestment of 218 Pandan Loop.
- Portfolio occupancy slipped 1.4ppt q/q to 84.1%, while aggregate leverage inched 2ppt to 38.1%.
- Trades at annualised 1Q yield of 8.3% and 0.8x P/B..
POSTIVE NEWS
*mm2 Asia
- 51% owned subsidiary, Vividthree Holdings has entered into a redeemable convertible loan agreement with pre-IPO investor. Ron Sim's R3 Asian Gems.
- Under the agreement, R3 will be subscribing for a $2m mandatory convertible note for a term of two years, which will be converted into Vividthree shares at a 15% discount to the IPO price upon its listing on the Catalist Board.
- In the event the listing does not materialise within two years, the note holders will receive a coupon payment of 2% per annum at maturity.
NEUTRAL NEWS
*ESR REIT
- Acquiring 15 Greenwich Drive, a modern ramp-up logistics facility, for a purchase price of S$95.8m, in line with its strategy to create a more balanced and diversified mix of assets in order to generate stable and recurring returns.
- The acquisition is expected to expand the REIT's exposure to the Logistics/Warehouse sector from 22.6% to 27.1%, and increasing its portfolio's occupancy from 90.7% to 91.2%.
- The asset occupies a land area of 271,894 sf and has a GFA of 455,395 sf and a 30-year lease tenure expiring in 2041. The property has an occupancy of 100% and is currently tenanted to two tenants.
- The Manager currently intends to finance the total acquisition Cost wholly through debt financing.
NEGATIVE NEWS
*Ezion
- Share price came under heavy selling pressure since the counter resumed trading on 17 Apr 2018
- SGX masnet revealed that one institutional fund, M&G Investment Management (ultimately owned by Prudential plc) have sold 29.6m shares at an average price of $0.1835 in the open market.
- As M&G's stake in Ezion is now under 5%, the fund will not need to disclose its share transactions going forward.
- Trades at 0.9x P/B but expects stock overhang to persist in the near-term.
*Versalink Holdings
- Warned that the group is likely to report a net loss for FY18, mainly due to a lower gross profit margin and higher operating expenditure incurred in the current six months under review.
- The market could be range bound after US stocks ended mixed weighed by technology and commodities. The dollar rallied to its highest level in more than 3 months as the US 10Y Treasury flirted with the 3% level and reignited worries about higher interest rates.
- Technically, the overbought STI is likely to consolidate below its last peak of 3,610 before resuming its uptrend. Downside support lies at at 3,510.
CORPORATE RESULTS
* CapitaLand Commerical Trust
- 1Q18 DPU of 2.12¢ was up 7.6% after adjusting for an enlarged unit base and on adjusted basis and came in within market expectations.
- Gross revenue and NPI climbed 7.7% and 10.5% to $96.4m and $77.2m, due to higher income from CapitaGreen, Capital Tower and Six Battery Road, as well as a full quarter contribution from Asia Square Tower 2.
- Signed 96,000 sf of leases during the quarter, of which 37% are new leases but average office rent eased 0.4% q/q to $9.70 psf. Only 5% or 173,000 sf left to renew in FY18.
- Portfolio committed occupancy was stable at 97.3% with WALE of 5.7 years.
- Aggregate leverage ticked up 0.6ppt q/q to 37.9% with slightly higher average cost of debt of 2.7% and longer debt tenor of 3.9 years.
- Trades at annualised 1Q yield of 4.8% and 1.0x P/B.
- MKE last had a Hold with TP of $1.80,
*Ascendas REIT
- 4QFY18 DPU edged up 1.5% to 3.91¢, despite larger unit base. This brought FY18 payout to 15.988¢ (+1.6%), meeting estimates.
- For the quarter, gross revenue of $215.7m (+3.3%) was bolstered by 100 Wickham Street in Brisbane, acuired in Dec '17.
- NPI grew at a slower pace to $157.9m (+2.5%) on higher operating expenses of $57.9m (+5.6%) in absence of one-off property tax refund arising from retrospective downward revisions of annual property values.
- Rental reversion of -6.8% was dragged by a single property lease but was up 0.7% for the full year.
- Portfolio occupancy ticked up 0.4ppt q/q to 91.5%, while rental reversion was up 0.7%.
- Aggregate leverage eased 0.8ppt q/q to 34.4%.
- Trades at annualised 4Q yield of 5.8% and 1.3x P/B.
- MKE has a Buy with TP of $3.05.
*Mapletree Industrial Trust
- 4QFY18 DPU rose 2.4% to 2.95¢, bringing FY18 payut to 11.75¢ (+3.2%), in line with estimates.
- For the quarter, both gross revenue and NPI grew 2.9% to $90.4m and $67.9m respectively underpinned by driven by contribution from its HP BTS project and recently acquired 40% interest in 14 US data centres.
- Portfolio occupancy dipped 0.5ppt q/q to 90%, dragged by its Singapore portfolio.
- Aggregate leverage was 33.1% with the weighted average all-in funding cost at 2.9%.
- Trades at 5.8% annualised 4QFY18 yield and 1.37x P/B
*Sunningdale
- 1Q18 headline net profit plunged 75% to $1.9m on higher FX loss of $5.2m (1Q17: $2.1m).
- Excluding one-off items, core earnings fell 25.5% to $7.1m, below consensus estimates.
- Revenue slid 1.6% to $168.9m, as weakness in consumer/IT segment (-12%) eroded growth in automotive (+2.9%), healthcare (+3.1%), and mould fabrication (+11.5%) divisions.
- Gross margin narrowed 2.3ppt to 12.7% as utilisation levels were dragged by consumer/IT business.
- Management expects to ramp up new consumer/IT projects in 2H18.
- Trades at 8x forward P/E.
*Cheung Woh
- 4QFY18 net loss deepened to $8.9m (4QFY17: -$1.8m), partly on impairment (-$3.3m) and write-off (-$1.6m) of fixed assets.
- This pummelled FY18 net loss to $16.8m (FY17: $3.6m profit).
- Revenue for the quarter slipped 1.7% to $20.7m on weaker sales of precision metal stamping components.
- Incurred a gross loss of $1.2m (4QFY17: $0.1m profit) amid higher direct costs of labour and overheads, as well as a change in useful life of some manufacturing tools.
- Bottom line was also hit by a $0.5m disposal loss, and an adverse $0.6m swing in associates' contribution.
- No final DPS declared (FY17: 0.4¢).
- Last traded at 0.53x P/B.
*Sabana REIT
- 1Q18 DPU was flat at 0.88¢ on lower distributable income of $9.2m (-0.8%).
- Gross revenue slid 4.4% to $21m due to lower occupancy of certain multi-tenanted properties and non-contribution from the vacant 1 Tuas Avenue 4.
- However, NPI grew 9.4% to $14.6m on reversal of impairment loss from 6 Woodlands Loop arising from the recovery of rental arrears, lower impairment loss from 1 Tuas Avenue 4 and reduced expenses following divestment of 218 Pandan Loop.
- Portfolio occupancy slipped 1.4ppt q/q to 84.1%, while aggregate leverage inched 2ppt to 38.1%.
- Trades at annualised 1Q yield of 8.3% and 0.8x P/B..
POSTIVE NEWS
*mm2 Asia
- 51% owned subsidiary, Vividthree Holdings has entered into a redeemable convertible loan agreement with pre-IPO investor. Ron Sim's R3 Asian Gems.
- Under the agreement, R3 will be subscribing for a $2m mandatory convertible note for a term of two years, which will be converted into Vividthree shares at a 15% discount to the IPO price upon its listing on the Catalist Board.
- In the event the listing does not materialise within two years, the note holders will receive a coupon payment of 2% per annum at maturity.
NEUTRAL NEWS
*ESR REIT
- Acquiring 15 Greenwich Drive, a modern ramp-up logistics facility, for a purchase price of S$95.8m, in line with its strategy to create a more balanced and diversified mix of assets in order to generate stable and recurring returns.
- The acquisition is expected to expand the REIT's exposure to the Logistics/Warehouse sector from 22.6% to 27.1%, and increasing its portfolio's occupancy from 90.7% to 91.2%.
- The asset occupies a land area of 271,894 sf and has a GFA of 455,395 sf and a 30-year lease tenure expiring in 2041. The property has an occupancy of 100% and is currently tenanted to two tenants.
- The Manager currently intends to finance the total acquisition Cost wholly through debt financing.
NEGATIVE NEWS
*Ezion
- Share price came under heavy selling pressure since the counter resumed trading on 17 Apr 2018
- SGX masnet revealed that one institutional fund, M&G Investment Management (ultimately owned by Prudential plc) have sold 29.6m shares at an average price of $0.1835 in the open market.
- As M&G's stake in Ezion is now under 5%, the fund will not need to disclose its share transactions going forward.
- Trades at 0.9x P/B but expects stock overhang to persist in the near-term.
*Versalink Holdings
- Warned that the group is likely to report a net loss for FY18, mainly due to a lower gross profit margin and higher operating expenditure incurred in the current six months under review.
Monday, April 23, 2018
SG Market (23 Apr 18)
MARKET OVERVIEW
- Investors could take cue from the weakness on Wall Street's last Fri as a jump in US bond yield and concerns over Apple's earnings overshadowed what has so far been a solid earnings season. But capital flows into commodity funds could support oil-linked counters.
- Meanwhile, US Treasury Secretary Steven Mnuchin is considering a trip to China for trade talks and is cautiously optimistic of reaching an agreement with the Chinese on their trade differences.
- Technically, the STI has failed to close above the resistance level at 3,610 with risk of further pullback in the near-term. We see downside support is at 3,510.
CORPORATE RESULTS
*SGX
- 3QFY18 net profit leapt 21% to $100.5m, lifting 9MFY18 earnings to $279.5m (+10%),or 76% of street estimates.
- Revenue for the quarter rose 9.6% to $222.2m, propelled by equities & fixed income (+4.7%), and derivatives (+20.4%) segments.
- Securities average daily traded value jumped 17% to $1.45b on total traded value of $89.9b (+15%). Turnover velocity improved to 46% from 41% in 3QFY17.
- Operating margin widened 2.2ppt to 53% on lower technology (-2.9%) and other operating (-22.5%) expenses.
- Maintained interim DPS of 5¢, bringing 9MFY18 payout to 15¢ (flat).
- Trades at 21.3x forward P/E.
- MKE has a Buy with TP of $8.79
*CapitaLand Mall Trust
- 1Q18 DPU edged up 1.8% to 2.78¢, mostly in line with estimates, on distributable income of $99m (+2.1).
- Revenue climbed to $175.2m (+1.8%) on higher occupancy for IMM, Clarke Quay, The Atrium@Orchard, Plaza Singapura, as well as higher car park income.
- NPI rose at a faster pace to $125.7m (+4.7%) on lower property operating expenses of $49.5m (-4.7%) arising from reduced marketing and utilities expenses.
- Portfolio achieved a positive rental reversion of 0.8%.
- Overall occupancy dipped 0.3ppt q/q to 98.9%, while aggregate leverage eased to 33.5% (-0.7ppt q/q).
- Trades at annualised 1Q yield of 5.3% and 1.1x P/B.
- MKE has a Hold with TP of $2.15
POSITIVE NEWS
*Swee Hong
- BCA Singapore has upgraded its contractor registration status under category CW02 for Civil Engineering to Grade A2 from Grade B1.
- This grant of A2 status would enable the group to tender for government contraction assignments with a maximum value limit of $85m, up from $40m.
- This is testament to the group's quality and would enhance its competitive strength in project tenders.
*AusGroup
- Awarded the structural, mechanical and piping installation package by MSP Engineering for the Talison Lithium Chemical Grade Plant 2 (CGP2) expansion project at Greenbushes in Western Australia.
- The A$27m contract includes installation of ~2,000 tonnes of structural steel and associated flooring and cladding, 70 tonnes of plate work and 450 pieces of mechanical equipment.
NEUTRAL NEWS
* China Jinjiang
- Makes its foray into Latin American by taking a 51% stake of the enlarged share capital in Foxx URE-BA Ambiental Ltda for BRL38.5m ($14.94m), with the remaining 49% held by Foxx Innova Ambiental S.A.
- Foxx URE-BA will construct and operate a WTE project located in Barueri, São Paulo, Brazil with a planned waste treatment capacity of 825 tons per day.
- This is the first WTE and the first PPP waste treatment project in Brazil.
- Separately, it is placing 214m new shares at $0.50 to Harvest Global capital Investments (14.9%) to raise$107m.
- Net proceeds will be used to finance the ongoing technical upgrading of eight of the group's WTE facilities in China.
* Datapulse
- Shareholders has voted to retain all four current board directors and approved diversification from the loss-making media storage business, as well as a special dividend of 1¢, after completing the sale of an industrial building.
NEUTRAL NEWS
*QT Vascular
- Issued 8.1m new shares to five independent third parties for the partial settlement of short-term loans amounting to $0.1m.
- To recap, loan agreement was entered in Aug '16 between the group and the lenders for a 120-day short-term loan of $1.5m.
NEGATIVE NEWS
* Singapore Medical Group
- A litigation suit was commenced by Eastlife and Maxglobe against the group, Dr Low Chai Ling and Dr Kenneth Lee Cheng San.
- In summary, the plaintiffs alleged that the group 1) infringed trademarks and copyright relating to The Sloane Clinics; 2) have conspired with the defendants to pass off the new SW1 Clinic as a Sloane Clinic; and (3) conspired with the defendants to harm the Plaintiffs.
- SMG has sought legal advice on the above claims, and believes that they are without merit and unlikely to have a material adverse impact on its operations and financial performance.
*Asiaphos
- Warned of net loss for 1Q18 results due to lower revenues arising from reduced quantity of P4 sold and narrower margins.
- The group also recorded lower profits from discontinued operations and suffered a $0.1m FX loss (1Q17: $0.2m gain).
- Investors could take cue from the weakness on Wall Street's last Fri as a jump in US bond yield and concerns over Apple's earnings overshadowed what has so far been a solid earnings season. But capital flows into commodity funds could support oil-linked counters.
- Meanwhile, US Treasury Secretary Steven Mnuchin is considering a trip to China for trade talks and is cautiously optimistic of reaching an agreement with the Chinese on their trade differences.
- Technically, the STI has failed to close above the resistance level at 3,610 with risk of further pullback in the near-term. We see downside support is at 3,510.
CORPORATE RESULTS
*SGX
- 3QFY18 net profit leapt 21% to $100.5m, lifting 9MFY18 earnings to $279.5m (+10%),or 76% of street estimates.
- Revenue for the quarter rose 9.6% to $222.2m, propelled by equities & fixed income (+4.7%), and derivatives (+20.4%) segments.
- Securities average daily traded value jumped 17% to $1.45b on total traded value of $89.9b (+15%). Turnover velocity improved to 46% from 41% in 3QFY17.
- Operating margin widened 2.2ppt to 53% on lower technology (-2.9%) and other operating (-22.5%) expenses.
- Maintained interim DPS of 5¢, bringing 9MFY18 payout to 15¢ (flat).
- Trades at 21.3x forward P/E.
- MKE has a Buy with TP of $8.79
*CapitaLand Mall Trust
- 1Q18 DPU edged up 1.8% to 2.78¢, mostly in line with estimates, on distributable income of $99m (+2.1).
- Revenue climbed to $175.2m (+1.8%) on higher occupancy for IMM, Clarke Quay, The Atrium@Orchard, Plaza Singapura, as well as higher car park income.
- NPI rose at a faster pace to $125.7m (+4.7%) on lower property operating expenses of $49.5m (-4.7%) arising from reduced marketing and utilities expenses.
- Portfolio achieved a positive rental reversion of 0.8%.
- Overall occupancy dipped 0.3ppt q/q to 98.9%, while aggregate leverage eased to 33.5% (-0.7ppt q/q).
- Trades at annualised 1Q yield of 5.3% and 1.1x P/B.
- MKE has a Hold with TP of $2.15
POSITIVE NEWS
*Swee Hong
- BCA Singapore has upgraded its contractor registration status under category CW02 for Civil Engineering to Grade A2 from Grade B1.
- This grant of A2 status would enable the group to tender for government contraction assignments with a maximum value limit of $85m, up from $40m.
- This is testament to the group's quality and would enhance its competitive strength in project tenders.
*AusGroup
- Awarded the structural, mechanical and piping installation package by MSP Engineering for the Talison Lithium Chemical Grade Plant 2 (CGP2) expansion project at Greenbushes in Western Australia.
- The A$27m contract includes installation of ~2,000 tonnes of structural steel and associated flooring and cladding, 70 tonnes of plate work and 450 pieces of mechanical equipment.
NEUTRAL NEWS
* China Jinjiang
- Makes its foray into Latin American by taking a 51% stake of the enlarged share capital in Foxx URE-BA Ambiental Ltda for BRL38.5m ($14.94m), with the remaining 49% held by Foxx Innova Ambiental S.A.
- Foxx URE-BA will construct and operate a WTE project located in Barueri, São Paulo, Brazil with a planned waste treatment capacity of 825 tons per day.
- This is the first WTE and the first PPP waste treatment project in Brazil.
- Separately, it is placing 214m new shares at $0.50 to Harvest Global capital Investments (14.9%) to raise$107m.
- Net proceeds will be used to finance the ongoing technical upgrading of eight of the group's WTE facilities in China.
* Datapulse
- Shareholders has voted to retain all four current board directors and approved diversification from the loss-making media storage business, as well as a special dividend of 1¢, after completing the sale of an industrial building.
NEUTRAL NEWS
*QT Vascular
- Issued 8.1m new shares to five independent third parties for the partial settlement of short-term loans amounting to $0.1m.
- To recap, loan agreement was entered in Aug '16 between the group and the lenders for a 120-day short-term loan of $1.5m.
NEGATIVE NEWS
* Singapore Medical Group
- A litigation suit was commenced by Eastlife and Maxglobe against the group, Dr Low Chai Ling and Dr Kenneth Lee Cheng San.
- In summary, the plaintiffs alleged that the group 1) infringed trademarks and copyright relating to The Sloane Clinics; 2) have conspired with the defendants to pass off the new SW1 Clinic as a Sloane Clinic; and (3) conspired with the defendants to harm the Plaintiffs.
- SMG has sought legal advice on the above claims, and believes that they are without merit and unlikely to have a material adverse impact on its operations and financial performance.
*Asiaphos
- Warned of net loss for 1Q18 results due to lower revenues arising from reduced quantity of P4 sold and narrower margins.
- The group also recorded lower profits from discontinued operations and suffered a $0.1m FX loss (1Q17: $0.2m gain).
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