Wednesday, August 31, 2016


CapitaLand: (S$3.08) Pivoting towards an asset-light Chinese shopping mall strategy
- Turning its sights to a more asset light strategy for its retail mall business after signing a contract to manage 95,000 sqm of retail space in Changsha, Central China
- Expected to commence operations by the end of 2018 and will double its presence in Changsha
- Pivot to China is noteworthy as retail spending growth back in Singapore slows down to a trickle
- Street is fairly bullish on the counter particularly due to its China exposure as well as undervalued domestic property portfolio


SATS: More broker downgrades on rich valuations
-CIMB downgrade to Hold from Buy
-Boost from tourist arrival and potential government grant for margin expansion priced in
-rising downside risk - Zika outbreak
-dividend yield became less compelling after strong price rally since mid-2016
-TP raised slightly to $4.64 from $4.57, but is still below current market price.
-the view is in line with Maybank KE, which has Street's only Sell rating with TP of $3.76

SG Market (31 Aug 16)

SG Market: Singapore market continue to be mired in low volumes amid weak sentiment and lack of major catalysts, with focus centred on a handful of small to mid-caps, mainly in healthcare and consumer space.

Regional markets opened lower in Tokyo (+0.8%), Seoul (flat) and Sydney (-0.7%).

STI has dipped below the support at 2,830, with next level at 2,800, while topside resistance remains at 2,880.

Stocks to watch:
*Banks: According to credit rating agency Fitch, S'pore banks will be able to withstand a property slump, due to a proactive regulator and measures to curb excessive debt. A drastic deterioration of 45% for home prices and housing NPL of 5% (2Q16:0.4%) would shave a modest 17-24% off FY15 earnings.

*Hospitality: UK, Australia, Taiwan and South Korea have all issued travel advisories for Singapore as Zika cases rise. This will have adverse impact on visitor arrivals and the hotel industry here, just when tourists are starting to flock back in. Affected counters include SIA, Genting S’pore, CDLHT, OUE HT and Far East HT.

*CapitaLand: Signed contract to manage the retail space (95,000 sqm) of Fortune Finance Center, a landmark integrated development under construction in Hunan. This marks its the start of its asset-light strategy to enlarge its mall network through third-party management contracts.

*ST Engineering: Its marine arm will partner American firm Raytheon and Saudi Arabia’s Zamil Group, to offer a full product suite in shipbuilding and systems integration. The JV, with each holding one-third stake, will bid for projects under the Saudi Arabian Naval Force’s modernisation programme. Separately, the group disclosed that former COO (Jun ’02 – Jun ’07) Han Yew Kwang has been found guilty of corruption.

*Top Glove: Acquiring a freehold industrial property, built on a 34,499 sqm land in Selangor, Malaysia, for RM51.5m, for future production expansion.

*Chip Eng Seng: Awarded a $75.9m contract by GS Engineering to supply precast concrete for the tunnels, rail and bus depot at Thomson-East Coast Line.

*Koon Holdings: 1HFY16 net profit tumbled 54.2% to $2.1m on losses from its precast operations in Indonesia. Revenue grew 4.6% to $108.9m from construction (+15.4%), pared by declines in precast (-40.9%) and electric power generation (-5.8%). Gross margin contracted to 11.6% (-3.5 ppts) on the shift in sales mix. NAV/share at $0.236.

*Serrano: Received letter of demand from Maybank for outstanding debt of $29.7m, as well as a writ of summons from supplier VGS Imports & Exports for $88.5m of unpaid goods and services.

*China Star Food: Denied all allegations made in relation to the $2.5m letter of demand from Cheong Chee Hwa.

*China Sky Chemical Fibre: Engaged counsel after it received winding-up proceedings against its subsidiary, Quanzhou Tianyu Chemical Fiber & Weaving Industry.

*Global Invacom: Obtained a patent for a new auto-assembly machine which doubles the efficiency of its satellite communications equipment line.

*Oxley: Repurchased 0.3m shares under its share buyback scheme on 30 Aug, at $0.41 apiece.

Tuesday, August 30, 2016


Ausgroup: (S$0.042) Blew A$193m hole in FY16; financial health in critical condition
- Reported a whopping 4QFY16 net loss of A$99.5m and bringing FY16 loss to A$192.7m (FY15: A$6.2m net profit), undermined by massive impairment losses.
- While FY16 revenue rose 12.7%, gross margin shrank to 4.8% from 13.9% in FY15, reflecting intense price competition in the O&G services industry.
- Balance sheet has reached critical levels, net gearing at a dangerous 3.1x.
- Notably, $110m worth of notes will be expiring on 20 Oct and group is in urgent need of fresh funding given the rapid deterioration of equity base to A$50.9m from A$241.4m a year ago.
- At the current price, Ausgroup is valued at 0.58x P/B. With significant liquidity issues in the near-term and no light at the end of the tunnel, we believe the negatives may be just beginning.
- Separately, Ezion, which owns a 17.8% stake in AusGroup, has slashed its reported 2Q16 net profit to US$8.1m from US$19.8m in view of the dreadful results of its associate.

Health Management International

Health Management International - Maybank Kim Eng (Unrated Note)
-Operations consist of two tertiary hospitals in Malaysia - Malacca & Johor
-Adopts SG's private hospitals' business model - proven to attract and retain top doctors
-accelerating growth - core earnings grew at 3-yr CAGR of 57% as at FY6/16
-healthy balance sheet - Operating cash flow grew at 3-yr CAGR of 44%, declared first dividend in five years
-Growth plans - Doubling capacity of Johor hospital by mid-2019, increase avg bill size at Malacca hospital, explore inorganic options
-trading at 27x forward P/E, 34% discount to peers, despite stronger ROE and comparable growth

SG Market (30 Aug 16)

SG Market: Rising odds of a US Fed rate hike could give a slight lift to the banks, but cast a shadow over the broader market and economy.

Regional markets opened mixed in Tokyo (-0.3%), Seoul (+0.7%) and Sydney (+0.5%).

STI is sitting at 2,830 support, with next level at 2,800, while topside resistance remains at 2,880.

Stocks to watch:
*GL: FY16 net profit of US$67.6m (+41%) was buttressed by interest cost savings arising from refinancing, while revenue slipped 7% to US$393.9m from reduced hotel revenue as a result of the weaker GBP, as well as lower Bass Strait oil and gas royalty income due to the decline in crude price and weaker AUD/USD. First and final DPS of 2.2¢ maintained. NAV/share at US$0.809.

*Viva Industrial Trust: Secured a leading household name as the latest anchor tenant, which took up 38,000 of white space (for sports and fitness, F&B and family-oriented amenities) at Viva Business Park. This lifts pre-committed leases for white space to over 90%. Final phase of AEI works at the property, which contributed ~30% of the REIT's gross revenue growth in 2Q16, is on track for completion in 4Q16.

*Yanlord: Moody’s has placed its Ba3 long term rating on the group under review with a possible upgrade within the next 12-18 months. The ratings agency pointed out the group’s good brand name and quality products as support for its healthy gross margins.

*Ausgroup: Following a profit warning, Ausgroup reported a whopping 4QFY16 net loss of A$99.5m (4QFY15: A$0.3m net profit) as it incurred impairment losses of A$75.7m, as well as shut-down costs related to the Singapore fabrication business. While revenue rose 14.1% to A$103.4m from more projects, gross margin shrank to 3.9% from 23% in 4QFY15, reflecting intense price competition in the O&G services industry stemming from the cutback in capex spending. Cash of A$22.1m and debt of A$179.2m pushed net gearing to 3.1x, with $110m notes expiring on 20 Oct. NAV/share collapsed to A$0.069 from $0.326 a year ago.

*Healthway Medical: Proposed placement of 133.3m new shares (5.73% of existing share capital) at 3¢ apiece, or 11% above last close, to KGI Fraser Securities as its agent. Net proceeds of $3.8m are intended for expansion (55%) and working capital (45%).

*Oxley: Company bought 0.9m shares via its share buyback scheme on 29 Aug, at $0.4056 apiece.

*Micro-Mechanics: FY16 net profit slipped 1.1% y/y to $11.9m on revenue of $51.3m (-1.8%) due to the depreciation of the RMB and MYR. Gross margin expanded 1.9 ppt to 56.9% on stronger margin across its semiconductor tooling (+0.4 ppt) and CMA (+4.1 ppt) divisions. Final DPS of 3¢ with special DPS of 1¢ brought FY16 DPS to 6¢ (FY15: 5¢). NAV/share at $0.3614.

*PEC: 4QFY16 net profit of $8.1m (4QFY15: $7.8m loss) helped lift FY16 earnings into $18.8m (FY15: $6.9m loss). For the year, revenue rose to $575.1m (+15%) on higher contribution from overseas projects, while bottom line was boosted by disposal gains ($9.2m) and an absence of provision for trade receivables (FY15: $14.4m). Net cash of $132.5m or $0.52/share is 19% higher than market cap. Raised first and final DPS to 2¢ (FY15: 1¢), and special DPS of 1¢ (FY15: nil), bringing full-year payout to 3¢. NAV/share at $0.867.

*Eu Yan Sang: Righteous Crane, a consortium comprising a PE firm (42%), Temasek Holdings (30%) and founding Eu family (28%) has extended the closing date for its privatisation offer at $0.60/share for the fifth time, after failing to convince two substantial shareholders Hillhouse Capital Management and Target Asset Management, which collectively own 10.6% stake, to accept the offer. Closing date extended to 12 Sep. As of 29 Aug, the offeror has received valid acceptances of 84.05%.

Monday, August 29, 2016


Oxley: (S$0.405) 4QFY16 held up by accounting gains; gearing improves
- 4QFY16 net profit more than doubled to $73.8m (+114%), thanks to higher fair value gains on its investment properties and negative goodwill.
- This took FY16 earnings to $206m (+162%) as revenue surged 40% to $981.3m, buoyed by progressive recognition from eight of its development projects.
- Further, rental income jumped to $9.7m (FY15: $0.6m).
- Oxley is proposing a final DPS to 0.25¢, raising full year payout to 1.9¢ (FY15: 0.41¢).
- Balance sheet was in better shape, with net gearing easing to 2.2x (3QFY16: 2.9x, 4QFY15: 4.1x).
- Unbilled sales of $3b in Singapore ($1.24b) and overseas ($1.76b), of which $1.9b will be recognised over the next 12 months.
- At the current price, Oxley trades at a 64% discount to street RNAV of $1.14/share.

Silverlake Axis

Silverlake Axis: 4QFY16 earnings lagged as cost outpaced sales; dividends cut
-4QFY16 net profit RM77.2m (+3%), FY16 earnings RM 273.8m (-3%) - 95% of consensus
-4QFY16 revenue RM166.9m (+32%) - maiden contribution from Symmetri and lifted by FX
-Bottom line negated by absence of divestment gain, FX loss, admin cost from Symmetri, loss from associates and JVs
-Proposed a lower final DPS of 1¢ (4QFY15: 1.2¢), bringing full-year payout to 3¢ (FY15: 4.2¢).
-Outlook remains challenging, venturing into fintech to stay relevant
-trading at 15.1x FY17e P/E. Street has 2 Buy and 1 Hold rating, with mean TP of $0.68


Cordlife: (S$1.235) Rising overheads set to continue into FY17
- FY16 net profit tumbled 60% to $13m due to increased overheads and lower fair value gains arising from China Cord Blood Corp (CCBC).
- Revenue edged up 3.5%, but gross margin was compressed to 66.2% (-3.3ppt) due to lower profitability at StemLife.
- No dividends has been declared this year (FY15: 2¢), despite the group's net cash position (including short-term investments) of $59.8m ($0.23/share), as Cordlife focuses on expanding its geographical footprint.
- Overheads are expected to maintain its upward trajectory.
- Cordlife is valued at a relatively pricey trailing P/E of 25.2x, compared to its 7-year historical average of 14.1x.

SG Market (29 Aug 16)

SG Market: Risk appetite is likely to remain low amid continued uncertainty after Fed Chair Janet Yellen asserted a stronger case for gradual rate hikes without giving any time-table, and ahead of key economic data from China and US this week.

Regional markets opened mixed in Tokyo (+2%), Seoul (-0.4%) and Sydney (-0.5%).

Immediate resistance for STI remains at 2,880, with underlying support at 2,830.

Stocks to watch:
*Cordlife: FY16 net profit tumbled 60% to $13m due to increased marketing costs, one-off professional expenses and lower fair value gains. Revenue edged up 3.5% to $59.6m on higher client deliveries on consolidation of StemLife, but gross margin compressed to 66.2% (-3.3ppt) from increased quality control costs. No DPS declared (FY15: 2¢). NAV/share at $0.5156.

*Oxley: 4QFY16 net profit more than doubled to $73.8m (+114%), thanks to higher fair value gains ($47.2m) on its investment properties and negative goodwill ($25.2m) arising from the acquisition of an associate. Revenue slipped 15% to $165.1m, from lower sales recognition for its development projects. This took FY16 earnings to $206m (+162%) on revenue of $981.3m (+40%). Final DPS of 0.25¢ brought full year payout to 1.9¢ (FY15: 0.41¢). NAV/share at $0.2679.

*Silverlake: 4QFY16 net profit edged up 3% to RM77. 2m despite the absence of disposal gains and lower JV contributions, as revenue rose 32% to RM166.9m, boosted by favourable FX rates and the consolidation of Symmetri Group's businesses. Gross margin widened 5ppt to 66% on a shift in sales mix. Proposed final DPS of 1¢, brought FY16 payout to 3¢ (FY15: 4.2¢). NAV/share at RM0.2271. Separately, it clinched six fintech contracts, scheduled for completion in 4Q16 and 1Q17, which will contribute positively to FY16 and FY17 earnings.

*Sin Heng: Slumped into a 4QFY16 net loss of $0.8m (4QFY15: $2.4m profit) on a 48.5% slide in revenue to $22.5m, weighed by broad declines in equipment rental (-10.7%) and trading (-63.6%) segments. Gross margin contracted to 7.7% (-11.1 ppt) on losses from non-performing and old cranes. No dividends paid out this year (FY15: 0.55¢). NAV/share at $1.07.

*Dukang Distillers: Trimmed FY16 net loss to Rmb10.7m (FY15: Rmb561.4m) on the absence of impairment losses (FY15: Rmb547.4m). Revenue crept up 0.2% to Rmb865m as higher ASPs (+13%) was offset by lower selling volumes (-11.3%). Gross margin widened 10.1 ppt to 34.8% on more sales for its premium series. Bottom line was eroded by higher selling and distribution expenses (+34.5%). NAV/share at Rmb17.84.

*Vard: Secured contract from Hapag Lloyd Cruises to design and construct two 16,100-tonne luxury expedition cruise vessels, each capable of carrying 240 passengers. Deliveries are expected in 1Q19 and 4Q19.

*Hyflux: Received positive results from the clinical study of its skin treatment product ELO Gel, which improves skin wrinkles, color, elasticity, hydration and radiance.

*Sinarmas Land: Reduced its effective stake in PT Puradelta Lestari to 56.96% from 66.96% after placing out 4.82b shares (10% interest) for Rp1.21t or $120.5m. This is to improve the liquidity of the property developer on the Indonesia Stock Exchange.

*EC World REIT: DBS has ceased price stabilisation after having purchased 4.2m units in the open market since listing.

*China Environment: Secured a Rmb3.3m contract from Shandong Shuangliang Hengli Electrical Engineering to supply one unit of hybrid dust collector.

*ABR Holdngs: Terminated the proposed acquisition of property at Yarraville, Victoria, Australia, and received the deposit refund of A$1.9m.

Friday, August 26, 2016

SG Market (26 Aug 16)

SG Market: Tepid liquidity is expected to persist ahead of the highly anticipated speech by Fed Chair Janet Yellen at Jackson Hole as investors seek clues on whether a Fed rate hike is imminent.

Regional bourses opened lower in Tokyo (-0.7%), Seoul (-0.6%) and Sydney (-0.1%).

Immediate resistance for STI remains at 2,880 followed by 2900, with underlying support at 2,830.

Stocks to watch:
*IHH Healthcare: 2Q16 results missed estimates as net profit of RM246.1m (+7.9%) was masked by asset divestment gains (RM54.8m), which hid the drop in EBITDA margin to 22.4% (-3.6ppt) due to start-up losses from new hospitals and higher operating costs. Revenue jumped 18.1% to RM2.47b, led by increased contribution from its largest operating subsidiary Parkway Pantai (+17%) on sustained organic growth from the ramp up of Mount Elizabeth Novena in Singapore. NAV/share at RM2.64.

*Sim Lian: FY16 net profit dived 71% to $68.8m, amid a 52% drop in revenue to $570.9m, as weakness in property development (-91%) business overshadowed improvements in construction (+88%) and property investment (+22%) divisions. Bottom line was further eroded by a plunge in JV contribution (-97%). First and final DPS reduced to 1.5¢ (FY15: 7.28¢). NAV/share at $1.15.

*Croesus Retail Trust: 4QFY16 DPU of 1.7¢ (+6.9%) took full year payout to 7.06¢ (+11.2%). For the quarter, revenue surged to ¥2.68b (+34.5%), mainly led by new contributions from Torius (acquired in Oct '15), Fuji Grand Natalie (Apr '16) and Mallage Saga and Feeeal Asahikawa (May '16). NPI rose at a slower pace to ¥1.44b (+19.4%) due to higher expense ratios at the new malls. Portfolio occupancy remained at 98.1% with WALE at 7 years. Aggregate leverage eased to 45.3% (-0.9ppt q/q), with average debt cost and tenor stable at 1.9% and 2.5 years, respectively. NAV/share rose 9.1% to $1.01.

*Creative Technology: 4QFY16 turned profitable with net profit of US$0.5m (4QFY15: US$2.7m loss), helped by a 39% reduction in overheads, which fully offset the absence of a US$9.2m disposal gain. Sales fell 19% to US$17.1m due to the uncertain and difficult market conditions, while gross margin improved to 29% (+1ppt) on a shift in sales mix. Management guides for challenging environment to persist. NAV/share at US$1.40.

*Health Management Int'l: 4Q15 net profit tumbled 38% to RM4.9m, while revenue rose 11% to RM106.2m, due to higher patient load and average bill sizes. However, bottom line was dragged by a 66% increase in admin expenses due to higher provision for doubtful debts, increased wage costs, as well as the absence of a RM2.2m write-back. First and final DPS of 0.75sen (FY15: nil) declared. NAV/share at RM0.296.

*iX Biopharma: Turned around to a 4QFY16 net profit of $0.4m (4QFY15: $2.9m loss), mainly lifted by a R&D tax incentive of $3.1m. However, revenue slid 24% to $1.7m on slumping chemical analysis business (-23%). Gross margin narrowed to 38.2% (-15.3 ppt) on higher staff cost related to clinical trials. NAV/share at 6.2¢.

*800 Super: 4QFY16 net profit soared 69.1% to $4.3m on lower input cost, as revenue firmed to $39.8m (+3.5%), thanks to increased pricing of existing projects and contribution from new ones. Proposed a higher final DPS of 2.5¢ (FY15: 2¢). NAV/share at $0.3939.

*Lasseters: Entered 55/45 JV with Paramount Corp to jointly own and develop a hotel in Glenmarie, Shah Alam, Malaysia, with total project cost of RM55m. The JV will collaborate with international hotel operator upon project completion.

*Chiwayland International: Successfully tendered for a 83,467 sqm land at Wuhan, Hubei, China.

*AGV: Placement of 26.9m new shares at $0.22 was fully subscribed and counter will commence trading at 9am today. The company is a provider of hot dip galvanising services to the steel and iron fabrication industries with a diversified client base. At listing price, it is valued at 16.6x trailing PE.

*Avi-Tech: Applied for removal from the SGX Watch-List.

Thursday, August 25, 2016


ISOTeam: (S$0.42) FY16 results disappoint but remain beneficiary of higher public spend
- FY16 results missed estimates with FY16 net profit of $9.2m (+13.6%)
- Revenue climbed 15.3% to $94.1m
- Gross margin expanded to 25.7% (+1 ppt) on the shift in its sales mix
- First and final DPS was raised to 0.75¢ from FY15’s 0.575¢ (adjusted for a 1:1 bonus in Feb ’16)
- Trading at 10.2x forward P/E based on FY17e net profit forecast of $11.7m

UG Healthcare

UG Healthcare: FY16 earnings boosted by FX gains; industry losing its lustre
-FY16 net profit $5.5m (+72.3%) - ahead of street estimate
-Revenue $58.8m (+5.5%) - Nitrile gloves (+5.9%), other products (+88.5%), latex gloves (-3.8%)
-Bottom line lifted by FX gains, associate contribution, and absence of IPO expenses
-Swung to net debt of $4.9m (FY15: $1.1m net cash), giving rise to net gearing of 12%
-Propose first and final DPS of $0.587¢ (FY15: nil)
-trading at 11.6x trailing P/E
-industry losing its shine - falling ASP as supply appears to have caught up with demand

SG Market (25 Aug 16)

SG Market: The Singapore market is still stuck in a holding pattern as investors look for new catalyst and direction amid rising geopolitical and security risks in north Asia.

Regional bourses opened lower in Tokyo (-0.2%), Seoul (-0.3%) and Sydney (-0.3%).

From a chart perspective, immediate resistance for STI is at 2,880 with underlying support at 2,830.

Stocks to watch:
*UG Healthcare: FY16 net profit of $5.5m (+72.3%) came ahead of street estimates, lifted mainly by FX gains. Revenue rose to $58.8m (+5.5%) from increased sales of nitrile gloves following the commencement of new production lines, which offset weak ASPs from latex gloves. While gross margin widened 0.9ppt to 21.6% on lower input cost, perating cash flow swung into negative $1.4m (FY15: $2m positive) on higher inventory and trade payables. Proposed first and final DPS of 0.587¢ (FY15: nil).

*ISOTeam: FY16 results missed despite delivering stronger net profit of $9.2m (+13.6%) on higher revenue of $94.1m (+15.3%), contributed by addition & alteration (+40%), coating & painting (+231%) segments, which pared by a decline in its repairs & redecoration (-26.1%) business. Gross margin expanded to 25.7% (+1ppt) on the shift in sales mix. First and final DPS raised to 0.75¢ from 0.575¢ (adjusted for 1:1 bonus) in FY15.

*Midas: Secured two contracts worth Rmb53.8m to supply aluminium alloy extrusion profiles for traincars, to be delivered across 2016 and 2017. Stock is trading at 17.1x forward P/E relative to historical average of 25.8x.

*China Everbright Water: Entered 60:40 JV with Jiangsu Zhongbo Investment Development to construct Phase 1 of the Nanjing Pukou Industrial Waste Water Treatment project. The 10,000 m3 daily capacity plant will have a concession period of 20 years and total investment cost of Rmb62m.

*Mapletree Industrial Trust: Credit ratings agency Fitch reaffirms the REIT's long-term issuer default rating at BBB+ with a stable outlook.

*Super Group: Substantial shareholder Sam Goi Seng Hui acquired 0.98m shares via the open market on 22 and 23 Aug at an undisclosed sum, lifting his stake from 15% to 15.09%.

Wednesday, August 24, 2016


SGX finetunes MTP requirements; reprieve for some
- Suspended its minimum trading price (MTP) rule possibly due to backlash
- SGX intends to add a market capitalisation criterion to MTP requirement, currently: six-month volume-weighted share price must fall below $0.20
- Notable companies already on the MTP list and would pass the new market cap requirement: China New Town Development, Chiwayland, Fu Yu, Rowsley
- Companies previously granted an extension to attain the previous MTP and would pass the new market cap requirement: Addvalue Tech, CDW, Geo Energy, ISR Capital, Nordic


Telecoms: Tougher quarters lie ahead in the domestic market
- While the three telcos reported largely in-line 2Q16 results, the going is about to get tougher
- Mobile – Pressured by voice-to-data phenomenon
- Pay-TV – OTT solutions bite
- Broadband – The only silver lining
- CLSA prefers Singtel (Outperform, TP: $4.43), reiterates Sell on M1 (TP: $2.34) and StarHub (TP: $3.31).


SMM: (S$1.325) Expensive stake acquisition in PPL Shipyard
-Sembcorp Marine will be acquiring the remaining 15% of PPL Shipyard that it does not own for US$115.1m.
-Although the transaction is priced at expensive 1x P/B, SMM could see the deal as strategic, as it now fully owns PPL Shipyard, which will make it easier for restructuring in the future
-Maybank KE has a Sell call on Sembcorp Marine with TP of $1.00.


SATS: Foray into Saudi is good, but not good enough
-SATS won tender to build and operate a new $40m cargo terminal in Saudi Arabia for 22.5 years.
-Maybank KE believes the expansion will add another growth dimension to the group
-Also opens opportunity for SATS to pursue passenger handling and inflight catering services in long term
-But this greenfield project is seen as riskier than group's previous expansion - mostly JVs and brownfield
-Assuming project at max capacity, earnings contribution to group may not be significant
-Recent strong price rally is stretching valuations - 22x FY17e P/E
-Maybank KE maintains the only Sell rating on the street with TP of $3.76

New Silkroutes

New Silkroutes (S$0.65): Surges 12% despite 4QFY16 net loss
- Announced this morning that it is on track to generate more than US$225m in revenue, a 4.5x jump from FY16's US$49.6m primarily due to its oil-trading business
- Growth to be debt-fueled. As at FY16, company in net cash position of ~US$3.5m
- Business to target buyers in Southeast Asia, North Asia, and Indian subcontinent.
- Started trading in China and Europe; to develop Malta into an energy trading hub between Asia and Europe.

Sheng Siong

Sheng Siong: (S$1.14) Aggressive price action; strategic shareholder emerging?
-Share price climbed almost 12% since start of the week
- Responding to queries whether Sheng Siong has received any shareholder offers have any inkling on who is buying their shares so aggressively, management indicated that it is not aware of the reason for the spike.
-Given Sheng Siong’s status as a defensive stock, unlikely is funds buying
- Since share price broke out of the consolidation range on 21 Jul, the volume has churned 89m shares or 5.9% of issued shares but no significant buyer has surfaced yet. What would be interesting if there is a corporation that is buying for strategic reasons.

SG Market Aug (24 Aug 16)

SG Market: Slight positive sentiment is likely to spill over to Singapore market on the continued improvement in the US economy, although outsized gains are not expected given the lack of fresh catalysts.

Regional markets opened mixed in Tokyo (+0.3%), Seoul (flat) and Sydney (+0.1).

From a chart's perspective, underlying support for STI is at 2,830, with resistance at 2,880.

Stocks to watch:
*Genting HK: 1H16 headline dived into net loss of US$53.6m from US$2.17b profit a year ago, mainly on the absence of an accounting gain from partial sale and reclassification of previous-associate Norwegian Cruise Lines. While revenue jumped 58% y/y to US$435.8m on full contribution of Crystal Cruises acquired in May '15, expenses swelled 73.1% on the consolidation of expenses from new businesses. NAV/share at US$0.64.

*SGX: Temporarily suspends its minimum trading price (MTP) rules to consider a $40m market cap criteria to its MTP watch-list, which if implemented in Jun 2017, would reduce the number of companies on the MTP list from 126 to 71.

*Sembcorp Marine/ Yangzijiang: Sembcorp Marine will be acquiring the remaining 15% stake in loss-making PPL Shipyard from PPL Holdings (45% owned by Yangzijiang) for US$115.1m or rather expensive 1x P/B given the industry downturn. This will enable the group to gain full control of the rigbuilder to optimally manage the business. MKE last had a Sell on Sembcorp Marine with TP of $1.00.

*GMG Global: Halcyon Agri launched a voluntary conditional general offer of 1 GMG share for 0.9333 new Halcyon Agri shares, as part of the consolidation deal between Sinochem International, Halcyon Agri and GMG. Post-deal, the enlarged entity is anticipated to be the world’s largest rubber supply chain manager.

*United Engineers: 67.6%-owned subsidiary disposed its entire 93% stake in agricultural seedling producer and distributor Suzhou Speedling, for Rmb5.5m ($1.1m).

*CNMC Goldmine: Received regulatory nod for the extension of the mining lease for Sokor Gold Field from 2018 to 2034. CNMC is required to pay a processing fee of up to RM20m for the lease extension.

*AusGroup: 4QFY16 profit warning on the depressed oil & gas sector. Group has decided to ceased operations for its Singapore fabrication and manufacturing business and sees more impairments ahead.

*New Silkroutes: 4QFY16 net loss deepened slightly to US$0.4m (4QFY15: US$0.3m loss), weighed by FV losses and increased professional fees. Revenue spiked 417% y/y to US$35m from higher sales of oil underpinned by its market expansion drive. NAV/share at US$0.275.

*Delong: Proposed to diversify its core operations of manufacturing hot-rolled steel coil to include investment business, and proposed an initial investment of Rmb60m for a 2% stake in China-based Qingdao Kutesmart, which engages in design and customisation of apparel via digital platforms.

Tuesday, August 23, 2016


SGX has reached agreement to acquire British maritime data supplier The Baltic Exchange in a bid to expand its revenue stream beyond the sluggish securities trading business.

The £87m ($153m) cash offer comprises £160.41 for each Baltic share, as well as a special dividend of £19.30/share, representing a steep valuation of 58.3x FY15 P/E and 3.4x P/B for the supplier of key shipping data, including the Baltic Dry Index, which is used to price freight and freight derivatives.

The acquisition will be implemented via a scheme of arrangement and SGX has received irrevocable undertakings from Baltic directors and certain shareholders representing 74% control to vote in favour of the deal.

SGX plans to develop new products and services and enhance Baltic's suite of shipping benchmarks by working more closely with Asian shippers and include their weightage in shipping indices.

Despite its monopoly in Singapore, we do not see any near-term catalysts for SGX given that measures to shore up liquidity and boost trading volumes have so far proven to be ineffective.

While SGX's forward P/E of 22.3x and dividend yield of 3.7% appear relatively cheaper than close peer HKEx (36.5x, 2.7%), the latter's valuation is backed by stronger growth prospects arising from its upcoming Shenzhen-HK stock connect link.

The street has mixed views on SGX, with 7 Buy, 8 Hold and 2 Sell ratings, and a consensus TP of $7.80.

SG Market (23 Aug 16)

Investors are likely to sit tight a they await further catalysts ahead of Fed Chair Janet Yellen's speech at Jackson Hole end of week.

Regional markets opened mixed in Tokyo (-0.3%), Seoul (+0.2) and Sydney (+0.2).From a chart's perspective, underlying support for STI is at 2,830, with resistance at 2,880.

Stocks to watch:
*SGX: Proposed acquisition of The Baltic Exchange for GBP87m (SGD153m), or 3.4x P/B, via a scheme of arrangement has received irrevocable undertakings from shareholders with 74% control following a unanimous decision by the Baltic board to recommend shareholders vote in favour of the deal.

*SATS: Awarded a tender to build and operate a $40m cargo terminal in Dammam for 22.5 years, becoming the first foreign firm to enter the Saudi Arabian air cargo market. When completed in 1Q19, the 20,000 sqm facility will be able to handle up to 150,000 tonnes of cargo annually. MKE last had a Sell with TP of $3.76 due to lofty valuations.

*Wing Tai: FY16 net profit crumbled 95% to $7.1m, widely missing estimates, in the absence of one-off fair value and disposal gains as well as tax adjustments. Revenue fell 20% to $544.5m due to a sharp drop in residential sales following some project completions last year. Declared final and special DPS totalling 6¢ (FY15: 3¢). NAV/share at $4.04.

*IPS Securex: FY16 net profit crept 0.5% higher to $2.3m, while revenue fell 18.5% to $12.8m, dragged by lower security solutions sales (-24.6%), as well as weaker maintenance and leasing (-7.3%) business. Bottom line was boosted by a $1.5m credit note received from supplier. Final DPS cut to 0.25¢ (FY15:0.75¢). NAV/share at 2.6¢.

*Broadway Industrial: Disposing its core foam plastics solutions and flow control device businesses to US-based private equity firm Platinum Equity for $150m, subject to fulfilment of seven conditions within six months. Upon completion, the group intends to pare down part of its debt and distribute the remaining proceeds as dividends. Pro forma FY15 NTA is estimated to rise from 34.53¢ to 38.09¢.

*City Dev: Divesting its entire 39% stake in Exchange Tower, a commercial property in Bangkok, Thailand, for Bt4.8b ($184m) to SCCP REIT.

*Riverstone: Constructing a new RM17m glove factory in Perak, Malaysia to expand annual production capacity by 1b gloves to 7.2b gloves, with completion expected in Jul '17.

*Yongnam: Acquiring three pieces of freehold industrial land totalling 10,324ha, in Johor, Malaysia, for RM46.7m ($15.6m). It intends to move the majority of its current factory operations to Malaysia from Singapore to alleviate labour costs.

*Chiwayland: Won the bids for 1) a 11,782 sqm land parcel in Wuxi City, and 2) a 34,180 sqm land parcel in Suzhou City, Jiangsu, China. Development for these land parcels are not expected to be completed before 2018.

*Chip Eng Seng: Awarded two contracts by HDB worth a total $191.9m to build 16 blocks of residential buildings and other community facilities over 47 months.

*Ley Choon: Award of contract by PUB worth $35.3m for the supply and installation of pipelines.

Monday, August 22, 2016


Ezion: (S$0.26) Substantial shareholder pares stake below key 5% mark- Wholly owned subsidiary of Commonwealth Bank of Australia, First State Investments (FSI), sold 3m shares for client funds at $0.29 apiece on 17 Aug, reducing its stake from 5% to 4.86% and ceased to be a substantial shareholder.
- This could be a negative signal for investors given that future stake par down(s) by FSI is/are no longer required to be disclosed under SGX rulings.
- Share price of Ezion has taken a beating since oil price tumbled in 3Q14.- However, counter remains one of the favourites in the O&G sector due to its relatively stronger balance sheet.
- Bloomberg consensus has 7 Buy and 4 Hold ratings with average 12-month TP of $0.37.

SG Market (22 Aug 16)

Singapore market will likely see light trading on a dearth of corporate news, while O&G counters are likely to push higher on the short-term uptrend in crude prices.

Regional markets opened mixed in Tokyo (+0.3%), Seoul (-0.4) and Sydney (flat).STI faces immediate resistance at 2,880, with underlying support at 2,830.

Stocks to watch:
*Sembcorp Marine: Acquiring naval architecture and engineering house LMG Marin for US$20m, to move up the value chain for the global offshore and marine sectors.

*Ezion: Wholly owned subsidiary of Commonwealth Bank of Australia, First State Investments, sold 3m shares for client funds at $0.29 apiece on 17 Aug, reducing its stake from 5% to 4.86% and ceased to be a substantial shareholder.

*Q&M: Board has approved the lifting of moratorium of 9.5m shares (1.2% share capital) held by Health Field Enterprises, which was allotted the shares as consideration for the acquisition of a 60% stake in Aoxin in Dec '13. Controlling shareholder Quan Min Holdings is currently in talks to buy over the said shares, which will lift its stake to 56.8% and intends to honour the moratorium till Nov '16.

*Best World: Received in-principle approval for its 1-for-4 bonus issue. Book closure date will be announced in due course.

*First Sponsor: Divesting a 70% stake in the Star of East River mixed-use project in Dongguan, China to Chinese developer China Vanke (55%) and Regent (15%), owned by Shu Zhen, CEO of its Guangdong operations for $339.8m Including loan assignment and shareholder loan to be injected by both parties. The group will retain a 30% stake in the project and book a net gain of $95.3m. Pro forma FY15 NTA is estimated to rise to $1.806 (+9.3%).

*KS Energy: 80.1% owned subsidiary KS Drilling secured a US$17.4m drilling contract for work in Indonesia, which is expected to commence in Jan '17 for 14 months.

*Swing Media: Entered non-binding MOU to acquire Grace Health Group, a company that owns ~7,000 wagyu cattle in Queensland, Australia. The company currently sells its produce domestically and intends to subsequently target the Greater China market.

Friday, August 19, 2016


Singtel: (S$4.23) AIS/Airtel acquisitions mildly accretive, exiting after a good run-up*-MKE has downgraded Singtel to Hold from Buy as valuations appear fairly valued after its 15% run-up ytd and against its revised TP of $4.41 (previously $4.69). -With the proposed $2.47b stake acquisitions of Intouch (21%) and Bharti Telecom (7.39%), focus could switch to its cash flows, which is short term negative, and could result in possible cut in forecast dividend rate. That said, the deal is marginally accretive.-Market Insight is also taking profit with a gain of 22.9% (including dividends) since our entry on 15 Jan '16, and exits its position from the Yield portfolio.


M1: (S$2.75) Locking-in gains as risk-reward appears less favourable after post-Brexit run-up*- Market Insight exiting the position in M1 from the Yield portfolio, locking in 6.7% gains (including dividends. -This is because despite lower risks of a fourth telco, valuations are not as appealing following the Brexit run-up. - If indeed a fourth telco does not materialise, M1 would enjoy a reprieve.- But if fourth telco does emerges, M1 would lose market share and see continued ARPU weakness

Capitaretail China Trust

Capitaretail China Trust: (S$1.61) Acquisition to ride on West China's growth- Acquiring Galleria, a mature retail mall in Chengdu, China, to latch on the city's high GDP growth.- The fully occupied asset will be purchased at market price of Rmb1.54b ($313.9m), or NPI yield of 5.4%. - The accretive acquisition will mainly be debt-funded (90%), with the remaining in cash. This is expected to raise CRCT's aggregate leverage ratio from 29% to 37%, on a FY15 pro forma basis.- Based on the pro forma FY15 DPU of 10.94¢, CRCT is trading at an implied yield of 6.8%, just above other retail REITs average of 6.7%.

SG Market (19 Aug 16)

SG MarketThe Singapore market remains directionless with few catalysts to sway sentiment, but O&M counters may get some relief from the 3% surge in oil prices.

Regional markets opened mixed in Tokyo (+0.5%), Seoul (flat) and Sydney (+0.3%).From a chart perspective, topside resistance for STI is at 2,880, with underlying support at 2,830.

Stocks to watch:
*CRCT: Acquiring Galleria retail mall in Chengdu for Rmb1.54b via debt (90%) and cash (10%). The property has 34,736 sqm of retail space that is currently fully leased. Post-acquisition, pro forma FY15 leverage is expected to climb to 37% from 29%, while DPU will rise 3.2% to 10.94¢.

*GLP: Signed a strategic partnership agreement with China International Marine Containers to develop logistics facilities and solutions in China. This adds to the group’s network in its logistics eco-system, expanding its customer base and strengthening its land sourcing capabilities.

*OUE: Successfully tendered for two land parcels at 28 Nassim Road for $56.6m, or $1,700 psf from the British government.

*Yanlord Land: Credit agency Moody's has placed Yanlord's current Ba3 corporate family and senior unsecured ratings on review for upgrade, prompted by stronger performance and credit profile.

*Soilbuild REIT: Launched 1-for-10 preferential offering at $0.63/unit (7.4% discount to last close) to part-finance acquisition of Bukit Batok Connection. Controlling shareholder Lim Chap Huat has undertaken to take up his pro-rata entitlement of 25.2% and excess unsubscribed units.

*Vard: Secured a contract to construct three module carrier vessels for national maritime shipping company of Kazakhstan, Kazmortransflot, for US$70m. Delivery is scheduled between 3Q17 and 1Q18.

*Super: Terminated a JV with WA Gourmet and two individuals due to a material breach of employment contract.

*Parkson Retail Asia: Narrowed 4QFY16 net loss to $12m (4QFY15: $59.8m loss) on 10.9% growth in revenue to $93.9m on stronger same stores sales growth in Malaysia (+21.5%), and Indonesia (+7.3%), partially pared by declines in Myanmar (-25%), and Vietnam (-4.1%). Bottom line was supported by the absence of closure costs of $68.5m recognised in 4QFY15. NAV/share at $0.24.

*Civmec: 4QFY16 net profit plunged to $1.5m (-77.4%), dragging full-year earnings to $17.4m (-42.5%). Quarterly revenue sank 23% to $88.4m on depreciation in AUD, weakening gross margin by 4.1ppt to 8.2%. Bottom line was further weighed by absence of a one-off tax gain. Maintained first and final DPS of 0.7¢. NAV/share at $0.3211.

*NauticAWT: Awarded a 2-year subsea engineering and installation contract involving 15 platforms in Indian waters. TheUS$2.5m contract is expected to commence in 4Q16.

*Interra Resources: Recommenced drilling in its 60%-owned Chauk oil field in Myanmar. Results of the drilling should be available in about six weeks.

*Otto Marine/ Hoe Leong: Otto Marine is suing Hoe Leong for an outstanding amount of US$0.9m. However, Hoe Leong believes it has abided by the terms of settlement.

Thursday, August 18, 2016


SMM: (S$1.325) Will Temasek use telco stake sale proceeds to privatise SMM?*-There is a plausibility that Temasek could use proceeds from stake sales to Singtel to privatise and restructure SMM.-Such a scenario makes sense as the shipyard business is a strategic industry for Singapore. This would buy time for SMM while waiting for industry recovery.-Currently, Temasek owns 49.5% of SCI, which in turn owns 61% of SMM. MKE postulates two possible privatisation options- Option 1: Temasek offers an all-cash offer for SMM with SCI undertaking not to sell its 61% stake. Temasek would end up having a direct 39% interest in SMM plus deemed interest through its stake in SCI. With 69.2% effective interest, Temasek would have sufficient control to restructure or develop SMM.-Option 2: Temasek makes an offer for 100% of SMM and support the rigbuilder financially. SCI can then focus on developing its utilities business. -Maybank KE currently has Sell ratings on SCI (TP $2.35) and SMM (TP $1.00)

SG Market (18 Aug 16)

SG Market: Singapore shares are likely to trade sideways with a positive bias after Fed FOMC minutes overnight offered little clues to future rate hike plans. Oil counters may pare losses amid sharp drawdown in US crude and gasoline stockpiles last week. Meanwhile, St. Louis Fed president James Bullard’s dovish comments on interest rates might bode well for REITs. Regional markets opened mixed, with Tokyo (-0.9%) and Sydney (-0.3%) weaker, and Seoul (+0.1%) marginally stronger.From a chart perspective, STI might see positive drift away from the 2,830 support, while resistance is seen at 2,900.Stocks to watch: *Macro: According to a MasterCard survey, consumer confidence dived 10.7 points to 33.6 in 1H16, a low since Jun '09.*Singtel: Signed conditional agreement to acquire stakes in Thailand’s Intouch (21%), and India’s Bharti Telecom (7.39%) from Temasek for a total of $2.47b. The deal will be funded by internal funds, debt, and placement of 386m new Singtel shares at $4.16/share. Acquisition is not expected to affect Singtel’s dividend policy.*GLP: Incorporated three subsidiaries in China, two of which, are for provision of distribution facilities, while the third is to undertake investment management.*United Global: Entered into a six-month MOU with Lighthouse Enterprise to explore collaboration opportunities, with the possibility of Lighthouse setting up a new lubricant oil blending plant in Myanmar with the group providing technical expertise. *Halcyon Agri: Cash offer of $0.75/share by parent Sinochem Int'l has received acceptances of ~50.3% and has become unconditional in all respects.Profit warning:Tiong Woon, Epicentre, Sin Heng Heavy Machinery

Wednesday, August 17, 2016


Singtel: (S$4.25) Revived talks on InTouch stake sale; bane or boon?
- Reportedly in talks with Temasek Holdings to acquire part of the latter’s 40.5% stake in InTouch Holdings
- If an agreement is reached, the deal could bring Singtel’s effective stake in AIS to 39.5% from a current 23%
- Maybank KE reckons that whether the potential transaction is positive or negative to Singtel will depend on the deal structure and pricing
- A foreign broker estimates that for earnings to be accretive, Singtel should not pay more than 7.5% premium to its current share price of Bt62.25.


Economy: Jul NODX contracts as exports to US, China plunge
-NODX -10.6% y/y in Jul (est:-2.5%), -2.5% in Jun
-NODX -1.8% m/m in Jul, -13% in Jun
-Significant drop in key markets: US (-19%), China (-17%), Indonesia (-23%)
-Electronics -12.9% (-1.7% in Jun), non-electronics -9.5% (-2.6% in Jun)
-Weak exports reaffirms MTI's downward revision of GDP growth forecast to 1-2% from 1-3%

SG Market (17 Aug 16)

SG Market: The Singapore market may tilt towards risk-off sentiment, taking cue from the retreat on Wall Street following hawkish comments from several Fed officials that voiced support for at least one interest rate hike this year.

Yields plays such as REITs and telcos could face some selling pressure after a recent run-up since late Jun.

Regional bourses opened mixed, with Tokyo (+0.1%) higher, but Seoul (-0.1%) and Sydney (-0.3%) weaker.

From a chart perspective, STI could pull back to lower end of 2,830-2,900 range.

Stocks to watch:
*Economy: Singapore Jul non-oil domestic exports fell 10.6% amid an uncertain economic landscape, dragged by a 12.9% contraction in electronics exports following a 1.7% decline in the previous month. With the exception of EU (+3%), exports to all major markets sagged, with Indonesia (-22.6%), US (-19.1%) and China (16.6%) dropping the most.

*Singtel: Reportedly interested to acquire part of Temasek's 40.5% stake in Thailand's Intouch Holdings, worth US$2.4b. Intouch owns 40.5% of Advanced Iinfo Services, Thailand's biggest telco and the deal would increase Singtel's current 23.3% holding in AIS. This appears at odds with faster growth opportunities in other regional markets such as Indonesia/India and its recent investments in the digital space.

*GLP: Selling 4 Japan properties to GLP J-REIT for ¥42.7b, representing 3% premium to internal valuation in Jun and a weighted average cap rate of 4.8%. Net sales proceeds will be used for reinvestment in Japan.

*Chip Eng Seng: Acquired SPP System, a private modular building construction company, for $1.8m.

*Otto Marine: Successfully defended itself against a US$8.9m claim. At the same time, it had initiated proceedings against Grupo Evya, claiming US$10.5m of unpaid hire with interest due.

*Serrano: Received a writ of summon filed by Maxcon Enterprise, which is suing the group for $0.7m plus interest for outstanding trade payables due in 2015 and 2016. The group is currently seeking professional advice and will update upon new developments.

*Lion Asiapac: Expects to book a 4QFY16 and FY16 net loss due to a plummet in turnover on declining demand as well as impairment losses on outstanding trade receivables.

Tuesday, August 16, 2016


Sunright: Share price up 17.5% on no company specific news.
Sunright provides burn-in, testing, and electronic manufacturing services to semiconductor and electronics manufacturers. Following the surge to $0.335/share, the counter is now valued at 12.6x

*Positive sentiment could flow towards closest peer Avi-Tech Electronics, the only other burn-in and testing EMS provider listed on SGX. Avi-Tech is currently trading at 7.1x.


KrisEnergy: (S$0.116) Struggling to stay afloat
- Share price has fallen 6.5% to $0.116 over the past two trading days, after company highlighted that its existing debt agreements could come under stress in the near term.
- Sparked fear for shareholders, particularly after the recent Swiber insolvency, that KrisEnergy could be the next victim of the sustained depressed oil market.
- KrisEnergy currently in talks with external parties to strengthen its capital structure.
- Keppel Corp is the company’s largest shareholder with 40%, giving sovereign fund Temasek an effective 8.3% stake in KrisEnergy, due to its 20.7% shareholding in Keppel Corp.
- At current prices, KrisEnergy is trading at a 70% discount (0.3x P/B) to its NAV/share at $0.4041, compared to upstream E&P peers Ramba (1.5x), Interra Resources (0.7x) and Rex (0.3x).


Spackman Entertainment: Most recent announcement was on 25 Jul when Alibaba Picutres purchased the rights to distribute Spackman's "Life Risking Romance" in movie theatres and on online platforms in China.

Also, Spackman's "The Last Princess" is performing relatively well in Korean box office, earnings a total of US$25.7m (week 1: US$12.4m) over the last two weekends. The movie's production budget was US$9.5m.

For comparison, Spackman's previous movie, "The Priest" scored US$34.7m in box office receipts with production budget of US$5.9m over its entire release period.

Spackman is testing a key resistance level this morning:
- Hit a high of $0.088, now trading at $0.087, +7.4% this morning.
- Immediate resistance at $0.088, followed by $0.095.
- Support at $0.081, followed by $0.076

SG Market (16 Aug 16)

SG Market: Singapore shares may get a slight lift from the record highs on Wall Street and oil price rally but upside likely to be capped as investors await FOMC meeting minutes this Wed for clearer guidance as 2Q corporate results wind down to an end.

Regional bourses opened mixed in Tokyo (+0.1%), Seoul (+0.5%) and Sydney (+0.1%).

From a chart perspective, STI is still consolidating within the 2,830-2,900 trading range.

Stocks to watch:
*Telecoms: Aspiring 4th mobile network operator (MNO) Consistel has been fined for a licence breach relating to an unauthorised ownership transfer of the Sports Hub wireless communications system. While the breach does not automatically disqualify Consistel from its MNO application, this incident might spoil its chances of securing a license. M1 (Hold, TP: $3.09) will be the main beneficiary if there is no new entrant, given that most of its earnings are derived from the mobile segment.

*KrisEnergy: Exploring equity raising and asset sales to raise up to $201m to ease its financial strain after it warned that some debt convenants may come under stress. The group has two outstanding bonds - $130m 6.25% notes due Jun '17 and $200m 5.75% notes due Aug '18. Keppel owns 40.5% of the oil explorer, which reported 2Q16 loss of US$25.2m and a negative working capital position. NAV/share at $0.4041.

*Centurion: Disclosed that its application to increase the number of beds at its Toh Guan worker dormitory by 10% to 8,628 beds has been denied due to a discrepancy in its reported and actual bed capacity. The group intends to appeal against the decision, failing which it will have to shift excess workers out from the dormitory accordingly.

*Hock Lian Seng/Sembcorp Industries: 60:40 JV has secured a massive $1.11b project for runway development works at Changi Airport, to be completed by 2020. This will lift Hock Lian Seng's order book to $980m.

*Geo Energy: CFO of 5.5 years Tan Cheang Shiong has resigned with immediate effect.

*Eu Yan Sang: Closing date for takeover offer from Righteous Crane at $0.60/share has been extended till 29 Aug. As at 15 Aug, the offeror has received valid acceptances of 83.6%.

*CNMC: Substantial shareholder Ng Eng Tiong pared 0.6m shares at an average $0.545 on 11 Aug, reducing his stake from 12% to 11.9%.

*Sing Medical: Independent Director Jimmy Yim sold 0.5m shares on 15 Aug at $0.325 each via the open market, paring his stake from 0.62% to 0.44%, after the stock skyrocketed 104% since the start of Aug.

*United Global: Entered MOU with lube manufacturer and trader PT Pacific Lubritama Indonesia to explore collaboration opportunities, including the possibility of a stake acquisition in the Indonesian company.

Monday, August 15, 2016


Japfa: (S$0.81) 2Q16 profit surge on Indon market recovery; which could be short-lived-2Q16 headline net profit surged to US$44.6m (2Q15: US$3m), thanks the continued recovery in the Indonesia poultry business. - Excluding FX, core net profit of US$51.9m (+194.4%) was its best quarterly results since 2013.-Management is cautious towards policy shifts that could impact competitive landscape.-A culling program has also been stopped in light of a case brought against Japfa and 11 other poultry companies. The halt of the program may bring back supply demand imbalance of day-old-chicks.- Trading at 10.4x FY16e P/E based on a single broker’s estimate


Saizen: Announced details of a proposed RTO of Australian industrial assets.
1) Unitholders will be getting a residual liquidation amount of 9.87¢/unit.
2) A unit of Sime Darby (SDPSL) will pay Saizen X amount for new units, which will be issued at 3.484¢/unit. As a gauge, SDPSL has applied for a whitewash waiver if their stake crosses above the 30% mark, on an enlarged basis.
3) The REIT will then use this cash from SDPSL to pay for part of the acquisition, with the remaining to be debt-funded/further issue of Saizen units.

As limited info is provided in the announcement at this point (number of units to be issued to SDPSL), we are not able to ascertain a value on Saizen.


UMS: 2Q16 earnings missed but attractive yields still intact
-2Q16 net profit $6.5m (-22%) - missed street estimate
-2Q16 revenue $23.6m (-24%) - sales for semicon integrated system (-15%), and components (-31%) weakened
-maintains interim DPS of 1¢
-Outlook positive as major cust. Applied Materials announced it received highest orders in 15 years
-Management is cautiously optimistic that FY16 will be a profitable year
-trading at 12.1x FY16e P/E and remains on track to offer 10.1% dividend yield in FY16
-Sits in Market Insight Yield Portfolio

Indofood Agri

Indofood Agri: (S$0.465) 2Q16 dragged by adverse effects of dry weather
- 2Q16 swung into core net loss of Rp11.6b (2Q15: Rp24.6b profit), bringing 1H16 loss to Rp79.7b (1H15: Rp117.1b profit). a far cry from FY16 consensus estimate of Rp446b.
- Revenue slumped 13.7% y/y to Rp3.57t, weighed by lower palm production arising from the impact of the El Nino in 2H15.
- Going forward, IFAR will be building three new mills in Malaysia to raise CPO production, as well as expanding two existing mills to increase FFB production capacity.
- At the current price, IndoAgri trades at a forward P/E of 15.2x. The street has 3 Buy, 4 Hold and 4 Sell ratings on the counter with average TP of $0.47.

First Resources

First Resources: (S$1.665) Weak 2Q16 largely priced in
- 2Q16 missed estimates, with 1H16 earnings of US$31.5m (-36.2%) making up just 29% (1H15: 46%) of FY16 street estimates.
- For the quarter, while revenue rose 14% to US$135.4m due to better sales from refinery and processing (+51%), this was partly offset by reduced production volume and yield from adverse effects of El Nino.
- FFB harvested fell 15.6% as FFB yields fell to 3.4 tonnes/ha (2Q15: 4.4 tonnes/ha), which resulted in a 20.3% drop in CPO production to 126,550 tonnes.
- Management cut its interim DPS to 0.625¢ (1H15: 1.25¢).
- Consequently, Maybank KE has revised down its FY16-18 earnings by 6-23%. Maintains Buy with TP of $1.80.

Haw Par

Haw Par: (S$8.93) 2Q16 profit hit by reduced investment income; stable core operations
- 2Q16 net profit plunged 58.3% to $48.4m on a sharp drop in investment income and associate contributions
- Revenue was 2.8% higher at $52.6m on stronger contributions from its leisure and property business arms, partially offset by a marginal decline in its healthcare business.
- Despite the weaker profit, the group hiked interim DPS to 10¢ (2Q15: 6¢), indicating a 12-month trailing yield of 2.7%, excluding 4Q15’s special DPS of 16¢.
- On the outlook, management opines that its investments will continue to be affected by gyrations in financial markets
- Notably, its equity stakes in listed companies have a combined market value of $1.72b, compared to Haw Par’s market cap of $1.95b. This excludes next cash of $270.6m as well as valuations for its core businesses.


Cogent: Superior 2Q16 margin; awaiting catalyst
-2Q16 net profit $7.9m (+35%)
-2Q16 revenue $33.8m (+6%)
-Operating margin expanded 5.9ppt to 30.8%, higher than peer average of 10.5%
-Upcoming catalyst would be JTC approval to build another iconic logistics hub in Jurong Island
-Trading at 11x trailing P/E vs. avg. 13x for other SG small caps with comparable margins and ROE
-Sits in Market Insight Value Portfolio


ComfortDelGro: 2Q16 earnings in line but may sputter over next two years
-2Q16 net profit $85.5m (+5.3%) - in line with consensus estimate
-2Q16 revenue $1.02b (-1.4%) - dragged by FX translation loss
-excluding FX, revenue grew 0.3% on higher rail ridership and taxi rentals
-Operating margin widened 0.4ppt to 12% on lower operating costs
-Raised interim DPS by 0.25¢ to 4.25¢
-Maybank KE expects rail profit margin to shrink and taxis to come under more pressure from private hire-cars
-House cut FY16-18 earnings by 10-15%. Maintain Hold but cuts TP to $2.63 from $2.80


KrisEnergy: Counter down 2.4% to $0.121. May see further downside after company cited that existing debt agreements could come under stress in the near term as weaker oil markets hit revenue.
NAV/share at $0.4041, translating to 0.3x P/B, compared to upstream O&G peers Ramba (1.5x), Interra Resources (0.7x) and Rex (0.3x).

Ying Li

Ying Li: (S$0.138) 2Q16 dragged by higher profit share to NCI; sanguine outlook
- Ying Li's 2Q16 net profit tumbled 43.7% to Rmb5m, mainly dragged by higher profit share to minority interest.
- 1H16 earnings Rmb21.8m (+158.6%), 13% (1H15: 6.6%) of FY16 street estimate.
- 1H16 top line (+31.6%), buoyed by growth in property development (+77.6%) and rental income (+2.7%).
- Residential project Lion City Garden in Chongqing continues to see healthy demand.
- Three other commercial projects remains on schedule to be completed between this year up to 2021, which should bolster revenue visibility over the next five years.
- Chongqing's underlying demand for residential/commercial assets is underpinned by the continued rise in GDP growth of 10.6% in 1H16 (1H15: 6.7%), making it the top city in terms of growth, compared to the national average of 6.7%.
- At the current price, Ying Li is valued at an attractive 0.36x P/B.

SG Market (15 Aug 16)

SG Market: The market likely to trade sideways following disappointing US economic data on Fri and lacklustre 2Q results, as investors look to US consumer prices and Fed minutes, Japan’s 2Q GDP figures and S’pore NODX this week for direction.

Regional bourses opened lower in Tokyo (-0.3%), while Sydney is flat. Seoul market is closed for public holiday.

From a chart perspective, STI could be range bound between 2,830 and 2,900.

Stocks to watch:
*ST Engineering: 2Q16 results broadly met expectations. Net profit of $127.3m (+1.8% y/y) was boosted by a one-off divestment gain and increased government grants. Revenue grew to $1.62b (+5.1%) thanks to aerospace (+20%) and electronics (+8%) segments, but EBIT margin slipped 1.3 ppt to 8.4% on higher acquisition expenses. Order book remained at $11.6b (1Q16: $11.5b), but management guided for a muted 2H outlook with weaker contributions from aerospace and land systems. Interim DPS of 5¢ was maintained. MKE has a Hold with TP of $3.17.

*ComfortDelGro: 2Q16 results met street estimates as net profit of $85.2m (+5.3%) was bolstered by lower fuel and power costs. Revenue slid 1.4% to $1.02b largely from a FX translation loss and lower average bus fares (-4.6%), although mitigated by a larger taxi fleet and higher ridership in the rail segment. Interim DPS raised by 0.25¢ to 4.25¢. NAV/share at SGD1.081.

*Jumbo: 3QFY16 net profit doubled to $3.4m (+101%), bringing 9MFY16 earnings to $11.3m (+55.8%) or 68% of full year consensus forecast. Revenue rose 13.8% to $32.7m on maiden contribution from two outlets in Shanghai and increased takings at the remaining outlets, while gross margin remained stable at 62.9 (+0.1ppt). However, valuations have caught up and MKE downgraded the stock to a Hold with TP of $0.69.

*Pacific Radiance: Reversed into a 2Q16 net loss of US$57.7m (2Q15: US$2.2m profit) after it was hit by an impairment charge (US$42.2m). This took 1H16 net loss to US$64.5m (2Q15: US$4.7m profit) vs full year loss estimate of US$7.6m. Revenue sank 42% to US$20m, dragged by lower utilisation and charter rates for offshore support vessels due to the weak environment. NAV/share at US$0.477.

*CWT: 2Q16 missed as net profit slumped 48% y/y to $13.6m, on lower revenue of $2.37b (-15%) due to a drop in both commodity prices and trading volume. EBIT margin narrowed 0.3ppt to 1% on higher unrealised marked-to-market losses of commodity contracts and impairment on trade receivable. No interim DPS declared (1H15: 3¢). Negotiation on potential stake sale by controlling shareholder C&P to China's HNA Group remains on-going. NAV/share at $1.347.

*United Engineers: 2Q16 net profit fell 25% y/y to $8m on absence of a divestment gain at its JV. Revenue slid 46% to $142.2m due to weaker contributions from its property rental & services (-2%), property development (-82%), and manufacturing (-11%), partially mitigated by growth in its engineering & distribution (+13%) segments. Gross margin improved to 31.9% (+15.4 ppt) on a shift in sales mix. NAV/share at $2.84.

*Haw Par: 2Q16 net profit plunged to $48.4m (-58.3%) on sharp drop in investment income (-29.4%) and associate contribution (-99.8%) due to the absence of disposal gains and the reclassification of HK-listed Hua Han as an available-for-sale asset. Revenue edged higher to $52.6m (+3%) from improvement in property and leisure segment, but gross margin narrowed 1.9ppt to 59.4%. NAV/share at $10.67.

*Ho Bee Land: 2Q16 in line; net profit jumped 2.5x to $42m, as revenue soared to $175.5m (+464.2%) on sales recognition of two completed residential development projects in Australia. Operating margin collapsed 48.7ppt to 29.5% on a $11m FX swing to $8m loss, but partially negated by a turnaround in associates and JVs contribution to $8.2m (2Q15: $1.3m loss). NAV/share at $4.13.

*Halcyon Agri: 2Q16 results swung to a net loss of US$8m (2Q15: US$3.2m) as revenue fell 33.4% to US$198.6m on lower selling prices and volumes (-21.3%), partially due to a self-impose rubber export restriction by the government of various ASEAN nations in Mar '16. Bottom line was also weighed by one-off professional fees amid on-going merger with Sinochem and GMG Global. NAV/share at US$0.1971.

*UMS: 2Q16 missed; net profit slid 22% to $6.5m on a softer revenue $23.6m (-24%), weighed by lower semiconductor integrated system sales (-15%) in Singapore, and weaker component sales (-64%) in US. Interim DPS maintained at 1¢. NAV/share at $0.4467.

*Tat Hong: 1QFY17 met although it recorded a net loss of $3.6m (1QFY16: $2.8m profit) on absence of PPE disposal gain. Revenue fell 16% y/y to $116.7m, undermined by subdued crane rental (-23%) and crane distribution (-21%) businesses. NAV/share at $0.91.

*Tianjin Zhong Xin: 2Q16 net profit climbed to Rmb139.1m (+16%) on a turnaround in associate contribution to Rmb36.3m (2Q15: Rmb26.8m loss). Revenue slipped 8% to Rmb1.6b, which gross margin lowered by 3.5ppt to 28.9%. NAV/share at Rmb5.27.

*Wheelock Properties: 2Q16 net profit doubled to $35.3m, as revenue surged to $300.9m (+275.5%) on increased unit sales at Ardmore Three and The Panorama. Gross margin shrank 15.2ppt to 15.8%. NAV/share at $2.48.

*First Resources: 2Q16 missed with net profit of US$5.3m (+4.2%). While revenue rose 14% to US$135.4m due to better sales from refinery and processing (+51%), this was partly offset by reduced production volume (-15.6%) and yield from adverse effects of El Nino. Accordingly, gross and EBITDA margins contracted to 41.7% (-4.7ppt) and 39% (-7ppt). Interim DPS cut to 0.625¢ (1H15: 1.25¢). NAV/share at US$0.51.

*Indofood Agri: 2Q16 swung into core net loss of Rp11.6b (2Q15: Rp24.6b profit), as revenue slumped 13.7% y/y to Rp3.57t, weighed by lower palm production arising from the impact of the El Nino in 2H15. Gross margin expanded to 20.2% (+1.4ppt) on a shift in sales mix towards the more profitable downstream segment. NAV/share at Rp8,193.

*Ying Li: 2Q16 below estimates as net profit tumbled 43.7% y/y to Rmb5m, dragged by higher share of profit attributed to non-controlling interest of Rmb3.3m (2Q15: negative Rmb0.3m). Revenue spiked 73.1% to Rmb169.3m due to progressive recognition of residential units at Sa Yan Wan Phase 2, while gross margin slid 25.8ppt to 40.5% on a shift in sales mix towards less profitable units handed over, as well as the absence of a one-off consultancy income. NAV/share at Rmb1.94.

*Midas: 2Q16 net profit of Rmb18.7m (+61.8%) below expectations, boosted by a 53.5% surge in associate contribution. Revenue edged higher to Rmb$382.8m (+2.3%) on higher sales for its aluminium alloy extruded products, while gross margin was stable at 27.8% (+0.1 ppt). No interim DPS was declared (2Q15: 0.25¢). Management remains sanguine on industry tailwinds.

*SIIC Environment: 2Q16 missed; net profit of Rmb101.2m (+21.8%) was lifted mainly by a VAT refund, while revenue (Rmb556.3m, +33.5%) was lifted by more construction activities. Gross margin contracted to 34.5% (-9ppt) due to a shift in mix. NAV/share at Rmb2.56.

*Cogent: 2Q16 net profit jumped to $7.9m (+35%) on a firmer revenue of $33.8m (+6%), driven by warehousing, automotive logistics, and container depot operations. Operating margin widened 5.9ppt to 30.8% on lower rental, fuel costs, as well as crane hiring expenses. NAV/share at $0.2307.

*Boustead Singapore: 1QFY17 net profit expanded 11% y/y to $7m, boosted by FX gain of $0.5m (1QFY16: $2.4m loss). However, revenue fell 3% to $113.7m primarily dragged by a 24% decline in its energy-related engineering division. NAV/share at $0.59.

*Japfa: 2Q16 net profit surged to US$44.6m (2Q15: US$3m), buoyed by higher revenue (US$782m, +11%) and gross margin expansion (24.4%, +7.1ppt), thanks to a better pricing environment in the Indonesian animal protein segment, as well as lower feed costs. NAV/share at US$0.42.

*BHG Retail Trust: 2Q16 DPU of 1.35¢ was 3.8% higher than IPO forecast, although revenue of $15.4m (-4.2%) fell short, due to VAT reforms and weaker CNY against SGD. Portfolio occupancy fell 0.4ppt q/q to 97.9%, with WALE of 9.2 years. Aggregate leverage stood at 29.4%. NAV/unit at $0.80.

*Food Empire: 2Q16 net profit dived 74.2% y/y to US$1.8m on slump in operating margin (-5.3 ppt to 0.6%). Revenue dropped 5.5% to US$53.4m on declines in Russia (-12.9%), Ukraine (-19.6%), and Central Asia (-12.3%), partially mitigated by growth in its IndoChina (+40.1%) markets.

*Macro Polo Marine: 3QFY16 swung into net loss of $6.4m (3QFY15: $0.3m profit), as revenue fell to $9.1m (-59%) on lower fleet utilisation and charter rate due to weakened shipping demand. Gross margin crashed to 2.14% (-26ppt), while a $2.9m FX loss dragged operations into losses of $6.6m (3QFY15: $1.8m profit). NAV/share at $0.499.

*Vallianz: 2Q16 net profit slid 12.9% y/y to US$4m due mainly to a one-off impairment charge of US$1.6m in relation to Swiber. Revenue of US$63.7m (-2.1%) was dragged by absence of contributions from ship management projects in Latin America and lower charter rates, while gross margin contracted to 25%. NAV/share at US6.91¢.

*Swissco: 2Q16 results fell to a net loss of US$2.1m (2Q15: US$13.2m profit) after revenue dived to US$5m (-72.8%), as there was zero contibution from drilling business, and OSV segment (-35%) deteriorated on lower charter rates and utilisation. NAV/share at US$0.3480.

*Nordic: 2Q16 net profit grew 19% y/y to $3.1m, on revenue of $21.8m (+4%), due to contribution from Austin Energy acquired in Jun ’15, which offset lower sales in maintenance services (-20%). Gross margin improved to 31% (+5 ppt) on a change in sales mix. Interim DPS increased to 0.5372¢ was declared (2Q15: 0.4¢). NAV/share at $0.156.

Friday, August 12, 2016


Yanlord: Strong sales momentum in 2Q16 results
-2Q16 net profit Rmb323.9m (+89%)
-2Q16 revenue Rmb7.4b (+3x) on increased GFA delivered (+197%) and higher ASP (+12%)
-Bottom line pared by small gross margin, FX loss, and absence of land divestment gains
-Unbooked pre-sales Rmb28.88b as at Jun '16
-Management remains positive on outlook amid healthy demand in China
-Trading at 0.58x P/B and 8.2x FY16e P/E


Wilmar: 2Q16 earnings rotted on one-off blunder; outlook intact
-2Q16 core net loss US$220.3m (2Q15: US$185m profit)
-2Q16 revenue US$9.37b (+0.9%) - tropical oil (+3%0, oilseeds and grains (+1%), sugar (+8%)
-Bottom line hit by untimely soybean purchases and bad weather affecting its sugar crop
-Net operating cash flow bled almost 3x faster to US$625.3m (2Q15: -US$213.5m)
-Maintained its interim DPS of 2.5¢
-Management believes outlook remains intact and resilient
-Trading at 15.3x forward P/E. Downside risk may be limited as bad news appear to have been priced in


Cityneon: (S$0.98) Stellar 1H16 performance, third movie franchise eyed- 1H16 results blew past expectations with net profit of $4.7m (1H15: $0.7m loss) - Revenue growth was mainly derived from maiden royalty/licensing fee income of $10.2m from Victory Hill Exhibitions acquired in Sep ’15- Moving forward, recent additions to its creative team marks its clear intention of expanding its portfolio- In light of 1H16’s outperformance, we are expecting the street to adjust their earnings forecasts upwards with positive revisions to the consensus TP of $1.10


Noble: 2Q16 results slumped into the red on working capital constraints -2Q16 net loss US$54.9m (2Q15: US$62.6m profit)-2Q16 revenue US$12.5b (-32%) - limited to working capital to boost liquidity-Worst performing segments were energy and mining & metals -adjusted net debt crept higher to 41.5% (1Q16: 40.3%, FY15: 40.7%)-liquidity headroom halved to US$0.8b (1Q16: US$1.9b)-Trading at 0.2x P/B. Several brokers appear to have cease coverage.


YuuZoo ($0.161) Phenomenal 2Q16 profit growth but where is the cash flow?-YuuZoo’s 2Q16 headline net profit surged to $14.2m from a low base (2Q15: $1.3m)-Revenue soared 235% to $35.8m, of which $17m was from non-cash franchise revenue -Balance of revenue from ecommerce segment which is barely breaking even.-Management believes its unique platform gives them competitive advantage. However, distrupting social media/e-commerce/payments giants such as Facebook, Alibaba, and PayPal will be tall order

Super Group

Super Group: (S$0.77) Uninspiring 2Q17 results with slightly bitter aftertaste
- 2Q16 results came in below expectations as net profit slipped 6.6% to $9.8m
- Revenue fell a sharper 8.4% to $115m on softer sales in branded consumer (-6.3% to $75m) and food ingredients (-12.1% to $40m)
- Gross margin expanded to 37.3% (+1.8 ppt)
- Maybank KE notes that the surprise weakness in its Myanmar operations stemmed from price discounts offered to its main distribution partner to tide it through the slump in the kyat.
- MKE notes that the upcoming 3Q16 is seasonally weaker and with economic conditions worsening, competition could rise if demand continues to be lacklustre.
- The stock has limited near term catalysts as reflected in street ratings comprising 1 Buy, 7 Holds, and 1 Sell with consensus TP of $0.87.


GLP: (S$1.915) 1QFY17 earnings dragged by FX and revaluation gains
- Headline net profit slipped 24.3% to US$202.9m largely on FX losses of US$33.1m (1QFY16: US$0.1m) and lower revaluation gains.
- Core net profit slumped 31.8% to US$38.6m, making up 15% of FY17 street estimate.
- Revenue rose 8.6% on 1) completion and stabilisation of development projects in China with increasing rents, 2) higher management fee income from the inclusion of GLP US Income Partners II and 3) growth in development activities in Japan.
- Overall leasing demand remained stable. Lease ratio at 91% (-1% q/q). Rental growth of 9.6% led by US and China.
- GLP has achieved 20% of its full year target for development starts.
- Stock currently trades at 0.73x P/B. The street is relatively bullish on the stock with 12 Buy, 3 Hold, and 1 Sell ratings and consensus TP of $2.20.

SG Market (12 Aug 16)

SG Market: Positive sentiment is expected to spill over to the Singapore market as crude prices surged following bullish remarks by a Saudi oil minister and IEA on a rebalancing of the oil market.

Regional bourses are up in Tokyo (+0.5%), Seoul (+0.5%), and Sydney (+0.6%).

STI faces immediate resistance at 2,900, with downside support at 2,830.

Stocks to watch:
*GLP: 1QFY17 core net profit (ex. revaluation) slumped 31.8% to US$38.6m, making up 15% of FY17 street estimate. Revenue rose 8.6% to US$206.6m on completion and stabilisation of development projects in China with increasing rents, higher management fee income from the inclusion of GLP US Income Partners II, and growth in development activities in Japan but EBIT fell 14% due to lower fair value gains. Met 20% of development starts. NAV/share at US$1.94.

*Olam: 2Q16 results above estimates as core net profit rose 19.2% to $114.8m, on revenue of $4.98b (+3.5%), buoyed by new acquisitions in the food category (+2.9%) and higher cotton volumes from its non-food segment(+7.2%). EBITDA margin expanded to 6.3% (+0.3ppt), while bottom line was lifted by lower finance costs (-9.3%) due to debt optimisation initiatives. NAV/share at $1.65.

*Noble: Swung to 2Q16 net loss of USD54.9m, as revenue tanked 32% on lower tonnage (-17.3%). Operating margin contracted 0.4ppt to 1.4%, while bottom line was weighed by a fall in fair value gains of commodity contracts. Operating cash flow remained negative, with a higher adjusted net debt of US$2.58b (1Q16: US$2.29b; FY15: US$2.26b), while liquidity headroom halved to US$0.8b from US$1.9b in 1Q16 on the reduced credit facility. NAV/share at US$0.52.

*Wilmar: 2Q16 core net loss of USD220.3m was flagged earlier as EBITDA margin collapsed to 0.4% (-4.3ppt) due to untimely purchases of soybeans, as well as delayed sugar harvests plus hedging losses. Revenue inched up to US$9.4b (+0.9%) on better trading volume. Interim DPS of 2.5¢ maintained. NAV/share at US$2.225.

*Golden Agri: 2Q16 in line; net profit rose 278.6% to US$39.5m, lifted mainly by tax credits due to an asset revaluation. Revenue slipped to US$1.74b (-4.9%) mainly on lower production yield, while EBITDA margin contracted to 4.9% (-3ppt) dragged by compressed refining margin and increased purchase cost of soy beans. NAV/share at US$0.30.

*ThaiBev: 2Q16 net profit slipped 1% y/y to Bt5.81b, dragged by a 66.4% slump in contribution from associate (F&N/FCL). Revenue grew 17% to Bt45.45b on stronger sales in all segment- spirits (+0.7%), beer (+69.4%), non-alcoholic beverages (+3.3%) and food (+4.8%). However, EBITDA margin contracted to 18.5% (-3 ppt) on weaker contributions from both its F&N/FCL associate (-58.1%) and increased raw material costs in the non-alcoholic beverage (-73.7%) segment. Interim DPS raised to Bt0.2 (1H15: Bt0.15).

*Super Group: 2Q16 net profit of $9.8m (-6.6% y/y) missed estimates, on lower revenue of $115m (-8.4%) due to weaker contributions from branded consumer (-6.3%) and food ingredient (-12.1%) segments. Bottom line was further dragged by increased operating expenses (+7.3%), which resulted in lower EBIT margin of 10.2% (-2.1 ppt). Interim DPS of 1¢ maintained. NAV/share at $0.455.

*Yanlord: 2Q16 missed despite higher net profit of Rmb323.8m (+89%), as revenue more than tripled to Rmb7.4b (2Q15: Rmb2.3) on increased GFA delivered to customers and sale of higher-priced properties. Bottom line was pared by lower gross margin of 20% (-15ppt) and JV losses amid absence of land sales. NAV/share at Rmb10.56.

*Riverstone: 2Q16 net profit of RM27.3m (+1.2%) missed. Increased revenue of RM156.7m (+21.5%) was negated by lower gross margin of 24.4% (-5,7ppt), due to raw material and FX fluctuations, gas and wage hikes in Malaysia and a more competitive environment. Interim DPS lowered to 1.3sen (1H15: 2.4sen). NAV/share at RM0.6643.

*Wheelock Properties: 2Q16 net profit increased 3.4% to $13.2m, boosted by a jump in associate contribution of $11m (2Q15: $1m), thanks to higher profit from d’Leedon condominium at Farrer Road. Revenue fell 20.8% to $129.7m mainly on reduced contribution from Tomlinson Heights condominium and softer takings at Maldives resorts. NAV/share at $3.25

*Q&M: 2Q16 core net profit of $3.7m, (+95.7%) at the lower range of estimates. Revenue jumped 25.6% to $38.3m on contribution from acquisitions of dental clinics in Singapore and China. Interim DPS of 0.42¢ maintained.

*Sino Grandness: 2Q16 net profit jumped 25% to Rmb157.7m on firmer revenue of Rmb1.13b (+22.1%), led by increased sales from canned products (+28%) and beverage (+27%) segment in China. Gross margin stable at 41.8% (-0.1ppt). NAV/share at Rmb3.469.

*Cityneon: 1H16 results beat expectations as it marked its return to black with net profit of $4.7m (1H15: $0.7m loss). Revenue rose to $46.3m (+13.8%) on maiden contribution from recently-acquired Victory Hill Exhibitions, which helped expand gross margin to 38.8% (+15.3 ppt). NAV/share at $0.26.

*ISEC: 2Q16 net profit surged 47% y/y to $1.7m, while revenue increased 11% to $8.2m, boosted by new acquisition Southern Specialist Eye Centre which offset the cessation of a clinic at Mount Elizabeth Novena Specialist Centre. Gross margin expanded to 47.5% (+0.8%). Interim DPS of 0.22¢ maintained. NAV/share at $0.11.

*Singapore O&G: 1H16 net profit surged 90.7% y/y to $5.2m on revenue of $13.9m (+80.5%), led by contribution from its new dermatology segment ($4.3m), on top of increased patient loads for its O&G and oncology segments. Operating margin widened to 44.4% (+2.4ppt) as expenses expanded at a slower pace than topline growth. Declared higher interim DPS of 1.53¢ (1H15: 0.88¢). NAV/share at $0.175.

*Yongnam: 2Q16 net profit dived 91.8% to $0.2m, even though revenue leapt 19.2% to $84.3m, with stronger contribution from both structural steelworks (+21.4%) and mechanical engineering (+13.8x) businesses. Gross margin shrank 1ppt to 8.7%, and bottom line was further hit by a spike in admin expenses (+56%). NAV/share at $0.9419.

*Courts Asia: 1QFY17 net profit surged 55.8% y/y to $9.4m, although revenue fell 0.9% to $196.3m, as lower Malaysia contributions were offset by Indonesia growth. Bottom line shored by gross margin expansion (36.1%, +1.6ppt), higher rental and interest income, and lower expenses. NAV/share at $0.568

*SBS Transit/SMRT: Entered into public bus services contracts with LTA for the operation of public bus services under the Bus Contracting Model. SBS will be paid fees totalling ~$5.32b by LTA for eight bus packages which average seven years.

Thursday, August 11, 2016

IREIT Global

IREIT Global: 2Q16 DPU in line and backed by long term German leases
-2Q16 DPU 1.6¢ (+45.5%) - in line with street estimate
-2Q16 distributable income €6.4m (+47%), revenue €8.5m (+57%), NPI €7.6m (+57%)
-Growth was driven by Berlin Campus, an office property acquired in Aug '15
-Hedging for FX risk has been increased to 100% from 8o% of FY16 forecast distributable income
-German office market expected to see strong demand but has limited supply
-IREIT performance expected to remain stable given long leases and blue chip tenants
-Trading at 2Q annualised yield of 8.4% > 5.8-7.5% from other Spore office REITs


Straco: (S$0.765) 2Q16 results disappoint on lacklustre visitorship in China
- 2Q16 net profit slipped 11.6% to $9.2m
- Revenue declined 5.2% to $27.9m as visitation to all its attractions fell by 7.2% to 1.14m
- Continues to boast a substantial net cash reserves of $56.8m or 6.6¢ per share
- Straco is currently trading at 14x trailing P/E and offers an indicative dividend yield of 3.3%

SG Market (11 Aug 16)

SG Market: The Singapore market is unlikely to see big directional shifts as oil prices struggle to find a bottom. Favour REITs, telcos and consumer plays.

Regional bourses opened lower in Seoul (-0.3%) and Sydney (-0.7%), while Japan is on public holiday.

From a chart perspective, STI faces immediate resistance at 2,900, with downside support at 2,830.

Stocks to watch:
*Economy: 2Q GDP expanded 2.1% vs advance estimate of 2.2% on manufacturing and services growth of 1.1% (prior: -0.5%) and 1.4% (prior: 1.7%), respectively. 2016 growth forecast has be shaved to 1-2% (prior: 1-3%) on weaker outlook and downside risks associated with Brexit and potential debt defaults in China.

*Singtel: 1QFY17 results within expectations. Underlying net profit of $954m (+6.6% y/y) was boosted by improved EBITDA margin of 31.6% (+2.1ppt) and stronger contribution from regional mobile associates of $767m (+15.3%). However, revenue slid 7.1% to $3.91b due to a decline in mobile termination rates in Australia. FY17 growth guidance kept. NAV/share inched up to $1.59 (+1.3%). MKE last had a Buy with TP of $4.50.

*City Dev: 2Q16 results ahead of estimates although net profit of $133.8m (+0.2%), was weighed by lower EBIT margin of 19.6% (-3.5ppt) due to FX loss, as well as reduced interest income. Revenue rose to $1.09b (+32.4%), underpinned by revenue recognition from fully sold EC Lush Acres in Singapore, partially offset by lower contribution from M&C on weaker hotel performance in New York and Singapore. Special interim DPS of 4¢ maintained. NAV/share at $9.75.

*Ezion: 2Q16 results missed estimates as net profit of US$19.8m (-31.5%) was masked by disposal gain of US$14.6m. Revenue dipped 7% to US$83.7m on a smaller fleet, while gross margin eroded to 21.3% (-13.6ppt) on increased deployment cost of additional service rigs. NAV/share at US$0.8072.

*Nam Cheong: 2Q16 net profit RM3m (-71.5%) trimmed 1H16 net loss to RM37.1m against consensus full year loss estimate of RM1.35m. Revenue slumped 39% to 117.4m on slower progressive revenue recognition and reduced utilisation rate in the chartering business. NAV/share at 60.9 sen.

*Mermaid Maritime: 2Q16 net profit plunged 50.3% to US$7.7m on a sharply lower revenue of US$49.6m (-53.8%), as its subsea business continued to be hurt by the oil cycle downturn. Top line was mainly eroded by a reduction in cable lay projects and utilization of vessels. Net gearing improved to 6% from 15.6% in FY15. NAV/share at US$0.23

*Thai Bev: Ratings agency Fitch assigned investment grade ratings of BBB for the group's foreign borrowings, and AA+ for its domestic debt, with stable outlook.

*Straco: 2Q16 net profit slipped 11.6% y/y to $9.2m, on lower revenue of $27.9m (-5.2%) on a drop in visitation (-7.2%) at its Shanghai and Xiamen aquariums, partially offset by stronger takings from the Singapore Flyer. Operating margin narrowed to 51.8% (-3.5 ppt) on higher staff costs (+13.9%) and FX losses of $0.3m (2Q15: $0.3m gain). NAV/share at $0.2438.

*CNMC: 2Q16 net profit jumped 30.9% to US$4.7m, on the back of a 34.6% increase in revenue to US$12.6m, boosted by volume growth (+24.5% to 9,807.37 oz) and higher average realised gold price (+8% to US$1,287.22/oz). All-in cost of production fell 3.3% to US$500/oz. Interim DPS raised to 0.2¢ (1H15: 0.18¢). NAV/share at $0.1359.

*IREIT Global: 2Q16 results met; DPU surged 45.5% to 1.6¢, as gross revenue and NPI both jumped 57% to €8.5m and €7.6m, respectively, on contribution from Berlin Campus acquired in Aug '15. Portfolio occupancy held steady at 99.7%, with WALE of 6.4 years. Aggregate leverage was reduced to 41.8% (-1.3ppt q/q), with effective debt cost of 2% and tenor of 3.3 years. NAV/unit at €0.42.

*Metro: 1QFY17 net profit slumped 74.1% y/y to $9.7m mainly due to an 86.2% dive in JV contribution on the absence of disposal gains. Revenue fell 25.4% to $31.9m on weaker contributions from retail (-24.8%) and property (-33.6%), while gross margin was crimped 2 ppt to 4.8% on the cessation of rental contributions from its Frontier Koishikawa Building. NAV/share at $1.65.

*Trendlines: 2Q16 swung to a net loss of US$4.6m (2Q15: US$2.9m profit), as top line was negative at US$2.9m (2Q15: US$5.9m positive), mainly weighed by loss from a change in value of its portfolio companies of US$4.7m (2Q15: US$4.5m gain). Bottom line was hurt by a spike in admin costs (+76.8%) due to IPO listing expenses. NAV/share at US$0.16.

*Sapphire Corp: 2Q16 net profit soared 5.5x to $2.8m on a stronger revenue of $53.4m (+278%), driven by the acquisition of Ranken Infrastructure, an EPC business specialising in the China rail transit sector. This more than offset its deteriorating mining business (-53.4%). NAV/share at $0.2756.

*YuuZoo: 2Q16 net profit surged to $14.2m (2Q15: $1.3m), but would have been lossmaking stripping out the effects of non-cash revenue. Revenue surged 235% to $35.8m, of which $17m is non-cash franchise fees, while the balance $18.7m is from ecommerce segment that only broke-even. NAV/share at 18.6¢

*Frencken: 2Q16 net profit inched 0.5% lower to $4.1m, while revenue increased 3.1% to $120.5m, aided by both mechatronics (+3.1%) and IMS divisions (+3%). However, this was negated by gross margin compression (15.2%, -0.6ppt). NAV/share at 51.35¢.

*Q&M: Updated the proposed spin-off of its China manufacturing business Aidite on China's new third board. Its stake in Aidite will be diluted to 38.2% following new share subscription by management (51.8%) and a further issue of new shares comprising 5-10% of total capital. Post restructuring pro forma FY15 EPS is expected to fall to 1.39¢ (-4.8%), while net gearing will drop from 17% to 10%.

Wednesday, August 10, 2016

Chip Eng Seng

Chip Eng Seng: 2Q16 earnings bulldozed by one-offs
-2Q16 net profit $14.3m (-33%) - Impairment on development property, FX losses, and higher taxes
-2Q16 revenue $234.3m (+18.9%) - divested an Australian property development site, and higher contribution from hotel
-Net gearing nearly doubled to 1x from 0.56x in FY15
-Outlook remains challenging across all segments
-Trading at 10.3x trailing P/E and 0.54x P/B.

Sinarmas Land

Sinarmas Land: "Buy property with tax amnesty"?​
- Indonesian property developers are aiming to grab a slice of the US$30b expected to be brought back to Indonesia under the Tax Amnesty programme
- Funds brought back through the programme must be kept in Indonesia for three years and can be invested in several ways including property investments
- Indonesian lender, PT Bank Tabungan Negara is partnering with some developers to offer investment opportunities to its clients
- Indonesia's residential property sales grew 1.5% q/q in 1Q16
- Wealthy Indonesians have a historical preference to invest in property. Sector could thus be the first to benefit from tax amnesty inflows.
- Counter has gained 4% since beginning end of last week.

Cosco Corp

Cosco Corp: Potential M&A?
- DBSV believes multiple headwinds – deferments/cancellations and cost overruns amid the downturn in the sector - have been priced in.
- While there are limited re-rating catalysts from the fundamental front in the near term, house continues to see that there is a possibility of a privatisation of Cosco by its parent in subsequent phases of restructuring of the two shipping giants.
- DBSV has a Hold with TP of $0.30.


SATS: (S$4.62) Embracing robotics as it tackles staff costs and productivity
- Investing in robotics as it seeks to achieve greater operating margins.
- Staff costs are substantial, accounting for 58% (+4ppt) of its total 1QFY17 operating costs.
- The robots will come in useful as the group deals with additional capacity from Changi Airport’s planned expansion
- The recent run up in its share price means that there is little room for error
- Currently trading at 21.3x FY17e P/E and 3.5% FY17e yield

SGX (10 Aug 16)

SGX: (S$7.64) Jul securities turnover remain lukewarm
- Jul securities turnover declined to $21b (-13% y/y, -7% m/m) on lower trading days (-10%) on both a year and month ago, with lower daily average value of $1.1b (-4% y/y, +3% m/m).
- Derivatives volume continue to slump (-40% y/y; -9% m/m), , while commodities derivatives rose to 1.3m contracts (+33% y/y; +29% m/m).
- Just a week ago, SGX made a hefty bid for London's Baltic Exchange in a bid to expand its product suite.
- While SGX has a monopoly in Singapore, any near-term catalysts remain to be unseen given that measures to shore up liquidity and boost trading volumes have not been proven effective.
- On a relative basis, SGX’s forward P/E of 22.3x and dividend yield of 3.7% appear more attractive than those of HKEx (36.9x, 3.1%).

SG Market (10 Aug 16)

SG Market: Singapore market likely to be underpinned by the global search for yield, although upside gains could be capped by the lacklustre 2Q corporate results so far.

Regional bourses opened mixed in Tokyo (-0.6%), Seoul (+0.1%) and Sydney (-0.2%).

From a chart perspective, STI faces immediate resistance at 2,900, with downside support at 2,810.

Stocks to watch:
*SMRT: 1QFY17 net profit of $15.5m (-22.9%) missed on lower revenue of $313.9m (-2%). Rail operating loss widened due to the 1.9% fare reduction in Dec '15 and cannibalisation from the Downtown Line 2, while performance for bus and taxi businesses also deteriorated on higher staff costs and a smaller hired-out fleet. EBIT margin narrowed 1.6ppt to 7%. MKE recommends shareholders accept Temasek's $1.68 privatization offer.

*Chip Eng Seng: 2Q16 net profit slumped 33.3% to $14.3m on property impairment ($5m) and FX (43m) losses, as well as higher effective tax. Revenue jumped 18.9% to $234.3m, bolstered by a property divestment in Melbourne, Australia, and full quarter contribution from Park Hotel Alexandra in Singapore. Net gearing nearly doubled to 1x from 0.56x in FY15 on increased borrowings for acquisition and development of a site at New Upper Changi Road. NAV/share at $1.1847.

*SGX: Jul securities turnover declined to $21b (-13% y/y, -7% m/m) on less trading days during the month, while daily average turnover value slipped to $1.1b (-4% y/y, +3% m/m). Derivatives volume also tumbled to 12.9m contracts (-40% y/y, -9% m/m) on lower Nikkei (-10% y/y, -29% m/m) and Nifty (-10% y/y, -14% m/m) index futures volumes.

*Sim Lian: Received a voluntary conditional management buyout offer at $1.08/share, 14.9% above the last close. Offeror Coronation 3G has secured irrevocable undertakings representing 80.36% of the total issued shares, and does not intend to raise the offer price.

*Sembcorp Industries: Secured long-term power purchase agreement with Bangladesh Power Development Board to supply 414MW of electricity over 22.5 years from its 70% owned Sirajani gas-fired power plant o be completed in 2018. Separately, group acquired a 74% stake in Mulanur Renewable Energy, which owns 25.5MW of wind power assets in Tamil Nadu, India, for $32m.

*ValueMax: 2Q16 net profit jumped 46% to $3.9m on a shift in sales towards more profitable pawnbroking and moneylending businesses. However, revenue slipped 10% to $64.9m due to reduced retail and trading of pre-owned jewellery and gold. Gross margin expanded to 13.3% (+3.9ppt), but bottom line was partially pared by higher finance costs and provisions. Net gearing spiked to 0.97x from 0.59x in FY15 on increased borrowings for acquisition of properties at Waterloo Centre and Aljunied. NAV/share at $0.2961.

*Cosco Corp: 51%-owned subsidiary, Cosco Shipyard Group secured an order for three units of 1,750 TEU container vessels from a European buyer. The vessels are scheduled to be delivered between 2Q19 and 3Q19.

*IHC: Terminated the proposed acquisition of Healthway Medical Corp via a scheme of arrangement.

Monday, August 8, 2016


Chiwayland: (S$0.112) 2Q16 sinks into a loss; turnaround in 4Q16?​
- Slumped into a 2Q16 net loss of Rmb35m
- Revenue plunged 47% to Rmb3987.7m as it suffered a double whammy of both lower sales volume and average selling price
- Its recent acquisition spree in US, Europe, and Australia as well as the financing demand of new projects have elevated its net gearing to 2.5x
- Looking ahead, development profits are expected to come from its higher end Suzhou projects; management envisages a return to profitability by 4Q16.
- Chiwayland is trading at a substantial discount of 0.2x P/B


Trendlines: (S$0.177) Not for the faint hearted given risky nature of technology start-ups
-Trendlines assists technology start-ups in medical devices, agricultural and food industries grow their business with eventual aim of monetizing its investments through a sale via M&A or public listing.
-Dependent on sale of investments to generate operating cashflow, so a lack of disposals could create liquidity problems.
-Looking ahead, three medtech companies are currently at exit stage, which may be a catalyst for a re-rating.
-However, the business is risky in nature, due to high failure rate of technology start-ups
-Trading at 0.8x P/B, vs similarly sized peers at 1x P/B

Cosco Corp

Cosco Corp: (S$0.28) No habour in stormy seas as 2Q16 sinks
- Cosco languished in a sea of red as 2Q16 net loss deepened to $36.8m from $4.8m the previous year
- Revenue slid 11% y/y to $762.9m on pressure from both its shipyard and dry bulk shipping segments
- The red ink pushed 1H16 loss further to $51.2m, blowing past FY16 street expectations for a $41.5m loss.
- Net gearing deteriorated further to 4.3x (1Q16: 3.9x)
- Notably, management is particularly pessimistic about the future


DBS: (S$15.04) 2Q results in line; outperformer for NIM
- DBS 2Q16 results came in line with estimates despite a 6% drop in net profit to $1.05b.
- Net interest income rose 5% as NIM widened to 1.87% (+12bps).
- Customer loans grew 1.7% stemming from corporate loans in Singapore and market share gains in housing loans.
- Non interest income rose 5.2% on improved investment banking income, and higher trading income and investment gains.
- The biggest drag was that provisions spiked to $366m (+167% y/y, +115% q/q) due to a $150m charge for O&G service provider Swiber, and NPL inched higher to 1.1% (2Q15: 0.9%, 1Q16: 1.0%).
- On relative valuations, DBS is trading at 0.91x P/B compared to 1x for both UOB and OCBC.


Venture: (S$8.90) 2Q16 results in line as R&D focus gains traction​
- 2Q16 net profit of $43.4m (+20.3%) matched expectations, making up 49% of FY16 consensus forecast.
- Venture generated operating cash flow of $33.6m (+15.2%) with its net cash hoard ballooning to $248.5m (+84%).
- This set of results reaffirms Maybank KE’s conviction that Venture is on the cusp of being able to pocket a greater slice of its customers’ economic value chain through its intense R&D focus.
- At last call, Maybank KE had a Buy on the counter with TP of $9.60.

Singapore Medical Group

Singapore Medical Group: Acquiring remaining stake in profitable health screening associate
-Acquiring 61.9% remaining stake in associate Lifescan Imaging for $8.5m,
-This will be funded by 33.4m new shares
-Lifescan is a diagnostic imaging business that operates Pacific Cancer Centre and Novena Radiology
-Lifescan turned around to a net profit of $0.348m in 1H16 vs. SMG’s $0.633m
-The price implies a 12.3x P/E, and is at an 11.6% discount to independent valuation by Deloitte
-Health screening is expected to contribute meaningfully to future earnings

SG Market (08 Aug 16)

SG Market: Investors will have plenty to chew on in a short trading week (public hoilday on 9 Aug) with release of China trade (8 Aug), inflation (9 Aug) and industrial production (12 Aug) figures, as well as 2Q results from blue-chips Singtel, Wilmar on Thu, and Golden Agri, GLP On Fri.

Regional bourses are up in Tokyo (+1.7%), Seoul (+0.5%), and Sydney (+0.8%).

STI sees immediate downside support at 2,810, with resistance at 2,900.

Stocks to watch:
*DBS: 2Q16 net profit of $1.05b (-6% y/y, -13% q/q) met expectations on stronger NII of $1.83b (+5% y/y, flat q/q), as NIM widened to 1.87% (+12bps y/y, +2bps q/q) and loans grew (+1.7% y/y, +3.9% q/q). Non-interest income rose to $1.09b (+5.2% y/y, +13.5% q/q) on higher investment banking fees and gains from investment securities. Provisions spiked to $366m (+167% y/y, +115% q/q) due to a $150m charge for Swiber, with NPL of 1.1% (2Q15: 0.9%, 1Q16: 1.0%). Interim DPS of $0.30 unchanged. NAV/share stood at $16.48.

*Venture: 2Q16 results in line as net profit climbed 20.3% to $43.4m on higher revenue of $683.3m (+3.4%), supported by increased customer traction. Pretax margin improved to 7.6% (+1.2ppt), largely from FX gains and reduced R&D costs (-28.7%). NAV/share at $6.437.

*Frasers Centrepoint: 2Q16 core net profit slumped 62.4% to $68.2m largely on FX losses (+74.8%), while revenue fell 32.5% to $682.1m on weaker contributions from development properties (-69%), partly mitigated by gains in commercial properties (+2%), hospitality (+63%) and its Australian arm (+32%). NAV/share at $2.19.

*China Everbright Water: 2Q16 net profit of HK$77.5m (-30%) came in short of estimates. Revenue jumped 31% to HK$668.5m on an increase in lower margin construction income. Accordingly, gross margin narrowed 10.1ppt to 34.1%. Bottom line was weighed by higher expansion expenses, FX losses, and higher interest costs on increased borrowings. NAV/share at HK$2.72

*Cosco Corp: 2Q16 net loss deepened to $36.8m (2Q15: $4.8m loss) due to a spike in interest expense and adverse FX impact. Revenue sank 11% to $762.9m owing to pressure in shipyard (-10.5%) and dry bulk shipping (-17.8%) takings. Gross margin shrunk to 1.5% (-5.4 ppt) on lower charter rates. Net gearing deteriorated further to 4.3x (1Q16; 3.9x) as its continued to bleed cash and took up $7.2b in debt to finance shipyard operations. NAV/share at $0.3249.

*Suntec REIT: Acquired 50% stake in Southgate Complex in Melbourne for A$289m. The 820,324 sf freehold commercial complex has locked-in rental escalations of 3-4% p.a. Post-deal, aggregate leverage is estimated to rise 2ppt to 38%. MKE has a Hold with TP of $1.69.

*Singapore Medical Group: Acquired the remaining 61.9% stake in associate Lifescan Imaging, a diagnostic imaging business, for $8.5m with the issuance of 33.4m shares ($0.256/share). Lifescan recorded a 1H16 net profit of $0.3m, implying a 12.3x P/E, and the price was also 11.6% lower than an independent valuation by Delotte.

*Dyna-Mac: 2Q results turned around to a net profit of $6.4m (2Q15: $8.5m loss), despite revenue slipping 6.6% to $34.1m, as existing projects were near tail end of completion. Gross margin was abnormally high at 42.1% (2Q15: -8.5%) due to revenue recognition of certain variation orders after final approval from customers, of which costs of such orders were recognised when they were committed in prior periods. Net cash position improved to $36.6m from almost zero. Net order book at $38m, with completion extending to just 2H16. NAV/share at $0.1785.

*Kim Heng Offshore: 2Q16 net loss narrowed to $1.4m (2Q15: $3m loss) on an expanded gross margin of 33.4% (+24.1ppt) on the absence of low margin sales. However, revenue plunged 31% to $7.7m from lower demand for new vessels and maintenance services for rigs and related assets due to the sustained downturn in oil prices. NAV/share at $0.119.

*Chiwayland: 2Q16 results slumped into a net loss of Rmb35m (2Q15: Rmb14.7m profit) in the absence of a Rmb32.5m tax credit. Revenue fell 47% y/y to Rmb398.7m on a 13.6% lower total GFA sold and reduced ASP (-38%). Bottom line was further weighed by jumps in selling and distribution (+57%), and other operating (+241%) expenses. NAV/share at Rmb1.467.

*Tiong Seng: 2Q16 net profit surged 3x to $4.5m on positive operating leverage, as revenue jumped 67% to $158m on broad based growth across construction (+54%), sale of development properties (+335%) and goods (+14%). NAV/share at $0.5438.

*ISOTeam: Won contracts worth about $20.1m with works stretching till Jul ’20.