Tuesday, August 23, 2016

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.

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