Monday, December 12, 2016

SG Market (12 Dec 16)

Market sentiment could be lifted by the relentless run-up sentiment on Wall Street, as well as from the surge in oil price, although upside may be capped by an expected US rate hike this week, which will bode well for banks and S’pore export data due Fri.

Regional bourses in Tokyo (+0.7%), Seoul (+0.1%) and Sydney (+0.3%) opened firmer.Technically, the overstretched STI could face resistance at the 2,960 triple-top, with next objective at 3,040. Underlying support is at the 2,882 breakaway gap.

Stocks to watch:
*O&M: Offshore names could rally today, in tandem with a 4.7% surge in WTI crude to almost US$54/bbl), following news that non-OPEC producers have agreed to cut oil output, and that Saudi Arabia is signalling deeper cuts. MKE likes Ezion as early cycle beneficiary, with Buy call and TP of $0.42

*Keppel Corp: Recent sentiment-driven rally of 8.8% since the Nov OPEC deal may be unsustainable. The market, which views Keppel as an oil-related play, may be disappointed, as its earnings have now skewed towards property, while the O&M segment (26% of 9M16 profit) is a late cycle beneficiary. MKE has a Sell with TP of $4.57.

*GLP: Set up GLP US Income Partners III Fund to acquire a US$1.1b portfolio of industrial assets in the US. Trading at 0.85x P/B.

*CITIC Envirotech: Secured its first build-own-operate project for a 95,000 tpa hazardous waste treatment facility in Shandong, China with JV partner Shangdong Zhengtian Environmental Protection Technology. The 70:30 JV will undertake the project, which has a total investment value of Rmb240m, and is expected to be completed by end-2017. Trading at 21.5x trailing P/E.

*KrisEnergy: Noteholders have consented to extend the maturity dates of its $330m worth of bonds to 2022 and 2033 instead of 2017 and 2018. This is a pre-condition for KrisEnergy to tap up to $140m preferential offering of 93 zero coupon notes with 837 detachable warrants for every 1,000 shares held, which Keppel Corp is underwriting.

*iFAST: Its new FSMOne platform has stopped trading Singapore stocks after its appointed counterparty, OCBC Securities pulled the plug on giving it access to SGX quotes as FSMOne ran into direct competition with OCBC's retail brokerage business. iFAST is applying to be an SGX trading member next year, subject to relevant approval. Meanwhile, it might face difficulties finding a willing counterparty to execute its trades.

*Pacific Radiance: 51:49 JV, DOT Radiance has agreed to defer delivery of a vessel to a charterer to 31 Dec 2017. A long term charter contract worth US$140m had previously been secured ahead of the vessel’s delivery in 2016/17.

*Soilbuild REIT: Terminated Technics Oil & Gas’s lease of the property at 72 Loyang Way. It currently has up to five months (unutilised portion of bank guarantee received in May) to look for a new tenant for the property. *KLW: Following investigations by the CAD and an SGX reprimand, it has terminated a 2b new share put option agreement with substantial shareholder Prince Abdul Qawi (9.3% ownership).

*Dukang Distillers: Terminated the sale of residual assets at its Yichuan factory, following the decision to temporarily slow down its relocation exercise due to production requirements.

*Ziwo: Terminated its proposed diversification into Korean real estate through the acquisition of Longrunn Intel Incheon. Separately, it proposed to acquire a 37.8% stake in Beijing E-Star Electric Technology, which provides charging equipment for electronic vehicles, for $1.2m through the issuance of new shares at $0.019/share.

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