SG Market (04 Jan 17)

The market might resume its upward climb, taking stock of the better-than-expected Dec manufacturing PMI and 4Q GDP growth as well as buoyant mood on Wall Street. O&M counters could come into focus in light of oil price volatility.

Regional bourses opened mixed, with Tokyo (+1.3%) playing catch-up and Seoul (-0.01%) and Sydney (-0.01%) flattish.Technically, the STI is poised to sail past 2,900 to test next resistance at 2,920. Bottom side support is seen at 2,868 (50-dma).

Stocks to watch:
*Strategy: Consumer staples was the best performing sector within the Singapore stock market in 2016, surging 25.8%. The best performing stocks include Japfa, Super Group and Golden Agri. For 2017, MKE favours office REITs (Buy KREIT, CCT) and healthcare (Buy Raffles Med).

*Jumbo: Inked its first franchise agreement for an initial 10 years to bring its seafood restaurants to Vietnam. The first outlet is expected to open in Ho Chi Minh City in mid-2017, with another two in the pipeline to be opened over the next two years. Separately, a new Ng Ah Sio bak kut teh outlet has opened in Ngee Ann City. MKE maintains its Buy with TP of $0.78.

*Midas: 32.5%-owned JV CRRC Nanjing Puzhen Rail Transport secured two metro train car supply contracts worth Rmb1.77b. The first contract (Rmb1.05b) is for the Changzhou Rail Transit Line One Phase One, slated for delivery between Jan '18 and Nov '19, while the second contract (Rmb720m) is for Xuzhou Urban Rail Transit Line One Phase One, scheduled for delivery between May '18 and Aug '19.

*First Resources: Nov FFB harvest surged 22.7% to 289,823 tonnes, with yield rising 12.5% to 1.8 tonnes/ha. CPO production soared 25% to 67,770 tonnes even though extraction rate slipped 0.2ppt to 22.1%. MKE last had a Hold with TP of $1.97.

*HC Surgical Specialists: 1HFY17 net profit slumped 91.8% to $0.1m, hurt by listing expenses of $1.3m. Excluding one-offs, earnings would have been stable at $1.5m (+0.9%). Revenue grew 11.1% to $4.3m on contributions from its new subsidiaries, Lai Bec and CTK Tan Surgery. Balance sheet remained intact with net cash of $13.4m (9.1¢/share) which it intends to use to expand operations in the heartlands. Declared maiden interim DPS of 1.8¢. NAV/share at $0.10. Separately, it set up a 40:40:20 JV with Iridium Investment Management and JILB Int'l to provide medical services in the heartlands.

*Regal Int'l: Entered into a RM90m conditional offtake agreement with Malaysian-based MyAngkasa Bina for the sale of all 276 residential units under Phase 3 of its Airtrollis property development project in Nilai, Negeri Sembilan. Construction and sales of the project will commence in 2017, and expected to be completed by 2020.

*Kitchen Culture: Entered into an agreement with Crede CG III to issue US$20m worth of 24-month 6% convertible notes in tranches of US$5m. It intends to use up to 20% of the net proceeds of $27.9m to repay debts with the remaining used for capex, growth expansion and general working capital.

*ISR Capital: Quah Su Yin has stepped down as CEO to “focus on family business”. The stock has been suspended since 27 Nov, and Quah has previously claimed that there is no direct or indirect link between the group and the 2013 penny stock saga, save for the fact that she is the sister of one of the co-accused persons.