SG Market (17 Jan 17)

SG MarketSentiment is turning increasingly jittery over US president-elect Donald Trump's incoming policies following his sweeping criticisms of China, EU, Nato, German Chancellor Angela Merkel, as well as foreign automakers ahead of British PM's Brexit speech this evening.

Regional bourses are mostly lower in Tokyo (-0.4%), Seoul (+0.4%) and Sydney (-0.7%).Technically, STI is overbought and could test the psychological 3,000 level, with underlying support at 2,968 and upside resistance remains at 3,040.

Stocks to watch:
*SIA: Group pax load factor rose 0.6ppt to 82.9% in Dec, as passenger traffic growth (+5.3%) outpaced capacity expansion (+4.5%). Load factors improved across East Asia (+3.3ppt), Americas (+0.6ppt), and Europe (+0.5ppt), due to stronger demand from year-end holiday travel, but deteriorated in SW Pacific (-3.2ppt), West Asia and Africa (-0.9ppt). Load factors at SilkAir (+0.4ppt to 75.5%), Scoot (+1.4ppt to 87.4%), and Tigerair (+2.1ppt to 88.3%) also recovered. Cargo load factor rose 1.5ppt to 64.9% as carriage growth (+8.8%) was stronger than the increase in capacity (+6.3%). MKE last had a Hold with TP of $9.70.

*CapitaLand: Divested 45 unsold units at upmarket condo The Nassim, to veteran banker Wee Cho Yaw's family vehicle Kheng Leong for $411.6m or $2,300 psf (~18% discount), uplifting its EPS by 3.8¢. While the pricing for this deal is not particularly compelling, MKE believe the avoidance of hefty QC penalties and the ability to recycle capital into new projects are key positives. Separately, the group will acquire a 0.6-ha prime commercial site in Ho Chi Minh City, Vietnam to develop a Grade A office tower, to be ready in 2020. MKE last had a Buy with TP of $3.46.

*GLP: Signed 128,000 sqm of new leases in China and Japan for domestic distribution, catering to demand from industries such as auto parts, e-commerce and consumer goods.*STE: Aerospace arm ST Aerospace secured $840m new contracts in 4Q16 (3Q16: $520m, 4Q15: $415m) for services ranging from line and airframe maintenance to component repair and overhaul.

*Best World: Terminated the JV agreement with Prolife Biobank and Celcott Biobank to distribute stem cell banking services.

*Vard: Signed LOI to design and construct an expedition cruise vessel for an undisclosed international cruise company for ~NOK1b. If agreed upon, delivery is scheduled from one of Vard's Norwegian yards in 2019.

*Hi-P: Arbitration proceedings between Hi-P and Yota Devices have resulted in a settlement of US$17m ($24.6m) to be paid by to Hi-P, which will continue to sell the existing inventory of Yotaphone 2. The settlement is expected to result in a $9.4m impact ($8.1m bad debt, $1.3m inventory provision) on its 4Q16 profit.

*Sunpower: Secured a Rmb338m build-own-operate centralised heat transfer oil project in Liutuan Industrial Park, Shandong Province, China. The project is expected to be carried out by a 75:25 JVCo, and will be financed via proceeds from its US$110m convertible bonds, bank loans and internal funds.

*SIIC Environment: Proposed placement of 350m new shares (15.5% share capital) at $0.63 apiece (5.9% premium to last close) to controlling shareholder Shanghai Industrial Holdings. Net proceeds of $220m will be used to repay existing borrowings (60%) and finance business expansion.

*United Food: Proposed placement of 22m new shares (20% share capital) at 3.8¢/share to two private investors Christine Mak (14.3m shares) and Ip Ka Kit (7.7m shares). Net proceeds of $0.8m will be used to strengthen its working capital to further expand business operations.

*Vallianz: Proposed placement of 350m new shares (9.7% share capital) at 2¢ apiece to Greatwill Asset Global, owned by Lim Oon Cheng, brother of the founder of oil trading firm Hin Leong. Net proceeds of $6.8m will be used for strengthening JVs/ strategic alliances and working capital..

*Koh Brothers: Entered into an MOU with Koracle to form a JV to set up beauty clinics and wellness spas in Singapore and Johore, Malaysia.

*Advancer Global: Wholly owned Nation Employment unit joined the Advance Placement Scheme, to allow it to source for and bring in a specific number of foreign domestic workers prior to employment, which facilitates better matching.

*United Global: Invested US$0.1m worth of products into a JVCo in Myanmar as its initial capital to sell lubricants in the country for a three-year period.