SG Market (20 Jan 17)

Investors are likely to stay cautious amid policy uncertainty on the eve of Trump's inauguration and ahead of a slew of corporate results from the REIT sector next week.

Regional bourses opened weaker in Sydney (-0.6%) and Seoul (-0.4%), but positive in Tokyo (+0.3%).Technically, the STI is still correcting from overbought levels with underlying support at 2,968 and topside resistance at 3,040.

Stocks to watch:
*SGX: 2QFY17 net profit of $88.3m (+5.5%) topped estimates as active securities trading (+17%) on the back of post US election rally lifted total revenue by 2.6% to $199.6m (+2.6%). However, derivatives revenue slipped 3.4% to $74.9m as higher volume (+5%) was offset by lower average fees per contract (-9.4%). Operating margin improved 1.2 ppt to 51.3% on tight cost control. Maintained interim DPS of $0.05. Expects a healthy pipeline of IPOs in 2HFY17.

*CapitaLand Mall Trust: Flat 4Q16; DPU of 2.88¢ brought FY16 payout to 11.13¢ (-1.1%), in line with estimates. For the quarter, both gross revenue of $169.3m (-6.1%) and NPI of $116.2m, (-7.6%) were dragged by the closure of Funan mall due to redevelopment works, and Rivervale Mall that was sold in Dec '15. Portfolio occupancy remained healthy at 98.5% (-0.1 ppt q/q), while aggregate leverage narrowed to 34.8% (-0.6ppt). NAV/unit at $1.89.

*GL: 1HFY17 net profit tumbled 52% to US$24.6m on weaker revenue of US$184.5m (-20%), mainly due to an 18% drop in GBP against USD, despite improvements in hotel RevPAR (+3%). Bottom line was further hit by the absence of a one-off $13m gain from the compensation for hotel management contract cessation last year, as well as $11m of other opex comprising a legal claim and asset write-offs. NAV/share at US$0.759.

*Oxley: 2QFY17 net profit surged 163% to $123.7m on revenue of $605.7m (+241%), due to the completion of commercial project Oxley Tower, and handover of certain plots in The Royal Wharf Phase 1A. Gross margin contracted to 33.3% (-4.9ppt) on a change in sales mix, while bottom line was impacted by the absence of marked-to-market FX gains (2QFY16: $12.9m) and JV/associate losses of $4.5m (2QFY16: $26.5m profit) due to fair value adjustments. Total unbilled contract value amounted to $2.6b. Net gearing eased from 2.1x to 1.8x as the group continued to pare its debt pile, underpinned by healthy operating cash flow of $273.6m. Interim DPS shaved to 0.5¢ (0.75¢). NAV/share rose 16% to $0.3105.

*mm2 Asia: Executive chairman and CEO Melvin Ang sold 10m vendor shares to Timothy Mou En-Kuang at $0.485 each. Industry verteran Mou manages Chinese superstar Fan Bingbing and is the CEO of several film studios in China. The group believes Mou's ownership of a 0.95% stake would enhance its business development in the North Asia market.

*AIMS AMP Capital Industrial REIT: In clarification to the media report citing that the REIT is studying potential investment targets, management stated that it is always on the lookout for M&A opportunities, but has not entered into any firm commitment for acquisition.

*Dasin Retail Trust: Public offer of 2m IPO units at $0.80 apiece was 7.6x oversubscribed. The Chinese business trust will commence trading at 2pm today.