SG Market (25 Jan 17)

The market could track higher on renewed Wall Street’s optimism over Trump’s pro-growth executive action despite lingering fears over his protectionist policies.

Regional bourses in Tokyo (+1.7%), Seoul (+0.3%) and Sydney (+0.3%) opened firmer.Technically, the overstretched STI has barely breached the 3,040 resistance with next objective at 3,110, while underlying support now sits at 2,980.

Stocks to watch:
*M1: 4Q16 net profit dropped 27.1% to $31.8m, taking FY16 earnings to $149.7m (-16.1%), missing estimates. For the quarter, revenue edged up 1.9% to $313.9m, buoyed by firmer handset sales (+14.2%), but was weighed by lower service revenue of $201m (-3.9%). While customer base rose 6% to 2.2m, ARPU fell across the board and customer acquisition cost jumped 10.1%, compressing EBITDA margin to 35.8% (-2ppt q/q). Challenging operating environment expected to persist. Final DPS shaved to 5.9¢, bringing full year payout to 12.9¢ (FY15: 15.3¢). MKE maintains Sell and cuts TP to $1.85 from $1.90.

*Keppel REIT: 4Q16 DPU of 1.48¢ (-11.9%) disappointed, bringing FY16 payout to 6.37¢ (-4.9%). Quarter revenue and NPI slipped to $40m (-6.5%) and $31.4m (-9.6%) respectively as 77 King Street was divested 1Q16, while Bugis Junction Towers (-15.3%) saw reduced takings. Occupancy stood at 99.2% (-0.3ppt q/q), while aggregate leverage held steady at 38.5%. Trading at 5.7% annualised yield and 0.7x P/B. MKE maintains Buy but shaves TP to SGD1.18 from SGD1.21.

*Mapletree Industrial Trust: 3QFY17 DPU of 2.83¢ (+0.4%) met expectations despite a slightly larger unit base (+0.9%). Growth in distributable income ($51.1m, +1.6%) was pared by higher borrowing cost (+7.8). Gross revenue climbed 1.4% to $84.5m, while NPI rose faster 2.5% clip to $63.4m on higher rental rates, contribution from Phase 1 of HP built-to-suit property and lower property expenses. Occupancy slipped to 92.1% (-0.4ppt q/q), while aggregate leverage stood at 29.4% (+0.4ppt q/q). Trades at 6.9% annualised yield and 1.2x P/B.

*Suntec REIT: 4Q16 DPU of 2.6¢ (-5.6%) met consensus estimates, while distributable income fell 4.9% to $66.1m, from the divestment of Park Mall and cessation MBFC income support. Although revenue inched up 1.6% to $88.9m from contribution of 177 Pacific Highway in Sydney, NPI fell 2.9% to $60.7m, from higher expenses at Suntec Singapore. Office and retail occupancies stood at 98.6% (-0.7%ppt q/q) and 97.7% (+0.4ppt) respectively, while aggregate leverage held at 37.7% (-0.1ppt). Trading at 6.2% annualised yield and 0.8x P/B.

*ParkwayLife REIT: 4Q16 results in line. DPU fell 9.2% to 3.06¢ due to the absence of one-off distribution of divestment gains of seven Japan nursing homes. Recurring distributable income rose 2.3% to $18.5m. Revenue of $27.7m (+5.4%) and NPI of $25.6m (+4%) were driven by a new nursing home in Japan, higher Singapore rents, and the stronger yen. Gearing stood at 36.3% (-1.9% q/q). Trading at 5.1% annualised yield and 1.4x P/B.

*Cambridge Industrial Trust: 4Q16 results met estimates even as DPU and distributable income fell to 0.996¢ (-12.6%) and $13m (-12%) on absence of capital distribution. Gross revenue slid 2.5% to $27.8m due to several master lease expiries and divestment of properties. NPI dropped 8.8% on increased multi-tenant building conversion costs. Portfolio occupancy rose 1.1ppt q/q to 94.7%, with WALE of 3.7 years. Aggregate leverage ticked up 0.6ppt to 37.5%. NAV/unit shrank 5.8% to $0.634 after it booked a $44.2m fair value loss on investment properties..

*Cosco: Its 51%-owned COSCO Shipyard Group won a shipbuilding contract from Everbright Int'l (HK) Offshore to construct a multi-purpose wind farm support unit scheduled for delivery in 4Q18 for an undisclosed amount. It has also granted an option to Everbright to build another similar unit within six months from the contract.

*Frasers Centrepoint: Hospitality arm Frasers Hospitality is launching Fraser Suites Kuningan, a 210-unit serviced residence in Jakarta. This is the fourth of nine properties that it plans to launch in Jakarta by 2019.

*MTQ: 3QFY17 net losses deepened to $4.3m (3QFY16: -1.1m) as revenue sank to $31.2m (-29.4%) due to lower activity levels in its oilfield and subsea divisions. Gross margin contracted to 17% (-4.8ppts) on pricing pressures. Bottom line was further affected by absence of disposal gains as well as insurance claims. NAV/share at $0.64.

*Yangzijiang Shipbuilding: Invested Rmb196.8m for a 32.8% stake in Wuxi Jinrui Zhonghe Investment Enterprise which is an investment holding company.

*Chasen: Its relocation business has secured contracted worth $20.6m for FY17 with projects in the US and Singapore spilling over into FY18.

*MoneyMax Financial Services: Incorporating three new 51:49 JV entities with an existing JV partner Chong Mei Sang, paving the way to acquire 11 Malaysian prawn broking businesses with valid licenses.*Roxy-Pacific: Acquiring five adjoining two-storey shophouses along Upper Bukit Timah Road for $17m. The freehold residential site has total land area of 10,256 sf with a plot ratio of 2.5, translating into potential GFA of 25,640 sf, and cost of $663 psf.

*Yuuzoo: Sold a franchise license to Congo-based emerging telco, Telkonex to tap on growing e-commerce, digital advertising, mobile games and mobile payments potential in the market. The licence will also provide its platforms such as YuuWallet and its marketplace with a stronger footprint in Africa.

*Sarine: Appointed David Block as CEO wef 1 May ’17 following Uzi Levami’s decision to retire. Levami will continue serving as executive director.

*Aspial Corp: Fully redeemed the outstanding $55.75m 4.5% notes due on 23 Jan 17.