The market could take a pause into the Lunar New Year holiday but sentiment could be supported by surprisingly strong Dec industrial production and Trump reflation trade.
Regional bourses opened higher in Tokyo (+0.3%) and Sydney (+0.6%). Korean markets are closed for public holiday.Technically, the STI has breached above the 3,040 resistance, with next objective at 3,110, while underlying support is at 2,980.
Stocks to watch:
*Economy: Industrial Production (IP) surged 21.3% in Dec, led by robust electronics sector (+49.4%), extending its double-digit growth into the seventh month on the back of semiconductor production. The biomedical cluster surged 44.9%. Excluding this typically volatile cluster, IP grew 16.1%. This could lift 4Q GDP growth to 2%, above the flash estimate of 1.8%. MKE is forecasting growth to strengthen to 2.5% in 2017, at upper end of MTI’s 1-3% range.
*Keppel Corp: 2016 net profit plunged 48.9% to a decade-low of $783.9m against $906.9m estimate, as 4Q earnings of $143.1m (-64.7%) was battered by $313m of provisions and impairments. O&M fell into the red (-$138m), while property was the top contributor ($269m). Despite rebounding oil prices, management does not envisage any quick recovery in the offshore business given low rig utilization rates and supply overhang and has slashed 35% of its workforce, mothballed two overseas yards and closing three more. Orderbook shrank to $3.7b as orders dried up since Aug. Final DPS cut to $0.12, bring FY16 payout to $0.20 (FY15: $0.34). MKE maintains its Sell with TP of $4.57.
*Mapletree Greater China Commercial Trust: 3QFY17 DPU of 1.778¢ (-4.1%) matched estimates. Revenue of $87.8m (-0.5%) and NPI of $71.4m (-1.5%) were dragged by weaker CNY against SGD, and lower contribution from Gateway Plaza due to the implementation of VAT, although partly offset by higher rental income from Festival Walk. Occupancy improved to 98.6% (+2.9 ppts q/q). Aggregate leverage remained high at 40.5% (+0.6 ppts q/q). NAV/share at $1.213.
*Starhill Global: 2QFY17 DPU slid 4.5% to 1.26¢, on track with estimates. Gross revenue of $54.1m (-2.8%) and NPI of $41.4m (-5.4%) were dragged by lower occupancies and average rents at Ngee Ann City (Office) and Wisma Atria, as well as reduced takings in China from mall repositioning and the divestment of a mall in Japan. Portfolio occupancy improved to 95.4% (+0.6 ppts q/q), while aggregate leverage stood at 35.2% (+0.1ppt q/q) with average interest rate of 3.16%. NAV/unit at $0.92.
*OUE Commercial REIT: 4Q16 DPU slumped 13.2% to 1.18¢, as distributable income fell 12.5% to $15.4m due to a one-off capital distribution. This brought FY16 DPU to 5.18¢ (+18.3%), in line with expectations. Revenue of $45m (+11.6%) and NPI of $34.8m (+17.3%) was led by contribution from One Raffles Place (acquired in Oct '15) and improved performances at OUE Bayfront and Lippo Plaza. Portfolio occupancy inched up to 94.8% (+0.4ppt q/q) with WALE of 2.5 years. Aggregate leverage stood at 39.8% (-1ppt q/q), with average cost of debt at 3.6% and tenor of 1.5 years. NAV/unit at $0.93.*Frasers Hospitality Trust: 1QFY17 results met. DPS fell 18.9% to 1.3258¢, due to a 22% increase in unitbase post rights issue in Sep '16, while distributable income rose 3.1% to $24.4m, thanks to the absence of a payment top up and distribution to perps holders. Revenue surged 26.1% to $39.6m, boosted by the addition of Novotel Melbourne on Collins and Maritim Hotel Dresden, as well as better performance of Sydney properties, while NPI rose at a slower clip to $30.5m (+15.9%) due to higher property expenses. Aggregate leverage stood at 33.7% (-4ppt). NAV/unit at $0.7479..
*Ascendas Hospitality Trust: 3QFY17 results slight beat as DPU jumped 13.1% to 1.64¢. Revenue grew 8% to $59.2m, while NPI advanced at a faster pace of 12.9% to $26.4m, thanks to stronger contributions from Japan (+35.5%), China (+11.4%) and Australia (+9.7%), but pared by contraction in Singapore (-5.2%). Aggregate leverage edged higher to 33.3% (+0.9 ppts q/q). NAV/share at $0.85.
*Fortune REIT: FY16 results in line with DPU higher at HK$0.4923 (+5%), on distributable income of HK$935.2m (+5.7%). Revenue and NPI of HK$1.98b (+5%) and HK$1.41b (+6.5%) was attributable to healthy rental portfolio reversions, as well as the full-year contribution of increased rental from Belvedere Square post-AEI, partially offset by a slip in portfolio occupancy to 96.7% (FY15: 98.8%, 1H16: 96.4%). Aggregate leverage stood at 29.5% (1H16: 29.8%), with average debt cost of 2.4% (1H16: 2.39%). NAV/share at HK$12.90.
*Tuan Sing: 4Q16 net profit fell 13% to $12.5m, dragged by the absence of an income tax credit. Revenue dropped 29% to $101.7m on lower recognition in property development revenue, while the bottom line was partially cushioned by a FX gain from the stronger AUD and firmer results from JV/associates. NAV/share at $0.777.
*First Resources: Dec FFB harvest surged 23.9% to 260,503 tonnes, on increased yield of 1.6 tonnes/ha (Dec '15: 1.4 tonnes/ha). CPO production soared 26.3% to 63,012 tonnes, on improved extraction rate of 22.5% (Dec '15: 22.2%). MKE last had a Hold on the counter with TP of $1.97.
*Cogent: Awarded a 2.5ha land in Jurong Island to build and operate the only full-fledged container depot. This adds to the recently awarded 5.9ha container depot at Tuas South and the patented Sky Depot at the Cogent One Stop Logistics Hub, both of which are expected to be fully operational by the 2Q17.
*Fragrance: Commenced construction on its Australian mixed-use development project, Premier Tower, which will house 780 residential units, retail spaces and a 187 room hotel. Slated for completion in 2021, the project has already secured sales for 70% of its residential units.
*Mencast: Entered into an MOU with Houston Technology Center-Asia to jointly offer technology innovation, incubation, acceleration and commercialisation assistance, to Singapore entrepreneurs and emerging hard science technology companies enabling them to accelerate and commercialise their technologies.
*ISOTeam: Awarded contracts worth $18m for works including upgrading, repair and waterproofing projects for public housing, as well as the supply and installation of timber flooring for Resorts World at Sentosa. Works are expected for completion between Jul '17 and Aug '18.
*IHC: Voluntary trading suspension, for the new board of directors to determine the current state of affairs of the company.