Tuesday, February 28, 2017

SG Market (28 Feb 17)

Some profit taking may take place as investors pare risks ahead of Trump's address to Congress tonight that could shed light on his tax reforms and fiscal plans.

Regional bourses opened higher in Tokyo (+0.8%), Seoul (+0.02%) and Sydney (+0.4%).Technically, the STI is trading at the bottom end of its upward trending channel bounded between 3,150 and 3,100.

Stocks to watch:
*Noble: Swung to a FY16 net profit of US$8.7m from a US$1.67b loss last year, due to significant drop in impairments. Stripping out discontinued businesses and non-cash items, adjusted net profit slipped 18.3% to US$252.1m despite being shored by a US$291m gain on disposal of Noble Americas Energy Solutions (NES) and NES’ pre-sale profit contribution of US$114m. Revenue tanked 25% to US$45.5b on lower sales tonnage (-17.6%), while operating margin narrowed 0.12ppt to 1.77%. The group continued to bleed operating cash of US$592.5m but adjusted net debt was reduced to US$1.3b (3Q16: US$1.9b), while net debt-to-capital improved to 42% from 55%. Liquidity headroom increased to US$2b (3Q16: US$1.2b), exceeding US$1.3b debt due in 2017. NAV/share plunged 40% to US$0.30. Last traded at 0.55x P/B.

*Olam: 4Q16 core net profit surged 155% to $102.3m, bringing FY16 core earnings to $363.8m (+23%), beating estimates. Quarter revenue rose 12% to $6.11b, buoyed by higher overall volume (+14%) and increased prices for coffee and cocoa products. EBITDA margin widened to 5.7% (+0.9ppts) on improved performance in food staples & packaged foods. Operating cash flow of $1.02b was met by a significant reduction in net capex, while adjusted gearing eased to 0.73x (3Q16: 0.79x). Declared second and final DPS of 3¢, bringing FY16 payout to 6¢ (unch). NAV/share at $1.9082.

*First Resources: 4Q16 net profit swelled to US$58m (+224%), lifting FY16 earnings to US$125.4m (+31.1%), beating estimates. Quarter sales jumped 33.9% to US$175.2m on increased volumes and ASPs for both plantation and refinery businesses, which resulted in wider EBITDA margin of 52.2% (+14.5ppt). Higher final DPS of 2.375¢ raised FY16 payout to 3¢ (FY15: 2.5¢). MKE last had a Hold with TP of $1.97.

*Ho Bee: 4Q16 headline net profit tumbled 33% to $129.5m on lower fair value gain from investment properties and an absence of write-backs. This brought FY16 earnings lower to $216.8m (-10.5%). Excluding the one-offs, FY16 core pretax profit of $132.7m (FY15: $50.3m) met 96% of street estimate. Quarter revenue climbed 18.7% to $42.5m mainly on sales recognition of two Australian residential projects, while rental income stayed flat. Raised first and final DPS to 6¢ (FY15: 5¢), but with no special payout in FY16 (FY15: 2¢). Trades at 48% discount to its NAV/share of $4.39. MKE last had a Hold with TP of $2.13.

*Jardine C&C: FY16 core net profit rose 7% to US$679m, meeting expectations. However, revenue stayed flat at US$15.8b, as improvements in Astra’s automotive, heavy equipment, mining contracting, and agribusiness operations were doused by weakness in financial services. Final DPS raised to US$0.56 (4Q15: US$0.51), bringing full-year payout to US$0.74 (FY15: US$0.69). NAV/share at US$14.56.

*United Engineers: FY16 headline net profit jumped 38% to $140.6m, beating street estimates. Revenue fell 44% to $479.7m from lower contribution from property development following the completion of Eight Riversuites. While gross margin expanded 14.7ppt to 40.4% on a shift in sales mix, this was negated by a 16% increase in distribution costs and a 36% surge in other expenses from revaluation loss on certain investment properties and higher impairment loss on some development projects. First and final DPS maintained at 5¢, although special DPS was raised to 7¢, bringing FY16 DPS to 12¢ (FY15 total: 8¢). NAV/share at $3.06..

*Ying Li: 4Q16 net profit tanked 42.4% to Rmb65.9m, bringing full year earnings to $87.7m (-30.5%). For the quarter, revenue jumped 85% to Rmb567.9m, mainly from continued handover of residential units at San Ya Wan Phase 2 and commencement of handover at Ying Li International Electrical and Hardware Centre Phase 1A. Gross margin held steady at 25.7% (-0.1ppt), while bottom line was weighed by lower fair value gains. NAV/share at Rmb1.96.

*Halcyon Agri: 4Q16 net profit surged to US$101.1m (4Q15: US$2.3m), lifting FY16 earnings to US$74.3m (FY15: US$6.8m). Quarter revenue more than doubled to US$441.4m (+106.8%), thanks to a 6% increase in ASP to US$1,441/tonne, as well as a surge in volume following the consolidation of GMG and Sinochem’s natural rubber processing facilities and trading business. Consequently, gross margin expanded 1.3ppt to 5.1%, while bottom line was boosted by a US$116.9m negative goodwill recognised from the acquisitions. NAV/share at US$0.4062.

*Roxy Pacific: 4Q16 net profit fell 4% to $11.9m (-4%), bringing full year earnings to $49.8m (-41%). Quarter revenue rose 14% to $93.1m, boosted by higher revenue recognition from residential developments Trilive, LIV on Sophia and LIV on Wilkie, although hotel contribution slipped (-0.3%). Gross margin fell 2ppts to 22%, while bottom line was dragged by lower fair value gains from investment properties and a broad increase in opex. Lowered final and special DPS of 0.622¢ and 0.542¢, respectively, bringing full year DPS to 1.667¢ (FY15 total payout: 1.913¢). NAV/share at $0.412.

*Mewah: 4Q16 net profit surged three-fold to US$5.4m, lifting FY16 earnings to US$20.8m (+220%). Revenue for the quarter leapt 37% to US$740m on higher sales volume (+10%) and average selling price (+24.6%). Operating margin widened 0.8ppt to 5.4%, as direct costs (+34%) rose at a slower pace. Raised final DPS to 0.55¢ (4Q15: 0.45¢), bringing full-year payout to 0.85¢ (FY15: 0.45¢). NAV/share at US$0.3257.

*Cogent Holdings: 4Q16 net profit of $8.6m (+17%) brought FY16 earnings to $32.1m (+26%), in line with street estimate. Quarter revenue climbed 8% to $36m, underpinned by growth in transportation management (+21%) and container depot (+24%) businesses. Operating margin dipped 0.5ppt to 29%, while the bottom line was lifted by lower taxes (-25%) due to prior overprovision. Net gearing shrank to 0.5x from 0.7x in FY15. Did not declare any dividends for FY16 (FY15: 1.88¢), ahead of capex required for construction of Jurong Island Chemical Logistics Facility. Last traded at 10.9x FY17e P/E. NAV/share at $0.2641.

*Hiap Hoe: 4Q16 net profit surged 382.4% to $28.2m, boosted by a $26.5m gain on disposal of Cavenagh Properties. Revenue fell 22.5% to $19.2m from the absence of development revenue, as well as lower contributions from rental (-23.3%), hotel operations (-9.7%) and leisure (-8.1%). First and final DPS of 1¢ maintained. NAV/share at $1.52..

*Sapphire: FY16 net profit jumped 48.8% to $9.6m, while revenue surged 262.5% to $223.9m from the consolidation of Ranken. Gross margin rose 0.7ppt to 12.2%. However, growth in the bottom line was pared by 56.6% drop in other operating income, as well as 63.8% jump in admin costs on the consolidation of Ranken’s expenses. NAV/share at $0.2983.

*Gallant Venture: Swung to 4Q16 net profit of $144m (4Q15: $57.8m loss), bringing full year earnings to $71.4m (FY15: $145m loss). Revenue fell 16% to $431.8m from lower vehicle and equipment sales at IMAS, and as well as lower utilities and resort contributions, while the bottom line was boosted by a $220.6m disposal gain of subsidiary Market Strength Limited. NAV/share at 32.13¢.

*United Global: FY16 net profit fell 9.5% to US$5.6m, while revenue dropped 8.3% to US$91.5m, dragged by a 16.9% reduction in trading business from lower prices and sales volume, although manufacturing remained steady. Although gross margin expanded 1.5ppt to 15.5%, this was largely negated by a 12% increase in admin costs, mainly arising from FX losses, and higher professional and directors’ fees incurred in conjunction with IPO. Final DPS of 0.5¢ brings FY16 DPS to 1¢ (FY15: nil). NAV/share at 6.3¢.

*Hotel Properties: FY16 net profit jumped 26.7% to $103.5m, boosted by a disposal gain of $41.3m and insurance proceeds of $10.9m. Revenue was flat at $577.6m, with lower hotel contribution stemming from weak economic sentiments, but offset by higher property revenue. First and final DPS of 4¢ maintained, along with special DPS of 4¢ (FY15: 8¢). NAV/share at $3.45.

*GLP: Inviting relevant short-listed parties to conduct due diligence on the group, for the purpose of partial or full acquisition in GLP.

*Tat Hong: 88.4% owned Tat Hong Equipment China raised its stake by 2.7ppts to 84.6% in China tower crane rental business, Tat Hong Equipment Service, for NT$128.8m ($5.9m).

*Sarine Tech: Entered collaboration with GGTL Laboratories to research new approaches to diamond grading and authentication.

*Ntegrator: Secured two major contracts worth $47.8m involving the supply of fibre installation and maintenance, over a period of two and three years, respectively, commencing Mar ’17.

Monday, February 27, 2017

SG Market (27 Feb 17)

Market sentiment will be driven by whether Wall Street can sustain its red hot rally as the local corporate results season drawing to close, with attention turning to US President Trump's first address to Congress tomorrow for more details on his fiscal plans, and China's manufacturing data mid-week.

Regional bourses opened lower in Tokyo (-0.7%), Seoul (-0.3%) and Sydney (-0.2%).Technically, the STI is still trading within its upward trending channel bounded between 3,150 and 3,080 despite being overbought for an extended period.

Stocks to watch:
*Venture: 4Q16 net profit jumped 20.6% to $54.1m, taking full year earnings to $180.7m (+17.3%), surpassing estimates; Quarter revenue rose 23.1% to $854.6m from new products/programmes, and growth from existing products. Pretax margin was maintained at 7.6%, while bottom line was partially weighed by a $22.6m legal settlement cost. First and final DPS of $0.50 was maintained. MKE maintains buy with TP of $11.50.

*UOL: FY16 net profit declined 27% to $287m, missing estimates. Revenue climbed 13% to $1.44b, lifted by strong property development sales (+27%) on higher progressive recognition of Riverbank@Fernvale, Botanique at Bartley and Principal Garden. Hospitality operations (+2%) benefitted from better performance at Australian hotels. But bottom line was weighed by lower share of profits from JVs of $4.3m (FY15: $29.1m) and a $9.7m fair value loss on investment properties (FY15: $60.9m gain). Maintained first and final DPS of $0.15. Trading at 0.66x P/B. MKE last had a Buy with TP of $7.39.

*Golden Agri: 4Q16 net profit of US$46.3m (+136.7%) brought FY16 earnings to US$399.6m (FY15: US$10.4m), within expectations. For the quarter, revenue grew 37.8% to US$2.1b on the back of a 37% jump in CPO prices and 7% increase in output. But earnings were hit oilseeds losses and a US$34.3m impairment in China. Bottom line was buttressed by a US$62m deferred tax income arising from tax-based asset revaluations. First and final DPS raised to 0.635¢ (FY15: 0.502¢).

*CWT: FY16 net profit tumbled 32% to $73.6m, below estimates. Revenue slipped 7% to $9.3b, as commodity marketing (-7.2%) was impacted by lower ASPs and volumes, while logistics (-4.2%) suffered from slower trade flow. Excluding exceptional items, largely comprising expenses accrued to an ongoing project and a $6.7m withholding tax, operating profit was $110.1m. Slashed first and final DPS to 3¢ (FY15 total payout: 9¢). Trading at 43% premium to its NAV/share of $1.456.

*Pacific Radiance: 4Q16 net loss deepened to US$36.2m (4Q15: US$2.6m loss) on impairments (US$12m), FX loss (US$2.2m) and disposal loss (US$6.8m). This pulled FY16 net loss down to US$118.6m (FY15: US$3.8m profit), below estimates. Revenue for the quarter sank 44% to US$12.1m amid lower utilisation and reduced charter rates for OSVs, while bottom line was further dragged by a spike in finance costs (+69%) on higher borrowings. Net gearing leapt to 1.6x (FY15: 0.86x). No DPS declared (FY15: 1¢). NAV/share fell 28.8% to US$0.408..

*QAF: FY16 net profit surged 129% to $120.4m, bolstered by a $59.4m gain from a partial 20% stake sale in Gardenia Bakeries KL (GBKL). Revenue fell 11% to $889.5m from the deconsolidation of GBKL, but all other segments saw healthy sales. Final DPS of 4¢ maintained, bringing full year payout to 5¢ (unch). NAV/share at 93.8¢.

*Sinarmas Land: Swung into 4Q16 net profit of $46.5m (4Q15: $7.8m net loss), bringing full year earnings to $114.9m (-19.7%). FY16 revenue fell 8.2% to $878.4m from lower sales of land for commercial and industrial purposes, offset by higher residential unit handovers. Gross margin fell 2.2ppt to 66.5% from decreased sales of higher margin land parcels. First and final DPS of 0.19¢ maintained. NAV/share at $0.47.

*Asian Pay TV: 4Q16 DPU slumped 27.8% to 1.625¢, bringing FY16 payout to 6.5¢ (-21.2%). Quarter revenue slipped 2% to $83.9m, dragged by lower contribution in all three segments consisting basic cable TV (-2.1%), premium digital cable TV (-3.3%) and broadband (-1.1%), on the back of lower ARPU and reduced churn rate, despite a 2.2% increase in overall subscribers. Accordingly, EBITDA margin narrowed 2.3ppts to 59.5%. Guided for FY17 DPU of 6.5¢, implying an attractive indicative yield of 13.8%. NAV/unit at $0.85.

*Sunningdale Tech: 4Q16 net profit spiked 63.3% to $21.5m, bringing FY16 earnings to $39.1m (-7.2%). For the quarter, revenue inched 3.4% higher to $184.1m, as higher sales from automotive (+10%) and consumer/IT (+9.6%) was offset by lower contribution from healthcare (-3.4%) and mould fabrication (-16.7%). Gross margin was stable at 13.6% (+0.3ppt), while the bottom line was boosted by one-off gains for FX ($8.4m) and disposal ($5.1m). Raised first and final DPS to 6¢ (5¢). NAV/share at $1.87.

*Sarine: 4Q16 spiked to US$5.0m (+238.5%), lifting FY16 earnings of US$18.0m (+401%) to come in line with consensus estimate. In the quarter, revenue jumped 52.6% to US$18.9m, primarily due to increased diamond manufacturing equipment, Galaxy family systems, in India, as well as higher recurring income. MKE last had a Buy with TP of $1.97.

*SingMedical: Turned in FY16 net profit of $2.4m (FY15: $0.1m loss), lifted by a re-measurement gain of $1.6m. Revenue rose 34.3% to $41.6m from new acquisitions Novena Radiology and Lifescan Imaging, acquired in Apr '16 and Sep '16, while gross margin expanded 4.6ppts to 35.8%.*Tiong Seng: FY16 net profit jumped 49% to $15.3m, on higher revenue of $774.3m (+37%) from increased construction contracts (+31%) and sales of development properties (+92%). Bottom line impact from the absence in disposal gains from car park lots and fixed asset were mitigated by a turnaround in JV contribution to $0.9m (Fy15: -$3.1m). Construction order book shrank to $1b (FY15: $1.3b). Raised first and final DPS to 0.8¢ (FY15: 0.5¢). NAV/share at $0.5731..

*Cosco Corp: 4Q16 net loss narrowed 35% to $313m, bringing full year loss to $466.5m (+18%). Quarter revenue of $409.8m (-43.5%) was dragged by reduced income from shipyard (-44%) and shipping (-3.3%). Gross loss worsened to $467.5m from $336.1m, on inventory writedowns. Bottom line saw a $65.4m net writeback of trade receivables (4Q15 impairment: $304.6m), but was partly offset by a 443% surge in taxes to $155.5m from de-recognition of deferred tax assets. NAV/share at $0.1501.

*Soo Kee: 4Q16 net profit growth of 38.4% to $3.1m was partially pared by FX loss of $0.8m. This brought FY16 earnings to $6.5m (-22.6%). Quarter revenue soared 50.2% to $54.7m from contribution of gold and silver dealer SK Bullion, acquired in Apr '16. While pretax margin was stable around 7%, bottom line was drag by higher taxes (+199%). Maintained first and final DPS of 0.5¢. NAV/share at $0.095.

*Money Max: 4Q16 net profit surged 42.1% to $1.5m, doubling FY16 earnings to $6.2m. For the quarter, revenue of $34.7m (+34%) was led by stronger pawnbroking business and retailing of pre-owned items. Maintained first and final DPS of 0.5¢. NAV/share at $0.1816.

*SUTL: 4Q16 net profit rose 49% to $2.0m, as revenue climbed 9% to $8.1m on increased F&B sales and berthing income, but partly offset by lower membership transfers, entrance fees and subscription base. Expenses (+2%) rose at a slower pace on increased operating leverage. First and final DPS of 2¢ declared (FY15: nil).

*Raffles Medical: MOU signed to explore cooperation between Chongqing Liangjiang New Area Administrative Committee and the Company on healthcare-related projects.*Duty Free Int'l: Proposed placement of 15.6m shares at $0.38 each, to raise net proceeds of $5.7m. The bulk (90%) will be for M&A and/ or potential business opportunities, with the remaining for working capital.

*Koh Brothers Eco Engineering: Awarded a subcontract by Keppel Seghers for civil, structural, piping, marine and architectural landscaping works for Singapore's fourth desalination plant at Marina East. The contract is scheduled to complete by Jan '20, and will lift group's order book to $576.8m from $569.5m.

*Hong Leong Asia: 40.2% owned China Yuchai announced that Saudi Arabia has ordered 321 Xiamen Kinglong buses, which are powered by Yuchai's heavy-duty engines.

*Yoma: 15:85 JV with Metro Group Wholesale & Food Specialist, to establish a one-stop food distribution platform in Myanmar.

*KS Energy: 80.09% owned KS Drilling was awarded a US$5m contract, utilising the KS Discoverer 6 land drilling rig in Indonesia for eight months.

*Profit warnings:
- Progen
- PSL Holdings
- Midas
- Resources Prima

Friday, February 24, 2017

SG Market (24 Feb 17)

*China Aviation Oil: 4Q16 net profit surged 57% to US$17.9m, bringing full year net profit to US$88.9m (+45.1%), beating street estimates. For the quarter, revenue grew 65.2% to US$3.3b from the increase in volume traded, while gross profit rose at a slower clip to US$10.6m (+32.3%). Further, bottom line was lifted by lower other operating expenses of $0.8m (-57%), as well as a spike in associate contribution (+36.7%) led by Shanghai Pudong International Airport Aviation Fuel Supply Company. Hiked first and final DPS to 4.5¢ (FY15: 3¢).

*Hyflux: FY16 net profit crashed 91% to $4.8m, despite revenue more than doubling to $987m (+121.7%), from contributions by TuasOne waste-to-energy project, Qurayyat Independent Water Project and Oman Tuaspring power plant. However, profits generated by the higher EPC projects were substantially wiped out by losses from the weak Singapore power market and electricity prices. Slashed final DPS to 0.25¢, bringing full year DPS to 0.45¢ (FY15: 1.7¢). NAV/share at $0.451.

*Far East Orchard: FY16 net profit surged to $65m (+123%), boosted by the development completion for commercial property project, SBF Center, as well as increased JV contribution. However, revenue fell 31.7% to $184.9m, on lower takings in both property development and hospitality. Gross margin widened 6ppts to 32.1% on a shift in mix, while the bottom line was also supported by the absence of a $4.9m goodwill impairment and positive FX swing of $11.1m. Maintained first and final DPS of 6¢. NAV/share at $2.91.

*ISEC: 4Q16 net profit spiked from a low base to $1.5m (4Q15: $0.1m), bringing FY16 earnings to $6.5m (+136%), slightly below forecast. For the year, revenue jumped 15% to $30.8m, from contribution of recently-acquired Southern Specialist Eye Centre and increased patient visits in Malaysia, but mitigated by the closure of loss-making International Specialist Eye Centre in Singapore. Accordingly, gross margin expanded 3.3ppts to 47.9%. Final DPS of 0.11¢ declared, bringing FY16 payout to 0.99¢ (FY15: 0.44¢). MKE last had a Buy with TP of $0.42.

*Memtech: 4Q16 net profit climbed 5.9% to US$4m, as revenue rose 25.5% to US$47.9m, led by improvements from consumer electronics and automotive segments, which outweighed weakness from telecommunication. Pretax margin narrowed 2ppt to 8.6% on higher staff and goods transportation costs, as well as an absence of a write-back of doubtful trade receivables. Healthy net cash of US$24m accounts for 39% of market cap. However, group cut its first and final DPS to 2.5¢ (FY15: 3.3¢).

*Frencken: 4Q16 net profit surged 5x to $4.4m, lifted mainly from the absence of an impairment loss. Revenue climbed 7.8% to $111.2m on stronger sales in mechatronics (+15%), but partially weighed by lower contribution from IMS (-2.3%). However, a 2.5ppt dip in gross margin to 14.6% negated the sales uplift. Higher first and final DPS of 1.2¢/share declared (FY15: 0.75¢). NAV/share at 0.5229.

*Q&M: Undertaking an independent strategic review and has appointed Religare Capital Markets as financial adviser. MKE last had a Buy with TP of $1.00.

*Global Premium Hotels: Received conditional privatisation offer at a final price of $0.365/share, representing 14% premium to last traded price, from Chairman Dr. Koh Wee Meng, who has secured undertakings for 71% of shares. The offer values the group at 0.53x P/B.

*Tritech: Awarded a Rmb10.5m contract to design, install and construct a waste water treatment plant in Hebei, China, with a capacity of 2,500 cubic meters per day.

Thursday, February 23, 2017

SG Market (23 Feb 17)

The market is likely to stay on its upward path following headline earnings beat from City Dev, Genting S'pore and Sembcorp Marine.Regional bourses are in the red in Tokyo (-0.2%), Seoul (-0.1%) and Sydney (-0.4%).Technically, the STI is trading within its uptrend channel bounded by topside resistance at 3,130 and support at 3,080.

Stocks to watch:
*City Dev: 4Q16 net profit slumped 40.6% to $243.8m due to absence of sales under its profit participation scheme and lower JV contribution following the completion of residential development projects. However, FY16 earnings of $653.2m (-15.5%) still beat consensus estimate. Quarter revenue rose to $1.17b (+36.5%), underpinned by a surge in property development sales (+147%) arising from the handover of units at Phase 1 of Suzhou Hong Leong City Center. Declared higher final and special DPS totalling $0.12, bringing FY16 payout to $0.16 (FY15: $0.12). NAV/share at $10.22. MKE last had a Hold with TP of $9.42.

*Sembcorp Marine: Headline 4Q16 net profit staged a turnaround to $34.3m (4Q15: $536.9m loss), bringing FY16 earnings to $78.8m, (FY15: $289.7m loss), beating estimates, but underlying results were weak. Quarter revenue fell 37.5% to $829.9m on rig delivery deferment and drop in repair business. Bottom line was mainly lifted by a FX gain $63.7m, and absence of writedowns. Net order book, excluding Sete Brasil drillships, shrank to $4.7b (3Q16: $5.2b). Final DPS of 1¢ brought FY16 payout to 2.5¢ (FY15: 6¢). MKE last had a Sell with TP of $1.00.

*Genting Singapore: Swung into 4Q16 net profit of $159.2m (4Q15 net loss: $7.75m), lifting FY16 earnings to $266.3m (+254%), above street estimates. Quarter revenue rose 2% to $557.7m on the back of improved gaming revenue (+7%) from higher rolling win rate and a revised strategy to focus on better margin businesses, but offset by an 8% dip in non-gaming revenue to $158.5m. EBITDA margin expanded to 41.9% (+8.8ppt) from improved cost control and lower bad debt provisions. Final DPS of $0.015 took full year DPS to $0.03 (FY15: $0.015). MKE upgrades to Buy with raised TP of $1.10 (+38%).

*Best World: 4Q16 net profit soared 231% to $12.3m, on higher revenue of $61.8m (+51%) from continued strength in direct selling (+34%) and impressive growth in exports (+197%) to China. This brought FY16 earnings to $34.6m (+242%) surpassing street estimate of $30.3m. Final DPS raised to 3¢, bringing adjusted FY16 payout to 4.6¢ (FY15: 1.6¢). Proposed a 2-for-1 share split. MKE maintains Buy with higher TP of $2.34 (+8%).

*Ezion: Remained in 4Q16 net loss of US$66.6m (4Q15: US$63.5m loss), dragging FY16 into a loss of US$33.6m (FY15: US$36.8m profit). For the quarter, revenue dropped 14.3% to US$72.6m due to a reduction in charter rates and an unexpected delay in completion of modification and upgrade for its service rigs. Accordingly, gross margin crumbled by almost half to 12.1% (-11.7ppts). NAV/share at US$0.6343..

*Breadtalk: FY16 net profit jumped 50.4% to $11.4m, lifted by divestment gains of investment securities, higher government grant and JV contribution. However, revenue edged lower to $615m (-1.5%) on weaker turnover for Food Atrium due to several premature outlet closures in China, as well as reduced contribution from the restaurant division. EBITDA margin widened 1.2ppt to 13.6% on tighter cost controls and productivity gains from bakery due to the rising proportion of franchise outlets. Raised final DPS to 2¢ (4Q15: 1¢), lifting FY16 payout to 3.85¢ including a special DPS of 1.35¢ paid earlier (FY15: 1.5¢).

*Riverstone: 4Q16 net profit fell 3.2% to RM36m, bringing FY16 earnings to RM120.4m (-4.9%), coming in at the higher end of estimates. Although quarter revenue jumped 19.3% to RM183m on increased volume of gloves sold, the effects were largely negated by reduced gross margin of 26.3% (-5ppt) arising from lower ASPs and a shift in sales to lower-margin healthcare gloves. Final DPS of RM0.0519 brings FY16 DPS to RM0.0649 (FY15: RM0.0645). NAV/share at RM0.7482.

*Cityneon: FY16 net profit made a significant jump to $6.7m (FY15: $0.9m), but still missing street estimates. Revenue inched 0.3% to $96.8m, as increased shows led to higher income from exhibition services (+11.1%), but was offset by reduced contributions from experiential environment (-15.8%) and event management (-70.8%). Gross margin expanded to 34.4% (+10.3ppts), resulting from increased profitability of the new intellectual property rights business, Victory Hill Exhibitions, acquired in Sep '15.

*Soilbuild Construction: 4Q16 net profit narrowed 37.6% to $3.5m dragged by higher tax expenses and weaker revenue of $89.4m (-8.8%). Gross margin narrowed 2.2ppt to 6% amid lower profitability from on-going HDB projects and higher construction costs. Orderbook depleted to $385.7m (FY15: $639m). Maintained final DPS of 0.5¢, but trimmed special DPS to 0.75¢ (4Q15: 1¢), resulting in lower full-year payout of 1.75¢ (FY15: 2¢). NAV/share at $0.1465.

*Rotary Engineering: FY16 net profit plummeted 73% to $11.4m from lower FX gains and absences of disposal gains and write-back on impairment. Revenue fell 29% to $233.9m as major projects has been completed, while gross margin remained steady at 24%. First and final DPS slashed to 0.5¢ (FY15: 1.5¢). NAV/share at $0.283..

*Delfi: 4Q16 net profit surged 357% from a low base to US$3.6m, on firmer revenue of US$105.6m (+5.6%) driven by sales from its own brands (+9.1%), although agency brands (-1.1%) slipped. Additionally, key Indonesian market benefited from a 6% appreciation in the Rupiah. Accordingly, gross margin expanded 7.6ppt to 38.4% on the shift in mix, as well as increased selling prices and cost control efforts. Hiked final DPS to 1.35¢, resulting in a full-year payout of 3.18¢ (FY15: 2.86¢).

*Fu Yu: 4Q16 net profit jumped 44.4% to $5.6m, mainly boosted by a positive FX swing of $5.2m. However, revenue contracted 3.5% to $48.5m on a general slowdown in customer demand. Gross margin narrowed 2.4ppt to 17.3%, while the bottom line was weighed by increased admin expenses from staff and IT system upgrades, as well as an absence of tax credit. Cash pile remained high at $105.6m, or 63.7% of current market cap. Maintained final DPS of 1¢ and full-year payout of 1.5¢. NAV/share at $0.2305.

*Kim Heng O&M: 4Q16 net loss worsened to $12.9m (4Q15: $1.5m loss), dragged by an $8.3m impairment of fixed asset. From the industry downturn, revenue tumbled 45% to $7.5m on low demand for rig maintenance and absence of sales on vessels and newbuild. Hence, first and final DPS slashed to 0.07¢ (FY15: 0.3¢). NAV/share at $0.129.

*Fragrance Group: FY16 net profit plunged 89% to $7.5m, weighed by a $26m drop in fair value gain on investment properties and a spike in finance costs (+40%). Revenue sank 58.4% to $118.7m due to a lower number of property development projects and reduced rental income due to higher vacancy. NAV/share at $0.155.

*Cache Logistics Trust: Acquiring freehold warehouse in Laverton North, Australia for A$22.3m, or a NPI yield of 7.4%. The property has a gross lettable area of 20,723 sqm and is master leased to Spotlight for a remaining term of 4.5 years, with two 6+6 renewal options. The deal is expected to complete by Mar '17.

*Vallianz: Agreed with trade creditors to settle $7.6m in payables via the issue of ordinary shares in Vallianz. A total of 13 trade creditors will subscribe for 380.6m new ordinary shares at $0.02/share, representing 8.8% of enlarged share base.

Wednesday, February 22, 2017

SG Market (22 Feb 17)

The market could track record-breaking Wall Street and crude oil prices higher but upside may be capped by a dearth of any inspiring 4Q earnings thus far.

Regional bourses opened flattish in Tokyo (-0.03%), Seoul (+0.04%) and Sydney (-0.1%).Technically, the STI is trading at the lower end of its upward channel bounded by topside resistance at 3,130 and support at 3,080.

Stocks to watch:
*PACC Offshore: 4QFY17 net loss deepened to a whopping US$345.4m (4QFY: US$149.7m) on the back of charges for impairments of fixed assets (US$111.2m) and goodwill (US$111.2m), sending its full year loss to US$371.4m (FY16: US$131m loss). Excluding one-offs, 4QFY17 operational net loss was US$35.3m against US$1.2m the previous year. Revenue sank 49% to US$36.7m from lower usage and charter rates cross all major segments. Net gearing rose to 1x, while NAV/share slumped to US$0.38 from USD0.585.

*CNMC Goldmine: Swung to 4Q16 net loss of US$1.9m (4Q15: US$3.3m profit) on lower revenue of US$5.2m (-44.2%) due to reduced gold production (-52.5%) from lower quality ore despite a 17.4% increase in realised price of US$1,283/oz. Bottom line was dragged by a US$3m swing to FX loss of US$2.3m stemming from the weakening MYR against the USD. This took FY16 earnings to US$9.1m (-14.8%), below US$14.7m street estimate. Final plus special DPS of 0.734¢ was declared, bringing full year DPS to 1.134¢ (FY15: 0.945¢) NAV/share at US9.73¢. Trades at 2.8x P/B.

*ValueMax: FY16 net profit surged 54.9% to $15.6m, despite a 6.2% drop in revenue to $253.3m on lower trading of pre-owned jewellery and gold, although pawnbroking and moneylending saw healthy growth. Gross margin widened 3.9ppts to 14.2%, and bottom line was further bolstered by increased income from moneylending facility fees, government grant and rental income. Raised first and final DPS to 1.08¢ (FY15: 0.95¢). NAV/share at $0.3108.

*Far East Hospitality Trust: 4Q16 DPU of 1.12¢ (-4.3%) brought FY16 payout to 4.33¢ (-5.9%) or 3% above estimate. Quarter gross revenue and NPI fell to $27.5m (-4.6%) and $24.9m (-5.4%), mainly from a drop in RevPAR to $136 (-7.3%) stemming from the weak operating environment. However, occupancy improved 1.2ppts to 86.5%. Aggregate leverage contracted slightly to 32.1% (-0.7ppts q/q) with average debt cost and tenor at 2.5% and 2.3 years. NAV/unit at $0.9090.

*TalkMed: 4Q16 net profit climbed 6.6% to $10.2m, on firmer revenue of $18.4m (+2.4%) from increased patient takings. Bottom line was buttressed by lower loss from associate Hong Kong Integrated Oncology Centre. Trimmed final DPS to 2.283¢ (4Q15: 2.305¢), but maintained full-year payout at 4.563¢. Proposed a 1-for-1 bonus issue. Trading at ex-cash FY16 P/E of 20x. NAV/share at $0.0967..

*Ramba Energy: 4Q16 net loss narrowed to $8.2m (4Q15: $21.7m loss), shored by lower impairment of O&G assets, a positive FX swing and absence of provisions. However, revenue declined 8.3% to $14.5m as weakness in logistics overshadowed the commencement of oil production from Lemang in mid-Nov. NAV/share shrank 32.5% to $0.0967.

*Trendlines: FY16 net loss almost doubled to US$6.6m (FY15: US$3.6m loss), as total income shrank to US$0.1m (FY15: US$9.9m), mainly from a US$9.8m write-off of nine portfolio companies as a result of funding shortage. However, core expenses continued to rise 26.1%, due to the recruitment of new high level employees as part of the group's expansion. NAV/share at US$0.15.

*NeraTel: 4Q16 net profit from continuing operations plunged to $0.9m (-76.8%) due to higher payrolls, former CEO's remuneration and dispute claims from former staffs. On the flip side, revenue jumped 25.9% to $49.6m on higher turnover of network infocomm equipment (+54%), which offset weakness in telecom (-4%). Gross margin narrowed 8.4ppts to 25.3% on lower writebacks from project closures, and a shift in mix. Cut final DPS to 0.5¢ (4Q15: 1¢), bringing full-year payout to 16.5¢ (FY15: 3.5¢), which included a special payout of 15¢ earlier. NAV/share at $0.1831.

*Mapletree Logistics Trust: Proposed to divest a vacant warehouse at 20 Old Toh Tuck Road, for $14.25m, and potentially realising a book gain of $1.2m.

*DiSa (formerly Equation Summit): A recent study by US Loss Prevention Research Council of DiSa's anti-theft system within designated Wal-Mart stores has concluded that 1) it appears scalable, 2) drives sales and 3) reduces product return rates.

*Profit warning:
- United Food
- Yongnam
- Abterra
- China Environmental Resources
- Delong

Tuesday, February 21, 2017

SG Market (21 Feb 17)

The market is unlikely to be stirred by a largely conservative Budget 2017, which did not offer any sweeping tax changes or incentives for businesses or individuals. Hence, focus will shift back to 4Q earnings, where a slew of mid and large caps will release results starting on Wed, notably Sembcorp Marine, Genting Sp, best World on 22 Feb, City Dev, SCI, zion, CAO on 23 Feb and UOL, Golden Agri, Cosco on 24 Feb.

Regional bourses opened mixed in Tokyo (+0.2%), Seoul (+0.4%) and Sydney (-0.2%).Technically, the STI is trading within an upward channel bounded by topside resistance at 3,130 and support at 3,065.

Stocks to watch:
*Economy: This Budget is more conservative than we expected. There is some targeted help for marine & process industries as well as SMEs, but not broadly for most other sectors (services or manufacturing). A modest amount ($2.4b over 4 years) is set aside to support CFE strategies, of which $1.5bn is for topping-up of research and productivity funds. We see limited impact to growth, structurally or cyclically, and maintain our GDP forecast at 2.5% for 2017.

*Construction: From Budget 2017, the sector will benefit from the $700m of public sector infrastructure projects brought forward to 2017 & 2018. However, there was no deferment of foreign worker levy rates, which will be increased from Jul '17, and the 30% hike in water prices from this Jul could raise operating expenses for the construction sector, one of the largest users of water by industry.

*Land transport: Restructured diesel taxes to be implemented in Aug '17 would be volume-based with a duty of $0.10/litre, compared to the previous lump sum tax. While this would incrementally raise fuel costs, particularly for public buses and companies such as ComfortDelGro and SBS Transit, the impact on diesel taxis would be partially mitigated by a $850 reduction in the annual tax to $4,250.

*O&M: Foreign worker levy increases in the industry will be deferred by one more year.

*Wilmar: 4Q16 core net profit of US$589.5m (+70%), brought FY16 earnings to US$976.6m (-14.1%) but still beating US$813.4m estimate. Quarter revenue jumped 26.7% to US$11.9b, underpinned by higher commodity prices and increased sales volume, while EBITDA margin widened 0.6ppts to 7.1%. Bottom line was lifted by higher pretax profits from tropical oil (+94%), sugar (+68%) and oilseed & grains (+8%), as well as a tax benefit of US$23.3m arising from tax incentive for its Indonesian operations. However, final DPS was shaved to $0.04, bringing full-year payout to $0.065 (FY15: $0.08). NAV/share at US$2.285.

*Maxi-Cash: FY16 net profit surged 193% to $11.3m as revenue jumped 35% to $163.2m from higher interest income from the pawnbroking (+15.5%) and increased contribution from retail and trading of jewellery, watches and branded bags (+40.7%). Bottom line benefitted from operating leverage, and a relatively slower uptick in expenses. Final DPS of 1¢ brought FY16 DPS to 1.5¢ (FY15: 0.5¢). NAV/share at $0.1317. Operating environment remains challenging amid keen competition, volatile gold prices and weak retail sentiment but the group will continue to work on building its market leadership on store network, branding, innovation and operational efficiencies.

*Auric Pacific: 4Q16 net loss narrowed to $0.3m (4Q15: $19.2m loss), mainly due to a 57% reduction in other operating expenses to $18.2m (4Q15: $42.2m). Revenue slipped 1.4% to $106.4m on lower contribution from downstream operations due to closure of loss-making food outlets, although upstream operations maintained its growth momentum. Gross margin held steady at 42.1%. NAV/share at $1.34..

*OKP: 4Q16 net profit soared 315% to $8m on sharply higher revenue of $34.4m (+40.6%), driven by increased projects for both construction (+33%) and maintenance (+72%) segments. Gross margin widened 15.6ppts to 31.3% on improved project implementation and lower raw material costs. Bottom line was further boosted by its JV Lakehomes, which handed over units of LakeLife executive condos in 4Q16. Maintained final DPS of 0.7¢, but raised special DPS by 0.5¢ to 0.8¢, bringing full-year payout to 2¢ (FY15: 1.1¢). NTA/share at $0.3654.

*GLP: Acquired Shanghai Jingxi Business Consulting for Rmb350m (US$51m), implying a 1x P/B valution for the business. Through Shanghai Jingxi, GLP now owns 45.6% in Beijing Capital Farm. No specific details were released on these two companies.

*TriTech: Awarded a Rmb14.9m contract to design and install a wastewater treatment system for a plant with a capacity of 8,000 tpd in Wuhan, China.

*Profit warning:
- Debao Property Development
- A-Sonic Aerospace
- Natural Cool

Monday, February 20, 2017

SG Market (20 Feb 17)

The main event this week is Budget 2017, which will be unveiled today at 3.30pm today. Investors expect pro-growth incentives to support the recommendations of the Committee for Future Economy. However, there is likely going to be more progressive personal as well as higher consumption taxes, including a new carbon tax, to balance the fiscal position.

Regional bourses opened lower in Tokyo (-0.4%), Seoul (-0.1%) and Sydney (-0.3%).Technically, the STI is trading within an upward channel bounded by topside resistance at 3,130 and support at 3,065.

Stocks to watch:
*Raffles Medical: FY16 net profit of $70.2m (+1.3%) met lower end of estimates. Revenue rose 15.4% to $473.6m on higher patient load from the expanding clinic network, and incremental sales contribution from more specialist consultants. However, operating margin contracted 2.3ppts to 17.3% on increased staff costs and 40th anniversary celebration expenses. Final DPS of 1.5¢ was maintained, bringing FY16 payout to 2¢ (unch). MKE last had a Buy with TP of $1.85.

*OUE: FY16 net profit slid 7.7% to $144.4m as lower share of negative goodwill and reduced contributions from OUEHT, a spike in marketing costs (+95%) arising from the sale of OUE Twin Peaks and higher taxes (+58%) ate into a doubling in revenue to $884.2m, which was boosted by consolidation of One Raffles Place and sales of Crown Plaza Changi Airport (SGD205m) and OUE Twin Peaks (SGD196.9m). Final DPS of 2¢ brought FY16 payout to 5¢ (unch). NAV/share at $4.45.

*UIC: FY16 net profit climbed 10% to $286m on firmer revenue of $1.04b (+28%), thanks to higher recognition of residential property sales. However, gross margin contracted 3.3ppts to 34.1%, while the bottom line was partially dragged by weaker JV contribution due to completion of several residential projects, as well as reduced fair value gain from investment properties. Maintained first and final DPS of 3¢. NAV/share at $4.39.

*Parkway Life REIT: Acquiring two nursing homes and a group home in Chiba prefecture, as well as two nursing homes in Yamaguchi prefecture, Japan, for a total of ¥4.76b ($59.5m), giving a 6.9% NPI yield. The properties are secured with long-term leases ranging 20-30 years, and would increase its WALE to 9.81 years from 8.44 years. Post-acquisition, aggregate leverage will inch up 1.2ppts to 37.5%.

*Hong Leong Asia: 40.2% owned China Yuchai has entered into a strategic partnership with HK-listed construction equipment manufacturer, Zoomlion Heavy Industry Science & Technology, to develop and produce six-cylinder medium and heavy-duty engines for Zoomlion’s agricultural equipment.

*Swing Media: Proposed acquisition of Grace Health Group (GHG) for A$115m via $90m cash payment, $10m in convertible bonds and $15m one year after completion of deal. There will also be an earn-out consideration of up to $45m based on GHG's FY3/18 and FY3/19 net profits. GHG is a producer and exporter of wagyu beef in Australia to China, and owns a total area of ~200 sq km with ~7,000 top quality wagyu cattle in Queensland, Australia. The acquisition will be funded by capital raising (>A$50m), bank loans and internal resources.*Noble: Secured a US$1b revolving facility supported by six banks led by Société Générale and ING Bank, to be used as working capital at Noble Clean Fuels.

*Oxley: Terminated its $50m convertible loan facility to IHC, following the mandatory unconditional cash offer for the latter by the OUE group.

Profit warning:
- Baker Tech
- Ezion
- Charisma Energy
- Rowsley

Friday, February 17, 2017

SG Market (17 Feb 17)

The market is likely to maintain its upward climb on the back of another takeover news by Indonesia's Riady family and better-than-expected 4Q GDP growth as well as UOB results.

Regional bourses opened lower in Tokyo (-0.7%), Seoul (-0.4%) and Sydney (-0.2%).Technically, the STI is trading within an upward channel bounded by topside resistance at 3,110 and support at 3,065.

Stocks to watch:
*Economy: 4Q GDP of 2.9% beat expectations (est: +2.5%, prior: 1.8%) propped up by a strong manufacturing output. This lifted 2016 GDP growth to 2.0% (2015: +1.9%), higher than MTI's forecast range of 1-1.5%. For 2017, MTI has maintained a GDP growth estimate of 1-3%.

*UOB: 4Q16 net profit slipped to $739m (-6.2% y/y, -6.6% q/q) but FY16 earnings of $3.1b (-3.5%) beat street forecast of $3.05b on higher fee income and surprise drop in bad debt charges. For the quarter, net interest income of $1.28b (-0.1% y/y, +3.7% q/q) was pressured by NIM of 1.69% (4Q15: 1.79%, 3Q16: 1.69%) but offset by strong loan growth (+8.9% y/y, 3.9% q/q). However, non-interest income of $753m (-6.2% y/y, -7% q/q) was weighed by reduced trading and investment income, overshadowing higher credit card and wealth management fees. Notably, provisions contracted to $131m (-31.4% y/y, 29.5% q/q) on a release in general allowance. NPL ratio held steady at 1.5% (4Q15: 1.4%, 3Q16: 1.6%), with Tier-1 CAR at 13% (4Q15: 13%, 3Q16: 13.4%). Maintained final DPS of $0.35, bringing FY16 payout to $0.70 (FY15: $0.90 including special DPS of $0.20). NAV/share at $18.82.

*OUE/IHC: OUE has launched an unconditional cash offer for IHC at $0.106/share, after sealing a deal to acquire 35.77% of IHC from Oxley executives Ching Chiat Kwong, Low See Ching and two related parties, taking its stake to 57.6%. OUE intends to maintain the listing status of IHC but may take it private if it gets control of >90% of the medical group.

*CapitaLand: Acquiring an accretive operating portfolio of office and retail assets in Tokyo, Japan, for ¥49.7b ($620.1m). The purchase of three offices and one retail property is estimated to contribute an additional $25m or 2.9% of FY16 earnings. This will enlarge its total asset size in Japan by 39% to $2.5b. MKE last had a Hold with TP of $3.66.

*SIIC Environment: 4Q16 net profit of Rmb170.3m (+42.3%) brought FY16 earnings to Rmb454.9m (+26.2%), topping full year street estimate of Rmb446.7m. For the quarter, revenue surged 122% to Rmb1.13b on increased construction activities (+266%) and higher operating and maintenance income (+79%). Gross margin contracted 13.9ppts to 23.2% on the shift in sales mix, while bottom line was lifted by a fair value gain from associate Longjiang Group of Rmb155.4m. Declared a first and final DPS of $0.01 (FY15: nil). NAV/share at Rmb2.6462.

*Chip Eng Seng: 4Q16 net profit surged 52.5% to $14.9m. Revenue of $250m (+62.5%) was lifted mainly by development business (+97.6%) from the progressive recognition of High Park Residence, while construction (+31.4%) benefitted from more HDB projects. However, gross margin compressed 9.3ppts to 18.3% on a shift in mix, but bottom line was bolstered by a $5.4m fair value gain, lower impairment loss and the absence of fair value loss on investment properties. Maintained its first and final DPS of 4¢. NAV/share at $1.23.

*Singapore O&G: FY16 net profit leapt 64.8% to $8.8m, as revenue soared 74.7% to $28.7m on the new dermatology segment and increased patients for O&G and cancer-related segments. Bottom line was further lifted by a $0.3m grant from the government (FY15: $0.2m). NAV/share at $0.1747..

*Rickmers Maritime: Booked a 4Q16 net loss of US$48.4m (4Q15: US$129.6m), mainly from a vessel impairment of US$48.1m (4Q15: US$126.3m). Revenue plunged to US$14.3m (-41%) amid a persistently depressed chartering market. Notably, the group is struggling to repay US$197.7m loans due 31 Mar '17 to HSH Nordbank and DBS, as well as its $100m MTN expiring on 15 May '17. Rickmers still remains in talks with its lenders and note holders on a debt restructuring. NAV/unit halved to US$0.21, but a further impairment may wipe out the entire book of financing is not obtained.

*Overseas Education: FY16 net profit tanked 64.8% to $5.3m, while revenue slipped 5.4% to $91.8m as a result of lower student enrolments. Bottom line exacerbated by a 1.4% increase in total expenses (excl. depreciation), while depreciation costs jumped 51.7% stemming from the new campus. Final DPS of 2.06¢ brings full year DPS to 2.75¢ (unch). NAV/share at $0.365.

*Singapore Medical Group (SMG): Entered into a strategic collaboration with Korean healthcare provider CHA Healthcare, on joint participation in future development and investment opportunities, projects and regional operational support in North Asiaand South East Asia. In relation, CHA will take up a 8.8% stake in SMG via the placement of 30m new shares at $0.50 apiece.

*Stratech: Proposed renounceable 2-for-1 non-underwritten rights issue at $0.10 each, intended to repay debt and strengthen its financial position.

*Zico Holdings: Launched an online legal services platform through its newly acquired subsidiary ShakeUp Online. Services include providing SMEs with high quality legal documents that are easy to understand and use.

*Profit warnings:
- SMJ International
- China Medical
- Kim Heng
- Anchor Resources
- Top Global

Thursday, February 16, 2017

SG Market (16 Feb 17)

Stocks could continue to press ahead following the record-breaking run on Wall Street, with investors also anticipating pro-growth measures in the upcoming Budget 2017, although gains may be checked by another disappointing bank result, this time from DBS. Regional bourses opened lower today in Tokyo (-0.2%), Seoul (-0.1%) and Sydney (-0.2%).Technically, the STI is trading within an upward channel bounded by topside resistance at 3,110 and support at 3,065.

Stocks to watch:*DBS: 4Q16 net profit fell 9% y/y and 15% q/q to $913m on mounting bad debts charges, underscoring the financial stress in the oil services sector. This brought FY16 earnings to $4.24b (-2%), below street forecast of $4.28b. For the quarter, net interest income of $1.82b (-2% y/y, flat q/q) was squeezed by NIM compression to 1.71% (4Q15: 1.84%, 3Q16: 1.77%) despite a larger loan book (+6% y/y, +4% q/q). Non-interest income of $952m (+19.3% y/y, -14.5% q/q) was largely buoyed by wealth management and trading income. Provisions soared to $462m (+87% y/y, +6% q/q) despite absence of any general allowance. NPL ratio climbed to 1.4% (4Q15: 0.9%, 3Q16: 1.3%), with Tier-1 CAR at 14.1% (4Q15: 13.5%, 3Q16: 14.4%). Maintained final DPS of $0.30, bringing FY16 payout to $0.60 (unch). NAV/share at $16.87.

*ST Engineering: 4Q16 net profit grew 21% to $170.4m, taking FY16 earnings of $484.5m (-8.4%) above expectations. Quarter revenue rose 2.3% to $1.82b, mainly from aerospace (+17.3%) and electronics (1.1%) segments, while overall EBIT margin expanded to 10.1% (+0.7 ppts). Order book remained healthy at $11.6b (3Q16: $11.4b). Maintained final DPS of $0.10, bringing FY16 payout to $0.15 (unch). Guided for comparable revenue and higher pretax profit in 2017. MKE last had a Hold with TP of $3.17.

*SIA: Jan group pax load factor improved 1ppt to 81.1%, as passenger traffic growth (+5.8%) overshadowed capacity expansion (+4.5%). Load factors rose on Lunar New Year promotions across East Asia (+2.7ppt), Americas (+1.8ppt), West Asia and Africa (+3.7ppt), but deteriorated in SW Pacific (-2.3ppt), and Europe(-0.1ppt). Load factors were higher at SilkAir (+3.5ppt to 73.2%) and Tigerair (+1.8ppt to 83.3%), while that for Scoot fell (-0.8ppt to 84%). Cargo load factor rose 1ppt to 61.5% as carriage (+3.5%) outpaced capacity growth (+1.8%). MKE last had a Hold with TP of $9.70.

*Lippo Malls Trust: 4Q16 DPU of 0.87¢ brought FY16 payout to 3.41¢ (+10%), beating estimates. Quarter revenue expanded 9.1% to $48.7m, while NPI rose 10.9% to $44.6m, driven by rental reversion of 6.7% and the stronger IDR against SGD. Occupancy fell 0.5ppt q/q to 94.3% with WALE of 4.51 years. Aggregate leverage stood at 31.5% (-1.2ppt q/q). NAV/unit at $0.3895..

*CWG: 4Q16 net profit surged 277% to Rmb222.2m, led by a 59% jump in revenue to Rmb3.4b due higher overall ASP of Rmb18,518/sqm (+112%) arising from units handed over at Suzhou Industrial Park Royal Mansion and Suzhou Royal Palace. Accordingly, gross profit jumped 286% and margin expanded to 22.3% (+13.2 ppts). NAV/share at Rmb1.909.

*Challenger Technologies: 4Q16 net profit plunged 46% to $4.1m, partially hurt by a $1.1m provision for impairment on investment in a last mile delivery company. Revenue sank 13% to $83.4m amid weaker physical retail operations for the IT products and services segment, while EBIT margin narrowed 3.1ppt to 6.1%. Raised final DPS by 0.05¢ to 1.6¢, bringing full-year payout to 2.7¢ (FY15: 2.65¢). NAV/share at $0.2324.

*GKE: With reference to the recent surge in share price, the group disclosed that some of its substantial shareholders are in preliminary talks relating to a potential acquisition of their shares.

*EuroSports: Entered non-binding MOU for the proposed acquisition of SS Ventures (SSV), the operator of taxi hailing app Fly Taxi in Hong Kong. The acquisition will be carried out in four tranches, where the group will buy a 10% stake in SSV for US$3m in the first tranche.

Profit warning:
- Dyna-Mac
- Healthway Medical Corp
- AEI Corp

Wednesday, February 15, 2017

SG Market (15 Feb 17)

The local market could tread more cautiously after being spooked by banks' credit quality fears, sparked by OCBC's bad debt provisions although prospects for faster US rates hikes, and thereby improving NIMs, could provide some relief. Meanwhile, shares of finance firms surged on news that MAS will loosen its foreign takeover rule and regulations on lending to SMEs.

Regional bourses are mostly higher in Tokyo (+1.1%), Seoul (+0.1%) and Sydney (+0.9%).Technically, STI is backing away from its 3,110 resistance towards the underlying support at 3,025.

Stocks to watch:
*Economy: Visitor arrivals hit historic high of 16.4m (+7.7%) in 2016, overshooting growth expectation of 0-3%, while tourism receipts jumped 13.9% to a record $24.8m (est: +0-2%, 2015: -6.8%). Indonesia remained the top market, just edging out China, while Chinese tourists were the biggest spenders. This could lift sentiment in tourism-related counters such as SATS, CDL Hospitality, OUE-HT, GP Hotels, Straco and Genting SP.

*CapitaLand: 4Q16 core net profit of $289.1m (+16%) brought FY16 earnings to $865.3m (+5.1%), thrashing full year estimates. For the quarter, revenue jumped 6.5% to $1.85b on higher handover of properties from development projects in China and rental income from serviced residences. Headline net profit of $430.5m (+74%) was also lifted by higher higher portfolio gains of $23.1m (+65%) as well as revaluation gains of $118.3m (4Q15: $15.5m impairment). Raised first and final DPS to 10¢ (FY15: 9¢). The stock trades at 33% discount to its RNAV/share at $5.13 and 16.6% discount to book value. MKE last had a Buy with TP of $3.46.

*Thai Beverage: 1QFY17 net profit of Bt7.7b (+28%) came in line with estimates, lifted by increased income from JV/associates (Bt1.8b, +149%) at Fraser & Neave and Frasers Centrepoint, as well as improved profitability in the beer segment. However, revenue fell 8% to Bt46.8b on lower spirits (-11%), beer (-4.6%), non-alcoholic beverages (-1.3%), and food (-1%) businesses, as sales slowed during the mourning period for the Thai king. NAV/share at Bt4.97.

*Silverlake Axis: 2QFY17 results disappointed although net profit spiked to RM246.3m (2QFY16: RM66.6m profit), mainly boosted by a disposal gain of RM223.9m from the sale of shares in Shenzhen-listed Global Infotech. Revenue tumbled 29% to RM126.7m, hurt by a sharp slowdown in software licensing (-90%), software project services (-82%), as well as sale of software and hardware products (-84%), on the slowdown of customers' capex. However, gross margin widened 1.7ppt to 60% on a shift in revenue mix towards the recurring maintenance and enhancement services. Bottom line was partly dragged by an FX loss of RM18m. NAV/share at RM0.3571.

*Parkson Retail Asia: Swung to a 2QFY17 net loss of $2.2m, despite a 7.4% climb in revenue to $111.1m, led by stronger direct sales (+15.8%). EBITDA margin collapsed to 2.7% (-30.1ppt) amid a spike in staff and rental costs, due to the addition of new stores (+12 y/y to 83 stores), while bottom line was dragged by increased depreciation. NAV/share of $0.22.

*Finance companies: Uncollateralised lending limit will be raised from 10% of capital to 25%, benefiting lenders such as Hong Leong Finance, Sing Investments and Singapura Finance. In addition, MAS will lift the bar on foreign takeovers of finance companies with some safeguards attached..

*City Dev: Acquiring a Shanghai office development, Meidao Business Plaza, for Rmb900m ($186m). The 32,300 sqm gfa project is located in Shanghai Hongqiao CBD and is in the final stages of construction, expected for completion by 2H17.

*Ezra: Logistics and transport company, Necotrans Singapore, has filed to wind up EMAS-AMC, a subsidiary of 40% owned Emas Chiyoda Subsea. Ezra is currently seeking advice on the application. Further, the group has sought a further delay for its 1QFY8/17 results release by an additional 30 days due to ongoing efforts to consolidate its funding requirements. Ezra disclosed that if an unfavourable outcome ensues, it would be faced with a going concern issue.

*Tat Hong: Turned in a 3QFY17 net profit of $0.2m (3QFY16: $6.7m loss), boosted by disposal gains from an Australian property of $8m and disbursement received from guaranteed trade receivables of $6.4m. Revenue fell 3% to $121.5m, as reduced crane rental (-35%) was offset by improved contribution from tower crane rental (+14%) and distribution (+21%). However, gross margin contracted to 25.9% (-4.7 ppts) due to lower utilisation rates in crane rental.*Lum Chang: 2QFY17 net profit tumbled 55% to $5.5m, while revenue slipped 3% to $97m, on lower sales recognition from two Malaysian developments and reduced takings from completed construction projects. Gross margin narrowed to 14.3% (-6.2 ppts) due to a shift in mix towards lower margin construction revenue, while the bottom line slump was further exacerbated by a 35% jump in finance costs.

*Stamford Land: 3QFY17 net profit edged higher to $11.4m (+2.6%) on firmer revenue of $55.4m (+5.4%), mainly lifted by hotel owning & management (+3.6%) and property investing (+44.8%) segments. Operating margin narrowed 1.3ppt to 24.9% on a shift in sales mix. NAV/share at $0.56.

*LTC Corp: 2QFY17 net profit soared 90% from a low base to $1.9m, although revenue fell 11.3% to $36.4m from slower property development sales in Singapore. However, higher steel prices and tonnage delivered in the steel supplies segment lifted it into operating profit of $1.3m (2QFY16: $2.1m loss), and led to a marked improvement in LTC's overall operating margin of 8.1% (+7.8ppt). Net cash pile stood at $49.9m, or 57% of market cap. NAV/share at $1.5906.

*Swee Hong: Swung into net profit of $2.1m in 2QFY17, reversing from its $5.5m loss a year earlier. Revenue rose 42% to $13.9m, attributable mainly from a civil engineering project at Bukit Brown. Gross margin jumped 4ppt to 14.3% on reduced costs and a reversal of provisioning made in the previous financial period. Bottom line was lifted by a 93% reduction in admin costs due to the absence of a $4.7m accrual of claims from scheme creditors. NAV/share at 0.19¢.

*Vard: Secured a contract from Aker Biomarine to design and construct one krill fishing vessel for sustainable fishing operations in Antartica, with delivery scheduled in 4Q18.

*IEV: Granted a US patent for its self-cleaning apparatus that helps prevention of marine growth, which has been applied to close to 500 offshore platforms worldwide. The technology is expected to result in stronger and more durable offshore structures that require lower inspection frequency.

Tuesday, February 14, 2017

SG Market (14 Feb 17)

Singapore market could be swept up by the buoyant risk-on mood, sparked by Trump's promised tax cuts to boost growth and softer tone towards China and Japan.Regional bourses opened mixed in Tokyo (+0.2%), Seoul (-0.2%) and Sydney (+0.3%).STI is hovering at its 3,110 resistance with the next short term objective at 3,150 and underlying support at 3,025.

Stocks to watch:
*OCBC: 4Q16 net profit of $789m (-18% y/y, -16% q/q) missed estimates, dragged by a jump in provisions to $305m (+57% y/y, +84% q/q), stemming from bad O&G accounts. Net interest income dipped to $1.25b (-7% y/y, +1% q/q) due to a NIM compression to 1.63% (-9bps y/y, +1bps q/q) despite a larger loan book (+5% y/y, +6% q/q). Non-interest income was down at $926m (-4% y/y, -5% q/q) as growth in wealth management was knocked back by lower life assurance profit and net trading income. NPL ratio ticked up to 1.3% (4Q15: 0.9%, 3Q16: 1.2%), while Tier-1 CAR slipped to 14.7% (4Q15: 14.8%, 3Q16: 15.1%). Final DPS maintained at $0.18, bringing FY16 payout to $0.36 (unch). NAV/share at $8.49.

*Jumbo: Cooked up a seasonally weak 1QFY17 net profit of $2.6m (+26.1%) that was in line with expectations. Revenue grew 5.8% to $32.7m, lifted by contributions from higher-margin Jumbo Seafood outlets in Shanghai. Consequently, gross margin expanded 1.3ppt to 64.2%, while the bottom line also benefitted from an absence of IPO expenses. MKE last had a Buy with TP of $0.78.

*Croesus Retail Trust: 2QFY17 DPU of 1.81¢ (+5.2%) met estimates. Revenue surged 30.7% to ¥3.18b (+55.8%), bolstered by new contributions from Torius (acquired in Oct '15), Fuji Grand Natalie (Apr '16), Mallage Saga and Feeeal Asahikawa (May '16). NPI climbed at a slower pace to ¥1.69b (+23.2%) due to higher expense ratios at the new malls. Portfolio occupancy inched up to 98% (+0.2ppt q/q), with WALE at 6.6 years. Aggregate leverage rose to 46.1% (+0.8ppt q/q), with average debt cost and tenor at 2.01% and 2.1 years, respectively. NAV/share at ¥77.89.

*Cordlife: Fell into a 2QFY17 net loss of $2.3m (2QFY16: $9.6m profit) in absence of FV and divestment gains (2QFY16: $14.8m). Revenue rose 4.7% to $15.2m due to increase in deliveries (+13.6%) from Stemlife, but partly offset by lower ASPs in Singapore. Gross margin contracted 2.1ppt to 62.8% on lower profitability from Stemlife and cheaper mass offering of cord tissue banking services. NAV/share at $0.481.

*Noble: Confirmed reports that it is in discussions regarding a possible strategic investment by another party following a Reuters report that Chinese chemicals trader Sinochem is in early talks to take a stake in the commodities group.

*ST Engineering: Intends to grow its aircraft leasing business by acquiring more mid-life narrow body aircraft that are currently on lease to airlines, via Keystone 4, a 50:50 JV with SJ Aviation Capital in Ireland. Stock offers an indicative yield of 4.7%.

*Hyflux: Clinched US$180m contracts to build-own-transfer three seawater reverse osmosis disalination plants in Saudi Arabia. Each plant will have a capacity of 16,000 m3/day and construction will commence upon finalisation of the deals.*Del Monte Pacific: Extended the maturity of its US$350m facility with BDO Unibank for two years, effective from 10 Feb '17..

*Metro Holdings: 3QFY17 net profit plummeted to $20.5m (-63.3%), largely on lower associate income from reduced handover and property sales, and a fair value loss in short-term investments of $4m. Revenue dropped 9% to $37.3m post-closure of Metro City Square department store in mid-3QFY16, although gross margin widened 0.6ppt to 7.9% on higher sales from remaining stores. Net cash position stood at $398.2m (2QFY17: $408.3m), equivalent to 41.3% of market cap.

*ISOTeam: 1HFY17 net profit fell 4.8% to $4.1m, while revenue stagnated at $44.8m (+0.1%), as growth from addition and alteration (+77.6%) and coating & painting (+67.8%) were offset by the slump in repair & redecoration (-55.5%). While gross margin expanded to 28.2% (+3.8 ppt) from the shift in sales mix, bottom line was impacted by a 38.8% increase in general expenses led by staff costs, allowance for doubtful debts and overheads from an acquisition.

*Accordia Golf Trust: 3QFY17 DPU slipped 3.2% to 2.09¢, bringing 9MFY17 payout of 4.37¢ (-3.7%) to meet just 66% of FY17 estimate. Quarter revenue slipped 2.5% to JPY14.61b due to lower visitorship (-1.7%) to its golf courses, resulting in lower operating profit of JPY3.72b (-12.3%). Course utilisation rate slipped to 79.7% (-0.5 ppts), while loan-to-value ratio held steady at 28.9%. NAV/unit at $0.93.

*Singapore Shipping: 3QFY17 net profit slipped 1.1% to US$3.1m, bolstered by FX gains of US$0.5m (3QFY16: US$0.01m loss). Revenue tumbled to US$10.8m (-9.2%) on declines in contribution from agency & logistics (-28.8%) and ship owning (-0.4%) segments. Operating margin contracted to 31.1% (-2.3ppts) on higher staff and crew (+4.5%), depreciation (+5.9%) and other operating (+70%) costs. NAV/share at US$0.177.

*Keong Hong: 1QFY17 net profit fell 20.9% to $3.8m, although lifted by a $1.5m FX gain. Revenue plunged to $43m (-37.2%) as several key projects were completed in FY16. Gross margin improved 4.3 ppts to 15.1% on higher profitability from the construction of two resorts and airport extension in Maldives. However, order book shrank to $309m (FY16: $351m).

*New Silkroutes: 2QFY17 net losses narrowed to US$0.3m (2QFY16: US$0.4m), while revenue spiked to US$123.8m (2QFY16: US$6.3m), stemming mainly from contribution of its new oil trading arm, International Energy Group. Accordingly, the new segment recorded purchases of US$124.7m (2QFY16: US$6.2m), while bottom line was dragged by FV losses of US$0.7m (2QFY16: nil) on derivatives, as well as higher finance costs (+92%) arising from letters of credit from oil trading. NAV/share at US$0.277.

*LHN: 1QFY17 net profit surged 218.4% from a low base to $4.9m, boosted by associate income of $3.9m (1QFY16: breakeven) due to a one-off negative goodwill post-acquisition from Four Star Industries. Revenue rose 1.9% to $26.4m mainly from higher facilities management and logistics services, but offset by lower contribution from space optimization for industrial properties. NAV/share at $0.2969.

*CEI: FY16 net profit slid 18.6% to $8.8m due to fair value loss on forward contracts of $0.6m (FY15: $0.3m gain), and lower FX gain (-83.6% to $0.1m). Revenue dipped 1.6% to $130.3m, reducing gross margin by 2ppt to 23.3% from a weaker USD. The bottom line was lifted by a write-off over a tax provision. Maintained final and special DPS of 0.4¢ and 4.8¢, respectively, taking FY16 payout to 10¢ (FY15: 10¢), implying a yield of 10.6%.

*Old Chang Kee: 3QFY17 net profit climbed 11.1% to $1.4m on firmer revenue of $20.3m (+7.5%), as contribution from new outlets outweighed weaker sales at existing outlets. Gross margin expanded 1.2ppt to 63.8% on improved efficiency at the centralised factory. NAV/share at $0.26.

*Tai Sin Electric: 1HFY17 net profit rose 15.3% to $10.9m on disposal gain from fixed asset and fair value adjustment on derivatives. Revenue declined 9.6% to $139.7m, mainly dragged by weak cable & wire business in Singapore and lower copper prices. Gross margin widened 2.7ppt to 21.5%. Interim DPS of 0.75¢ maintained. NAV/share at $0.3767.

*PEC: 2QFY17 net profit slipped 5.9% to $4.2m, while revenue slumped 22.2% to $118.6m due to the completion of overseas projects in FY16. Gross margin expanded to 17.5% (+3.7ppts) from stronger margin domestic projects. NAV/share at $0.862.

*Abterra: Signed non-binding MOU for the proposed acquisition of a 51% stake in Tianjin Belong Faith Energy Minerals, which imports coal for sale within China, upon completion of a restructuring exercise by the vendors. Consideration will be based on a valuation report to be issued by a third party valuer, and will be funded via issuance of new shares.

Monday, February 13, 2017

Singapore Post

Singapore Post's 3QFY17 underlying net profit fell 28.5% to $31.4m, bringing 9MFY17 core earnings to $94.2m (-22.6%). Meanwhile, headline 9MFY17 net profit of $98.6m (-31.3%) met only 70% of full year consensus forecast.

The poor set of results was primarily due to the consolidation of US subsidiary Trade Global, which fell into a deeper loss from structural issues, as well as deteriorating postal business.

For the quarter, revenue climbed 16.8% to $369.4m, mainly hoisted by more than doubling in e-commerce sales following the inclusion of TradeGlobal (acquired Nov '15) and Jagged Peak (Mar '16).

Segment Performance:
Postal: Revenue grew 2.9% to $143.3m, mainly from e-commerce-related deliveries, especially from the Alibaba group, although that was offset by falling domestic mail volumes as financial institutions push towards e-statements. Operating profit fell 6.6% to $38.5m from the shift towards lower-margin international mails.

Logistics: Revenue rose 5.6% to $171.3m, driven by higher contribution from Couriers Please and Quantium Solutions from increased e-commerce activities. However, operating profit tumbled 30.2% to $8.8m, reflecting costs from the new Regional eCommerce Logistics Hub, and pricing pressures.

E-commerce: Revenue surged 106.8% to $81.1m from consolidation of US subsidiaries TradeGlobal and Jagged Peak, although operationally, the segment swung to loss of $8.4m from $1.8m profit last year.

TradeGlobal was hit by the loss of two key customers (one decided to in-source its freight operations, another filed for bankruptcy) and cost pressures from tight competition for labour. On the other hand, Jagged Peak posted good growth in volumes that supported top and bottom line.

SingPost's board has flagged the risk of a significant asset impairment for TradeGlobal, given its major underperformance. A write-off of the entire $169m goodwill could wipe off entire FY17e earnings, based on Maybank KE estimates.

In view of its poor performance and possible kitchen sinking in its 4Q results, the group slashed its interim DPS to 0.5¢ from 1.5¢ in 3QFY16, which has led to downward revision of its FY17 dividend to 4.7¢ (FY16: 7¢).

Separately, SingPost has completed the issuance of shares to Alibaba in Jan, raising the Chinese e-commerce giant's stake to 14.4% from 10.2% previously, deepening the strategic partnership between the duo.

Meanwhile, the redevelopment of SPC Mall is expected to be completed around 1H17, and leasing of the mall is on track.

SingPost is currently trading at 23.7x FY17e consensus P/E.

Latest broker ratings:
Maybank KE maintains Hold, cuts TP to $1.34 from $1.75
OCBC maintains Hold, cuts TP to $1.42 from $1.47
UOB Kay Hian maintains Hold, cuts TP to $1.46 from $1.76
CIMB maintains Add, cuts TP to $1.62 from $1.76
Deutsche maintains Buy with TP of $1.70
Nomura maintains Buy, cuts TP to $1.75 from $1.90

SG Market (13 Feb 17)

Market sentiment will be underpinned by the record highs on Wall Street, sparked President Trump’s anticipated tax cuts, his agreement to honour the “One China” policy and commitment to US-Japan alliance, which reaffirmed stable ties. Also on the radar this week will be Singapore’s Dec NODX and 4Q earnings from the three banks, CapitaLand and STE.

Regional bourses opened in positive territory today in Tokyo (+0.6%), Seoul (flat) and Sydney (+0.5%).Technically, immediate resistance for the STI lies at 3,110 with underlying support at 3,030.

Stocks to watch:
*SingPost: 3QFY17 underlying net profit of $31.4m (-28.5%) trailed estimates. While revenue grew 16.8% to $369.4m on doubling of e-commerce contributions from recently-acquired US units TradeGlobal and Jagged Peak, e-commerce swung into operating loss of $8.4m (3QFY16: $1.8m profit) due to loss of two key customers and cost pressures. Core postal segment also deteriorated on lower domestic letter volumes and slower growth in international mail. Risk of significant impairment to TradeGlobal's entire goodwill of $169m could potentially wipe out FY17 earnings. Interim DPS shaved to 0.5¢ (3QFY16: 1.5¢).

*ComfortDelGro: FY16 net profit rose 5% to a record $317.1m, meeting estimates. Revenue slid 1.3% to $4.06b, largely on the back of unfavourable currency translation arising from the falling pound, but bottom line was lifted by lower fuel and material costs. Outlook has turned more bearish for the taxi segment amid a challenging operating environment, with management guiding for a decline in taxi revenue for the first time. The only bright spot is in the bus segment, with the transition into more profitable bus contracting model. Final DPS raised to 6.05¢, bringing FY16 payout to 10.3¢ (FY15: 9¢). MKE retains Hold with higher TP of $2.68.

*Hutchison Port Holdings Trust: 4Q16 core net profit of HK$346m (-8.4%) missed estimates on softer revenue of HK$2.96b (-2.5%) on weaker average revenue per TEU in both its HK and Yantian terminals, as well as lower container throughput at the latter (-4.3%). Operating margin contracted to 32.9% (-6.5ppts) from the absence of government grants, while bottom line was further dragged by higher finance costs (+15%). Final DPU cut to HK16.6¢ (-11.2%), leading to lower FY16 payout of HK$30.6¢ (FY15: HK34.4¢).

*Valuetronics: Stellar 3QFY17 as net profit surged 70.2% to HK$42.9m, on the back of higher revenue of HK$587.6m (+35.2%), mainly stemming from a 92% boost in consumer electronics thanks to an expanded product portfolio to include wireless lighting with smart control features. Industrial electronics segment also grew 7.9% from higher demand. Gross margin slipped 0.7ppt from a shift in sales mix. NAV/ unit at HK$2.30..

*Global Premium Hotels: 4Q16 net profit plunged 46.7% $2.6m, on lower revenue of $13.9m (-7.8%), dragged by lower average occupancy of 77.2% (-1.3 ppts) and reduced revPAR of $79.4 (-6.4%). Further, gross margin contracted 1.5ppt to 87.6% on higher costs such as consumables and hotel rental charges, while bottom line was also weighed by an adversed $1m FX swing and a spike in income tax (+58.9%). NAV/share at $0.6931.

*Boustead Singapore: 3QFY17 net profit grew 25.8% to $9.5m on $3.3m in FX gains (3QFY17: $0.2m). Revenue fell 18.7% to $115.7m on declines in its energy-related engineering (-28.7%) and real estate (-22.2%) solutions, partially mitigated by growth in its geo-spatial tech (+3.9%) segment. NAV/share at $0.594.

*800 Super: 2QFY17 net profit spiked to $3.6m (+111.2%) due to better operating leverage. Revenue inched 3.2% higher to $39.4m, attributed to new contracts and repeat contracts with improved pricing. Declared interim DPS of 1¢ (2QFY16: nil). NAV/share at $0.415.*Marco Polo Marine: 1QFY17 net profit surged to $3.4m from breakeven last year, driven mainly by $3.8m of FX gains. However, revenue plunged 33% to $11.4m from lower utilization and reduced chartering rates, as well as fewer shipbuilding projects. Gross margin improved 4ppt to 34% from lower project costs. NAV/ unit at $0.50.

*DBS: Selling PwC Building to Manulife Financial for $747m, which will result in $350m in disposal gain, or 8% of MKE's FY17 estimated net profit. Post-sale, DBS's fully-loaded CET1 could increase by 28bps to 13.8% (3Q16: 13.5%). MKE last had a Hold with TP of $15.68.

*United Engineers: Disclosed that controlling shareholders OCBC and Great Eastern have received non-binding interests for their stakes in United Engineers and WBL Corp. At $2.95, United Engineers trades at 3.6% discount to its NAV/share of $3.06, and 18.7% below consensus RNAV of $3.63.

*Global Palm Resources: Expected to report substantially stronger FY16 results due to gains in CPO ASPs and sales volumes.

Friday, February 10, 2017

AIMS AMP Capital Industrial REIT

AIMS AMP Capital Industrial REIT's (AIMS) 3QFY17 results were on par with expectations, even though DPU slipped 2.8% to 2.77¢. This brought 9MFY17 DPU to 8.27¢ or 75% of full-year consensus estimate.

For the quarter, distributable income fell 2.3% to $17.7m on weaker revenue of $30.4m (-6.7%) and NPI of $19.8m (-6%), but the impact was negated by a 12.1% drop in borrowing cost post-refinancing of a $100m medium-term note in Aug '16.

The decline in top line was attributable to lower rental at 27 Penjuru Lane, 8 & 10 Pandan Crescent, as well as temporary income loss from the redevelopment of 8 & 10 Tuas Avenue 20.

Portfolio occupancy improved 1.3ppt q/q to 94%, higher then industry average of 89.5%, with weighted-average-lease-to-expiry of 2.49 years (2QFY17: 2.6 years).

Aggregate leverage ticked up by 0.6ppt q/q to 34.6%, while average debt cost was reduced by 0.2ppt q/q to 3.7% and tenor shortened to 2.1 years (2QFY17: 2.4 years).

Interest rate risks are largely managed as 84% of total debt are hedged to fixed rates. Nonetheless, the industrial landlord estimates that every 25 bps increase in interest rate would impact DPS by $0.03.

Management is generally cautious on its outlook due to risk factors arising from spillover effects on global trade from Trump's protectionist stance, potential slowdown in China, and oversupply of industrial space in Singapore.

On a brighter note, AIMS has received TOP for its recently conversion of 30 Tuas West Road from a three-storey industrial building into a five-storey ramp-up warehouse. The property is fully-leased to CWT at an annual rental income of $4.15m, and will offer partial contribution in 4QFY17 with full-quarter impact from 1QFY18.

AIMS currently offers a annualised 3Q distribution yield of 8%, in line with industrial sub-sector average, and trades at 0.93x P/B.

The street has 3 Buy ratings with a consensus TP of $1.63 on the industrial REIT.

SG Market (10 Feb 17)

The market could drift higher on optimism over Trump's latest tax comments and pro-growth strategies laid out by the Committee for Future Economy, which aims to grow the domestic economy by 2-3% per year on average.

Regional bourses opened higher today in Tokyo (+1.7%), Seoul (+0.5%) and Sydney (+0.8%). Technically, topside resistance for the STI remains at 3,110, with underlying support at 3,025.

Stocks to watch:
*SATS: 3QFY17 results beat expectations with net profit of $65.1m (+7.4%) on lower raw material costs in food solution. Revenue stayed flat at $441m as growth in gateway services (+2.2%) was offset by reduced sales in food solution (-1.8%). Operating margin widened 1.1ppt to 15.1% on costs reduction. Outlook expected to be challenging amid increasing pressure in airline margins. MKE maintains Sell with TP of $3.76.

*Yoma: 3QFY17 net profit plunged to $0.3m (-98.7%), with 9MFY17 earnings of $11m (-60.2%) achieving just 23% of full year estimate. Quarter earnings were dragged by the absence of revaluation gain (3QFY15: $27.7m) from its edotco stake and FX loss of $9m due to the strengthening USD. Revenue climbed 16.6% to $27.7m, driven by sale of residences and land development rights (+26.1%) in StarCity Zone C, higher automotive and equipment sales (+17.6%) from increased vehicle leasing and more KFC stores in the consumer segment (+111%). Gross margin expanded to 42.8% (+8.5 ppts) on a shift in sales mix. NAV/share at $0.3815.

*Frasers Centrepoint: 1QFY17 headline net profit of $187.5m (+90.1%), or 38% of consensus FY17 estimate, was lifted by lower net interest costs, fair value and FX gains, as well as a gain on acquisition of an associate. Revenue rose 44.7% to $971.7m on higher development revenue recognition in Singapore and China. Gross margin ticked up 0.6ppt to 36.8%. NAV/unit at $2.38.

*ARA Asset Management: 4Q16 net profit slipped 28% to $18.5m, taking FY16 earnings of $88.7m (+14%) above expectations. For the year, revenue rose 13% to $176.8m, mainly driven by higher finance income (+140%) arising from Suntec REIT and increased management fees (+8%), which helped offset lower acquisition, divestment, and performance fees (-60%). Operating margin widened 1 ppt to 57.4%. NAV/unit at $0.5840.

*SBS Transit: FY16 net profit surged 87.6% to $31.4m on firmer revenue of $1.1b (+7.3%) as growth in ridership on the DTL 2 was offset by lower average fares in the bus and rail segments. Operating margin widened to 3.8% (+1.3ppts), thanks to lower fuel and electricity costs (-26.9%). Final DPS lifted to 2.7¢, bringing FY16 DPS to 5.05¢ (FY15: 2.7¢). NAV/share at $1.35.

*Boustead Projects: 3QFY17 net profit grew 18.6% to $8.5m, despite a 22.1% slide in revenue to $66.6m on weaker contribution in design-and-build (-24.3%) and leasing (-3.5%) segments. However, gross margin improved 3ppt to 26%, while the bottom line was also lifted by reduced overheads (-22%) from the absence of the one-off legal and professional fee last year. NAV/share at $0.672.

*Tiong Woon: 2QFY17 net profit jumped to $2m from breakeven a year ago, boosted by a $1.6m gain in FX and a $0.4m write-back of trade receivables. Revenue fell 12% to $31.3m on a 19% drop in heavy lift and haulage segment, on fewer projects in Singapore, India and Middle East. Gross margin climbed 5ppt to 28% from more profitable projects in Singapore and Vietnam. NAV/share at $0.102..

*HMI: 2QFY17 net profit slipped 1% to RM5.3m, despite a 11% rise in revenue to RM106.9m, driven by higher patient load and average bill sizes at two Malaysian hospitals. Bottom line was impacted by a RM1.7m swing to FX losses of RM0.9m, and higher admin costs (+14%) from professional fees for the proposed acquisitions of non-controlling interests in the two hospitals. NAV/share at RM0.3142.

*KSH Holdings: 3QFY17 net profit tumbled 33.9% to $9.1m, on lower revenue of $35.9m (-33.6%) due to weaker construction business. However, operating margin expanded 2.9ppt to 14% on reduced expenses in construction, staff and finance, but bottom line was pulled down by a drop in associate income. NAV/share at $0.6788.

*Singhaiyi: 3QFY17 net profit plunged 56.6% to $1.1m due to 1) a sharp drop in dividend income, 2) a $2.2m adverse swing in fair value changes for financial assets, and 3) marked increase in taxes. Revenue rose 20.8% to $12m on higher sales in property development (+49.8%), which outweighed lower rental income (-33.9%). Gross margin widened 15.1 ppt to 51.2%. NAV/unit at $0.1658.

*Ellipsiz: 2QFY17 net profit jumped 26.5% to $1.7m despite an 8.3% drop in revenue to $29.7m, due to the absence of a sizeable order in its Distribution & Services Solution segment. Bottom line was boosted by stronger operating margin of 8.4% (+3.1ppts). Declared interim and special DPS of 1¢ (2QFY16: 0.7¢) and 1.5¢ (2QFY16: Nil). NAV/share at $0.778.

*SIA: Placed a massive order to purchase 20 B777-9s and 19 B787-10s for US$13.8b, with additional options for another 12 aircraft. The deal is intended to maintain SIA's market share against tough competition from Mid-East carriers, as well as to modernise its fleet over the next decade. Deliveries for the initial batch are expected in FY21/22.

*CWT: Updated that the potential transaction relating to controlling shareholder C&P is still in progress, since 16 May 2016.

*Soo Kee: Partnering The International Institute of Diamond Grading & Research for polished diamond grading services which will provide accurate and consistent assessment and quality assurance of its Lovemarque diamond collection. Separately, it entered into an MOU with Aurora Design to establish a 40:60 JVCo to develop and operate the business of selling gold and diamonds in Thailand.

*Nordic: Recently clinched several contracts worth $7.7m with repeat and new customers with projects slated for completion in 2017.*PEC: Clinched a seven-year contract from a new client in Vietnam, Nghi Son Refinery and Petrochemical, to provide daily maintenance services for the latter's Nghi Son Refinery and Petrochemical Complex. It is the largest refinery and petrochemical plant in Vietnam with a refining capacity of 10m tons per year.

*Equation: Completed phase II proof-of-concept testing for its asset protection solution at 20 Wal-Mart stores. Independent retail research group Loss Prevention Research Council monitored the test and will release its findings at the retailer summit to be held on 9 and 10 Feb, at Target Corporation’s HQ in Minneapolis.

Thursday, February 9, 2017

SG Market (09 Feb 17)

The local market will likely grind along as investors look to corporate results for direction. Recent interest has been drawn towards small/mid-caps and potential privatisation candidates.

Regional bourses opened generally lower in Tokyo (-0.5%), Seoul (-0.1%) and Sydney (-0.1%).Technically, topside resistance for the STI remains at 3,110, with underlying support at 3,025.

Stocks to watch:
*Singtel: 3QFY17 results came in line. Core net profit rose 4.2% to $994m, propped by a FX gain of $16m and higher dividend income from Southern Cross Cables. Revenue slid 1.5% to $4.41b due to a decline in mobile termination rates in Australia; otherwise Singapore consumer business grew 3%. EBITDA was stable at $1.22b but slipped 2.2% in constant currency terms due to heightened competition in Australia and absence of some ICT projects. Contributions from regional associates rose 2.8% on stronger performances at Telkomsel, Globe and NetLink Trust. Management maintained full year guidance for revenue to decline by low single digit, but expects EBITDA to be flat. MKE retains Hold with TP of $3.70.

*GLP: 3QFY17 net profit (ex. revaluation) slumped 49.6% to US$41.8m, bringing 9M17 core earnings of US$152m (-19.7%) to 60% of full year street estimate. For the quarter, revenue rose 16.9% to US$232.5m on completion and stabilisation of development projects in China, as well as financial services in China and higher fund management fee income, while EBIT inched up 1.4% on higher revaluation gains. Achieved 56% of FY17 target for development starts of US$950m. Trading at 2.5% discount to its NAV/share of US$1.90.

*UG Healthcare: 1HFY17 net profit tumbled 57.1% to $1.4m, missing estimates. Revenue inched 2.7% higher to $31m on increased sales volume of gloves but was weighed by reduced ASPs. Further, gross margin eroded 9.6ppt to 14.3% due to a spike in raw material prices and increase in gas tariff. Expects the business environment to remain challenging, MKE last had a Hold with TP of $0.37..

*F&N: 1QFY17 net profit tumbled 14.1% to $22.4m, hurt a weaker MYR, as well as higher distribution and brand investment costs. Revenue ticked up to $495m (+0.2%) on growth in beverages (+5.2%) and dairy (+0.5%), but offset by printing & publishing (-8.3%). Bottom line was also dragged by provision for restructuring and obsolescences of inventory, such as books and magazines. NAV/unit at $1.85.

*AIMS AMP: 3QFY17 results were largely in line, albeit lower DPU of 2.77¢ (-2.8%). Both gross revenue of $32.5m (-6.7%) and NPI of $21.1m (-6%) fell, on reduced rental contributions at three industrial properties and revenue loss from 8 & 10 Tuas Avenue 20 due to redevelopment works. Occupancy improved 1.3ppt q/q to 94%, while aggregate leverage inched higher to 34.6% (+0.6 ppt q/q). NAV/unit at $1.48.

*Vicom: FY16 net profit slipped 10.4% to $28.2m, as revenue slipped 5.2% to $101.2m from lower business volumes. Operating margin narrowed to 32.1% (-2.1 ppts) on higher costs for repairs & maintenance (+10%) and depreciation & amortisation (+5.9%). Consequently, group shaved final and special DPS to 8.5¢ and 10¢ respectively, bringing FY16 total payout to 26.5¢ (FY15: 28.5¢). NAV/share at $1.691.

*Avi-Tech: 2QFY16 net profit rose 6.4% to $1.8m, largely lifted by FX gains. Revenue grew 10.7% to $8.7m thanks to improved contributions on all fronts, although gross margin narrowed 3.4ppt to 31.3% on a shift in sales mix. Management raised interim DPS to 1¢ (1H15: 0.8¢), and also adopted a dividend policy, payout out not less than 30% of core earnings going forward.

*IPS Securex: 1HFY17 net profit tumbled 27.6% y/y to $725.4m, mainly from increased admin costs (+34.5%) stemming from the integration of recently-acquired Yatai and Avac Systems. Revenue rose 2.5% to $7.1m, on improved sales in maintenance and leasing business as well as higher sales of Acoustic Hailing Systems, but was offset by reduced demand for integrated security solutions in Singapore. Bottom line was lifted by a $0.3m FX gain in trade receivables. NAV/share at 2.5¢.

*Ho Bee Land: To sell office property Rose Court in Southwark, London, for £94.5m ($167.2m). Group expects to record a net gain of ~£4.5m ($7.9m) in FY17, and intends to use proceeds to reduce borrowings and working capital.*GKE: Renewed a chartering contract with Sinogas for a liquefied gas carrier vessel for another three months, based on daily spot rates for very large gas carriers.

*Katrina: Set up two new restaurants in Ngee Ann City (Bali Thai) and Raffles City (Streats).

*Singapore Myanmar Investco: Clinched an exclusive distribution agreement with luxury skincare brand Shiseido in Myanmar, to market its products for three years.

Wednesday, February 8, 2017

SG Market (08 Feb 17)

The market could head higher as investors sought for undervalued stocks following a series of buyout offers, led by Indonesia's Riady family-controlled Lippo Group. Sentiment could also be swayed by 4Q earnings releases, policies outlined by the Committee on Future Economy and Budget 2017, all within the next two weeks.

Regional bourses opened mixed in Tokyo (+0.2%), Seoul (-0.6%) and Sydney (+0.1%).Technically, topside resistance for the STI remains at 3,110, with underlying support at 3,025.

Stocks to watch:
*SIA: 3QFY17 net profit of $177.2m (-35.5%) met estimates, dragged by a $79m write-down in Tigerair, as well as an absence of a $52m gain from SilkAir’s sale and leaseback of aircraft. Revenue fell 2.5% to $3.84b, hurt by a 5.5% decline in passenger yield and drop in load factor to 79% (-1ppt). However, operations at Scoot and SIA Cargo improved, with the latter recording its best performance in nine years, while fuel costs declined $200m, largely due to the reduction in fuel hedging loss. Outlook remains challenging amidst overcapacity and aggressive pricing by rival airlines. Trades at 0.83x P/B, low end of historical range. MKE maintains Hold with TP of $9.70.

*Perennial Real Estate: 4Q16 net profit fell 37.8% to $25.6m, bringing FY16 earnings to $35.1m (-39.6%). Quarter revenue slipped 24.2% to $21.5m dragged by lower rental revenue from TripleOne Somerset as expiring leases were not renewed since AEI works commenced in 2Q16, while bottom line was lifted by a $24.4m gain in fair value of an investment property, albeit lower than $44.8m a year ago. NAV/share at $1.57.

*Courts Asia: 3QFY17 net profit rose to $5m (+24.4%) on lower taxes (-36.2%) arising from a tax credit from the loss in Indonesian operations. Revenue sank 8.6% to $187.2m on reduced corporate sales for digital products in Singapore and Malaysia. Gross margin widened 3.4ppt to 33.1%, underpinned by higher service charge income and merchandise margin, while bottom line benefitted from lower distribution (-4.6%) and finance (-14.7%) expenses. NAV/share at $0.567.

*SGX: Jan securities turnover totalled $20.9b (-10% y/y, unch m/m) with average daily value of $1.05b (-10% y/y, +5% m/m), while derivatives volume shrank to 11.7m contracts (-34% y/y, -12% m/m) on fewer trades in equity indexes (-38% y/y, -14% m/m), partly mitigated by increased trading of FX futures (+12% y/y, +6% m/m). Commodities trading derivatives volume (-5% y/y, -1% m/m) also declined.

*Best World: In response to the SGX trading query yesterday, group reiterated its cautious optimism of the group's performance for 4Q16 and informed that fundamentals have not changed since the 3Q16 results announcement on 4 Nov '16.

*Healthway Medical: Received a voluntary conditional offer at SGD0.042/share from Lippo-linked entities, which collectively own 13.3% in the clinic operator. The offeror intends to retain its listing status.*Cambridge Industrial Trust: Leading logistics property developer, e-Shang Redwood, has completed the 10.65% stake acquisition in the REIT at $0.70/unit and has emerged as the second largest unitholder with 11.04% control.

*Q&M: Received several injunction orders against suspended dentists in Johor Bahru, in relation to the improper conduct discovered in the state's operations.

*Oxley/ IHC: Proposed grant of a $50m 6% convertible loan facility to IHC, intended to pay interest expenses and working capital. Oxley will have the right to convert the total outstanding amount into new IHC shares at $0.06102/share.

*Acromec: Secured a $8.7m contract for fitting-out of production facilities, expected to be completed by 3QFY9/17.

*Samudera Shipping Line: Updated that Disposed 6 vessels, including Sinar Jimbaran, over the last 12 months for an aggregate price of US$5.73m. The disposal proceeds will be utilized for working capital and business expansion.

Tuesday, February 7, 2017

SG Market (07 Feb 17)

Stocks could move lower on the overnight drop in crude oil prices and weakening technical picture, with banks and O&M counters likely to face knock-on pressure from Ezra's financial woes.

Regional bourses opened lower today in Tokyo (-0.8%), Seoul (-0.1%) and Sydney (-0.2%).Technically, topside resistance for the STI remains at 3,110, with underlying support at 3,025.

Stocks to watch:
*Wing Tai: 2QFY17 net profit almost doubled to $2.1m (+98%) but 1HFY17 earnings of $3.2m (+3%) met only 5% of consensus full year estimate. For the quarter, revenue halved to $60.9m on lower contributions from development properties, while bottom line was lifted by higher JV/associates income of $18.5m (+119%), contributed by Wing Tai Properties in HK and Uniqlo in Singapore and Malaysia. MKE maintains Hold with TP of $1.67.

*RHT Health: 3QFY17 DPU slumped 34.6% to 1.25¢ in absence of contribution from Fortis Hospotel following its 51% stake disposal. Revenue grew 1.6% to $22.5m and 3.1% in local currency (INR) on higher average revenue per operating bed, but was muted by the impact of the demonetisation policy. Net service fee and hospital income fell 3.6% to $12.8m and 2.1% in rupee terms due to increased operating expenses. Portfolio occupancy fell to 75% (-9ppts q/q), while aggregate leverage stood at 19.9% . NAV/unit at $0.838.

*Micro-Mechanics: 2QFY6/17 net profit climbed 23.5% to $3.4m, lifting 1HFY17 earnings to $6.7m (+6.7%). The good set of results came on the back of record quarterly revenue of $14.2m (+16.3%), largely driven by higher sales in Singapore, Malaysia and US, as global semiconductor sales picked up. While gross margin held steady at 55.4%, core operating margin dipped 1.5ppt to 33.4% on higher staff costs to gear up manufacturing and improve delivery. NAV/share at $0.3696.

*Auric Pacific: Voluntary conditional offer of $1.65/share by controlling shareholders Stephen Riady and Andy Adhiwana, currently owning 49.3% and 27.4% stakes, respectively. The offer is not entitled to rights of compulsory acquisition and the offer price is final.

*SGX: Courting Saudi Aramco for a secondary listing, slated in 2018. Estimated to be worth US$100b, the planned listing of up to 5% of the energy giant is expected to be the world's biggest IPO. The exchange is hoping the full package of government incentives and state investments could give it a better chance of winning the proposal against other markets including NY, London, HK and Tokyo.*Innovalues: Last day of trading today (7 Feb) following the court sanction of the scheme of arrangement by Northstar Private Equity at $1.01/share.

*GSH/Vibrant: Plaza Ventures for $725.2m, an investment vehicle owned by GSH (51%), Vibrant DB2 (35%) and Sam Goi's TYJ Group (14%) was sold to HK-listed Fullshare, owned by China tycoon Ji Changqun, for $725.2m . The target owns GSH Plaza (formerly known as Equity Plaza), a office building in Raffles Place area. The deal values the office units at $2,900 psf and will net a divestment gain of $79.6m/$27.8m for GSH/Vibrant.

*XMH Holdings: Non-binding MOU with Myanmar MarcoPolo to incorporate a 70:30 JV that engages in manufacturing, assembly and selling of generator sets and related power solution products in Myanmar.*Ezra: Seeking advice on a claim lodged by Forland, to seek repayment of NOK25.5m ($4.4m) that is due and owing by Ezra as the parent corporate guarantor to 40% owned EMAS Chiyoda Subsea.

*Luzhou Bio-Chem Tech: Fire broke out at its Liaoning premises on 5 Feb ’17, which resulted in suspension of operations at a production line. The company is seeking an insurance claim.

*Profit warning:
- Gaylin
- SBI Offshore
- Metal Component
- CSC Holdings

Monday, February 6, 2017

SG Market (06 Feb 17)

Investors are also looking for longer term direction from the upcoming Committee on Future Economy report, which is likely to focus on building new capabilities, entrepreneurship and skills to take the economy up the next phase of growth.Regional bourses edged higher today in Tokyo (+0.8%), Seoul (+0.3%) and Sydney (+0.4%).Technicals for the STI are deteriorating, with topside resistance at 3,110 and underlying support at 3,025.

Stocks to watch:
*StarHub: 4Q16 net profit slumped 33.2% to $54m, dragging FY16 earnings of $341.4m (-8.3%) below estimates. For the quarter, service revenue held steady at $567.1m (+0.7%) as growth in enterprise (+9.5%) and broadband (+3.9%) was offset by a drop in mobile (-0.4%) segment, hurt by declining ARPU, as well as dimmer Pay TV (-6.1%) due to a shrinking customer base. Consequently, EBITDA margin narrowed to 23.9% (4Q15: 27.9%, 3Q16: 32.8%). Final DPS of 5¢ is maintained, bringing 2016 total payout to $0.20, but management guided for lower EBITDA margin of 26-28% (FY16: 31.2%) in 2017, and cut its DPS forecast to $0.16. Downgraded by MKE to a Sell with TP of $2.49.

*SIA Engineering: 3QFY17 results in line, as net profit climbed 6.5% to $52.6m, lifted by a $2.3m disposal gain on partial disposal of an associate, a positive $6.9m FX swing, as well as an absence of provisions for closure and impairment costs. Revenue dipped 1% to $272.3m, dragged weaker fleet management and airframe and component overhaul segments, while operating margin narrowed 1.3ppt to 9.3% on a spike in staff costs (+7.5%). The counter offers an indicative yield of 3.4%. MKE maintains Hold with TP of $3.70.

*Frasers Logistics & Industrial Trust: 2QFY17 DPU of 1.74¢ was 6.1% higher than its IPO forecast, while distributable income of A$24.9m exceeded by 5.1%. mainly from interest savings. However, revenue of A$39.7m (-1.5%) and NPI of A$30.7m (-0.6%) were below estimates, due to a delay in acquiring the Marin Brower property. Occupancy steadied at 99.3% (+0.1ppt q/q) with WALE of 6.9 years, while aggregate leverage stood at 29.7% (+1.5 ppt q/q) with average interest cost of 2.8%. NAV/unit at A$0.88. Trades at 7.3% 2Q annualised yield and 1x P/B.

*GLP: Updated that it has received a number of non-binding proposals and disclosed that CEO Ming Z Mei, as well as non-executive and non-independent director Fang Fenglei, have recused themselves from board discussions relating to GLP's strategic review, as both individuals have interests in separate parties, which have submitted proposals. Notably, Mei was previously the MD of Prologis China, while Fang is the founding partner of Hopu Investments. The counter trades at a 14% discount to its consensus RNAV/share of $3.06.

*UOL: Exercised its option to acquire the 45 Amber Road property for $156m ($1,063 psf ppr), with the intention to build a 190-unit residential development.

*Profit warning:
- GS Holdings
- Manufacturing Integration Technology
- GRP- Starland
- First Ship Lease Trust
- Yamada Green

Thursday, February 2, 2017

SG Market (02 Feb 17)

Sentiment may be lifted by upbeat economic data in US and China, as well as Fed’s optimistic outlook on the US economy, but upside gains may be capped by continued jitters over Trump’s policies amid an overbought market.

Regional bourses are mostly flat in Tokyo (+0.02%), Seoul (-0.01%) and Sydney (+0.1%).Technically, the STI broke new ground to a 14-month high and appears headed to the next objective at 3,110. Underlying support is at 3,025.

Stocks to watch:
*GLP: Added two distribution facilities in Chicago with combined space of 448,000 sf for US$33m, bringing total space in the state/country to 11m/173m sf. The logistics facilities owner currently trades at a 16% discount to its RNAV/share of $3.06.

*Roxy-Pacific: Appointed Jones Lang LaSalle and Colliers International as the joint marketing agents for the proposed sale of its property in Sydney, Australia, located at 59 Goulburn Street. The commercial property was previously acquired in Apr '14 for A$90.2m.

*k1 Ventures: Swung into 2QFY17 net profit of $6.6m (2QFY16: $8.5m loss), mainly from a FX gain of $5.1m, as well as an absence of a FX loss of $17.6m last year from the voluntary liquidation of Focus Up Holdings. However, revenue slumped 74% to $3.5m from reduced investment income from Knowledge Universe Holdings. The group disclosed it will not be making any new investments, but will focus its efforts on managing the current portfolio. NAV/share at $0.44.

*Loyz Energy: Turned around in 2QFY17 with net profit of US$0.9m (2QFY16: US$0.6m loss) on revenue of US$2.6m (+8.3%), buoyed by higher selling price of US$44.85 per barrel (+29.4%). Bottom line was boosted by a US$0.8m gain on settlement of bond receivable from Farm Exploration as well as reduced staff costs. NAV/share at US$0.028.

*HC Surgical Specialists: Acquiring a 51% stake in Julian Ong Endoscopy & Surgery, which intends to set up its first clinic at Mount Elizabeth Novena Hospital. The consideration of $2.2m comprises cash of $1.6m and 1m new HCSS shares at $0.6059 apiece. Pro forma FY5/16 EPS of 1.86¢ (-0.5%) implies a P/E of 32.3x.

*Technics Oil & Gas: Judicial manager of the group is divesting the entire 51% stake in structural steel manufacturer Technics Steel to TTJ Holdings for $0.35m.

*Gallant Ventures: Incorporated a 80:20 Singapore-based subsidiary, Teachcast Global, to engage in education services.

*Spackman: Commenced filming "Golden Slumber", a manhunt thriller directed by Nakamura Yoshihiro and is based on the Japanese novel by Isaka Kotaro, which is targeted for release in Korean theatres in 2H17.

*Moya Holdings: Disclosed that it is currently considering a potential acquisition, which is in water business.