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.