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.