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.