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.

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