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