Tuesday, February 28, 2017

SG Market (28 Feb 17)

Some profit taking may take place as investors pare risks ahead of Trump's address to Congress tonight that could shed light on his tax reforms and fiscal plans.

Regional bourses opened higher in Tokyo (+0.8%), Seoul (+0.02%) and Sydney (+0.4%).Technically, the STI is trading at the bottom end of its upward trending channel bounded between 3,150 and 3,100.

Stocks to watch:
*Noble: Swung to a FY16 net profit of US$8.7m from a US$1.67b loss last year, due to significant drop in impairments. Stripping out discontinued businesses and non-cash items, adjusted net profit slipped 18.3% to US$252.1m despite being shored by a US$291m gain on disposal of Noble Americas Energy Solutions (NES) and NES’ pre-sale profit contribution of US$114m. Revenue tanked 25% to US$45.5b on lower sales tonnage (-17.6%), while operating margin narrowed 0.12ppt to 1.77%. The group continued to bleed operating cash of US$592.5m but adjusted net debt was reduced to US$1.3b (3Q16: US$1.9b), while net debt-to-capital improved to 42% from 55%. Liquidity headroom increased to US$2b (3Q16: US$1.2b), exceeding US$1.3b debt due in 2017. NAV/share plunged 40% to US$0.30. Last traded at 0.55x P/B.

*Olam: 4Q16 core net profit surged 155% to $102.3m, bringing FY16 core earnings to $363.8m (+23%), beating estimates. Quarter revenue rose 12% to $6.11b, buoyed by higher overall volume (+14%) and increased prices for coffee and cocoa products. EBITDA margin widened to 5.7% (+0.9ppts) on improved performance in food staples & packaged foods. Operating cash flow of $1.02b was met by a significant reduction in net capex, while adjusted gearing eased to 0.73x (3Q16: 0.79x). Declared second and final DPS of 3¢, bringing FY16 payout to 6¢ (unch). NAV/share at $1.9082.

*First Resources: 4Q16 net profit swelled to US$58m (+224%), lifting FY16 earnings to US$125.4m (+31.1%), beating estimates. Quarter sales jumped 33.9% to US$175.2m on increased volumes and ASPs for both plantation and refinery businesses, which resulted in wider EBITDA margin of 52.2% (+14.5ppt). Higher final DPS of 2.375¢ raised FY16 payout to 3¢ (FY15: 2.5¢). MKE last had a Hold with TP of $1.97.

*Ho Bee: 4Q16 headline net profit tumbled 33% to $129.5m on lower fair value gain from investment properties and an absence of write-backs. This brought FY16 earnings lower to $216.8m (-10.5%). Excluding the one-offs, FY16 core pretax profit of $132.7m (FY15: $50.3m) met 96% of street estimate. Quarter revenue climbed 18.7% to $42.5m mainly on sales recognition of two Australian residential projects, while rental income stayed flat. Raised first and final DPS to 6¢ (FY15: 5¢), but with no special payout in FY16 (FY15: 2¢). Trades at 48% discount to its NAV/share of $4.39. MKE last had a Hold with TP of $2.13.

*Jardine C&C: FY16 core net profit rose 7% to US$679m, meeting expectations. However, revenue stayed flat at US$15.8b, as improvements in Astra’s automotive, heavy equipment, mining contracting, and agribusiness operations were doused by weakness in financial services. Final DPS raised to US$0.56 (4Q15: US$0.51), bringing full-year payout to US$0.74 (FY15: US$0.69). NAV/share at US$14.56.

*United Engineers: FY16 headline net profit jumped 38% to $140.6m, beating street estimates. Revenue fell 44% to $479.7m from lower contribution from property development following the completion of Eight Riversuites. While gross margin expanded 14.7ppt to 40.4% on a shift in sales mix, this was negated by a 16% increase in distribution costs and a 36% surge in other expenses from revaluation loss on certain investment properties and higher impairment loss on some development projects. First and final DPS maintained at 5¢, although special DPS was raised to 7¢, bringing FY16 DPS to 12¢ (FY15 total: 8¢). NAV/share at $3.06..

*Ying Li: 4Q16 net profit tanked 42.4% to Rmb65.9m, bringing full year earnings to $87.7m (-30.5%). For the quarter, revenue jumped 85% to Rmb567.9m, mainly from continued handover of residential units at San Ya Wan Phase 2 and commencement of handover at Ying Li International Electrical and Hardware Centre Phase 1A. Gross margin held steady at 25.7% (-0.1ppt), while bottom line was weighed by lower fair value gains. NAV/share at Rmb1.96.

*Halcyon Agri: 4Q16 net profit surged to US$101.1m (4Q15: US$2.3m), lifting FY16 earnings to US$74.3m (FY15: US$6.8m). Quarter revenue more than doubled to US$441.4m (+106.8%), thanks to a 6% increase in ASP to US$1,441/tonne, as well as a surge in volume following the consolidation of GMG and Sinochem’s natural rubber processing facilities and trading business. Consequently, gross margin expanded 1.3ppt to 5.1%, while bottom line was boosted by a US$116.9m negative goodwill recognised from the acquisitions. NAV/share at US$0.4062.

*Roxy Pacific: 4Q16 net profit fell 4% to $11.9m (-4%), bringing full year earnings to $49.8m (-41%). Quarter revenue rose 14% to $93.1m, boosted by higher revenue recognition from residential developments Trilive, LIV on Sophia and LIV on Wilkie, although hotel contribution slipped (-0.3%). Gross margin fell 2ppts to 22%, while bottom line was dragged by lower fair value gains from investment properties and a broad increase in opex. Lowered final and special DPS of 0.622¢ and 0.542¢, respectively, bringing full year DPS to 1.667¢ (FY15 total payout: 1.913¢). NAV/share at $0.412.

*Mewah: 4Q16 net profit surged three-fold to US$5.4m, lifting FY16 earnings to US$20.8m (+220%). Revenue for the quarter leapt 37% to US$740m on higher sales volume (+10%) and average selling price (+24.6%). Operating margin widened 0.8ppt to 5.4%, as direct costs (+34%) rose at a slower pace. Raised final DPS to 0.55¢ (4Q15: 0.45¢), bringing full-year payout to 0.85¢ (FY15: 0.45¢). NAV/share at US$0.3257.

*Cogent Holdings: 4Q16 net profit of $8.6m (+17%) brought FY16 earnings to $32.1m (+26%), in line with street estimate. Quarter revenue climbed 8% to $36m, underpinned by growth in transportation management (+21%) and container depot (+24%) businesses. Operating margin dipped 0.5ppt to 29%, while the bottom line was lifted by lower taxes (-25%) due to prior overprovision. Net gearing shrank to 0.5x from 0.7x in FY15. Did not declare any dividends for FY16 (FY15: 1.88¢), ahead of capex required for construction of Jurong Island Chemical Logistics Facility. Last traded at 10.9x FY17e P/E. NAV/share at $0.2641.

*Hiap Hoe: 4Q16 net profit surged 382.4% to $28.2m, boosted by a $26.5m gain on disposal of Cavenagh Properties. Revenue fell 22.5% to $19.2m from the absence of development revenue, as well as lower contributions from rental (-23.3%), hotel operations (-9.7%) and leisure (-8.1%). First and final DPS of 1¢ maintained. NAV/share at $1.52..

*Sapphire: FY16 net profit jumped 48.8% to $9.6m, while revenue surged 262.5% to $223.9m from the consolidation of Ranken. Gross margin rose 0.7ppt to 12.2%. However, growth in the bottom line was pared by 56.6% drop in other operating income, as well as 63.8% jump in admin costs on the consolidation of Ranken’s expenses. NAV/share at $0.2983.

*Gallant Venture: Swung to 4Q16 net profit of $144m (4Q15: $57.8m loss), bringing full year earnings to $71.4m (FY15: $145m loss). Revenue fell 16% to $431.8m from lower vehicle and equipment sales at IMAS, and as well as lower utilities and resort contributions, while the bottom line was boosted by a $220.6m disposal gain of subsidiary Market Strength Limited. NAV/share at 32.13¢.

*United Global: FY16 net profit fell 9.5% to US$5.6m, while revenue dropped 8.3% to US$91.5m, dragged by a 16.9% reduction in trading business from lower prices and sales volume, although manufacturing remained steady. Although gross margin expanded 1.5ppt to 15.5%, this was largely negated by a 12% increase in admin costs, mainly arising from FX losses, and higher professional and directors’ fees incurred in conjunction with IPO. Final DPS of 0.5¢ brings FY16 DPS to 1¢ (FY15: nil). NAV/share at 6.3¢.

*Hotel Properties: FY16 net profit jumped 26.7% to $103.5m, boosted by a disposal gain of $41.3m and insurance proceeds of $10.9m. Revenue was flat at $577.6m, with lower hotel contribution stemming from weak economic sentiments, but offset by higher property revenue. First and final DPS of 4¢ maintained, along with special DPS of 4¢ (FY15: 8¢). NAV/share at $3.45.

*GLP: Inviting relevant short-listed parties to conduct due diligence on the group, for the purpose of partial or full acquisition in GLP.

*Tat Hong: 88.4% owned Tat Hong Equipment China raised its stake by 2.7ppts to 84.6% in China tower crane rental business, Tat Hong Equipment Service, for NT$128.8m ($5.9m).

*Sarine Tech: Entered collaboration with GGTL Laboratories to research new approaches to diamond grading and authentication.

*Ntegrator: Secured two major contracts worth $47.8m involving the supply of fibre installation and maintenance, over a period of two and three years, respectively, commencing Mar ’17.

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