SG Market (01 Mar 17)

The market could enter a corrective phase with a lot of expectations built into Trump's address to Congress and rising prospects of a Fed rate hike this month. Regional bourses opened higher in Tokyo (+1.2%) and Sydney (-0.2%). Korea market is closed for Independence Day.Technical picture is deteriorating with STI just breaching the downside of its upward trending channel, with next support at 3,088.

Stocks to watch:
*Yangzijiang: 4Q16 net profit surged to Rmb607.8m (4Q15: Rmb41.5m), taking FY16 earnings to Rmb1.75b (-29%), meeting street estimates. Quarter revenue jumped 76% to Rmb5.51b, boosted by its trading business, which contributed Rmb1.05b (4Q15: nil), as well as nine vessels delivered (4Q15: six). Gross margin contracted 3.7ppts to 26% owing to thin trading margin but bottom line was lifted by higher net investment income of Rmb344m generated by its investment segment as well as recognition of forfeited deposits of Rmb226m and the reduced net impairments. Order book stood at US$4.3b at end-2016, comprising 85 vessels, which will keep it busy till 2019. First and final DPS cut to 4¢ (FY15: 4.5¢). Trades at 0.76x P/B.

*Vard: 4Q16 net loss shrank 19% to NOK67m, which helped to narrow FY16 loss to NOK163m (FY15: NOK603m) versus street forecast of NOK147m loss. For the quarter, revenue slumped 35% to NOK2.15b due to reduced activity at its shipyards from low order intake in 2015. But EBITDA rose to NOK67m (4Q15: NOK35m) from positive contribution of certain projects. Order book reduced to NOK12.65b (3Q16: NOK14.08b). Trades at 0.84x P/B.

*UMS: 4Q16 net profit tanked 40% to $5.9m, eroding FY16 earnings to $22.6m (-34%), but still slightly above estimates. Revenue surged 56% to $34.2m on sales of semiconductor integrated systems (+155%), but mitigated by weaker sales in semiconductor components (-2%). However, gross margin collapsed to 45.7% (-30.1ppt) on the shift in sales mix, while bottom line was also hurt by higher staff expenses (+18%) and one-offs totalling $2.6m. Maintained its final and special DPS of 3¢, bringing FY16 payout to 6¢ (unch). NAV/share at $0.4416.

*Super Group: 4Q16 net profit was muted at $15.5m (-1%), dragging FY16 earnings to $44.3m (-6%), below street forecast. Revenue for the quarter rose 9% to $154.3m, as growth in food ingredient sales (+27%) outpaced branded consumer segment (+1%). However, the shift in sales mix and higher raw material costs led to lower gross margin of 35% (-4ppt). Bottom line was dragged by write-offs for inventory and fixed assets of $1.9m, but mitigated by a positive FX swing of $2m and tax incentives. No final DPS was declared in 4Q16 (4Q15: 1.2¢), resulting in a FY16 payout of 1¢ (FY15: 2.2¢).

*Wheelock: 4Q16 net loss deteriorated to $16.4m (4Q15: $0.9m loss), bringing FY16 earnings to $58.4m (+44.7%) missed. Quarter revenue jumped to $224.3m (+107%) on higher development property sales, but the segment led to a sharply lower gross margin of 8.5% (-13.5ppt). Bottom line was further hit by a massive fair value loss on investment property of $53.4m and lower associate contribution (-55%), but was partially offset by a $8.2m write-back of impairment on development property and $9.4m tax credit. Maintained first and final DPS of 6¢. NAV/share at $2.50..

*Hong Fok: FY16 net profit tumbled 56% to $73m, dragged mainly by the absence of a disposal gain (FY15: $81.9m). Revenue slipped 3% to $58.4m on lower rental income from leasing of investment properties and property management income, but was partially offset by higher rental income from the residential units of Concourse Skyline. Maintained first and final DPS of 1¢. NAV/share at $2.24.

*Indofood Agri: 4Q16 core net profit spiked 331% to Rp417.3b, bringing FY16 earnings to Rp467.6b (+72.6%), above consensus estimate of Rp302b. Revenue rose to Rp4.26t (+12.9%) on stronger sales from both plantations (+9.2%) and edible oil products (+14.5%), thanks to higher ASPs for both segments, and increased sales volume for the latter. This lifted gross margin to 33.3% (+9.9ppt). An unknown quantum of DPS will be declared subsequently (FY15: 0.5¢). NAV/share at $0.912.

*Yanlord: 4Q16 earnings jumped 26% to Rmb1.55b, taking FY16 earnings to Rmb2.7b (+84%), significantly above estimates. For the quarter, revenue slipped 3% to Rmb9.9b on lower ASP per sqm sold, but partly offset by a higher gfa delivered. Due to a shift in mix towards projects with relatively lower development costs, gross margin significantly expanded to 42.5% (+17.2ppts), while bottom line was further bolstered by a turnaround in JV income of Rmb17.5m (4Q15: Rmb73.6m loss) and associate income of Rmb1.1m (4Q15: nil). Raised first and final DPS to 4.35¢ (FY15: 1.52¢). NAV/share at Rmb10.84.

*Centurion: 4Q16 net profit tanked 61% to $2.9m, bringing FY16 net profit to $28.7m (-16%) missing street estimates. This was despite stronger operational results, as the lion’s share of profits was attributable to minorities. For the quarter, revenue rose 23% to $34.8m, boosted by a 26% increase in the accommodation business. The business saw better performance at Singapore worker dormitories, as well as student accommodation assets in UK, Singapore and Australia. Bottom line was impacted by a $3.1m fair value loss on investment properties. Final DPS of 1¢ maintained, bringing full year DPS to 2¢ (FY15: 1.5¢).

*Food Empire: Swung to 4Q16 net profit of US$2.9m (4Q16: US$3.2m net loss), bringing FY16 net profit to US$14.5m (FY15: US$0.2m), in line with the single broker estimate on the street. Quarter revenue jumped 11.4% to US$70m, hoisted by Russia (+12.2%), Indochina (+28.7%), other markets (+41.1%), and notably Ukraine (+8.5%). Gross margin improved 0.4ppt to 37.8%. Bottom line was also shored by a steep 90.9% narrowing of FX loss to US$0.6m. First and final DPS of 0.6¢ (FY15: nil). NAV/share at US$0.2883.

*Sunpower: FY16 net profit spiked 81.7% to Rmb145.7m, on a 13.3% growth in revenue to Rmb1.63b, attributed to increased contributions from both EPC integrated solutions and environmental equipment manufacturing. Gross margin inched higher to 25.1% (+2.8ppts), while bottom line was lifted by higher government grant received and a reversal of impairment. First and final DPS of 0.12¢ maintained.

*Sino Grandness: Booked 4Q16 net loss of Rmb106m (4Q15: Rmb104.5m loss), bringing FY16 earnings to Rmb578.2m (FY15: Rmb206.7m profit). Quarterly revenue tumbled 36% to Rmb548.9m, amid weaker overseas (-44%) and domestic (-21.3%) canned products sales, as well as drop in beverage (-37%) turnover. Gross margin was stable at 42.4%. Bottom line was hit by ballooning distribution costs (+51%) admin expenses (+81%), and Rmb11.9m FX loss, but cushion by a sharp reduction in finance costs (-96.7%) and a Rmb15.4m tax credit. No dividends was declared in FY16 (FY15: Rmb0.018). NAV/share at Rmb3.568..

*Straco: 4Q16 net profit was down 1.9% to $6.1m, bringing full year net profit to $46.4m (-5.2%). Quarter revenue dropped 2.5% to $23.2m, from lower contributions from Underwater World Xiamen, partially offset by higher revenue from Shanghai Ocean Aquarium, Lixing Cable Car and the Singapore Flyer. Overall, visitors fell 2.6% to 915,000 in the quarter. Raised first and final DPS to 2.5¢, although there was no special DPS (FY15 payout: 2.5¢). NAV/share at 28.19¢.

*Midas: FY16 net profit surged 76.3% to Rmb100.8m, while revenue fell 1.8ppt to Rmb1.49b, from lower aluminium alloy extruded products contributions of Rmb1.3b (-13.8%), partially offset by Rmb182m of aluminium alloy stretched plates sales (new division). Gross margin rose 2.8ppt to 29.7%. Bottom line was lifted by a 72% increase in other income from government subsidies, as well as from operating leverage. NAV/share at Rmb2.35.

*Mermaid Maritime: Swung to FY16 net profit of US$17.2m (FY15: US$232.6m net loss), amid the absence of US$163.3m of impairment losses. Revenue fell 45% to US$185.2m on lower utilization and lower rates at subsea business. Bottom line was also lifted by US$11.5m share of profit from associates (FY15: US$50.4m loss), largely from the absence of impairment at Asia Offshore Drilling. NAV/share at US$0.24.

*Yeo Hiap Seng: 4Q16 net profit fell 27.4% to $10.3m, bringing full year net profit to $29m (-21.4%). Quarter revenue fell 4.3% to $91.5m, while gross margin fell 3.8ppt to 36.2% due to higher raw material costs. Although the company enjoyed $16.9m gains (incl. property & FX), this was largely negated by rising admin expenses (+116%). First and final DPS of 2¢ maintained. NAV/share at $1.1759.

*Yongnam: FY16 net loss dived deeper to $31.6m (FY15: $3.3m loss), despite revenue rising 19.2% to $321.4m, as higher contributions from structural steelworks (+21.7%) and mechanical engineering (+5.5x) businesses were pared by specialist civil engineering division (-23%) due to the tailing down of Downtown Line 2 and 3 projects. FY16 swung to a gross loss of $13.8m (FY15: $19.7m profit), undermined by project cost overrun and variation order issues. Bottom line was also hurt by higher taxes (+270%). NAV/share dropped 33% to $0.6294.

*Hong Leong Asia: FY16 net loss worsened 17.3% to $71.3m, as the profits from diesel engine unit (Yuchai) and building materials unit (BMU) were not able to offset losses in consumer products unit (Xinfei). Revenue fell 8.8% to $3.7b, as Yuchai (-5.6%) and Xinfei (-12.8%) were affected by slower economic growth in China, while BMU (-20.2%) saw competition intensify in Singapore and Malaysia. First and final DPS of 1¢ (FY15 payout: 2¢). NAV/share at $1.8679.

*China Sunsine: 4Q16 net profit jumped 46% to Rmb66.3m, bringing FY16 net profit to Rmb221.7m (+14%). Quarter revenue grew 22% to Rmb553.4m, from increased orders, particularly from tire makers, as competitors’ production were forced to cease by some local governments (e.g. Tianjin, Henan) due to smog “red alert”. Gross margin increased 3.7ppt to 27.2% from economies of scale. Bottom line also benefitted from scale as opex rose at a slower clip. First and final DPS, as well as special DPS of 1¢ and 0.5¢ respectively, were maintained..

*GSH: Swung to a 4Q16 net loss of $3.3m (4Q15: $6.6m profit), dragging FY16 into the red with losses of $3.6m (FY15: $16.4m profit). Quarterly revenue plunged 70% to $17.7m amid as phase 1 property sales at GSH Plaza completed in 2015, with phase 2 slated to launch in 1Q17. While gross margin widened 16ppt to 51%, bottom line was hurt by a doubling in admin expense on new regulated wage structure in Malaysia, and a $4.3m adverse swing in fair value of investment property. NAV/share at $0.1765.

*Figtree: 4Q16 net profit tanked dropped 30.6% to $2m, bringing full year net profit to $10.2m (-18.7%). Quarter revenue halved to $14.6m (-53.6%) from a high base, as various major projects were completed last year. However, gross margin jumped 37.9ppt to 50.2% from cost savings. However, bottom line was dragged by a 117% increase in admin costs from the marketing costs for 303 La Trobe in Melbourne, as well as a $2.45m allowance for doubtful debts. Shaved first and final DPS to 1.25¢ (FY15: 1.6¢). NAV/share at 15.36¢.

*Golden Energy and Resources: Turned around to a FY16 net profit of US$21.8m (FY15: US$9.4m loss) on firmer revenue of US$393.3m (+9.3%), mainly driven by coal mining division (+9.7%) on higher sales volume and a 17.6% y/y increase in average selling price in 4Q16. Gross margin expanded 5.6ppt to 36.6%, as direct costs remained stable. Bottom line was further boosted by lower freight and amortisation costs, absence of US$5.2m FX loss, as well as higher other income (+121%). NAV/share surged 43.7% to US$0.1265.

*Abundance International: FY16 headline net loss narrowed to US$0.8m (FY15: US$6.1m loss). Revenue of US$109.9m (FY15: US$7.6m) was mainly from the new chemical trading business, which achieved segmental profit of US$0.7m. NAV/share at US2.93¢.

*Uni-Asia: Sank to a 4Q16 net loss of US$13.6m (4Q15: US$5,000 profit), on US$8.6m of fixed assets impairment and a $3.5m provision for onerous contract, thereby pulling FY16 into a net loss of US$14.2m (FY15: US$2.7m profit). Quarterly revenue edged up to US$21.8m (+4%) as growth in charter (+13%) and hotel (+33%) income, offset lower fee income (-69%) and investment returns (-53%). Operating margin excluding the two one-offs collapsed to 3.5% (-12.5ppt) Slashed first and final DPS to 3¢ (FY15: 6.25¢). NAV/share at US$2.68.

*Wong Fong Industries: FY16 net profit fell 36.3% to $3.6m, while revenue fell 9.6% to $70.2m from lower equipment sales amid a challenging environment, offset by higher contributions from projects and training. However, bottom line was affected by negative operating leverage as expenses stayed stubborn. Final DPS of 0.3¢ announced (FY15: nil). NAV/share at 18.76¢.

*Ezra: 40% owned Emas Chiyoda Subsea filed for bankruptcy protection after receiving several arbitration claims. Parent corporate guarantor, Ezra, is currently undergoing efforts to consolidate its funding requirements, failing which, it would be faced with a going concern issue. Trades at 0.17x P/B.

*Tiong Seng: Awarded $113.8m construction contract at Alexandra View, which comprises design, construction and maintenance of a block of residential flats, two basement carpark, and amenities.