Thursday, March 2, 2017

SG Market (02 Mar 17)

Singapore market could get another shot in the arm from positive spillover sentiment from Wall Street, with banks and O&M firms likely to be beneficiaries of fresh fund flows.

Regional bourses opened higher in Tokyo (+1.1%), Seoul (+0.9%) and Sydney (+1.1%).Technically, the STI remains within its uptrend channel between 3,100 and 3,155.

Stocks to watch:
*Japfa: FY16 core net profit jumped 48% to US$130.2m, but still below estimate. Revenue grew 9% to US$3.03b on improvement in all segments; animal protein (+8.5), dairy (+9.7%) and consumer food (+9.7%). Operating margin rose 2.5ppts to 10.3% mainly from higher breeding margin due to increased poultry prices and lower feed costs. First and final DPS raised to 1¢ (0.5¢).

*Citic Envirotech: FY16 net profit doubled to $99.3m on stronger revenue of $544.6m (+62.1%), buoyed by its engineering division (+155.9%). However, gross margin dipped 0.5ppt to 39.1% on a shift in sales mix, while bottom line was boosted by a turnaround in associate contribution to $6.8m (FY15: $0.03m loss). Final DPS raised to 0.75¢ (4Q15: 0.36¢), plus special DPS of 0.25¢ declared, bringing full-year payout to 1¢ (FY15: 0.36¢). Trading at 17.8x P/E and 0.58x P/B.

*Q&M: FY16 net profit of $28.3m (+148%) came in within expectations, lifted by a $21.3m disposal gain from Aidite spinoff. For the quarter, revenue rose 25% to $154.9m on the back of increased contribution from existing and new dental outlets, as well as higher equipment/supplies distribution and manufacturing businesses. Excluding one-off items, core pretax margin improved to 12.9% (+1.7ppts). Expansion plans remain on track. Final DPS was raised to 0.7¢, bringing FY16 payout to 1.12¢ (FY15: 0.84¢). MKE last had a Buy with TP of $1.00.

*World Precision: 4Q16 net profit jumped 38.8% to Rmb30.1m, bringing full year net profit to Rmb0.8m (FY15 net loss: Rmb10.8m). Quarter revenue rose 29.3% to Rmb723.1m, from a 26.5% increase in conventional stamping machines sales and a 69.4% surge in high tonnage stamping machines sales. Gross margin fell 10.9ppt to 19.7%. Bottom line jump was from a 22.8% reduction in other expenses on lower bad debt allowances, as well as from a halving of financial expenses on lower loan balances. NAV/share at Rmb2.56.

*Dutech: 4Q16 net profit fell 5.4% to Rmb20.8m, bringing FY16 net profit to Rmb126.1m (+6.9%), above estimate. Revenue jumped 34.6% to Rmb444.4m, as high security segment (+23.2%) was driven by increased ATM safes sold, while business solutions (+185%) grew from the consolidation of Krauth and Metric. Gross margin fell 1.2ppt to 24.1% from increased steel price, as well as a shift in sales mix. Bottom line drop was driven by the consolidation of Krauth and Metric’s expenses, as well as a 304% surge in finance expenses from increased borrowings. NAV/share at Rmb2.3164.

*Acesian Partners: Swung to FY16 net loss of $2.2m (FY15 net profit: $2.6m). Revenue grew 35.9% to $46.8m, mainly from the manufacturing and engineering segments from higher sales to new customers and certified project works. However, gross margin fell 6.4% to 16.1% amid a dispute regarding Terminal 4 works, while bottom line was further weighed by goodwill impairment ($1m) and bad debt allowance ($0.6m). NAV/share at 3.36¢.

*Cosco Corp: 51% owned Cosco Shipyard secured an order from a European buyer to build one offshore heavy lift vessel at an undisclosed contract value.

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