Monday, March 20, 2017

SG Market (20 Mar 17)

The market could react negatively to renewed fears of rising US protectionist rhetoric, after G20 finance ministers dropped the decade-long tradition of endorsing free trade at the key summit in Germany over the weekend. Regional markets opened lower in Seoul (-0.4%) and Sydney (-0.3%). Japan is closed for public holiday.Technically, the STI sees downside support within the uptrend channel at 3,140, with resistance at 3,200.

Stocks to watch:
*Banks: Key lenders DBS and OCBC could be weighed by further loan provisions/ write-downs from latest O&G casualties Ezra and Nam Cheong, due to the prolonged slump in the industry. Ezra has filed for US Chapter 11 bankruptcy over the weekend, while auditors of Nam Cheong cast on the group's ability to continue as a going concern.

*M1: Controlling shareholders Axiata Group (28.5%), Keppel T&T (19.2%) and SPH (13.4%) have appointed Morgan Stanley as the financial adviser for a strategic review. Based on a control premium of 15-20%, MKE believes that the market could price M1 at $2.12-$2.22 per share. MKE last had a Sell rating on the counter with TP of $1.85.

*Keppel Corp: Raised its stake in Saigon Centre in Ho Chi Minh City, Vietnam, for $53.5m. The integrated development sits on a two-hectare prime site in CBD and is currently undergoing development works for Phase Two, which is expected for completion in end-2017.

*SATS: Divesting a 51% and 4% stake in SATS HK and Asia Airfreight Terminal (AAT) for HK$76.5m ($13.8m) and HK$100m ($18.1m), respectively, to Hong Kong Airlines (HKA). The new partnership will be able to tap on HKA's large base load to improve utilisation of ramp and cargo services.

*Keppel T&T: Divesting a 10% stake in Asia Airfreight Terminal to Hong Kong Airlines for HK$250m ($45.1m), and expects to recognise a divestment gain of $19m upon completion.

*Ezra: Requested for trading suspension after it filed for reorganization under Chapter 11 of the US bankruptcy code, to facilitate the financial restructuring of the group.

*Kimly: Draws strong support for its IPO of 173.8m new shares at $0.25, with subscription being 8.3x subscribed. Trading for the coffee shop operator will commence today at 9am.

*Auric Pacific: The $1.65/share unconditional offer by Silver Creek Capital has attained valid acceptances of 90.15%. Hence, trading in the stock has been suspended and the closing date for the offer will be extended to 7 Apr, 5.30pm.

*CNMC: Proposed acquisition of its third mining asset in Malaysia for RM2.5m. KelGold Mining has exploration rights for iron ore, gold and/or other minerals in an area of 1,550 hectares in Kelantan till 2019, and is in the midst of renewing its rights in an area of 870 hectares. Upon production, CNMC will provide a tribute payment of 2.5% gross on the sale of gold extracted, on top of the prevailing 10% royalty fee and additional tribute payment of 6% to government body Yayasan Kelantan Darulnaim.

*CWG: Launched a US$20m fund (with a US$24m ceiling) to invest in the group's overseas real estate development projects in Australia and the US. It currently manages eight funds with AUM of US$100m. *Rex: 85.2% owned unit has commenced drilling for new exploration well Karamah#1, located in Block 50 Oman.

*EMAS Offshore: Served charter termination notices for Lewek Toucan and Lewek Pelican, following various events of default and breaches of the charter agreements.

*Regal: MOU with Sarawak-based Twin Revenue to jointly collaborate and venture into development projects, land investments and/or other projects.

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