SG Market (21 Mar 17)

The market could continue to retrace as Ezra’s Chapter 11 filing, Triyard's trading halt and Nam Cheong financial troubles reignite worries about more bankruptcies in the O&M sector and banks' bad loans.

Regional bourses opened mixed, with Tokyo (-0.6%) and Sydney (-0.2%) trading lower, and Seoul (+0.3%) higher.Technically, the STI is still remains range-bound within its uptrend channel with upside resistance at 3,200 and support at 3,140.

Stocks to watch:
*Keppel Corp: Entered heads of agreement with Borr Drilling, which will make a down-payment of US$275m and take over five jackup rigs totalling US$1.1b currently under construction for Transocean, as well as undertake the remaining instalments. MKE has Sell with TP of $4.57. Separately, the group has named Chris Ong acting CEO of Keppel Offshore to replace Chow Yew Yuen wef Apr 1.

*SIA: May incur a financial provision of $111.8m in FY18 after the European Commission slapped a €776m administrative fine on it and several other carriers for colluding in an air cargo cartel more than 10 years ago. MKE has Hold with TP of $9.70.

*SGX: Given 24 months to improve its recovery processes and systems in the wake of a major trading disruption last year and will contribute $1.5m to co-fund the costs that may be incurred by brokerage firms to implement these measures.

*OCBC: Hong Kong subsidiary Wing Hang has agreed to sell its 33.33% stake in Hong Kong Life Insurance for HK$2.4b, and will book an estimated gain of HK$2.1b, based on the HK Life NAV of HKD793m at end FY16. MKE has Sell with TP of SGD8.05.

*GLP: Acquired the remaining 50% interest in GLP-MC Tianjin Logistics Property Development from JV partner for Rmb35.1m, or 1x P/B. The transaction was funded via internal resources.*Jumbo: Entered into a 51:49 JV with Beijing Hualian Group to open its first JUMBO seafood restaurant in Beijing, China. The restaurant is targeted to be operational by 3Q17 and will be its fourth in China. MKE last had Hold with TP of $0.78.

*EMAS Offshore: Disclosed that it might be negatively impacted by parent Ezra’s Chapter 11 filing. As at 30 Nov, EMAS has US$566m loans owing to banks, of which US$242m/US$193m are fully/jointly guaranteed or secured by Ezra. Aside, EMAS also has US$177m of charter-party agreements that are either fully or jointly guaranteed by Ezra. In turn, EMAS owes US$170m to Ezra, of which US$125m was subject to deferred payment over a period of three years.

*mm2 Asia: Lodged the preliminary offer document for the proposed spin-off and listing of event management company, UnUsUaL Group.

*UnUsUaL: Reported 9M16 net profit of $3.8m (+40.4%) although revenue slipped 28.1% to $16m after SG50 celebrations in 9M15. Earnings were supported by expansion in gross margin to 37.6% (+10.1ppts) as it utilised internal resources for more of its projects instead of outsourcing. Intends to use proceeds from its IPO to expand its operations both locally and regionally as well as expand its access to event and concert venues.

*KSH Holdings: Clinched a $145.7m contract to construct a research building comprising 16 floors and a basement for NUS. The project will lift its order book to over $360m, and is expected to begin in Apr '17, and be completed within two years.

*Perennial Real Estate: Filed appeals against the High Court’s decision to dismiss the winding up application of three associated companies. The associates are Capital Investment Holdings, Capitol Retail Management, and Capital Hotel Management.

*C&G Environmental: Declared a special DPS of $0.103 after it received remaining payments for the sale of its main operating subsidiary C&G Enviromental Protection Thailand to New Sky Energy Thailand in a Rmb500m (received remaining Rmb320.1m) deal, as well as all other entities to Ahead Auto for HK$600m (received remaining HK$344.7m)..

*Civmec: MOU with ASC Shipbuilding to jointly bid for the construction of 12 offshore patrol vessels for the Royal Australian Navy. If tender is successful, a 50:50 JV will be set up.

*Cosco Corp: 51% owned Cosco Shipyard delivered an oil tanker (Babylon) to its Singaporean buyer.

*Sincap: Received a letter for demand claiming the payment of Rmb6.8m from Shangdong Luneng Taishan Mining.

*IEV: Received a patent in China for its self-cleaning apparatus for prevention of marine growth.