Wednesday, March 29, 2017

SG Market (29 Mar 17)

Positive sentiment could spill over following a strong rally in Wall Street, fuelled by strong consumer confidence data and higher oil prices due to an outage in Libya and Trump's latest move to roll back carbon curbs in the US.

Regional markets opened higher again in Tokyo (+0.1%), Seoul (+0.2%) and Sydney (+0.7%).STI has re-entered its uptrend channel bounded by support at 3,140 and topside resistance at 3,200.

Stocks to watch:
*Property: Top Global became the fourth property firm (after Popular, SC Global, Soilbuild) to seek delisting to avoid QC penalties. While developers CapitaLand, City Dev and Wing Tai still have a few projects facing QC deadlines, their exposure are small and are unlikely to take the privatisation route. Ho Bee could be a possible candidate due to its low free float and cheap valuation, but its projects are not subject to the QC ruling.

*Top Global: Controlling shareholder and executive chairman Oei Siu Hoa (sister of tycoon Oei Hong Leong and vice-chairman of Indonesian conglomerate Sinar Mas Group) launched a conditional cash offer at SGD0.33/share or low implied P/B of 0.38x. Oei has secured irrevocable undertakings of 77.4%, and will delist the company if she obtains >90% acceptance. The group faces QC charges for two residential projects - 130-unit E Maison (40% unsold) and 45-unit R Maison (20% unsold) in Mar '18.

*China Everbright Water: Leading a a consortium (78.4% stake) to undertake a Rmb956m Suizhou public-private partnership project, involving the financing, design, construction, operation, management an d maintenance of the landscape and greenery of both banks of the Fuhe River for a concession period of 13 years and a 10,000 m3/day industrial wastewater treatment plant in Xihe County for a concession period of 25 years.

*Trek 2000: Swung back into black with FY16 net profit of US$6.1m (FY15: US$6.6m loss) on higher revenue of US$165.7m (+11.4%) due to improved sales in both interactive consumer solutions and licensing fees. Gross margin widened from 2.7% to 11.7% on cost containment and expanded WiFi module applications. Bottom line was also lifted by reduced overall expenses (-5.2%), attributed to lower R&D (-21%) and marketing (-21.7%) costs. NAV/share at US$0.1301. Counter still remains suspended since 26 Apr 2016 due to a CAD investigation into interested party transactions.

*Interra Resources: 60% JV Goldpetrol is seeking extension with Myanma Oil and Gas Enterprise (MOGE) of the terms of the improved petroleum recovery contracts for the Chauk and Yenangyaung fields in Myanmar, which are due to to expire on 3 Apr 2017. As the agreements may be approved at a later date, MOGE is allowing the group to continue its incremental petroleum operations in both fields pending approval.

*Trendlines: Received a grant from Singapore Israel Industrial Research and Development Foundation of up to 50% of the US$400,000 required to fund the development and clinical trial for its stress urinary incontinence product. The trial, consisting of 50 women, is expected to start mid-2017.

*Wee Hur: Plans to buy an office warehouse building in Adelaide, Australia, for A$6m. The group intends to develop it into a purpose-built student accommodation to raise recurring income.

*Healthway Medical Corp: Lippo is extending the closing date for its takeover offer at 4.2¢/share to 2 May. Lippo has obtained valid acceptances of 28.04% of the maximum potential share base of the company.

*Swissco: Interim judicial managers is assessing five indicative bids, and formal bids are expected by the second week of Apr. The bids were narrowed down from 12 non-binding expressions of interest. The judicial managers have until 12 Apr to file a further report.

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