SG Market (18 Apr 17)

The market could see a slight rebound following the relief rally on Wall Street but trading is likely to remain subdued as geopolitical tensions simmer and investors refocus on the 1Q corporate results season, which kicked off yesterday.

Regional markets opened mixed in Tokyo (+0.8%), Seoul (+0.1%) and Sydney (-0.7%).Technically, the STI is sitting just above its 50-dma at 3,135 with topside resistance recalibrated at 3,160.

Stocks to watch:
*M1: 1Q17 results were in line although net profit of $36.3m (-14.6%) was dented by higher opex and interest costs. Service revenue remained stable at $201.5m (-0.1%) as growth in fixed services offset lower IDD and roaming turonover. While total customer base grew 6.6% to 2.2m and postpaid data usage increased 12% to 3.7GB/month, ARPU fell across the board and customer acquisition cost jumped 14%, compressing EBITDA margin to 39.2% (1Q16: 40.9%, 4Q16: 35.8%). Lack of full year guidance reflects uncertainty but there could be situational interest as major shareholders undertake a strategic stake review. MKE last had a Sell with TP of $1.75.

*Keppel DC REIT: 1Q17 distributable income swelled 47.6% to $21.8m, translating to a diluted DPU of 1.89¢ (+13.2%), which met estimates. Gross revenue of $32.2m grew 30.1% on contributions from KDC Singapore 3, Milan DC and Cardiff DC but partially pared by lower income from Dublin 1 (client downsizing) and KDC Singapore 1 & 2 (variable income). NPI of $28.8m (+36.1%) was further lifted by lower property tax expenses and maintenance costs. Portfolio occupancy rose to 95.1% (+0.7ppts q/q) with WALE of 9.2 years (4Q16: 9.6 years), while aggregate leverage narrowed to 27.9% (-4ppts q/q). NAV/unit at $0.946.

*Keppel Infra Trust: Flat 1Q17 DPU of 0.93¢ was in line with expectations. Revenue grew 18.3% to $155.3m, mainly due to stronger contribution from City Gas (+9.8%) on increased town gas tariff and volume, as well as higher facility fees from Basslink ($21.2m) as no fees were recognised in 1Q16 due to a cable outage and higher revenue for Keppel Merlimau Cogen plant. However, this was pared by a dip from its waste and water concessions in the absence of construction revenue. Aggregate leverage rose to 38.7% (+1.3ppts q/q). NAV/share at $0.32.

*First REIT: 1Q17 DPU of 2.14¢ (+2.5%) came in line as revenue and NPI rose 2.5% to $27.2m and $26.9m, respectively, on new contribution from recently-acquired Siloam Hospitals Labuan Bajo in Dec ’16. Aggregate leverage stood at 31% (-0.1ppt q/q). NAV/unit at $1.01.

*SIA: Mar group pax load factor improved 1.1ppts to 79.7%, as growth in passenger traffic (+6.6%) outpaced capacity expansion (+5.1%). This was attributed to fare promotions, with higher load factors across Europe (+8.2ppts), Americas (+4.7ppts) and East Asia (+1.7ppts), but lower from South West Pacific (-4.3ppts) and West Asia & Africa (-0.4ppts). However, load factors fell in subsidiary carriers Scoot (-5.7ppts to 81.2%), Silkair (-2.3ppts to 69.2%) and Tigerair (-2ppts to 82.4%). Cargo load factor rose 3.5ppts to 67.5% on improved carriage (+5.4%) and reduced capacity (-0.1%). MKE last had a Hold with TP of $9.70.

*SATS: Received EU approval to provide meat transshipment services between New Zealand and the EU, via Singapore.*Tung Lok Restaurants: Entered a 3-year tenancy agreement for 8,547 sf premise with interested-party Orchard Central for $2m, which will be used to operate restaurants.

*ST Engineering: Aerospace unit secured new contracts worth about $1.11b in 1Q17 for services ranging from line and heavy airframe maintenance to component repair and overhaul.

*China Jinjiang Environment: Secured a BOT waste management project in Lucknow City, India, with investment amount of ~Rmb300m. Operations are scheduled to commence in Apr '19 for the 1,500tpd facility, under a 30-year concession period.