Thursday, April 20, 2017

SG Market (20 Apr 17)

The market is likely to come under pressure from the overnight drop in crude prices following the surprise build in US gasoline stockpiles, poltical uncertainty over upcoming elections in Europe as well as growing voices for ECB to end its monetary easing.

Regional markets had a tepid opening today in Tokyo (flat), Seoul (flat) and Sydney (+0.3%).Technically, the STI has broken below its 50-dma at 3,135 with next support at 3,110.

Stocks to watch:
*Keppel REIT: 1Q17 DPU fell 13.7% to 1.45¢ in absence of a capital distribution, achieving 23% of full year street forecast. Revenue and NPI slipped 3.2% and 4.6% to $39.9m and $31.4m, due to absence of income from 77 King Street (divested in Jan ’16) and lower contribution from Bugis Junction Towers. Portfolio occupancy inched up to 99.4% (+0.2ppts q/q), while aggregate leverage held steady at 38.4% (-0.1ppts). Trades at 5.4% annualised yield and 0.8x P/B. MKE last had a Buy with TP of $1.18.

*China Aviation Oil: 1Q17 net profit climbed 4.7% to US$25.3m, meeting 26% of FY17 street estimate. Revenue soared 126.1% to US$3.31b from increased volume traded to 7.39m tonnes (+49%), fuelled mainly by expansion of trading in crude oil to China and fuel oil to Mid-East, but gross margin was squeezed to 0.5% (-0.4ppts). Bottom line was lifted by stronger associate contribution from Shanghai Pudong Int’l Airport Aviation Fuel Supply Company (+7.1%), but pared by weaker contribution from its Korean oil hub (-1.6%). NAV/share at US$0.788.

*ComfortDelGro: 75% owned SBS Transit was awarded the Seletar bus package (currently operated by SMRT) after putting in the lowest bid of $480.3m, well below the first two packages won by Tower Transit (Bulim: $556m) and Go-Ahead (Loyang: $498m). This is the third and last package up for grabs, with the remaining contracts held by incumbents set for future tender once they expire over the next 2-10 years. The five-year contract with a 2-year extension option will commence in 1Q18 and will add ~2% to CDG’s FY18 revenue and earnings. MKE maintains Hold with TP of $2.68.

*Hong Leong Asia: 40.2% owned China Yuchai has acquired the remaining 47.5% and 20% interests in JVs Sichuan Yuchai Machinery Industrial Development and Chongqing Yuchai Machinery Monopoly for Rmb8.9m and Rmb0.15m, respectively.

*ABR Holdings: Raised its stake in Malaysia property developer Sering Manis (SM) from 10% to 19% for RM1.1m. ABR will also dish out a shareholder loan of RM21.7m. SM is in the process of acquiring a 1.13m sqm plot of freehold land in Pahang, Malaysia, near Genting Highlands for RM170.67m.

*Meghmani Organics: 57% owned Meghmani Finechem plans to expand both the chemical and power capacity at GIDC Dahej, South Gujarat in India, by 50%. The project will cost Rs4b and is expected to be commissioned in Jun 2019.

*IEV: 25% owned JV Gas Malaysia IEV has commenced its virtual pipeline business, following the launch of the compressed natural gas distribution station in Gelang, Malaysia.

*Profit warning:
- SP Corp
- Versalink

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