SG Market (26 Apr 217)

The market could be greeted by positive spillover sentiment from US as investors get excited over Trump’s long-awaited tax cut announcement tonight.

Regional markets are higher again this morning in Tokyo (+0.7%), Seoul (+0.4%) and Sydney (+0.9%).Technically, STI is likely to break above its 20-dma at 3,164 before heading towards next objective at 3,190. Immediate support is now at 3,140.

Stocks to watch:
*CapitaLand: 1Q17 core net profit leapt 121.1% to $337.8m, or 35% of full year street estimate, boosted by a $160.9m gain from the 45-unit sale of The Nassim, otherwise earnings would have improved by 15.7% to $176.9m. Revenue was relatively flat at $897.5m (+0.4%) as higher handover from development projects in China and rental income from newly acquired properties were offset by fewer sales in Singapore. Net gearing stood at 0.44x. Trades at 0.72x P/RNAV and 0.88x P/B. MKE last had a Hold with TP of $3.70.

*Ascendas REIT: 4QFY17 DPU of 3.852¢ (+13%) brought FY17 payout to 15.743¢ (+2.5%), meeting estimates. Quarter revenue edged up 2.4% to $208.9m on contributions from newly acquired ONE@Changi City, three Science Park Buildings and a Sydney business park, while NPI rose 7.4% to $154.1m due to lower utility expenses and a property tax refund. Portfolio occupancy held steady at 90.2%, while aggregate leverage crept up 2ppt q/q to 33.8%. Trades at 6% 4QFY17 annualised yield and 1.24x P/B. MKE maintains Buy with TP of $2.85.

*Mapletree Commercial Trust: 4QFY17 DPU rose 11.9% to 2.26¢ despite an enlarged unit base, bringing FY17 DPU of 8.62¢ (+6%), in line with expectations. For the quarter, revenue and NPI surged to $107.5m (+47.3%) and $83.2m (+51.2%), mainly driven by Mapletree Business City I (acquired in Aug '16) and higher rental income from VivoCity. Portfolio occupancy slipped 1.1ppt q/q to 97.9%, while aggregate leverage narrowed 0.7ppt q/q to 36.3%. Trades at 5.7% 4QFY17 annualised yield and 1.14x P/B.

*Suntec REIT: 1Q17 DPU of 2.425¢ (+2.3%) was in line with estimate on distributable income of $61.8m (+3.1%). Revenue and NPI climbed to $88.4m (+12.9%) and $61.8m (+14.6%), led mainly by contribution from newly-opened 177 Pacific Highway A-Grade office in North Sydney, Australia. Both occupancies for office (+0.3ppts to 98.9%) and retail (+0.3ppts to 98%) improved, while aggregate leverage was flat at 37.7%. NAV/unit at $2.145.

*CDL Hospitality Trusts: 1Q17 DPS rose 9% to 2.42¢, in tandem with higher distributable income of $26.8m (+10%), meeting estimates. Revenue and NPI rose to $46.4m (+3.9%) and $35.9m (+6.4%), on higher contribution from Grand Millenium Auckland and lower property expenses (-3.8%), although partially offset by weaker contribution from properties in Australia (-5.1%), Maldives (-8.2%) and Japan (-13.1%), and further dragged by a weaker GBP. Singapore occupancy improved to 88.4% (1Q16: 83.9%; 4Q16: 83.6%) with RevPAR at $159 (1Q16: $161; 4Q16: $154). Aggregate leverage held steady at 36.8%. NAV/unit at $1.5298..

*Ho Bee Land: 1Q17 net profit surged 205% to $56.3m, lifted by a divestment gain of $7.4m from Rose Court, as well as higher associate income of $32.7m (+252%) arising from profits from the Shanghai JV project. Revenue grew 13.9% to $42.4m from sales recognition of two Australian residential projects in Melbourne and Gold Coast, but partially offset by a 4.3% decline in rental income. NAV/share of $4.45. MKE retains Hold with TP of $2.60, based on a 36% discount to its RNAV/share of $4.07.

*Citic Envirotech: 1Q17 net profit swelled 41.2% to $17m but achieved just 19% of the sole FY17 street forecast. Revenue grew 14.3% to $113.7m, on increased takings from engineering (+53.4%) and treatment (+4.7%) divisions, offset by a 43.4% reduction in membrane sales. Gross margin narrowed to 31.4% (-5.9ppts) on the shift in sales mix, while bottom line was buttressed by lower finance costs (-42.2%) after redemption of its $100m MTN bond. NAV/share at $0.658.

*SIIC Environment: 1Q17 net profit rose 34.3% to $120.1m, meeting 22% of FY17 consensus estimate. Revenue shot up 77.6% to Rmb999.7m, boosted by significant growth in construction (+70.7%), operating and maintenance income (+73.2%), financial income (+135.9%) and others (+107%), while gross margin expanded to 35.5% (+4.1ppts) on the change in sales mix. However, bottom line was weighed by a spike in finance costs (+180%) and lower JV/ associate income (-53.6%), as well as a higher effective tax rate of 28.1% (1Q16: 19.7%). NAV/share at Rmb2.735.

*Far East Orchard: 1Q17 net profit tumbled 66.8% to $5.6m, weighed by a sharp drop in JV income (-94%) due to the absence of one-off gain. Revenue slumped 22.9% to $39.4m following the expiry of certain lease agreements in Australia and New Zealand, as well as weaker performance from two hospitality assets in Perth. NAV/share at $2.94.

*Talkmed: 1Q17 net profit dipped 0.4% to $8.5m, dragged by higher staff costs (+5.7%), while revenue inched higher to $16.3m (+1.4%) from increased patient loads and higher contribution from subsidiary Stem Med.

*SPH: Diversifying into the healthcare sector via the acquisition of nursing home operator Orange Valley Healthcare, which owns and operates five nursing homes in Singapore, for $164m or 2.3x P/RNAV. The group notes that one in four Singaporeans will be aged above 65 by 2030, which will lead to strong demand for elderly care services in the next decade.

*Atlantic Navigation: 49/51 JV with Oceanus Co. Korea was awarded a US$45.2m project by a Mid-East national oil company to purchase and remove decommissioned offshore and onshore facilities. The project is expected to start in Jun '17, and be completed within 18 months. In addition, the group is also providing around seven vessels to support the offshore phase of the project.

*First Ship Lease Trust: Extended bareboat charters for three vessels, namely Speciality, Superiority, and Seniority.

*Lian Beng: Disposing a freehold property with 1,915.5 sqm NLA at Collins Street, Melbourne, Australia for A$35m..


*Amplefield: Disposing three plots spanning 19,181 sqm in Johor, Malaysia, along with buildings constructed on the land, to URC Snack Foods Malaysia for RM12.75m ($4m) or 1.28x P/B and realising a net gain of RM0.3m.

*Global Premium Hotels: Chairman Koh Wee Meng will exercise his right to compulsorily acquire all remaining shares in Global Premium Hotels at $0.33/share, after obtaining 94.55% control through the voluntary offer.

*Bukit Sembawang: Granted an option to an associate company of non-executive and non-independent director Lee Chien Shih, to purchase a unit in the Paterson Collection development project for $3.3m. The proposed sale price is based on market valuation and no preferential terms were given.

*Yanlord: Credit ratings agency Moody's has upgraded the group's corporate family and senior unsecured debt ratings to Ba2 from Ba3, with outlook stable.

*YuuZoo: Applying to SGX for extension to current deadline of 30 Apr '17 to hold its FY16 AGM, as it needs more time to prepare its audit report for shareholders' review.

*Eratat: To be liquidated following a failed judicial management bid.

*Profit warnings:
- Asia Enterprises
- Weiye