SG Market (28 Apr 17)

Singapore stocks are likely to range trade as more 1Q17 earnings appear to fall in line with consensus estimates.

Regional markets are seeing tepid early trading in Tokyo (-0.03%), Seoul (+0.1%) and Sydney (-0.1%).Technically, topside resistance for the STI is at 3,190 with immediate support near the 50-dma at 3,140.

Stocks to watch:
*M1: Reportedly attracted three non-binding offers from Shanxi Meijin Energy, China Broadband Capital and Bahrain Telecoms after its largest shareholders (Axiata, KepCorp, SPH) said they are reviewing their stakes for potential sale as fourth telco operator TPG Telecom prepares the roll-out of its mobile services next year.

*UOB: 1Q17 net profit of $807m (+9.3%) met 25.3% of full year street estimate. Net interest income rose 2.3% to $1.3b on a 9.5% jump in loan growth but partly squeezed by tighter NIM of 1.73% (1Q16: 1.69%). Notably, non-interest income surged 17.8% to $819m, led by strong growth in wealth management (+56.1%) and higher trading income (+58.8%). However, bottom line was weighed by increased provisions of $186m (+59%), mainly from the O&G sector. NPL ratio held steady at 1.5% with Tier-1 CAR at 13.2% (1Q16: 13%). NAV/share rose 2.8% q/q to $19.35.

*Sembcorp Marine: 1Q17 net profit of $39.5m (-27.9%) was propped up by a $46.8m gain from disposal of its 30% stake in Cosco Shipyard Group, favourable $21m FX swing and $2.8m tax credit. Otherwise, it would have ended in the red. Revenue sank 17.2% to $760m on deferment on rig delivery and slower repair works. Operating margin slumped to 1.8% (-6ppts), impacted by increased costs for a floater project that is pending client acceptance. Net order book (excluding Sete Brasil drillships) shrank to $4.02b (4Q16: $4.7m) but management remains hopeful of winning FLNG contracts. NAV/share at $1.24.

*Mapletree Logistics Trust: 4QFY17 DPU of 1.86¢ (+3.3%) brought full year DPU to 7.44¢ (+1%), in line with estimates. Quarter revenue rose 9.1% to $96.5m, while NPI jumped 10.5% to $80.3m, thanks to four new acquisitions, higher rents from HK properties and contribution from the redeveloped Mapletree Logistics Hub. Distributable income (+4.1%) was eroded by a payout to perps holders. Occupancy expanded 0.2ppt q/q to 96.3%, while aggregate leverage narrowed to 38.5% (-0.2ppt q/q). NAV/unit at $1.04.

*Frasers Hospitality Trust: 2QFY17 DPS fell 4.2% to 1.2063¢, representing 23.7% of full year estimate, following the 22% expansion in unit base post-rights issue in Sep '16, while distributable income jumped 21.4% to $22.3m. Revenue surged 43.1% to $38.7m, boosted by the addition of Novotel Melbourne on Collins and Maritim Hotel Dresden, as well as better performance of Sydney, UK and Malaysia properties, while NPI rose at a slower clip to $28.9m (+29.9%), crimped by higher property expenses. Aggregate leverage steadied at 33.4% (-0.3ppt q/q). NAV/unit at $0.7682.

*Viva Industrial Trust: 1Q17 DPU of 1.854¢ (+13.2%) met estimates as a stronger distributable income of $17.8m (+25.9%) overshadowed dilution from a larger unit base (+11.2%). Gross revenue and NPI jumped to $27.4m (+24.9%) and $20.3m (+28.8%), underpinned by two newly-acquired properties and higher rental at Viva Business Park. Occupancy rose 1.3ppt q/q to 91.1%, while aggregate leverage climbed to 39.2% (+2ppt q/q). NAV/unit at $0.792..

*Starhill Global REIT: 3QFY17 DPU fell 6.3% to 1.18¢, coming in at the lower end of street estimates. Gross revenue of $53.3m (-0.6%) and NPI of $41.2m (-0.9%) slipped on lower contributions from Wisma Atria, Ngee Ann City (Office) and Myer Centre Adelaide. Occupancy stayed at 95.1%, while aggregate leverage held steady at 35.3% (+0.1ppt q/q). NAV/unit at $0.92. Trading at 6.1% annualised 3QFY17 yield and 1.3x P/B.

*Yangzijiang: 1Q17 net profit jumped 49% to Rmb667.7m, exceeding 36% of FY17 street estimate, as revenue surged 73% to Rmb4.68b, boosted by increased shipbuilding trading activities, which contributed Rmb1.52b (1Q16: Rmb429.7m), as well as sale of four bulk carriers. However, gross margin contracted to 19% (-5ppts) on the shift in mix. Order book declined to US$4.03b (4Q16: US$4.3b), comprising 84 vessels, after four shipbuilding orders were terminated. NAV/share Rmb6.0962.

*Indofood Agri: 1Q17 net profit of Rp170.6b (+79.6%) beat estimates on higher revenue of Rp4.4t (+39.8%). The strong performance was attributable to growth across plantations (+53.9%) and edible oils & fats (+29%) on higher ASP and increased sales volume, which helped spearhead gross margin to 24% (+7.3ppts). NAV/share at $0.903.

*Tuan Sing: 1Q17 net profit fell 44% to $5.4m, as revenue dropped 29% to $74.8m on lower contribution from property (-54%) following the sale for most of the residential projects last year. Bottom line was buttress by higher JV income (+107%) due to stronger takings at GulTech. NAV/share at $0.781.

*Japfa: 1Q17 net profit tumbled 91% to US$2.1m, largely weighed by a 72% drop in FX gain and US$11.7m fair value loss from biological assets. Otherwise, core net profit slumped 65% to US$7.3m due to negative operating leverage, despite higher revenue of US$736.1m (+3%) from increased contribution from animal protein (Indonesia) dairy, and consumer segments, but offset by weakness in animal protein business in other markets from a drop in swine prices in Vietnam. Gross margin contracted 1.9ppt to 18.5%. NAV/share at US$0.45.

*China Sunsine Chemical: 1Q17 net profit soared to Rmb57.2m (+70%), on solid revenue of Rmb574.6m (+29%), driven by higher average selling price (+17%) for its rubber chemical products and improved sales volume (+10%), due to higher purchases from China's tire makers, as well as spillover demand after production at competitors plants were affected by the enforcement of stringent environmental protection regulations. Gross margin remained stable at 24%.

*iFAST: 1Q17 net profit jumped 60.7% to $2m on operating leverage, on the back of higher revenue of $22.1m (+18.3%), led by increased assets under administration (+17.2% to $6.46b). Operating margin fattened to 9.8% (+3.5ppts), while expenses grew a slower 5.1% to $9.4m, with the increase attributed to expansion of its China operations.

*Memtech: 1Q17 net profit surged 180.7% to US$1.6m, on the back of a 9.8% increase in revenue to US$36.4m, attributable to higher contributions from automotive and consumer electronics segments. Bottom line surge was driven by a 2.2ppt increase in gross margin to 18.1%. NAV/share at US$0.799..

*Samudera Shipping: Swung to 1Q17 net loss of US$0.9m (1Q16: US$2.9m) on weaker revenue of US$62.7m (-7.9%), as contribution from container shipping business (-7.9%) was weighed by lower freight rates, while bulk & tanker business (-8.7%) shrank amid a smaller fleet size. Gross margin narrowed 6.4ppt to 3%. NAV/share at US$0.445.

*Keppel Corp: Secured its first US$40m contract from PTSC Mechanical & Construction to provide engineering, technology and construction management support services for a Tension Leg Wellhead Platform in Vietnam. *CapitaLand Mall Trust: Upcoming IT-focused Funan mall has received strong support, with leasing commitment of >25% on its total net lettable retail area of 325,000 ahead of its completion in 4Q19.

*Soilbuild Construction: Set up a subsidiary Soilbuild Thilawa in Thailand with capital of US$6.7m to manufacture construction materials, and wholesale of pre-fabricated materials.

*Delong: Positive profit guidance for 1Q17 due to higher average selling price for its steel products amid production capacity cuts across the industry and increase in demand in China.

*Global Palm Resources: Expected to report 1Q17 net profit which is substantially higher than 1Q16 mainly due to the higher ASP and sales volume of CPO and palm kernel.

*Sarine Tech: Its Sarine Profile Paradigm is being implmented in full by K-Uno jewellery retail chain in Japan.