Wednesday, May 31, 2017


M1: According to Bloomberg, Warburg Pincus has dropped out of the race for M1 but MyRepublic is reportedly seeking private equity backing to pursue the telco after failing to bid for Singapore’s fourth mobile operator license.Other contenders that have submitted first round offers for M1 include Shanxi Meijin Energy and China Broadband Capital.M1’s substantial shareholders Axiata Group, Keppel T&T and SPH, which together hold a combined 60% of M1, has appointed Morgan Stanley to review their stakes in the company.

SG Market (31 May 17)

Trading sentiment is expected to remain subdued amid the lack of clear direction and Wall Street’s retreat from record highs on soft inflation data and ebbing consumer confidence.

Regional bourses opened lower in Tokyo (-0.3%) but little changed in Seoul and Sydney.Technically, the STI may lose further ground after breaking beneath its 20-dma. Near term support is at 3,190, while immediate resistance lies at 3,250.

Stocks to watch:
*Ascott Residence Trust: Acquiring a hotel in New York, its third US hospitality asset, at market value of US$106m ($148.4m). The 224-room DoubleTree by Hilton Hotel New York – Times Square South will enhance ART's pro forma FY16 DPU by 0.8%. NAV/unit has fallen 6.8% to $1.24 following the recent rights issue.

*SGX: Inked MOI with IMDA to create a pathway for fast growing IMDA-accredited companies to leverage capital markets in Singapore more efficiently for expansion. Through this tie-up, both parties aim to lower the access barriers for technology companies into the capital markets, catalyse more high-tech IPOs and increase Singapore’s attractiveness as a venue for capital raising.

*Ascendas REIT: Divested vacant light industrial building, 10 Woodlands Link, for $19.3m. Post-disposal, pro forma FY3/17 DPU is expected to slip marginally by 0.01¢ to 15.733¢, while aggregate leverage will be reduced from 33.8% to 33.7%.

*Centurion: Launched an A$30m asset enhancement for RMIT Village to boost capacity by 35% to 616 beds. Separately, it broke ground on its second student hostel in Australia with 280 beds in Adelaide. The two initiatives will almost double its Australian student accommodation portfolio to 900 beds. MKE last had a Hold with TP of $0.41.

*Tat Hong: 4QFY17 net loss narrowed to $29.2m from $39.8m a year ago, bringing FY17 loss to $38m (FY16: $39.3m). But quarter revenue still fell 13% to $110.2m, undermined by weaker crane rental (-32%) and tower crane (-11%) turnover due to lower utilization rates in Australia and Singapore on completion of projects as well as closure of specialized transport business in Australia from Apr '16 . Gross margin compressed 2ppt to 24.3% owing to downward pressure on rental rates. NAV/share at $0.78.

*Sing Myanmar: FY17 net loss widened to US$7.1m from US$0.3m, weighed by loss from discontinued telecom towers business and absence of disposal gains. Otherwise, underlying loss would have narrowed to $4.3m (FY16: $6.8m), on the back of a 211.8% spike in revenue to US$23.3m, stemming from the commencement of Duty Free luxury and lifestyle retail business at Yangon Int'l Airport. While gross margin expanded to 20.7% (+4.9ppts), higher distribution (+22.3%) and administrative costs (+11.2%) led to an operating loss. Operations at Junction City has commenced since Apr '17. NAV/share at US$0.0954.

*Swing Media: FY17 net profit grew 6.9% to HK$74.3m on better operating margin of 7.6% (+1.1ppts). Revenue rose 2.2% to HK$1.14b as sales of DVD-Rs (+2.4%), trading (+1%) and leasing income (+11.5%) improved. Bottom line was partly dragged by higher finance costs (+2.4%). NAV/share at HK$29.20..

*Mermaid Maritime: Clinched several subsea contracts across SE Asia and Middle East in 1Q17, with contract value totalling US$26m.

*Rex Int'l: 88.9% owned Masirah Oil completed the drilling of an exploratory well in Oman (Karamah#1), which yielded positive results. The next phase will be to plan for possible early production from the specific block.

*Jasper Investments: Will be removed from the SGX Watch-List with effect from 31 Mar 2017. However, the group remains on the watch-list based on the minimum trading price criteria.

*Chasen: Secured two relocation projects for FY18 amounting to Rmb90m, with works scheduled between Jun 2017 and Mar 2018.

*Telechoice: Disclosed that its logistics agreement with StarHub will be expiring on 30 Jun, which could result in a single-digit percentage drop on FY17 earnings.

*Lafe Corp: Granted NHT Management an option to buy its freehold office building at 57 Cantonment Road for $7.03m. The proposed sale of the 292sqm commercial property is expected to result in a disposal loss of US$0.46m.

*BRC Asia: Disclosed that certain substantial shareholders have received an unsolicited approach for a potential offer, but discussions are in preliminary stage.

Tuesday, May 30, 2017

SG Market (30 May 17)

The market is expected to be range bound today amid a lack of catalysts following trading holidays in the US, UK, Hong Kong and China yesterday.

Regional bourses opened little changed in Tokyo (-0.1%), Sydney (-0.04%) and Seoul (+0.2%).Technically, the STI has dipped below its 20-dma amid deteriorating momentum and appears headed towards its near term support at 3,190. Upside resistance remains at 3,275.

Stocks to watch:
*China Everbright Water: Secured the Liaoning Dalian Lvshun Bailanzi wastewater treatment upgrading project with total investment value of Rmb42m. While the daily capacity will remain at 30,000m3 post completion of upgrading work in Dec, the water tariff will be increased.

*Metro Holdings: 4QFY17 net profit soared to $34.2m (4QFY16: $1.2m) but FY17 earnings still tumbled 28.7% to $80.7m. Full year performance was marred by a $33.1m decline in associate contributions due to lower recognition of property sales at Nanchang project and $45.9m drop in JV profits due to absence of one-off gain from disposal of EC Mall. Net cash was trimmed to $323.5m (-34.5%) as the group deployed cash to accretive investments. Maintained first and final DPS of 2¢ but cut special DPS to 3¢ from 5¢. NAV/share at $1.63.

*Yongmao: 4QFY17 net profit fell 32.1% to Rmb5.7m, bringing FY17 earnings to Rmb28.1m (FY16: Rmb3.9m). Quarterly revenue grew 2.1% to Rmb119m on higher rental income and higher sales of components and parts partially offset by lower sales of tower cranes. Gross margin grew to 33.6% (+1.7ppts)on the change in sales mix. Bottom line was hurt by lower interest income (-95.6%) as well as higher operating expenses (+6.5%). Declared first and final DPS of $0.01 (FY16: nil). NAV/share at Rmb6.9526.

*Old Chang Kee: Slumped to a 4QFY17 net loss of $2.1m (4QFY16: $1.1m profit), dragging FY17 earnings to $1.7m (-64.9%) due largely to fair value loss of $3m on fixed assets. Full year revenue grew 6.1% mainly due to stronger turnover from retail outlets (+5.9%) as well as other services (+15.9%). Gross margin inched up 0.2ppt to 63.3% on improved efficiency at its centralised factory. Maintained final DPS of 1.5¢ albeit with no special DPS (FY16: 3¢), halving FY17 DPS to 3¢ (FY16: 6¢). NAV/share at $0.23.

*Changtian Plastic & Chemical: Received an privatisation offer of $1.30/share, representing 45.3% premium to last traded price, from Chairman Yang Qingjin (25.73% stake) and Deputy Chairman Chen Yongfu (30.07%). Both have secured undertakings for 79.93% of the group's shares (including respective interest). The offeror intends to acquire all shares and delist the group.

*Vard: Confirmed a previously announced contract to design and construct a krill fishing vessel for American Biomarine after all pre-conditions of the contract have been met. Delivery of the 130m vessel is scheduled for 4Q18.*Fraser Centrepoint Trust: Priced its $30m notes due 2022 at 2.645%. This is part of its $1b multicurrency MTN programme, and will be issued on 5 Jun, and is unconditionally and irrevocably guaranteed by trustee HSBC Institutional Trust Services (Singapore). The notes are expected to receive BBB+ rating by S&P.

Monday, May 29, 2017

SG Market (29 May 17)

The market could be open on a softer note and consolidate recent gains given the lack of fresh catalysts and muted performance on Wall Street.Meanwhile, the US, UK and China markets are closed for holiday today, while North Korea fired another projectile.

Regional bourses opened mixed in Tokyo (-0.1%), Sydney (-0.2%) and Seoul (+0.5%).Technically, the STI has dipped below its 20-dma amid deteriorating momentum and appears headed towards its near term support at 3,190. Upside resistance remains at 3,275.

Stocks to watch:
*StarHub: Acquiring 51% stake in cyber security systems integrator Accel Systems & Technologies for $19.4m. This will complement the group’s in-house capabilities to provide end-to-end cyber security solutions and services. MKE has Sell call with TP of $2.36.

*SATS: Changi Airport Apr traffic climbed 7.8% to 5.2m passengers, with stronger growth across all regions except Mid-East, particularly from India (+16%), Indonesia (+16%) and Malaysia (+11%). Cargo shipments rose 4.4% to reach 171,720 tonnes.

*STE: Injected US$3.5m into Total Engine Asset Management, a 50/50 JV with Marubeni, to expand its engine leasing business. This brought STE's total investment to US$15.02m.*China Sunsine: Disclosed that Chinese Ministry of Environmental Protection inspection team has identified some lapses at its Shandong Sunsine factory. The Shanxian Environmental Protection Department has been directed to ensure that the group carries out rectification works. Management underscores that no environmental laws were broken, and no stop/suspension order were issued, nor was production affected in any way.

*KSH: FY3/17 net profit slumped 33.4% to $41m on lower income from its associates (-82.5%). Revenue fell 18.8% to $199.3m mainly due to weaker contributions from its construction (-19.1%) and investment properties (-9.6%) segments. However, operating margin expanded to 16.4% (-8.9ppts) mainly due to reduced construction (-25.2%), personnel (-20.3%) and finance (-61.1%) expenses. Bottom line was boosted by positive swing in contributions from JVs to $5.7m (FY16: $0.3m loss). NAV/share at $0.7037.

*Bukit Sembawang: 4QFY17 net profit plunged 67% to $2.3m due to a $5.8m provision on development property Paterson Collection, bringing FY17 earnings to $72.5m. Quarterly revenue jumped 24% to $15.2m on higher contribution from property development, but gross margin shrank 9ppt to 69%. Maintained final DPS of 33¢. NAV/share at $4.93..

*Singapore Shipping: 4QFY17 net profit leapt 27.5% to US$1.6m, bringing FY17 earnings to US$8.6m (-10.8%). Quarterly revenue slipped 6% to US$10.3m, dragged by both ship owning (-1.8%) and agency & logistics segments (-17.8%). Operating margin improved 2.5ppt to 24.9%, on reduction of depreciation (-8.5%), warehouse, transportation &I terminal operating cost(-23.2%) and staff expenses (-24.1%). Maintained final DPS of 1¢. NAV/share at US$0.182.

*Ley Choon: Swung to 4QFY17 net loss profit of $3.7m (4QFY16: $13.5m loss). Revenue jumped 24.6% to $29.2m, mainly due to higher contributions from projects in the pipes and roads segment, partially offset by lower revenue from construction materials segment. Due to cost control and efficiency, the group recovered to $5m gross profit (17% gross margin) compared to $2.9m loss last year. Bottom line also boosted by $6.4m reversal of impairment on property, plant and equipment. NAV/share at 3.91¢

*Sunpower: Awarded contracts worth Rmb116.7m to supply towers, reduction furnaces and heat exchangers which are expected to be delivered this year.

*China Jinjiang Environment: Investing in a new waste-to-energy project in Yan’an, Shaaxi, by taking up a 49% stake in Yan’an Guojin Environmental Protection Energy for Rmb47.8m.Total estimated investment amount is estimated to be Rmb325m. The project has total designed waste/sludge treatment capacity of 1,300/100 tpd, and should commence operations in 1H19.

*Roxy-Pacific: Mutually agreed to cancel a heads of agreement for the proposed sale of a freehold property at 59 Goulburn Street, Sydney, Australians I-Prosperity Group and Toga D&C. Subsequently, group enter into heads of agreement for a possible sale of the property to Fortius Fund Management for A$158m.

*Profit warning: Stratech

Friday, May 26, 2017

SG Market (26 May 17)

The market could consolidate within a tight range as positive sentiment from Wall Street is checked by falling oil price following OPEC's decision not to deepen output cuts.

Regional markets opened mixed in Tokyo (-0.2%), Sydney (-0.6%) and Seoul (+0.4%). Technically, the STI is expected to consolidate within the 3,190-3,275 range.

Stocks to watch:
*GLP: Updated that discussions on the non-binding proposals it received during its strategic review are ongoing and due diligence process is still in progress

*Oxley/KSH/Lian Beng: A consortium by Oxley (35%), KSH (35%), Lian Beng (20%) and Apricot Capital (10%) has purchased a former HUDC estate, Rio Casa, in a collective deal for $575m. The 286-unit residential property sits on a site area of 36,811 sqm, with gross plot ratio of 2.8. Inclusive of $208m differential premium payable for lease top-up and redevelopment, the estimated land cost works out to $706 psf ppr.

*Oxley: Proposed to sell its 19.85% interest in MGlory to Sociedade De Investimento E Desenvolvimento Glory for Rmb22m.*Accordia Golf Trust: 4QFY17 DPU fell to 1.48¢ (-24.5%), bringing FY17 payout to 6.04¢ (-8.9%), meeting expectations. Quarterly revenue declined 5.1% to ¥9.91b due to a 0.2% dip in visitorship to its gold courses as well as the absence of a one-off refund recorded in 4QFY16. Consequently, operating loss deepened to ¥2.32b (4QFY16: ¥622m). Course utilisation rate inched up 1ppt to 70.2%, while loan-to-value ratio held steady at 28.9%. NAV/share at $0.91.

*Pan Hong: FY17 net profit jumped 25.3% to Rmb100.9m, while revenue surged 131.1% to Rmb1.4b, buoyed by the handover of property units at Nanchang Sino harbour Kaixuan City Zone 3, Pan Hong Run Yuna Phase 1 and Huzhou Hua Cui Ting Yuan Phase 2. Gross margin jumped 5.6ppt to 18.9% from improved sales mix. NAV/share at Rmb4.33

*Jason Marine: Broke even in FY17 with net profit of $0.3m (FY16: $6m loss). Revenue fell 10.8% to $33.2m, with weakness across all business segments. But gross margin widened 11ppt to 30.1% due to cost and operational efficiency. Bottom line was further boosted by a overall drop in operating expenses. NAV/share at 21.3¢

*Hiap Tong: FY17 net profit more than doubled to $4.8m mainly due to $3.8m in fair value gain on investment properties. Revenue rose 3.7% to $41.6m, mainly on the strength of its leasing business (+3.8%). Gross margin compressed to 19.2% (-5ppts) on higher wages. Bottomline was shored up by lower finance (-33.8%) and tax (-30.2%) expenses. NAV/share at $0.2696.

*BBR: Acquiring Goh & Goh Building at Upper Bukit Timah Road in $101.5m en-bloc deal, following the exercise of a call option. The 4-storey freehold property has a plot ratio of 3 and comprises seven apartments and seven shops, which can be redeveloped into 100 residential units with ground floor retail space, subject to a development charge.

*Rickmers Maritime: Received US$24.7m from the sale of 14 vessels to Navios Partners as part of its US$59m sale, which also saw Navios assume US$34.3m of secured loan obligations.

*ISDN: Entered into strategic cooperation framework with HK-listed Comtec Solar Systems to develop and operate solar power generation station projects, as well as collaborate on power storage and electric bar charging businesses. Group will also offer Comtec right of first refusal for sale of roof distributed photovoltaic power stations that it might develop in the future.

*DISA: No longer proceeding with the 50-into-1 share consolidation, citing the increase in company’s share price over the past few months (ytd return: +117%). However, as shareholder approval has been sought for the consolidation, management will have to seek approval to disregard the exercise.

Thursday, May 25, 2017

SG Market (25 May 17)

The market could tick higher on GDP and NODX growth upgrades for 2017 and after Wall Street reacted favourably to dovish Fed minutes that it could raise interest rates next month and start to unwind its massive balance sheet.

Regional markets opened mixed in Tokyo (-0.03%), Sydney (-0.3%) and Seoul higher (+0.3%).Technically, the STI is likely to trade with an upward bias within the 3,190-3,275 range.

Stocks to watch:
*Economy: Singapore final 1Q17 GDP growth was revised to 2.7% from earlier flash estimate of 2.5%. While MTI kept its 2017 growth forecast at 1-3%, it foresees the economy will expand more than 2% this year as exports continue to strengthen. 1Q17 NODX surged 15.2%, on the back of a recovery in electronic shipments. On that front, IE Singapore raised its growth estimate for exports from 4% to 6%.

*Keppel Corp: Won $103m contract to build two LNG carrier vessels for Stolt-Nielsen Gas, with completion in 2Q/3Q19. The deal comes with options for three additional vessels, with 6/12/18 months expiry from the contract date. Latest order brings the total contracts secured this year to just $279m, well off peak of $10b in 2011 and $0.5b in 2016.

*SIA Engineering: Setting up wholly-owned subsidiary in Japan to provide line maintenance services at airports in Japan. It will commence operations at Kansai Int'l Airport and subsequently expand to other Japanese airports. This will brings SIE’s maintenance network to 37 airports across eight markets.

*SATS: Launched a technology innovation centre, TechnIC@SATS, which will roll out technological solutions to boost productivity. The centre will be supported and co-funded by the CIAS and the EDB to the tune of $110m.

*Valuetronics: FY17 net profit jumped 27.9% to HK$154.1m, beating estimates, as it was partially helped by a positive HK$5.1m FX swing. Revenue climbed 16.5% to HK$2.27b, with improvement in industrial & commercial electronics (+14.1%), as well as consumer electronics (+19.7%) segments. Gross margin was relatively stable at 15% (FY16: 15.2%). Cash pile ballooned to HK$752.9m (FY16: HK$689.3m), accounting for 40% of market cap. Maintained final and special DPS of HK$0.20. Trading at 12x FY17 trailing P/E, and 7.1x ex-cash P/E.

*Cityneon: Officially opened its maiden Avengers S.T.A.T.I.O.N travelling exhibition in Beijing, China. After Beijing, the set will move on to other cities within China over the next two years. *Secura: Entered two-year strategic alliance with ComfortDelGro to offer cyber security related consultancy, products and services to the latter’s customers.

*Vallianz: Converting net payables to Swiber of US$36.6m, as well as Rawabi’s shareholder advances of US$102.1m into equity in its own capital, via the 1-for-1 proposed rights cum warrants issue first announced in Sep ’16.

*Sinwa: Won supply agreements of A$8m for the Prelude FLNG Project in Western Australia. Scope of services include the supply of provisions, stores and logistics to vessels involved in the project.

Wednesday, May 24, 2017

SG Market (24 May 17)

The market could creep higher as Wall Street pushed to near records, while oil rallied above US$50/bbl ahead of the OPEC meeting on Thu.

Regional bourses in Tokyo (+0.8%), Seoul (+0.3%) and Sydney (+0.1%) opened higher.Technically, STI remains range-bound between its support at 3,190 and resistance at 3,275.

Stocks to watch:
*Noble: Responded to SGX query following a trading halt after its shares plunged 28% yesterday on the third ratings downgrade in a week. The group disclosed that it is still in talks with various potential strategic partners although no transaction is assured. Meanwhile, it will continue to right size its business and evaluate further asset sales. It also acknowledges but refuses to confirm a Reuters report that Sinochem is no longer interested to invest in the firm.

*GLP: Onboarded another co-investor to its GLP US Income Partners III fund with US$40m fresh equity committed. This raises the total capital commitment of fund to US$660m against its target of US$1.5b. Following this syndication, GLP’s stake in the fund has been reduced to 45.9% from 49.9%.

*Keppel Corp: Secured a contract from Jan De Nul to build two trailing suction hopper dredgers, which are valued at a total of $120m, including owner-furnished equipment. First dredger is expected to be completed by 2H19, while the second will require the purchaser to exercise an option within six months from now. This takes total orders secured year to date to a paltry $176m.

*Yoma: 4QFY17 net profit soared 171% to $24.1m (+171%), entirely boosted by $24.4m fair value gain on investment properties. This brought FY17 earnings to $35.9m (-3.5%), trailing estimates. For the quarter, revenue leapt 17.6% to $53.8m, driven by property development (+4.3%), automotive & heavy equipment (+64%), consumer (+69%), and tourism (10.7%) businesses. Gross margin expanded 10.9ppt to 40.2% on improved profitability in property development segment. Maintained final DPS of 0.25¢. NAV/share at $0.3822.

*mm2: FY17 net profit surged 130% to $18.8m along with the 149% jump in revenue to $95.4m as newly acquired UnUsUal generated additional contributions of $22.6m from events and concert promotions and cinema operations pulled in another $7.7m. Meanwhile, core business and post production turnover also swelled 86%/36% to $55.3m/$4.9mrespectively. Gross margin was maintained at ~48% NAV/share at 9¢

*UnUsUaL: 15MFY17 net profit jumped 78.4% to $7.3m by virtue of additional three months of contributions as well as $1.2m in disposal gain. Stripping this out and assuming equal contributions across Oct-Mar, 12MFY16 earnings would have come in at $5m (+20.8%), in line with its profit guarantee to parent mm2. 15MFY17 revenue of $33.9m (+29.8%) comprised promotion ($20.1m), production ($11.7m) and others ($2.1m). Gross margin improved to 35% (+4.7ppts) as more of its projects utilised internal resources. Bottomline was slightly pressured by higher admin expenses (+32.3%). NAV/share at 2.23¢..

*Boustead Singapore: 4QFY17 net profit jumped 124% to $9.2m on asset disposal gain ($8.9m) and compensation for lease termination ($9.4m), but was pared by property impairment (-$3.6m)and FX (-$2.9m) losses. This brought FY17 headline earnings to $33.3m (+18%). Quarterly revenue dropped 19% to $90.9m on weakness in energy-related engineering (-16%) and real estate solutions (-35%). Gross margin expanded 9.2 ppt to 36.9% on cost reduction. Final DPS was shaved to 1.5¢ (4QFY16: 2¢), dragging full-year payout to 2¢ (FY16:3¢). NAV/share at $0.617.

*Hiap Seng Engineering: Swung to 4QFY17 net loss of $1.8m (4QFY16: $1.9m profit), dragging FY17 earnings to $2.5m (-59%). Quarterly revenue slid 37% to $35m on lower project revenue. Gross margin shrank 3.3ppt to 8.1%. Final DPS of 0.5¢ brought FY17 payout 1¢, matching that of FY16. NAV/share at $0.205.

*Singhaiyi: 4QFY17 net profit surged 165% to $22.2m mainly due to a $30.5m disposal gain on its 20% stake in Perennial Somerset Investors. This helped to boost FY17 net profit to $31.1m (+6.1%). Quarterly revenue stood pat at $8.2m (+0.8%) as growth in property development (+7.4%) and management fees (+123.5%) were offset by a slide in rental income (-27.8%). Gross margin expanded 6.1ppts to 52.1% as it recognised more revenue from its property development arm in the US (+34.6%). Bottomline was further bolstered by a $5.9m tax credit (4QFY16: $0.4m expense). Declared first and final DPS of 0.3¢ (FY16: 0.2¢). NAV/share at $0.171.

*GuocoLand: Entered 75:25 JV agreement with Hong Leong Holdings China to fund the development project for GLL Chengdu. Based on GuocoLand’s 75% share, initial investment is expected to be Rmb2.84b, to be funded via equity and loans.

*CWG Int’l: Clarified a recent media article that it is currently still in discussions with potential buyers regarding a potential transaction on its residential building, The Peak at Parramatta, New South Wales, Australia. The property had been reported to be on the market for A$55m.

*Imperium Crown: Raising net proceeds of $37.5m through the placement of 300m shares at $0.125/share (3.9% discount to last price) to four investors, to fund a stake in Global Entertainment Media to 69% from 27%, for a consideration of $53.5m. Global Entertainment Media has the rights to Wonder Stone Park in Shandong.

*Rowsley: Agreed to pay $8m to acquire AC Consortium, an industrial building design firm in Singapore, via the issuance of 115.7m new shares in two tranches to Mesdames Young and Tan, who will both stay on with the company post-acquisition.

*Sysma Holdings: Secured a $3.5m contract to reconstruct a two storey detached dwelling house with swimming pool at Bukit Tunggal Road, Singapore. The project is expected to commence in May '17 for 12 months.

*Singhaiyi: The effective date of its transfer from the Catalist board to the Mainboard will be 26 May.

Tuesday, May 23, 2017

SG Market (23 May 17)

The market could trade sideways as investors anticipate Fri's release of 1Q17 economic growth and industrial production data for fresh leads.

Regional bourses are seeing tepid early trading in Tokyo (-0.1%), Seoul (flat) and Sydney (+0.1%).Technically, the STI remains range-bound between its support at 3,190 and resistance at 3,275.

Stocks to watch:
*Noble: S&P cuts its credit rating by 3 notches to CCC+ with Negative outlook and warned that the embattled commodity trader could default within 12 months. This follows downgrades by Moody’s and Fitch in the past week and comes at a time when Noble is seeking a crucial US$2b credit facility before US$600m of bank loans mature next month. According to Reuters, China state-owned Sinochem is no longer pursuing an investment in Noble due to concerns over its finances and business outlook. Prices of its bonds have slumped by a third recently, while its share price hit a 15-year low.

*IHH Healthcare: Media reported that IHH has emerged as the front runner to purchase controlling stakes in both Fortis Healthcare, the second largest hospital chain in India with 55 facilities, and Fortis Malhar, in a deal valuing both entities at US$2.8b. Assuming a 51% stake, this will cost US$1.4b, or equivalent to 12.3% of IHH's current market cap. The acquisition will give IHH instant access to a much bigger market and is in line with its strategy to have control over its investments.

*Keppel T&T: 70% owned Keppel Data Centres and Huawei is setting up a cognitive computing data centre reference site at Keppel DC Singapore 4. The facility will feature technologies geared towards a virtualized and energy efficient data centre management system, which will help firms lower operating and maintenance costs, while enhancing operational efficiency.

*Boustead Projects: 4QFY17 net profit surged 165% to $14.3m, bringing FY17 earnings to $36.1m (+58%). For the quarter, revenue slumped 35% to $38.5m on declines across design-and-build (-39%) and leasing (-16%) segments, but gross margin expanded to 32.4% (+8.5ppts) from cost savings. Additionally, bottom line was shored up by a disposal gain ($8.9m) of its stake in TripleOne Somerset and compensation for early termination of the AusGroup lease ($9.4m). Declared maiden first and final DPS of 1.5¢ and a special DPS of 1¢. NAV/share at $0.717.

*TTJ: Clinched several new contracts, bringing its order book to $166m as at May 22. These include the supply, fabrication and installation of structural steel works for the methionine plant on Jurong Island, the East Coast Integrated Depot and the Mandai Depot.

*GLP: Signed 182,000 sqm of new leases in Japan and China over the past two months, mostly to third party logistics providers to cater for the growing demand in the e-commerce space.

*UnUsUaL: Co-organising a series of sold-out concerts in Zhongshan, China, for Jacky Cheung’s “A Classic Tour” over two nights in Jun.

*GCCP: Received a writ of claim for RM187,000, arising from alleged negligence in a work site accident, where the sudden fall of a huge rock caused injury and death to two respective workers.

*Ziwo: Entered placement agreement with Asia Haause Investments to place out 87.5m new shares at 10% discount, to raise a maximum $4m gross proceeds for general working capital.

Monday, May 22, 2017

SG Market (22 May 17)

Oil-related stocks may find some support as oil rebounded above US$50 a barrel, but broader market will look to 1Q economic growth and Apr industrial production data due on Fri for further direction.

Regional bourses are higher in Tokyo (+0.4%), Seoul (+0.6%) and Sydney (+0.5%).Technically, the STI is likely to be range-bound after bouncing off the 3,190 support last week with topside resistance at 3,275.

Stocks to watch:
*IHH Healthcare: 1Q17 net profit doubled to RM470m, bolstered mainly by a disposal gain of RM313.4m from the sale of 6.1% stake in Apollo Hospital Enterprise. Otherwise, core earnings of RM201.8m (-15.3%) missed estimates. Revenue of RM2.68b (+8%) was lifted by recent acquisition Tokuda and City Clinic, but EBITDA margin contracted to 21.1% (-3.8ppts) on start-up costs at Gleneagles Hong Kong Hospital and Acibadem Altunizade Hospital. MKE maintains Hold but cuts TP by 6% to RM5.62.

*Vallianz: Swung to 5QFY17 net loss of US$173.2m (1QFY17 net profit: US$4.9m), hit by US$212.9m of impairments. Quarter revenue sank 21.5% to US$38.7m, from lower utilisation amid challenging market conditions. Gross margin contracted 5.5ppt to 23.8%. NAV/share at US4.12¢. The group has requested for a trading halt pending the release of an announcement.

*mm2 Asia: In discussions with ASX-listed Village Roadshow to buy over its 50% JV stake in Golden Village Cinema in Singapore. Golden Village operates 11 multiplexes with 92 screens, and the acquisition could help mm2 scale up in the downstream segment.

*Top Glove: Acquiring two factories from A1 Globe and Titi Globe for a combined RM60.7m, or 0.8x and 0.7x P/B, respectively, to boost production capacity and market share.

*Koh Brothers: Marked foray into South Korean real estate with the acquisition of a freehold site in Gangnam-gu for KRW95.8b ($119m) via its 45% JVCo. The 17.798.5 sqm gfa site will be developed into a mixed-use project, comprising 380 luxury residential units and 2,700 sqm of retail space, and construction is expected to complete in 2020.

*Pacific Radiance: Set up 51:49 JV with Allianz Offshore Middle East to own, manage, charter and lease offshore support vessels, particularly in the Gulf and Egypt.*Nordic Group: 1Q17 net profit jumped 21% to $2.8m, helped by reduced operating expenses (-24.5%). Revenue held steady at $19.9m (+1%) on higher sales from maintenance services (+17%) and sales of carbon emission allowances of $1.4m (1Q16: nil), but was pared by a 14% slump in project services. Gross margin stood pat at 31%. NAV/share at $0.177.

*Global Yellow Pages: Divesting 80% stake in marketing services firm eFusion Solutions back to the founder Lim Kok Eng for $1.2m. Including a $1.1m loan owed to eFusion to be written-off, the disposal will result in a loss of $2.6m. Post-divestment, eFusion will pay Global Yellow Pages a management fee of $1.5m for use of its office facilities and support services over three years.

*AA Group: Acquiring a 95% stake in W&P Precast from Poh Huat Heng for $2.1m, to position itself for a pick-up in the construction industry.

*SGX: Welcomed the inaugural rupee-denominated bond listing of National Highways Authority of India, which raised Rs30b at 7.3% per annum over the five-year tenor.

Friday, May 19, 2017

SG Market (19 May 17)

Market sentiment is likely to stay muted amid concerns of political stability in the US, while at home, investors digest 4QFY17 earnings of three STI index stocks, SIA, SATS and GLP, all missing estimates.

Regional bourses are mixed in Tokyo (+0.1%), Seoul (-0.1%) and Sydney (-0.3%).Technically, the benchmark STI bounced off its immediate support at 3,190 yesterday, with topside resistance pegged at 3,275.

Stocks to watch:
*SIA: Ran into 4QFY17 loss of $138.3m from $224.7m profit a year ago, due to intense competition and a cargo provision, brining FY17 earnings to $360.4m (-55.2%), missing estimates. Revenue stagnated at $3.72b as the increase in load factor to 80.6% (+2.1ppts) was offset by a 4.7% drop in passenger yield. Operating profit plunged 82% to $27.6m, dragged by higher fuel costs (+4.6%) and weak subsidiary performances at SilkAir (-15.6%), Scoot/Tigerair (-53.2%) and SIAE (-11.1%). Final DPS shaved to $0.11, giving FY17 payout of $0.20 (FY16: $0.45). Outlook remains challenging amidst overcapacity and aggressive pricing by rivals. Trades at 0.98x P/B.

*SATS: 4QFY17 underlying net profit of $51.6m (+1.8%) took FY17 core earnings to $234.3m (+7.4%), which fell short of estimates. Revenue inched up 2% to $425.8m on growth in gateway services (+3.6%) and food solutions (+0.7%), but operating margin narrowed to 10.8% (-1.1ppt) on cost pressures. Outlook expected to be challenging amid increasing pressure in airline margins. Final DPS of $0.11 raised FY17 payout to $0.17 (FY16: $0.15). MKE last had a Sell with TP of $3.76.

*GLP: 4QFY17 net profit (ex-revaluation) inched up 3.8% to US$53.6m, bringing FY17 core earnings of US$205.6m (-14.6%), below street estimates. Revenue rose 14% to US$226.9m mainly on rental growth and completion and stabilisation of China development projects. FY17 development starts amounted to US$2.2b, exceeding its target by 5%. Final DPS maintained at $0.06. Trading 12% above NAV/share of US$1.86.

*Citic Envirotech: Secured a Built-Transfer project in Feng Hua District, Ningbo, China worth Rmb3b. The project, of which it has a 60%-stake in, involves the investment, design, construction, procurement and commissioning to restore the rivers and its surrounding environment.

*mm2: Agreed to buy Malaysian cinema owner Lotus Fivestar, which owns 13 cinemas across the country, for $38.2m in cash. Post-acquisition, pro-forma FY16 EPS would increase 2.7% to $0.76.

*Fragrance: To acquire a 4,868 sqm mixed-use site in Hobart, Tasmania, Australia for an undisclosed price. Currently located on site are the University of Tasmania’s conservatories of music with a gross building area of 4,313 sqm, a 1,108 sqm warehouse and six other buildings.

*Wee Hur: Secured a construction project worth $62m from Stuttgart Auto, to erect an 8-storey factory & ancillary office with construction scheduled to complete end-Nov ’19..

*Anchor Resources: To pay subcontractor Sinomine Resource Exploration an aggregate US$337k in new shares for undisclosed reasons, following a mutual agreement to terminate the mining engagement at Anchor's Lubuk Mandi mine. Separately, Anchor has engaged Great Aims Resources (GAR) to be its exclusive mining contractor at Lubuk Mandi, with revenue generated from gold sales split on a 35:65 basis between GAR and Anchor, with the latter entitled to tributes and royalties of a minimum RM80k/month based on GAR's 65% revenue share.

*Meghmani Organics: Considering potential delisting of its Singapore Depository Receipts.

*Viking Offshore & Marine: Proposed 2-for-5 renounceable and non-underwritten rights shares at $0.018 apiece, with one free detachable warrant (2.5¢ exercise price) attached with every two rights shares subscribed.

*Marco Polo Marine: Filed application to restrain all legal proceedings against the group, in a bid to finalise a scheme of arrangement with creditors.

*Kitchen Culture: $2m 9% notes issue via crowdfunding was lacklustre despite attractive terms, with just $0.8m raised. The group may conduct further fundraising campaigns for the remaining sum.

*Olam Int'l: Issuing ¥6b 0.9725% fixed rate senior unsecured notes due 2022 under its US$5b Euro Medium Term Note Programme.

Monday, May 15, 2017

SG Market (15 May 17)

Investors will be digesting a slew of results that were released last Fri, as well as the Silk Road summit with China pledging US$124b on the ambitious project, and Singapore's trade data on Wed for fresh direction.

Regional markets opened mostly lower in Tokyo (-0.6%), Seoul (+0.1%) and Sydney (-0.2%).The STI appears overextended, with immediate resistance at 3,290, with underlying support at 3,212.

Stocks to watch:
*Genting SP: 1Q17 net profit soared to $181.1m (1Q16: $10.8m), above expectations, bolstered by $96.3m gain on sale of 50% stake in Jeju resort. Revenue slipped 4% to $586.6m on lower gaming and non-gaming takings, but gaming turnover grew 8% q/q on strong VIP and premium mass business. Core EBITDA margin surged to 47% to $192.5m as operating margins improved from lower bad debt provisions and cost efficiency initiatives. MKE last had a Buy with TP of $1.25.

*ComfortDelGro: 1Q17 net profit of $82.5m met expectations, buttressed by special dividend from Cabcharge Australia. However, revenue dipped 2.4% to $972m, dragged mainly by FX translation losses and weak taxi business (-5.7%). EBITDA margin improved to 20.9% (+0.3ppt) from change to bus contracting model as well as lower costs. On its outlook, revenue from Singapore bus (new contracting model) and rail (increased ridership) and Australia bus are expected to pick up, while UK bus business will dip from weaker and China bus station business will face greater competition from China's growing high speed rail network. MKE has a Hold, cuts TP to $2.64 from $2.68.

*SingPost: 4QFY17 net loss of $65.3m (4QFY16: $105.4m profit) was crushed by $208.6m of impairment charges, including $185m from struggling US e-commerce firm TradeGlobal, partially offset by $108.7m fair value gain from SingPost Centre. Excluding one-offs, core earnings declined 32.8% to $21.4m. Revenue edged up 2% to $324m as a 30.9% rise in e-commerce revenue was eroded by a 7.7% drop in logistics. Core logistics operating profit crumbled 78% to $2.6m on intense competition, while e-commerce loss widened three-fold to $15.1m. Final DPS slashed to 0.5¢, bringing full year payout to 3.5¢ (FY16: 7¢).

*UOL: 1Q17 net profit edged 4% higher to $80.3m or 22% of FY17 forecast. Revenue rose 6% to $350.7m, lifted by stronger property development sales (+12%) arising from residential projects Principal Garden and Botanique at Bartley. Hospitality operations stood pat as improved performance by Australian hotels was offset by lower takings from PARKROYAL Penang due to ongoing refurbishment. Gross margin contracted to 33% (-2ppts) on a shift in sales mix. Plans to launch three development projects in 2018, consisting two residential projects in Singapore and a mixed-use project in London. Trading at 0.69x P/B. MKE reiterates Buy and raised TP to $5.30 from $7.68.

*SIA Engineering: 4QFY17 net profit grew 10.9% to $45.9m, in line with expectations, on higher associate contribution (+64.2%). Revenue improved marginally to $295.4m (+0.4%), while operating margin narrowed to 8.1% (-1.2ppt) on higher staff costs (+12.4%). Raised final DPS by 1¢ to $0.09 and dished out special DPS of $0.05, giving total FY17 payout of $0.18 (FY16: $0.14). MKE last had a Hold with TP of $3.70..

*United Engineers: 1Q17 net profit from continuing operations slid 12% to $8.3m, on lower revenue of $101.4m (-30%) from weak property development sales. While gross margin expanded 8.5ppt to 44.1% from a shift in sales mix, the gains were erased by lower associate/JV contribution (-66%). NAV/share at $3.06.

*Wheelock Properties: 1Q17 net profit fell 9.8% to $10m despite higher revenue of $93.7m (+2.1%), driven by sales in residential development Ardmore Three, although offset by slower sales at The Panorama and lower interest income from quoted securities. The bottom line was dragged by higher opex and lower associate contribution. NAV/share at $2.52.

*UMS: 1Q17 results beat as net profit spiked 230% to $11.2m, on the back of a 105% jump in revenue to $41.8m, underpinned by strong sales in semiconductor integrated system (+192%) and components (+47%). However, gross margin shrank 8.8ppt to 51.3% on a change in sales mix, while bottom line was buttressed by a drop in FX losses (-46%). NAV/share at $0.4651.

*Jumbo: 2QFY17 net profit of $5.8m (+0.3%) brought 1HFY17 net profit to $8.5m (+7.1%) missing estimates. For the quarter, revenue inched 0.6% lower to $39.4m, on lower takings from Singapore, which offset higher sales from the Shanghai outlets. Gross margin expanded 3.5ppt to 63.9%. Declared interim DPS of 0.5¢/share (1HFY16: nil). MKE keeps HOLD with TP of $0.75.

*Sunningdale: In line 1Q17 as net profit surged to $7.7m (+115%), partly lifted by a $0.4m disposal gain. Revenue improved 6.5% to $171.8m, on higher takings in automotive (+14.7%), consumer/IT (+10.7%), and healthcare (+15.9%) units, which helped expand gross margin to 15% (+1.4ppt). NAV/share at $1.86.

*Midas: 1Q17 missed despite a 187.6% surge in net profit to Rmb28.7m, boosted mainly by associate CRRC Nanjing Puzhen Rail Transport (+359%). Revenue leapt 31% to Rmb398.4m from maiden contribution arising from the aluminium alloy stretched plates segment (+Rmb76.6m), while the core aluminium alloy extruded products segment rose 6%. However, gross margin narrowed 3.1ppt to 27.9% from the shift in sales mix. NAV/share Rmb2.36.

*Sapphire: 1Q17 net profit rose 3.2% to Rmb9.9m, despite a 9.1% drop in revenue to Rmb187.8m as certain major infrastructure projects were still in initial stages with lower sales recognised. The bottom line was lifted by the expansion in gross margin to 14.2% (+2.2ppt), as well as a 55.7% jump in other income. NAV/share at Rmb1.44.

*Ying Li: 1Q17 net profit slumped 36.1% to Rmb10.7m, despite a 121.3% spike in revenue to Rmb202.1m led by continued handover of residential units at San Ya Wan Phase 2 and bespoke units at Ying Li Intl Electrical & Hardware Centre Phase 1A. However, gross margin more than halved to 27% (-42.3ppt) from an increase in sales mix towards lower profitability sale of properties segment, while bottom line was buttressed by reduced admin expenses (-22.7%). NAV/share stable at Rmb1.94.

*Cogent Holdings: 1Q17 net profit climbed 5% to $8.1m on firmer revenue of $35m (+7%), bolstered by transportation management (+8%) and container depot (+42%) segments, while automotive logistics (+1%) and warehouse & property management (-1%) arms remained muted. Operating margin ticked 1ppt lower to 30.5% on higher subcontracting costs for container repair & trucking, as well as rising fuel prices. NAV/share at $0.2809..

*Avi-Tech: 3QFY17 net profit rose 10.5% to $1.6m, as revenue jumped 22.5% to $10.8m, led by broad-based improvements across burn-in board manufacturing and PCBA services (+40%), burn-in services (+15%) and engineering services (+3.6%). Gross margin narrowed 1.6ppt to 30.4% on a shift in sales mix. NAV/share at $0.2732.

*Sunpower: 1Q17 net profit jumped 60.1% to Rmb25.7m, while revenue rose 17.8% to Rmb343.2m, lifted by higher contribution from environmental equipment manufacturing, but mitigated by lower sales from engineering procurement construction integrated solutions. Gross margin rose 1.2ppt to 25.3%, while bottom line was aided by a 74.6% drop in other operating expenses due to lower impairment of receivables. NAV/share at Rmb1.553.

*GSS Energy: 1Q17 net profit jumped 58.5% to $1m, while revenue rose 28.3% to $21.7m, driven by stronger performance in the precision engineering arm. Gross margin was stable at 23.5% (-0.3ppt), while bottom line was buttressed by cost control efforts. NAV/share at 7.84¢.

*UG Healthcare: 3QFY17 net profit fell 43.5% to $0.9m, despite increased revenue of $17.6m (+16.8%) due to higher volume of gloves produced and sold. However, a rise in raw material costs caused gross margin to narrow 3.6ppt to 18.7%, while the bottom line was further weighed by an 82.2% jump in admin expenses. NAV/share at $0.1928.

*Cordlife: 3QFY17 net loss contracted to $0.4m (3QFY16: $2m loss), mainly due to the absence of professional fees (3QFY16: $3.1m). Revenue slipped 4.8% to $14.2m on higher discounts, while gross margin contraction to 64.8% (-0.5ppts) was also weighed by lower profitability at Stemlife. Consequently, group swung into an operating loss of $0.4m (3QFY16: $1.4m profit). NAV/share at $0.4774.

*Hong Leong Asia: 1Q17 net loss narrowed to $9.8m (1Q16: $16.5m loss), on the back of a 19.1% jump in revenue to $1.13b, led by strong performance from diesel engine unit China Yuchai (+30.3%), which translated to higher gross margin of 19.4% (+1ppts). Bottom line was also lifted by FX gain of $1.9m (1Q16: $1.8m loss) and a disposal gain of $0.9m (1Q16: $1.9m loss), but was erased by higher non-controlling interests of $44.7m (1Q16: $15.5m). NAV/share at $1.7903.

*CNMC Goldmine: 1Q17 net profit dived 98.7% to a paltry US$54,834, below estimate. Revenue slumped 43.8% to US$4.7m as production dived 49.5% to 3,669.9oz, although partially mitigated by higher gold ASP (+11.4%). Recorded operating loss after all-in margin contracted to 24% (-34ppts), further weighed by lower FX gain (-82.8%), while bottom line was buttressed by higher finance income (+13.2%). NAV/share at US$0.0975.

*Spackman Entertainment: 1Q17 net profit spiked from a low base to US$4.8m (1Q16: US$1m), constituting 97% of full-year estimate. Stemming from the premiere of Master, revenue jumped 108% to US$8m on higher takings in film production (+123%) and distribution (+100%), while gross margin expanded to 48% (1Q16: US$0.7m loss). NAV/share at US$0.056..

*Singapore O&G: 1Q17 net profit of $2m (+2.8%) rose at a slower pace compared to revenue of $7m (+6.1%), which was due to improved takings from O&G and cancer-related segments. This was due to lower operating margin of 34.2% (-1.6ppts) from higher wage expenses (+11.3%) and depreciation (+55%). NAV/share at $0.1831.

*Sino Grandness: Dismal 1Q17 as net profit crashed 85.3% to Rmb52.8m, weighed by a negative Rmb165m swing into fair value loss of Rmb7.1m on its convertible bonds. Revenue slumped 12.2% to Rmb635.1m due to lower overseas sales for canned products (-5.8%) and beverage (-15.4%). Further, gross margin contracted 1.9ppt to 39.1% on higher raw material costs and a shift in sales mix. NAV/share at Rmb2.832.

*Mewah Int'l: 1Q17 net profit jumped 35.8% to US$3.9m, on higher revenue of US$727.9m (+2.3%) led by stronger consumer pack business (+35.5%), but offset by tepid sales volume from the bulk segment (-7.9%). Gross margin inched up 1.3ppt to 4.8%, but bottom line was pared by a sharp drop in FX gains (-77%). NAV/share at US$0.3295.

*Pacific Radiance: 1Q17 net loss deepened to US$14.7m (1Q16: US$4.6m loss), missing estimates. Revenue sank 24% to US$13.9m on weak utilisation and depressed vessel charter rates. The bottom line was further dragged by a spike in finance expenses (+33%). NAV/unit at US$0.387.

*Marco Polo Marine: 2QFY17 net loss deepened to $8.2m (2QFY16: $1.1m loss). Despite an 8% rise in revenue to $12.8m due to higher takings in ship building and repair (+17%), ship chartering (-9%) slumped from lower utilisation and charter rates. Group could not contain its cost of sales (+81%) and swung into a gross loss of $1.3m (2QFY16: $4.1m profit). Further, the bottom line was weighed by increased finance costs (+26%). No new developments have been made in relation to the group's proposed debt restructuring. NAV/share at $0.461.

*Civmec: 3QFY17 net profit plummeted 65.5% to $0.8m on a sharp drop in JV contribution following project completion. Revenue inched up 1.6% to $74.1m, but gross margin inched down 0.2ppt to 9.4%. NAV/share at $0.3507.

*800 Super: 3QFY17 net profit slumped 16.7% to $6.3m, as revenue inched 2.1% lower to $39.5m following the completion of certain cleaning contracts. Pretax margin contracted 3.1ppt to 18.5%, mainly from increased employee benefits (+9.3%) as a result of lower government grant. NAV/share at $0.4395.

*TA Corp: 1Q17 net profit tumbled 31.4% to $1.6m from the absences of reversal for 1) doubtful debt allowance (1Q16: $1.6m) and 2) impairment from property development (1Q16: $3m). Revenue leapt 70.1% to $61m, driven by property development (+313%), property investment (+28%), construction (+29%) and lubricant and tyre distribution (+20.3%) businesses, which lifted gross margin higher to 19.8% (+1.9ppt). NAV/share at $0.437.

*PCI: 3QFY17 net profit surged 230% to US$2.5m, on improved revenue of US$45.1m (+15.8%) amid increased demand from existing and new customers. Gross margin improved 3.7ppt to 12.6%. Net cash position improved to US$38.9m (FY16: US$27.9m), which translates to 51.3% of market cap. NAV/share at US$0.4169..

*Procurri: 1Q17 net profit leapt 74.5% from a low base to $0.2m, as revenue rose 47.2% to $38.3m, lifted by growth in IT distribution (+49.9%) and lifecycle services (+36.9%). Gross margin expanded to 33.6% (+2.6ppts) on the shift in revenue mix, but bottom line was hit by higher FX loss of $0.4m (1Q16: $40,000 loss) and increased provision for obsolescence. NAV/share at $0.2386.

*Declout: 1Q17 net loss narrowed to $2.7m (1Q16: $4.6m loss), on higher revenue of $63.1m (+11.4%), from broad-based growth in IT infrastructure sales & services (+7.3%) and vertical domain cloud (+39.9%). Gross margin expanded to 26.3% (+2.5ppts) on the shift in sales mix, although bottom line was weighed by higher admin expenses (+22.9%). NAV/share at $0.1721.

*Alliance Mineral: Sank to a deeper 3QFY17 net loss of A$1.7m (3QFY16: A$0.6m), undermined by a A$0.9m option paid to its corporate advisor, as well as A$0.4m in operating costs to maintain the Bald Hill mine site, which was previously capitalised. There was no revenue as commercial production has not commenced. NAV/share at A$0.032.

*Jadason: 1Q17 net profit crept higher to $0.3m (+7%), lifted mainly by higher FX gain of $0.5m (1Q16: $0.1m). Revenue slumped 10% to $13.8m as higher takings from manufacturing & support services of $8m (+3%) could not fill the drop in equipment & supplies of $5.2m (-24%). While gross margin remained flat at 20%, bottom line was buttressed by reduced finance costs (-64%) and absence of associate loss (1Q16: $0.1m loss). NAV/share $0.0682.

*Keppel Corp: News reports cited that the group could bag its first box ships order from Pasha Hawaii, after being selected to construct two 2,525 TEU LNG-fuelled box ships for an undisclosed sum, which comes with the option for an additional two vessels.

*Yanlord: To acquire a majority stake in Wuhan Shan Ling Investment Management, an entity that holds the land use rights for a prime residential development project with gfa of 144,000 sqm. Yanlord has injected an initial investment of Rmb5.54m for a 1% stake, as a precursor for an eventual 55% interest.

*Cityneon: CEO Ron Tan and several Chinese parties, including HKEx-listed Jin Bao Bao, have launched a pre-conditional mandatory general offer at $0.90/share, following a buyout of majority shareholder Star Media’s 52.51% stake. The parties currently do not intend to privatise the company.

*DiSa: Group’s point-of-sales digital asset protection solution will be adopted by E FUN’s Nextbook Tablets from 13 May onwards. E FUN has been marketed as one of the top five tablet brands by sales volume in 2016.

*Profit warnings:
- Dyna-Mac
- Gaylin
- Tat Hong

Friday, May 12, 2017

SG Market (12 May 17)

Stocks may ease on weak corporate earnings and as technical indicators approach grossly overbought levels.

Regional markets opened lower in Tokyo (-0.2%), Seoul (-0.04%) and Sydney (-0.03%).The STI has rallied 4.6% almost uninterruptedly over the past three weeks and a pause is overdue. Immediate resistance for the index is at 3,290 with underlying support at 3,212.

Stocks to watch:
*Noble Group: Swung to a shock 1Q17 net loss of US$129.4m, a sharp reversal from US$40.5m profit a year earlier and well off street forecasts. Revenue rose 12.8% to US$12.49b from a broad recovery in commodity prices but sales tonnage fell 17.4% to 46.9m tonnes. Supply chain operating income plunged to a US$2.6m loss, largely blamed on market dislocations in the coal market. Bled operating cash outflow of US$323m (4Q16: US$592.5m), which led to higher adjusted net debt-to-capital of 29.6% (4Q16: 25.3%). Founder Richard Elman hinted of long slog to profitability as he stepped down as chairman. Trading at 0.24x P/B after shares tanked to a 15-year low but 74% of equity value hinges on unclear valuation of its commodity derivatives contracts.

*City Dev: 1Q17 net profit declined 18.9% to of $85.5m (14% of FY17 estimates) despite booking higher revenue of $783.8m on higher home sales at a Suzhou project and Gramercy Park. Earnings were affected by the absence of contributions from two JV residential projects completed last year, PPS gains and poorer performances from hotel operations and rental properties. Management sees some signs of revovery in the S'pore residential market and is taking advantage of subdued conditions to invest overseas. Ytd, it has made five acquisitions worth $770m. Trading at 1.06x P/B. MKE reiterates its Hold with TP of $9.80.

*Wilmar: In line 1Q17 core net profit jumped 40.5% to $312.6m, meeting expectations. Revenue grew 17.4% to US$10.6b, driven by higher commodity prices and stronger sales both tropical oils and sugar businesses, which offset weaker seasonal sales from its consumer products segment, which was affected by early Chinese New Year this year. EBITDA margin expanded 0.3ppt to 6.5% as it benefitted from higher CPO prices, higher soybean crushing volume and stable crush margins. Earnings were also shored by higher FX gain of US$25.9m (+201%), investment gains of US$53.3m (+168%) and higher contributions from JVs/associates of US$42m (+228%). NAV/share at US$2.38.

*ST Engineering: 1Q17 net profit fell 6.1% to $103.4m, achieving just 19% of FY17 forecast, weighed by lower government wage credits (-47%). Revenue slipped 5.4% to $1.54b on weaker contribution across aerospace (-12%), land systems (-14%) and marine (-16%), which mitigated growth in electronics (+14%). Operating margin expanded to 7.6% (+1.6ppts). Order book grew to $13.3b (4Q16: $11.6b). Maintained guidance for comparable revenue and higher pretax profit in 2017. NAV/share at $0.7252.

*Thai Beverage: 2QFY17 results met expectations, as net profit sank 23% to Bt6.56b. Revenue declined 8.8% to Bt50.35b, as sales fell amid the mourning period for the late Thai King across spirits (-7.5%), beer (-13.9%) and non-alcoholic beverages (-3.2%). EBITDA margin shrank 1.8ppt to 17.5%, while bottom line was further dragged by lower associates income (-52% to Bt0.53b) stemming F&N and Frasers Centrepoint. Declared interim DPS of Bt0.2 (2QFY16: nil). NAV/share at Bt4.89..

*Ezion: Swung into 1Q17 net loss of US$12.7m (1Q16: US$15.6m profit), on a 16.4% slump in revenue to US$68.6m due to lower charter rates and a drop in utilisation. Accordingly, gross margin crumbled by almost half to 12.8% (-12.4ppts). NAV/share at US$0.6281.

*Wing Tai: 9MFY17 net profit of $10.6m (+104%) missed expectations, albeit supported by strong contributions from JV and associates (+40%), including Wing Tai Properties in Hong Kong, and Uniqlo in Singapore and Malaysia, as well as a $4.5m gain on disposal of JV. Revenue plunged 49% to $204.6m due to lower property development sales. While gross margin expanded 11.1ppt to 50.8%, operating profit dropped 96% to $1.2m as costs remained sticky. Bottom line was also shored by lower finance costs and a $1.4m tax credit. NAV/share at $4.02.

*Asian Pay TV: in line 1Q17 with DPU flat at 1.625¢. Revenue rose 6.1% to $82.6m on positive FX movement. In constant TWD terms, contribution from basic cable TV (-1%), and broadband (-4.2%) fell on lower ARPUs, while premium digital cable TV (+1.2%) increased on more subscribers. EBITDA margin held steady at 59.2% (+0.1ppt). Reaffirmed guidance for FY17 DPU of 6.5¢, implying 12.3% yield. NAV/unit at $0.87.

*Haw Par: 1Q17 net profit jumped 21.8% to $17.3m, achieving 12% of the street's sole FY17 forecast, on revenue of $60.8m (+16.3%) which was attributable to higher healthcare (+22.2%) offset by lower contributions from its leisure (-67.8%) segment. Gross margin expanded to 63.8% (+1.9ppts) in light of the shift in revenue mix. The bottom line was pressured by higher distribution & marketing cost (+19.9%) and lower other income (-41.9%). NAV/share at $12.22.

*China Everbright Water: 1Q17 net profit increased 11% to HK$114.5m, attaining 22% of the street's FY17 forecast on an 18% growth in revenue to HK$774.1m due to stronger construction contributions (+31%). Gross margin contracted to 34% (-2ppts) mainly due to a shift in revenue mix. Bottom line was weighed on by higher finance costs (+26%) partially mitigated by HK$1.9m in contributions from an associate. NAV/share at HK$2.68.

*First Resources: 1Q17 net profit surged 807% to US$48.5m ahead of estimates. Sales jumped 71.6% to US$194.1m, driven by higher ASPs and volume. Consequently, gross margin fell 16.6%. Bottom line was also boosted by a 231% surge in FX gains to US$1.8m and a US$0.6m gain on derivatives (1Q16: US$1.1m loss). NAV/share at US$0.59.

*SBS Transit: 1Q17 net profit jumped 26.6 % to $10.2m, partially lifted by a drop in finance costs (-23.8%). Revenue climbed 7.6% to $283.4m on stronger public transport business (+9.2%) from higher bus contributions and rail ridership, albeit pared by weakness in other commercial services (-16.5%) due to lower advertising revenue. EBITDA margin widened 2ppt to 13.2%. NAV/share at $1.38.

*Vard: 1Q17 swung into net loss of NOK25m (1Q16: NOK37m profit), as revenue slipped 12% to NOK1.78b due to reduced activity from low order intake in 2015. EBITDA margin stabilised at 2.3% (-0.6ppt). Order book stood at NOK12.98b (4Q16: NOK12.65b). NAV/share at $0.31.

*Health Management International: Swing to 3QFY17 net loss of RM1.6m (1Q16: RM8.7m profit) weighed by RM7.3m professional fees incurred from the consolidation of ownership of two of its hospitals to full ownership and RM1.4m FX loss. Core net profit of RM7.1m (+12%) was in line. Revenue expanded 7% on higher patient load and average bill sizes at both Mahkota Medical Centre and Regency Specialist Hospital. NAV/share at RM0.1806.

*SUTL: 1Q17 net profit inched 1% higher to $0.7m. Total income fell 6% to $6.4m, on lower sales of goods and services (-5%) and membership fees and management fees (-9%). Bottom line was partially lifted by a 44% decrease in income tax expenses. NAV/share at 63.6¢.*Fragrance: 1Q17 net profit rose 1.8% to $5.4m, although revenue surged 92.2% to $43.7m, mainly driven by revenue contribution from the City Gate project. Gross margin rose 4ppt to 35.5%, lifted by City Gate. Bottom line growth was weighed by a 554% surge tax expense. NAV/share at 15.6¢.

*Q&M: 1Q17 net profit of $3.8m (+4%) was in line. Revenue fell 6.7% to $32m as higher takings from dental equipment and supplies distribution (+29%) was offset by the deconsolidation of Aidite to an associate. NAV/share at $0.15.

*Food Empire: 1Q17 net profit surged 58.8% to US$6.3m on revenue of US$62.4m (+23.6%), bolstered by Russia (+23%), Kazakhstan & CIS (+141.6%) and other markets (+37.9%) partially offset by weakness across Ukraine (-14.9%) and Indochina (-18%). Gross margin improved to 39.9% (+7.8ppts) on higher ASPs in key markets. Bottom line was pressured by lower FX gains (-52%) as well as losses of US$0.7m (1Q16: US$0.2m profit) from its Korean associate. NAV/share at US$0.3036.

*Tiong Seng: 1Q17 net profit of $4.1m (+9%) was buttressed by a $1.2m drop in FX loss and a $1.4m positive swing in JV contribution. Revenue slid 16% to $207.7m, as the drop in property development sales (-86%) outweighed higher contribution from construction contracts (+25%). Operating margin narrowed 0.5ppt to 3.2%. NAV/share at $0.5709.

*Frencken: 1Q17 net profit surged more than five-fold to $16.3m, lifted mainly by a $10.2m disposal gain (1Q16: nil) on Precico Electronics. Stripping that out, net profit would have still almost doubled to $6.1m. Revenue grew 17.9% to $134.4m on stronger sales across its mechatronics (+21.5%) and IMS (+11.3%) divisions. Gross margin expanded to 17.2% (+2ppts) on improved capacity utilisation and shift in sales mix. NAV/share at $0.5561.

*Dutech: 1Q17 results missed, as net profit slid 17.3% to Rmb15.3m. Revenue rose 31.9% to Rmb354.4m on stronger sales from both high security (+3.2%) and business solutions segment (+70.6%), as the latter segment was boosted by the acquisition of Metric. Gross margin shrank 4.3ppt to 27.3% due to higher steel prices for the high security business. Bottom line was also hurt by ballooning operating expenses from the consolidation of Metric and a spike in finance costs. Maintained interim DPS of 1¢. NAV/share at Rmb2.3566.

*Nordic: 1Q17 net profit rose 21% to $2.8m, even though revenue was muted at $19.9m (+1%), as growth in maintenance services (+17%) segment and proceeds from sale of carbon emission allowances were doused by weakness in the project services business (-14%). Gross margin ticked lower by 1.1ppt to 30.6%, but bottom line was shored by a drop in staff cost. NAV/share at $0.177.

*Grand Banks: Slumped into a 3QFY17 net loss of $1.1m bringing 9MFY17 net loss to $0.5m (9MFY16: $2m profit). Revenue fell 23.6% to $13.2m as a boat swap resulted in a reversal of revenues. Gross margin contracted to 14.4% (-0.3ppts) on additional construction hours at its Malaysian yard. Bottom line was further hurt by higher operating expenses (+11.8%) as well as FX losses of $0.7m (3QFY16 $0.1m). NAV/share at $0.241.

*CSE Global: 1Q17 net profit fell 45.5% to $3m, while revenue dropped 11.5% to $74.5m, from lower contributions from Americas and EMEA regions, mainly from delays in orders, particularly in the O&G sector. Gross margin was stable at 29.2%. Operating expenses rose 1.2%, mainly from lower labour cost recovery to projects. NAV/share at 48.08¢.

*Geo Energy: Leapt to a 1Q17 net profit of US$14.6m (1Q16: US$2.6m loss) as revenue surged more than 8x to US$99.3m on higher coal sales volume (+356%) as well as coal ASPs (+1.5%) at its SDJ mine. Consequently, gross margin fattened to 25.5% (+23.4ppts). Cash profit per tonne of coal averaged US$13.52 (-2.5%) on increased production costs that were pegged to coal prices. Bottom line was affected by higher FX losses (+101%) and depreciation (+277%) partially mitigated by stronger interest income (+162%). NAV/share at $0.16.

*iREIT Global: Weak 1Q17 DPU of 1.44¢ (-8.9%) was weighed by €0.7m of income retained. Distributable income rose 1.4% to €6.5m. Revenue inched 0.4% lower to €8.8m, partially weighed by lower service charges income. However, NPI rose 3.5% to €7.9m as there was no corresponding decrease in recoverable property operating expenses. Occupancy stable at 99.8% while aggregate leverage inched up 0.5ppt to 42.1%. NAV/unit at €0.42.

*Gallant Venture: 1Q17 net loss worsened to $39.2m (1Q16: -$15.7m), as revenue fell 7% to $436.9m on weaker passenger vehicle sales and car rental business in Indonesia. While gross margin improved 2.5ppt to 18.5%, bottom line was pummelled by a $12.5m adverse FX swing, higher provision for doubtful debts, $15m loss (1Q16: $1.7m profit) from automotive associates, and a spike in taxes (+153%). NAV/share at $0.3101.

*EC World REIT: 1Q17 DPU of 1.541¢ was 5.3% higher than IPO forecast. Revenue of $23.7m (+4.6%) and NPI of $21.6m (+5.4%) exceeded forecasts, due to higher rental income from the sheltered warehouse in Chongxian Port Investment. Full occupancy maintained, while aggregate leverage stood at 28.6% (+1ppt q/q). NAV/share at $0.90.

*Emerging Towns & Cities: Swung to 1Q17 net profit of $1m, while revenue surged 92.3% to $10m, driven by property units sales at Golden City project. Bottom line was boosted by a $8.3m gain from the transfer of 16 units of residential apartments from development properties to investment properties. NAV/share at $0.1107..

*SPH: Proposed to divest its entire 1/3 stake in online classified business, 701Search, to JV partner Telenor Communications for US$109m.

*China Star Food: Halts production at new manufacturing plant in Liancheng as the completion of the county’s centralised waste water treatment has been further delayed. China Stars’ factories have been closed since CNY from the tightening of pollution control by the local government.

*Nordic: Clinched a three-year $35m scaffolding, insulation and coating capital project from a petrochemical company, and will commence work on 1 Jun '17. Also secured several adhoc projects worth $3.9m from repeat customers, and are expected to complete by 2Q18.

Tuesday, May 9, 2017

SG Market (09 May 17)

Expect some profit taking as traders pare risk positions ahead of the mid-week public holiday.

Regional markets opened lower in Sydney (-0.6%) and flat in Tokyo, while the Korean market is closed for Presidential election. STI is overbought with topside resistance at 3,250 and downside risk at 3,212/3,190.

Stocks to watch:
*OCBC: 1Q17 net profit of $973m (+14%) beat estimates on strong non-interest income from wealth management (+70%), investment banking (+99%), life assurance (+111%) and trading (+30%). Net interest income slipped 3% to $1.27b, as 5% loan growth was eclipsed by NIM compression to 1.62% (-13ppt). Provisioning was flat at $168m, while NPL ratio rose to 1.3% (1Q16: 1%, 4Q16: 1.3%). Tier-1 CAR deteriorated to 13.3% (1Q16: 14.6%; 4Q16: 14.7%). NAV/share at $8.67, translating to P/B of 1.18x relative to DBS at 1.12x and UOB at 1.21x.

*Perennial Real Estate: 1Q17 net profit soared >4.5x to $38.7m (1Q16: $8.5m), boosted by a partial disposal (20.2% stake) and revaluation (30%) gains of $55.7m in TripleOne Somerset. Revenue tumbled 31.4% to $20.2m on lower project management fees and reduced rentals from TripleOne due to renovation works, while earnings was partially dragged by higher finance costs (+26.2%), taxes (+374%) and a sharp drop in JV income (-93.2%). NAV/share at $1.61.

*F&N: 2QFY17 results disappointed as core net profit slumped 67.1% to $3.8m, bringing 1HFY17 earnings to $26.3m (-29.3%). Quarterly revenue slid 5.8% to $451.3m, mainly dragged by reduced beverage sales (-21.5%) from Singapore and Malaysia due to weak consumer sentiment, which led to operating loss of $5.2m (2Q17: $9.1m profit) in the segment. Maintained interim DPS of 1.5¢. NAV/share at $1.97.

*Vicom: 1Q17 net profit fell 6.3% to $6.8m, on weaker revenue of $24.1m (-4.9%) due to less vehicle inspections. Accordingly, EBITDA shrank 0.3ppt to 39.6%. However, net cash position improved to $111.5m (22% of market cap) from $105.7m in FY16. NAV/share at $1.7675.

*GP Hotels: 1Q17 net profit declined 4.9% to $3.2m on softer revenue of $14m (-3.8%), as one hotel underwent asset enhancement works. NAV/share $0.6977.

*Acromec: Swung to 1H17 net loss of $2.4m (1H16: $1.6m profit) on cost overruns. Revenue slipped 10% to $21m on lower progressive sales from current projects, while gross margin compressed significantly to 1.9% (1H16: 20.5%), blamed on complexity of a few major projects. NAV/share at 7.52¢.

*OKP: 1Q17 net profit soared 172.7% from a low base to $5.1m, lifted by JV income of $1.6m (1Q16: nil) due to sale of units at Lake Life EC. Revenue grew 21% to $29.7m from higher contribution from maintenance (+139.5%), partially offset by construction (-1%). Gross margin expanded to 20% (+7.9ppts) from higher-profitability construction projects. But construction order book thinned to $306.1m (1Q16: $322.1m), with sales visibility till 2019. NTA/share at $0.3818..

*Ellipsiz: 3QFY17 net profit edged up 2% to $2.3m, mainly shored by a $1.2m gain on disposal of an associate. However, gross revenue dipped 5% to $29.5m from weakness in both probe card solutions (-5%) and distribution & services (-5%), while gross margin narrowed 1.1ppt to 35.2%. NAV/share at $0.7621.

*Soo Kee: 1Q17 net profit tumbled 45.7% to $1.4m, despite an 11.3% growth in revenue to $40.8m, lifted by sales contribution from gold and silver dealer, SK Bullion, which was acquired in Apr ’16. However, pretax margin contracted to 4.6% (-4.1ppts) from the shift in sales mix towards lower profitability bullion business. NAV/share at $0.0973.

*ISEC Healthcare: 1Q17 net profit rose 5% to $1.7m, while revenue jumped 24% to $8.5m from new acquisitions and increased patient visits in its Malaysia operations. However, gross margin narrowed 3.6ppt to 46.6%, while bottom line was weighed by increased admin costs from consolidation of newly acquired units. NAV/share at $0.12.

*Manufacturing Integration Tech: Secured new orders totalling $18m for semiconductor equipment, which will be used by customers to produce devices for the mobile communication and memory segments. This lifted order book to $23m, slated for delivery over the next two quarters, and will contribute positively to 1H17 financials.

*GKE: Extended the chartering contract for its 83,000 cu m liquefied gas carrier vessel with Sinogas for three months, starting from 1 Apr '17. The fixed charter rate remains depressed and is not expected to have material impact on earnings in FY5/17.

*Astaka: Awarded a contract to JBB Kimlun to construct a 15-storey Grade A office tower for Johor Bahru City Council. The office tower will span 445,848 sf of gfa and is expected to sell for RM308m and be completed in 2019.

*Oxley: Issued US$100m 6.375% notes due 2021 under its US$1b guaranteed euro MTN programme, to be used for general working capital.

*Ezion: Issued profit warning for 1Q17 and expects net loss owing to depreciation in USD, which has given rise to FX translation loss on its SGD financial liabilities.

Monday, May 8, 2017

SG Market (08 May 17)

The market could turn risk-on following the solid US Apr non-farm payrolls report and French presidential election win by pro-EU centrist Emmanuel Macron.But immediate focus will be on a slew of 1Q results from local blue-chips (OCBC, City Dev, Wilmar, Genting Sp, UOL, SIAE, ST Engineering, ComfortDelgro) as the earnings season gets underway.Investors are also watching oil prices, which dipped to a 9-month low, near US$45 per barrel last week.

Regional markets opened higher in Tokyo (+1.3%), Seoul (+0.4%) and Sydney (+0.7%).Technically, the STI appears a little stretched with near term supports at 3,212/3,190 and upside resistance is at 3,250.

Stocks to watch:
*OUE: 1Q17 net profit surged 85.3% to $15.4m on a 60.3% jump in revenue to $196.3m, which was bolstered by development sales of $72.6m (1Q16: $4.7m) from additional units sold at OUE Twin Peaks. Bottom line was also lifted by $23.5m of one-offs, including an impairment write-back of Twin Peak units sold/ transferred to its investment property portfolio, as well as higher fair value gain. NAV/share at $4.40.

*OUE Commercial REIT: 1Q17 missed, as DPU slid 6.8% to 1.23¢ due to the enlarged unit base from a recent placement, while distributable income slipped 2.3% to $16.6m after setting aside profits from the sale of Lippo Plaza to reserves. On the flipside, revenue of $44.8m (+4.4%) and NPI of $34.6m (+4.2%) both improved on higher contribution across all three properties under its portfolio. Portfolio occupancy ticked up 1ppt q/q to 95.8%, while aggregate leverage eased 3.6ppt q/q to 36.2%. NAV/unit at $0.86.

*Cosco Corp: Sank into a deeper 1Q17 net loss of $78.9m (1Q16: $14.4m loss), as revenue slumped 44% to $401.8m from lower broad-based contribution in ship repair, building and marine engineering segments. The group incurred a gross loss of $57.8m due to a $21.2m write-down on inventory (1Q16: $1.2m write-back), as well as a $70.6m provision on construction contracts. Bottom line was further dragged by FX ($3.7m) and disposal ($5.1m) losses. Order book stood at US$5.8b, with deliveries up till 2020. NAV/share at $0.1126.

*Cosco Corp: Divested its stakes in Cosco Shipyard Group (51%), Cosco Nantong (50%) and Cosco Dalian (39.1%) to parent Cosco Shipping Heavy Industry for Rmb1.47b, as part of the group's restructuring exercise. Post-divestment, Cosco Corp is expected to reap a disposal gain of Rmb126.5m, , which works out to 1.15¢/share.

*Roxy Pacific: 1Q17 net profit tumbled 40% to $5.9m on a 36% drop in revenue to $65.4m, due to lower contributions from property development (-41%) and hotel ownership (-10%), although partly mitigated by higher income from property investment (+7%). Gross margin improved to 25% (+3ppts) from the change in sales mix, while the bottom line was buttressed a $1.4m (1Q16: nil) fair value gain on derivatives. NAV/share at $0.4232.

*Federal Int’l: 1Q17 net profit plunged 69% to $0.4m in the absence of a $0.7m disposal gain recognized last year. Revenue slipped 7.3% to $21.5m from reduced contribution from its trading business due to lower sales to China. Gross margin contracted to 21.2% from a change in its sales mix, while the bottom line was weighed further by lower associate contribution (-53.6%), which pared lower selling & distribution costs (-46.4%). NAV/share at $0.612..

*Lum Chang: Collective purchase of all 13 strata units and common area of freehold residential property One Tree Hill Gardens near Orchard MRT station, with land area spanning 3,629.1 sqm for $65m to redevelop into landed homes for sale.

*Riverstone: Acquired a 6,443.66 sqm land with built-up factory at Rawang, Selangor in Malaysia for RM6.5m, to support its glove production capacity expansion.

*CMC Infocomm: Mandatory cash offer at 9.5¢/share (18.8% above last traded price) from Shanghai Yinda Science and Technology Industrial, after the group acquired 74.41% stake from substantial shareholders TEE Int'l and CMC Engineering.

*QAF: Conducting strategic review for its Australian primary production business, with possible monetization via spin-off or divestment.

*Cityneon: Parent Star Media Group has received an expression of interest for its 52.51% stake in Cityneon from an undisclosed party.

*LHN: Appointed Fortune Financial Capital as the sponsor for its proposed dual primary listing in Hong Kong.

*Addvalue Tech: Clinched trial order of $1m for the supply of its Wideye iFleetONE terminal. The group disclosed it is in further discussions with new customers for an additional order for products worth ~US$3.5m.

*SingHaiyi: Acquiring the remaining 20m shares (10% stake) in Corporate Residence, the developer of freehold residential project City Suites, for $0.08m.

*Midas: Expecting a substantial jump in 1Q17 net profit from higher sales, FX gain and increased associate income stemming from CRRC Nanjing Puzhen Rail Transport.

*Profit warnings:
- Vallianz
- Dukang Distillers
- BRC Asia
- A-Sonic Aerospace

Friday, May 5, 2017

SG Market (05 May 17)

Commodity and oil-linked counters may face downward pressure as oil tumbled almost 5% and gold/silver retreated to 6-week lows on Chinese deleveraging. Interest appeared to have has shifted from blue chips to penny stocks although revived merger speculation could continue to hold up Keppel Corp and SembMarine. Sydney edged 0.1% lower in early trading, while bourses in Japan and Korea are closed for a public holiday. Technically, the overbought STI may close the breakup gap at 3,212, with further support at 3,190. Upside resistance is at 3,250.

Stocks to watch:
*OUE Hospitality: 1Q17 DPU of $0.013 (+18.2%) met 26% of full year expectations as distributable income rose 19.1% to $23.5m on income support for Crowne Plaza Changi Airport (CPCA). Gross revenue and NPI rose to $32.1m (+6.4%) and $27.4m (+4.3%), mainly underpinned by higher master lease income from enlarged 563-room CPCA, better occupancy at Mandarin Gallery and lower interest expenses, while performance of Mandarin Orchard Singapore deteriorated. Aggregate leverage stood at 38.1%. Last traded at 7.3% annualised yield and 0.9x P/B.

*Riverstone: 1Q17 net profit of RM33.6m (+23.7%) beat estimates. Revenue of RM205.7m (+38.9%) was bolstered by higher glove demand and additional 1b gloves production capacity from phase 3 expansion. Gross margin shrank 3.9ppt to 25.2% on a spike in raw material prices. Net cash position strengthened to RM123m (FY16: RM103m) on operating cash flow of RM40.4m (1Q16: RM13.3m). MKE upgrades to Buy from Hold and hikes TP to $1.05 from $0.83.

*Lippo Malls Indo Retail Trust: 1Q17 DPU rose 7.2% to 0.89¢, in line with estimates, on distributable income of $25.1m (+8.4%). Revenue and NPI grew 6.7% and 12.9% to $48.6m and $46.1m respectively, boosted by the Kuta mall acquisition and positive rental reversions of 7.5%. Occupancy slipped 0.5ppt q/q to 93.8%, while aggregate leverage stood at 32.2% (+0.7ppt q/q). Trading at 8.5% annualised yield and 1.1x P/B.

*Frasers Logistics & Industrial: 2QFY17 DPU of 1.75¢ met street estimates, and came in 6.7% ahead of IPO forecast on distributable income of A$25.1m (+5.9% above IPO) amid interest savings, lower trust expenses and FX gains. Gross revenue of A$40.9m (+1.6%) and adjusted NPI of A$30.9m (+0.3%) were largely in line with projections. Portfolio occupancy stood at 99.3%, with WALE of 6.7 years. Aggregate leverage at 28.9%, with average debt cost of 2.8%. Trading at 2Q annualised yield of 6.8% and 1.08x P/B.

*Hi-P: Swung to a 1Q17 net profit of $8.4m (1Q16: $12.4m loss) even as revenue slid 11.4% to $244.2m on fewer high component content assembly product sales. Despite this, gross profit margin more than doubled to 13.7% (+6.9ppts) mainly due to 1) better product mix, 2) improved operational efficiencies, and 3) lower inventory provision and scrap expenses. Bottomline was also supported by a FV gain on derivatives of $1.4m (1Q16: $0.7m loss). NAV/share at $0.7174..

*Hyflux: 1Q17 net profit plunged 89% to $0.8m, dragged by $27m (+46%) loss from up for sale Tuaspring plant due to weak Singapore power market. Excluding Tuaspring, it would have recorded a 8% increase in earnings to $27.8m, boosted by a $16.5m gain related to the disposal of its 50% stake in Galaxy Newspring. Revenue fell 59% to $91.5m due to lower EPC activities in its TuasOne WTE project and the Qurayyat Independent Water Project. The group continued to bleed operating cash outflow of $86.2m (+157%), resulting to a 15.7% drop in NAV/share to $0.38.

*Chip Eng Seng: 1Q17 net profit surged 68% to $6.1m, albeit from a low base as revenue soared 63% to $181.9m across all divisions, namely property developments (+116%), construction (+33%), hospitality (+12%) and property investments & others (+17%). Gross margin contracted to 16.1% (-2.4ppts) on the change in revenue mix. Bottomline was further supported by $4.9m gain (1Q16: nil) on disposal of investment securities, FX gain of $1.6m (+117%) as well as lower legal and professional fees (-77%). NAV/share at $1.2423.

*Chip Eng Seng: Awarded a $110.8m 42-month contract by the HDB for construction of nine blocks of residential buildings and other community facilities at Toa Payoh Bidadari.

*NeraTel: 1Q17 net profit jumped 50.6% to $2.9m on stronger revenue of $44.1m (+44.3%), which was in turn driven by growth across its network infrastructure (+62.1%) and wireless infrastructure network (+15.8%) segments. However, gross margin contracted 7.2ppts to 25.7% on change in sales mix. NAV/share at $0.19.

*PACC Offshore: Dived to 1Q17 net loss of US$18.4m from net profit of US$4.5m a year ago as revenue tumbled 42% to US$34.3m, dragged by its offshore accommodation (-65%) and OSV (-31%) segments on lower charter rates and utilization. Consequently, the group incurred a US$5m gross loss, reversing from US$14m profit in 1Q16. Bottomline was further pressured by higher finance cost of US$4.7m (+63%). NAV/share at US$0.3697.

*Secura: Swung to $0.3m 1Q17 net loss from $0.1m net profit a year earlier. Revenue rose 9.8% to $9.5m, driven by higher contributions from security guarding, cyber security, as well as systems integration and homeland security segment. Although gross margin improved 5ppt to 19.4%, this was not enough to offset a 76.5% jump in admin expenses, due to acquisitions of subsidiaries RSPL and Soverus, as well as increased staff costs. NAV/share at $0.1177

*CapitaLand: Serviced residence business unit, The Ascott has acquired the 125-unit Hotel Central Fifth Avenue New York and will invest close to US$50m in renovating and rebranding the property into Ascott’s first Citadines serviced residence in the US in 2018. The investment boosts Ascott’s portfolio in the Americas to over 1,100 units across five properties.

*CDL Hospitality Trusts: Acquired a 165-room luxury hotel in Manchester, UK for £52.5m. The acquisition is expected to be yield accretive with DPS accretion of 2.7% although net gearing would rise to 39.1% (+2.3ppts).

*Noble: Going ex 1-for-10 consolidation on 5 May. Based on last close, theoretical ex price is SGD1.31.

*SingPost: Reprimanded by the SGX for breaches of listing rules for the lack of robust internal controls as well as inaccuracies related to the F.S. Mackenzie acquisition announcement. The SGX has further referred the various breaches to the relevant authorities.

*Yuuzoo: Its group financial controller, Thai Youn Fatt who was hired in Jan ’15 has left the company and is the latest in a string of key executives leaving the company, many of them from the finance fnction.

Thursday, May 4, 2017

SG Market (04 May 17)

The market could encounter some resistance after rallying in eight out of nine past trading days although the gains were not broad-based.

Regional markets opened mixed, with Seoul (+0.4%) higher, and Sydney (-0.4%) weaker.Technically, the STI is likely to lose momentum as it approaches overbought territory. Topside resistance is seen at 3,250, while immediate support is at 3,190.

Stocks to watch:
*Sembcorp Industries: 1Q17 net profit grew 11% to $119.1m on revenue of $2.14b (+13%) but stripping out the $46.8m gain on disposal of its 30% stake in Cosco Shipyard Group, the results would have missed. Utilities earnings shrank 27% to $55.3m, hurt by lower power tariffs for its thermal power plant in India, while marine earnings of $24.1m (-28%) was eroded by weaker rigbuilding contributions and costs associated with a floater project. In contrast, earnings from urban development business soared more than 30x to $37m from recognition of land sales in Nanjing. The group is undertaking a strategic review under a new CEO. NAV/share at $3.78.

*StarHub: 1Q17 net profit slumped 21.3% to $73.1m, meeting street estimates. Service revenue dipped 1% to $537m as declines in mobile (-0.6%), which was hit by lower ARPU, and Pay TV (-6.8%), which is suffering from a shrinking customer base, was partially offset by bright spots in in enterprise (+2.9%) and broadband (+0.5%). EBITDA margin narrowed 3.9ppts to 29.9%. Interim DPS was cut to 4¢ (1Q16: 5¢). Management maintained EBITDA margin of 26-28% and DPS guidance of $0.16 this year but would not commit to dividend sustainability beyond FY17. MKE reiterates Sell with TP of $2.36.

*BreadTalk: 1Q17 net profit surged 337.2% to $10.7m, as restructuring efforts pay off. While revenue fell 4.5% to $147.6m, dragged by bakery and food atrium sales, group EBITDA margin improved 4.9ppt to 17.8%, on the back of food atrium recovery across China, and strong performance in Singapore. NAV/share at $0.581.

*GLP: Acquired the remaining 50% interest in CLH Chongqing Logistics Property from JV partner for Rmb81.6m, valuing the entity at 1.36x P/B. Separately, it announced 275,000 sqm of new leases in China with two e-commerce leaders and two auto-parts companies.

*Heeton/Ryobi Kiso/KSH/Lian Beng: 60%/20%/10%/10% owned Luma Concept Hotel in London has commenced operations, after the consortium acquired a freehold building in 2015 for $31m, and and redeveloped it into a 89-room hotel, now managed by Heeton's hospitality division.

*mm2 Asia: Entered binding MOU to acquire 19.68% of Cinema Pro for HK$4m. Cinema Pro provides all-in-one cinema management service in Hong Kong and China. The deal comes with an undisclosed profit and buyback guarantee from Cinema Pro and its majority shareholder Kbro Media.

*TTJ Holdings: Acquiring a 4,931-ha leasehold land in Mukim, Johor, Malaysia with tenure expiring in 23 Mar '71, along with built-up factories, office, canteen, 22 overhead cranes and other heavy equipments from Air Products Specialised Process Equipment for RM38m. The property and equipment will be used for the group's structural steel business.

*PACC Offshore: Disclosed that it is taking legal advice over an additional $24.5m in legal claims concerning a tussle over a property it failed to acquire. This brings claim amount to $30.5m, or 3.5% of its NTA as at 31 Dec ’16.

Wednesday, May 3, 2017

SG Market (03 May 17)

The market could eke out further gains today as yesterday's bank-induced blue-chip rally spill over to the broader market. Sydney slipped 0.1% in early trading, while bourses in Japan and Korea are closed for a public holiday.Having broken above the 3,200 level, the STI has reached its highest level since Aug '15 and may attempt to bridge the 30-point gap at 3,250 set in Jul '15. Immediate support is now at 3,190.

Stocks to watch:
*Economy: Manufacturing PMI logged its 8th straight month of expansion in Apr, coming in at 51.1, a slight dip from Mar's 51.2 reading. The marginal pullback was attributed to some softening demand in domestic and export orders, which is in line with the trends across the region, including China and Taiwan. However, the declines were cushioned by stronger factory activity.

*SIA: According to Bloomberg, the carrier might swing into a net-debt position of >$550m, or a net gearing of 5%, as early as 2018 as its takes on more debt and issue bonds to finance its record purchase of 214 aircraft totalling US$53b.

*Nobel Design: Received an unconditional cash offer at $0.51/share after controlling shareholder Grand Slam RF18, raised its stake to 64.3% from 41% after acquiring a 23% block from a substantial shareholder via several married deals at $0.51 The offer is final and will not be revised and Grand Slam intends to exercise its right of compulsory acquisition and delist Nobel if it secures more than 90% acceptances.

*Hyflux: Proposed partial divestment of up to 70% for Tuaspring plant, announced in Feb, has reportedly attracted potential buyers from China, Japan, Asean and Middle-East. The $1b integrated water & power project has been operational since 2013 but is currently loss-making.

*Yoma: Substantial shareholder Aberdeen Asset Management raised its stake from 8.9469% to 9.0126% via open market purchase of 1.1m shares at $0.5831 apiece on 28 Apr.

*Sinostar Pec: 1Q17 net profit surged 131% to Rmb26.4m on improved operational leverage. Revenue jumped 43% to Rmb471.9m, boosted by improved performance in process LPG (+45.5%), propylene (+62.5%) and polypropylene (+44.2%) divisions, largely driven by higher ASP and sales volume. Consequently, gross margin expanded 2.8ppt to 7.2%. Management is confident of its outlook in next 12 months and the group is in advanced negotiations to acquire a stake in a newly built propylene processing plant. NAV/unit at Rmb1.00.

*Moya: Swung to 1Q17 net profit of $1.3m (1Q16: $1.7m net loss), as revenue soared 227% to $9.8m from higher percentage completion for the BOT project and contribution of water sales in Tangerang. Gross margin expanded a significant 6.3ppt to 8%, while the bottom line was lifted by higher interest income (+189%) and lower admin expenses (-37%). NAV/share at 4.36¢.

*Centurion: Its dormitory at Tuas Lodge 1 has been granted a short-term lease extension for nine months from 29 Apr '17 to 30 Jan '18.

*Advancer Global: Proposed placement of 12.5m new shares at $0.40 each, with a warrant attached for every two shares (3-year term with exercise price at $0.45), to MES Group. Post-allotment and full warrant exercise, share capital will be enlarged by 10.8%. Net proceeds of $4.8m will be used for business expansion (75%) and working capital (25%).

*Manufacturing Integration Tech: Adopted a dividend payout policy of at least 25% of net profit. As a gauge, group was loss-making in FY16.

*Oceanus: Independent auditor Foo Kon Tan flagged that financials for the group cast a significant doubt of its ability as a going concern.

*Profit warnings:
- United Food
- Luzhou Bio-Chem Tech

Tuesday, May 2, 2017

SG Market (02 May 17)

Stocks could creep higher on the back of relatively resilient 1Q17 corporate earnings over the past week although trading volume is expected to dwindle on the lack of fresh macro catalysts.

Regional markets opened mixed in Tokyo (+0.3%), Seoul (+0.6%) and Sydney (-0.3%).Technically, STI could test its immediate resistance at 3,190, with downside support at 3,146 (50-dma).

Stocks to watch:
*DBS: 1Q17 net profit inched up 1% to a record $1.21b, coming ahead of street estimates. Net interest income was flat at $1.83b as 9% loans growth was pared by NIM compression to 1.74% (1Q16: 1.85%). Non-interest income of $1.06b (+2.2%) was largely buoyed by fees from wealth management (+26%) but slightly offset by reduced net trading income (-14%). Provisions jumped 18% to $200m on higher charges stemming from loans to the O&G support services sector. Notably, the group booked $350m of general allowances as one-off item, not included under provisions. NPL ratio remained at 1.4%, with Tier-1 CAR at 14.6% (1Q16: 14%). NAV/share rose 3% q/q to $17.37.

*Venture: 1Q17 net profit leapt 35.6% to $48.6m, surpassing expectations. Revenue surged 33.7% to $843.1m from broad-based demand growth and new product launches and programme introductions by customers, which led to an improvement in pretax profit margin to 7.1% (+0.4ppts). The group remained net cash positive at $400m with NAV/share climbing to $7.11. MKE maintained Buy and raised TP to $13.35 from $11.50.

*Sheng Siong: 1Q17 net profit of $17.1m (+4.4%) met expectations. Revenue rose 4.1% to $217.1m on new store openings although same-store-sales remained flat due to lacklustre demand from lower footfall at stores affected by the slowdown in the O&G industry, renovations (Tampines) and closure (Woodlands). Gross margin inched up 0.5ppt to 25% as it enjoyed increased rebates for bulk handling and discounts. Facing higher competition from rivals, sites and possible entry of Amazon Fresh and impending closure of two large stores at The Verge and Woodlands in 2H17. MKE has a Sell with TP of $0.85.

*Jardine C&C: 1Q17 core earnings surged 44% to US$202m, as revenue rose 16% to US$4.23b on stronger performance from Astra due to larger market share in the automotive market, and a turnaround at Permata Bank due to better trading performance of heavy equipment and agribusiness. Operating margin widened 1.1ppt to 9.9%. NAV/share at US$15.26.

*Manulife US REIT: 1Q17 DPU of US1.65¢ was 8.6% above forecast and reached 27% of full-year street estimate. While gross revenue dipped 1.3% to US$19.8m on lower recoveries income, NPI climbed 2.7% to US$12.8m owing to higher-than-anticipated rental escalation and higher car park income, as well as lower finance expenses. Occupancy rate inched higher to 97.2% (+0.2ppt q/q), while aggregate leverage rose 0.4ppts q/q to 34.2%. NAV/unit at US$0.87.

*Oxley: 3QFY17 net profit declined 12% to $45.7m in the absence of a $25.6m disposal gain recognised in previous year. But revenue nearly doubled to $386.5m (+91%) on sales recognition from commercial project The Flow, mixed-residential development at Joo Chiat Road and handover of plots at The Royal Wharf Phase 1A. Gross margin contracted to 23.8% (-8.7ppts) on a change in sales mix, while bottomline was hurt by higher FX losses of $6.9m (3QFY16: $76,000 loss) as well as lower associate/JV contribution (-74%). Total unbilled contract value amounted to $2.36b. Interim DPS was cut to 0.3¢, bringing 9MFY17 DPS to 0.8¢ (9MFY16: 1.15¢). NAV/share expanded 18.6% to $0.3177.

*UIC: 1Q17 net profit was flat at $59.8m, despite a 31% jump in revenue to $264.5m mainly from higher project sales recognition and improved contribution from IT ops (+17%), while rental income was stable. However, gross margin narrowed 2.8ppt to 37%, while bottom line was further dragged by a $14.8m ABSD payment and higher selling and distribution costs (+60%). NAV/share at $4.43..

*Micro-Mechanics: 3QFY17 net profit leapt to $3.5m (+26.6%), on revenue of $14.2m (+13.7%), thanks to stronger sales in Singapore, Malaysia, Philippines and China. Gross margin inched up 0.3ppt to 57.4%, while bottom line was lifted by greater tax incentives, although partially offset by disposal losses, FX losses and lower government grant. NAV/share at $0.3604.

*Tianjin Zhong Xin: 1Q17 net profit of Rmb133.7m was shored by disposal gains, lower net borrowing costs, and reversal of impairments. Revenue slid 11% to Rmb1.46b, but gross margin expanded 5.8ppt to 37.4%. Bottom line was also helped by a notable drop in admin expenses (-12%). NAV/share at Rmb5.56.

*CCT: Selling 50% stake in Grade A office building One George Street to insurer FWD Group, based on an agreed property value of $1.18b (16.7% above valuation), or $2,650 psf of net lettable area, translating to a net property yield of 3.2%. CCT expects to book a $79.7m net gain from the sale that will be used to strengthen its balance sheet. Pro forma FY16 NAV is expected to rise 2.3% to $1.77.*Vard: Secured contract for the design and construction of one research expedition vessel for an undisclosed sum, expected for completion in 2020.

*Addvalue Tech: Proposed $7.1m issue of 4-year 5% convertible loan notes (exercise price of 5.5¢ each) to seven individuals, including Alan Wang of Asdew Acquisitions and Ron Tan of CEO of Cityneon. With the recent private share placement still pending SGX AIP, the group raised an aggregate $13.1m to improve its balance sheet.

*Imperium Crown: Regarding the proposed acquisition of 27% stake in Global Entertainment Media, which has 40 years of operating rights to Wonder Stone Park in Shandong, management updates that it is in the midst of due diligence intends to extend the long-stop date of 30 Apr.

*China Kangda Food: Received an MGO from China Tian Yuan Manganese for HK$1.34/share, significantly below its last traded price of HK$2.42.

*Sen Yue: Expected to report a turnaround to profitability in 1H17 due to reduced FX losses as well as an increase in revenue.

*Profit warnings:
- Acromec