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