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