SG Market (13 Jun 17)

MARKET OVERVIEW
- Continued profit taking likely to pressure high flying tech names, taking cue from the US tech sell-off ahead of Fed's decision on interest rates this week.
- Despite yesterday's drubbing, Venture (+23% ytd), AEM (+331%), Sunningdale (+80%), UMS (+78%), Hi-P (+78%), Valuetronics (+61%) still vastly outperformed the market this year.
- Technically, immediate support for STI is at 3,228, with topside resistance at 3,275.

MACRO WATCH
- Singapore-China relations are on the mend after both countries agreed to work together on China's Belt and Road initiative.
- Beijing proposed three areas of cooperation, including one that will draw on Singapore's strength as a regional financial and yuan clearance centre to raise funds for various BRI projects.
- The two sides will also expedite RCEP negotiations for a stronger and more substantive China-ASEAN relationship and hold talks for upgrading the China-Singapore FTA.
- Two-way trade between the two countries amounted to US$66b last year, or 13% of Singapore's total trade. Singapore is also China's second-largest investor, pouring in US$6.18b in 2016.
- Major beneficiaries: Banks, infrastructure companies

POSITIVE NEWS:
*China Sunsine
- Adopted dividend policy for FY17/18 of not less than 20% of net profit.
- Implied minimum yield of 2.5%, or DPS of 2¢/share, based on FY16 earnings.
- Management sees favourable financial prospects given the current economic outlook.

*SUTL Enterprise
- Signed MOU to provide marine consultancy services for a marina project in Boom Banyuwangi, East Java, Indonesia.
- Project expected to be completed in phases by 2020.
- Upon completion, SUTL will manage the marina under the ONE°15 brand.
- Currently trades at 18.1x forward P/E.

*IPS Securex
- Received a $10.4m variation order to a principal contract, including a $3.6m extension option, to provide maintenance support and equipment replacement services from Jun 2017 to Dec 2019.

*SIA
- Disclosed that flight frequency to Paris, France, will be increased from seven to 10 per week due to stronger demand.
- MKE last had a Hold rating with TP of $9.70.

NEUTRAL NEWS:
*Noble
- Reportedly approached by potential buyers for its US physical oil trading business but has not entered into discussions.
- A potential sale could help raise much needed capital for Noble, which remains engaged in crisis talks with lenders to roll over a US$2b credit facility expiring end Jun.
- Trading at distressed 0.073x P/B.

*SGX
- Launched Net Total Return futures for Taiwan, China, India and Indonesia.
- Contracts provide an exchange-listed solution to OTC equity index swaps in Asia.
- Currently trades at 22.5x forward P/E vs HKEx's 35.2x.