SG Market (20 Jun 17)

MARKET OVERVIEW
- Local shares could push higher after the Dow, S&P 500 and DAX rallied to record highs as large tech stocks reversed a spate of weakness.
- Play in tech manufacturers could return; proxies include Venture (Buy, TP: $13.35), AEM, UMS and Micro-Mechanics.
- Technically, the STI held its ground above the 20 and 50-dmas and appears to be forming a pennant pattern. A breakout of the topside resistance at 3,268 could signal the resumption of its uptrend. Immediate support lies at 3,228.

POSITIVE NEWS
*Noble Group
- Updated that the senior secured revolving credit facility at Noble Americas Corp will be extended by 120 days from 20 Jun 2017.
- Continues to be in talks with potential investors concerning the sale of an interest in the group or parts of its business.
- Discussions with bankers are continuing in relation to its revolving credit facility due May 2018. Deferred the coupon payment of its US$400m perpetual capital securities due on 26 Jun 2017.
- Expects to complete its strategic review once discussions with banks and potential investors become clearer, with results likely to include an asset realisation programme and further reduction in overhead expenses.

*SIA Engineering
- 49:51 JV with Pratt & Whitney, Eagle Services Asia, has been designated as an MRO facility in Singapore for one of two engines that power the Airbus A320neo aircraft.
- ESA will invest US$85m to equip the facility and services are expected to commence in 2019 to tap on growth opportunities arising from large orders of A320neos in the region.
- Trading at 24.1x FY3/18 consensus P/E with indicative dividend yield of 3.1%.

*Manulife US REIT
- Proposed private placement of 73.6m new units (11.7% of unit base) to institutional and other investors at US$0.817-0.842/unit.
- Bulk of the gross proceeds of up to US$80.5m (including 24.9m upsize option) is intended to part fund the US$115m acquisition of an 11-storey prime office building in New Jersey, US.
- The property will increase its total NLA by 25.9% to 2.25m sf and is underpinned by a long WALE of 9.2 years with built-in rental escalation and high occupancy of 98.9%.
- Post-deal, pro forma FY16 DPU will rise 2.3% to US$0.0363.

*Dyna-Mac
- Clinched two contracts from new customers worth a total provisional sum of $30m.
- First was awarded by Schlumberger for fabrication of a MEG reclamation unit, expected to be completed by 3Q18.
- Second is fabrication of a skid package for Papua New Guinea, expected to be completed by 2Q18.
- Group is loss-making and trades at 0.95x P/B.

*Sarine Tech
- Launched Advisor 7.0, the latest version of its industry-leading rough planning software tool.
- Updated software includes many new features that further revolutionise rough planning, helping diamond manufacturers to further streamline the planning process and optimise the polished yield.
- Trading at 24.3x trailing P/E and 5.1x P/B.

*Ley Choon
- Bagged five new contracts worth $51.4m for underground utility infrastructure and construction works.
- The contracts lift order book to $172.3m.

*Wong Fong Industries
- Collaborating with two European principals Bucher Industries and Europress to supply a range of waste management products and solutions in Singapore and Myanmar.
- Under the agreement, it will be the exclusive distributor for Bucher's sweeper vehicles for two years till May '19.
- The group was also appointed to develop and market waste compactors for Europress, with the first shipment to be delivered for field testing in Jul '17.

NEUTRAL NEWS
*China Flex Packaging
- Voluntary unconditional management buyout at $1.25/share or 0.53x P/B.
- Offeror and concert parties currently own 58.4% of the loss-making plastic film manufacturer.

*Nobel Design
- Extended the offer period of its mandatory unconditional offer at $0.51/share to 20 Jun.
- As at 19 Jun, offeror Gland Slam RF18 Investments has garnered 82.51% control.

*Eurosports Global
- 51:49 JV with S Agata to distribute automobiles, parts and related accessories in Indonesia.
- S Agata is owned by a third party with business interest in the property and services sector in Indonesia.
- The group is currently loss-making and trades at 5.2x P/B.

*TIH
- Updated that discussions on the potential share sale and change of control are still on-going.
- Trading at 13.5x trailing P/E and 1.03x P/B.

*Vallianz
- Issuing 156.3m new shares at $0.02 apiece, for settlement of $3.1m in trade payables.
- This will result in NAV/share falling to US4.07¢ from US4.17¢
- Implied P/B valuation of 0.3x.