SG Market (30 Jun 17)

MARKET OVERVIEW
- Slight profit-taking likely ahead of the weekend although downside may be supported by improving sentiment over banks and property counters.
- MAS maintains its 2017 GDP growth forecast of 1-3%, with strong likelihood that it would surpass last year's 2% expansion.
- Technically, STI broke clear of its 20 and 50-dms and is approaching top end of its pennant formation at 3,268. A breakout could take the index to next resistance at 3,355. Downside support remains at 3,190.

POSITIVE NEWS
*Keppel REIT
- Acquired a 50% stake in a prime freehold office building (717,000 sf) to be developed in central Melbourne for A$347.8m.
- Construction is due to start in 3Q17 with completion expected in 4Q19
- The 41-storey office tower will be fully leased to the Victoria state government for 30 years with fixed rental escalation and a market rent review after 15 years.
- It comes with a stable average NPI yield of 6.4% over the first 15 years of the lease and will extend portfolio WALE to nine years.
- This is an accretive purchase with minimal leasing risk, and will lift pro forma FY16 DPU by 1.1% to 6.44¢.

*Del Monte Pacific
- 4QFY17 core net profit rose 16.5% to US$17.2m (+16.5%) bringing FY17 core earnings to US$45.5m (+80.1%), beating street estimates.
- Quarter revenue grew 3.9% to US$545.2m (+3.9%) on broad-based growth across Americas (+1.5%), Asia (+5.1%) and Europe (+68.8%).
- Gross margin improved to 23.3% (+1.4ppt) on cost improvements but operating margin of 6.7% (-5.3ppt) was marred by higher selling and marketing expenses at its US unit and absence of net US$15.2m one-off gains.
- First and final DPS of US$0.0061 represents 50% dividend payout.

*CWT
- Updated that offeror HNA Belt and Road Investments has released its EGM circular to seek shareholder approval on the pre-conditional buyout offer at $2.33/share.
- The date for the EGM has not been set, with the long-stop date of the offer on 9 Sep '17.

*Nordic
- Secured several contracts worth a total of $9.6m, scheduled for completion through to 3Q20.
- Contracts were from both new and repeat customers, comprising MNCs, and companies in O&M, infrastructure and petrochemical industries.
- Trading at 11.2x trailing P/E, above the 5-year average of 8.1x.

NEUTRAL NEWS
*mm2 Asia
- StarHub has agreed to subscribe for 26.3m shares at $0.57 apiece in the proposed placement of 87.7m new shares.
- Post-placement, StarHub's stake will be lifted from 8.39% to 10.1%.

*shopper360
- Debut trading today following the placement of 38m shares (18m new shares, 20m vendor shares) at $0.29 apiece (7.4x FY16 P/E).
- Substantial placees include Asdew Acquisitions (5.3m shares), Island Asset Management (4.3m) and BTS Group Holdings (2.3m)
- Net proceeds of $3.4m will be used to fund business expansion.
- No fixed dividend policy, but it intends to distribute not less than 20% of earnings in FY17 and FY18.

*Raffles United
- Acquired a 2-storey freehold shophouse at 359 Jalan Besar for $5.2m.
- Store to be opened to sell bearings, seals, gearbox and electrical products.

*Miyoshi
- Acquired a freehold industrial property in Siang Cavite, Philippines for Php125m ($3.4m).
- The 13,600 sqm gfa property will be used to expand its light electric vehicle business in Philippines.

*Keppel Corp
- Broke ground at Keppel Marina East Desalination Plant.
- The facility will be able to produce 30m gallons of drinking water per day.
- Slated for completion by 2020.

*SGX
- Welcomed Shinhan Investment and Cathay Futures as new derivatives trading members.
- Total members lifted to 59.