Monday, July 31, 2017

SG Market (31 Jul 17)

- Property counters may draw interest on continued appetite for new sale launches and en-bloc tenders. MKE views UOL (Buy, TP $9.05) and City Dev (Buy, TP $12.05) as the best proxies for a home price rebound.
- Technically, STI faces topside resistance at 3,360 with downside support at 3,275.

*Mapletree Greater China Commercial Trust
- Flat 1QFY18 DPU of 1.851¢ was in line with estimates.
- Gross revenue and NPI grew to $88.9m (+4.6%) and $72m (+3.7%) from increased rental rates at all three properties.
- Distributable income of $51.9m (+1.3%) was dented by higher finance costs (+2.4%).
- Portfolio occupancy ticked higher to 98.8% (+0.2ppt q/q), while aggregate leverage stood at 39.4% (+0.2ppt q/q).
- NAV/unit slid 4.4% to $1.244 due to FX loss on investment properties due to weaker HKD and CNY against SGD.
- Last traded at 1Q annualised yield of 6.7% and 0.89x P/B.

*Frasers Logistics & Industrial Trust
- 3QFY17 DPU of 1.75¢ beat estimates and came in 6.7% above IPO forecast on interest savings and lower withholding tax.
- Gross revenue and adjusted NPI of A$40.2m and A$30.8m were largely in line with projections. Two leases at Adelaide Airport and Queensland were renewed during the quarter.
- Portfolio occupancy was stable at 99.3%, while aggregate leverage inched up 0.4ppts q/q to 29.3%.
- Recent acquisition of seven properties for A$169.3m is expected to strengthen its portfolio and contribute to future income.
- Trading at annualised yield of 8% and 1.2x P/B.

*Starhill Global REIT
- 4QFY17 DPU slumped 8.5% to 1.18¢, bringing FY17 DPU to 4.92¢ (-5%) or 3.5% shy of full-year estimate.
- Gross revenue and NPI stayed flat at $53.7m (+0.1%) and $41.4m (unch), as positive contributions from master leases were offset by income disruption from asset redevelopment (Plaza Arcade), weaker contribution from Wisma Atria Retail, lower occupancy for offices and loss of income from Japan divestment.
- Occupancy rose 0.4ppt q/q to 95.5%, while aggregate leverage was unchanged q/q at 35.3%.
- NAV/unit at $0.92.

*Raffles Medical
- 2Q17 net profit of $16.8m (+0.5%) took 1H17 earnings of $32.3m to 45% of full-year consensus estimate.
- Revenue crept up 1% to $120.1m on higher patient load despite softer-than-expected demand from foreign patients.
- However, operating margin of 16.3% (-0.5ppt) was squeezed by increased staff costs in preparation for opening of Raffles Hospital extension in 4Q17.
- Trades at 31x forward P/E. MKE last had a Buy with TP of $1.54.

*Fortune REIT
- 1H17 DPU grew 3% to HK25.52¢, in line with estimates and in tandem with 3.7% increase in distributable income to HK$487.3m.
- Revenue rose 2.5% to HK$1b on positive 10.7% rental reversion, while NPI climbed 3% to HK$727m on lower electricity consumption and one-off rebates.
- Portfolio occupancy held steady at 96.6% (FY16: 96.7%); aggregate leverage slipped to 28.4% (FY16: 29.5%).
- Trades at 5.2% annualised yield and 0.73x P/B.

- 2Q17 net profit slumped 33% to $74.7m as it took a fair value loss of $3m on investment properties, reversing from a $51.5m gain last year.
- Stripping out these effects, earnings would have been 29% higher at $77.7m.
- Revenue surged 53% to $361.9m on higher sales in Pollen & Bleu and progressive sales recognition for V on Shenton, while rental income from investment properties remained stable and hotel operations dipped 1%.
- Gross margin contracted 4ppt to 30%, while bottom line was further pressured by a surge in selling & distribution costs (+103%).
- NAV/share at $4.44.

*Sing Investments & Finance
- 2Q17 net profit almost doubled from a low base to $6m (+96.2%), mainly due to a $2.4m gain from sale of SG government bonds.
- While interest income slipped 5.4% on a lower loan balance, net interest income jumped 16.3% to $10.7m due to lower interest cost (-27%).
- Net interest margin widened 0.09ppt to 0.57%.
- Valued at 0.72x P/B, slightly above its 10-year historical mean and 40% discount to banking peers.

- Sold 89 units of its luxury Martin Modern development over the weekend, above initial plan to launch 50-60 units.
- Sale prices range from $2,009-2,500 psf, with total takings above $220m.
- The stock is valued at 0.65x P/B.

*Profit warnings:
- Declout
- Procurri
- New Toyo
- Global Palm Resources
- Gaylin

Friday, July 28, 2017

SG Market (28 Jul 17)

- The overstretched market could see some profit taking ahead of the weekend, particularly after the stellar outperformance of banks and property developers this week.
- Technically, STI faces topside resistance at 3.360 with downside support at 3,275.

- 2Q17 net profit of $845m (+5.5%) was in line with estimates.
- Net interest income rose 12% to $1.36b on higher loan growth (+7.4%) and NIM improvement to 1.75% (2Q16: 1.68%, 1Q17: 1.73%).
- Non-interest income nudged up 1.8% to $827m as increased fee income of $517m (+9%) from wealth management (+23.8%) was eroded by a 24% drop in net trading income to $164m.
- Provisioning rose 11.9% to $180m but was down 3.4% q/q.
- NPL ratio was stable at 1.5% (2Q16: 1.4%, 1Q17: 1.5%) with Tier 1 CAR at 13.8% (2Q16: 13.1%, 1Q17: 13.2%).
- Interim DPS unchanged at 35¢.
- Trades at 1.25x P/B.

- 1QFY18 net profit fell 8.4% to $235.1m in absence of disposal gain from SIA Engineering, but still reached 59% of FY18 consensus estimate.
- Revenue of $3.86b (+5.6%) was boosted by improved pax load factor of 80.2% (+3.6ppt) although yield (-3.1%) remained weak, while cargo was lifted by better freight carriage (+6.9%) and yield (+4.8%).
- At the operating level, profit jumped 45.6% to $281m as margin expanded 2ppt to 7.3% on smaller increase in net fuel costs (+3.4%). But operating profit for SilkAir and Scoot/Tigerair declined due to expanded capacity that led to higher costs.
- Flags uncertain economic climate and overcapacity in key markets will continue to dampen yield performance.
- Last traded at 0.91x P/B.

*Sembcorp Marine
- 2Q17 net profit plunged 51.2% to $5.6m, leaving 1H17 earnings at 45% of full year estimate.
- Revenue slipped 27.8% to $655.5m on continued weakness in rigbuilding and offshore platforms.
- Operating margin contracted to 4.3% (-1.6ppt), squeezed by costs incurred for a floater project and increased depreciation for new Tuas yard.
- Interim DPS cut to 1¢ from 1.5¢.
- Highlighted that offshore day rates appear to have stabilised and utilisation levels have begun to improve.

- Turned in 4QFY17 net profit of $85.2m (+10.9%) in absence of $6m impairment loss, though FY17 earnings fell 2.7% to $339.7m, within expectations.
- Stronger 4Q revenue of $207.7m (+4.9%) was mainly driven by derivatives (+10.2%), with equities & fixed income (+0.7%) relatively flat.
- Operating margin improved to 47.8% (+1.5ppt) on lower processing and royalty fees and technology expenses.
- Final DPS maintained at 13¢, bringing FY17 payout to 28¢.
- Trades at 23.8x FY17 P/E.

*Ascendas REIT
- 1QFY18 DPU of 4.049¢ (+4.3%) met expectations, lifted by capital distribution of 0.227¢.
- Revenue and NPI grew 2.7% and 2.6% to $213.3m and $153.4m, respectively, on full quarter distributions from three Science Park Buildings acquired in Feb '17, and 52 Fox Drive in Melbourne purchased in Apr '17.
- Occupancy improved to 91.6% (+1.4ppts q/q), while aggregate leverage held steady at 33.9% (+0.1ppts).
- Trades at 6% annualised yield and 1.3x P/B.

*Mapletree Commercial Trust
- 1QFY18 results met expectations, as DPU jumped 10% to 2.23¢ despite a larger unit base (+34.8%).
- Gross revenue and NPI surged to $107.8m (+46.9%) and $84.2m (+49.6%) respectively, boosted by acquisition of Mapletree Business City I and improved takings from VivoCity and Mapletree Anson.
- Portfolio occupancy remained stable at 98.1% (+0.2ppt q/q), while aggregate leverage held at 36.4% (+0.1ppt q/q).
- Last traded at 2Q annualised yield of 5.4% and 1.19x P/B.

*Frasers Hospitality Trust
- 3QFY17 DPS fell 18.2% to 1.2374¢, following the 34% expansion in unit base post-rights issue in Sep '16.
- This brought 9MFY17 DPU of 3.7695¢ (-17.4%), or 74% of full year estimate.
- 3Q revenue rose 22.6% to $38.9m, boosted by the addition of Novotel Melbourne on Collins, as well as better performance of Sydney, UK and Malaysia properties, while NPI rose at a slower clip to $29.3m (+8.5%), crimped by higher property expenses.
- Aggregate leverage inched up 0.7ppt to 34.1%.
- NAV/unit at $0.7492.

*CDL Hospitality
- 2Q17 in line; DPS slipped 3.7% to 2.08¢ on the enlarged unit base (+17%) following the rights issue.
- Revenue and NPI rose to $47.8m (+12.7%) and $34.9m (+11.4%), mainly from new contribution from recently-acquired The Lowry Hotel in UK, and improved NPI particularly from New Zealand (+94%), as well as Singapore (+4.9%) and Australia (+3.8%).
- Singapore occupancy inched up to 86.2% (2Q16: 83.5%) although RevPAR slipped to $155 (2Q16: $157).
- Aggregate leverage rose 1.9ppt to 38.7%.
- NAV/unit at $1.5454.

Thursday, July 27, 2017

SG Market (27 Jul 17)

- Banks will come into focus following the stellar 2Q results from OCBC. Currently, DBS has the cheapest valuation with 1.21x P/B, followed by UOB (1.26x) and OCBC (1.29x).
- Technically, the STI could break upwards to test its next resistance at 3,360. Underlying support is at 3,275.

- 2Q17 net profit of $1.08b (+22%) trumped estimates as non-interest income surged 34% to $1.05b, driven by life assurance (+123%), wealth management (+45%), investment banking (+72%) as well as other income (+34%) .
- Net interest income climbed 7% to $1.35b on 11% loan growth but NIM was compressed by 3bps to 1.65% (1Q17: 1.62%).
- Provisioning jumped 93% to $169m with NPL ratio at 1.3% (2Q16: 1.1%, 1Q17: 1.3%) and Tier 1 CAR at 1.3%.
- Interim DPS unchanged at $0.18.
- NAV/share of $8.73 translates to 1.29x P/B.

- 2Q17 DPU crept 0.4% higher to 2.62¢, in line with estimates, as distributable income of $23.3m (+4.3%) was diluted by an enlarged unit base.
- Revenue jumped 14.5% to Rmb59m mainly on contribution from recently-acquired CapitaMall Xinnan in Sep '16, while NPI rose at a slower pace to Rmb40m (+12.6%) due to additional property tax arising from the change in tax basis in China.
- Occupancy rate was stable at 96.2%, while aggregate leverage narrowed to 35.3% (-1.1ppt q/q).
- NAV/unit of $1.58.

*China Aviation Oil
- 2Q17 as net profit rose 4.1% to US$24.6m, taking H17 earnings to $49.9m (+4.4%) or 50.5% of full year consensus estimate,
- Revenue jumped 21.5% to US$3.67b primarily due to higher oil prices as total supply and volume traded fell 4% to 8.39m tonnes.
- Volume for middle distillates rose 2.1% to 4.98m, of which jet fuel accounted for 3.99m tonnes (+7.3%) but that for other oil products ditched 11.7% to 3.41m tonnes.
- Gross margin dipped to 0.29% (2Q16: 0.33%) on lower optimisation gains from jet fuel trading but other income soared 276% to US$1.2m from higher bank interest income.
- Share of profits from associates declined 5.5% to US$18.3m due to lower contributions from Pudong (US$16.1m), which was attributable to a weaker CNY to the USD.
- NAV/share at US$0.788.

*Lian Beng
- 4QFY17 net profit climbed 5.3% to $31.9m, bringing full-year earnings to $53.2m (-48.3%).
- FY17 revenue tumbled 36.8% to $281.7m, mainly dragged by construction (-70.3% to $103.5m) and ready-mixed concrete (-21.1% to $56.2m), but was shored by property development ($87.8m, FY16: $0.2m) and investment ($10.2m, FY16: $1.1m).
- Gross margin expanded 14ppt to 26.6% on profit recognition upon TOP of 65% owned Mandai Foodlink industrial development project.
- Bottom line was hurt by a significant drop in income from associate (-83.6% to $10.2m) and JV (-85.2% to $5.6m) following completion of development projects in FY16.
- Final DPS was raised to 1.25¢ (FY16: 1¢) but there was no special dividend (FY16: 1¢), bringing FY17 payout to 2.25¢ (FY16: 3¢).
- NAV/share at $1.172.

*Samudera Shipping
- 2Q17 net profit rose 7.9% to US$2m in tandem with higher revenue of US$71.2m (+7.4%).
- Top line saw improvement in container shipping (+9.9%) from increased volume, but outweighed by weakness in bulk & tanker division (-10.6%).
- Gross margin was relatively stable at 7.4% (-0.1ppt).
- Bottom line was lifted by lower marketing (-15.5%) and admin (-9.6%) expenses.
- NAV/share at US$0.4461.

*Oxley/Lian Beng/KSH Holdings
- 40:20:20:20 consortium with Apricot Capital will acquire HUDB site Serangoon Ville for $499m in a collective sale.
- The consortium intends to apply for leasehold extension for the 27,583.9 sqm site to 99 years for redevelopment.

*Noble Group
- Flags a whopping 2Q17 net loss of US$1.7-1.8b on reduced risk positions amid credit constraints.
- This would cut its NAV/share by almost half to $2.13, still putting it on distressed P/B of 0.27x.
- Fire sale of its assets continues with the group selling Noble Americas Gas & Power for US$248m and seeking buyers for its oil liquids business to pare down debt over the next two years.
- Hard-pressed to turn profitable by 2019.

*ST Engineering
- 50:50 JVCo with Marubeni has set up two new SPVs in Ireland and the UK.
- The JVCo will support its engine leasing business.

*CDL Hospitality Trust
- Disclosed that its 20-for-100 rights issue was 2.2x oversubscribed.
- The new units are expected to be credited and commence trading on 2 Aug '17.

Wednesday, July 26, 2017

SG Market (26 Jul 17)

*Frasers Centrepoint
- North Point Shopping Centre is scheduled to complete the AEI by Sep '17, and is on track to achieve 90% occupancy when it opens in 4Q17.
- It will be renamed as North Wing, and be integrated into Northpoint City, a 1.33m sf integrated development.
- Development of the remaining retail space South Wing at Northpoint City is scheduled to be ready by 4Q17.
- 920-unit North Park Residences is 87% sold to date, and is expected to be ready for occupation in 4Q18.
- Community club and bus interchange and Northpoint City scheduled to be operational by 2018 and 2019.

*Vibrant Group
- 80% owned Fervent Industrial Development Suzhou achieved 92% occupancy for six blocks of factories at its Phase 1 Fervent High Tech Industrial Park.
- Fervent is in advance discussion with a potential tenant to lease the remaining units out of the total 58,024sqm factory space.
- Majority of committed leases are from MNCs with tenor of 5 to 10 years.
- Fervent also secured a 10-year lease contract to design and build a customised BTS factory with lease area of 13,122sqm on an adjacent 50-year leasehold land with 76,533sqm, which it acquired earlier this year.

- Acquiring In-Line Group, which is headquartered in UK, and offers design,engineering, assembly and testing services for flow control valves for upstream O&G industry.
- Total consideration is up to £3m, implying a P/B of 10.3x.
- The deal is expected to increase the scale and scope of the group's core oilfield operations.

*SP Corp
- Divesting certain assets, stocks, receivables, business contracts and operating leases of its tyre distribution unit for $2.2m, or 1.57x P/B.
- The purchaser GTI Holdings is an associate co. of Michelle Liem and William Liem. Michelle Liem has substantial deemed interest in the group through her stake in group's major shareholder Tuan Sing.
- The disposal came after the tyre distribution unit incurred losses for the last three years.

- Disclosed that the controlling shareholder has been approached by third parties on a possible transaction.

- To record a substantial loss in 2Q17 of US$3-4m (1Q17: US$2.1m profit, 2Q16: US$44.6m profit) due to sharply lower swine ASPs in Vietnam which has since fallen below operating costs.
- However, core net profit excluding FX is expected to remain positive (1Q17: US$7.3m, 2Q16: US$51.9m).
- Results slated to be released after market on 27 Jul.

- Expects significantly lower net profit for 2Q17, due to drop in revenue from lower ore grade.
- Results slated to be released on or before 14 Aug.

- Cancelled the Justin Bieber Purpose World Tour concert in Singapore.
- The group will need to process refund for tickets purchased.

- Set up a US$150m venture capital (VC) unit to invest in promising technology start-ups and early stage companies.
- Areas of interest for the VC include robotics, autonomous tech, data analytics and cyber security.
- Additionally, STE will set up an Open Innovation Lab in Singapore which will offer a collaborative platform, supported by a dedicated applied engineering team and advanced equipment.

- Formed a 30:60:10 JV with Yokomori Mfg and Marubeni-Itochu Steel to produce and sell steel staircases in Singapore.

Tuesday, July 25, 2017

SG Market (25 Jul 17)

- The market will remain range-bound ahead of a slew of results from several blue-chips in later part of the week.
- Oil-related counters may get a lift from firmer oil prices after oil producers called for stricter adherence to output cuts, which included Nigeria, at a Russian meeting.
- Technically, the STI is overbought and could pull back to underlying support at 3,275. Topside resistance is at 3,360.

*Mapletree Logistics Trust
- 1QFY18 DPU grew 2% to 1.887¢, meeting expectations.
- Revenue and NPI rose 7% and 7.5% to $95.8m and $80.8m from stronger performance of its Singapore and HK portfolios and accretive acquisitions completed last year.
- Out of 157,900 sqm of leases due for expiry, 93% were successfully renewed during the quarter.
- Occupancy stood at 95.5% (-0.8ppts q/q) with WALE of 3.9 years, while aggregate leverage inched up 0.5ppt q/q to 39%.
- Trades at 1Q annualised yield of 6.2% and 1.2x P/B.

*Frasers Centrepoint Trust
- 3QFY17 DPU fell 1.3% to 3¢ (-1.3%), in line with estimates.
- The 3.3% drop in revenue to $43.6m was dragged by ongoing refurbishment work at Northpoint mall and challenging retail environment, while NPI slipped 1.3% to $30.8m on lower property expenses (-7.8%).
- Occupancy was flat at 87.1% (-0.1ppt q/q), while aggregate leverage stood at 30% (+0.6ppts q/q).
- Trades at 3Q annualised yield of 5.6% and 1.1x P/B.

*Frasers Commercial Trust
- Flat 3QFY17 DPU of 2.4¢ was in line with estimates.
- Both revenue and NPI dipped 0.6% and 0.8% to $38.3m and $27.9m, respectively, owing to lower occupancy at Alexandra Technopark (under renovation) and China Square Central in Singapore but its three Australian properties put up a better showing from the stronger AUD.
- Portfolio occupancy improved to 92.6% (+0.8ppt q/q), while aggregate leverage held steady at 35.9%.
- Trades at 3Q annualised yield of 6.7% and 0.94x P/B.

*Parkway Life REIT
- 2Q17 DPU of 3.32¢ (+10.3%) included a 0.22¢ capital distribution on divestment gains and was in line with estimates.
- Gross revenue and NPI improved to $27.7m (+1.1%) and $25.9m (+1.4%) on higher rentals from its Singapore properties, although income from its Japanese portfolio was eroded JPY depreciation.
- Aggregate leverage rose 1.1ppt to 37.4%.
- Trades at 2Q annualised yield of 5% and 1.55x P/B.

- 2Q17 net loss widened to NOK69m (2Q16: NOK53m) dragging 1H17 loss to $94m (+488%), forming 70% of full year estimate.
- Revenue slipped 4% to NOK2.13b on reduced activity, especially at the Norwegian yards, as well as cessation of operations in Vard NiterĂ³i in 3Q16.
- EBITDA margin improved to 2.8% from 0.5% last year.
- Order book stood at NOK12.88b (1Q17: NOK12.98b).
- NAV/share at $0.31.

*Great Eastern
- 2Q17 net profit surged 173% to $279.5m, boosted by profit from life assurance of $240.4m (+123%). This brought 1H17 earnings to $497.4m or 69% of full year estimate.
- In the quarter, total weighted new sales rose 6% to $255.7m, underpinned by continued growth in SG and MY.
- New business embedded value grew 17% to $121.1m with higher margin of 47.4% (2Q16: 42.7%, 1Q17: 36.5%).
- NAV/share at $14.80

*Frasers Centrepoint
- Developing $190m new commercial facilities in The Key Industrial Park in the South East and West Park Industrial Estate in Melbourne.
- Six tenants have committed 10-year leases at the two properties.

*First Resources
- 2Q17 FFB harvest improved 15% to 613,597 tonnes, with yield rising 0.1ppt to 3.5 tonnes/ha.
- CPO production rose 13.6% to 143,777 tonnes, despite a dip in extraction rate to 22.2% (-0.3ppt).
- MKE last had a Hold with TP of $1.97.

*Lian Beng/KSH
- 80:20 JVCo Goldprime Realty is divesting 596 St Kilda Road in Melbourne for A$34m.
- The freehold property with 19 housing units sits on land area of 1,803.6 sqm.

- Appointed by IMC Live Group China to co-promote Angela Chang's world tour between Sep '17 and Jan '18.
- This will take it to 10 cities in Beijing, Xian, Dalian, Guiyang, Suzhou, Kunming, Nanchang, Xiamen, Shenzhen and Kuala Lumpur.

- Management expects higher 2Q17 revenue and net profit due to higher sales volume and ASP of phosphorus, following resumption of full production in the quarter.
- 2Q17 results slated to be released on or before 14 Aug '17.

- Secured three new infrastructure contracts worth Rmb308m in China, lifting order book to Rmb2.6b.
- The contracts are mainly expected to be fulfilled over the next 36 months, with the exception of one that is due by end '21.

*Alliance Mineral
- Obtained all environmental approvals required to construct and operate a 1.2mtpa dense media separation plant at Bald Hill Mine in Western Australia.
- The approvals also allow for mining and processing of lithium and tantalum to commence at Bald Hill.

Monday, July 24, 2017

SG Market (24 Jul 17)

- Market may head into some volatility ahead of FOMC policy decision and key corporate results in later half of the week from SIA, Sembcorp Marine, AREIT, OCBC and UOB.
- Technically, the STI is overbought and could pull back to underlying support at 3,275. Topside resistance is at 3,360.

- New executive condominium Hundred Palm Residences met an overwhelming response over the weekend with all 531 units sold out within seven hours of launch, fetching an average price of $826 psf..
- This raises hopes that the property market has regained its footing and reinforces MKE's view of a potential rebound in home prices.
- Positive on developers with UOL (Buy, TP $9.05) and City Dev (Buy, TP $12.05) as the best proxy plays.

- 1QFY18 results missed expectations despite turning in higher core net profit of $57.3m (+3.2%) from increased associate/JV income (+27%).
- Revenue crept up 0.5% to $426.5m as improved gateway services (+5.1%) was offset by weakness in food solutions (-2.9%).
- Operating margin narrowed 0.3ppt to 12.5% on higher licensing fees (+24.9%) and others (+6.3%) comprising fuel, marketing and equipment maintenance.
- MKE last had a Hold with TP of $4.90.

*Cache Logistics Trust
- 2Q17 DPU fell 9.5% to 1.8¢ as distributable income dropped 8.8% to $16.3m owing to lower income from operations and legal fees arising from ongoing proceedings at 51 Alps Ave.
- Gross revenue dipped 0.7% to $27.9m following divestment of Cache Changi Districentre 3 in Jan and conversion of 40 Alps Ave from master lease to multi-tenancy as well as lower income from 51 Alps Ave due to legal issues. This was partially mitigated by better contribution from DHL Supply Chain ARC and Cache Cold Centre, both of which enjoyed higher occupancies.
- NPI declined 4% to $21.6m on higher property expenses.
- Portfolio occupancy rose 1.1ppt q/q to 98.3%, while aggregate leverage ticked 0.3ppt higher to 43.4%.
- Trading at 2Q annualised yield of 7.6% and 1.22x P/B.

- Swung to 2Q17 net profit of $1.2m from $5.3m loss a year ago, mainly due to a $4.2m remeasurement gain.
- Revenue inched 1% higher to $22.5m amid a challenging real estate market in Singapore but supported by overseas markets as well as maiden sales from Squire Mech, which became a wholly-owned subsidiary in Aug 2016.
- Contributions from RSP India and Malaysia also turned around from a loss last year.
- NAV/share was almost flat at 8.63¢.

- Acquiring an 80% stake in leading US accommodation provider Synergy Global Housing for US$33.7m ($46.7m) or 7.2x P/B.
- The deal will triple Ascott's US serviced residence portfolio to 3,000 and expand its global footprint to 70,000 units.

*Jasper Investments
- Appointed as the project manager for logistics and transportation of quarry dust for the Hong Kong International Airport Third Runway System.
- The one year contract, with the option for extension of an additional year, is expected to commence in Aug/ Sep.

*Mermaid Maritime
- Awarded two subsea contracts worth US$4.6m.
- One contract is from a new customer in the Middle East and is expected to commence in 3Q17, while the other came from an existing Indonesian client, and will commence in 4Q17.

*SUTL Enterprise
- 60:40 JV with UEM Land to construct, develop and manage a marina, marina club, hotel, recreation centre and other ancillary facilities.

- Credit ratings agency Moody's downgraded its senior unsecured ratings to A1 from Aa3, due to rising absolute debt levels.
- Outlook remains stable.

*mm2 Asia
- Proposed deal to acquire 50% stake in Golden Village Cinemas Singapore for $184.3m failed to obtain one of the conditions.
- The follows after Golden Screen, the owner of the other 50% stake rejected the deal.

*CSE Global
- Will pay US$12m as settlement for a potential civil liability to U.S. Department of the Treasury's Office of Foreign Assets Control.
- The alleged violations arose from payment in USD for rendering non-US goods to Iran.
- Consequently, CSE Global is expected to recognise a 2Q17 net loss arising from the one-off charge.

*Hatten Land
- Launched SATORI, a wellness-themed mixed development in Malacca, Malaysia, with estimated GDV of RM300m.
- The development has gfa of 570,400 sf, consisting 192 serviced suites, retail mall (85,250 sf), 336-room hotel and 50 other facilities.

- Among 49 companies that were awarded the standing offer agreement for quality professional services 4.
- The award allows Azeus to tender for various Hong Kong government IT professional services contracts of up to HK$15m in two years up till Jul '18.
- Group secured the offer agreement for the fifth consecutive term.

Friday, July 21, 2017

SG Market (21 Jul 17)

- Market may give way to light profit-taking to take stock of the recent rally and mixed set of 2Q results so far.
- Technically, STI could see further downside following the bearish engulfing candlestick yesterday, with next support level at 3,275. Topside resistance is at 3,360.

*Union Gas
- IPO of 60m shares at $0.25 each, comprising 30m new shares and 30m vendor shares (2% public, 98% private), was 7.1x subscribed.
- Net proceeds of $5.7m intended for acquisition of LPG dealers (70%), diversification into the supply and retail of piped natural gas (17.5%) and working capital (12.5%).
- Trading debut for the fuel products supplier at 9am today.

*Darco Water
- Formed 51:49 JV with Northern Ecological Environment Municipal Engineering Technology to develop environmental protection related projects.
- JVCo will undertake public-private-partnership and BOT projects in Xiongan New Area, Hebei, China.
- Separately, the group clinched a 15,000m3 BOT water treatment project in Ben Tre, Vietnam, with 50-year concession period.
- The project is estimated to cost US$11.7m and construction is expected to complete within 18 months.

*Jiutian Chemical
- Issued positive profit alert for 1H17 results.
- Expect to report a jump in revenue and net profit due to higher sales volume and ASP.

*Keppel Corp
- 2Q17 net profit sank 22.1% to $160.3m as offshore & marine barely broke even for the second consecutive quarter. This brought 1H17 earnings to 48% of full-year consensus estimate.
- 2Q revenue of $1.55b (-4.4%) was propped by property (+16%) and infrastructure (+29%), which replaced O&M (-38%) as the top revenue generator as its yards suffered from lower workload and project deferments.
- Bottom line was weighed by fair value loss of $48.4m arising from KrisEnergy warrants, albeit pared by $31.2m increase in associate contribution from investments.
- Only $300m of new orders were secured in 1H17, with order book shrinking further to $3.4b.
- Interim DPS maintained at 8¢.

- Dived into 3QFY17 net loss of US$63.3m (3QFY16: US$4.1m profit) due to a massive US$45.1m provision amid the depressed O&G services sector.
- Revenue plunged 62% to US$30.9m in absence of contribution from construction of seven self-elevating units that have been completed.
- Recorded gross loss from project cost overruns and lower margins in a competitive market environment.
- NAV/share slumped 28.9% to US$0.478.

- Expects 2Q17 net loss due to the weak Singapore power market.
- Results slated to be released on or before 14 Aug.

- Bank of America is joining Citigroup and Morgan Stanley in steering away from HNA and its deals on growing concerns about the group's debt levels and ownership structure.
- The move could jeopardise HNA's pre-conditional offer for the company at $2.33/share, which has a long-stop date of 9 Sep.
- Stock is currently trading at $2.13.

- Profit warning for 2Q17 due to:
1) Losses from newly acquired German subsidiary Almex
2) Lower revenue from ATM safes due to trend towards e-payment
3) Rising costs of steel and argon weilding gas

*CapitaLand Mall Trust
- 2Q17 DPU inched 0.4% higher to 2.75¢, meeting expectations.
- Revenue slipped 1.3% to $168.6m on cessation of operations at Funan, while NPI rose 1.2% to $117.5m (+1.2%) on lower utilities and maintenance expenses.
- 1H shopper traffic crept up 0.4%, while tenant sales held steady.
- Portfolio occupancy improved 0.9ppt q/q to 98.6%, while aggregate leverage narrowed to 34.7% (-0.6ppt q/q).
- Trades at 1H annualised yield of 5.5% and 1.03x P/B.

*HC Surgical Specialists
- FY17 net profit plunged 52.2% to $1.3m mainly due to IPO expenses of $1.3m.
- Excluding IPO expenses and other one-offs, core earnings declined 14.9% to $2.8m on higher opex from business expansion.
- Revenue climbed 19.8% to $9.5m following recent acquisitions of CTK Tan Surgery (Sep '16), Lai Bei (Nov '16) and Julian Ong Endoscopy and Surgery (Apr '17).
- Declared final DPS of 0.7¢, bringing FY17 dividend payout to 2.5¢ (FY16: nil).

Thursday, July 20, 2017

SG Market (20 Jul 17)

- Market may push higher on the back of record close on Wall Street and resurgence in tech stocks although technical indicators are approaching overbought levels following the recent run-up.
- Topside resistance for STI is now seen at 3,360 with downside support at 3,275.

*ST Engineering
- Electronics arm secured $490m worth of contracts in 2Q17 (1Q17: $464m).
- These comprise work in rail electronics & intelligent transportation ($131m), satelite & broadband communications ($57m) and advanced electronics and ICT solutions ($302m).
- Trading at 21.9x forward P/E, at the upper end of its 13-24x historical range.

*Soo Kee
- Proposed 55:45 JV with major Chinese gold jewellery firm Global Crown Group.
- JVCo to sell gold and diamond products under Soo Kee's "Love & Co." trademark in HK and China.
- Targets to establish 550 points-of-sales and achieve revenue of Rmb2b by the end of its fifth year of operation.
- Initial investment for the JVCo will be Rmb50m ($10.2m).

*Addvalue Tech
- Wideye iFleetONE terminal approved by the Thai authorities for vessel tracking and management to combat illegal fishing.
- The group will commence delivery of the terminals in batches to support its partners' plan to deploy 200 terminals by end-2017.

*Hutchison Port Holdings Trust
- 2Q17 results came in below estimates as net profit slid 21.5% to HK$269.1m, weighed by associate loss of HK$24.9m (mainly at newly acquired Huizhou Int'l Container Terminals), higher finance costs (+18%) and taxes (+16%).
- Revenue rose 2.2% to HK$2.89b on higher container throughput in HK terminals (+3.9%) and Yantian port (+10%), but was pared by lower average revenue per TEU.
- Interim DPS slashed to HK$0.095 (1H16: HK$0.14).
- NAV/unit at HK$4.62.

*Keppel T&T
- 2Q17 net profit tumbled 45.3% to $10.3m, missing expectations on higher operating expenses (+4%) and lower M1 earnings.
- Revenue slipped 5.1% to $47.6m following stake disposals in Keppel DC Singapore 3 and Keppel DC REIT Management, as well as weaker logistics contribution.
- Management remains bearish on the logistics business as volumes and margins continue to be pressured.
- Going forward, it is pursuing more data centre development and acquisitions in collaboration with Alpha Data Centre Fund.

*Nam Cheong
- Temporarily cease debt repayments as the group undertakes a proposed restructuring.
- Accordingly, it will not be making next coupon payment due on 23 Jul wrt the $75m 6.5% notes due 2018.
- Appointed PWC to as financial advisor on restructuring options.
- Has outstanding debt, comprising bank loans and notes, of RM1.84b as of Mar '17, elevating its net gearing to 1.2x
- Trades at liquidation P/B of 0.11x

*Ascott REIT
- 2Q17 results in line even as DPU fell 14% to 1.84¢ on an enlarged unit base (+26%) following a placement in Mar '16.
- Revenue rose 4% to $123.6m, from new acquisitions, Sheraton Tribeca New York Hotel and two serviced residence properties in Germany.
- On same store basis, RevPAU improved 2% on recovery in Belgium, Philippines and Vietnam.
- Aggregate leverage reduced to 32.4% (-8.7ppt q/q) post-rights issue.
- Trading at 1H17 annualised yield of 5.7% and 0.96x P/B.

*Keppel T&T
- 70% owned Keppel Data Centres Holding signed two MOUs to explore innovative space usage for data centres.
- First MOU with JTC to assess feasibility of deploying data centres underground.
- Second with IMDA and Huawei to explore feasibility of deploying a high-rise green data centre with energy efficient technologies.

Wednesday, July 19, 2017

SG Market (19 Jul 17)

- Market may take a breather to consolidate its big move after recent corporate buyouts with attention now focused on 2Q earnings releases.
- Topside resistance for STI is now seen at 3,360 with downside support at 3,275.

*ST Engineering
- Aerospace arm clinched new contracts worth about $650m in 2Q17 (1Q17: $1.11b).
- Scope of work includes heavy airframe & engine maintenance, component repair & overhaul, freighter conversion.
- Trading at 21.7x forward P/E, above its 7-year historical average of 19.1x.

*Manufacturing Integration Tech
- Issued positive profit guidance for 1H17, after the group returned to profitability from its loss position in FY16.
- 1H17 sales expected to match FY16 turnover, buoyed by upturn in global semiconductor industry and impending new mobile handset introductions by industry leaders.
- 1H17 results scheduled for release on or around 4 Aug.

- Entered non-binding term sheet with controlling shareholder Peter Lim (45.4% stake) to purchase healthcare firm Sasteria for up to $1.9b in all share deal.
- The proposed acquisition will be financed via issue 25.33b shares at 7.5¢ each. Sasteria owns and operates Thomson Medical Centre and has a 51.93% stake in KLSE-listed TMC Life Sciences.
- Prior to completion of the acquisition, Sasteria will acquire an additional 18.43% stake in TMC Life Sciences and is evaluating a possible acquisition of one or more medical practices to expand its offerings.
- Upon completion, the group will undertake a 2-for-1 bonus warrants issue with exercise price of 9¢, plus 1 piggyback warrant (exercise price: 12¢) for every bonus warrant exercised.

*mm2 Asia
- Proposed issue of up to $93m 3-year convertible debt securities at 2% per annum by wholly-owned MM Connect.
- MM Connect intends to use proceeds to fund its $184.3m acquisition of the 50% stake in Golden Village Cinema business in Singapore.
- The notes may be converted into shares, if an IPO is launched, at a 15% discount to listing price.

*Netlink NBN Trust
- IPO of 2.898b units was twice subscribed.
- Debut trading for the fibre broadband infrastructure provider at 3pm today.
- At IPO price of $0.81, Netlink offers FY18/19 yield of 5.43%/5.73%.

- 2Q17 DPU of 2.27¢ (+3.2%) was in line with estimates.
- Post-acquisition of the remaining 60% stake in CapitaGreen in Sep '16, gross revenue surged 29.5% to $87.5m, while NPI rose at a slower pace to $69.1m (+14.1%) due to consolidation of CapitaGreen's expenses.
- Portfolio occupancy dipped slightly to 97.6% (-0.2ppt q/q), while aggregate leverage narrowed to 35.2% (-2.9ppt q/q).
- Management guided that pressure on rental revenue is expected to continue in 2018 given relatively high expiring rent base.
- NAV/unit rose 5.7% q/q to $1.85.

- Introducing three adjustments to equities market structure as below:
1) Equities market will break from 12pm to 1pm.
2) Minimum bid size for securities priced between $1.00 and $1.99 will be increased to $0.01 from $0.005.
3) Forced order range will be widened to +/- 30 ticks from +/- 20 ticks.
- The adjustments will be effective from 13 Nov '17.

*Keppel T&T
- Proposed transfer of Keppel DC Singapore 4 (KDC4) at $170m to 70:30 JVCo Thorium DC, held between Alpha Investment Partners and Keppel Data Centres.
- Keppel Data Centres is a 70:30 JV between Keppel T&T and Keppel Land.
- Post-transaction, Keppel T&T's stake in KDC4 will decrease from 70% to 40.7%.
- Pro forma FY16 NTA/share will remain unchanged at $1.43, while EPS increased 2.1% to $0.193.

- Expect negative reaction after major shareholders abandoned the strategic review of their stakes and weak 2Q results.
- While 2Q17 results came in line, net profit plunged 20.8% to $32.5m on higher opex (+9.9%) due to higher handset (+19.7%) and wholesale costs of fixed services (+14.4%).
- Although service revenue was stable at $204.7m (+0.4%), ARPU slumped across the board and customer acquisition cost jumped 15.2%.
- Consequently, EBITDA margin compressed to 35.9% (2Q16: 40.3%, 1Q17: 39.2%).
- Interim DPS was cut further to 5.2¢ from 7¢.
- Management forecast lower FY17 earnings as competition heats up with the impending entry of another mobile player.

*Keppel REIT
- 2Q17 results met the low end of expectations, as DPU slid to 1.42¢ (-11.8%) on absence of 0.15¢ distribution of other gains.
- 2Q17 distributable income fell to $47.4m (-9.7%), partially due to lower rental support (-16.4%), interest income (-24.4%) and JV contributions (-9.4%).
- Both revenue and NPI slipped 1.7% to $39.8m and $31.9m respectively, weighed by weakness in Bugis Junction Towers.
- Portfolio committed occupancy edged up 0.4ppt q/q to 99.8%, with WALE of 6 years.
- Trading at FY17e yield of 5.3% and 0.83x P/B.
- Maybank KE downgrades to Hold from Buy, with unchanged TP of $1.18, after a 18% rally YTD.

Tuesday, July 18, 2017

SG Market (18 Jul 17)

- Market will likely stay range-bound ahead of corporate 2Q results.
- Technically, STI remains bounded within its 3,190-3,275 trading range.

*Keppel DC REIT
- 2Q17 DPU of 1.74¢ (+4.2%) met expectation despite a larger unit base (+27.6%).
- Surge in revenue to $34.5m (+38.8%) and NPI to $31.4m (+41.9%) was led by recent acquisitions of Milan DC, Cardiff DC, and 90% stake in KDC SGP 3.
- However, portfolio occupancy dipped 2ppt to 93.1%, while aggregate leverage ticked 0.2ppt lower to 27.7%.
- Trading at 2Q annualised yield of 5.3% and 1.36x P/B.

- Positive Jun operating stats, with improved group passenger load factor of 82.1% (+4.6ppt), as traffic (+8.6%) outpaced capacity growth (+2.7%).
- Load factor for parent on routes to Americas (+5.1ppt), Europe (+7.5ppt), West Asia and Africa (+9.6ppt) improved the most.
- Load factors at subsidiaries SilkAir (+5.7ppt to 73.8%) and budget carrier (+2.3ppt to 85.8%) were also better.
- Further, cargo load factor grew 4.5ppt to 65.6%.

- Acquiring US-based autonomous mobile robots manufacturer Aethon for US$36m.
- The robots are capable of delivering goods such as materials, meals, medication, etc, up to a load of 635kg per robot.
- Globally, 164 units have been deployed in the industrial, healthcare, hospitality and other commercial environments.

- Signed build-to-suit agreement with Adidas to develop their largest distribution centre in Asia.
- The 83,000 sqm facility in Suzhou, Eastern China will support strong demand from the growing domestic consumption.

- Awarded contract worth Rmb65.9m from Qinghai Damei Coal Industry to provide EPC services.
- Project located in Ganhe Industrial Park Development Zone, Qinghai, China.

*Tiong Seng
- 60:40 JV with Ocean Sky to acquire two freehold residential sites at Jervois Road for $21m ($1,118 psf ppr).
- The combined site has a land area of 13,415 sf with gross plot ratio of 1.4 and will be redeveloped.

*Elec & Eltek
- Positive profit alert for 1H17, with a significant increase of not less than 250% in net profit.
- Due to increased sales in higher margin products, improved profit margin of laminates manufactured and sold, as well as an absence of provision for impairment (1HFY16: US$5m).

*Keppel Infrastructure Trust
- Flat 2Q17 DPU of 0.93¢, on a slightly lower-than-expected rise in distributable cash flow (+1.9%) due to timing differences in the adjustment of gas tariffs at City Gas.
- Revenue jumped 15.6% to $158.8m, on stronger contribution from City Gas (+13.6%), Basslink of A$21.7m (2Q16: A$5.2m) on service resumption, but partially offset by weakness in concessions (-17%).
- Aggregate leverage stood at 39.1% (+0.4ppts q/q).
- Trades at 6.5% 1H17 annualised yield and 1.9x P/B.

*First REIT
- 2QFY17 DPU inched up 1.4% 2.14¢, in line with estimates.
- Gross revenue and NPI rose to $27.5m (+3.3%) and $27.2m (+3.2%), mainly on contribution from Siloam Hospitals Labuan Bajo acquired in Dec '16.
- Aggregate leverage remained at 31%
- NAV/unit at $1.0041.

- The successful management-led buyout of Star Media's 52.5%-stake at $0.90/share in the company has triggered an unconditional mandatory general offer.
- Management intends to maintain the listing status of the company and does not intend to exercise any right of compulsory acquisition.

- Secured 3-year term loan worth ¥25b (US$222m) for refinancing existing loans and general corporate purposes.

Monday, July 17, 2017

SG Market (17 Jul 17)

- Cautious trading expected ahead of a busy week packed with corporate earnings, commencing with Keppel DC REIT and Keppel Infra Trust today.
- Technically, STI remains bounded within its 3,190-3,275 trading range.

*Keppel Corp
- Secured two contracts worth over $20m in China.
- Group will provide incineration technology and services for the Beijing Fangshan District Circular Economy Industrial Park Waste-to-Energy (WTE) plant, and the Hunan Yueyang Municipal WTE plant, with a total incineration capacity of 2,220 TPD.
- Both plants are scheduled to be operational by 2019.

- Positive 2Q17 profit guidance.
- Group expects higher net profit from better-than-expected sales.

*Sunpower Group
- Awarded contracts worth Rmb116.3m by Hengli Petrochemical (Dalian) and SINOPEC Engineering.
- Scope includes the supply of towers and other equipment for the refinery and chemical integration project of Hengli and the supply of spiral wound heat exchangers for the methanol-to-olefins facility of SINOPEC.
- Contracts are expected for delivery in 2018 and 2019.

- 55% owned JV Fico Pan United Concrete signed a MoU with Bimibo and Su Tu Bien in Ho Chi Minh, Vietnam.
- The two Vietnamese firms will supply VSI stones and manufactured sand to the JVCo, for production of ready-mixed concrete.

- Divesting its freehold property at 59 Goulburn Street, Sydney, Australia to Fortius Funds Management for A$158m.

- 3QFY17 net profit plunged 45.2% to $28.9m, due to a $37.8m impairment charge primarily arising from the magazine business.
- 9M17 earnings of $128.1m (-31.9%) met just 53% of street FY17 estimate.
- For the quarter, revenue deteriorated to $259.9m (-10.8%) from a sharp drop in contribution from advertisement (-18.7%) and circulation (-10.6%), which led to a collapse in operating margin to 13.2% (-7.6ppt).

*Hotel Properties
- 70:30 JV with Anchorage View (AV) to acquire a hotel operation and freehold property in West London for £39.4m.
- AV is owned by Managing Director Ong Beng Seng and Non-Executive Director David Fu Kuo Chen.
- The target group owns the 189-room Hilton Doubletree hotel located at 2-8 Hanger Lane, Ealing in London.

- Granted a UK patent for self-cleaning apparatus for the prevention of marine growth.

- Acquired an additional 20% stake in Bluesky Parramatta for A$3.2m, after the government approved the latter's application to increase the plot ratio for a land owned by Bluesky to 8:1 from 4:1.
- Upon completion, CWG will own 95.8% of Bluesky.

Friday, July 7, 2017

SG Market (07 Jul 17)

- The market is likely to open weaker following the US swoon and spike in global bond yields on worries that central banks (Fed, ECB, BOE) might look to tighten liquidity.
- Technically, the STI remains pinned within its 3,190-3,275 trading range.

- URA has put up a Beach Road commercial site with GFA of 88,313 sqm for sale at a minimum bid price of $1.138b ($1,197psf of GFA).
- Tender was triggered after a developer committed to the opening price and is in line with MKE's expectations of more aggressive land banking by developers.
- Strong bids for this land parcel will benefit property companies with large Singapore office exposure.
- Separately, Guocoland will be looking to tap on improved property sentiment when it launches its latest residential development, Martin Modern on 22 Jul.
- MKE is Positive on property developers with UOL (Buy, TP: $9.05) as the top pick.

*HC Surgical Specialists
- Its 40:40:20 JVCo, HSN Healthcare has entered into a 55:45 JV with four doctors to manage Nex Healthcare in a $1.9m deal.
- Nex will acquire the pharmaceutical business and medical managed services of Northeast Health Int'l.
- Currently trades at 24.2x trailing P/E versus 29.1x for industry peers.

*AVIC Int'l Maritime
- To provide engineering and construction support services to Xiamen Shipbuilding Industry XSI for the Viking Line LNG-fuelled ro-pax vessel newbuilding.
- The contracts with XSI are worth a total €11m over an estimated period of 12 months.

*Sembcorp Marine
- Further extended the delivery deferral of its semi-submersible drilling rig, the West Rigel to North Atlantic Drilling (NADL) to 6 Jan '18. Delivery has been delayed since Dec '15.
- In the event neither party is able to sell the asset, it will form a 77:23 JV with NADL for joint ownership of the rig.
- Forward P/E valuation of 35.1x is steep, largely supported by hopes of a rebound in crude oil prices and FLNG contract wins.

- MyRepublic has set rumours of a potential takeover to rest as the former fourth telco aspirant plans to be the second MVNO telco in Singapore by leasing bandwidth.
- Currently trades at indicative yield of 6.1%.

- Commenced talks with the subsidiaries of logistics provider, Cinema Europe on a country-to-country basis despite having an exclusive option to buy the holding company.
- No further details or deadline was provided on potential deals.

* Proposed 1-for-1 rights issue at $0.02 apiece has been enlarged to 4.48b new shares from 3.6b,
* Each new rights share will come with two free detachable warrants,and each warrant has the right to subscribe for one new share at $0.02.
* Rights issuance is expected to raise up to $179m.

*ESR-REIT / Natural Cool
- ESR is divesting 87 Defu Lane 10 to Natural Cool for $17.5m, implying 1x P/B.
- The property is a six-storey light industrial building with GFA of 109,920 sf and remaining land tenure of 33 years.
- Subject to HDB's approval, the sale is expected to complete in 3Q17.
- ESR-REIT is trading at FY17e 6.8% yield, 0.95x P/B ; Natural Cool is loss-making and trading at 0.96x P/B.

-Secured revolving credit facility worth US$1b in Europe.

Thursday, July 6, 2017

SG Market (06 Jul 17)

- The market is likely to bobble around as sentiment is lifted by the rebound in tech names and divided Fed views over the timing of interest rate hikes and unwinding of its balance sheet, which could benefit banks.
- But oil-related counters may face renewed selling pressure after crude prices slumped more than 4% to US$45 on worries that Russia is averse to deeper output cuts.
- Technically, the STI broke back above its 20 and 50-dmas in an engulfing move but remains trapped within its 3,190-3.275 trading range.

- Global chip sales surged 22.5% to a all-time high of US$31.9b in May, the strongest y/y growth since Sep '10.
- The sales momentum turned positive in Aug '16 (+1.3%) and has been accelerating monthly since then.
- This is likely to bode well for SG semiconductor names like AEM, UMS and Micro-Mechanics.

- MAS will delay the implementation of the Fundamental Review of the Trading Book (FRTB) rule by a year following concerns over the complexity of the regulation as well as uncertainty about how they will fit with other capital reforms.
- FRTB rules would require banks to hold more capital against their trading books and were scheduled to become effective in Jan '19.
- The move follows similar postponements by banking regulators in Hong Kong and Australia.
- Within the banking sector, MKE prefers DBS (Hold, TP: $19.18) over UOB (Hold, TP: $20.80) and OCBC (Hold, TP: $9.85).

- According to IATA, demand for global air freight jumped 12.7% in May as new export orders hover close to six-year highs.
- Set against a capacity growth of 5.2%, industry load factors rose 3ppts to 45.2%, its highest level since Jul 2014.
- SIA cargo load factor climbed 4.2ppts in May to 66.5%, although outperformance was mainly due to traffic (+10.1%) outpacing capacity growth (+3.1%).
- MKE last had a Hold with TP $9.70.

- Acquired an additional 50% stake (current: 50%) in Tailai Coal (Shanghai) for US$5.4m (1.2x P/B).
- 1Q17 net loss of US$129.4m was attributable to the decoupling of prices across coal markets which resulted in hedging losses.
- Currently trading at a distressed 0.13x P/B.

- Its rights issue of 1-for-6 existing shares at $0.17 apiece was 100.5% subscribed.
- Net proceeds of $20.4m will be channelled to its secured lending business ($10m) and for general corporate and working capital purposes ($10.4m).
- Theoretical ex-rights price at $0.183.

- Appointed Professor Hans Tjio as the deputy chairman of the listings advisory committee (LAC), replacing Professor Tan Cheng Han, who will be appointed as chairman of the new Singapore Exchange Regulation entity.
- Professor Tjio joined the LAC as a member since Feb '16, and the vacant member role will be filled by Goh Kian Hwee.
- Goh is the joint group managing director of QAF, and a non-executive independent director of CapitaLand Commercial Trust Management.

*Mirach Energy
- MOU with Malaysia-listed PRG Holdings to explore a proposed JV to undertake property and construction projects, mainly in Malaysia.
- Group is expected to contribute funds, an amount to be determined, for initial working capital of JVco for its first project.
- PRG will source for the first project, as well as provide construction expertise, help obtain bank facilities and licenses for the first project.

*First Ship Lease Trust
- Issued a write of summons to former CEO Alan Hatton, for breach of his duties owed to the company.

Wednesday, July 5, 2017

SG Market (05 Jul 17)

- The market is likely to open weaker on risk-off sentiment in the wake of North Korea's missile test and as investors await fresh catalysts from the upcoming 2Q results season kicking off in mid-month.
- Yield plays and defensives such as the S-REITs and telcos could find some investor interest.
- Technically, the STI is still range-bound but could test its immediate support at 3,190 after breaching below its 50-dma. Topside resistance remains at 3,275.

- Wholly owned The Ascott is acquiring an additional 60% stake (currently 20%) in Quest Apartment Hotels for A$193m ($203m) to become the largest serviced residence operator in Australasia.
- Quest operates under a franchise model with 180 properties in Australia, New Zealand and Fiji.
- The acquisition will boost Ascott's portfolio by over 11,000 units to more than 67,000 units across 507 properties in 124 cities globally and puts it on track to exceed its target of 80,000 units by 2020.
- It also acquired its first serviced residence in Brisbane for A$24m. The 100-unit Quest Cannon Hill will be developed on a turnkey basis and is slated to open in 2018.
- MKE last had a Hold rating with TP of $3.75.

*Sanli Environmental
- Secured four new contracts worth a total of $26m.
- Scope involves a series of engineering, procurement and construction works at water treatment plants and operations & maintenance project at a water reclamation plant for both the public and private sectors.
- The new contract wins bring its order book to $125.1m, and are expected to have material positve impact on its revenue in FY3/18.

*Genting Hong Kong
- Suspension of gaming license at Resorts World Manila has been lifted, and gaming operations have resumed.
- The loss-making group is trading at 0.5x P/B.

- Prices of Indonesian live broiler birds in Jun slipped to Rp18,501 (-3.5% y/y, -0.5% m/m), while day-old chicks were at Rp4,500 (-8.5% y/y, +1.2% m/m).
- The mixed price performance came despite the Ramadan period when prices typically surge.
- Trading at 8.9x forward P/E in line with its 51%-owned PT Japfa Comfeed.

*Cheung Woh Technologies
- Warned that it expected to report a loss for 1QFY18, affected by weak sales of its HDD components
- 1QFY18 results to be released on or before 14 Jul '17.
- Trading at 18.1x trailing P/E.

*Shanghai Turbo
- Employees at its Changzhou factory submitted a letter of plea to local authorities to end the illegal occupation of the factory premises by former management.
- Plans to restart operations by mid-Jul and expects significant losses in 2Q17 due to the factory closure.

- Launched a new loyalty programme, the HighFlyer, aimed at letting smaller corporates earn points while employees continue to chalk up KrisFlyer miles.
- Carrier aims to chalk up more business-related travel that is usually more resilient to economic cycles.
- MKE last had a HOLD with TP of $9.70.

- A medical product developed by its most valuable portfolio company (MVP) is on track to launch in 2018.
- The rights to the product were sold to an acquirer back in Nov '14, and is currently in the midst of establishing a high-volume manufacturing facility.
- Group is expected to receive dividend, as the MVP receives royalty payments when sales of the product commence.
- The loss-making group is trading at 0.7x P/B.

Tuesday, July 4, 2017

SG Market (04 Jul 17)

- The market could be poised for a stronger start after Dow and S&P 500 came within hair's breath of their all-time highs amid continued strength in US and domestic manufacturing.
- Technically, the market is currently in a consolidation mode. While a rebound could take place, strong resistance lies ahead. Our seasonality analysis suggests that Aug could be a bad month and investors should consider selling the market on strength. Underlying support for STI is at 3,190 with resistance at 3,275.

- Singapore's Jun PMI inched up to 50.9 from May's 50.8 on marginal improvements in new orders and exports, inventory and factory output.
- But manufacturing activity was affected by a slowdown in imports, input prices, supplier deliveries and order backlog.
- The electronics cluster lost some steam as its PMI slipped to 52.1 from 52.4 on declines in new orders, exports, factory output and inventory.

*CapitaLand Commercial Trust/Lian Beng
- CCT is divesting fringe asset Wilkie Edge, a 12-storey development with 154,528sf of NLA comprising retail and office units, as well as service residence, Citadines Mount Sophia to a 50/50 JV between Lian Beng and Apricot Capital, for $280m or $1,812 psf.
- The property has committed occupancy of 99.9% and NPI yield of 3.39% based on the sale price.
- CCT expects to realise a net gain of $76m and coupled with the recent sale of 50% stake in One George Street, would bring its aggregate leverage down to 30.3% from 38.1%.
- We view this deal positively as it helps to address the funding needs for the redevelopment of Golden Shoe and allows CCT to participate in the potential acquisition of Asia Square 2 by parent CapitaLand.
- CCT is offering a DPU yield of 5.5%. MKE has a Buy with TP of $1.81. Lain Beng trades at trailing P/E of 5.9x and yield of 5%.

*Ascott REIT
- Divesting two service residence properties in China, Citadines Biyun Shanghai and Citadines Gaoxin Xi'an for Rmb980m ($198m).
- The sale is estimated to realise a net gain of Rmb239m ($48.3m), and proceeds will be used for paring debt and future acquisitions.
- Trading at 7.6% distribution yield and 0.9x P/B.

*Sinarmas Land
- Acquired 33 Horseferry Road, its fourth freehold prime commercial building in London, UK for £188.6m ($337.6m).
- Of the total of 180,600sf of NLA, 163,761 sf are Grade A office space, fully leased to the UK government with WALE of 17 years. The remaining space is zoned for retail and fully leased to high quality tenants.
- Together with two other properties, Warwick House and Alphabeta Building, the group now owns and manages almost 500,000sf of freehold commercial space in central London with assets under management of over $1b.
- Trading at 0.98x P/B.

*Soilbuild Construction
- Awarded a $82.5m contract by its chariman's company to construct two blocks of nine-storey multi-user industrial factory at 164 Kallang Way.
- The project will commence in 3Q17, and is expected to complete within 20 months.
- Order book has been raised to $590.6m.
- Trading at 16.4x trailing P/E.

*Ziwo Holdings
- Acquiring 20% stake in Estar Investments for $0.57m, thereby increasing its interest to 65%.
- The move is aimed at enhancing the benefits from the business expansion of the target company.

- Secured six orders totalling US$133m in contract value in 2Q17.
- The orders are for three 1,800 TEU containerships and three 82,000 dwt bulk carriers, and are scheduled to be delivered between 2018 and 2020.
- Ytd, the group has clinched 19 shipbuilding contracts worth US$450m, along with nine outstanding options.
- Trading at 11.4x FY17 consensus P/E.

*QT Vascular
- Signed an MOU with the administrative committee of Shijiazhuang high-tech industry development zone and Hong Kong-listed China CAST Industrial Urban Development to explore opportunities in China.
- These include project development, biotechnology sharing, talent exchange and fund raising opportunities.

*First Sponsor
- Disposed Guangdong Idea Valley Advertisement (GIVAL) to Dongguan Zexin Trading for Rmb14.1m ($2.9m) in cash.
- GIVAL owns 145 commercial units and 11 service apartments in the Humen International Cloth Centre in Dongguang, Guangdong, China.
- It intends to use proceeds for working capital purposes.

- Expiry of the group's option to acquire Cinram Europe was extended from 30 Jun to 5 Jul by the vendor, 46 State Street.

Monday, July 3, 2017

SG Market (03 Jul 17)

- The market is likely to remain range-bound given the modest close on Wall Street and ahead of US Fed minutes and payroll data later this week, with attention also focused on rebounding crude oil prices and domestic politics.
- From a chart perspective, the STI has covered the breakup gap formed on Thu and is hovering just above its 50-dma support at 3,220 with technical indicators not showing any clear direction. Immediate resistance is at 3,268 with downside risk at 3,190.

*DBS/Sembcorp Industries/ST Engineering
- Part of six local companies, including SMRT, which are teaming up to partner international players to jointly participate in high-speed rail (HSR) projects, starting with the Kuala Lumpur-Singapore HSR.
- Tenders for the 350km KL-SG HSR are expected to be called by the end of the year.

- Seeking more aggressive land-banking in China as it leverages up on its third Raffles City private equity fund to invest in prime integrated developments in gateway cities.
- The group currently has a portfolio of 23 integrated developments totaling more than 6.2m sqm across China.
- China currently accounts for 44% of its total assets and 42% of 1Q17 revenue.
- MKE last had a Hold with TP $3.75.

*Q&M Dental
- Acquiring a 20% stake in Superline Tech for Rmb62m ($12.7m) from five individuals.
- Deal is priced at 17.4x FY18e P/E and comes with a profit guarantee stretching over 12 years.
- Superline manufactures nikel-titanium based dental-related supplies and would help Q&M's push upstream to create better synergy with its dental operations.
- MKE last had a Hold with TP of $0.60, reflecting a lower growth profile.

*Mapletree Logistics Trust
- Divesting two four-storey warehouses (Zama and Shiroishi) to God Kaisha Asset Moshi Jigyo 4 Go for ¥13.5b ($165.4m).
- Expected to reap a divestment gain of ¥234m ($2.9m) with proceeds to be distributed to unitholders as well as used to fund committed investments or reduce existing debt.
- MKE last had a Hold with TP$1.20.

*Pacific Radiance
- Updated that Shanghai Waigaiqiao Shipbuilding & Offshore and China Shipbuilding Trading has contested the claims by 50% owned CA Offshore Investment (CAOI) in the arbitration for the rescission of two shipbuilding contracts.
- The shipyards has asserted counterclaims against CAOI for the balance payments of the contracts after the latter claimed US$5.6m refund for pre-delivery instalment paid for two platform supply vessels.
- Currently trading at 0.2x P/B.

*Keppel Corp
- Divested its Netherlands shipyard, Keppel Verolme to Damen Shipyards for €23.5m.
- Separately, media reported that its US$735m converted floating liquefaction vessel (FLNGV), the world's first, is on track to be delivered to Golar Hilli in Aug.
- Currently trading at 13.2x forward P/E vs historical of 10.9x.

- Entered into a 50:50 JV with Tokyo-listed Lion to manufacture and sell methyl ester sulfonate in Indonesia.
- The JVCo will acquire its existing manufacturing facilities in Indonesia.
- Currently trading at 12.4x forward P/E vs historical of 13.1x.

- Acquired a freehold plot of land spanning 1,200sqm for US$6m which it intends to use for a showroom for its existing project, The Peak, due to be completed in three years.
- Subsequently, it intends to develop a commercial property at the site.

- Acquired an additional 1.12%-stake in AXS from OCBC for $0.9m of which $0.2m will be recorded as goodwill.
- MKE last had a Hold with TP $19.18.

*Wing Tai
- Extended the closing date for its unconditional takeover offer for Wing Tai Malaysia (WTM) from 4 Jul to 18 Jul.
- Current public float for WTM is 11.94%, lower than the regulatory threshold for listing of 25%.
- The group does not intend to maintain listing of WTM.

*China Everbright Water
- Received approval from authorities to list yuan-denominated bonds on the Shanghai Stock Exchange.