SG Market (03 Jul 17)

MARKET OVERVIEW
- 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.

POSITIVE NEWS
*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.

*CapitaLand
- 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.

NEGATIVE NEWS
*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.

NEUTRAL NEWS
*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.

*Wilmar
- 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.

*Oxley
- 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.

*DBS
- 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.