SG Market (20 Jul 17)

MARKET OVERVIEW
- 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.

POSITIVE NEWS
*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.

NEGATIVE NEWS
*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

NEUTRAL NEWS
*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.