SG Market (21 Jul 17)

MARKET OVERVIEW
- 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.

POSITIVE NEWS
*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.

NEGATIVE NEWS
*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¢.

*Triyards
- 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.

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

*CWT
- 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.

*Dutech
- 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

NEUTRAL NEWS
*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).