SG Market (28 Jul 17)

MARKET OVERVIEW
- 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.

CORPORATE RESULTS
*UOB
- 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.

*SIA
- 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.

*SGX
- 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.