SG Market (02 Aug 17)

MARKET OVERVIEW
- The broad market could edge higher on positive sentiment, buoyed by record highs in Wall Street overnight.
- Technical indicators are stretched with STI facing topside resistance at 3,360, while downside support is at 3,275.

CORPORATE RESULTS
*CWT
- 2Q17 net profit soared 266% to $49.9m, boosted by a $23.1m gain on disposal of financial assets.
- Revenue grew 9% to $2.59b from the finalisation of a design and build project, as well as commodity marketing (+7.3%) due to increase in commodity prices and higher volume of naptha traded.
- Gross margin widened 0.46ppt to 3.29%.
- Adjusted net gearing rose to 0.25x (Dec '16: 0.18x) with total bank facilities of $4.8b and liquidity headroom of $3.8b.
- Trading at 13.3x FY17e P/E and 1.4x P/B.

*OUE Hospitality Trust
- 2Q17 performance met expectations as DPS surged 31.5% to 1.21¢ on distributable income of $21.8m (+31.8%), with income support of $1.6m from Crowne Plaza Changi Airport (CPCA).
- Revenue rose 16% to $31.2m from higher master lease income at Mandarin Oriental Singapore and CPCA, and increased occupancy of 93.9% (2Q16: 79.1%) at Mandarin Gallery shopping mall following completion of AEI works.
- Accordingly, NPI jumped 15% to $26.6m.
- Aggregate leverage inched up 0.1ppt q/q to 38.2%, with lower average debt cost of 2.8% (+0.3ppt q/q) and tenor of 1.9 years (1Q17: 2.1 years).
- Trades at 6.5% forward yield and 1x P/B.

*Tiong Seng
- 2Q17 net profit more than doubled to $10.2m (+126.7%), on a 37% jump in revenue to $216.7m.
- The improved turnover was lifted by its construction segment (+49% to $205.7m) from new and ongoing projects, but partly offset by a slump in property development (-47% to $10.6m) due to absence of sale recognition from Tranquility Residences.
- Operating margin was steady at 6.2% (+0.4ppt).
- Bottom line was shored by lower FX loss from depreciation in CNY against SGD.
- However, construction order book was depleted to $730m (1Q17: $924m, 4Q16: $1b).
- NAV/share at $0.5887.

*PACC Offshore
- 2Q17 net loss narrowed to US$9.1m (2Q16: US$17.5m loss), shored by JV profit of US$4.6m (2Q16: US$3.1m loss) as POSH Terasea completed major towage and positioning projects.
- This brought 1H17 net loss to US$27.5m (1H16: US$13.1m loss), or 61% of full-year loss estimate.
- Quarter revenue declined 8% to US$42.4m amid challenging conditions, dragged by a 24% drop in contribution from offshore accommodation vessel segment.
- The group swung to a gross loss of US$2.7m, reversing from a US$1.6m profit in 2Q16.
- Bottom line was cushioned by a US$6.2m reduction in allowance for doubtful debts.
- Last traded at 0.57x P/B.

*UnUsUaL
- 1QFY18 net profit leapt 152% from a low base to $1.5m, in tandem with a 166% jump in revenue to $6.2m, thanks to its promotion (+$2.8m) and production (+$1.7m) segments.
- Gross margin doubled to 45.6% (+22.8ppt) on the shift in sales mix.
- Management is seeking opportunities to expand its concert repertoire into North Asia, particularly China.

*k1 Ventures
- FY17 net profit rose 6.7% to $150m despite a 51.7% drop in revenue to $94.2m due to an absence of investment income from Knowledge Universe Holdings.
- Bottom line was boosted by a a fair value gain of $119m arising from its investment in Guggenheim and divestment of KUE 3 LP.
- Proposed final DPS of 6.5¢ (FY16: nil).
- NAV/share at $0.76.