SG Market (22 Aug 17)

MARKET OVERVIEW
- The market may range trade as investors look for further direction on global monetary policies ahead of the Jackson Hole meeting of central bankers later this week.
- Technically, the STI is oversold with underlying support at 3,190 and topside resistance at 3,275.

SECTOR WATCH
*Property
- Amid a collective sale fever, 488-unit Normanton Park is making its second stab at selling en bloc with a $800m reserve price.
- This translates to a land cost of $989 psf ppr, which includes a development charge of $225.3m and lease top-up premium of $220.6m.
- The 99-year leasehold site near Kent Ridge Park could potentially be redeveloped into a high-rise development comprising 1,200 new residential units.
- So far, there have been seven collective sales worth $2.5b compared to just three for whole of last year, totalling $1b.

CORPORATE RESULTS
*Oxley
- 4QFY17 net profit plunged 41% to $41.5m on a 50% drop in other gains to $39.3m and associates loss of $6.9m (4QFY16: $27.9m profit). This took FY17 earnings to $218.1m (+6%).
- For the last quarter, revenue jumped 36% to $224.3m from progressive sales recognition of three projects, The Royal Wharf Phase 1A, Floraville/Floraview/Floravista and The Rise @ Oxley-Residences.
- However, gross margin shrank 13.9ppt to 19.9%, impacted by higher funding costs.
- The decline in bottom line was pared by a positive $24m FX swing and higher fair value gains on financial instruments of $4.3m (4QFY16: $14m loss).
- Net gearing stayed at 1.9x q/q.
- Final DPS raised to 0.7¢ (4QFY16: 0.25¢), bringing full-year payout to 1.5¢ (FY16: 1.4¢).
- Trades at 1.5x P/B.

*Spindex Industries
- FY17 net profit surged 38.9% to $14m on operating leverage.
- Revenue grew 14.2% to $141.8m as growth in machinery & automotive systems (+10%) and others (+42%) outweighed a 5% decline in imaging & printing contributions.
- Gross margin held steady at 23%, while bottom line was bolstered by lower opex (-1.1%).
- Increased final DPS to 3¢ (FY16: 2.3¢).
- Trades at 9.6x trailing P/E.

*Ellipsiz
- FY17 net profit fell 11% to $8.5m on impairment loss of $1.5m on a quoted investment.
- Revenue slipped 2% to $116.7m on weaker contributions from distribution & services (-1%) and probe card solutions (-2%).
- Gross margin improved to 36% on a favourable shift in revenue mix.
- Bottom line was impacted by marginal associates/JVs contributions of $0.2m (-80%) as well as a spike in income tax to $3.1m (FY16: $1.4m).
- Declared final DPS of 2¢ (4Q16: 0.8¢) and special DPS of 4.5¢ (4Q16: 1¢), bringing FY17 payout to 6.5¢ (FY16: 2.5¢).
- Proposed to dispose its probe card solutions business to Japanese manufacturer Nidec for US$65m ($88.3m) or 1.34x P/B.
- If approved, the sale will lift cash hoard to $140.9m, or 27% above its market cap of $111.1m ($0.63/share).
- Trades at 13.1x historical P/E.

POSITIVE NEWS
*The Trendlines
- Set up 51:49 Shanghai-based JVCo, China-Israel New Trend (Taizhou) Medical Technology, with Chinese PE firm Shousan Wealth.
- Plans to raise venture funds to help provide manufacturing and commercialisation support services in China to selected medical companies, both within and outside the group's portfolio.
- Required to establish the venture capital fund within 180 days or else the JV agreement may be terminated.

NEUTRAL NEWS
*Yoma
- Substantial shareholder Aberdeen acquired 8.2m shares at $0.5675 each via the open market on 18 Aug.
- This raised its stake from 9.5662% to 10.0383%.
- At last close, Yoma is valued at 1.5x P/B.

*CapitaLand
- Pared its stake in four wholly owned Vietnamese entities to 40% for US$157m ($213m) through an issue of new units.
- The entities will undertake a commercial development project in Vietnam.

*TSH Corp
- Entered non-binding term sheet with controlling shareholder Teo Kok Woon and another vendor Margaret Louise Batchelor for the proposed acquisition of four commercial properties in Brisbane, Australia, which caters to the beauty and wellness industry.
- Total purchase consideration is A$8m, including $5.2m of outstanding loans, and will be satisfied via new shares at $0.035 each.

*CWG Int'l
- Acquired a 40,612 sqm plot of land with plot ratio of 2:1, in Changsha City, Jiangsu, China for Rmb454m.
- The acquisition is part of efforts to build up its land bank in Tier-3 cities, which are seeing high sales turnover.
- Development of the land parcel is not expected to be completed before 2019.

*DiSa
- Updated that its Point-of-Sale Activation Solution will be used for undisclosed top-rated GPS and navigation products in Wal-Mart stores.

*EnGro
- 98.6% owned unit has formed a 60:40 JV with Omni-Plus System to manufacture and distribute thermoplastic compounds to serve the automotive industry in the Asia ex-China market.