SG Market (23 Aug 17)

MARKET OVERVIEW
- The market is poised for a minor technical rebound from oversold levels amid cautious sentiment as investors look for potential catalysts ahead of the gathering of central bankers at Jackson Hole tomorrow.
- Technically, the STI remains oversold with underlying support at 3,190 and topside resistance at 3,275.

SECTOR WATCH
*Property
- Former HUDC estate Florence Regency has been put up for collective sale at a reserve price of $600m as the en bloc fever rages on in Singapore.
- With a balance 71-year lease, the 336-unit estate at Hougang Avenue 2 has a site area of 389,236 sf and plot ratio of 2.8, which can support a gross floor area of 1.1m sf or 1,100 homes.
- At the minimum bid price of $600m and estimated differential premium of $249m, the land cost works out to $779 psf ppr, with breakeven of ~$1,200 psf.
- This comes barely a day after Normanton Park launched its $800m en bloc offer, with Park West also mulling a sale.
- So far, there have been seven collective sales worth $2.5b compared to just three for whole of last year, totalling $1b.

CORPORATE RESULTS
*Lum Chang
- FY17 net profit fell 37% to $18.7m, dragged by lower associate income of $1m (FY16: $14.6m) following completion of an EC project last year.
- Revenue slid 13% to $369m on lower contribution from two Malaysian property development projects and completion of certain construction projects.
- Gross margin held steady at 13.5%, while the bottom line was buttressed by a $4.7m disposal gain, $2.9m reduction in fair value loss and absence of a $2.1m asset acquisition stamp duty.
- Final DPS cut to 1.2¢ (4QFY16: 1.25¢), bringing full-year payout to 1.5¢ (FY16: 2¢).
- NAV/share at $0.5791.

*Civmec
- 4QFY17 net profit slumped 35.4% to $1m, pulling down full year earnings to $8.4m (-51.7%).
- For the last quarter revenue grew 10.5% to $97.7m following the commencement of new projects.
- Gross margin held steady at 8.5% (+0.3ppt).
- Bottom line was impacted by higher admin expenses (+40.4%) to secure larger EPC projects, but was partly mitigated by a tax credit of $0.6m (4QFY16: $0.8m expense) on R&D incentives.
- Maintained first and final DPS of 0.7¢.
- NAV/share at $0.3495.

POSITIVE NEWS
*CapitaLand
- Signed agreements to manage Alibaba's Shanghai headquarters and launch an online mall on Lazada Singapore.
- The group will oversee the pre-opening and management of the retail podium and one of the four office towers at the 80,000 sqm gfa Alibaba Shanghai Center in Hongqiao CBD, slated to open in 2018.
- The group will offer a shop-in-shop platform on Lazada.SG that connects its retailers to shoppers both offline and online, complemented by a unique in-mall collection service for online shoppers.

NEUTRAL NEWS
*ComfortDelGro
- Entered exclusive discussions with Uber to form a potential strategic alliance, which could better optimise its fleet and make available its taxis on Uber's ride-hailing app.
- The last-ditch effort comes more than three years after CD's domestic taxi business was disrupted by private car hiring services.
- CD trades at 15x forward P/E and 4.8% dividend yield.