SG Market (24 Aug 17)

MARKET OVERVIEW
- The market could drift lower as investors take risks off the table on fears of dysfunctional politics after US President Trump threatened to shut down the government if Congress refuse to fund a border wall with Mexico.
- Technically, the STI remains in oversold territory with underlying support at 3,190 and topside resistance at 3,275.

CORPORATE RESULTS
*IHH Healthcare
- 2Q17 net profit rose 29% to RM316.6m, bolstered mainly by a disposal gain of RM241.1m from the sale of 6.1% stake in Apollo Hospital Enterprise.
- Excluding that, core earnings missed estimates, slumping 54% to RM86.2m, hurt by start-up costs and depreciation from opening of two new hospitals.
- Revenue grew 12% to RM2.77b on organic growth from existing operations and ramp-up of two new HK and Turkish hospitals, as well as the acquisition of Tokuda and City Clinic in Bulgaria.
- But core EBITDA margin narrowed to 19.3% (-3.1ppt) on higher start-up, operating and staff expenses.
- MKE maintains Hold but cuts TP by 1% to RM6.08.

*Health Management Int'l
- 4QFY17 net profit more than doubled to RM10.6m (+119%) following acquisition of remaining stakes in two key hospitals.
- This brought FY17 core earnings, excluding one-off professional fees and non-operational FX loss, to RM32.1m (+40.3%), meeting expectations.
- Revenue for the quarter climbed 5% to RM111.7m, thanks to higher patient loads (+3.7%) and average outpatient bill sizes (+7.8%), which overcome flat inpatient bills (-0.2%).
- EBITDA margin expanded 3ppt to 21.5%, on lower provision of doubtful debts.
- Bottom line was eroded by a spike in finance cost amid a $53m loan drawdown for the stake acquisitions.
- Last traded at 28.4x FY18e P/E.

*Parkson Retail Asia
- 4QFY17 net loss deepened to $43m from $14.9m last year, partly weighed by impairment charges of $25.7m, which swung FY17 results to net loss of $59.5m (FY16: $30.2m profit).
- On the flipside, quarter revenue rose 17% to $109.6m on higher sales during the Hari Raya festival, underpinned by higher same-store-sales growth in Malaysia (+15%) and Indonesia (+11%), while the Vietnam (-14%) operations deteriorated.
- However, gross merchandise margin narrowed 2.8ppt to 61.9% amid higher provision for inventories.
- No final DPS declared (FY16: 0.5¢).
- Trading at 0.56x P/B.

*ISOTeam
- 4QFY17 net profit tumbled 66.5% to $1.3m, which dragged FY17 earnings to $6.4m (-30.1%).
- Quarter revenue slumped 26.5% to $21.7m on a broad-based decline across all segments on fewer projects.
- Gross margin contracted 4.7ppt to 22.9%.
- Bottom line was further impacted by a 13.2% jump in general and admin expenses due to increased allowance for doubtful receivables from a customer under receivership.
- First and final DPS shaved to 0.65¢ (FY16: 0.75¢).
- Trades at 15.4x historical P/E.

POSITIVE NEWS
*Keppel Corp
- Secured a US$400m contract from Honolulu-based Pasha Hawaii for the construction of two LNG fuelled containerships.
- Delivery of the first vessel expected in 1Q20 and the second vessel in 3Q20.
- This brings its ytd order wins to $823m, down from peak of ~$10b in 2011/2012 and $0.5b in 2016.

*Yangzijiang
- 79.6% owned Jiangsu Yangzijiang Offshore Engineering has set up a 40:60 JVCo, Jiangsu Yangzi Chengkang Marine, with total initial capital of Rmb100m.
- The JV will be involved in steel structure fabrication of steel pipe pile for international seas, port, bridge and offshore projects.

*Boustead Projects
- Secured a design-and-build contract from Yusen Logistics Singapore for the addition of a two-floor ramp-up warehouse on an existing logistics facility in Tuas, with completion in 4Q18.
- This lifted the group's order book to $160m (Jun '17: $137m).

*Ausgroup
- 67% owned JV with Meisei Industrial was awarded a A$165m contract extension for work on the INPEX-operated Ichthys LNG Project by JKC Australia LNG.
- Scope of work includes painting, surface protection, fireproofing and insulation works for the onshore facilities.

NEUTRAL NEWS
*Q&M
- Controlling shareholder Quan Min Holdings acquired 300,000 shares at $0.64321 each on 22 Aug.
- The transaction lifted its stake from 43.92% to 43.946%.

*Aoxin
- Controlling shareholder Quan Min Holdings acquired 98,900 shares at $0.215 each on 22 Aug.
- The transaction lifted its stake from 49.61% to 49.64%.

*Ellipsiz
- CEO Melvin Chan Wai Leong acquired 1.5m shares at $0.7525 each on 22 Aug.
- The transaction lifted his stake from 3.76% to 4.65%.

*Metro
- In preliminary discussions with H-Change Real Estate for a proposed divestment of 30% owned associate Nanchang Top Spring at an undisclosed sum.