SG Market (05 Sep 17)

MARKET OVERVIEW
- Heightened geopolitical tensions over North Korea are expected to cast a pall on risk appetite as market participants await by the sidelines ahead of ECB meeting on Thu.
- Technically, the STI has been knocked back after failing to penetrate its 20 and 50-dmas at 3,277, with immediate support now standing at 3,220, followed by 3,190.

MACRO WATCH
- Singapore's factory activity rose for the 12th straight month in Aug with the PMI climbing to 51.8 (Jul: 51), its highest reading since Nov 2014, as the electronics cluster surged to 53.2 (Jul: 52.2) for its best showing in seven years.
- Almost all indicators shows signs of improvement. New orders, exports, factory output and inventory all expanded at a faster pace, while manufacturing employment contracted at a slower rate.
- The brighter data mirrored that of several regional economies, including Taiwan, Vietnam, China, India, Indonesia and Malaysia.

POSITIVE NEWS
*DBS
- Won in-principle approval to provide banking services in India through a wholly owned subsidiary.
- This will allow it to expand its operations and footprint in India, which could potentially become the next growth catalyst.
- The group is currently the 5th largest foreign bank in India by assets but returns are not yet meaningful.
- MKE has a Hold with TP of $21.50.

*EMAS Offshore/Baker Technology
- Baker Technology and private equity firm Point Hope has entered into a binding term sheet with Emas Offshore (EOL) to aid in the latter's debt restructuring.
- Baker Tech and Point Hope could potentially invest US$50m in EOL to substantially deleverage its balance sheet and enable it to continue as a going concern.
- The deal involves a scheme of arrangement and issue of new shares that will result in the two potential investors holding a majority stake in EOL.
- The term sheet may be terminated if the restructuring is not underway by 30 Oct.

*Citic Envirotech
- Secured a Rmb315m hazardous waste treatment project in Binzhou City, Shandong, China.
- The project involves the construction of a 60,000 tpa waste treatment facility, comprising an incineration plant, a physical-chemical treatment plant and a landfill.
- Works are expected to be completed within 12 months.
- Last traded at 16x forward P/E.

*Manufacturing Integration Tech
- Secured $5.5m of new orders for its semiconductor equipment and contract equipment manufacturing services business.
- The orders are slated to be fulfilled by end-2017.

*AIMS AMP REIT
- Secured its first tenant for the newly completed industrial redevelopment at 8 Tuas Avenue 20.
- The tenant is from the aerospace sector and has committed to a 10-year lease with rent escalation during the term.

NEGATIVE NEWS
*ComfortDelGro (CDG)
- Asia private car hailing operator Grab has launched an aggressive campaign to woo CDG's cabbies, offering a rental discount of over 40% to those willing to defect to any taxi company using its platform.
- The salvo came a week after CDG announced a potential tie-up with Uber.
- This is expected to intensify competition in its declining Singapore taxi business, which contributes c.22% of its EBIT.
- MKE has a Hold with TP of $2.25.

NEUTRAL NEWS
*Cache Logistics Trust
- Undertaking an underwritten and renounceable 18-for-100 rights issue at $0.632/unit.
- Gross proceeds of $102.7m is intended to pare debt, with aggregate leverage expected to be lowered from 43.4% to 35.5%.
- Pro forma FY16 DPU will be diluted to 6.882¢ from 7.725¢ from the 18% increase in unit base.

*Spackman Entertainment
- Wholly-owned subsidiary Zip Cinema will be producing its next major film titled "Sovereign Default", a Korean financial crisis thriller.
- The production will have an estimated budget of 9.7b won (US$8.6m).
- Filming is slated to commence in end-2017 or early-2018, with the premier targeted in 2H18.

*Fragrance Group
- Acquired the 141-room Lyndene Hotel in Lancashire, UK, for £5.3m.
- Trades at 1.03x P/B.