SG Market (13 Sep 17)

MARKET OVERVIEW
- The market could creep higher on improving sentiment in Asia as fears over North Korea and US hurricanes ebbed, and positive overspill from Wall Street after Treasury Sec Steven Mnuchin hinted of a tax overhaul by the end of the year.
- Technology plays are likely to stay in focus with the launch of iPhone X.
- Technically, immediate support for the STI lies at 3,220, with overhead resistance at 3,275.

ECONOMIC NEWS
- Jul retail sales nudged up 1.8% (est: 2.1%, prior: 1.9%) in Jun as higher spending at petrol stations, medical goods and department stores was eroded by weakness in F&B and furniture/household equipment.

POSITIVE NEWS
*Keppel DC REIT
- Acquiring a data centre in Dublin, Ireland, for €66.0m.
- The 999-year leasehold property has 25,200 sf of space and commenced operations in 2013.
- Post-deal, pro forma FY16 DPU is expected to rise 6% to 6.51¢, translating to 5% yield.

*QAF
- Proposed spin-off of its Australian pork business and Australian properties (grain storage facility, feedmill, warehouse) on ASX.
- It intends to retain a controlling interest in the Australian Listco, which generated revenue of $398m and net profit of $36.7m in 2016, and accounted for 17% of Australia's pork production.
- In connection to the listing, the group expects to receive A$52m repayment of unsecured loans extended to the Australian Listco.
- Trades at 7x trailing P/E.

*Aspen Group
- JV partner and IKEA franchisee Ikano has commenced construction of the 4th Malaysian IKEA store in Aspen Vision City, Penang.
- The IKEA store will be the anchor tenant for the group's 245-acre mixed development Aspen Vision City, with a 1m sf regional integrated shopping centre.
- Ikano is expected to invest RM600m to develop the 433,000 sf IKEA store, slated to open in 1Q19.

*Sapphire
- Secured a Rmb276m rail engineering contract for the second phase of the Beijing Metro's Changing Line.
- The contract is scheduled for completion by 31 Dec '20.
- This brings its order book to about Rmb2.8b.
- It is also in the midst of evaluating a potential consultancy contract for a metro rail project in Bangladesh.

NEUTRAL NEWS
*United Engineers
- Market watchers believe that the Yanlord-led consortium cash offer of $2.60 apiece could lapse after the second extension of its offer to 19 Sep from 12 Sep.
- Consortium will have to attain a remaining 15.2% stake in the company to cross the 50% threshold for the offer to become unconditional.
- Notably, Oxley and its chairman Ching Chiat Kwong have accumulated a 14.86% stake at prices between $2.67 and $2.74.

*SUTL Enterprise
- Signed a MOU with Hainan Cruise & Yacht Association to be its strategic partner in the development and expansion of Hainan's yachting, cruising and maritime industry.
- The group will see provide advisory services in marina development and management to improve the hardware and software on Hainan Island, including hosting hosting international yachting events and regattas at the island.
- It will also assist in establishing the framework for training local personnel with the relevant skillsets and service aptitude.
- Counter trades at 16.9x forward P/E.

*Heeton/KSH/Ryobi Kiso
- 50:25:25 JV acquired the Dry Bar, an iconic entertainment venue in Manchester, UK.
- The consortium intends to convert the upper floors of the 4-storey terraced buildingwith gfa of 20,713 sf, into a hotel which will be managed by Heeton's hospitality division.
- No financial details were disclosed.

*Asia-Pacific Strategic Investments
- Proposed partial-underwritten 2-for-1 rights issue at 0.3¢ each.
- Shareholders who subscribe for two rights share will be issued a warrant with exercise price of 0.3¢.
- Maximum subscription proceeds of $42.7m is intended to fund the group's proposed new business into real estate development.