SG Market (14 Sep 17)

MARKET OVERVIEW
- Market is consolidating within a narrow trading range but oil-linked plays could see some rotational interest after an IEA report showed global oil market could be returning to balance with inventories nearing a five-year average.
- Technically, the immediate support for the STI remains at 3,220, with overhead resistance at 3,275.

SECTOR OVERVIEW
*Telecom
- Maybank KE is initiating coverage on Singapore telcos with a Negative view, putting a Sell on Starhub (TP: $2.17) and M1 (TP: $1.59), and a Hold on SingTel (TP: $3.83).
- The house believes that the sector has not fully priced in the impending entry of new competition into the market.
- Its baseline assumption of competition and new smartphone launches leading to higher retention costs, partly through recontracting, and modest ARPU pressure results in soft FY18/FY19 core profit expectations.

CORPORATE RESULTS
*Vibrant Group
- 1QFY7/18 net profit soared to $122.6m (1QFY17: $0.4m), mainly lifted by $123.9m of negative goodwill arising from the acquisition Blackgold Int'l in Jul '17.
- Revenue surged 89% to $86.8m following the acquisition, but gross margin was compressed to 19.6% (-13.2ppt) as Blackgold commanded thinner margin of 6.3%.
- Bottom line was eroded by higher other expense of $6.5m (+236%) due to unfavourable FX movements.
- NAV/share at $0.7728.

NEGATIVE NEWS
*Swiber
- Defaulting on the redemption and upcoming coupon payment for its Rmb450m 7.75% notes, part of its $1b multicurrency debt programme.
- Trading in the stock is currently suspended.

NEUTRAL NEWS
*Mapletree Logistics Trust
- Proposed a non-renounceable 10-for-1 preferential offering at $1.145 apiece and private placement at $1.175 each to raise $640m to part-finance the acquisition of Mapletree Logistics Hub Tsing Yi in Hong Kong and repay debt.
- Last traded at 1QFY18 annualised yield of 6.3%.

*Olam
- Invested US$150m in animal feedmills and poultry farms in Nigeria to boost its agribusiness in Africa.
- These include bird and fish feedmills to support annual production of 8b eggs and 100m kg of poultry and a hatchery to produce 1.6m day-old chicks per week.
- Last traded at 14.8x forward P/E.

*OLS Enterprise
- Acquiring BSDCN, an investment holding company, for $6m or 4.18x P/B, to be paid in two tranches.
- BSDCN holds a 9.98% interest in Korean-based Pine Asia Asset Management, which has AUM of US$3.5b and an ascribed valuation of US$44.3m.
- The deal its part of its strategic expansion into asset management, following the 51% stake acquisition of Advance Capital Partners Asset Management.
- Post acquisition pro forma FY3/17 NTA/share will fall to -0.12¢ from 0.13¢, while loss per share will widen to 0.117¢ from 0.113¢.