SG Market (22 Sep 17)

MARKET OVERVIEW
- In absence of fresh market catalyst, sentiment is likely to remain subdued as investors stay wary of Fed's hawkish move to tighten monetary policy.
- Technically, the next support for STI lies at 3,190, while overhead resistance at 3,275.

POSITIVE NEWS
*CapitaLand Commercial Trust
- Acquiring Grade-A office building Asia Square Tower 2 in Marina Bay for $2.09b ($2,689 psf).
- The property has NLA of 778,719 sf, with 97% being offices and 3% in retail space, and has committed occupancy of 88.7%. Average lease-to-expiry is 3.4 years.
- Initial property yield expected to be 3.6%, higher than the divested One George Street (3.2%) and Wilkie Edge (3.4%).
- This will be funded via a fully underwritten 166-for-1,000 renounceable rights issue at $1.363 apiece to raise $690m, bank borrowings of $1.12b and $340m proceeds from recent divestments.
- Pro-forma 1H17 DPU would be diluted 4.23¢ (-7.2%), translating to an annualised yield of 5.13% (-0.25ppt).
- But, Maybank KE sees potential upside from occupancy and reiterates its Buy call with TP of $1.81.

*Tat Hong
- Disclosed that it has been approached by certain parties for a potential share transaction.
- The group has appointed Rippledot Capital Advisers on the approaches.
- Loss-making crane specialist trades at 0.53x P/B

*Darco Water
- Under the facilitation of IE Singapore, group is partnering InfraCo Asia Development on four municipal water treatment projects in Vietnam.
- These 50-year concession projects will be on a design, build, own, and operate model, and involve investment of around $50m.
- The projects target to provide up to 62,000 cubic metres of water, benefitting 0.5m of Vietnamese.
- First project with 15,000 cubic metres capacity will kick off in 4Q17, while remaining three will commence in 2018.

*Sino Grandness
- Collaborating with Wechat Food to distribute its own-branded Garden Fresh beverage products using automatic vending machines across China, which ride on Wechat Food's cloud platform.

*Shanghai Turbo
- Regained control of its Changzhou, China factory premises after five months when riot police evicted a group of trespassers.
- Operations has since resumed with management taking stock of production machinery and inventory.

NEUTRAL NEWS
*Del Monte Pacific
- Divesting its Sager Creek business, which produces specialty vegetables to McCall Farms for US$55m.
- Group intends to channel resources towards its core business.

*Neo Group
- Entered into exclusive agreement with potential vendors to acquire stakes in ER Marketing (ERM) and Ever Rich (ER).
- The exclusivity runs till 31 Aug '18.
- ERM mainly imports and exports food products such as raw condiments, fruits, and vegetables, for wholesale and retail businessses.
- ER mainly owns and operates warehouses and cold rooms for storage of food products.

*ASL Marine
- On track to meet a mandatory partial principal redemption of $1.25m worth of outstanding notes.
- Outstanding amount of its notes programme will still be a mammoth $48.75m.