SG Market (25 Sep 17)

MARKET OVERVIEW
- With the war of words between US and North Korea receding into the background, investors' attention will turn towards Aug inflation and industrial production data to have a better gauge on how the Singapore economy has fared, as well as details of the US tax plan this week.
- Technically, underlying support for STI is at 3,190 with overhead resistance at 3,275.

CORPORATE RESULTS
*Sunright
- FY7/17 net profit surged 6.7x to $9.2m (FY17/16: $1.4m), boosted by operational leverage.
- Revenue grew 14% to $147.9m on stronger demand for burn-in, testing and electronic manufacturing services, particularly from automotive customers.
- Pretax margin expanded 3.7ppt to 10.7%.
- The group expects to perform satisfactorily this year given the global growth in the semiconductor industry.
- First and final DPS raised to 0.3¢ (FY7/16: 0.2¢).
- Trades at 8x P/E and 0.95x P/B.

POSITIVE NEWS
*Olam
- Sold 5,100 acres of farmland assets in California, US, to Farmland Partners for US$110m.
- Olam will continue to operate the edible nuts orchards for 25-years, with an undisclosed portion of derived revenue paid to Farmland.
- Last traded at 14.9x forward P/E.

NEGATIVE NEWS
*Frasers Commercial Trust (FCOT)
- Major tenant Hewlett-Packard Enterprise (HPE) has served notice that it intends to vacate 178,843 sf space at Alexandra Technopark (ATP) when the leases expire on 30 Sep and 30 Nov.
- The space to be vacated by HPE constitutes 17.1% of the total net lettable area of ATP and 6.6% o FCOT's gross rental income.
- To-date, FCOT has secured commitment for 24,000 sf (13.4%) of the space that will be vacated. ATP is currently undergoing a $45m asset enhancement initiative, which will be completed by mid-2018.
- The group is still in discussions with another tenant HP Singapore, which currently occupies 304,920 sf of space under leases expiring in Nov 2017.
- Trades at 6.9% 3QFY17 annualised yield and 0.92x P/B.

*CapitaLand Commercial Trust (CCT)
- Long-term corporate rating downgraded by S&P from A- to BBB+, due to increased leverage arising from its proposed debt-funded acquisition of Asia Square Tower 2.
- Trades at 5.4% 2Q17 annualised yield and 0.9x P/B.

NEUTRAL NEWS
*Hatten Land
- Raising up to US$20m from Haitong Int'l Financial Products via a 7% convertible loan to accelerate its property development business in Melaka, Malaysia.
- The lender can convert the loan into new shares at any time during the two-year tenure at $0.35 per share.
- Trades at 3.8x forward P/E and 3.7x P/B.

*Chew's Group
- Updated that controlling shareholders are still in negotiations with third parties for a possible transaction.
- Last traded at 1.9x trailing P/E and 1x P/B.

*New Silkroutes
- Disposed its entire 28.41% stake in New Silkroutes Asset Management for $0.8m.