SG Market (26 Sep 17)

MARKET OVERVIEW
- Sentiment continue to be weighed by the latest verbal flare-up between US and North Korea but oil-linked counters could be spurred by the overnight spike in crude prices following a Turkish threat to block Kurdish oil exports and market expectations that OPEC output cuts could be extended.
- Technically, underlying support for STI is at 3,190, with near-term overhead resistance at 3,235 (20-dma).

CORPORATE RESULTS
*TTJ Holdings
- FY17 net profit tumbled 58% to $10.9m, on the back of a 39% slump in revenue to $82.9m.
- The revenue fall came amid broad-based declines across structural steel (-35%) and dormitory (-67%) businesses.
- Gross margin narrowed to 24.6% (-4.3ppt) on a shift in revenue mix.
- Order book stood at $152m, providing visibility till FY21.
- First and final DPS slashed to 0.7¢ (FY16: 1.7¢).
- NAV/share at $0.3756.

POSITIVE NEWS
*Ascendas REIT
- Acquired an office property at 100 Wickham Street on the fringe of CBD in Brisbane, Australia for A$89.9m.
- The 14-storey freehold building has net lettable area of 13,131 sqm and weighted average lease-to-expiry of 4.8 years, with annual rental escalation of 3-4%.
- Key tenants include the State of Queensland (Department of Health) and three data centre operators.
- NPI yield for the first year is 7.1%, above AREIT's current 6.2% distribution yield.
- MKE maintains Buy and TP of $2.90.

*Hi-P Int'l
- Upgraded guidance for a higher y/y revenue and profit (previous: similar) in 3Q17 due to better-than-expected sales and improving operational efficiency.
- The group is a beneficiary of iPhone sales.
- Last traded at 11.7x forward P/E.

*Trendlines
- One of its portfolio companies, Fidmi Medical, has received a $2m investment from German healthcare giant B. Braun.
- The investment will be used to complete clinical trials and prepare for the market entry of its low-profile enteral feeding device (nutrition through a tube).
- Trades at 0.72x P/B

*Koh Brothers Eco Engineering
- Awarded a $225.4m contract by LTA for construction of the Circle Line 6 MRT project.
- The 4km line comprises three stations that will close the loop for the Circle Line by connecting Harbourfront and Marina Bay stations.
- Work scope involves civil, structural, architectural, electrical & mechanical and system works for the tunnels and other structures from the planned Prince Edward Station to the existing Marina Bay Station.
- Work will commence by end-2017 and is expected to be completed by 2025.
- The contract will lift its order book to $696.9m.
- Last traded at 7x trailing P/E.

*Mermaid Maritime
- Its Middle East JV has secured a US$96m contract extension for offshore inspection, repair and maintenance services with a national oil & gas company, following its initial five-year contract.
- Trading at 11.8x forward P/E.

NEGATIVE NEWS
*Frasers Commercial Trust
- Moody's has affirmed FCOT's Baa2 credit ratings but downgraded its outlook from stable to negative.
- The change in outlook is to reflect the weakening of its financial profile, given the anticipated increase in vacancy rates following Hewlett Packard Enterprise Singapore's intention to vacate over 90% of its space upon lease expiry on 30 Sep and 30 Nov.
- Last traded at 6.9% yield and 0.92x P/B.

*Starland Holdings
- Proposed $158m RTO deal to acquire fintech and social trading firm, Ayondo, placement of 134.9m new shares and disposal of Starland Axis and Starland Commercial Trading have all lapsed and are terminated following the non-fulfilment of conditions.
- Expenses of $2.5m have been incurred by the group in connection with the proposed acquisition, of which $1m will be recovered from Ayondo.

NEUTRAL NEWS
*Engro Corp
- 98.57% owned R&P invested US$1.13m in a 60:40 JV with Omni-Plus System.
- The JVCo will manufacture and distribute thermoplastic compounds to serve the automotive industry in the Asia ex-China market.

*Plato Capital
- Entered into term sheets with KL-listed AirAsia, Everbright Financial Investment and Oxley Capital to set up a JV to establish a low-cost airline in China to be known as AirAsia (China).
- No financial details were disclosed, with any formalisation to be made before 25 Sep 2018.