Monday, October 2, 2017

SG Market (02 Oct 17)

- No major news flow to drive the market this week apart from URA 3Q flash estimates, which might show a rebound in home prices for the first time in four years.
- Momentum indicators are improving but the STI needs to move above 3,250 to break out of its downtrend channel.

- Acquiring leading European logistics platform Gazeley, which owns logistics facilities across four countries in Europe totalling 32m sf of gross leasable area, for US$2.8b.
- These are located in UK (57%), Germany (25%)< France (14%) and Netherlands (4%). 17m sf of its existing assets are leased, while 16m is in the development pipeline.
- The acquisition will be funded via cash, existing credit facilities and new debt. This is no need for additional equity funding.
- GLP intends to syndicate its stake in the target portfolio as part of its long-term strategy of growing its fund management platform.
- Post-acquisition, pro forma FY17 EPS is expected to rise 0.7% to US$0.1643.
- The transaction will not affect the timeline of its privatisation offer via scheme of arrangement at $3.38/share.

- Proposed to acquire a minimum 70% stake in Xintai Zhengda Thermoelectric, which provides steam and heat to industrial enterprises and residents, as well as supply electricity to local grid in Xintai City, Shandong, China.
- Consideration amount is pending an independent valuation report, and will be updated in due course.
- The target has been ordered by local government to relocate to Xintai Economic Development Zone.
- There will be relocation compensation from the government, and the new facilities will be constructed in phases, mainly comprising a 130t/h biomass boiler and three units of 130t/h coal-fired boilers, with electricity generators and steam distribution pipelines.
- Last traded at 15.5x trailing P/E.

*China Star Food
- Commenced operations at its Zilaohu factory in Fujian, China.
- Production at the 30,000-tonne capacity factory is in time to capture peak season demand.

*Yamada Green
- External auditor BDO has filed a report with Ministry of Finance, pointing to inconsistencies in the group's financial records, which may involve fraud or dishonesty.
- The group is seeking legal advice on the matter but has drawn attention to a formal notice issued by MoF China and China Securities Regulatory Commission suspending BDO China from undertaking securities-related work in May this year.
- Latest setback follows a mysterious fire that destroyed a vehicle transporting key financial documents relating to its FY17 and FY18 accounts.
- Counter has been suspended since 31 Aug.

*Frasers Centrepoint (FCL)
- Acquired 6.1m shares in Thai-listed TICON Industrial Connection via the open-market at an average price of Bt15.88 each.
- The Bt97.2m ($3.95m) acquisition lifted FCL's stake in TICON to 40.95% from 40.61%.
- Last traded at 12.3x forward P/E.

*Straits Trading
- Acquired a 98.5% stake in the distribution of a freehold 6-storey rental residential apartment in Tokyo, Japan for ¥448m ($5.4m).
- The building comprises 96 apartments with an occupancy rate of 99% as at 31 Aug.
- Last traded at 17.1x forward P/E and 0.7x P/B.

*ST Engineering
- Injected US$10.5m into its 50% owned Keystone Holdings to expand its aircraft leasing business.
- This would bring its total investment into Keystone to US$20m.
- Last traded at 21.4x forward P/E.

*Noble Group
- Completed the disposal of its North American gas and power business after Mercuria Energy made with final US$185m payment.
- Sale of its global oil liquids business is in progress and is expected to be completed by year end.
- Last traded at 0.23x P/B.

*Ziwo Holdings
- Proposed a renounceable non-underwritten 2-for-1 rights issue of warrants at $0.0033 each.
- Each warrant is exercisable within a 3-year period for a new share at $0.01.
- This translates to $0.0133 for each new share, or a 39.5% discount to its last close at $0.022.

- Deadline for the RTO of SHC Capital for its tourism assets has been further extended to 31 Dec.

- Acquiring a 5-storey building in Osaka, Japan, for ¥575m ($6.9m), or a 6.8% discount to its market valuation on 1 Aug.
- The property has total floor area of 427.78 sqm, which will be used for the group's foray into Japan for its food business.
- Last traded at 15.5x trailing P/E and 0.6x P/B.

- Disposing its leasehold property at 2 Kwong Min Road to Tong Tar Transport Service for $4.4m.
- The deal is expected to net a gain of $3m.

*Loreno Bio-Chem
- Attempting its third RTO with a new deal to acquire Knit Textile and Apparel for $26.4m, via the issue of 2.64b shares at $0.01 apiece.
- Knit Textile is a contract manufacturer of clothing in Malaysia and Cambodia.
- The group is in the process of expanding upstream into knitting, dyeing, printing and finishing of fabric.

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