SG Market (05 Oct 17)

MARKET OVERVIEW
- Range-bound trading could persist despite records highs achieved in the US market, as investors position away from sectors facing headwinds such as telecoms and transport.
- Technically, the STI sees support at 3,190 with topside resistance capped at 3,270.

SECTOR WATCH
*O&M
- Global offshore rig rental appears to be recovering, led by oil firms' growing demand for harsh-environment exploration.
- Market watchers opine that the nascent pick-up for harsh-environment rigs, particularly for North Sea drilling, could lead to higher day rates as soon as 2018, and translate into increased capex spending by oil majors.
- Notable firms that build harsh-environment rigs include Sembcorp Marine (47.2x forward P/E, 1.43x P/B), Keppel Corp (14.5x, 1x P/B) and Vard (0.75x P/B).

POSITIVE NEWS
*Keppel Corp
- Secured a major FPSO conversion contract from SBM Offshore for an undisclosed sum.
- Following conversion from a Very Large Crude Carrier, the FPSO will be subsequently deployed to the Liza field in offshore Guyana in South America.
- Last traded at 14.5x forward P/E and 1x P/B.

*United Global
- Proposed 40:60 JV with Japan-based M-TechX to manufacture oil absorbing nano-fibre materials for various industrial and commercial industries in Japan, Indonesia and Singapore.
- The JVCo will leverage on United Global's extensive distribution channels across 30 countries for the super-absorbent nano-fibres produced by M-TechX, which owns the proprietary technology for mass production of nano-fibres.
- United Global will provide US$4m interest-free loan to the JVCo for working capital.
- Trades at 12x trailing P/E.

*Addvalue Tech
- Two days following a share price spike, group announced a new partnership to offer its maritime product and data solutions bundle for deep-sea fishing vessels.
- Addvalue and the undisclosed partner hope to capture a market size of at least 500 vessels for a two-month trial for its communication product from Nov '17, followed by a commercial rollout.

NEGATIVE NEWS
*SIA Engineering
- Share price plunged as much as 9% yesterday after JPMorgan reportedly sold its entire stake of 38.9m shares (3.5% share capital) at the low end of its marketed $3.11-3.30 range.
- Based on the last closing price of $3.20, counter is valued at 21x forward P/E, still above its 10-year historical average of 18x.

NEUTRAL NEWS
*Adventus
- JV set up with Panthera, a holding company representing two Vietnamese locals, to invest in real estate projects in Ho Chi Minh, Hanoi and Da Nang.
- The first development project is located in the CBD of Da Nang and sited on a land plot of 1,562.7 sqm, which will be developed into a hotel with retail component.
- Trades at 4x trailing P/E.

*UnUsUaL
- In response to a SGX trading query following a 10.2% surge in share price, group cited it was looking to finalise a certain corporate exercise.