SG Market (19 Jan 18)

MARKET OVERVIEW
- The market could pull back further on profit-taking as sentiment turned wary after the STI index touched a new 10-year high in yesterday's session.
- Investors will look towards a slew of corporate results from REITs and Keppel group of companies next week before taking further bets.
- Technically, the STI exhibited a bearish engulfing pattern yesterday, suggesting that a short term correction may be underway. Downside support lies at 3,470 with topside resistance at 3,560.

CORPORATE RESULTS
*Cache Logistics Trust
- 4Q17 DPU slid 9.8% y/y but was up 3.6% q/q to 1.597¢ on a post-rights unit base (+19%). This brought FY17 DPU to 6.583¢ (-10.9%), in line with estimates.
- For the quarter, revenue and NPI rose to $29.6m (+8.5%) and $23.5m (+10.2%), respectively, lifted by the rental top-up for 51 Alps Ave following settlement of the legal suit in Oct '17, as well as higher contribution from the Australian portfolio.
- Portfolio occupancy slipped 0.6ppt q/q to 96.6%, with WALE of 3.4 years.
- Aggregate leverage fell 7.3ppt q/q to 36.3%, while average debt cost of 3.56% (+0.1% q/q) and tenor of 2 years held steady.
- Trades at annualised 4Q yield of 7.3% and 1.2x P/B.
- MKE has a Hold with TP of $0.90.

*Oxley
- 2QFY18 net profit slumped 45% to $68m, dragged by lower recognition of development sales.
- This brought 1HFY18 earnings to $116.8m (-11%), making up 66% of the street's sole full year forecast.
- For the quarter, revenue of $406.1m (-33%) was derived from ongoing development of Royal Wharf in London, as well as The Rise @ Oxley-Residences in Singapore, rental income from investment properties and contributions from hotel operations.
- Gross margin shrank to 17% from 33.3% in 2Q16 due to the mismatch between sales recognition and costs incurred.
- Bottom line was shored by a turnaround in associate/JV profit of $60.6m (2QFY17: $4.5m loss).
- Total unbilled contract value amounted to $1.78b, comprising mainly of projects overseas (92%.
- Raised interim DPS to 0.72¢ (2QFY17: 0.5¢) and proposed a 1-for-5 bonus share issue.
- Trades at 20% discount to street RNAV/share of $0.84.

POSITIVE NEWS
*CapitaLand
- Signed MOU with the district government of Wuchang in China, for a joint development of a prime site in the city.
- The potential scale of the integrated development is expected to surpass all its existing properties in central China and will deepen its presence in core city clusters in the mainland.
- MKE has a Hold with TP of $3.75.

*SATS
- 47.1%-owned HK JVCo, Pan Asia Pacific Aviation Services, is issuing new shares constituting a 15% stake to Hong Kong Airlines for HK$45.2-HK$55.2m ($7.7m-$9.4m).
- Upon completion, SATS' stake will be pared to 40%.
- Hong Kong Airlines is expected to help strengthen the JVCo's growth path with its fleet of 35 aircraft.

*Cache Logistics Trust
- Divesting Hi-Speed Logistics Centre at 40 Alps Avenue for $73.8m, 7% above market valuation.
- The 309,000 sf gfa property is multi-tenanted with occupancy of 74% and has a remaining land lease of 47.6 years.
- The sale will yield a gain of $2.3m but is expected to shave off pro forma FY17 DPU by 0.8% to 6.683¢.
- Proceeds will be used to reduce debt and reinvest in better performing assets.

*BreadTalk
- Assigned a master franchise to Som Datt Group (SDG) to establish the BreadTalk bakery chain in Delhi and National Capital Region in India.
- SDG is an Indian infrastructure and construction conglomerate.
- The flagship store in Delhi is expected to open in 3Q18.
- Last traded at 30.7x forward P/E.

*Sunpower
- Secured a supply contract worth Rmb40.4m from Xinjiang Tianye Hyuihe New Materials to provide hydrogenation reactors for a syngas-to-ethylene glycol project.
- The supply contract is expected to contribute to FY18 results on product delivery.
- Trades at 6.8x trailing P/E.

*Katrina Group
- Intends to open two new outlets at Marina One (So Pho) and West Mall (Streats) by the end-Jan.
- Also signed letters of offer to open two more outlets in Jewel Changi Airport (So Pho) and Tampines One (Streats).
- The outlet expansion builds on three previously opened restaurants in Singapore and one in Shanghai, China.

*Rex International
- 87.84%-owned Lime Petroleum AS (LPA) has been awarded a new offshore E&P licence (PL818B) in Norway.
- It is an extension of its existing licence (PL818) and both are held by operator Aker BP (40%), LPA (30%) and Statoil (30%).
- The two North Sea licenses have exploration potential, with principal prospect Orkja area between them.
- PL818B is also near Johan Sverdrup, one of the five largest oil fields on Norwegian continental shelf and adjacent to producing fields.
- Drilling decisions is expected in summer 2018 with possible drilling to commence in 2019.

POSITIVE NEWS
*Alliance Mineral
- Substantial shareholder Living Waters Mining Australia (LWMA), owned by CEO Tjandra Pramoko and his wife, has agreed to sell 19m shares (3.42% stake) to a private investor.
- Post-sale, LWMA will hold 67.1m shares or 12.08% stake, just under Burwill (13.47%).
- The group updated that LWMA has fully repaid all debts owed to Jonathan Lim and Grande Pacific, and the injunction order on 46.1m frozen shares has been discharged.

NEUTRAL NEWS
*Venture Corp
- Acquiring a freehold property on 9.64 acres of land at 481 Cottonwood Drive, US, for US$29.37m.
- The industrial building has a built-up area of ~182,405 sf, which will be refurbished as the group's cluster of excellence, to develop an ecosystem that can foster innovation and collaboration with its business partners.
- The deal is expected to complete by 9 Feb '18.
- Trades at 20.1x forward P/E.

*Full Apex
- Plans to expand into upstream industries through its US$3b investment in a petrochemical & chemical fibre integrated project in the Jazan Economic City, Saudi Arabia.
- The initial stage of the project, costing US$1.04b, will produce a PET upstream product, purified terephthalic acid as well as PET.
- Group is currently considering various financing methods for the project including a loan from a Saudi development fund, as well as strategic partners.
- Expects to commence construction in 2018 with production in 2020.

*Golden Energy and Resources
- 70%-owned Indo-listed PT Golden Energy Mines (GEMS) recorded 5.5mt coal output in 4Q17, bringing full-year output of 15.6mt to 8.3% above its target.
- However, trading in GEMS may be suspended before Feb '18 as its free float is below the regulatory requirement.
- The group is in the midst of exploring opportunities to meet the requirement.

*FSL Trust
- Sold its older 1,221 TEU containership vessel FSL Busan for US$6.2m.
- Net proceeds will be used to repay its outstanding loan, reducing its debt under syndicated loan facility to US$132m.
- Post disposal, the group will record a disposal gain of US$0.75m in 1Q18.