Wednesday, January 31, 2018

SG Market (31 Jan 18)

- The market could see further profit taking following the biggest selloff in Wall Street in 8 months, pressured by a spike in US Treasury bond yields, which could signal an acceleration in interest rate increases this year.
- Technically, the STI sees support at 3,510, with topside resistance at 3,640.

*CapitaLand Retail China Trust
- Flat 4Q17 DPU of 2.37¢ was in line with estimates, as higher distributable income (+6.8%) from a capital distribution was diluted by an enlarged unit base.
- For the quarter, revenue and NPI fell to Rmb264.8m (-3.9%) and Rmb161.4m (-4.6%) due to loss of contribution from CapitaMall Anzhen following its divestment, and lower takings at CapitaMall Grand Canyon due to disruptions to trading activities arising from an operational review by the authorities leading up to the 19th National Congress.
- Occupancy maintained at 95.4% (-0.2ppt q/q), while aggregate leverage lowered to 28.4% (-7ppt q/q).
- Trades at FY18 yield of 6.3% and 1.06x P/B.

*OUE Hospitality Trust
- 4Q17 DPS fell 6.6% to 1.27¢ due to absence of income support and higher interest expenses.
- This brought FY17 payout to 5.14¢ (+11.5%), meeting expectations.
- Revenue for the quarter rose 1.8% $33.8m on higher master lease income from Mandarin Orchard due to better RevPAR (+2.3%), banquet and F&B sales, but NPI slipped 1.1% to $29.2m on higher land rent and property tax for Crowne Plaza Changi Airport.
- Aggregate leverage jumped 7ppt q/q to 38.8%, with WALE shortened to 3.8 years (3Q17: 3.9 years).
- Offers annualised 4Q yield of 5.7% and trades at 1.16x P/B.

- 3QFY18 net loss contracted to $3.9m (3QFY17: $4.4m loss), helped mainly by reduced staff costs (-16%).
- Revenue declined 10% to $28.2m, while gross margin was relatively unchanged at 16.3% (-0.7ppt).
- Bottom line was pressured by a swing into JV loss of $0.2m (3QFY17: $0.2m profit).
- Separately, MTQ proposed a renounceable underwritten 2-for-5 rights issue at $0.20 each to raise up a minimum $12.1m for working capital and debt repayment.
- Additionally, entitled shareholders will receive one free detachable warrant for every four rights shares, with an exercise price at $0.22 apiece.
- NAV/share at $0.52.

- Emerged as top bidder for 2 of 3 private housing sites in state tenders.
- It lodged the highest bid of $212.2m or $1,722 psf ppr for a Handy Road plot, comparable to the price paid by Frasers Centrepoint for the Jiak Kim Street site last month, and $472.4m or $800 psf ppr for a West Coast Vale site, which is 35% higher than the price paid by China Construction for the nearby Twin Vew site in Feb '17 but is in line current land rates.
- MKE views these deals positively as the group continues to ride on the recovering housing market by adding c.860 units to its inventory.
- Buy with TP of $13.80.

- Entered in to 20:80 JV with CHA SMG (Australia) to explore business opportunities in Australia.

- Won a Rmb30.9m contract to provide flue gas desulphurization EPC services to repeat customer Qinghai Damei Coal Industry.
- This is expected to have a positive impact on Sunpower's FY18 results upon completion.
- Trades at 7.3x trailing P/E.

*CFM Holdings
- Guided for an improvement in 1HFY18 financials due to increased sales from higher demand for metal stamping operations and cleanroom products, as well as lower depreciation expenses, reduced staff costs and professional expenses.
- Last traded at 0.61x P/B.

*Noble Group
- Credit rating agencies S&P and Moody's both downgraded Noble's ratings following its proposed debt restructuring.
- S&P has slashed long-term corporate credit rating to CC from CCC- and gave it a negative outlook, while Moody's cut its rating to Ca from Caa3, highlighting a high level of uncertainty on the group's ability to turn around its operations and return to profitability.

- Disclosed that an ammonia leak has occurred at its F&B products warehouse at Fishery Port Road.
- A stop work order has since been issued by regulators until certain rectification measures are taken.

*First Resources
- 4Q17 FFB harvest rose 2.6% to 885,617 tonnes despite a dip in yield to 5.1 tonnes/ha (-5.6%).
- CPO production slipped 1% to 203,383 tonnes, with extraction rates declining 0.3ppt to 22.1%.
- MKE last had a HOLD with TP of $2.04.

- 50% owned Rotterdam Harbour and its 51:49 JV partner Tomas Kovanda have sold their entire stake in loss-making FPS Famous Pacific Shipping for €1.
- As part of the consideration, the purchaser will also repay an inter-company debt of €0.135m to Rotterdam Harbour.
- FPS provides container consolidation shipments and services and has a negative carrying value of €7,380 on Rotterdam Harbour's books.

*Rex International
- 90% owned Lime Petroleum is divesting its 20% participating interest in license PL762 located in the Norwegian Sea for an undisclosed sum.
- The non-core asset sale is part of group's strategy to focus on areas close to infrastructure in the North Sea.

*Marco Polo Marine
- To resume trading on 2 Feb following completion of its debt restructuring.

*Hong Leong Asia
- Set up 51:49 JV company with Malaysian-based Sunway Construction Group to manufacture and sell precast concrete components.
- This is to capitalise on the Singapore government's encouragement to use precast components in construction projects.

*BM Mobility
- 65% owned Estar Investments is acquiring 99.9992% stake in Malaysian-based Wanted Marketing Communications from Ng Heok Seong and Abdul Halim Bin Abdul Aziz for RM0.85m, or 2.12x P/B.
- The target is an authorised sales agent for electric bike manufacturer Treelektrik, and also has a 75% interest in UniRide Ecotour, which has the rights to provide a car sharing programme to four universities in Malaysia.

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