Wednesday, February 28, 2018

SG Market (28 Feb 18)

MARKET OVERVIEW
- Heightened market volatility could return after new Fed chief Jerome Powell's hawkish testimony spooked equities and revived worries about higher interest rates.
- Technically, the STI is heading towards its near term objective at 3,575 with immediate support at 3,470.

SECTOR WATCH
*Property
- CDL-TID JV submitted a top $509.4m bid or $583 psf ppr for a 2.7ha plot in Sumang Walk under the government land sales programme.
- Notably, all 17 bids surpassed the record price for EC sites.
- Strong turnout and high breakeven cost of $1,000 psf reflects developers' bullish view of the property sector.

CORPORATE RESULTS
*City Dev
- 4Q17 net profit fell 23.4% to $186.7m, bringing FY17 earnings to $538.2m (-17.6%), within expectations.
- For the quarter, revenue rose 13.8% to $1.33b on higher contributions from property development (+27%) and stable hotel operations (+1.5%), while rental income slipped (-3.4%).
- Pretax profit was weighed by lack of higher margin projects and divestment gains.
- Maintained final DPS of 8¢ but hiked special DPS to 6¢ (+50%), bringing FY17 payout to 18¢ (FY16: 16¢).
- Trades at 7.8% discount to RNAV/share of $13.80.

*UOL
- FY17 core net profit grew 10% to $355.9m, or 93% of consensus estimate.
- Revenue jumped 46% to $2.1b on consolidation of UIC. Excluding that, property development sales rose 14% on higher progressive bookings from Principal Garden, while hotel operations gained 3% on new contribution from Pan Pacific Melbourne.
- Low net gearing offers scope for further capital management.
- Increase in first and final DPS to 17.5¢ (FY16: 15¢) was a surprise.
- Trades at 26% discount to RNAV/share of $11.55.
- MKE maintains Buy with raised TP of $10.40.

*UMS
- 4Q17 net profit surged 166% to $15.8m, boosting FY17 earnings to $52m (+130%), in line with expectations.
- Revenue for the quarter leapt 13% to $38.7m, mainly bolstered by semiconductor equipment component sales (+39%), while contribution from semiconductor system (-1%) was muted.
- Gross material margin widened 12.6ppt to 58.3% due to higher proportion of component sales.
- Bottom line was also helped by absence of goodwill impairment of $1.6m, reversal of inventory provision of $1.1m (4Q16: $2.3m provision), and gain on fixed asset disposal of $1.8m.
- Maintained final and special DPS of 2¢ and 1¢, respectively, bringing full-year payout to 5.6¢ (+17%).
- Trading at 11.6x forward P/E.

*IHH Healthcare
- 4Q17 net profit turned around to RM101.3m (4Q16: RM42.5m loss), bringing FY17 earnings to RM970m (+58%), ahead of estimates.
- For the quarter, revenue rose 10% to RM2.9b on organic growth from existing operations and ramp-up of recently-opened hospitals and operations of Tokuda and City Clinic Group in Bulgaria.
- EBITDA margin remained relatively steady at 21.3% (-0.1ppt).
- Bottom line was supported by lower net finance costs of (-15.5%) and the absence of lower other operating expenses of RM338.4m (-36.1%) in absence of impairment loss from JV and doubtful debts.
- Maintained first and final DPS of 3¢.
- Trades at 19.2x FY18 EV/EBITDA.

*Wheelock Properties
- Turned around to a 4Q17 net profit of $19.9m (4Q16: 16.4m loss), mainly in absence of a $54.3m fair value loss on investment properties.
- This lifted FY17 earnings to $115.2m (+97.5%), beating estimates.
- However, revenue for the quarter slumped 42.7% to $128.6m, as contribution from property development tumbled to $109.8m (-47%).
- Gross margin expanded 21.3ppt to 29.8% amid the shift in revenue mix, and better property development margin.
- Improvement to bottom line was pared by the absences of a write-back of development property (4Q16: $8.2m) and tax credit (4Q16: $9.3m), as well as associate loss of $6.5m (4Q16: $4.4m profit).
- Maintained first and final DPS of 6¢.
- Trading at 0.72x P/B.

*Indofood Agri Resources
- 4Q17 core net profit tumbled 65.4% to Rp76.9b, bringing FY17 earnings to Rp447.3b, below estimate.
- For the quarter, revenue slipped 15.7% to Rp3.59t on lower sales volume of CPO and PK related products due to lower production.
- Accordingly, EBITDA margin halved to 18% (-17ppt).
- Bottom line was dragged by the absence of a Rp107b one-off claim, although partly supported by lower FX loss (-87%).
- Trades at 7.5x forward P/E and 0.43x P/B.

*Cityneon
- FY17 results beat expectations as net profit more than doubled to $17.4m (+160.4%), following the opening of three Marvel's Avengers S.T.A.T.I.O.N exhibitions and a Transformers Autobots Alliance exhibition.
- Revenue grew 20.7% to $116.7m as growth in intellectual property rights unit (+187.3%) helped offset weakness in its legacy businesses.
- Gross margin jumped to 53.5% (+17.5ppt) on the shift towards higher-margin intellectual property rights segment of 88.7%.
- However, bottom line was pressured by a jump in finance costs (+227.9%).
- Last traded at 11.4x FY18e P/E.

*Memtech
- 4Q17 net profit slipped 6.9% to US$3.8m, impacted by a negative US$0.9m swing to FX loss of US$0.4m.
- This brought FY17 net profit to US$14.1m (+125.3%), 34.9% ahead of street estimates.
- Revenue for the quarter grew 3.5% to US$49.6m as strength in automotive (+14.5%) and industrial & medical (+62.8%) was partially offset by weakness in consumer electronics (-12.1%) and telco (-15.7%).
- Gross margin was relatively stable at 18.8% (-0.4ppt).
- However, bottom line was hit by a surge in taxes (+549.2%).
- Hiked first and final DPS to $0.055 (FY16: $0.025).
- Last traded at 11.1x forward P/E.

*Manufacturing Integration Tech
- Turned around to FY17 net profit of $6m (FY16: $5.5m loss), helped by improved profitability.
- Revenue soared 85.6% to $65.9m on higher demand for semiconductor equipment as well as contract equipment manufacturing orders from existing customers.
- Gross margin fattened to 30% (+10.2ppt).
- Bottom line was also lifted by a disposal gain of $0.4m (FY16: nil) and government grant of $0.2m (FY16: nil), but was partially pared by increased FX loss of $0.6m (FY16: $0.2m loss).
- Proposed final DPS of 0.75¢, bringing FY17 payout to $0.01 (FY16: nil).
- Trades at 12.7x trailing P/E.

*Centurion
- 4Q17 core net profit declined 27% to $9.3m, bringing FY17 earnings to $44.3m, meeting forecasts.
- For the quarter, revenue slipped to $33.6m on reduced contribution from Westlite Tuas in Singapore due to lease expiry and reduction in bed capacity at Westlite Toh Guan.
- Gross margin held relatively steady at 68% (+0.9ppt).
- Headline earnings of $5.9m (+101%) was helped by the absence of a $9.9m fair value loss on investment properties, but partly pared by 2.6m dual listing expense.
- Declared final and special DPS of 1¢ and 0.5¢, respectively, bringing full-year payout to 2.5¢ (FY16: 2¢).
- Trades at 9.4x forward P/E.

*Citic Envirotech
- FY17 net profit rose 25% to $127.3m, beating expectations.
- Revenue soared 67% to $908.8m on firmer takings from its engineering (+115%) and treatment (+16%) divisions, as Chinese authorities imposed stricter environmental discharge standards.
- But, gross margin shrank 9.8ppt to 25% amid the change in revenue mix.
- Growth in bottom line was also pared by a higher effective tax rate.
- Net gearing was reduced to 0.09x from 0.23x in 3Q17.
- Proposed a higher first and final DPS of 1.5¢ (FY16 final: 0.75¢, special: 0.25¢).
- Last traded at 17.2x forward P/E.

*Fragrance Group
- FY17 net profit spiked 547% from a low base to $48.5m, lifted by $29.7m in fair value gain on investment properties.
- Revenue soared 66.8% to $198m, bolstered by City Gate project in property development (59% to $100.3m), higher occupancy achieved from commercial investment (+20% to $18.5m) and maiden contribution from hotels business ($15.4m).
- Gross margin held relatively steady at 36.1% (-0.4%).
- Net gearing rose to 0.89x from 0.77x in FY16.
- Last traded at 0.94x P/B.

*Q&M Dental
- FY17 results beat although net profit slid 16% to $23.9m, partially dragged by the absence of one-off gain from the disposal of Aidite and various provisions.
- Revenue slumped 25% to $112.8m on due to the deconsolidation of Aoxin from a subsidiary to an associate in Apr '17, as well as the absence of contribution from Aidite.
- Bottom line was supported by lower effective tax of 3% (FY16: 6.2%).
- Slashed final DPS to 0.42¢ (-40%) but paying a special DPS of 0.5¢ (FY16: nil), bringing total dividend payout to 1.62¢ (+44.6%).
- Trades at 32x forward P/E.

*Hyflux
- FY17 sank into a net loss of $34.5m (FY16: $118.3m profit), while earnings would have been hurt further if the $81.9m loss from Tuaspring plant, which was planned for partial divestment, was accounted for.
- Revenue plunged 57% to $353.6m on lower EPC activities at TuasOne waste-to-energy project and Qurayyat Independent Water project in Oman as construction is ongoing.
- Bottom line was weighed by higher finance costs of $58.5m (+22%) and other expenses of $104.9 (+45%) arising from project costs, higher machinery rental, FX loss and provision for doubtful debts.
- First and final DPS of 17.5¢ was 16.7% higher than last year.
- Trades at 0.39x P/B.

*Dasin Retail Trust
- 4Q17 DPU of 1.96¢ brought FY17 distribution to 7.16¢, 6% above IPO forecast.
- Revenue and NPI of $18.2m (+71%) and $14.2m (+86%) on higher takings from newly-acquired Shiqi Metro Mall, increased turnover rent from existing malls and recognition of future rent escalations on straight-line basis.
- Portfolio remains fully occupied, while aggregate leverage eased 0.8ppt q/q to 30.7%.
- Trades at an annualised 4Q yield of 9.2% and 0.56x P/B.

*Hong Leong Finance
- FY17 net profit leapt 61.5% to $85.7m, ahead of estimates.
- Net interest income jumped 28.3% to $175.4m on the back of higher loan yield and lower interest expenses (-25.9%), albeit on a reduced loan base.
- Bottom line was partially weighed on by $3.8m (+244.7%) provision of doubtful debt as well as costs relating to distribution of wealth management products.
- Hiked final DPS to $0.09 (4Q16: $0.06), bringing FY17 DPS to $0.13 (FY16: $0.09).
- Last traded at 13.4x forward P/E and 0.7x P/B.

*Mermaid Maritime
- FY17 results beat expectations despite a 75.3% slump in net profit to US$4.2m on lower contributions from associates and JV (-59.7%).
- Revenue fell 21.9% to US$144.7m due to a subsea day rate deduction and lower utilisation of some vessels.
- Consequently, gross profit declined 31.8%, exacerbated by a decline in other non-vessel projects.
- Bottom line was further hit by higher finance costs (+3%) as well as the absence of a tax credit of US$2.8m (FY17: US$56,000 expense).
- Trades at 38.5x forward P/E.

*Global Testing Corp
- FY17 net profit fell 32.8% to US$2.5m on a US$0.8m swing to tax expense of US$0.6m.
- Revenue slipped 3.2% to US$28.1m in tandem with a decrease in customers' orders.
- Gross margin contracted to 28.7% (-3.5ppt).
- Bottom line was partially shored by lower admin expenses (-27.2%).
- Cut first and final DPS of $0.09 (FY16: $0.20).
- Last traded at 12.2x trailing P/E.

*Thakral
- FY17 net profit surged to $37.7m (FY16: $0.4m) on disposal gain of $33.9m from its warehouse properties in Hong Kong.
- Turnover declined 29% to $153.2m as a slump in its lifestyle business (-35.3%) overshadowed improvement in its investment business (+4%).
- Gross margin improved to 32.3% (+11.2ppt) on the shift in revenue mix.
- Bottom line was further shored up by lower FX losses (-47%) and JV losses (-71%) as well as minority interests (-35%).
- Last traded at 1.9x trailing P/E, 0.5x P/B.

*Sino Grandness
- 4Q17 net profit turned around to Rmb4.9m and brought FY17 earnings to Rmb356m (+38.4%)
- For the quarter, revenue jumped 66.7% to Rmb914.8m on higher takings across all beverage (+75.6%) and domestic canned products (+27.6%) and overseas canned products (+60.1%) segments.
- Gross margins contracted 3ppt to 39.4% on higher cost of sales (+75.2%).
- Bottom line was lifted by FX gain of Rmb10.7m (4Q16: Rmb11.9m loss) and lower distribution and selling expenses (-8.6% to Rmb283.8m), but eroded by increased finance costs (+75.8% to Rmb14.3m) and high tax expense of Rmb23.1m.
- Trades at 2.2x trailing P/E.

*Delong
- 4Q17 net profit turned around to Rmb327.3m (4Q16: Rmb396.8m loss), bolstered full-year earnings to Rmb2.56b (+728.1%).
- Revenue for the quarter grew 9.9% to $2.98b on continual increase in ASP of hot-rolled coil, fuelled by greater infrastructure and construction activities in China
- Topline was partially offset by lower sales volume (-4.9%) due to the cessation of subsidiary Aoyu Steel and shutdown of blast furnaces amid environmental issues in China.
- Gross margin expanded 7.8ppt to 25.1% as rising ASP outpaced the rising raw material costs.
- Bottom line was lifted absence of Rmb600m impairment charge from Aoyu Steel, but partially weighed by 245% surge in admin expenses to Rmb139.9m due to R&D costs and exit fees of cessation of Aoyu Steel.
- Trades at 1.2x trailing P/E and 0.59x P/B.

POSITIVE NEWS
*Keppel Corp
- Signed a letter of intent with Awilco Drilling for a semisubmersible drilling rig for harsh environment use, with the option to build up to a further three units.
- Last traded at 15x forward P/E.

*Oxley
- Leasing the entire office building at No. 2 Dublin Landings, North Wall Quay, in Ireland to Dublin Landings Tenant, with co-working space firm WeWork as guarantor.
- The 20-year lease will commence upon the completion of construction of the premises, which is expected to be in May.
- The annual rent for the first five years is expected to be €4.8m.
- Trades at 9.4% discount to RNAV/share of $0.64.

*Versalink
- The manufacturer of mid to high-end system furniture was awarded a RM2.7m contract to supply and install office system furniture for life insurance firm AIA.
- The project includes several offices in Kuala Lumpur, Ipoh and Penang, covering a range of office furniture as such workstations, chairs, lockers and cabinets.
- The group has secured more than RM13.2m worth of contracts from AIA and more is expected in the pipeline.
- Last traded at 0.78x P/B.

Tuesday, February 27, 2018

SG Market (27 Feb 18)

MARKET OVERVIEW
- The market is likely to ride on the strength in Wall Street as 10Y UST yield eased from last week's four-year high, alleviating concerns about rising interest rates and refocused attention on economic growth and corporate earnings.
- Of the over 100 SGX companies we track that have released 4Q17 results, 16% beat earnings estimates, 57% were in line, while 28% missed expectations. This compares to 24%, 47% and 29% respectively for 3Q17.
- Technically, the STI is heading towards its near term objective at 3,575 with immediate support at 3,470.

CORPORATE RESULTS
*Golden Agri
- 4Q17 underlying net profit slumped 43.6% to US$37.3m but FY17 core earnings of US$253.8m (+36.3%) still beat estimates.
- Revenue for the quarter fell 10% to US$1.92b on lower CPO average selling price of US$662/MT (-6%) as well as lower palm production of 650,000 MT (-26%).
- EBITDA margin contracted slightly to 8.1% (-0.3ppt) on lower profitability from its downstream business amid a competitive market environment.
- Declared final DPS of 0.116¢, bringing FY17 payout to 0.809¢ (FY16: 0.635¢).
- Trading at 18.2x FY18e P/E.

*First Resources
- 4Q17 net profit tumbled 41.1% to US$34.2m, bringing FY17 earnings to US$137.7m (+9.8%), trailing estimates.
- For the quarter, revenue rose 3.2% to US$180.8m on increased sales volumes.
- But, EBITDA margin narrowed to 43.3% (-8.9ppts) due to lower CPO ASPs.
- Bottom line was dragged by higher selling & distribution costs due to increased freight charges and export taxes, as well as a negative US$15.6m swing in fair value loss of biological assets.
- Cuts final DPS to 2.15¢ (-9.5%) but paying special DPS of 3.4¢, bringing FY17 payout to 6.8¢ (FY16: 3¢).
- Trades at 12.2x forward P/E. MKE upgrades to Buy with TP of $2.20.

*Olam
- 4Q17 core net profit rose 7.2% to $109.7m, bringing FY17 core earnings to $431.5m (+18.6%).
- Revenue for the quarter jumped 18.5% to $7.24b on higher overall trading volume (+85.2%).
- But, EBITDA margin narrowed to 4.3% (-1.4ppt) on pressure in coffee and sugar trading.
- Headline earnings of $265.1m (+159.3%) was lifted mainly by a net exceptional gain of $149.2m, including a $121.2m gain from partial divestment of 50% interest in Indonesian sugar refinery business Far East Agri.
- Adjusted net gearing reduced to 0.51x (FY16: 0.73x).
- Declared higher final DPS of 4¢ (+33%), bringing full year payout to 7.5¢ (FY16: 6¢).
- Trades at 17.2x trailing P/E and 1.35x P/B.

*Best World
- 4Q17 net profit jumped 77.2% to $21.8m, bringing FY17 earnings to $55.7m (+61%), 30% ahead of street estimate.
- For the quarter, revenue rose 19.8% to $74.1m as a spike in export sales to China (+129%) from greater product adoption overshadowed the slump in Taiwan sales (-22%) from its promotion halt.
- Gross margin contracted 4ppt to 67.9% due to the shift in sales mix towards the lower priced export segment.
- Net margin improved 9.5ppt to 29.4% on improved operating leverage as export sales do not incur commissions, and was further supported by a tax credit of $1.5m (4Q16: $6.2m expense) owing to earlier provisions.
- Hiked final DPS to 2.6¢ (+73%), bringing full-year payout to 4.1¢ (+78%).
- Management expects stable sales in Taiwan and growth momentum in China to sustain in FY18.
- Trades at 12.9x forward P/E and offers 3% yield.

*Haw Par
- FY17 net profit edged 0.4% higher to $125.5m despite a 10.5% growth in revenue to $222.8m.
- Improved sales was buoyed by better performance in healthcare (+14.3%), but was partially offset by weaker contributions from others (-16.5%).
- Gross margin improved to 63.8% (+1.6ppt) on the shift in revenue mix.
- Bottom line was pressured by higher distribution & marketing (+26.5%) and general & admin (+30.7%) expenses, as well as higher effective tax of 10.9% (+1ppt).
- Maintained final DPS of $0.10, bringing FY17 payout to $0.20 (unch).
- Trades at 17.5x forward P/E and 0.91x P/B.

*Sinarmas Land
- 4Q17 net profit surged 412.5% to $238.2m, boosted by disposal gain of $109.4m (4Q16: nil) from Orchard Tower strata units.
- This brought FY17 earnings to $356m (+209.8%).
- Revenue for the quarter jumped 70.8% to $560.4m mainly on higher sales of land parcels to Japanese and Chinese property developers, as well as higher sales recognition from BSD City apartment handovers.
- Gross margin expanded 7.1ppt to 69.2% on the shift towards land parcel sales.
- Bottom line was further supported by slower rise in opex (+20.6%) as well as lower effective tax rate of 5.1% (-12ppt).
- Proposed special DPS of 0.7¢, bringing FY17 payout to 1.5¢ (FY16: 0.19¢).
- Last traded at 0.75x P/B.

*Hotel Properties
- FY17 net profit jumped 67.9% to $173.7m on the back of a significant increase in JV/ associate contribution to $128.9m (FY16: $34.7m), following the completion of Burlington Gate and Holland Park Villas in London.
- Revenue grew 14.1% to $659.2m attributable to sales from Tomlinson heights as well as better performances from hotels and resorts.
- Bottom line was further supported by a positive swing to fair value gain of $12m (FY16: $2.4m loss).
- Maintained first and final DPS of $0.04 but hiked special DPS to $0.06 (4Q16: $0.04), bringing FY17 payout to $0.10 (FY16: $0.08).
- Last traded at 1x P/B.

*GK Goh
- 4Q17 net profit from continuing operations slumped 67% to $7.9m, bringing FY17 earnings to $25.2m (-21%).
- For the quarter, revenue slid 10% to $32.1m as growth in corporate services revenue (+6%) was negated by reduced investment (-24%) and other income (-63%) arising from lower management fee income.
- Operating margin shrank 28.3ppt to 13.7% due to increased operating expenses (+34%) from higher staff costs (+64%) and office and equipment rental expense (+10%).
- Bottom line was weighed by the absence of a $16.7m one-off tax write-back from associate Opal Aged Care, but partially mitigated by lower finance cost (-34%) and a tax credit of $0.8m (4Q16: $9.5m expense).
- Lowered final DPS to 3¢ (FY16: 4¢), although paying a special DPS of 3¢ (FY16: nil).
- Trades at 14.5x trailing P/E and 0.89x P/B.

*Hock Lian Seng
- FY17 results came ahead of street's sole estimate despite a 45% plunge in net profit to $19.8m, on absence of JV contribution of $11m stemming from a residential project which has completed.
- Revenue leapt 28% to $151.1m as a civil engineering project for its Changi Airport JV progressed to a more active phase.
- Gross margin fell 7.7ppt to 17.9% on lower reversal of maintenance provision, as well as lower profitability for on-going projects.
- Net cash position ticked higher to $117m (3Q17: $115.2m).
- Trimmed first and final DPS to 1.8¢ (FY16: 2.5¢).
- Civil engineering order book depleted to $775m (3Q17: $830m).
- Trades at 15x forward P/E and 1.37x P/B.

*Aspial
- FY17 net profit more than doubled to $2.3m, albeit from a low base, on stronger JV/associate contributions (+127%).
- Revenue fell 22% to $485.1m on weaker contribution from real estate (-45.1%) and jewellery (-9.4%), although partially mitigated by stronger takings from financial service (+15.4%).
- Bottom line was partially weighed by higher effective tax rate of 60.6% (+30.4ppt).
- Maintained first and final DPS of 0.25¢.
- Trades at 1.48x P/B.

*Maxi-Cash Financial Services
- FY17 net profit expanded 17% to $13.3m, while revenue grew 15% to $188.4m.
- Topline growth was led by growth across pawnbroking (+6.9%) and retail & trading of jewellery & branded merchandise (+16.1%), as well as maiden contribution from the secured lending business ($1.9m).
- Bottom line was bolstered by interest income of $2m (FY16: nil) and lower effective tax rate of 10.7% (-2.2ppt).
- However, group slashed final DPS to 0.7¢ (4Q16: 1¢), bringing FY17 dividend payout to 1.2¢ (FY16: 1.5¢).
- Trades at 10.1x trailing P/E.

*Bumitama Agri
- 4Q17 net profit fell 21.2% to Rp363.6b, bringing FY17 earnings to Rp1.19tr (+18.7%), beating estimates.
- Revenue slid 9% to Rp2.07t as higher selling price of CPO (+4.8%) and palm kernel (+1.5%) was negated by lower sales volume of CPO (-11.7%) and palm kernel (-13.9%).
- Gross shrank 6.4ppt to 33% on change in sale mix.
- Bottom line was supported by narrower FX loss of Rp11.5b (4Q16: Rp55.4b) and absence of share of loss from associate (4Q16: Rp6.9b).
- NAV/share at Rp4,282.

*Kencana Agri
- Turned around to FY17 net profit of US$5m (FY16: US$8.9m loss), lifted by a disposal gain of US$8.2m.
- Revenue grew 7% to US$148.1m on higher ASPs of CPO (+5.6%) and crude palm kernel oil (+11.5%) partially offset by lower sales volume of CPO (-6.1%).
- Operating margin of 15.6% (+7.8ppt) on lower distribution (-2%) and admin (-11%) costs.
- Bottom line continued to be hampered by substantial interest expense of US$19.6m (+1%).
- Trades at 10.7x trailing P/E.

*Hafary
- 4Q17 net profit grew 5% to $2.9m, bringing FY17 earnings to $8.7m (+7%).
- Revenue for the quarter slipped 2.2% to $30m as contributions from its general (+1.7%) was offset by weakness in its project (-7.8%) segment.
- Gross margin was expanded to 40.9% (+1.8ppt) on lower purchases (-14.4%).
- Bottom line was shored up by higher associate contribution (+20.8%) and lower taxes (-29.8%).
- Proposed final DPS of 0.5¢ (4Q16: nil), bringing FY17 DPS to 1.5¢ (FY16: 1¢).
- Last traded at 8.3x trailing P/E and FY17 yield of 8.9%.

*Nordic
- 4Q17 net profit rose 14% to $4.3m, lifting FY17 earnings to $15.3m (+20%).
- Revenue for the quarter climbed 10% to $20.7m, as growth in the maintenance services segment (+99%) outweighed weakness in project services division (-28%).
- Gross margin expanded 4.9ppt to 34.7% amid the shift in revenue mix.
- Bottom line was shored by a $0.6m tax credit, which helped offset pressure from higher admin expenses (+29%).
- Net gearing was pared to 0.09x from 0.14x in 3Q17.
- Raised final DPS to 0.873¢ (4Q16: 0.731¢), bringing FY17 payout to 1.506¢ (1.2682¢).
- Order book increased to $106.8m as at Jan '18, from $99.4m in Sep '17.
- Trades at 15.3x trailing P/E.

*Dyna-Mac
- 4Q17 net loss stayed at $18.4m (4Q16: $19.3m loss), while FY17 loss deepened to $57.1m (FY16: $19m loss).
- Revenue for the year dived 84.6% to $31.4m due low volume of projects amid weak oil prices.
- Accordingly, the group sank to gross loss of $30.1m (FY16: $41.8m profit).
- Net cash position tumbled to $30.3m from $42.8m in 3Q17.
- Net order book, with deliveries into 4Q18, depleted to $90m from $98.6m in Sep '17.
- Trades at 1.15x P/B.

*Ntegrator
- Sank into FY17 net loss of $1.6m (FY16: $2.5m profit) as operating expenses of $9.6m (-0.6%) outweighed operating income of $6.9m (-44.4%).
- Revenue for the full-year slumped 50.5% due to reduced contribution from project sales segment (-77.9%), but was partly offset by higher turnover from project management and maintenance services business (+16.9%).
- Gross margin widened 3.5ppt to 21.1% on lower cost of sales (-52.6%).
- However, order book surged to $75.5m (+109%), with secured contracts from repeated customers in Singapore, Vietnam and Myanmar.
- Trades at 0.56x P/B.

POSITIVE NEWS
*Tat Seng Packaging
- Awarded the tender of a 74,115 sqm land by government of Xiting town, Tongzhou district, Nantong, in China for Rmb21.9m ($4.5m).
- The 50-year lease-term land will be used for building new factory and expanding Nantong Tat Seng existing business.
- Trades at 6.4x trailing P/E.

*Nordic Group
- Secured several new contracts worth $6.9m from repeat customers.
- This include $4.1m capital projects for its system integration services division, which are expected to complete between 1Q18 and 3Q19.
- Remaining $2.8m projects are for the precision engineering division, and are expected to complete by 2Q-4Q18.

*ISOTeam
- Awarded 26 projects in Singapore worth an aggregate $24.16m.
- Projects are expected for completion by Mar 2021.
- Trades at 8.8x forward P/E.

*Singapore Myanmar Investco (SMI)
- Signed exclusive agreement to expand the Coffee Bean & Tea Leaf (CBTL) brand and outlets across Myanmar.
- The first new outlet is scheduled to open by 1Q18.
- This expands from SMI's existing franchise rights to operate CBTL outlets in the new Yangon International Airport Terminal.

*The Trendlines
- Its portfolio company, Saturas, has completed an investment round of US$4m with investors including Hubei Forbon Tech, Ramat Magshimim and Miguel Torres Winery.
- Saturas is in the midst of developing an system for automatic irrigation based on a miniature sensor.
- Trades at 0.69x P/B.

NEGATIVE NEWS
*Yongnam
- 25%-owned consortium's framework agreement on a public-private partnership with Myanmar's government for the design, construction and management of Hanthawaddy Int'l Airport has expired.

*Profit warnings
- Blumont
- A-Sonic Aerospace

NEUTRAL NEWS
*Sembcorp Industries
- Setting up a visitor centre and exhibition gallery with Ascendas-Singbridge at Amaravati Capital City Start-up Area in Andhra Pradesh, India.
- To recap, the Singapore consortium was appointed as master developer of the 684ha start-up area, which will likely to become Amaravati's financial district.
- Project Phase Z.ro, with land area over 2ha, is part of a larger catalytic development and would act as a key touchpoint for visitors to get a glimpse of Amaravati Capital City as it develops.
- It will also function as a community hub, which locals would be able to access it for recreation activities.
- Trades at 14x forward P/E and 0.96x P/B.

Monday, February 26, 2018

SG Market (26 Feb 18)

MARKET OVERVIEW
- The market could continue its uptrend following a positive close on Wall Street last Fri, while investors await a slew of Singapore economic data this week, including Jan industrial production and PMI for Feb.
- Technically, the STI is heading towards its near term objective at 3,575 with immediate support at 3,470.

CORPORATE RESULTS
*Genting Singapore
- 4Q17 net profit slid 17% to $132.8m but FY17 earnings of $601m (+78%) came in within expectations.
- Revenue for the quarter rose 4% to $580.1m on stronger slot and VIP volumes, despite lower hold rate, as well as improved leisure and hospitality segment, with daily average visitorship growing between 6-9%.
- Adjusted EBITDA rose 9% to $255.1m on record low provisions from a more measured credit policy.
- However, operating margin shrank 11.4ppt to 30.9% mainly on a negative FX swing to $1.5m loss (4Q16: $65.4m gain), as well as higher admin cost of $41m (+22%).
- Declared higher final DPS of 2¢ (+33.3%) to bring full-year payout to 3.5¢ (+16.7%).
- Optimistic that the Japan IR Execution Bill will be tabled in this year's Diet session, which will pave the way for the formal bidding process for Japan gaming licence.
- Trades at 20.6x forward P/E.

*Raffles Medical
- FY17 net profit of $70.8m (+0.8%) met estimates.
- Revenue was flat at $477.6m (+0.8%), as higher local patient load was offset by lower renewal of international healthcare plans by foreign patients.
- Operating margin narrowed marginally to 16.8% (-0.5ppt) on increased staff costs (+2.4%).
- Raised final DPS to 1.75¢ (+17%), bringing full year payout to 2.25¢ (+12.5%).
- Trades at 30.6x forward P/E.

*AEM Holdings
- 4Q17 net profit surged more than 11x to $9.7m (4Q16: $0.8m), boosting FY17 earnings of $31.5m (+576%) ahead of expectations.
- Revenue for the quarter jumped 202% to $59.1m on strong sales of test handlers and relevant consumables to its key semiconductor customer.
- Gross material margin widened 1ppt to 37.3% amid a favourable shift in sales mix, and change in pricing following a switch from SGD to USD billing.
- Net cash position improved to $46m (3Q17: $25m), accounting for 11% of market cap.
- Raised final DPS to 6.5¢ (4Q16: 1.3¢), bringing full-year payout to 12¢ (FY16: 1.8¢).
- Proposed a 3-for-1 bonus issue.
- Trading at 10.3x FY18e P/E.

*Asian Pay TV
- Flat 4Q17 DPU of 1.625¢ brought FY17 distribution payout to 6.5¢, meeting expectations.
- Revenue for the quarter rose 0.9% to $84.7m mainly on positive FX effects. In constant TWD terms, contribution from basic cable TV (+0.3%) improved, while broadband (-2.2%) and premium digital cable TV (-5.8%) declined.
- EBITDA margin widened to 61.1% (+1.6ppt).
- Reaffirmed FY17 DPU guidance of 6.5¢, implying 11.4% yield.
- NAV/unit at $0.83.

*HRnetGroup
- FY17 net profit crept up 0.6% to $41.3m, in line with estimates.
- Revenue rose 7.4% to $391.9m on strong growth in flexible staffing business in Singapore.
- Gross and operating margins both contracted 1.7ppt to 34.7% and 14.5%, respectively.
- Updated that M&A work is on track.
- Declared maiden final DPS of 2.3¢.
- Trades at 20.1x forward P/E.

*APAC Realty
- 4Q17 net profit jumped 59.7% from a low base to $7.9m, taking FY17 earnings to $25.9m (+63.1%), beating estimates.
- Revenue surged 62.5% to $79.8m on higher brokerage income from increased market transactions for new home sales (+162.9% to $46.8m), as well as resale and rental of properties (+34.9% to $80.7m).
- Gross margin narrowed 1.9ppt to 12.3% on higher pace of cost expansion (+66.1%) arising from higher headcount.
- Proposed maiden final DPS of 2¢.
- Trades at 14.1x forward P/E.

*CSE Global
- Sank to FY17 net loss of $45.1m (FY16: $21.2m profit), largely hurt by impairment of receivables ($11.2m) and goodwill ($27.9m), as well as a one-off settlement cost ($16.8m).
- Stripping out non-recurring items, core earnings tumbled 37.1% to $13.3m, but came ahead of estimates.
- Revenue rose 14% to $362.3m on firmer contributions from projects in Americas and Asia Pacific, but gross margin narrowed 5.7ppt to 26%.
- Proposed final DPS of 1¢ and a special DPS of 0.5¢, maintaining full-year payout at 2.75¢.
- FY17 new orders totalled $381.9m (+33.2%), although order book was depleted to $175m (3Q17: $207.6m).
- Trades at 0.82x P/B.

*BHG Retail REIT
- 4Q17 DPU edged up 0.8% to 1.32¢, bringing full-year DPU to 5.47¢ (+2.8%).
- For the quarter, gross revenue and NPI rose to $16.7m (+5.8%) and $11.1m (+8%), respectively, amid higher rental reversion and occupancy in its three multi-tenanted malls in China.
- Overall portfolio occupancy ticked up 0.7ppt q/q to 99.7%, with WALE of 7.1 years (3Q17: 8.2 years).
- Aggregate leverage pared down by 0.3ppt q/q to 32.2%, with average debt cost of 3.7% (3Q17: 3.66%).
- Offers 4Q annualised yield of 7% and trades at 0.91x P/B.

*Heeton
- FY17 net profit soared to $71m (+469%), boosted by fair value gain of investment properties of $36.5m and $28m disposal gain.
- However, revenue slid 15% to $57.1m due to lower sales recognition from residential project Onze@Tanjong Pagar.
- Bottom line was helped by absence of a divestment loss (FY16: $10.3m) and a lower effective tax rate, but pared by lower JV/ associate income (-40%).
- Maintained first and final DPS of 0.6¢, but proposed special payout of 0.4¢ (FY16: nil).
- Trades at 0.5x P/B.

*Yeo Hiap Seng
- 4Q17 net profit declined 25.6% to $7.7m, bringing FY17 net profit to $153.7m (FY16: $29m profit), which was lifted by a disposal gain of $138.4m.
- Core F&B revenue declined 8.2% to $84m due to general market weakness, competitive pricing and sales disruption in Cambodia.
- Gross profit for the F&B unit contracted a further 20.9% to $24.5m on higher costs of finished goods.
- Bottom line was further hit by lower FV gains on investment properties (-33.2%), although partially offset by a disposal gain of a China subsidiary for $3.4m.
- Maintained final DPS of 2¢, bringing FY17 payout to 4¢ (FY16: 2¢).
- Last traded at 4.6x trailing P/E.

*Tiong Seng
- FY17 net profit more than doubled to $30.9m, supported by reduced net finance costs (-37%) and lower effective tax rate of 24.4% (-10.7ppt).
- Revenue slipped 4% to $742.8m as growth in construction (+3%) was offset by lower sales of development properties (-35%) and rental income (-4%).
- Operating margin expanded to 6% (+1.9ppt) on the shift towards higher-margin construction business.
- Construction order book at $543.1m, providing sales visibility till 2020.
- Disclosed that ~$60.7m worth of development unit sales have yet to be recognised.
- Hiked first and final DPS to 1.5¢ (FY16: 0.8¢).
- Trades at 5.8x trailing P/E.

*HG Metal
- 4Q17 net profit sank to just $88,000 (4Q16: $0.8m profit) on nil associates contribution (4Q16: $0.5m).
- This brought FY17 net loss to $11.9m (FY16: $0.9m profit).
- Revenue for the quarter grew 17% to $42m as a 37% jump in ASPs more than offset a 14% decline in sales volume.
- Gross margin improved to 6.7% (+1.4ppt).
- Trades at 0.45x P/B.

*ValueMax
- FY17 net profit jumped 22.7% to $19.1m on improved operating leverage and higher associate contribution (+30.3%).
- Revenue slipped 5.5% to $239.4m due to weaker takings from retail and trading of pre-owned jewellery and gold business (-8.5%), although partially mitigated by a stronger pawnbroking (+8.9%) business.
- Gross margin expanded 3.4ppt to 17.6% on the shift in revenue mix.
- Hiked first and final DPS to 1.26¢ (FY16: 1.08¢).
- Trades at 8.4x trailing P/E and 0.92x P/B.

*GSH Corp
- 4Q17 net profit turnaround to $15.7m (4Q16: $3.7m loss), boosted by a negative goodwill of $11.7m arising from new associate Henan Zhongyuan.
- This brought FY17 earnings to $91m (4Q16: $3.6m loss).
- Revenue for the quarter surged 114% to $37.8m on higher progressive revenue recognition from Eaton Residences project in Malaysia, as well as improved takings from the hospitality segment.
- Gross margin improved 2ppt to 51% on the change in revenue mix.
- However, bottom line was partially offset by higher personnel expenses of $8.6m (+48.8%) and increased director remuneration of $1.6m (4Q16: $0.34m).
- Proposed final DPS of 1.25¢ (4Q16: nil), bringing total dividend payout to 2.25¢ (FY16: 1¢).
- Last traded at 10.7x trailing P/E.

*Kim Heng Offshore & Marine
- 4Q17 net loss contracted to $9m (4Q16: $12.9m loss), mainly on $4.6m drop in impairment of fixed assets.
- This brought full-year loss to $15.3m (FY16: $17.8m loss).
- Revenue for the quarter tumbled 30% to $5.2m on a revenue reversal stemming from a long overdue customer balance, and drop in turnover from equipment rental & material sales.
- Kim Heng barely broke even at the gross level (4Q16: 10%).
- Net gearing increased to 0.33x from 0.25x in 3Q17.
- Maintained first and final DPS of 0.07¢.
- Trades at 0.86x P/B.

*CNMC Goldmine
- Turned around to 4Q17 net profit of US$1.3m (4Q16: US$1.9m loss), helped mainly by non-core items.
- This brought FY17 earnings to US$2.8m (-69.4%).
- For the quarter, revenue slipped 6.2% to US$4.9m as higher ASP (+4.7%) was more than offset by a slump in sales volume (-10.4%).
- Swung into operating profit of US$1.5m (4Q16: US$2.3m loss) mainly from a US$3.1m swing to FX gain of US$0.7m as well as a reversal of performance bonus accruals.
- Slashed first and final DPS to 0.2¢ (FY16: 0.934¢).
- Trading at 9.3x forward P/E and 1.8x P/B.

*Jiutian Chemical
- 4Q17 net profit turnaround to Rmb28.1m (4Q16: $5.8m loss), bringing FY17 earnings to Rmb70.1m (FY16: Rmb0.4m).
- Revenue for the year jumped 59% to Rmb1.12b on higher sales volumes and selling prices of DMF and Methylamine, amid tighter industry supply arising from production stoppages by other producers due to environmental issues.
- Selling price of DMF surged 33% to Rmb5,527, while that for methylamine jumped 49% to Rmb7,558. Sales volume rose 8% and 16%, respectively.
- Accordingly, gross margin widened 7.6ppt to 13.2%.
- Bottom line was partially offset by decline in other income (-65% to Rmb3.3m) due to absence of one-off government grants, lower interest income and rental income.
- Trades at 9.7x trailing P/E.

POSITIVE NEWS
*SBS Transit
- Awarded a five-year contract by LTA to operate the Bukit Merah bus package, marking the second award for SBS Transit out of four sets of public bus services put up for tender under the bus contracting model.
- The contract can be extended by another two years.
- It comprises 18 bus services, including two cross-border services to Johor Bharu, and will commence in 4Q18.
- Last traded at 17.4x trailing P/E.

*Cordlife
- Partnered US-based PlumCare to offer genetic screening for disease management and prevention.
- Genetic testing service PlumCare™ DNA Advisor will soon be launched by Cordlife, to help families in Asia identify gene variants associated with increased risk of developing inherited conditions such as breast and ovarian cancer.

*MindChamps
- Acquired MindChamps PreSchool @ Woodlands for $1.3m.
- The deal was priced at 4.6x P/B and is in line with the group's M&A strategy.

Friday, February 23, 2018

SG Market (23 Feb 18)

MARKET OVERVIEW
- The market will likely continue to be volatile as interest rate fears ebb and flow according to movements in US treasury yields.
- Sembcorp Industries' new growth strategy could disappoint investors due to the lack of any restructuring plans for Sembcorp Marine.
- Technically, the STI is still heading toward its near term objective at 3,575 with immediate support at 3,470.

CORPORATE RESULTS
*Sembcorp Industries
- 4Q17 net profit plunged 85% to $22.8m, taking FY17 earnings to $230.8m (-42%), widely missing the mark.
- Turnover for the quarter inched 4.8% higher to $2.12b, on better utility performance (+24%), but pared by the marine division (-21%) due to lower sales recognition for rig & floaters and offshore platform projects.
- However, gross margin slumped 5.4ppt to 7% on lower profitability in both divisions.
- Bottom line was further impacted by a $25.4m provision for potential fines and claims at an overseas water business arising from an alleged environmental offence for discharge of off-specification wastewater.
- Final DPS halved to 2¢, bringing FY17 payout to 5¢ (FY16: 8¢).
- Plans utilities divestments of up to $0.5b and IPO of India energy business.
- Last traded at 13.8x forward P/E.

*ST Engineering
- 4Q17 net profit slipped 1.1% to $168.5m but FY17 earnings of $511.9m (+6%) came in at top end of estimates.
- Revenue for the quarter declined 6.5% to $1.7b on weakness across electronics (-9%), land systems (-21%), marine (-22%) and others (-14%), except aerospace (+9%).
- PBT margin held steady at 10.2% (+0.1ppt) as better profitability in aerospace, electronics and land systems divisions helped offset continued weakness in marine.
- Final DPS of $0.10 brought FY17 payout to $0.15 (unch).
- During the year, it secured $5.1b of contracts, boosting its order book to $13.2b (+14%).
- Guided for growth in its aerospace, electronics and land systems divisions, while marine will remain weak.
- Last traded at 19.7x forward P/E and 4.4% yield.

*Wilmar
- 3Q17 core net profit slumped 37% to US$373.9m but FY17 core earnings of US$1.05b (+7%) met estimates.
- For the quarter, revenue slid 3.3% to US$11.5b due to weaker performances in tropical oils (-3.3%) and sugar (-95.6%) segments, but shored by stronger oilseeds & grains (+18.2%).
- EBITDA margin was maintained at 7.2% (+0.1ppt).
- Headline net profit of US$427.5m (-23.8%) was buttressed by US$139.9m (4Q16: US$158.3m loss) in other operating items mainly arising from FX gain, but partially offset by impairment loss of US$30.6m from its Australian sugar refinery business.
- Despite a weaker set of results, final DPS was raised by 75% to $0.07, bringing full-year payout to $0.10 (+53.8%).
- Trades at 12x forward P/E and 0.91x P/B.

*Sheng Siong
- 4Q17 net profit rose 9.3% to $16.8m, taking FY17 earnings to $69.8m (+11.4%) meeting estimates.
- For the quarter, revenue rose 1.7% to $200.3m on higher same store sales growth (+3.2%) and contribution from new stores (+2.7%).
- Gross margin of 26.5% (+0.2ppt) was due to better buying prices and higher rebates from suppliers for special promotion and volume discounts.
- Bottom line was weighed by higher effective tax of 19.1% (4Q16: 18.4%).
- However, final DPS was slashed to 1.75¢ (-5.4%), bringing total dividend payout to 3.3¢ (-12%).
- Last traded at 19.7x forward P/E.

*OUE
- FY17 results beat estimates despite a 31.5% slump in net profit to $98.9m due to higher minority interests (+90.5%).
- Revenue declined 14.7% to $754.1m on absence of development property income arising from Crowne Plaza Changi Airport Extension (FY16: $250m). Excluding that, sales improved 11%
- Gross margin held steady at 35.9% (-0.3ppt).
- Bottom line was dragged by a provision for legal and related expenses of $46m related to OUE Lippo Healthcare, but was mitigated by higher fair value gain of $112.2m (FY16: 34.1m loss)
- Maintains final DPS of 2¢, bringing full year payout to 3¢ (FY16: 5¢)
- NAV/share at $4.46.
- Trades at 24x forward P/E and 0.44x P/B.

*United Engineers
- FY17 net profit jumped to $89.6m (+227%) on a revaluation gain of $44m and a $16.8m write-back.
- Revenue climbed 12% to $539.4m mainly lifted by higher property development sales (+106%) at Chengdu Orchard Villa (phase 4) in China and The Manhattan in Malaysia.
- Gross margin narrowed 3.7ppt to 36.7% amid a shift in revenue mix.
- Bottom line was also helped by a sharp drop in finance expenses to $21.2m (-41%) amid lower borrowings.
- Proposed a lower first and final DPS of 4¢ (FY16: 5¢) without any special payout (FY16: 7¢).
- Trading at 0.8x P/B.

*Riverstone
- 4Q17 net profit grew 5% to RM34.2m, bringing FY17 earnings to $129.3m (+7.4%), missing estimates.
- Revenue jumped 15.1% to RM210.7m on increased demand for both healthcare and cleanroom gloves.
- However, gross margin shrank 1.9ppt to 24.4% on increased cost of raw materials.
- Further, bottom line was partly weighed by a FX loss of RM2.8m (4Q16: RM6.1m gain) and higher taxes (+11.8% to $6m), but partially mitigated by a positive swing in fair value gain on derivatives to $1m (4Q16: $3m loss).
- Undertaking phase 5 expansion plan, which will raise annual production capacity to 9b (+18%) by Dec 2018.
- Proposing a final DPS of 5.7sen (+9.8%), taking full-year payout to 7sen (+7.9%).
- Trades at 15.1x forward P/E.

*Hotung
- FY17 results beat estimates as net profit grew 9% to NT$345.4m on reduced impairment losses (-26%) and lower effective tax rate.
- But, revenue fell 10% on lower fair value gains (-97.9%), dividend income (-7%) and higher FX losses (+126%), although partly mitigated by increased disposal gain on investments.
- Bottom line was supported by a larger decline in opex (-14%).
- Hiked first and final DPS to NT$3.42 (FY16: NT$3.10).
- NAV/share at NT$63.48 ($2.85) translates to 0.67x P/B.

*Far East Orchard
- FY17 net profit plunged 67% to $21.6m on a 83% dive in JV contribution to $11.7m, due to lower property development sales and absence of one-offs.
- Revenue fell 18% to $151.2m following the cessation of hospitality lease agreements in Australia and New Zealand in late 2016.
- Gross margin widened 2.1ppt to 34.2%.
- Bottom line was further weighed by a $3m drop in interest income.
- Maintained first and final DPS of 6¢.
- Trading at 0.5x P/B.

*ISEC Healthcare
- 4Q17 net profit jumped 44% from a low base to $2.1m, bringing FY17 earnings to $7.9m (+23%).
- For the quarter, revenue climbed 15% to $9.5m, bolstered by increased patient visits in Malaysia and Singapore, and contribution from four recently-acquired general clinics in Singapore.
- Gross margin improved marginally to 47.6% (+2.7ppt).
- Hiked final DPS to 0.7¢, bringing full-year payout to 1.2¢ (FY16: 0.33¢).
- Last traded at 21.6x trailing P/E.

*Kingsmen Creatives
- FY17 net profit slid 18% to $9.7m, partly weighed by FX loss of $1.6m (FY16: nil).
- Revenue declined 7% to $307.3m on softer takings in both exhibitions & thematic (-9.7%) and retail & corporate interiors (-5%) segments.
- Gross margin slipped 0.2ppt to 25.1%.
- Maintained final DPS of 1.5¢, bringing full-year payout to 2.5¢ (unch).
- Trading at 12.6x FY17 P/E.

*Trek 2000 International
- FY17 net profit grinded 1.5% higher to US$6.2m, helped by lower R&D, marketing and staff expenses.
- However, revenue tumbled 32% to US$112.6m on a drop in contribution from key revenue generating interative consumer solutions segment, as well as the disposal of Racer Group in 1Q17.
- Gross margin expanded 4.3ppt to 15.4% on costs containment.
- Net cash rose to US$37m (3Q17: US$33.6m), accounting for 61.8% of market cap.
- Proposed first and final DPS of 1¢ (FY16: nil).
- Trading at 9.8x FY17 P/E.

POSITIVE NEWS
*AEM
- Acquired Singapore-based IRIS Solution for $1.5m, priced at 3.6x P/E or 2.9x EV/EBITDA.
- IRIS Solution is engaged in R&D and integration of advanced machine vision solutions, which have been integrated with automated optical wafer inspection systems, die bonders and semiconductor devices inspection systems.
- Payment will be via cash over five tranches with the first $0.5m upon completion of acquisition.
- The deal will deepen and enhance the group's capabilities, product range and services to the semiconductor and industrial sectors.
- Trades at 13.1x forward P/E.

*SUTL Enterprise
- To acquire a 60% stake in Thai firm Makham Bay Marina for $5.6m, with the intention to develop ONE°15 integrated marina club in Phuket, Thailand.
- The project's total construction cost is estimated to be $24.3m and will span a total land area of 38,400 sqm and feature a 171-berth marina, 66 hotel rooms and multiple F&B outlets.
- The remaining 40% stake will be held by Bangkok-based shareholders.
- Trades at 14.3x trailing P/E and 1.08x P/B.

*SJM Intl
- Expected to turn around to a marginal FY17 net profit (FY16: $0.4m loss) on its new consultancy services business as well as a disposal gain.

NEGATIVE NEWS
*Chaswood Resources
- Guided for a more substantial loss in FY17 due to lower revenue amidst challenging market conditions and higher asset impairment as a result of closure of non-profitable outlets in Malaysia.
- Results slated to be released on or before 1 Mar.

Thursday, February 22, 2018

SG Market (22 Feb 18)

MARKET OVERVIEW
- The market could pull back after minutes of the latest FOMC meeting revived worries about higher interest rates and sent US 10-year yields closer to 3%.
- Rig builder Sembcorp Marine could face renewed selling pressure following its dismal 4Q results and news that a consultant linked to its US$5.5b drillship contracts with Sete Brasil was charged by the Brazilian authorities for corruption.
- Technically, the STI has almost closed its breakdown gap at 3,520, with next resistance at 3,575 and downside support at 3,460.

CORPORATE RESULTS
*Sembcorp Marine
- Sank into 4Q17 net loss of $33.8m (4Q16: $34.3m profit), which pulled down its FY17 earnings to $14.1m (-82%), well below estimates.
- Excluding a tax credit of $25.6m, the group would have ended the full year in the red.
- For the quarter, revenue slipped 21% to $655m despite the sale of nine jack-up rigs to Borr Drilling, as it suffered reduced activity for its rigs, floaters and offshore platform projects and additional cost accruals.
- This resulted in a gross loss of $48.2m (4Q16: $34.7m profit). No new provisions made in the quarter.
- Secured $696m of new orders, taking FY17 order wins to $966m (excluding $1.77b from Borr Drilling).
- Net order book contracted 8.2% q/q to $4.45b.
- Maintained 1¢ final DPS, bringing full-year payout to 2¢ (FY16: 2.5¢).
- While the industry is showing some signs of improvement, order flow remained weak amid intensified competition.
- As share price has rallied 43% ytd largely on hopes of huge order wins, we anticipate a wave of downgrades.
- Trades at 2.2x P/B.

*BreadTalk
- 4Q17 net profit jumped 14.4% to $5.1m due to lower tax rate, bringing FY17 core net profit to $17.7m (+153.3%), ahead of estimates.
- For the quarter, revenue slipped 2% to $150.3m on lower takings from core bakery (-4.5%), food atrium (-0.6%) and other (-4.1%) segments, although partially mitigated by improved contributions from restaurant (+1.4%) and F&B incubator 4orth (+13.9%).
- Overall EBITDA margin contracted 5.4ppt to 13% on slimmer profitability across bakery (-3.8ppt), food atrium (-3.6ppt) and restaurant (-2.7ppt) segments.
- Bottom line was lifted mainly by lower effective tax rate of 27.8% (-16.6ppt), and shored up by lower associate losses.
- Maintained final DPS of 2¢ but declared an additional special DPS of 1¢, bringing FY17 payout to 7¢ (FY16: 3.85¢).
- Last traded at 23x forward P/E and 4.1% FY17 yield.

*The Trendlines
- Turned around to FY17 net profit of US$3.9m (FY16: US$6.6m loss).
- This was supported by a multiple fold jump in revenue to US$15.6m (FY16: US$74,000), mainly attributable to a fair value gain of US$9.4m in its portfolio, which offset the absence of disposal gains of $2.1m.
- However, bottom line was weighed by tax expense of US$1.6m (FY16: US$3.4m tax credit).
- Trades at 0.7x P/B.

*AF Global
- FY17 net profit surged 73% from a low base to $8.3m on higher JV contribution including Knight Frank Group.
- Revenue edged up 3% to $55.7m on higher occupancies and average room rates for its hotel and serviced residence segment.
- Gross margin ticked up 0.3ppt to 48.5%.
- At the bottom line, a drop of $3.9m in asset write-off was offset by absence of $3.8m FX gain.
- NAV/share at $0.28.

*Sinwa
- Posted a substantial turnaround to FY17 net profit of $9.5m (FY16: $9.5m loss) mainly on the absence of asset impairment (FY16: $15.1m) and a $1.4m write-back.
- Revenue grew 13.4% to $172.6m on higher sales from marine and offshore supply business in Singapore, Australia and Thailand.
- However, intense competition weighed on gross margin, which contracted 1.2ppt to 23.1%.
- Net cash position slipped to $23m (FY16: $25.8m), or 28% of market cap.
- Shaved first and final DPS to 0.5¢ (FY16: 1.2¢).
- Last traded at 8.6x trailing P/E.

POSITIVE NEWS
*Silverlake Axis
- Expanded its insurance customer ecosystem platform business with five new account wins in Singapore (two), Indonesia (one) and Hong Kong (two).
- The software platform is now used by over 120 insurers across eight countries.
- Trades at 17x forward P/E.

*Weiye
- Expected to report a 70% jump in FY17 net profit due to higher 4Q gross profit (+10%) on increased handovers, as well as a 140% surge in JV profit.
- Last traded at 44.7x trailing P/E.

NEGATIVE NEWS
*Profit Warnings
- Natural Cool
- Charisma Energy
- China Haida

NEUTRAL NEWS
*Lee Metal
- Received a pre-conditional offer from BRC Asia at $0.42/share, or 1.09x P/B.
- The founding Lee family which owns 48.06% of share capital has given their undertaking for the voluntary offer.

*Viva Industrial Trust
- Requested Moody's to withdraw its credit ratings.
- At the latest, Moody's has assigned a Ba1 corporate rating on the REIT with stable outlook.

Wednesday, February 21, 2018

SG Market (21 Feb 18)

MARKET OVERVIEW
- The market could struggle for further gains after the quick recovery of the STI as investors look to a resumption of 4Q earnings from several index stocks for near-term direction.
- Technically, the STI has bounced off the key 200-dma to reach the 50-dma and the next move is to fill the breakdown gap at 3,520. Immediate support is now at 3,460 level.

CORPORATE RESULTS
*PACC Offshore
- 4Q17 net loss narrowed to US$193m (4Q16: US$345.4m loss), partly on lower vessel (-46% to US$108.3m) and goodwill (-49% to US$57.1m) impairments.
- This dragged FY17 net loss to US$230.3m (FY16: US$371.4m loss).
- Revenue for the quarter surged 71% to US$62.7m from the continued charter of POSH Arcadia accommodation vessel to Shell, and firmer contribution from OSV segment.
- Gross loss shrank to US$1.3m (4Q16: US$9.5m loss) on the back of POSH Arcadia's contribution and better utilisation in the transportation & installation division.
- Bottom line was partly shored by lower doubtful and bad debts, as well as reduced JV loss.
- Net gearing ballooned to 1.63x from 1.13x in 3Q17 as a result of the impairments.
- Trading at 1.15x P/B.

*TalkMed
- 4Q17 net profit fell 19.3% to $8.2m, taking FY17 earnings to $32m (-14.3%), which was above estimates.
- For the quarter, revenue declined 17.6% to $15.1m due to reduced patient visits.
- Operating overheads kept pace with the drop, with reduced staff costs of $3.5m (-19.1).
- Slashed final DPS to 1.37¢ (-40%), bringing full year dividend payout to 2.131¢ (FY16: 2.283¢).
- Trades at 28.1x forward P/E.

*Lee Metal
- 4Q net profit slumped 40.5% to $2m, dragging FY17 earnings to $7.5m (-43.6%).
- Revenue for the quarter grew 13.4% to $92.5m on higher steel prices.
- But, gross margin compressed 7.8ppt to 13.9% due a fewer sales of higher-margin value-added components.
- Bottom line was weighed by FX loss of $1.7m and higher tax expense of $1.7m (+212.6%).
- Trades at 26x trailing P/E.

*Global Investments
- 4Q17 net profit surged 6-fold from a low base to $21.8m, lifting FY17 earnings to $39m (+128%).
- For the quarter, revenue soared 255% to $21.4m on higher net gain on sale of investments of $16.8m.
- Bottom line was buttressed by a $6.1m write-back (4Q16: $2.5m impairment).
- Declared a final DPS of 0.6¢ (-13.3%), bringing total dividend payout to 1.25¢ (-16.7%).
- NAV/share of 20.95¢ (+9.8%).

POSITIVE NEWS
*Delong
- Guided for a significant increase in net profit for 4Q17 and FY17 due to higher steel ASP, amid tighter supply following production cuts and increased infrastructure and construction activities in China.
- However, top line growth is partially offset by reduced contribution from Laiyuan County Aoyu Steel, which had ceased steel-making operations in Aug '17.
- Last traded at 1.5x trailing P/E.

NEGATIVE NEWS
*Profit Warnings
- Fuji Offset Plates Manufacturing
- China Environmental Resources

NEUTRAL NEWS
*Singapore Medical Group
- Spent $0.8m of placement proceeds on the purchase of medical equipment and renovation.
- The balance $2m is earmarked for M&A opportunities.

*Koh Brothers
- Subscribing 25% of the enlarged share capital of Global KB Venture (GKV) at Rm1/share.
- GKV will subsequently acquire a 99-year leasehold site in Pulai, Johor Bahru, for Rm36m.
- The site has a gross floor area of 449,539 sf and GKV intends to develop the plot into a mixed-used property.
- Trades at 9.7x trailing P/E.

*Keppel REIT
- Obtained a $350m loan facility from RBC Investor Services Trust Singapore, bringing aggregate loan facilities to $3.76b.

*Chaswood Resources
- Extended a moratorium for 120 days until 15 Jun to facilitate the finalisation of its proposed debt restructuring in Malaysia.

Tuesday, February 20, 2018

SG Market (20 Feb 18)

MARKET OVERVIEW
- The market could continue its recovery from the recent sell-off after Budget 2018 turned out to be a fiscal plan for the future, with investors relieved by the delay in GST hike till 2021-2025 and a small increase in stamp duty for home buyers as well as other schemes to keep the country relevant in a competitive world.
- Technically, the next move for the STI is to fill the breakdown gap at 3,520, with 3,460 now acting as the immediate support.

ECONOMY WATCH
*Budget 2018
- Overall market-friendly budget measures.
Positives:
1) Corporate income tax rebate raised to 40% this year and extended to 20% in 2019;
2) REITs to gain from proposed removal of tax on REIT ETFs,
3) Healthcare firms and education providers could benefit from increased government spending in the sectors;
4) Construction firms to benefit from increased spending on infrastructure,
5) O&M companies see a reprieve on a deferral on foreign workers' levy.

Negatives:
1) Consumer stocks, including F&B operators and retailers, as well as hospitality plays could be impacted by higher GST of 9% but only from 2021-2025, which will be mitigated by $100-300 cash handouts;
2) Property developers as the 1ppt increase in buyer's stamp duty for property values of above SGD1m could add hefty cost to en bloc deals but unlikely to dampen buying demand,
3) Utility companies and REITs could be hit by higher expenses with the introduction of carbon tax.

NEUTRAL NEWS
*ComfortDelGro
- The regulatory board will enter the second phase of the deliberation process for ComfortDelGro's proposed alliance with Uber.
- The next stage may take up to 120 working days to complete, too assess that the deal would not raise competition concerns.
- To recap, ComfortDelGro proposed to acquire a 51% stake in Lion City Rental, a private car rental firm owned by Uber.
- With the JV, the fleet of both taxis and private-hire cars will come under centralised fleet management system, which handles dispatching of vehicles to customers.

*LTC Corp
- Updated that controlling shareholders, Mountbatten Enterprises, received valid acceptances constituting 0.58% of firm, bringing its latest shareholding to 49.12%.
- The privatisation bid at $0.925/share was recently launched on 9 Feb and the offer document is still pending release.

Monday, February 19, 2018

SG Market (19 Feb 18)

MARKET OVERVIEW
- Likely to see muted trading action as major Asian markets in China, Korea and Vietnam are still on Lunar New Year holiday.
- Nonetheless, the positive close in the US last week is likely to provide some comfort for traders today.
- All eyes will be on Budget 2018 today, with expectations of new/higher taxes (GST, e-commerce, carbon, wealth), pro-business measures to help local companies innovate, go digital and venture abroad, labour upskilling and social spending at the top of the agenda.
- Technically, the STI could reverse from oversold levels to test immediate resistance at 3,470 with downside support at 3,340.

POSITIVE NEWS
*SGX
- Intends to list successor products to its SGX Nifty family of products before Aug '18 to provide market participants with the same ability to invest and maintain exposure to Indian capital markets.
- Working with the National Stock Exchange of India to develop a link that will allow trading on NSE's International Exchange in Gujarat International Finance Tech city.
- Details will be announced by Mar '18.
- MKE last had a Buy with TP of $8.73.

NEGATIVE NEWS
*Profit Warning:
- Design Studio
- AsiaMedic

NEUTRAL NEWS
*Noble Group
- Updated that senior creditors holding ~51% (prior: 36%) of its existing senior debt instruments have indicated their broad support for its proposed restructuring of its US$3.45b debt.
- It has also reached agreement with an ad hoc group of senior creditors and ING to provide a 3-year committed US$700m trade finance facility, to be made available upon the restructuring effective date.
- Separately, the group issued a profit warning that it expects to incur a 4Q17 net loss of US$1.73-US$1.93b due mainly to further write-offs of its derivatives portfolio amounting to US$1.45-1.55b. This will lead to a net loss of US$4.78-4.98b in FY17 (FY16: US$8.7m profit)
- The expected loss will result in a negative NAV of US$650-850m.
- The FY17 results will be released on 28 Feb.

*Sembcorp Industries
- Consolidating its thermal and renewable energy businesses under a single entity, Sembcorp Energy India.
- It will hold an effective 93.7% stake in the new entity, while Gayatri Energy Ventures will hold the remaining 6.3%.

*Indofood Agri
- Set up 50: 50 Brazilian JV Canapolis with JF Investimentos via an initial capital injection of BRL23.6m (US$7.2m).
- The JV has acquired a sugar mill in Minas Gerais in Brazil with annual cane crushing capacity of 1.8m tonnes and 6,048 ha of land through a court auction due to the bankruptcy of the previous owner.
- Acquisition price for the mill is BRL137.8m (US$42m), and will be paid in four installments, with the final payment being in Jun '19.
- Canapolis expects to commence operation at the mill in 2020 after completion of cane planting and rehabilitation of the mill.

*Hyflux
- Its 30.4%-owned consumer business, HyfluxShop has received an unconditional cash offer of $0.1783/share from controlling shareholder owner, Olivia Lum.
- Lum intends to list HyfluxShop assuming growth performance remains on track and market conditions are favourable.

Monday, February 12, 2018

SG Market (12 Feb 18)

MARKET OVERVIEW
- Market could attempt to reclaim back some lost ground after a turbulent week but sentiment remains on edge on continued jitters of a faster-than-expected pick up in US Treasury yields, with Jan's CPI the key indicator to watch this Wed.
- From a technical perspective, the STI sees support at 3,370, with near-term resistance at 3,385.

CORPORATE RESULTS
*F&N
- 1Q18 net profit surged 16.3% to $26.1m, lifted by maiden contribution from associate Vinamilk of $17m.
- Revenue dipped 1.6% to $487.1m on a slump in soft drink sales (-16%) due to pricing pressure in Malaysia and seasonality effect on the later Chinese New Year this year.
- Gross margin shrank 2.3ppt to 34.5% on higher cost of sales (+2%).
- Bottom line was weighed by a negative swing in FX to $2.8m loss (1Q17: $4.4m) and higher net finance cost of $3.7m (1Q17: $1.5m gain).
- Trading at 24.1x forward P/E.

*KSH
- 3QFY18 net profit grew 12.9% to $10.3m, bringing 9MFY18 net profit to $20.4m (-25.2%).
- Revenue for the quarter increased 20.3% to $41.5m on increased contribution from construction (+20.3%).
- Due to lower provision for staff bonuses, operating margin expanded to 18.1% (+4.1ppt).
- Bottom line was partially impacted by lower JV/associate income (-25.6%) on reduced development sales.
- Trading at 9.8x forward P/E.

*Kimly
- 1QFY18 net profit slid 14% to $5.7m, partly due to higher administrative staff costs ($0.5m), which included bonuses for executive directors.
- Revenue rose 7% to $50.1m on higher F&B sales and increased takings from sub-leasing due to more coffee shops, food courts, and drink stalls.
- Gross margin narrowed 2ppt to 20.3% from higher direct employee costs and operating lease expenses from new coffee shops.
- Trades at 17.3x forward P/E.

*Spindex Industries
- 1HFY18 net profit fell 42.4% to 4.5m due to a negative $2.9m swing into FX loss of $0.9m stemming from the weaker USD.
- Revenue growth of 8% to $74.2m was attributable to strength in machinery and automotive systems (+20%) and imaging & print printing (+5%) segments, which helped offset by a slide in others (-6%).
- Gross margin contracted to 19.3% (-3.1ppt) due to the shift in revenue mix.
- Bottom line was further pressured by a higher effective tax rate of 29.3% (+6.7ppt) arising from increased chargeable income at its Malaysian plant.
- Net cash slid to $27.2m (Jun '17: $35.9m) or $0.236/share.
- Last traded at 11.9x trailing P/E.

*Multi-Chem
- 4Q17 net profit jumped 25% to $4.8m, which lifted full-year earnings to $10.9m (+13%).
- For the quarter, revenue leapt 23% to $118.9m on large deals clinched by the IT distribution business (+29%).
- However, gross margin edged 0.2ppt lower to 14.6%.
- Bottom line was helped by lower taxes (-24%), albeit partially offset by absence of $1m FX gain.
- Net cash rose to $51.1m (3Q17: $40.4m), constituting 68% of market cap.
- Final DPS of 3.3¢ maintained and dished out a special DPS 1.1¢ (4Q16: nil), bringing full-year payout to 5.51¢ (2016: 4.41¢).
- Trading at 6.8x FY17 P/E and offers a dividend yield of 5.3%.

*Challenger Technologies
- 4Q17 net profit surged 94% to $5.8m, partly due to absence of $1.1m impairment on financial assets.
- This lifted FY17 earnings to $16.2m (+32%).
- Revenue for the quarter climbed 7% to $88.9m, largely driven by stronger retail, trade show and corporate sales of IT products.
- Gross margin ticked up 0.4ppt to 21.7%, while bottom line was also helped by lower taxes (-11%).
- Net cash rose to $63.2m (3Q17: $49.4m), representing 43.6% of market cap.
- Proposed higher final DPS of 2.2¢ (4Q16: 1.6¢), bringing full-year DPS to 3.3¢ (2016: 2.7¢).
- Trading at 8.9x FY17 P/E and offers a 7.8% dividend yield.

*Ryobi Kiso
- Slumped into 2QFY18 net loss of $0.1m (2QFY17: $0.4m profit), bringing 1HFY18 net profit to $44,000 (1HFY17: $0.6m).
- For the quarter, revenue jumped 48% to $50.1m on higher contribution from bored piling operations (+146.8%).
- However, gross margin contracted to 9.1% (-4.2ppt) on a shift to lower margin projects.
- Bottom line was further pressured by $0.2m in losses from associates and higher finance costs (+21.8%), although partially mitigated by income tax credit of $0.2m (3QFY17: $0.4m expense).
- NAV/share at $0.2968.

*Global Yellow Pages
- 2QFY18 net profit fell 39.2% to $2.3m, bringing 1HFY18 net profit to $2m (-45.9%).
- Revenue for the quarter slumped 40.3% to $6.4m from reduced contributions from both Search and ice cream businesses.
- Bottom line was partially shored by a 42.6% fall in total expenses on lower staff (-69.7%) and printing & material (-66.5%) costs.
- NAV/share at $0.2994.

*Pan Hong
- Swung into 3QFY18 net profit of Rmb2.7m (3QFY17: Rmb3.2m loss), shored by Rmb7.7m interest income, Rmb4.2m FX gain, and lower taxes (-51%).
- Revenue plunged 55% to Rmb44.8m on weaker residential development business (-73% to Rmb25.9m), although buttressed by higher contribution from commercial development (+4.3x to Rmb18.8m).
- Gross margin widened 10.2ppt to 36.5% due to handover of residential units that command higher margin.
- Improvement to bottom line was partly offset by a spike in finance cost (+7.6x to Rmb3.9m) amid higher borrowings.
- NAV/share at Rmb4.3687.

POSITIVE NEWS
*SIA Engineering
- Signed MOU with CaseBank Technologies to collaborate in data analytics.
- Both parties will explore in the areas of R&D and commercialisation of advanced diagnostic software for use in the aviation industry, anticipated to streamline the troubleshooting process and reduce aircraft maintenance downtime and component removal costs.

*Keppel T&T
- To jointly promote end-to-end ecommerce services to retailers across Southeast Asia with ecommerce agency SmartOSC.
- Retailers on board include COURTS Singapore, Lotte, Nestlé and Friso.

*Best World
- Accepted as a member of the Direct Selling Association of UAE.
- The entry into the UAE market is part of the group's broader initiative to expand its overseas footprint.
- Through the sale of its Halal certified products, Best World intends to use its Dubai Regional Centre as a springboard into the other Gulf Cooperation Council markets of Saudi Arabia, Qatar, Bahrain, Oman and Kuwait.

*Kitchen Culture
- Clinched two contracts totalling $6.1m for projects in Singapore, expected to be executed over the next 1-3 years.
- First contract ($5.3m) involves design, supply and installation of kitchen cabinets, wardrobes, bathroom cabinets for a 735-unit residential development.
- Second contract ($0.8m) involves similar work for a 44 unit exclusive high-end residential project.

NEGATIVE NEWS
*SGX
- Three Indian bourses will terminate licensing agreements for their indices and data with foreign exchanges as part of concerted move to protect their turf and prevent trading volumes from moving overseas.
- The curbs will hit SGX's Nifty suite of derivative products, including the popular Nifty 50 index futures, in 6 months.
- MKE anticipates FY18-20e derivatives volume will be cut by 3-9% and net profits by 1-3%, but maintains Buy with lowered TP of $8.73.

*Keppel Corp
- Updated that it has not been served court papers relating to a new US$660m civil law suit brought against it by certain funds managed by EIG Global Energy Partners in the US over its participation in a Brazilian bribery case, for which Keppel reached a US$422m global settlement with prosecutors.
- EIG had sued Keppel and other firms in 2016 for inducing it invest in Sete Brasil but a US district court has dismissed the action.

*AsiaPhos
- The Sichuan Provincial Authority has rejected the group's application to renew the mining license for Mine 1 due to potential environmental damage to a nearby panda national park.
- AsiaPhos is currently negotiating for a settlement relating to the non-renewal.

*Profit Warnings
- BH Global
- AEI Corp
- GS Holdings

NEUTRAL NEWS
*Spackman Entertainment
- Invested US$0.45m into an upcoming Korean fantasy film "Now I will meet you", starring leading actors Son Ye-Jin and So Ji Sub.
- The film is based on a Japanese original novel "Be with you", which sold over a million copies in 2004.
- The fantasy melodrama movie is set to release on 14 Mar '18.

Friday, February 9, 2018

SG Market (09 Feb 18)

MARKET OVERVIEW
- Brace for another selldown after US markets tumbled into correction territory on rising inflation expectations, and shock revelation by a S-chip of serious irregularities at its China operating units.
- A similar 10% correction from recent peak would take the STI to the 3,248 level
- From a technical perspective, STI sees underlying support at 3,370 with near term resistance at 3,470.

CORPORATE RESULTS
*Frasers Property
- 1QFY18 core net profit slumped 62% to $69.2m, while revenue dropped 23.8% to $740m on absence of significant sales and settlements of development projects in China.
- Gross margin held relatively steady at 36.3% (-0.5ppt).
- Bottom line was dragged further by lower fair value change on derivatives, higher net interest expense (+188.2%) arising from increased debt, although pared by higher JV/associate income (+26.7%) and a $13.3m rise in fair value on investment properties.
- Net gearing climbed higher to 0.84x (4QFY17: 0.7x).
- Last traded at 0.81x P/B.

*Valuetronics
- 3QFY18 net profit leapt 35.7% to HK$58.2m, beating estimates.
- Revenue jumped 34.2% to HK$788.3m as the consumer electronics segment (+48.1%) remained strong on growing demand for smart LED lighting, while the industrial & commercial electronics unit (+22.3%) also saw higher customer demand.
- Gross margin of 14.4% (-1.1ppt) and operating margin of 8.5% (+0.1%) held relatively steady.
- Trades at 12.9x FY18 P/E and offers an indicative yield of 4.1%.

*BRC Asia
- 1QFY18 net profit surged 36% from a low base to $2.6m, while revenue jumped 26% to $100.9m on higher selling prices.
- Accordingly, gross margin improved 0.9ppt to 7.5%.
- But, bottom line was partly weighed by higher distribution costs (+13%) and other operating expense (+19%) arising from mark-to-market loss of foreign currency forward contracts.
- NAV/share at $0.9166.

*Lion Asiapac
- Turned around to a 2QFY18 net profit of $0.1m (2QFY17: $0.2m loss), help by a reversal in impairment loss of $0.5m and higher interest income of $0.2m (+51%).
- Revenue jumped 55% to $3m on increased demand for lime products.
- Gross margin inched 2.2ppt higher to 37.1%.
- Notably, net cash pile of $70.7m, or $0.871/share, is 182% above the current market cap of $39m.
- NAV/share of $1.0027.

*China Star Food
- 3QFY18 net profit slumped 33.7% to Rmb8m, swinging 9MFY18 to a net loss of Rmb4.8m (9MFY17: Rmb51m loss).
- For the quarter, revenue tumbled 20% to Rmb92.3m, as its Zilaohu factory had not been producing at optimal capacity following a resumption of operations in mid Sep '17 after a production halt.
- Accordingly, gross margin collapsed 16.7ppt to 27.3%, and this was exacerbated by lower sale prices due to a change in channel management strategy.
- But, the strategy alleviated some pressure on bottom line, as it passed on substantial marketing and distribution costs (-73%) to external distributors.
- NAV/share at Rmb1.41.

*SunMoon Food
- Sank to 3QFY18 net loss of $1.25m (3QFY17: $5.3m profit) due to absence of a $5.7m gain on disposal of subsidiaries.
- Revenue jumped to $10.8m (+744%) on increased in sales to Shanghai Yiguo E-Commerce.
- But, it barely broke even with a gross profit of $0.3m (3QFY17: -$0.08m), while gross margin turned positive to 3.2% amid less discounts provided.
- NAV/share at $0.0275.

POSITIVE NEWS
*ComfortDelGro
- Acquiring remaining 51% stake in ComfortDelGro Insurance Brokers (CIB) for $22.9m, or 4.5x FY16 P/E.
- CIB provides insurance broking, risk management and claims management services in Singapore.
- The deal is earnings accretive and estimated to lift FY18e earnings by 1.6%, or $5.1m.
- MKE maintains its Buy with TP of $2.40.

*SIA Engineering
- Forming a 60:40 JV with Nasdaq-listed Stratasys to establish an additive manufacturing service centre to provide 3D printed parts for use in commercial aviation.
- The parts can be used for airline operators, MRO providers and OEMs.
- Trades at 22.1x forward P/E, near upper end of 13-24x historical range.

*King Wan
- Secured new mechanical and electrical projects in Singapore worth a total of $24.9m.
- New projects include electrical and installation works in 3 condos, 1 manufacturing support building and 1 HDB block.
- Projects are slated to complete by 2021.
- Order book stood at $173.1m with contracts lasting to 2024.

*Neratel
- Clinched a total of $3.2m worth of new contracts for its Network infrastructure business segment.
- First contract worth $2.2m was awarded by a local telco to supply and maintain IP network equipment for broadband and mobile networks.
- Second contract worth $1m is its first win with a key telco in Malaysia to design and manage the telco's internet service.

*Kingsmen
- Entered into a licensing agreement with Hasbro to create, build and operate NERF Family Entertainment Centre (FEC) attractions across Asia Pacific.
- NERF is a toy brand and has a variety of foam-based weaponry products.
- The group will co-conceptualise, build and operate NERF FEC attractions with first location to open in Singapore by 2019.
- Each indoor facility will feature multiple activity zones, merchandising and F&B areas.

*iX Biopharma
- Granted a patent for its WaferiX drug delivery tech in China, which expires ion 11 Oct '33.
- The IP rights are now secured in key Asian markets such as Singapore, South Korea, Malaysia, Indonesia and Japan.

NEGATIVE NEWS
*Midas
- Uncovered several litigations, freeze orders and undisclosed corporations within the group during an audit.
- The group highlighted that it is in the midst of fact finding and will assess whether it can continue as a going concern.
- Share price has shot up 78% YTD but financials can no longer be relied upon.

*AGV Group
- Proposed placement of up to 18m new shares (12.5% of enlarged share capital) at $0.11 apiece, 8.3% below last traded price.
- Placees are CJM Global (4.86%), China Equity Investment (3.13%), Teo Yong Ping (3.13%), Tiong Hua Ting (0.69%), and Ho Bee Ping (0.69%).
- Estimated net proceeds of $1.94m will be used for capex and general working capital.

NEUTRAL NEWS
*ST Engineering
- Aerospace arm ST Aerospace is divesting a 5% stake in ST Aerospace (Guangzhou) Aviation Services (STA Guangzhou) to Japan Airline for US$7m ($9.2m).
- Previously, STA Guangzhou is a 49:51 JVCo between the group and Guangdong Airport Authority, which provides aircraft MRO services within Guangzhou Baiyun International Airport in China.
- Post-divestment, ST Aerospace, Guangdong Airport Authority and Japan Airline will hold now 44%, 51% and 5% in the JVCo, respectively.
- The strategic investment by Japan Airline will facilitate cross-learning, enabling STA Guangzhou to enhance its safety and quality standard and better positioned for greater growth.

*Singpost
- 62.5%-owned Famous Holdings has acquired the remaining 10% stake of Famous Pacific Shipping (NZ) for NZ$0.53m ($0.51m).
- NAV of the acquired firm is NZ$2.8m as of 31 Dec '17.

*Singapore Medical Group
- Reallocated $1.7m of unutilised proceeds from its private placement for M&A opportunities and growing its existing business (prior: expansion into other South East Asia countries).

*The Trendlines
- Appointed as one of the partners along with venture cap firm, K2 Global, under the Startup SG Equity scheme (SSC) administered by SPRING SEEDS Capital, Singapore govt's investment arm.
- To recap, SSC announced $100m investment allocation to groom start-ups and issued a call to appointed partners to co-invest in health and biomedical science fields in Jul '17.
- As such, the group will collaborate with Singapore-based K2 Global to invest in medical technology seeking Series A funding.
- The partnership enables the group to leverage on its expertise in grooming medical technology companies, while K2 Global provides growth capital to support scaling of operations.
- Both parties anticipate co-investing with SSC in more than 11 companies over the next 8 years.

Thursday, February 8, 2018

SG Market (08 Feb 18)

MARKET OVERVIEW
- Expect choppy trading to persist as markets try to find its footing amid rising US bond yields and in-line results from bellwethers DBS and Singtel.
- From a technical perspective, the STI has failed to cover the 3,414-3,470 breakdown gap that occurred on 6 Feb. Underlying support now lies at 3,370 with near term resistance at 3,470.

CORPORATE RESULTS
*DBS
- 4Q17 net profit jumped 33% to a new quarterly high of $1.22b. This brought FY17 core earnings to $4.39b, in line with consensus forecast.
- For the last quarter, net interest income climbed 15% to $2.1b, driven by healthy loan expansion (+7% y/y, +3% q/q) and improved NIM of 1.78% (+7bps y/y, +5bps q/q).
- Non-interest income held steady at $958m (+0.6%) as growth in wealth management (+44%) and investment banking (+140%) was overshadowed by lower net trading income (-43%).
- Loan provisions fell significantly to $225m (-51% y/y, -72% q/q) as residual O&G support service exposures were dealt with in previous quarter.
- NPL ratio ticked up to 1.7% (4Q16: 1.4%, 3Q17: 1.7%) but capital position improved with Tier 1 CAR at 14.3% (4Q16: 14.1%, 3Q17: 14%).
- Declared final DPS of $0.60 and special DPS of $0.50, bringing FY17 total payout to $1.43 (FY16: $0.60).
- Trading at 1.42x P/B against historical average of 1.25x

*Singtel
- 3QFY18 net profit slipped 8.5% to $890m, dragged by lower contributions from associates Bharti Airtel and Globe.
- Revenue rose 4.4% to $4.6b on improved consumer (+3.1%) and digital life (+121.9%) segments helped offset lower takings from enterprise (-3.9%).
- Australian consumer operations (+8%) was lifted by increased customers, higher NBN migration payments and increased equipment sales but Singapore (-3%) suffered from continued shift from voice to data communications.
- Accordingly, EBITDA margin inched 0.4ppt to 28.1%.
- This brought 9MFY18 core earnings to $2.74b (-5.2%), barely meeting expectations.
- Lowered guidance for FY18 revenue growth from mid-single digit to low single digit, and maintained EBITDA growth in the mid-single digit level.
- Trades at 13.8x forward P/E and 5.3% yield.

*Perennial
- 4Q17 net profit climbed 7.9% to $27.6m, bringing FY17 core earnings to $48.1m (FY16: 0.3m).
- However, revenue for the quarter tumbled 25.7% to $16m in absence of takings from TripleOne Somerset as a result of the deconsolidation following the divestment of a 20.2% equity stake to 30%.
- Gross margin held steady at 56% (-0.5ppt).
- Bottom line was held up by higher fair value gains of $39.2m (+60.7%), and lower finance costs (-25.5%), as well as a jump in JV/associate income to $20.9m (+57.2%).
- NAV/share at $1.663.

*mm2 Asia
- 3QFY18 net profit jumped 52.9% to $6.4m, pushing 9MFY18 net profit to $17.4m (+56%), but at 64% of the street's FY18 forecast.
- Quarter revenue surged 190.4% to $52.4m mainly on new contributions from cinema acquisitions (Lotus Fivestar and Cathay Cineplexes), as well as increased contribution from UnUsUaL and its core business.
- Gross margin narrowed to 46.1% (-3.1ppt) on change in sales mix.
- But, bottom line was pressured by minority interests (+203.4%) and a spike in taxes (+111.7%).
- Separately, group announced an issuance of $47.9m in convertible debt securities to finance expansion plans in cinema operations.
- Last traded at 20.6x forward P/E.

*UnUsUal
- 3QFY18 results came in line as net profit surged 158% from a low base to $2.51m, bringing 9MFY18 earnings to $6.54m (+26%).
- For the quarter, revenue soared to $10.6m (+143%) on markedly stronger concert/event promotion takings (+$5.2m) and production revenue (+$1m).
- Operating margin widened 1.5ppt to 28.2%, as staff expenses (+75% to $1m), a key operating cost component, rose slower than top line.
- Trades at 53.1x forward P/E.

*Singhaiyi
- 3QFY18 net profit jumped 83.3% to $2m, bringing 9MFY18 net profit to $33.2m (9MFY17: $8.8m).
- Revenue for the quarter jumped 3.5x to $41.7m on revenue recognition following completion of its Executive Condo project, The Vales.
- Gross margin collapsed to 14.1% (-37.1ppt) on a significant shift in top line towards different geographies as well as lower margin property development projects.
- Bottom line was affected by the absence of FX gains (3QFY17: $1.9m), although mitigated by lower finance costs (-88.3%) as well as a turnaround in contributions from JVs & associates to $0.4m (3QFY17: -$7,000).
- Last traded at 0.66x P/B.

*CSC
- Continued to bleed with net loss of $2.1m (3QFY17: $5.6m loss), dragging 9MFY18 losses to $7.7m (3QFY17: $17.9m loss).
- Quarterly revenue surged 69.7% to $94.9m on higher work volume in Singapore
- Gross margin widened 1.1ppt to 4.5% due to firmer contract prices amid recovering demand for foundation engineering works.
- However, bottom line was marred by sticky administrative expense of $6m (+3.4%), but partly offset by lower tax expense (-83.4% to $0.1m) and other income (+617% to $0.9m) arising from disposal of old equipment.
- Order book swelled to $210m (3QFY17: $190m).
- Management is cautiously optimistic on its 2H18 outlook on the back of the series of en-bloc sales, positive economic condition and uptick of construction activities over the past 3 quarters.

*Neo Group
- 3QFY18 net profit jumped to $2.1m (3QFY17: $0.1m) due to the absence of a $5.2m disposal loss.
- However, revenue fell 4.2% to $44.7m on reduced trades of low margin products at its supplies & trading business (-$2.7m), and closure of non-performing outlets for the food retail segment (-$0.4m).
- Gross material margin expanded 5.5ppt to 54.9% amid an on-going strategic review across business segments to improve profitability.
- Bottom line growth was partly weighed by a $2.2m drop in tax credit to $0.3m.
- Net gearing fell from 2x in 2QFY18 but remained elevated at 1.75x.
- NAV/share at $0.224.

POSITIVE NEWS
*ComfortDelGro
- Acquiring bus and coach firm New Adventure Travel Group (NAT) for £13.4m ($25m).
- The deal for NAT translates to 5.5x EBITDA and is the group's first expansion of its scheduled bus operations outside of London.
- NAT is one of the leading operators in South Wales, UK, and has a license to operate 117 buses and coaches across 4 depots, comprises of Cardiff, Swansea, Newport and Pontypridd.
- NAT derives the bulk of its revenue from scheduled public bus service routes, with the remaining from chartered coach services.
- Trades at 14.4x forward P/E and indicative yield of 5.1%.
- MKE maintains Buy with TP of $2.40.

*ParkwayLife REIT
- Entered into a partnership with G.K. Nest to acquire a Japanese elderly nursing rehabilitation facility for ¥1.5b ($17.8m), or 7.4% below market valuation.
- The 120-room facility, Konosu Nursing Home Kyoseien, will be leased to Iryouhoujin Shadan Kouaika for 20 years at an annual gross rental of ¥112m ($1.33m).
- Acquisition is slated to complete by 1Q18.
- Offers 4.9% indicative yield and trades at 1.58x P/B.

*Ezion (suspended)
- Secured US$1.5b refinancing package from six lenders, namely DBS, OCBC, UOB, Maybank, CIMB and Caterpillar Financial.
- The package will be secured by 100m vendor shares owned by CEO Chew Thiam Keng and family (about half of their personal holdings).
- The deal include minimal fixed principal repayments over the next six years at lowered interest rates, and up to US$118m additional revolving credit facilities.
- The next step in Ezion's debt restructuring is to secure regulatory and shareholder approvals for the proposed issuance of new bonds, shares, and warrants to the relevant stakeholders.
- Ezion will apply to lift its share trading suspension after obtaining shareholders' approval at the EGM in Mar.

*OKP Holdings
- 51:49 JV with HSB Holdings to acquire a freehold nine-storey office complex at 6-8 Bennett Street, Perth, Australia, for A$43.5m.
- OKP's first overseas investment property has 10,219 sqm of NLA, occupying land area of 3,115 sqm, and currently is 68% occupied with WALE of 6.02 years.
- The property will be funded by a mix of internal funds and bank borrowings.

NEGATIVE NEWS
*Profit warning
- China Yuanbang Property

Wednesday, February 7, 2018

SG Market (07 Feb 18)

MARKET OVERVIEW
- The market is likely to stabilise on bargain hunting following the overnight rebound on Wall Street but volatility may return given worries of higher interest rates and valuations.
- Investors will be looking out for key 4Q results from DBS and Singtel tomorrow.
- Technically, underlying support for STI is at 3,370, with near-term resistance at 3,470, followed by 3,520.

CORPORATE RESULTS
*Ellipsiz
- 2QFY18 net profit of $5.8m (+251%) was buttressed by disposal gain of $14.2m from sale of SV Probe.
- Revenue rose 3% to $10.5m, while gross margin widened 2ppt to 25%.
- But bottom line was weighed by higher admin costs of $8.6m (+432%) and other expenses (+280%) including one-off items ($7.6m) and FX loss ($2m) on weaker USD.
- Declared an interim DPS of 2¢ (+100%) and special DPS of 8¢ (+433%)
- Trades at 10.8x trailing P/E and 0.92x P/B.

*OKH Global
- 2QFY18 net profit surged to $3m (2QFY17: $0.8m), which helped swing 1HFY18 to a profit of $2.7m (1HFY17: $1m loss).
- Revenue for the quarter spiked 117% to $6.3m, on the back of sales from property development of $2.6m (2QFY17: nil), and higher takings from investment properties of $3.7m (+28%) due to increased occupancies.
- Accordingly, gross margin expanded 10.8ppt to 57.5%.
- The bottom line was also bolstered by lower general expenses (-33%) and higher tax credit of $0.9m (2QFY17: $0.3m), but was partly offset by higher finance costs (+19.6%).
- Net gearing remained elevated at 1.82x (1QFY18: 1.87x).
- Trading at 0.59x P/B.

*Asia Enterprises
- 4Q17 net profit of $1m (+41%) brought FY17 earning to $1.4m (-40%).
- For the quarter, revenue inched 3% higher to $6.5m while gross profit improved 20% to $1.9m, on the back of increased ASP of steel products.
- Accordingly, gross margin rose to 29.7% (+4.3ppt).
- Bottom line was partly pared by reduced other gains of $0.1m (-41%).
- Raised first and final DPS to 0.5¢ (FY16: 0.3¢).
- Notably, group is in a net cash position of $57.2m ($0.1678/share), or 93% of current market cap.
- Trades at 42.7x trailing P/E.

*Japan Foods
- 3QFY18 net profit jumped 73.1% to $2.5m on improved operational leverage.
- Revenue rose 11.4% to $18.7m on higher sales from revamped and rebranded restaurants, as well as an increase in net sales of existing restaurants.
- Gross margin held steady at 85.1% (+0.2ppt).
- Bottom line was partly pared by a 2.5% increase in selling and distribution expenses arising from higher rental, staff costs and online delivery charges.
- Net cash pile held steady at $20.5m (4QFY17: $20.2m), constituting 28% of current market cap.
- Trades at 13.5x trailing P/E.

*Capital World (former Terratech)
- 2QFY18 net profit soared 90% to RM17.4m on a 2.5x surge in revenue to RM46m. This brought 1HFY18 earnings to RM37.1m (+56%).
- The increased top line for the quarter was due to higher revenue recognition from the retail podium and serviced suites at mixed development, Capital City, in Johor.
- Gross margin slipped 7.4ppt to 74.7% on recognition of higher construction costs.
- Bottom line was impacted by higher general & admin expenses (+428%), as well as a jump in taxes (+97%).
- NAV/share at RM0.2158.

POSITIVE NEWS
*SGX
- Setting up a stock market trading link with Bursa Malaysia by year end, which could boost liquidity on both exchanges, encourage new listings and extend to other ASEAN bourses, if successful.
- This will bring together 1,600 companies with combined market cap of >US$1t.
- MKE estimates that every 10% increase in ADT would add 8-10% to SGX's securities clearing revenue.
- Maintain Buy with TP of $8.82.

*Frasers Property
- Investing $250m to develop a 200-room serviced residence on a prime freehold land in Tokyo's Ginza district.
- The property will be launched under the group's millennial-focused hotel residence brand, Capri by Fraser, and is expected to open around 2020.
- Last traded at 10.2x forward P/E and 0.81x P/B.

*ESR REIT
- To divest property at 9 Bukit Batok Street 22 for $23.9m.
- The REIT expects to record a divestment gain of $0.3m with sales proceeds earmarked for debt repayment, M&A, AEIs and/or working capital.
- Offers an indicative yield of 6.6% and trades at 0.95x P/B.

*mm2 Asia
- Appointed Matthew Crakes as its new corporate strategy advisor to improve the media group's appeal to North American investors.
- Matthew has 20 years of experience in fund management and investment banking in the US.
- He is currently the founder and managing member of US-based Canaan Valley Capital, which focuses on high-growth companies in Asian emerging markets.
- He has executed two special purpose vehicles, including private equity investments in Uber, Snap, and Airbnb.
- Trades at 20.2x forward P/E.

NEGATIVE NEWS
*OUE Lippo
- Guided for a net loss for 4Q17 and FY17 attributable mainly to operating costs and provisions.
- Results slated to be released on or before 1 Mar.

NEUTRAL NEWS
*SIA Engineering
- Signed a MOU with French aircraft engineering firm Safran to collaborate in the field of data analytics.
- The partnership includes R&D of predictive maintenance software to improve operational planning and reduce disruptions.
- Trades at 22x forward P/E.

*ST Engineering
- ST Electronics is entering into a 49:51 JV with SatixFy UK to develop a satellite antenna system that delivers enhanced in-flight connectivity for commercial aviation, to improve operational efficiencies of airline operators.
- Last traded at 20.7x forward P/E.

*Lian Beng
- Extended the deadline for its proposed A$90.2m disposal of a freehold property at 50 Franklin Street in Melbourne, Australia, to 20 Feb.
- To recap, the sale is a good opportunity for the group to realise the capital appreciation of this overseas property, which was purchased for A$51.5m in Nov '16.
- Last traded at 7.6x trailing P/E.

*Choo Chiang
- Signed a lease agreement with a third party for a property located at 17 Hamilton Road.
- Group will relocate its existing retail branch at Bendemeer Road to the new premise by Apr '18.

Tuesday, February 6, 2018

SG Market (06 Feb 18)

MARKET OVERVIEW
- Brace for a further pullback after US markets suffered one of its steepest one-day correction ever and erased gains for the year amid concerns over rising bond yields and inflation as well as the expiry of the US government funding bill this Thu.
- Technology and oil-related stocks may face selling pressure after US semiconductor and energy stocks were tumbled on poor iPhone sales/rising inventory and 2% slide in crude prices respectively.
- Technically below 3,470, the next level of support for STI is at 3,380

CORPORATE RESULTS
*NetLink NBN Trust
-3QFY18 net profit of $21.7m came in 32.5% higher than IPO forecast due to lower operating and staff costs.
- Revenue of $83.4m (+0.6%) was slightly above forecast on higher monthly recurring connection fees, more ducts & manholes services and central office revenue.
- EBITDA margin of 75.7% benefitted from lower IT maintenance and professional costs, as well as staff expenses.
- As at Dec '17, it has 1.17m (+2% q/q) residential connections and 43,228 (+2.9% q/q) commercial users.
- The group is continuing to expand its network in new housing estates such as Tengah. with 42,000 new homes estimated to be developed over the next two decades.
- Aggregate leverage inched 1.6ppt higher q/q to 13.5%.
- Trades at a projected yield of 5.3% and 1.02x P/B.

*Manulife US REIT
- 4Q17 DPU of US$0.0142 was 7.6% above IPO forecast and beat street estimates.
- Gross revenue was 49.6% higher-than-expected at US$29.3m, while NPI beat by a larger margin of 54.1% to US$18.4m, following the acquisition of Plaza and Exchange, and higher rental & other income.
- Occupancy rate was stable at 95.9% (+0.2ppt q/q), while aggregate leverage crept up 0.6ppt q/q to 33.7%.
- Trades at annualised 4Q17 yield of 6.2% and 1.12x P/B.

*Hutchison Port Holdings Trust
- 4Q17 DPU slid 33.1% to HK$0.111, bringing FY17 payout to HK$0.206 (-32.7%), in line with expectations.
- For the quarter, revenue slipped 3.4% to HK$2.9b as higher container throughout volumes in HK (+0.9%) and China (+10.6%) were offset by increased concessions and tariffs revisions.
- Accordingly, operating margin slipped 5.5ppt to 27.4%, and was also dragged by an absence of govt subsidy and disposal gain.
- Net profit of HK$237.8m (-38.4%) was also marred by higher financing cost (+19.1%).
- Trades at an indicative yield of 7.6% and 0.64x P/B.

*Yoma
- 3QFY18 net profit soared to $16.8m (3QFY17: $0.3m), lifted by a net gain of $27.7m from the spin-off of its tourism business.
- Revenue was relatively flat at $24.1m (+0.1%) as the decline in sale of residences & land development rights (-77.3%) was pared by automotive & heavy equipment (+37%), consumer (+28.1%) and real estate rental and services (+2.5%).
- Gross margin compressed to 27% (-14.4ppt) on a shift in sales mix.
- Bottom line was also boosted by a positive $11.3m swing to FX gain from the weaker USD, but partly offset by higher admin costs (+32%) due to the opening of more KFC stores and Convenience Prosperity branches.
- NAV/share at $0.3959.

*FJ Benjamin
- Turned around to 2QFY18 net profit of $0.96m (2QFY17: $7.3m loss), helped by lower operating expenses (-20.3%) and FX gain of $1.2m.
- However, revenue slid 19% to $50.5m after it terminated several loss-making brands in a restructuring exercise and reduced shipments to its Indonesian associate, which started buying directly from some of its principals in Apr '17.
- Gross profit margin improved 7ppt to 46% on tighter inventory control and better full price sell through.
- Trades at 1.04x P/B.

*Vashion
- FY17 net loss widened 18.1% to $2.6m.
- Excluding net loss from discontinued operations, FY17 loss would have been $2.1m (-14.6%).
- Revenue grew 4.8% to $3.2m, largely attributed by higher contribution from the distribution division.
- Gross margin remained stable at 19.5%, but bottom line was eroded by higher operating expenses (+21.7%).

POSITIVE NEWS
*ComfortDelGro
- Acquiring 217 taxi licenses and vehicles in Liaoning Province, China, for Rmb71.6m ($15m).
- This will increase its fleet size by more than 10% to 1,503 taxis, and reinforce the group's position as the largest taxi operator in Shenyang.
- Currently, its taxi fleet is fully hired out despite competition from the private hire industry.
- The group will also invest in a new vehicle repair workshop in Jilin City for an estimated $1m.
- MKE retains its Buy rating with TP of $2.40.

*Del Monte
- Proposed secondary offering and listing of up to 30% of existing shares in Del Monte Philippines (DMPI) on The Philippine Stock Exchange.
- The group will undertake that it will continue to own at least 67% of its shareholding in DMPI for five years following the offering.
- Estimated maximum net proceeds of US$304m is earmarked for debt repayment and working capital.

NEGATIVE NEWS
*Dukang Distillers
- Guided for overall revenue and earnings to be significantly lower for 2QFY2018 due to baijiu production restrictions stemming from regulatory orders to cut emissions, inventory surplus at its distributors, as well as intensified competition in the liquor market in Henan Province due to entry of new products.

NEUTRAL NEWS
*Ascendas India Trust (AIT)
- Proposed private placement of at least 73m new units at between $1.027 and $1.083 to raise gross proceeds of not less than $75m.
- Proceeds will mainly be used to repay debt, and reduce aggregate leverage to 30.9% from 35.1%.
- AIT plans to make an advanced distribution of ~2.44¢ for the period between 1 Oct '17 and the day before the placement.
- Citibank and DBS are joint book runners and underwriters for the placement.

*Keppel T&T
- Raised stake in a logistics subsidiary Courex to 85% from 59.6% for $7.5m.
- Keppel T&T will also extend a convertible loan of up to $9.75m to Courex for working capital.
- The remaining 15% stake continues to be owned by Choa Soon Heng, managing director of Courex.
- The capital injection is to support growth in Courex's e-commerce channel management, warehousing & inventory management, and last-mile fulfilment.

*Oxley
- Acquiring a 99-year leasehold estate Huang Shi Zong Hui (Huang Clan Association) at 16 Lorong 35 Geylang for $13m.
- The 2219.6 sqm site will be developed into an eight-storey mixed-use development, comprising the association's premises in two storeys and residential flats and amenities in the remaining floors.
- Post-completion, the group will transfer the association's units to be held in trust for the association as beneficial owner.

*Amara
- Soft-opened Amara Signature Shanghai at Shanghai's historical commercial zone in Puxi.
- The 343-room-5-star hotel is within the inner core of Puxi City Centre and is adjacent to 100 AM Shanghai, a 10,500 sqm complex, comprising an office tower and retail mall which is slated to soft open in 2H18.
- The group expects the hotel to commence operations in FY18.