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.