Thursday, March 29, 2018

SG Market (29 Mar 18)

- The SG market could edge lower, dampened again by the continued downdraft of tech companies on Wall Street overnight.
- Technically, the STI has broken its psychological support at 3,400 and sees the next downside support at 3,370 (200MA). Topside resistance at 3,440.

- 4Q17 loss deepened to US$969m (4Q16: US$66.6m loss), dragged by a significant US$896.9m impairment loss on its vessel fleet due to depressed market conditions from the industry oversupply.
- This brought FY17 net loss to US$1.02b (FY16: US$33.6m loss), in line with earlier profit warning.
- For the quarter, revenue slumped 38.5% to US$44.7m from 1) delays in re-deployment of liftboats due to working capital constraints, 2) lower utilisation rate of jack-up rigs and OSVs, and 3) reduced charter rates.
- Accordingly, gross margin contracted 4.6ppt to 7.5%.
- Bottom line was dragged by the absence of FX gain and impairment loss at associates/ JVs.
- Counter remains suspended.

- Selling the 300-year lease at No. 1 Dublin Landings in Ireland for €164.2m, of which Oxley will be entitled to 77.53%.
- Deal completion is expected to be in Apr '18, and the proceeds will improve the group's cash flow.
- The group is also seeking expressions of interest from potential purchasers of No. 2 Dublin Landings, which has entered a 20-year lease agreement with WeWork Companies.
- Trades at 1.64x P/B.

*Soilbuild Business Space REIT
- Received rental for the period 11 Jan '18 to 26 Mar '18 from NK Ingredients, a tenant which the REIT has an on-going legal dispute.
- The REIT also received a top up in security deposit from the tenant.
- Offers an indicative 8.6% yield and trades at 1.01x P/B.

*United Food
- Guided for a 4Q17 and FY17 loss, although significantly lower than the two respective periods.
- Slated to release results no later than 1 Apr.
- Last traded at 0.72x P/B.

- Completed the $12m acquisition for a 51%-stake in a Malaysia-based tourism and retail-related business, YC Capital, from the group's CEO and executive chairman Chu Sau Ben.
- To recap, the acquisition is satisfied via 93.75m new shares issued at $0.128 each, which lifted Chu Sau Ben's stake from 50% to 71.977%.
- Trades at 11.1x trailing P/E.

*Wee Hur
- Received irrevocable undertakings from GSC Holdings and four individual shareholders to vote in favour for the proposed disposal of a land plot at 62-80 Ann Street and 71-97 Turbot Street in Brisbane for A$79m ($81.2m).
- The undertaking shareholders collectively hold a total of 51.99% interest in the group.
- Trades at 11.6x trailing P/E and 0.61x P/B.

*BH Global
- Entered into a strategic partnership with Horangi Cyber Security to offer cyber security advice, products, and services.
- Trades at 0.5x P/B.

Wednesday, March 28, 2018

SG Market (28 Mar 18)

- The overnight sell off in the US tech sector could hit sentiment in SG tech-related manufacturers, spurring heavy downward pressure on profit-taking activities.
- Technically, the STI sees support at 3,400 and topside resistance at 3,485.

- Passenger traffic at Changi Airport for Feb rose 5.6% (Jan: +0.9%) to 4.93m, boosted by more travelling trips over the Chinese New Year holiday.
- Aircraft movements were 6% higher at 29,700 landings and take-offs, while cargo throughput inched up 1.4% to 148,930 tonnes.
- Strengthening traffic growth would be positive for aviation services providers SATS (Buy, TP $5.70) and SIA Engineering (Hold, TP $3.50).

*Sembcorp Marine
- Secured a contract from TechnipFMC for EPC of the hull and living quarters for a newbuild FPSO at an undisclosed sum.
- Scheduled for completion in 4Q20, the FPSO will be deployed at the Energean-operated Karish and Tanin deepwater field developments in the Eastern Mediterranean.
- Trades at a hefty 67x forward P/E and 1.86x P/B.

*Mapletree Greater China Commercial Trust
- Proposed acquisition of a 98.47% stake in a portfolio consisting six Japanese commercial properties for ¥60,926m ($753.4m), or NPI yield of 4.8%.
- The freehold assets are located across Tokyo, Chiba and Yokohama.
- The portfolio has a high occupancy rate of 99.9% and 5.8 years WALE.
- Pro forma FY17 DPU is expected to rise 3.6% to 7.602¢ post-acquisition.

- Acquired all units at Ampas Apartment for $95m via a collective sale.
- The deal is priced at $1,073 psf ppr, inclusive of the development charge, for the freehold property situated on a land area of 2,809.3 sqm.
- The property will be redeveloped, subject to regulatory approvals.
- Trades at 1.69x P/B.

*Aspial / World Class Global (WCG)
- WCG, 80% owned by Aspial, received net sales proceeds of A$69m for 134 residential units at its Melbourne development AVANT, accounting for 66% of the 203 units handed over to buyers in Feb '18.
- Settlement of about A$35.8m for the remaining 69 units in the first stage handover is expected to be realized over the next few weeks.
- With 97% of units at AVANT sold to date, the second stage handover of 241 units with revenue of A$151.6m is expected to be recognised in the next six months.
- WCG trades at 2.15x P/B.

- 50.01% owned vCargo Cloud (VCC) was awarded a contract by the Cambodian government to implement phase 2 of Cambodia's National Single Window following successful implementation of phase 1.
- VCC will create an electronic platform based on its trade facilitation platform, CamelONE, to connect traders with regulators, enabling timely and accurate statistics reporting, as well as digitalising documentation processes such as license and permit applications.

- Subsidiary Dalian Huicheng Aluminum (DLHC) provided an unauthorized guarantee for debts owed by an unrelated party Chongqing Huicheng Aluminum.
- The lender, which is a Chinese supplier of raw materials, has filed a civil complaint on 26 Feb '18 against the borrower and DLHC for Rmb28.7m as the loan fulfillment period has expired.
- Trading remains suspended for the counter.

*Lian Beng
- Lodged the preliminary offer document and applied to SGX for the proposed listing of SLB Development, the group's property development business.
- No details on the offer price, tranches, and timetable at this point.

- Disposing entire 45% stake in Secura Thailand, which is loss-making and has net tangible liability of Bt2.3m ($97,000), to Fidelium Thailand for $1.
- The purchaser is 75% owner by the group's former CEO Paul Lim Choon Wui.
- Trades at 0.71x P/B.

Tuesday, March 27, 2018

SG Market (27 Mar 18)

- Receding trade tensions on hopes that the US and China could negotiate new terms of trade to avert a trade war could spur some bargain hunting in the local bourse, with beta plays favoured, including banks and property counters.
- Technically, the STI is likely to bounce off the bottom-side of its downtrend channel at 3,400 and work towards closing the breakdown gap at 3,485.

- Industrial production grew 8.9% in Feb despite the CNY effects, and beat expectations for the second straight month in 2018, although it still lagged behind Jan's 16.9% expansion.
- Excluding biomedical manufacturing, factory output rose 9.1% (Jan: +19.6%).
- Electronics was again the star performer, expanding 17.4% (Jan: +28.3%), primarily boosted by the booming semiconductor growth of 26.7% (Jan: +36.6%).
- MKE raises its 2018 GDP growth forecast to 3.1% from 2.8% previously, with 1Q18 expected to come in at ~4%.

*Ho Bee Land
- Agreed to invest up to €40m in Credit Suisse (Lux) European Property Fund II.
- Also committed to co-invest up to €50m by acquiring notes issued by Clouse S.A., Compartment 29, which will invest in a 45,000 sqm commercial building complex, Correo in Munich, Germany.
- The investments are part of the group's strategy to diversify its geographical exposure and optimise returns.
- Trades at 0.53x P/B.

*ComfortDelGro (CDG)
- Reviewing its proposed acquisition of Lion City Rental (LCR) following the Grab-Uber-merger, with UberFlash service ceasing on Apr 8.
- The latest development presents both opportunities and threats for CDG.
- Its taxi business could benefit from a possible tie-up with a bigger ride-hailing entity or reduced competition if Grab cuts its heavy subsidies.
- Risks would include its LCR deal being blocked by the competition watchdog or Grab rejecting any collaboration.
- MKE has a Buy with TP of $2.35.

- Acquiring a small vessel from WF Tanker for US$3.1m, to enhance logistics capabilities of its operations.
- Trades at 9.3x trailing P/E.

*Gaylin Holdings
- Signed non-binding LOI to acquire a 97% stake in Amos International from Danny Lien (27.56% stake), and Lighthouse Logistics (69.44%), an associated company of the group's chairman Kyle Shaw.
- Amos provides supplies, services and logistics solutions to the maritime fleet and offshore oil & gas operators.
- Purchase consideration will be funded by issue of new shares.
- The exclusive negotiation period will be for 120 days.
- Trades at 0.27x P/B.

*Natural Cool
- Proposed sale of property at 42 Toh Guan Road East for $1.82m or 4.2% below market valuation.
- Net proceeds of $1.74m will be used for working capital needs and general corporate expenses.
- Trades at 1.04x P/B.

Monday, March 26, 2018

SG Market (26 Mar 18)

- The market could face more risk aversion this week after Wall Street took another beating last Fri over prospects of a US trade war with China as both sides prepare lists of products as possible targets.
- With IT and electronics products high up on the US list, this could lead to overhang in the technology sector, including suppliers in the supply chain.
- Technically, the STI sees its next support at 3,370 (200MA), with overhead resistance at 3,430.

*Dairy Farm
- Proposed injection of Rustan Supercenters for 12.15% of PSE-listed retailer Robinson Retail Holdings (RRHI) in a US$346m asset swap and acquiring another another 6.1% from RRHI's controlling shareholder, Gokongwei family, for US$174m, giving it a total stake of 18.25%.
- RRHI has revenue of PHP115b, 5.2x higher than Rustan, in 2017.
- Trades at 19.7x forward P/E and dividend yield of 2.7%.

*Hiap Seng Engineering
- Clinched two contracts totalling $53m.
- The first contract was awarded by new customer Vopak Terminals Singapore, involving the provision of EPC and commissioning works for four new storage tanks at Vopak Sebarok Terminal.
- Second contract was secured from Singapore Refining Co. to undertake mechanical and piping works for the Catalytic Reforming Unit Revamp Project.
- Trades at 0.71x P/B.

*Far East Group
- Proposed disposal of its regional headquarters at 112 Lavender Street in Singapore for $27m.
- The deal will result in a significant net gain of $22m, compared to its current market cap of $8.7m.
- Net proceeds of $26.2m will be utilised for working capital, business expansion and future investment opportunities.
- Pro forma NAV/share will spike from $0.193 to $0.3965 if deal completes.

- Uber has reportedly agreed to sell its South-east Asian ride-hailing business to rival Grab.
- This could derail CD's proposed JV with Uber to buy a 50% stake in Uber's Singapore car rental operations and leveraging on its cab-booking app.
- Trades at 16.4x forward P/E and 5% yield.

*Noble Group
- Clarified to SGX that the resignation of non-executive director and chairman emeritus Richard Elman was due to amicable differences of opinion with the board of directors, and some of the group's creditors.

- Independent auditor Ernst & Young highlighted uncertainties over the availability and timing of the award of new contracts, which may cast significant doubt on the group's ability to continue as a going concern.
- The auditor's opinion for FY17 financial statements remains unqualified.
- Trades at 1.35x P/B.

*Profit warnings
- Gaylin Holdings
- Transit-Mixed Concrete

- Subscribing for a 60% stake in Jiangsu Yangzi Zhuoneng Industrial, a China-based trader of metal, paper and plastics products for an undisclosed sum.
- The group expects the new entity to provide additional revenue stream and help reduce dependency on the import and export of steel products by third parties for its shipbuilding activities.
- Trades at 9.85x forward P/E.

*Viva Industrial Trust / ESR-REIT
- Updated that both industrial landlords are still in discussions over a possible merger.

- Set up a 70:30 JVco, Pura Indah Berkat Venture, with PT. Pura Indah Berkat to develop and operate Toast Box chain of outlets in Indonesia.
- The first outlet under the JV is slated to open in central Jakarta in 2018.
- Currently, the JV partner manages the Toast Box outlet at Soekarno-Hatta International Airport Terminal 3.
- Trades at 25.3x forward P/E.

*Santak Holdings
- Acquiring a freehold property with land area of 47,469.24 sf and built-up area of 32,093.79 sf in Nusajaya Tech Park, Malaysia, for RM11.48m.
- The property will be used for manufacturing of precision machined components, as the group intends to relocate its current factory operations from Singapore to the property to restructure its cost base.
- Funding will be from internal cash resources.

*Transcorp Holdings
- Proposed acquisition of a 10% stake in Motor Megamall for $1.5m.
- Motor Megamall provides an agency platform for owners and purchasers of vehicles to obtain financing from financial institutions or hire purchase companies via an online matching platform.
- Pro forma FY10/17 loss per share is expected to lower from 2.23¢ to 1.99¢.
- Trades at 0.49x P/B.

Friday, March 23, 2018

SG Market (23 Mar 18)

- Brace for a knee-jerk sell-down after US announced tariffs on up to US$60b of Chinese imports, singling out China for the first time, sparking fears of a trade war between the two economic powerhouses.
- But there were few details on the product list, which will be unveiled over the next two weeks, which is likely to target high-tech sectors such as aerospace, ICT and machinery, followed by a 30-day consultation period before action is taken. There will also be restrictions on Chinese investments in the US.
- But the Trump administration edged away from a global trade war by exempting EU, along with Argentina, Australia, Brazil and South Korea from its punitive steel and aluminium tariffs.
- This comes amidst more political upheaval at the White House with the latest sacking of US National Security Adviser H.R. McMaster, joining a long list of high profile departures.
- Technically, the STI is likely to break the downside of its triangle pattern to the next support at 3,430 level.

*Bukit Sembawang
- Successfully tendered for the collective sale of the 32-unit Makeway View at the reserve price of $168m.
- Including development charge of $21.3m, the sale price reflects a land rate of $1,626 psf ppr.
- The 41,583 sf freehold site near Newton MRT has a gross plot ratio of 2.8 and can be redeveloped into 154 units.
- Assuming an ASP of $2,600 psf, the project could yield a development surplus of $0.14/share.
- This is BS second en bloc deal in a week, following the recent acquisition of Katong Park Towers for $345m.
- Last traded at 42% discount to RNAV.
- MKE has a Buy with TP of $8.55.

*Boustead Projects
- Boustead Development Partnership (BDP), a co-investment partnership with a Mid-East sovereign wealth fund, has launched an 11-floor business park with two basement car park in Mediapolis, One-North.
- The development is named ALICE, and the multi-tenanted building will have 39,487 sqm of gfa.
- It will be integrated with collaborative spaces, F&B options, recreational amenities, and shared media facilities to offer media companies the convenience of having more work done at a single location.
- Construction of ALICE is in progress, and expected to be completed by 4Q18.
- Trades at 7.2x trailing P/E.

*Hoe Leong
- Settled a lawsuit with Sumatec whereby Sumatec will pay its 80%-owned Ebony RM27m, of which RM7m will be in cash and RM20m will be in redeemable convertible preference shares.

*Midas Holdings
- Disclosed that its China legal counsel has found court documents regarding three legal cases.
- Most prominent case involve civil complaints filed by Jilin Provincial Micro Refinancing Corp, which sued 9 parties on 7 Dec '17.
- The plaintiff had lent a total of Rmb379m to companies associated with Midas, but management is unaware of how the loans transpired and the actual use of the proceeds.
- The group's audit committee only found out about the loans on 14 Mar '18, as its legal representatives did not report to the board about the litigation.
- Second case is a court order from Nanjing Xuan Wu District Court dated 16 Aug '17, and is related to Luoyang Midas and an unauthorised guarantee to a third party.
- Third case relates to another lender. Ning Xiao Fei, which sued five parties related to Midas for loans plus interest of up to Rmb40.5m.
- In a further twist, CEO Patrick Chew has resigned due to health issues and litigation matters.

- Cites "impossible" time frame given by SGX and auditors to produce business plans and 5-year DCF analysis of 46 franchisees to meet 8 Mar deadline for its auditors' opinion on certain items in its FY17 results.
- Disclosed that 23 of its franchisees significantly outperformed their expected user numbers and showed stronger-than-expected financial results in 2017.
- The franchisees are located in South Korea, UK, India, Romania, Poland and South Africa.
- Trading in its shares has been suspended since 19 Mar.

*BH Global
- Parent company Beng Hui Holdings is providing a shareholder loan of $15m to the group for working capital requirements and daily operations.
- The loan is repayable in one year, with interest of 3.92% p.a.

*Allied Technologies
- Extending the deadline for Platform Internet Capital till 30 Apr to finalise and enter into a definitive sale and purchase shares agreement.
- To recap, the group has inked a binding MOU to acquire 51% stake in e-commerce ticketing platform Asia Box and is negotiating on a price for the acquisition.
- As a gauge, the target company's internal valuation is estimated to be $60m.

*Mirach Energy
- Proposed placement of 56m new shares at $0.10 apiece to 12 individuals as well as Zhuang Sheng Singapore.
- Net proceeds of $5.6m will be used to pay for its acquisition of a 70% stake in RCL.

Thursday, March 22, 2018

SG Market (22 Mar 18)

- Traders are likely to stay on the sidelines after the Fed raised its benchmark rate by 25bps as expected but steepened the path of rate hikes in 2019/20 on stronger growth outlook following tax cuts.
- The big story today will be on trade where the White House is set to unveil at least US$30b of tariffs on Chinese imports, with China preparing to retaliate against US agricultural products.
- Oil-linked stocks may gain after crude rallied 2.6% on a drop in US inventories.
- Technically, the STI is still hovering near its 50-dma at 3,505 within its its triangle pattern bounded by near-term support at 3,490 and resistance at 3,550.

- Collaborating with cloud services provider, US-listed Twilio to develop an Internet-of-Things (IoT) platform for software developers in order to accelerate the adoption of IoT solutions in Singapore and the Asia-Pacific.
- The tie-up would leverage on Singtel's network in Singapore and Twilio's Programmable Wireless product to enable developers to manage cellular connectivity.
- The platform will help boost the group's enterprise business (27% of 9MFY18 revenue) by offering enhanced connectivity, network security, device management and advanced analytics.
- Trades at 14.1x forward P/E and 5% dividend yield.
- MKE has a Hold with TP of SGD3.69.

- Divesting a 34.1%-stake in wholly owned ISO-Integrated M&E to Jasdaq-listed Taisei Oncho for $3m.
- The proposed divestment will pave the way for the establishment of a JV between both parties. This will enable the group to strengthen its M&E and energy management capabilities by leveraging on Taisei's M&E expertise and overseas network.
- Net proceeds of $2.9m will be used to fund future business expansion, investments and acquisitions as well as general working capital.
- Trades at 8.9x forward P/E.

*Kori Holdings
- Awarded $13.5m worth of contracts, comprising mainly strutting works, as part of Circle Line 6, and Thomson-East Coast MRT Line.
- Projects are slated to start in 1Q18, and expected to be completed in 24 months.
- The contracts are expected contribute positively to FY18 earnings.

*KS Energy
- 80.09% owned KS Drilling was awarded a US$4m contract for the KS Medstar 1 jack-up drilling rig.
- KS Drilling provides onshore and offshore drilling services, rig management and support services, oilfield equipment ownership and leasing.
- The work in Egypt will be for three months, commencing 2Q18.

- Warns that it is likely to report a net loss of US$1b for both 4Q17 and FY17, largely attributable to impairment losses of US$900m amid the prolonged downturn in the O&G industry, which has depressed the market values of its assets.
- Continued to experience delayed payment from clients, which further constrained its cash flow.
- Revenue and profitability were also afflicted by delays in re-deployment of some of its assets and lower charter rates.
- Releasing financial results on 28 Mar.
- Trading suspended since 14 Aug.

- Wilmar is acquiring the remaining 50% interest in Nauvu Investments from Olam for a consideration of up to US$148m, of which US$85.4m comprises repayment of a shareholder's loan.
- Nauvu invests in integrated palm oil, natural rubber and sugar assets in Africa as well as engages in the production of crude and refined oil.
- Trades at 12.7x forward P/E and 3.1% dividend yield.

*OUE Commercial REIT
- Commencing asset enhancement initiatives (AEI) at One Raffles Place Shopping Mall in mid-2018 to improve circulation areas of the mall and open retail space with better visibility.
- The mall will remain operational during the AEI period, as work will be implemented in phases to minimise disruption to tenants and shoppers.
- Cost of AEI is not expected to have material impact on the REIT's gearing.
- The mall will also be welcoming Spaces, a co-working space operator, which will be occupying 35,000 sf over a few levels from early 2019.
- Trades at 4Q17 annualised yield of 6.4%.

- Proposed placement of 16.7m new shares at $0.06 apiece to Jacfun (12.5m) and Yalla (4.2m).
- It will also issue 5m non-listed transferable warrants with exercise price of $0.08 each to Jacfun (3.75m warrants) and Yalla (1.25m warrants).
- Jacfun invests in theme park, hotel and entertainment assets and is the principal investor behind Yaturu, an operator of digital theatrical tours. Yalla is a developer of technology and producer of content for AR devices.
- Both companies have been working with Asiatravel on digital/augmented projects.
- Net proceeds of $0.97m will be used for general working capital purposes, including the development of digital tours.
- Loss-making and trades at 0.86x P/B.

*Trendlines Group
- Signed MOU with Nutreco Investments, a prominent producer of animal nutrition and aquafeed, to explore possible areas of collaboration.
- Collaboration areas include development of new technologies and identify investment opportunities related to the animal feed industry.
- Trades at 0.63x P/B

*Chew's Group
- Clarified that a previously proposed special DPS of $0.35 is subject to shareholders' approval and completion of the disposal of its agriculture, engineering services, investment and marketing arms to Huat Lai for $11m.

*Tee Int'l
- Proposing a 1 bonus warrant for every 10 shares, with exercise price of $0.215 apiece, representing 7.5% premium over last close.
- Maximum proceed's of $10.7m from warrant conversion will be used for new investments, reducing its existing loans and working capital purposes.

Wednesday, March 21, 2018

SG Market (21 Mar 18)

- Market sentiment is expected to be cautious as investors brace for higher US borrowing rates as well as possibly more hawkish tones from the Fed.
- But trade war still pose the biggest tail risk as reports flagged that President Trump is ready to slap US$60b of tariffs on Chinese products this Fri.
- Oil-linked stocks may come into play as crude price climbed 2.3% to a 3-week high on Mid-East tensions and possibility of further declines in Venezuelan oil output.
- Technically, the STI is hovering near its 50-dma at 3,505 and trapped within a triangle pattern bounded by near-term support at 3,490 and resistance at 3,550.

*Keppel Corp
- Secured a five-year technical support agreement and two performance bonuses totalling over £7m with Viridor efW for its Phase 2 Thermal Power Station at Runcorn, UK.
- The £3.25m contract is to provide technical support to the plant's current operation and maintenance team, starting from 2018, while £4m bonuses were awarded for achieving better economic returns from the plant.
- Trades at 14.4x forward P/E.

- Reportedly eyeing regional mobile wallet tie-ups with its associates, AIS (Thailand), Globe Telecom (Philippines), Telkomsel (Indonesia) and Airtel (India).
- This will enable customers to make cashless payments in home currency while abroad.
- About 8.5% of the group's 590m regional mobile customers use their telco's mobile wallets.
- Trades at 14.2x forward P/E and 5% dividend yield.
- MKE has a Hold with TP of $3.69.

- Acquiring a 49%-stake in Beijing Wish for Rmb25.2m in cash.
- Beijing Wish engages in the film production and distribution business as well as commercial performance and concert brokerage businesses in China.
- The acquisition is in line with its strategy to expand its presence in China.
- Post-transaction, Beijing Wish will dispose its film-related businesses, while the vendor has provided an undisclosed profit guarantee.

- Secured $5.6m worth of contracts from existing customers.
- The contracts are for the provision of maintenance, repairs and overhaul services as well as the manufacturing and supply of shipsets.
- Delivery of the shipsets will take place over May-Dec 2018.

*Noble Group
- Credit score downgraded by the S&P to "D" from "CC" after it missed principal and coupon payments on two outstanding USD notes.
- The credit agency warns that such failure will trigger cross-defaults on its other obligations
- Separately, major shareholder Goldilocks Investment (8.1%-stake) has filed a lawsuit, alleging that the group had inflated profits to raise money.
- Goldilocks wants a court declaration that management had breached fiduciary duties and is seeking relief on behalf of shareholders, including about US$169m in executive remuneration as well as any interest and damages assessed by the court.
- The legal suit pose another hurdle for its proposed debt restructuring scheme, which needs approval from both bond and share holders.

*Sino Grandness
- Signed strategic agreement with Baixianwang Intelligent Technology and Tomcat Culture to distribute its own-branded products at Baixianwang's unmanned convenience stores.
- Baixianwang is involved in retail platform technology development, covering automated warehousing, transportation and inventory system, domestic robots, and unmanned convenience stores.
- Tomcat Culture does strategic branding, management, execution and licensing, covering creative culture and original animation works.

Tuesday, March 20, 2018

SG Market (20 Mar 18)

- Brace for a risk-off sentiment from the overnight selloff in US equities after new Fed Chair, Jerome Powell signalled that he was open to four rate hikes in 2018 as opposed to three previously forecasted.
- The Fed is widely expected to raise the benchmark rate by 25bps on Thu morning and investors are eager to hear on the interest rate outlook for the year.
- Tech names likely to bear the brunt of the increased regulatory scrutiny following Facebook's data breach scandal, potential EU taxes on global digital companies and Apple's in-sourcing plans. Yield plays are also expected to come under pressure.
- Technically, the STI has dipped below its 50-dma at 3,505 and approaching bottomside of its converging "symmetrical triangle" pattern with near term supports at 3,490/3,470 and resistance at 3,550.

- Newcomer TPG Telecom will offer a mobile data plan to seniors at no extra charge for 24 months when services are rolled out in 2H18.
- The free public service is intended to enhance its corporate image, create buzz and help draw in customers.
- MKE is cautious on the sector and expects a more aggressive tariff war emerging in the coming months.
- The house has Sell calls on M1 (TP: $1.59) and StarHub (TP: $2.17).

- The 20-unit Peak Court at Thomson Road is latching onto the en-bloc fever by launching a collective sale tender with a reserve price of $106m.
- The freehold 57,350 sf site with gross plot ratio of 1.4. Including a 10% bonus balcony area, the reserve price would translate to $1,342 psf ppr and yield 106 new units.
- The property is situated near Novena MRT station and the future Health City Novena and Thomson Medical Centre.
- Tender will close at 3pm on 9 May.

- Successfully tendered for the en bloc acquisition of 290-unit Pacific Mansion in River Valley for $980m or SGD1,806 psf ppr, 4.5% above the reserve price.
- This marks the biggest collective sale in more than a decade and the second highest deal on record since the $1.34b sale of Farrer Court in 2007.
- GuocoLand will hold a 40% stake in in the project, while related partners Hong Leong Investment Holdings and ong Realty will own 40% and 20% respectively..
- The property lies within prime District 9 district and is within walking distance to its Martin Modern project.
- Assuming an ASP of $3,200 psf, MKE estimates a development surplus of $0.06/share.
- Trading at a steep 44% discount to RNAV of $3.75.
- MKE reiterates its Buy rating with revised TP of $3.00 (prior: $2.95).

- Awarded a contract by Oxley to manage its mall in Phnom Penh, Cambodia.
- The group will oversee asset planning, pre-opening and retail management for the five-story mall, which has a NLA of 260,000 sf and expected to commence operations in 2020.
- Trading at a 33% discount to RNAV of $5.49.
- MKE last had a Buy with TP of $4.10.

*Spackman Entertainment
- Its "Be With You" melodrama romance movie broke historical records for its genre in the Korean box office, grossing US$6.7m in its first week.
- During the weekend, the film captured 45% of South Korea's market share of box office revenue.
- Trades at 6.7x forward P/E.

- SGX has suspended trading in its shares after issuing it a notice of compliance two weeks earlier to disclose its auditors'opinion on certain items in ist FY17 results by 19 Mar.
- The latest blow comes after auditors were unable to give opinion on the veracity and reasonableness of $8m in other income, mainly bargain purchase gain of assets and $54.2m assets available-for-sale, with corresponding $38.4m recognised as revenue, citing inability to obtain sufficient audit evidence.

*CWG Int'l
- The buyout offer of $0.195/share by Elidom Investment has closed with the Sinway-led consortium holding a 97.9%-stake.
- Trading in CWG shares will be suspended with immediate effect.
- The consortium intends to compulsorily acquire the remaining shares that it does not own.

*Cosco Shipping
- Awarded a $94.9m contract to SH Design & Build to design and construct the Jurong Island Chemical Logistics Facility, a project secured from JTC previously by its newly acquired subsidiary Cogent Holdings.
- The 8-storey facility comprises general warehouse, chemical warehouse, ISO tank depot, container depots, mezzanine offices and vehicle ramp.

*Wong Fong
- Acquiring Smatra Training Hub for $1, taking into account for the net losses for FY16 and FY17.
- Smatra is engaged in safety and quality consultancy, management services, as well as training services.
- Expected to log negative goodwill of $0.02m.

- Extending the completion of the disposal of Yangtzekiang Industries for another two weeks to 2 Apr.
- The group is disposing Yangtzekiang to F Retail for RM15.6m and had previously extended the the transaction date for two months back in Dec '17.

Monday, March 19, 2018

SG Market (19 Mar 18)

- Expect a rocky week ahead of a FOMC meeting and a widely expected rate hike, with investors focusing on the Fed's tightening trajectory as well as global trade war fears amid positive economic data.
- Technically, the STI is trading with a triangle formation with near-term support at 3,479 and topside resistance at 3,550.

*Bukit Sembawang
- Acquired 118-unit Katong Park Towers through collective sale tender for $405m or $1,280 psf ppr, 20% above the reserve price, beating nine other bidders.
- The 99-year leasehold property has a site area of 140,758 sf with plot ratio of 2.1 and is located in the vicinity of the upcoming Katong Park MRT station (completion in 2023).
- Assuming an estimated ASP of $2,200 psf, the project will yield a development surplus of $0.23/share.
- Trading at underrated 41% discount to RNAV of $10.35.
- MKE has a Buy with TP of $8.25.

- Partnering with local solar energy provider, Sunseap to venture into the electricity sector.
- Plans to sell electricity in Apr at the soft launch of the Open Electricity Market in Jurong.
- There will be two clean energy subscription plans offerred by both companies: Green Life and Green Save.
- Customers of Green Life will get 100% of electricity produced by Sunseap's solar systems and be charged the regulated electricity tariff, now at 21.56¢/kWh.
- Green Save customers will get 5% clean energy and entitled to 20% discount off the regulated tariff.
- All households in the Jurong area will be able to buy electricity from any of the 14 retailers from next month. This option to shop around for electricity suppliers will be extended to the rest of Singapore in 2H18.
- MKE has a Sell with TP of $2.17.

- Awarded a two-year renewable contract by a European OEM supplier to car manufacturers.
- Under the contract, the group will supply more than 12,000 upholstery leather kits per annum, significantly large compared to its current annual production of 18,000.
- Awarded a separate two-year contract with an OEM automotive manufacturer in Malaysia to supply 2,300 vehicle upholstery kits per annum for a commercial vehicle model.
- Following the acquisition of new premises, its current production capacity of 26,000 upholstery kits will be increased to 32,000 by 3Q18.

- Declared that it will not make interest and principal amounts payable on its 8.75% USD senior notes due 2022 and 3.625% USD senior notes due 20 Mar 2018 to "preserve assets" during its proposed restructuring.
- This event of default could trigger payouts on credit default swaps tied to the group and activate cross-default clauses on its other debts.
- It would also allow some customers/trading partners to exercise clauses and walk away from its trading contracts.
- Valuations are no longer meaningful given its eroding balance sheet.

*Hatten Land
- Terminated proposed acquisition of Rico Development (RD) and Rico Ventures (RV) for a total of RM90.8m.
- The deal was cancelled as the parties could not come to an agreement on a revised issue price given that that group's share price has weakened over time.

*Keppel Corp
- Acquired the remaining 10%-stake in Saigon Sports City (held through Jencity) in Vietnam for US$11.4m from Jenclub.
- Saigon Sports City is a 64ha township in Ho Chi Minh City with total development cost projected to be more than US$500m.
- The first phase of the development will feature commercial space of 90,000 sqm of gfa and 1,220 homes, of which, 620 units will be launched in 2H18.
- Trades at 14.3x forward P/E.

- Combined its 60%-owned ComfortDelgGro Savico Taxi and 70%-owned Vietnam Taxi operations as part of efforts to rationalise its taxi business in Ho Chi Minh City.
- Also acquiring the remaining 10%-stake in Chongqing ComfortDelGro Driver Training from by-Hour Driver Training Centre of Chongqing for Rmb5m ($1m).
- 80%-owned Beijing Tian Long Da Tian Vehicle Inspection has ceased operations temporarily following government redevelopment of its land. It is actively seeking an alternative site for the resumption of operations.
- Trades at 14.7x forward P/E and offers a dividend yield of 5.2%
- MKE has a Buy with TP of $2.35

*HL Global Enterprises
- Proposed to convert all its existing non-redeemable convertible cumulative preference shares (NCCPS) to ordinary shares at a conversion ratio of 10 to 1.
- This is subject to the approval of shareholders and NCCPS holders.

*Infinio Group/Oxley
- Acquiring 80% stake in Oxley Batam for $10.4m and assuming the inter-company loan of $10.4m from Oxley Holdings.
- Oxley Batam is engaged in construction, development and operation of properties in Batam, Indonesia and recorded a net loss of $0.009m in FY6/17 with negative NAV of $0.06m.
- This is in line with the group's strategic plan and on-going efforts to pursue and diversify into property business.

Friday, March 16, 2018

SG Market (16 Mar 18)

- The SG market could remain lacklustre amid ongoing concerns of trade protectionism, as investors pare risk exposures prior to the weekend.
- Technically, the STI sees near-term support at 3,470, with topside resistance at 3,575.

*Datapulse Tech
- Turned around to 2QFY18 net profit of $38.1m, boosted by a property disposal gain of $44.6m.
- Revenue jumped 58% to $4.5m from a one-off special project worth $1.3m, as well as new contribution from recently-acquired Wayco Manufacturing (Dec '17).
- Improvement to bottom line was pared by higher opex (+165.5%), arising from a spike in staff costs (+307.6%) and increased raw material expenses (+202.9%).
- Trades at a trailing 2.2x P/E.

- Feb passenger load factor marginally improved to 80.9% (+0.2ppt) as traffic growth (+4.2%) inched out capacity expansion (+4%).
- Cargo load factor ticked up 0.6ppt higher to 62% as increase in loads (+11.8%) outstripped capacity (+10.8%).
- Parent airline load factor fell 0.7ppt to 79.9% on weakness in East Asia (-1ppt), Europe (-1.8ppt), and West Asia & Africa (-2.1ppt).
- Load factors for subsidiary carriers SilkAir and Scoot grew to 74.1% (+1ppt) and 86.9% (+2.7ppt), respectively.
- Trades at 0.93x P/B.
- Maybank KE has a Hold with TP of $10.95.

*Chip Eng Seng
- Proposed to dispose a commercial site at 150 Queen Street, Melbourne, for A$55m.
- The property was purchased in Sep '11 for redevelopment into a 71-storey residential apartment skyscraper dubbed as Tower Melbourne.
- However, legal action brought about by the adjoining site owner in 2013 had halted the project indefinitely.
- The sale is expected to complete by 3 Jul '18, and may contribute positively to the NTA and earnings of the group for FY18.
- Trades at 0.75x P/B.

*Memtech Intl
- Established a new subsidiary, Kunshan Taitech Automation, that will undertake research and manufacturing of automation equipment, robots, electrical and other intelligent or hi-tech equipment and parts.
- Trades at 15.1x forward P/E.

*Spackman Entertainment
- Distribution rights to its Korean fantasy melodrama film, Be With You, has been sold to 17 countries worldwide.
- The film is scheduled to open in Taiwan, Vietnam and Singapore on 30 Mar, 6 Apr and 19 Apr, respectively.
- Trades at 7x forward P/E.

*Lorenzo Intl
- Disposing two properties located in Kuala Lumpur, Malaysia for RM4.6m ($1.6m) to reap a disposal gain of RM2.6m.
- Intends to use proceeds for general working capital purposes.
- Trades at 3.26x P/B.

- Extended the long stop date of the 33.33% stake sale in Hong Kong Life Insurance to 30 Sep '18.
- To recap, the HK$2.37b ($425.9m) deal is priced at 2.98x P/B, and subject to regulatory approvals.
- Trades at 1.44x P/B.

*Yanlord Land
- Acquired property development company, Hainan Jinzhonghong Industrial Development, for Rmb10m, or 3.33x P/B.
- The group will be injecting an additional Rmb22m into the newly-acquired entity.
- Trades at 0.72x P/B.

- Proposed placement of 156.8m new shares (4.03% share capital) at $0.51/share to joint placement agents Credit Suisse, DBS and Maybank Kim Eng.
- Net proceeds of $78.1m earmarked for working capital, including project development.

- 50.01% owned vCargo Cloud (VCC) will be implementing a pilot National Single Window e-trade project in Djibouti, Africa.
- The pilot project will showcase VCC's capabilities to execute seamless cross-border trade in developing countries through its CamelONE e-trade platform, which will significantly reduce cross-border risks and costs incurred by shippers and companies.
- Djibouti has been recognised as a key location in China's Belt and Road Initiative, with the country importing more than US$1.98b worth of goods from China.
- With the addition of Djibouti, CamelONE is currently connected to 13 custom nodes globally, including Eastern Africa - Burundi, Kenya, Rwanda, Tanzania and Uganda.
- In 2017, CamelONE platform facilitated more than US$117b gross merchandise value across 12 countries.
- Trades at 0.63x P/B.

Thursday, March 15, 2018

SG Market (15 Mar 18)

- Rising worries on heightening trade tensions could result in a jump in volatility for the SG market, as investors steer clear of potential downside risks arising from increased protectionism.
- Technically, the STI sees its next objective at 3,575 with near-term support at 3,470.

- Private-sector economists have raised Singapore's 2018 GDP growth forecast to 3.2%, against an earlier estimate of 3% made in Dec '17, and falls within the MTI's range between 1.5% and 3.5%.
- GDP growth is anticipated to moderate to 2.8% in 2019.

*Vibrant Group
- 3QFY4/18 net profit dived 89% to $0.15m amid higher attribution to minority interest.
- Revenue surged 231% to $177.3m from new contribution from recently-acquired Chinese coal producer Blackgold International.
- However, gross margin crumbled to 7.7% (-21.2ppt) due to the temporary shutdown of mining activities for maintenance work.
- Bottom line was boosted by $6.8m (3QFY17: nil) write backs on impairments partially pared by a 165.9% surge in net finance costs to $5.6m.
- Trades at 0.59x P/B.

*Khong Guan
- 1HFY18 net profit soared 733.68% to $0.8m albeit from a low base of $95,000.
- Revenue inched up 0.3% to $28.8m as declines in contributions from its Sabah operations (-1.6%), others (-18.3%) and investment trading (-52.3%) was mitigated by strength in its Penang operations (+15%).
- Bottom line was further boosted by a positive change to short-term investments to $0.6m (1HFY17: -$0.8m).
- Trades at 24.6x trailing P/E.

*Keppel DC REIT
- Acquiring the remaining 999-year leasehold interest in Keppel DC Dublin 1 located at Dublin 24 for €30m ($48.1m).
- The longer tenure will allow the REIT to be more agile in its investment strategy and provide longer term certainty to its clients.
- Post-acquisition, the REIT will own leasehold interest in the data centre until end 2998, up from Apr 2041 currently.
- Transaction is slated to take place within 1H20.
- Offers an indicative yield of 5% and trades at 1.45x P/B.

*Spackman Entertainment
- Korean fantasy melodrama film, Be With You, grossed US$805.5k on the first day of its release, capturing 34.6% market share of Korea's box office revenue.
- The group is one of the major investors in the film and is co-presented by associate company Spackman Media Group.
- Potential income is expected from a multitude of direct and indirect channels including investment return, artists fees, and co-presenting fees.
- Trades at 6.9x forward P/E.

*Keong Hong
- Awarded a contract to erect a a building for the National Skin Centre.
- Also, group will reconstruct an existing 5-storey building for the National Healthcare Group Offices.
- No financial details were provided.
- Last traded at 2.2x trailing P/E.

*AA Group Holdings
- Charged with an offence under the Workplace Safety and Health Act for failure to ensure safety of workers from contractor Poh Huat Heng Corp. in carrying out painting works at a factory at 60 Benoi Road.
- Potential fine is expected to be $0.13m.
- Next court hearing is scheduled on 10 May '18.

*China Kangda Food Company
- Guided for FY17 loss due to an increase of mortality rate of chickens resulting from bad weather and higher admin cost arising from increased professional fees and employees' cost.

*Yanlord Land
- Credit rating firm S&P Global has upgraded Yanlord's long-term corporate credit rating to BB from BB-, due to its improving financial position, stemming from substantial margin expansion and prudent growth strategies.
- Last traded at 0.73x P/B.

- Proposed placement to fund project developments, working capital and general corporate purposes.
- Counter has requested for a trading halt.

*Straits Trading
- Acquiring an 86.8% economic interest in the pre-tax distributions from SIM Residence 2 GK through a silent partnership agreement for ¥989m ($12.2m).
- SIM is acquiring a 134-unit rental residential apartment in Saitama, Japan. The property has an NLA of 6,957 sqm and has secured a 5-year master lease.
- Trades at 0.62x P/B.

Wednesday, March 14, 2018

SG Market (14 Mar 18)

- Some profit-taking in risk assets is likely in the near-term due to political concerns in the US, while investors keep their eyes peeled on retail sales and industrial production data coming out from China this morning.
- Technically, the STI sees its next objective at 3,575 with near-term support at 3,470.

- Proposed conditional delisting from SGX at $0.65/share (HK$3.88/share) by Chairman and controlling shareholder, Mr. Zhang Wei.
- Shareholders who do not accept the exit offer will be able to continue trading their shares on HK Exchange.
- The delisting is due to the limited trading liquidity on SGX, as well as HK Exchange being geographically more aligned with its business operations.
- The mixed property developer trades at 0.36x P/B.

*Alliance Mineral
- The board has terminated the services of CEO Tjandra Adi Pramoko and his wife Simone Suen Sze Man, citing a loss of confidence in both persons.
- Both persons are its second largest shareholder and owns a 12.1% stake as at Jan'18.
- Separately, group updated that it has commenced production at Bald Hill Lithium and Tantalum Mine in Western Australia.

- Recently-installed financial controller, Lim Sze Chern, has resigned after four months on the job, to pursue personal interests.
- Last traded at 0.64x P/B.

- Proposed to combine the contract classes for exchange-traded derivatives and OTC commodities into a single contract class, as well as to refine the methodology for members' clearing fund contributions.
- Maybank KE last had a Buy and TP of $8.73.

- Divested an undeveloped land parcel in Ahmedabad, India, at book value of Rp528.5m, as part of the group's strategy to enhance capital productivity.
- Maybank KE has a Buy with TP of $4.10.

*Perennial Real Estate
- To acquire the remaining 50% stake in mixed development, Capitol Singapore, for $528m.
- The deal is expected to be completed by 8 May.
- Last traded at 0.53x P/B.

- Diversifying into the renewable energy sector via a 80:20 JV with Malaysia's Green Energy Resources.
- The Malaysian JVCo will look for opportunities to work on projects related to electricity generation on a build-own-operate basis.
- Group also expanded its trading operations into Indonesia, where it will provide engineering products and solutions to the country.

Tuesday, March 13, 2018

SG Market (13 Mar 18)

- Tech-related manufacturers could provide the SG market with a boost, while investors remain cautious on global trade tensions.
- Technically, the STI sees its next objective at 3,575 with near-term support at 3,470.

- 1HFY18 net profit jumped 38% to $3.3m on improved operational leverage.
- Revenue rose 12% to $78.3m on increased contribution from burn-in, testing and electronic manufacturing services, led by the fast-growing automotive sector.
- Operating margin expanded 1.2ppt to 10.8% as costs rose at a slower pace.
- Trades at 13.6x trailing P/E and 1.65x P/B.

*LY Corp
- FY17 net profit rose 17.8% to RM51.2m, supported by lower effective tax rate of 20.5% (FY16: 22.9%).
- Revenue grew 22% to RM350.6m on higher sales volume (+17.4% to 6,620 containers) arising from increased demand from the US, as well as increased ASP of RM53,000 (+3.9%) per container of products sold.
- However, gross margin narrowed 1ppt to 25% on higher cost of sales (+23.7% to RM262.9m).
- Declared first and final DPS of 0.78¢ (FY16:nil).
- NAV/share at RM4.35.

*mm2 Asia
- 51% owned Vividthree Productions is partnering KRX-listed New Entertainment World to develop a virtual reality tour show based on the 2016 Korean blockbuster, Train to Busan.
- No further details were disclosed.
- Trades at 21.7x forward P/E.

*Tan Chong Intl
- Expected to report a substantial increase in FY17 net profit mainly due to more favourable business conditions.
- Slated to release results by end-Mar.

*GSS Energy
- Adopted a dividend policy to pay at least 20% of earnings for FY18 and FY19.
- Trades at 8.6x forward P/E.

- To search for more potential undisclosed corporations within the group as part of its action plan to address irregularities.
- Other measures include the appointment of a Chinese law firm as its external Chinese legal counsel and the submission of information to external auditors.
- There will also be a change in legal representative for six of its subsidiaries.
- Counter remains suspended.

- Singapore High Court has granted the discharge of the judicial management order and winding up of the group.
- The liquidators will prepare the necessary applications to delist the group from SGX Mainboard.
- Counter remains suspended.

*ST Engineering
- Injected an additional $3.9m into 90% owned JVCo, ST Aerospace Aircraft Seats, which is responsible for the end-to-end design and manufacturing for a range of aircraft seating solutions.
- MKE has a Buy with TP of $4.15.
- Trades at 19.7x forward P/E and offers an indicative yield of 4.4%.

*Lian Beng
- Acquiring a commercial building at 381 Joo Chiat Road for $27m.
- The deal for the 2,296 sqm gfa property is accretive and will be kept as an investment property for rental income.
- Separately, group completed the disposal of an Australian commercial building in Melbourne for A$90.2m.
- Trades at 7.1x trailing P/E and 0.56x P/B.

- Proposed to undertake a 4-into-1 share consolidation exercise.
- Management believes that consolidation will reduce share price volatility and increase market interest.
- Trading at 2.59x P/B.

*Addvalue Tech
- Collaborating with KSAT to provide enhanced communication services in support of small low-orbiting satellite operations, used for earth observation, scientific, surveillance, weather forecasting and imaging missions.
- KSAT is a leading provider of ground-station-based communication services to low orbiting spacecraft.
- Under the partnership, KSAT will provide Addvalue's Inter-Satellite Data Relay Service as an integrated element to enhance current service offering to its customers.
- Remains loss-making and trades at 3.38x P/B.

Friday, March 9, 2018

SG Market (09 Mar 18)

- Market may open higher on news that North Korean leader Kim Jong Un has offerred to refrain from further muclear or missile tests and will meet US President Trump in May for denuclearisation talks.
- This comes as investors weigh the economic fallout of Trump's contentious tariffs on foreign steel and aluminium, abeit with some exemptions, against the signing of the TPP trade pact by 11 Asia-Pacific nations, which accounted for 22% of Singapore's merchandise trade for 2017.
- Technically, upside resistance for the STI is at 3,575 with immediate support at 3,420.

*Mandarin Oriental
- FY17 net profit slipped 4% to USD54.9m, impacted by renovation works of Mandarin Oritental Hyde Park, London.
- Revenue rose 2.2% to USD610.8m on improved RevPAR in Asia (+8%), Europe (+4%) and US (+1%).
- Bottom line was hurt by higher effective tax of 21.6% (FY16: 19.5%)
- Its strategic review of The Excelsior, Hong Kong is ongoing, including the option to redevelop the site as a commercial property.
- Final DPS to USD0.015 brought FY17 dividend payout to USD0.03 (FY16: USD0.04).
- Trades at forward P/E of 44.1x and 0.5x P/B.

*Dairy Farm
- FY17 underlying net profit declined 13% to US$403m, due largely to non-recurring business change costs of US$64m. Excluding that, core earnings would have inched up 1%, at low end of expectations.
- Revenue was relatively flat at US$11.3b (+1%) as positive performances in convenience store, health & beauty and furnishings and key associates were offset by poor showing by its supermarkets and hypermarts.
- Gross margin expanded 0.2ppt to 30.4%.
- The US$64m business change costs arose from closure of underperforming stores and stock clearance in its food division, as well as higher tax expense of US$92.9m (+8.4%).
- Maintained final DPS of US$0.145, bringing total dividend to US$0.21 (unch).
- Trades at 20.4x forward P/E.

*Hongkong Land
- FY17 underlying net profit expanded 14% to a record US$970m on increased rents in Hong Kong and lower vacancies in both Hong Kong and Singapore.
- Headline profit soared 67% to US$5.6b on US$4.67b in FV gains on its investment properties.
- Revenue dipped 2% to US$1.96b on lower sales of properties of US$907.8m (-10%) partially mitigated by stronger contributions from its rental income of US$911.7m (+6%) and service income of US$140.3m (+7%).
- Operating margin narrowed 2.4ppt to 46.3% on higher operating costs (+3%).
- Proposing higher final DPS of US$0.14, bringing FY17 dividend payout to US$0.20 (FY16: US$0.19).
- Last traded at 0.4x P/B.

*Jardine Strategic
- FY17 underlying net profit rose 11% to US$1.6b, while headline profit surged 50% to US$4.11b.
- Gross revenue rose 7% to US$31.56b on stronger contributions from Astra (+13% to US$15.4b), Dairy Farm (+1% to US$11.3b), Mandarin Oriental (+2% to US$611m) and Jardine C&C (+6% to US$2.3b)
- Operating margin narrowed 0.3ppt to 9.4%.
- Bottom line was lifted by higher share of associate/JV of $1.05b (+78%).
- Proposed a final DPS of US22.5¢ (FY16: US21¢), bringing full-year payout to US32¢ (+6.7%).

*Jardine Matheson
- FY17 underlying net profit grew 13% to US$1.57b , while headline earnings surged 51% to US$3.79b.
- Revenue grew 7% to US$39.5b on higher contributions from Jardine Pacific (+2% to US$2.4b), Jardine Motors (+7% to US$5.5b), Dairy Farm (+1% to US$11.3b), Jardine C&C (+7% to US$2.3b) and Astra (+13% to US$14.5b).
- Operating margin stood relatively flat at 8.4% (+0.1ppt).
- Bottom line was lifted by higher share of income of associates/JVs of $1.23b (+68%).
- Proposing a final DPS of US$1.20, bringing total dividend payout to US$1.60 (+6.7%).

*City Developments
- Inked a memorandum of general agreement (MOGA) with TID Residential to form a 60:40 JV to undertake a 820-unit EC housing development project worth $509.4m.
- HDB has awarded the 99-year lease land with the area of 27,056.4 sqm and maximum permissible GFA of 81,169.2 sqm located at Sumang Walk to both parties.

*Frasers Hospitality
- Plans to double its Middle East portfolio to 13 properties over the next few years to capitalise on the growing number of business tourists.
- The group has opened Fraser Suites Riyadh in Saudi Arabia and Fraser Suites Muscat in Oman.
- It also plans to open three more properties in Dubai, one in Jeddah and one in Saudi city of Al Khobar and another in Kuwait.

*Citic Envirotech
- Clinched a Rmb300m Public-Private-Partnership project (PPP) in Xiaogan City, Hubei Province in China.
- The project involves the design, construction and operation of a 40,000m3/day wastewater treatment plant and piping works stretching 12.2km.
- The construction of the BOT project will commence immediately and is slated to complete by 2018.
- Project comes with a service concession of 30years with minimum offtake to reach 40,000m3/day in Year 3 from 30,000m3/day in Year 1.

- Launching digital theatrical tours with its B2B division, in partnership with Yaturu.
- Tours are staged using augmented reality technology (AR) and scripted audio-dramas of the history of destinations, along the tour itinerary chronologically.
- The launch will be in May '18, starting with special group packages to Israel.
- Following the launch, the group and Yaturu will jointly develop similar digital theatrical tours in major tourism destinations in Asia, with the first to be ready as early as end 18.
- An extension of the production house (now in Hollywood) will be established in Singapore to fast track development across Asia Pacific.

- Signed an MOU with NUS spin-off company Envirotech and Consultancy under the group's MIC Incubation Programme.
- Envirotech engages in R&D, consultancy, manufacture and design of areas of water and wastewater treatment technologies, as well as environmental modelling and risk assessment.

*8Telecom Int'l
- Acquiring a 51%-stake in China Commodity Market and China Commodity Shopping Centre from Letu Investment and New Pacific Trading for $8m in cash of $6.2m, a loan of $0.4m and 16m shares at $0.09 apiece.
- The companies own two supermarkets in Geylang (4,900 sf) and Chinatown (10,500 sf).

*Chew's Group
- Divesting its Agriculture, Engineering Services, Investment and Marketing arms to Huat Lai for $11m in cash.
- Intends to distribute proceeds from the disposal to shareholders.
- Disposal proceeds together with the group's cash balance of $41.6m would translate to $0.62/share, 11.7% above its last traded price of $0.555.
- It will continue to operate its egg trading business in Chew's HK.

*Noble Group
- Ordered by SGX to appoint an IFA to opine on whether the latter's proposed restructuring and allocation of shares to shareholders, management and senior creditors.
- The IFA opinion is to be included to ensure that stakeholders are fully informed in making their decision during the vote, which require 50% approval to pass the proposed restructuring plan.

Thursday, March 8, 2018

SG Market (08 Mar 18)

- Investors remain on edge as US President Trump is expected to announce a raft of tariffs on Chinese imports on Thu, which could pose a key risk for Asia, even as the White House ponders on exemptions for some countries.
- Technically, immediate for the STI is at 3,420 with upside resistance at 3,575.

- The collective sale fever shows no signs of abating with another four residential properties put up for sale.
- Asia Gardens ($1,675 psf ppr), Park View Mansions ($1,183), 27 Moulmein Rise ($1,525) and Katong Omega Apartments ($1,062) join 12 others on the growing list that is up for tender, worth a total of $5.04b.
- Tenders will close on 16 Apr, 20 Apr, 18 Apr and 5 Apr for the respective sites.
- Ytd, there has been nine en-bloc sales transacted totalling $3.3b vs 27 deals valued at $8.2b for the whole of 2017.

TTJ Holdings
- 2QFY18 net profit grew 19% to $3.7m bringing 1HFY18 earnings to $4.4m (-38%).
- Revenue for the quarter jumped 32% to $26.4m on higher contribution from its structural steel business.
- However, gross margin narrowed 6.3ppt to 19.9% due to lower margin projects and reduced contribution from its dormitory business.
- Bottom line was lifted by FX gain of $0.6m (2QFY18: $8,000) as well as lower effective tax of 14.8% (2QFY17: 21.8%).
- Trades at 13.8x trailing P/E.

- Acquiring a 70% stake in a 50:50 JVCo between SATS and DFASS for an undisclosed amount.
- It intends to engage in a travel retail business in Singapore, offering inflight and ground-based duty-free and duty-paid goods as well as mail order and pre-order services.
- Post acquisition, SATS and DFASS will each hold a 15% stake in the JVCo.
- MKE last had a Hold on SIA with TP of $10.95 and Buy on SATS with TP of $6.10.

*CSE Global
- Provided a DPS guidance of $0.0275 for 2018, which gives a dividend yield of 7.4%, during discussions with shareholder Quarz Capital Management.
- Quarz remains supportive of management's commitment to turn around its existing US business and achieve a long-term target ROE of over 10%.

*Creative Technology
- Co-founder and ex-CTO, Ng Kai Wa sold a total 200,000 shares in two transactions at $9.04 apiece, cashing in a total of $1.8m.
- Shares in the tech firm ran up to levels not seen since 2007 after it unveiled its Super X-FI headphone technology.
- Trades at 46.2x trailing P/E.

*Datapulse Tech
- Received a letter from Ascapia informing that it will announce whether or not it would make a partial offer for the company by 9 Mar.
- Media reports had revealed that Ascapia was looking to purchase a 27% stake in the company.

- Entered into an MOU partnership with IDX-listed PT Waskita Karya (Persero) in Jakarta, Indonesia with the aim to identify opportunities for joint efforts for environmental projects in Indonesia.
- Waskita is a construction company specialising in commercial and residential building contracts.

*Geo Energy
- Entered into a US$500m contact with PT Bukit Makmur Mandiri Utama (BUMA) to provide land clearing and overburden removal for its mining area over the entire life of mine.
- The mining area is located at Angsana and Sungai Loban sub-district, Tanah Bumbu Regency, South Kalimantan, Indonesia.
- BUMA is one of the largest mining services in Indonesia and has been providing service to the group's s SDJ mine since Jun '15.

*Grand Banks
- Acquiring Stuart Service Yard in Florida for US$3.2m ($4.2m) in cash to serve as its official US headquarters and consolidate its presence in boat market.
- The property includes seven berths and 12,000 sf of waterfront offices, shops and maintenance facilities.
- It also houses commissioning and repair equipment such as a 50-ton travel lift, an enclosed floating workshop, deep water docks and concrete haul-out area.
- The Stuart Service Yard is strategically located in a hurricane-safe zone in Martin County, Florida, which offers attractive property and labour tax rates.

Wednesday, March 7, 2018

SG Market (07 Mar 18)

- The market appears primed for more volatility on news that US President Trump's top economic adviser, Gary Cohn, viewed as a bulwark against protectionism, has resigned.
- This comes as the administration prepares to impose more tariffs on Chinese imports as well as clamp down on Chinese investments in the US, specifically targeting its economic rival for the first time.
- Technically, the STI could pull back to immediate support at 3,420 with topside resistance at 3,575.

- Teaming up with IMDA again to produce short videos under the government's Public Service Broadcast initiatives.
- The second season will feature 120 videos and will be released under 16 titles from May '18- Apr '19.
- Separately, the group is partnering NeuroTrend to launch a neuromarketing consumer insights lab in Singapore.
- The lab will cater to its clients and help marketers gain a better understanding of consumer behaviour.
- Currently trades at 19.2x forward P/E, below historical average of 21.1x.

- Secures contract for the design and construction of two luxury expedition cruise vessels for PONANT.
- The New contract adds to an existing pipeline of four cruise vessels with deliveries extending till 2020.
- No financial details were disclosed.
- Trades at 0.8x P/B.

*Koh Brothers Eco Engineering
- Secured a contract through a 20%-owned JVCo, lifting order book to $954.7m from $762.7m in Dec '17.
- Further details of the contract award will be announced upon clearance from client and JVCo partners.
- Trades at 11.1x trailing P/E.

*Singapore O&G
- Receiving $1.3m from former independent director, Christopher Chong following a dispute settlement.
- Chong owns 200,000 SO&G shares as of 27 Dec.
- Trades at 18.3x forward P/E

*Golden Agri
- Acquired a 26%-stake in Emperius Infralogistics for Rs72.7m (US$1.1m), or 9.5% above valuation.
- India-based Emperius provides liquid storage tank and related logistics solution at Indian ports.
- Currently trades at 18.7x forward P/E, above historical average of 15.9x.

*Huan Hsin
- Entered conditional agreement to acquire Chinese mining company, Huangshan Zhongtian Weiliang Mining (HZWM) from Jade Merit Developments for $1.06b in reverse takeover deal.
- Payment will be made via $60m in cash and issue of consideration shares at $0.033 each, which will give Jade Merit a 87.02% stake, thereby triggering a general offer.
- HZWM owns a vanadium mine in China with a licence to mine up to 115,000 tonnes/year, while Jade Merit is a BVI company, whose sole shareholder, Yip Zhao Lin, is the MD of Sum V Energy, formerly known as China Minerals Group.
- To fund the acquisition, the group will raise $80m trough a placement of 3.6b new shares to Oriental Straits Investment.
- The group also proposes to undertake a 20-into-1 share consolidation.
- The deal is subject to shareholder approval and expected to be completed by 4 Mar 2019.
- Extended its deadline to exit the SGX watchlist till 4 Mar '19, pending the RTO.

*SIIC Environment
- Requested for a 2-month extension to hold its AGM to mmet the requirements of its primary dual listing on the Stock Exchange of Hong Kong.
- Trades at 11.3x forward P/E.

*Datapulse Tech
- Filed a claim for defamation against Singapore-based hedge fund, Ascapia Capital following its publication of an open letter entitled "Minority shareholders demand answers".
- Ascapia, which owns 410,000 shares is also mulling a possible partial offer to acquire a 27%-stake

*CWG Int'l
- Disclosed that Elidom Investment, now control 641.6m shares or a 96.91% stake of the company following the close of its privatisation offer at $0.195 each.
- As the free float has fallen below 10% since 6 Feb, the shares will be delisted.
- Offer closes on 19 Mar, 5.30pm.

- To be delisted from SGX from 9 Mar

Tuesday, March 6, 2018

SG Market (06 Mar 18)

- Market jitters over a brewing global trade war could ease on bets that US President Trump's threat to impose hefty steel and aluminium tariffs was just a negotiating tactic to obtain concessions from its trading partners but sentiment is fragile, and investors are still nervous over rising interest rates and bond yields.
- Technically, the STI could rebound to 3,470 in near term with support at 3,420 level.

*APAC Realty
- Its ERA Realty Network was appointed as the marketing agent for the collective sale of Nicon Gardens.
- Nicon Gardens is a 99-year leasehold landed development located in Choa Chu Kang and will be launched for tender on 8 Mar and close on 18 Apr.
- Owners are expecting at least $110m for the 47 townhouses, which has 62 years left on its lease and sits on a 164,470 sf site.
- Including development charge and lease top-up premium, the land rate is estimated to be between $760-800 psf ppr.
- Potential buyers can develop 50-69 landed units, subject to URA's planning approval.
- Last traded at 15x forward P/E.

- Acquiring a 34% stake in Digital Wave Money Myanmar for US$19.4m from First Myanmar Investment.
- Consideration is at the mid-range of independent valuation of US$37-73m.
- Acquisition is part of its strategy to focus on domestic consumption, which leverages on the country's GDP growth.
- Wave Money is a market leader in Myanmar mobile payment solutions and services.
- Last traded at 37.3x forward P/E.

*Sembcorp Industries
- Divesting its 35% stake in Omani utilities developer, Centralised Utilities Company (CUC) to Oman Oil's Facilities Development Company at book value of SGD3.4m.
- The sale will also end its JV with Takamul Investment Company.
- Completion of disposal is expected to take place within 30 days.
- Last traded at 13.4x forward P/E.

*Chip Eng Seng
- Proposing to diversify its business into the education sector in Asia Pacific region.
- The group has yet to disclose a specific education segment it plans to venture into.
- The diversification will provide the group with additional recurrent revenue stream, which is complementary to its existing business as the establishment of reputable schools within its property development will enhance property prices.
- In addition, the education sector is less capital intensive compared to construction and property sector.
- Last traded at 18.04x forward P/E.

*Asia-Pacific Strategic Investments
- Will no longer purchase Oei Hong Leong's 28.1m shares in IPC Corp following his withdrawal of acceptance.
- Intends to proceed with the acquisition of 11.9m shares from remaining vendors through the issue of 1.58b new shares.
- Upon completion, it will own a 13.95%-stake in IPC and will thus not be required to make a mandatory offer for remaining shares

Keong Hong/Hock Lian Seng
- Set up a 40:60 JVCo FSKH Development with Hock Lian Seng to engage in real estate and property development.

*Samurai 2K Aerosol
- Granted trademark for "Samurai" brand in the US till 20 Feb '28.
- Management does not foresee any difficulties in obtaining other intellectual property rights for other remaining brands.

*Lippo Malls
- Obtained a $40m unsecured uncommitted revolving credit facility from BNP Paribas.
- The funds will be used for general corporate funding such as acquisition, working capital and asset enhancement initiatives.
- Last traded at 8.3% indicative yield and 1.2x P/B.

- Slapped with both a notice of compliance and queries from SGX over its latest FY17 results.
- The notice of compliance was flagged on YuuZoo's "other income" amount of $8m in 4Q17 as well as an increase of assets available for sale to $54.2m.
- The group has to engage auditors to provide an opinion on these items by 19 Mar.
- It also has to clarify circumstances leading to the suspension of certain payment-related services in FY17, which contributed to a $51.4m fall in turnover. It has until 9 Mar to respond to queries.

*Alliance Mineral Assets
- Request for a trading suspension.
- This is much longer than a trading halt ans suggests that there could be a serious corporate development within the group.

Monday, March 5, 2018

SG Market (05 Mar 18)

- Fears over a potential trade war between US and its trading partners as President Trump looks to impose punitive tariffs on steel and aluminium imports this week as well a more aggressive Fed monetary policy are likely to keep markets on edge in the near term following the end of the corporate earnings season.
- Technically, the STI is hovering just below its 50-dma with immediate support at 3,470 and further downside risk to 3,445. Near term resistance is at 3,575.

- Manufacturing expanded for the 18th straight month in Feb with a PMI of 52.7 (est: 53.1) but the pace moderated from 53.1 in Jan, dragged by the electronics manufacturing sector.
- The electronics sector came in at 52.1, its lowest in eight months and down from Jan's reading of 52.9, on slower growth in both factory output and new orders.
- Jan/Feb readings could be skewed by Chines New Year festive season. Mar data would provide more clarity on the performance of the manufacturing sector.

- Entered into an MOU with Y Ventures to explore a potential collaboration for the development of an e-commerce buying platform that will focus on cross-border purchases.
- The pact would be able to consolidate deliveries and tap on logistics-related technology to enhance efficiency across its vertical logistics chain.
- Trades at 26.9x forward P/E.
- MKE last had a Buy with TP of $1.50.

AVIC Int'l Maritime
- Its 79.57%-owned subsidiary has entered into a €5m contract with Chinese Guangzhou Shipyard Int'l (GSI) to provide consultancy and engineering services for ro-pax ferries to be built for a third party.
- The contract is expected to be carried out over an estimated 13 months.
- Last traded at 9x trailing P/E

*TPV Technology
- Expects to report a FY17 net loss of US$50-75m (FY16: US$39m profit) due to provisions for doubtful trade receivables from certain OTT customers in China and goodwill impairment for its TV segment.
- The profit warning came despite accelerated sales momentum and improved gross profit margin during the peak 4Q season.

- Substantial shareholder, Orion Phoenix sold a 6% stake (4m shares) to new shareholders comprising several institutional and family funds for a total of $2.4m or $6.10 apiece.
- The disposal reduces Orion's stake to 17.3%.
- Trades at 10.3x forward P/E.

- Expects to reduce its loss over the course of 2018 and return to profitability in FY18 (FY17: $7.8m loss) on: 1) lower from Corous360, absence of major impairments, and 3) further reduction in expenses.
- 46.83%-owned Procurri is also expected to return to profitability in FY18 (FY17: $2.7m loss) as it executes its four-pronged strategy.

*United Engineers
- Substantial shareholder Oxley (OHL SP) has raised its stake to 16% from 15.94% through the acquisition of 381,700 shares at $2.58 each.
- This follows Oxley's recent rejection of UE's pre-conditional cash offer for WBL.
- Trades at 18.2x trailing P/E and 0.9x P/B.

*IPC Corp
- Substantial shareholder, Oei Hong Leong, who holds a 32.96% stake has revoked his acceptance of an offer by Asia-Pacific Strategic Investments (APSI).
- Oei also owns a 34.82% stake in APSI. The latter had earlier offered to buy out Oei's stake via issue of 133 new shares for every IPC share.

- Expects minimal impact from the revised development charge rates on its proposed developments in Singapore as its eight projects had been granted provisional permission prior to the revision.

Friday, March 2, 2018

SG Market (02 Mar 18)

- Expect more volatility ahead following the sharp sell-off on Wall Street after US President Trump announced plans to slap punitive steel and aluminium tariffs next week, sparking fears of a possible trade war with major trading partners, including China and Europe.
- Technically, the STI could extend its decline to 3,470 with the next level of support at 3,450. Near term resistance is at 3,575.

- According to a local semiconductor group, Singapore's semiconductor output growth to moderate in 2018 from last year's robust expansion (+48%) amid recent signs of softening in global demand for mobile devices.
- Chip-related stocks include AEM, UMS, Global Testing and Avi-tech.

*Jardine C&C
- FY17 headline net profit jumped 16% to US$811.2m with underlying profit of US$788m (+16%) meeting estimates.
- Revenue rose 12% to US$17.7b on the back of growth in Astra (+13.2%) and direct motor interests (+6.4%).
- Operating margin improved to 10% (+0.4ppt).
- Bottom line was lifted by Astra (+28% to US$641m) and other strategic interest (+5% to US$34m), but was partially offset by direct motor interest (-25% to US$125m).
- Raised DPS to US$0.68 (4Q16: US$0.56) to bring full-year dividend payout to US$0.86 (FY16: US$0.74).
- Trades at 12.1x forward P/E.

*Yanlord Land
- 4Q17 net profit slid 23% to Rmb1.19b, but FY17 earnings rose 19% to Rmb3.22b, in line with expectations.
- Revenue for the quarter jumped 14% to Rmb11.27b on an increase in ASP psm due to the inclusion of higher-priced products such as Yanlord on the Park and Yanlord Eastern Gardens in Shanghai but partly offset by lower GFA delivered.
- Gross margin improved 6.5ppt to 49%.
- Bottom line was dragged by higher admin cost (+34% to Rmb262.9m), lower other operating income of Rmb254.6m (-48%) and higher effective tax of 48.8% (4Q16: 44.6%).
- Proposed higher first and final DPS of 6.8¢ (FY16: 4.35¢).
- Trades at 2x P/B.

- FY17 core net profit plummeted 88% to US$15.7m on continued weakness in its Vietnamese swine operations, missing the sole street forecast.
- Revenue climbed 5.2% to US$3.2b, supported by Indonesia animal protein (+8.7%), dairy (+21.9%) and consumer food (+0.7%), offset by weakness in animal protein other (-15.4%).
- Operating margin almost halved to 5.9% (-4.4ppt) on weaker margins in Indonesia animal protein (-3.6ppt to 7.1%) as well as operating losses in animal protein other (-US$26.9m) and consumer food (-US$16m) partially mitigated by dairy (+1.3ppt to 19.3%).
- Bottom line was further hit by higher finance costs of US$67.3m (+12%).
- Net gearing rose to 0.7x from 0.5x in Dec '16.
- Trades at 7.1x forward P/E, cheaper than its 51%-owned PT Japfa's 11.5x.

*Cosco Shipping
- Turned around to FY17 net profit of $263.9m (FY16: $466.5m loss), bolstered by $166.9m profit (FY16: $466.5m loss) from discontinued operations (shipyard businesses), which more than offset losses from its dry bulk shipping and other businesses.
- Revenue declined 8% to $37.2m due to a lower contribution from smaller fleet of bulk carriers.
- Currently, its dry bulk shipping fleet was reduced to three carriers, down from 10 in Dec '17.
- Bottom line was hit by a $22.4m loss on disposal of property, plant and equipment.
- Last traded at 2x P/B.

*Ying Li
- 4Q17 net profit soared 382% to Rmb317.3m, lifting FY17 earnings to Rmb350.2m (+300%).
- Revenue for the quarter tumbled 40.2% to Rmb339.9m, mainly on weaker property sales (-43.7%) due to fewer units handed over at Ying Li International Electrical and Hardware Centre and San Ya Wan Phase 2 project, as well as lesser rental income of Rmb50.7m(-7.1%).
- Gross margin dipped 0.3ppt to 25.4% due to a shift in project mix.
- Bottom line was bolstered by Rmb260m fair value gain on other investments (4Q16: Rmb18m), as well as a Rmb118.4m gain on disposal of subsidiaries.
- Trades at 0.3x P/B.

*Geo Energy
- 4Q17 net profit slumped 77% to US$3.4m, dragging FY17 earnings to US$36.7m (+65%), missing street expectations.
- Revenue for the quarter stagnated at US$92.8m (+1%) as a decline in sales volume (-11.6%) on poor weather was mitigated by an increase in ASPs (+9%).
- Gross margin contracted to 19.3% (-10.8ppt) on additional mining royalties paid retrospectively.
- Bottom line was hit by finance cost of US$8.8m (+514%).
- Trades at 6.1x P/E.

*Advancer Global
- FY17 net profit grew 14.2% to $3.1m on higher revenue and improved margin.
- Revenue jumped 28.2% to $65.3m on increased takings across employment services (+4.1%), building management (+50%) and security services (+10.7%).
- Gross margin expanded to 28.9% (+2.3ppt) on better profitability across its business segments.
- Bottom line was partially pared by lower government credit schemes and grants of $1.1m (-44.4%).
- Increased final DPS of 0.34¢ (4Q16: 0.43¢), bringing full-year dividend payout to 0.83¢ (FY16: 0.78¢).
- Trades at 16.9x P/E.

- FY17 net loss narrowed 11% to $56.2m (-11%) in absence of impairment loss (FY16: $30.4m).
- Revenue fell 9% to $93.9m, mainly on lower revenue from its architectural, engineering and town-planning segment (-12% to $76.4m), partially mitigated by growth in its hospitality segment (+7% to $17.4m).
- Bottom line was hit by one-off professional and project expenses of $6.6m related to proposed acquisition of Sasteria (Thomson Medical hospital and 70.4% stake in TMC Life Sciences) as well as absence of tax credit of $7.1m.
- An EGM will be convened on its proposed healthcare business acquisition on 23 Mar.
- NAV/share at $0.0761.

- Slumped into 4Q17 net loss of $7.8m (4Q16: $10.8m profit), widening FY17 loss to $16.4m (FY16: $7.8m profit).
- Revenue for the quarter fell 23.6% to $69.6m on weakness in its Vertical Domain Clouds (VDC) (-94.5%) segment, while IT Infrastructure saw marginal growth (+1.7%).
- Gross margin improved to 31.1% (+6.4ppt) on the shift in sales mix.
- Bottom line was hit by impairment loss of $5.8m on intangibles and absence of a disposal gain (FY16: $21.9m on the divestment of Acclivis Tech).
- NAV/share at $0.1342.

- Swung into 4Q17 net loss of $21.5m (4Q16: $4.1m profit), dragging FY17 earnings to $2.3m (-84%).
- Revenue for the quarter plunged 67% to $9.7m on reduced franchise and celebrity-branded network sales.
- Bottom line was hit by higher impairment of $18.2m (+309%) on assets available-for-sale and employee benefits of $5.9m (+312%) but offset by a surge in other income of $8m (4Q16: $0.2m).
- NAV/share at $0.121.

- Amongst more than 10 foreign stock exchanges that are in the race to purchase a controlling stake in the Tel Aviv Stock Exchange.
- Warsaw, Hong Kong, Australia, London and Toronto are amongst other stock exchanges that will be competing for the stake.
- Maybank KE last had a Buy rating with TP of $8.73.

*Singapore Medical Group
- Acquiring 85% stake in local aesthetics firm, Pheniks for up to $6.5m, via issue of 6.05m new shares at $0.578/share and $3m cash to be paid over three years.
- Pheniks operates the SW1 aesthetic, plastic surgery and medical spa clinic in Paragon Medical Centre. It was set up by ex founders of The Sloane Clinic last Dec, and currently has five aesthetics practitioners and a plastic surgeon at the 7,000sf clinic.
- SWI broke even within its first two months of operations and has plans to expand regionally as 30% of its patients are from overseas.
- Separately, the group plans to undertake a 1-for-20 rights issue at SGD0.48 each to raise SGD10.8m for M&As (70%) and to grow existing business (30%).
- Trades at 18.7x forward P/E.
- MKE has a Buy with TP of $0.70.

-FY17 net loss narrowed 50.1% to $15.8m but expenses continued to outstrip revenue.
- Revenue fell 4.6% to $306.7m due to lower contribution from structural steelworks (-9% to $196.2m) and mechanical engineering (-94.7% to $1.7m), but was partially shored by specialist civil engineering projects (+34.3% to $89m).
- Incurred a gross loss of $3.6m (-73.5%) on higher cost of sales (+7.4%).
- Bottom line was supported by lower admin cost of $15.7m (-19%) and finance cost of $4.5m (-20.9%).
- Trades at 0.5x P/B.

Thursday, March 1, 2018

SG Market (01 Mar 18)

- The market could pull back further following the sell-off on Wall Street on renewed interest rates worries and slide in oil prices on rising US stockpiles, while a sharp drop in manufacturing activity across China, Japan and India also sapped investor confidence.
- Technically, the STI could retrace to 3,470 before resuming its uptrend. Near term resistance is at 3,575.

*Venture Corp
- Blowout 4Q17 results as net profit surged 2.6x to $143m, boosting FY17 earnings to $372.8m (+10.6%), beating estimates.
- Revenue for the quarter jumped 27% to $1.08b on stronger execution of customers' programmes and deeper partnerships with clients.
- Gross material margin widened 2.2ppt to 26.9% on increased R&D and cost control.
- Bottom line was also bolstered by $11.3m gain on disposal of associate Fisher Tech, as well as absence of legal settlement cost (4Q16: $22.6m), impairment loss (4Q16: $5.9m) and trade receivables provision (4Q16: $3.5m).
- Net cash position ballooned to $721.6m from $535.1m in 3Q17.
- Raised first and final DPS to 60¢ (FY16: 50¢).
- MKE maintains its Buy with higher TP of $31.20.
- Trading at 19.6x FY18e P/E.

- 4Q17 net profit climbed 12% to Rmb677.9m, bolstered by a marked reduction in taxes due to a preferential income tax rate and a higher amount of non-taxable income.
- This brought FY17 earnings to Rmb2.93b (+67%), ahead of street estimates.
- Revenue for the quarter rose 15% to Rmb6.35b on higher volume of shipbuilding activities (+8.9%) and stronger trading business (+43.4%).
- But gross margin tumbled to 14.9% (-11.2ppt) mainly due to a provision for expected losses on construction contracts.
- For FY17, the group secured orders for 74 new vessels worth US$2.1b, almost double that of 2016.
- Order book expanded to US$4.7b (3Q17: US$4.3b), providing revenue visibility till 2020.
- Hiked first and final DPS to 4.5¢ (FY16: 4¢).
- Trades at 12.7x forward P/E.

*Noble Group
- 4Q17 net loss of US$1.89b dragged FY17 loss to a massive US$4.94b (FY16: US$8.7m profit), which included a US$1.05b loss from discontinued operations and US$3.24b of exceptional items, comprising US$2.15b write-down of its commodity contracts and US$1.04b in impairments.
- FY17 revenue tumbled 26% to US$6.4b as traded volumes shrank 26% due to constraints in trade finance and liquidity.
- Operating cash outflow narrowed to US$8.6m (FY17: US$592.5m outflow) due to changes in working capital.
- However, adjusted net debt/capital blew up to 135.2% (FY16: 42%, 3Q17: 75.8%).
- Notably, its auditor flagged concerns over its survival even as the group is in debt restructuring talks with creditors.
- Valuations not meaningful given the cycle of asset write-offs.

*Ho Bee Land
- 4Q17 net profit fell 20.9% to $102.4m, but FY17 earnings of $249.3m (+15%) still surpassed street estimates.
- For the quarter, revenue slid 3.1% to $41.2m on reduced takings from development sales (-46.9% to $3.5m) due to lower sales recognition from two Australian residential projects, which overshadowed the growth in rental income (+4.9% to $37.7m).
- Bottom line was dragged by lower fair value gain on investment properties of $78.1m (-25%) and share of JV loss of $12m (4Q16: $2.4m profit), but partly mitigated by associate income of $25.6m (+216.9%).
- Lifted first and final DPS to 8¢ (FY16: 6¢), along with special DPS of 2¢ (FY16: nil).
- Trades at 0.55x P/B.

*China Sunsine
- 4Q17 net profit nearly doubled to Rmb132m (+99%), bringing FY17 net profit to Rmb341.3m (+54%), beating street forecast by 10%.
- Revenue for the quarter jumped 58% to Rmb873.3m on higher overall ASPs (+40%) and sales volume (+13%).
- Accordingly, gross profit margin widened to 33.3% (+7.3ppt).
- Bottom line was partially pared by higher admin expenses (+103% to Rmb79m) on increased staff bonus and R&D.
- Hiked final DPS to $0.025 (4Q16: $0.015), bringing FY17 DPS to $0.03 (FY16: $0.015).
- Trades at 8.6x FY18e P/E.

*Singapore Medical Group
- FY17 results missed estimates although net profit more than tripled to $8.5m (+250.8%) on acquisitions and operating leverage.
- Revenue jumped 63.5% to $68m on stronger contributions from health (+68.9%) and diagnostic & aesthetics (+52.1%) businesses.
- Gross margin improved to 42.6% (+6.8ppt) on better profitability in the health business.
- Bottom line was supported by slower growth in opex (+58.6%) as well as lower minority interests (-48.3%) following the acquisition of remaining stake in Lifescan.
- Trades at 18.7x FY18e P/E.

*China Aviation Oil
- 4Q17 net profit slumped 21.7% to US$14m, bringing FY17 earnings to US$85.3m (-4%) missing expectations.
- Revenue for the quarter grew 24% to US$4.06b due mainly to an increase in oil prices, but on marginally lower supply and trading volume (-0.6%).
- Gross margin contracted to 0.2% (-0.1ppt) due to lower trading gains amid a backwardation market.
- Bottom line was weighed by higher total operating expenses (+45.3%) mitigated by increased associate contribution (+26.2%) mainly due to higher takings from Pudong.
- Maintained first and final DPS of $0.045.
- Trades at 9.4x FY18e P/E.

*Food Empire
- Swung into 4Q17 net loss of US$2.8m (4Q16: US$2.9m) due to an impairment charge of US$7.7m in relation to Korean associate, Caffebene.
- This brought FY17 earnings to US$14.1m (-2.6%), missing estimate.
- Revenue for the quarter climbed 5.8% higher to US$74.1m on improved sales in Kazakhstan (+64.7%) and others (+13.1%), but was partly pared by weakness in Ukraine (-12.7%), Indochina (-9.6%) and Russia (-1%).
- Operating margin expanded to 10.6% (+4.6ppt) on lower selling & distribution expenses (-13.6%).
- Maintained first and final DPS of 0.6¢.
- Trades at 16.2x forward P/E.

*Straits Trading
- 4Q17 net profit dived 72.8% to $5.8m, bringing FY17 earnings to $48.1m (-28.5%).
- During the quarter, revenue declined 11.3% on weakness across its tin mining and smelting (-10.5%) as well as property (-31.1%) segments.
- Bottom line was impacted by a decline in other sources of income (-96.6%) from lower dividend (-45.1%) and disposal gains (-96.6%) as well as lower contributions from associates and JVs (-85.5%).
- Maintained first and final DPS of $0.06.
- Trading at 19.3x trailing P/E and 0.66x P/B.

*Spackman Entertainment
- Turned around to a FY17 net profit of US$3m (FY16: US$2.4m loss), 8% above street estimate.
- Revenue leapt 36% to US$20.6m on contribution from the equipment leasing business acquired in Mar '17, share of profit from producing MASTER, and sales of distribution rights for THE OUTLAWS.
- Swung to gross profit of US$8.3m (FY16: US$4m loss) on lower film production cost, and motion film distribution expenses following the disposal of Opus Pictures.
- Trading at 7.1x FY18e P/E.

- 4Q17 sank into a net loss of $0.4m (4Q16:$1.2m profit), while FY17 earnings surged 142% to $7.6m but still missed estimates.
- Revenue for the quarter soared 343% to $50.5m, driven by mainly by the sale of water at Acuatico.
- Gross margin jumped 14.4ppt to 42.5% following the inclusion of water sales from Acuatico.
- Bottom line was marred by higher admin cost of $11.2m (+772%) and higher net finance costs of $7.2m (4Q16: $0.1 net interest income) due to the consolidation of Acuatico, as well as FX loss of $2m (4Q16 $1.1m gain).
- Net gearing crept up to 2.44x (+0.7ppt q/q), with $364.1m of secured loan payable within one year.
- Trading at 9.3X forward P/E.

*GSS Energy
- 4Q17 net profit crashed to $0.4m (4Q16: $2.2m) due to a drop in gross margin to 16% (-6.8%).
- This brought FY17 earnings lower to $4.4m (FY16: $13.5m).
- For the year, revenue grew 24.6% to $94.3m on higher orders from existing and new customers in its precision engineering business.
- Gross margin contracted due to product mix changes, pricing challenges and unfavourable FX rates.
- Still in the midst of monetising sweet gas in well SGT-01 of Trembul Operation area.
- Trades at 14.3x trailing P/E.

*Fu Yu
- 4Q17 net profit slumped 56.8% to $2.4m, bringing FY17 net profit to $4.5m.
- Revenue for the quarter increased 8.7% to $52.7m, buoyed by higher sales across Singapore, Malaysia and China.
- Gross margin expanded to 19.1% (+1.8ppt).
- Bottom line was hit by a $4.7m swing to FX loss of $1.2m.
- Net cash position slipped to $95.4m (Dec '16: $105.6m) or $0.127/share.
- Maintained final DPS of $0.01, bringing FY17 DPS to $0.015 (unch).
- Trades at a hefty 32x trailing P/E.

- FY17 results disappointed despite a 54% jump in net profit, albeit from low base, to $2.8m.
- Revenue rose 10% to $63.1m on growth in both equipment and supplies (+4.4%) and manufacturing and support services (+14.3%) segments from increased work.
- However, gross margin narrowed 3.6ppt to 19% on higher cost of sales (+16%) arising from absence of write-back for inventory (FY16: $0.5m).
- Bottom line was boosted by a $1.1m FX again and $0.4m reversal of provision for receivable.
- Trades at 7.3x forward P/E.

- 4Q17 net profit dipped 1.2% to $6.1m on a higher effective tax rate, bringing FY17 earnings to $47.7m (+2.7%).
- Revenue for the quarter climbed 5.8% to $24.6m on firmer contribution from its three China attractions, but partly offset by weakness from its Singapore Flyer.
- Overall visitation across all attraction improved 7.4%.
- Operating margin narrowed 0.5ppt to 39.5% on higher operating lease expense, as well as repair & maintenance expense.
- Net cash position strengthened to $140.5m (19.6% of market cap) from $136.2m in 3Q17.
- Maintained first and final DPS of 2.5¢.
- Trading at 14.9x trailing P/E.

- 4Q17 net loss widened to NOK131m (4Q16: NOK67m loss), dragging FY17 loss to NOK233m (FY16: NOK163m loss), deeper than full-year forecast of NOK133m loss.
- Revenue rose 25% to NOK2.69b on high activity level at the Romanian and Vietnamese yards due to rapid progress on module carrier vessels projects for Topaz Energy and Marine and Kazmortransflot, and the ongoing construction on all six expedition cruise vessels contracted in 2016.
- EBITDA margin (excluding restructuring cost) slumped to 0.3% (-2.8ppt) due to a mark down on fair value of vessels held in inventory. Excluding that, EBITDA margin of 2.3% was relatively in line with 4Q16.
- Order book amounted to NOK13.23b (3Q17: NOK12b, FY16: NOK12.65b).
- NAV/share at $0.29.

*Soo Kee
- 4Q17 net profit jumped 49.5% to $4.6m, helped by a $0.88m tax refund. This lifted FY17 earnings to $7.4m (+14.6%).
- Revenue for the quarter surged 108.6% to $114.1m on higher sales from subsidiary SK Bullion.
- Gross material margin collapsed 17.2ppt to 15.5% due to a change in product mix.
- Maintained first and final DPS of 0.5¢.
- Trading at 10.6x trailing P/E and 1.35x P/B.

*Moneymax Financial Services
- 4Q17 net profit jumped 43.9% to $2.3m, bringing FY17 net profit to $6.9m (+9.8%).
- Revenue for the quarter expanded 24.4% to $43.2m on growth in both its pawnbroking and retail & trading of pre-owned items segments.
- Bottom line was affected by higher material cost (+27.3%), finance (+30.5%) and other expenses (+17.4%) partially mitigated by FX gain of $0.2m (4Q16: $0.2m loss) as well as FV gain on investments of $0.3m (4Q16: nil).
- Maintained first and final DPS of $0.005.
- Trades at 9.4x trailing P/E and 0.98x P/B.

- FY17 net profit more than halved to $1m (-57.7%), partly due to negative operating leverage.
- Revenue eked up 2% to $57.9m on firmer online sales, as well as contributions from Bali Thai, Streats, and So Pho outlets.
- Gross margin narrowed 4.9ppt to 9.9% on set-up costs of new outlets, as well as higher commission paid for online sales.
- The drop in bottom line would have been sharper if not for the absence of $0.9m IPO expense.
- Proposed a lower first and final DPS of 0.26¢ (FY16: 0.61¢).
- Trading at 35x trailing P/E

*JB Foods
- 4Q17 net profit soared 5.4x to US$6.5m, propelling FY17 earnings to US$14.2m (+276.7%).
- Revenue for the quarter declined 6.8% to US$75.5m, as lower ASP, mainly arose from lower cocoa bean prices, more than offset higher shipment volume.
- However, gross margin expanded 11.7ppt to 14.1% on marked improvement to processing margin.
- Trading at 8.1x trailing P/E.

*TA Corp.
- Swung to 4Q17 net loss of $4.3m (4Q16: $3.2m profit) due to a $2.8m increase in fair value loss of investment properties, and absence of $3m impairment reversal.
- Revenue grinded 1.2% higher to $56.3m, but gross margin deteriorated 1.5ppt to 16.6% on thinner margins from the construction and distribution segments.
- Net gearing crept up to 1.61x from 1.57x in 3Q17.
- Maintained first and final DPS of 1¢.
- Construction order book was partly boosted by a recent $180m JTC contract to $241m from $96m in 3Q17.
- Trading at 0.7x P/B.

*Hong Leong Asia
- FY17 net loss narrowed to $66.5m (FY16: -$71.2m) as profits from its diesel engine unit (Yuchai) was unable to offset losses from its consumer products unit (Xinfei) and restructuring impairments.
- Revenue grew 8.1% to $4.03b on higher contributions from Yuchai (+17%) pared by lower contributions from building materials unit, BMU (-18.1%) and Xinfei (-25.4%).
- Gross margin was steady at 20.3% (-0.2ppt).
- Bottom line was hit by a doubling in minority interests offset by higher other income (+304.9% to $133.4m) on disposal gains amounting to $92.1m (FY16: -$3.3m).
- Canned first and final DPS (FY16: $0.01).
- Trades at 0.65x P/B.

*United Global
- FY17 net profit surged 62.5% to US$9.2m on recognition of negative goodwill of US$1.4m (FY16: nil), arising from the acquisition of PT Pacific Lubritama Indonesia (Jul '17).
- Revenue increased 9% to US$99.8m on expansion in manufacturing (+56.6%) following the acquisition of PLI pared by halved contributions from its trading arm.
- Gross margin expanded to 18.5% (+3ppt) on the shift in revenue mix.
- Bottom line was supported by lower effective tax rate of 12.8% (-5.5ppt).
- Increased final DPS to 0.7¢ (4Q16: 0.5¢), bringing FY17 payout to $0.012 (FY16: $0.01).
- Trades at 14.1x trailing P/E.

*Y Ventures
- Slumped into FY17 net loss of US$0.9m (FY16: US$1.5m profit) on IPO expenses and impairment losses of $1.1m.
- Excluding those, FY17 earnings would have still fallen to US$93,527 (-93.9%), under estimates.
- Revenue grew 17.4% to US$14.2m on higher sales of goods on online marketplaces (+18.3%).
- Gross margin contracted to 41.8% (-2.1ppt) on higher logistics, freight and handling charges.
- Bottom line was further hit by higher selling & distribution (+70.2%) and admin (+130.2%) expenses.
- Trades at 25.7x FY18e P/E.

*Viking Offshore
FY17 net loss narrowed 16.8% to $13.2m on lower operating expenses (-24.2%) incurred from admin costs (-17% to $12.2m) and other operating expenses (-28% to $14.1m).
- Revenue slid 17% to $38.7m due to project delays, lower order book and lesser new order intake.
- As such, gross margin eroded 0.7ppt to 40% as cost of sales fell at a slower pace (-16%).
- Net gearing inched up 1.6ppt to 45.5%.
- NAV/share at $0.06 (-33.3%).
- Trades at 0.2x P/B.

- 4Q17 net profit soared 141.4% from low base to US$13.1m, bolstered by FX gain of US$10.9m (FY16: US$26.8m loss) and reversal of provision of US$3.7m (FY16: US$0.06m).
- This lifted FY17 earnings by 61.7% to US$33.6m.
- However, revenue for the quarter slipped 2.4% to US$722.2m on weaker contribution from both bulk (-1% to US$501.1m) and consumer pack (-5.5% to US$221.1m) segment, as higher ASP (+0.7%) was negated by lower sales volumes (-3.1%).
- Gross margin contracted 4.3ppt to 7.7% as cost of sales declined at a slower pace (-3.3%).
- Trades at 9.2x trailing P/E.

*Profit warning
- XMH Holdings

- Welcomes OTCex Hong Kong as a trading member on SGX's derivatives market.
- The new member is headquartered in Paris, and has a global client base of over 600 institutions.
- Trading at 21.8x forward P/E.

*Tung Lok Restaurants (2000)
- Leasing a 6,426 sf retail unit The Central at 6 Eu Tong Sen Street in Singapore for operation of "Tung Lok Signatures".
- Acquired 25% stake of Jiangsu Sushang Joint Industry Investment Partnership at Rmb700m, making it an associate of the group.
- The core business of Sushang are related to those of equity fund and convertible bonds investments in industries such as new material, electronic components, intelligent hardware, big data, artificial intelligence, FinTech and high-end manufacturing.

*Karin Technology
- Acquiring 80% stake of KCF A Store from an individual for HK$2m.
- KCF engages in operation of retail chain selling full range of Apple products, and acquisition will extend the group's business into retail market.
- Trades at 63.9x trailing P/E and 1.06x P/B.