SG Market (02 Mar 18)

MARKET OVERVIEW
- 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.

SECTOR WATCH
*Manufacturing
- 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.

CORPORATE RESULTS
*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.

*Japfa
- 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.

*Rowsley
- 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.

*Declout
- 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.

*Yuuzoo
- 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.

NEUTRAL NEWS
*SGX
- 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.

*Yongnam
-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.