SG Market (13 Mar 18)

MARKET OVERVIEW
- 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.

CORPORATE RESULTS
*Sunright
- 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.

POSITIVE NEWS
*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.

NEGATIVE NEWS
*Midas
- 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.

*Anwell
- 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.

NEUTRAL NEWS
*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.

*JEP
- 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.