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.

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