SG Market (09 Apr 18)

MARKET OVERVIEW
- The US-China trade tiff will continue to dominate headlines and overhang sentiment with US President Trump's latest tweet that China will buckle first on its trade policy, while investors await China President's Xi's keynote address at the Boao Forum tomorrow.
- At home, focus will be on the advanced 1Q18 GDP growth and MAS policy statement this Fri, with expectations for a shift from neutral stance to a modest appreciation of SGD.
- Technically, the STI is likely to trade within its downward channel between 3.370 and 3,480 in the near term.

CORPORATE RESULTS
*SPH REIT
- Flat 2QFY18 DPU of 1.4¢ met expectations.
- Gross revenue and NPI dipped to $53.6m (-0.8%) and $42.3m (-1.1%) on lower rental income from Paragon shopping mall.
- While both its properties continued to enjoy full occupancy, negative rental reversions were recorded in 1HFY18 at Paragon (-7.1%) and The Clementi Mall (-2.5%) for new and renewed lease, representing 16.4% of portfolio NLA.
- Portfolio WALE held steady q/q at 2.1 years, with 8.2% of NLA due for expiry in FY18 (1QFY18: 13.3%).
- Aggregate leverage stood at 25.4% with average tenor extended to 2.2 years (1QFY18: 1.8 years).
- Trades at an annualised 1QFY18 yield of 5.6% and 0.94x P/B.

POSITIVE NEWS
*KrisEnergy
- KrisEnergy appointed major shareholder Keppel Corp as its preferred contractor for offshore O&G work.
- The agreement includes newbuild, repair, conversion and upgrading of marine assets and/ or vessels, as well as leasing and chartering of marine vessels.
- Loss-making and trades at 0.66x P/B.

*Global Dragon (formerly TMC Education)
- Won the en bloc tender to acquire the freehold Katong Omega Apartments for $46.31m.
- Land area of the 18-unit property is 2,592 sqm with plot ratio of 1.4.
- Including development charge of $2.7m, and 10% of bonus balcony, the property may yield potential gfa of 42,959 sf, translating to a land rate of $1,141 psf ppr.
- Trades at 2.05x P/B.

NEUTRAL NEWS
*Keppel Corp
- The leniency agreement entered by Keppel with the Public Prosecutor's Office in Brazil has been approved and has become effective.
- To recap, the group reached a US$422m global resolution with criminal authorities in the US, Brazil and Singapore in Dec '17 in relation to corrupt payments made by the group's former agent in Brazil.
- Trades at 14.3x forward P/E.

*M1
- Subscribed additional preference shares in Trakomatic via two tranches of $1.5m each.
- The group now holds 25% of the enlarged share capital of Trakomatic, which will become an associate of the group.
- Trakomatic is B2B video analytics solutions provider, powering smart sensors and big data and targets retailers and tourist attractions.
- Trades at 13.2x forward P/E with dividend yield of 6.6%.

*AusGroup
- Proposed placement of 1.05b subscription shares at $0.035 each to AOC Acquisitions (750m), Bernard Toh (200m) and Melvin Poh (100m) for aggregate cash consideration of $36.8m.
- AOC Acquisitions is in turn owned by Asdew Acquisitions (51%), Ching Chiat Kwong (15%), Low See Cheng (15%), Han Seng Juan (9.5%) and David Low (9.5%). Post subscription, Asdew will become the biggest shareholder with 31.14% stake. 
- The 750m subscription shares allotted to AOC shall be moratorised for period of 12 months from completion date, with long stop date set on 30 Sep ’18.
- Net proceeds of $36.5m will be used for partial 30% redemption of $110m 8.45% notes due 2018 and working capital purposes. Post placement pro forma NTA/share will rise to 0.44¢.
- Proposed renounceable non-underwritten 1-for-2 rights issue at $0.035.
- Major shareholder Ezion (18.1% stake) extended the term of its existing US$25.2m loan by a minimum five years.