SG Market (13 Apr 18)

MARKET OVERVIEW
- The market could get an uplift today, spurred by positive spillover from Wall Street after President Trump softer rhetoric against Syria and softer stance towards the TPP deal.
- Technically, the STI has closed the breakdown gap at 3,485 but remains trapped within the broad downtrend channel between 3,375 and 3,520.

CORPORATE RESULTS
*Lian Beng
- 3QFY18 net profit jumped 63% on a low base to $4.7m, but 9MFY18 earnings fell 20.6% to $16.9m.
- For 9MFY18, revenue slipped 6.2% to $146.5m, as increased contribution from investment holding and ready-mixed concrete segments were offset by the weakness in the construction segment.
- Gross margin narrowed 0.5ppt to 24.7%, weighed by lower profitability from construction, although partially offset by higher profit from investment holding.
- Bottom line was dragged by increased finance costs (+58.3%), tax expenses (+148.1%), as well as reduced income from associates/JVs (-28.1%), but was helped by a $7.7m disposal gain from its Melbourne investment property and reduced other operating expenses (-39.9%).
- Construction order book slipped to $924m (2QFY18: $972m), providing sales visibility through FY22.
- Last traded at 6.5x trailing P/E and 0.53x P/B.

*Secura
- 1Q18 net profit turned around to $0.5m (1Q17: $0.2m loss).
- Revenue grew 8.8% to $10.4m on increased contributions from security guarding (+26.4%) from more contracts secured and higher ASP, but partially weighed by security printing (-13%), cyber security (-43.3%) and homeland security and system integration (-10.6%).
- Gross margin contracted to 18.7% (-0.7ppt) on higher cost of sales (+9.8%).
- Last traded at 0.67x P/B.

*GKE Corp
- 3QFY18 net loss narrowed to 0.8m (3QFY17: $0.9m loss), bringing 9MFY18 net loss to $9.8m (9MFY17: $1.4m loss).
- For the quarter, revenue of $17.3m (+8.3%) was led by higher contributions from freight forwarding and sale of ready-mix concrete, but partially offset by weakness from TNS Ocean Lines.
- Gross margin contracted to 18.6% (-1.8ppt) due to a shift in revenue mix.
- Bottom line was partially shored up by lower admin expenses (-17.2%) as well as reduced share of minority interests (-41.2%), which helped offset taxes of $0.3m (3QFY17: $20,000 credit).
- Last traded at 0.77x P/B.

POSITIVE NEWS
*Yanlord Land
- Successfully co-tendered with Hongkong Land for the collective sale of freehold Tulip Garden, near Holland Village, for $906.9m, 50% above reserve price, or $1,790 psf ppr.
- Based on 1.6 plot ratio, the 316,708 sf site could yield 670 new homes and marks the group's maiden entry into Singapore's prime residential property market.
- Trades at 0.71x P/B.

*ComfortDelGro
- Acquiring Tullamarine Bus Lines (TBL) for A$32.2m, or 9.9x EBITDA, to strengthen its bus footprint in Victoria, Australia.
- TBL operates seven bus routes in north-west Melbourne with a fleet of 34 buses as well as contracted school services and a small taxi management business.
- The deal is expected to enhance FY19e EBITDA by 0.4%.
- MKE last had a Buy with TP of $2.35.

*Silverlake Axis
- Secured a contract to implement a core banking solution for MBSB Bank, the second largest full-fledged Islamic Bank in Malaysia.
- The contract is scheduled to be implemented within 12 months with no further financial disclosures provided.
- Separately, group intends to sell up to 14.6m of its shares in Global InfoTech (current holdings: 37.1m shares) within the six-month period from 8 May.
- Last traded at 8.3x trailing P/E.

*Noble Group
- Received more than 75% approval among senior creditors for its proposed financial restructuring.
- Management is confident that more creditors under the restructuring support agreement will continue to rise ahead of the scheme meeting.

*First REIT
- Clarified that the new Indonesian income tax regulations on service charges and utilities recovery charges are not expected to have any material impact on the REIT.
- This is because its properties are subject to master leases and the lessees do not pay service charges and utilities recovery charges.
- Last traded at 1.34x P/B and offers an indicative yield of 6.3%.

*Ley Choon
- Secured contracts worth $11m for road and pipe installation works.
- Last traded at 6.9x trailing P/E.

*Pan Asian Holdings
- Set up its manufacturing operations unit for valves products in Wuxi, China.
- The set up will help it grow its manufacturing business and expand sales internationally.
- The unit will rent all relevant machinery, equipment and factory premises from its existing supplier, Duvalco Wuxi, to minimise capital commitments.
- Last traded at 0.4x P/B.

NEUTRAL NEWS
*Jardine Cycle & Carriage
- Increased its stake in Refrigeration Electrical Engineering to 24.65% (prior: 24.46%) through the acquisition of 599,150 shares for an aggregate US$1.1m.