SG Market (26 Apr 18)

MARKET OVERVIEW
- The market could be choppy as benchmark US 10Y Treasury yields extend climb beyond 3%, while local corporate earnings were mixed.
- Technically, the STI is likely to consolidate at current levels, with immediate resistance at 3,610 and downside support at 3,510.

CORPORATE RESULTS
*Venture Corp
- 1Q18 net profit surged 72.2% to $83.7m but still trailed bullish street forecasts, coming in at 19% of full-year consensus estimate.
- Revenue edged up 1.5% to $856m but would have been up 9.1% in USD terms.
- Wider net margin of 9.8% (+4ppt) was achieved through favourable product mix and strong cost control.
- CEO refutes short seller report on slowing IQOS smokeless device sales by Philip Morris and reaffirms its broad-based growth across 150 customers.
- Last traded at 14.4x forward P/E.
- MKE believes share price correction is overdone and reiterates Buy but lowered TP by 8% to $28.83.

*Sembcorp Marine
- 1Q18 net profit plunged 85.7% to $5.3m on lack of one-off gains, making up merely 8% of the full-year estimates.
- Revenue jumped 58.3% to $1.18b, largely buttressed by the delivery of 2 jack-ups to Borr Drilling and 1 jack-up to BOTL, which offset weaker contributions from offshore platforms.
- Margins remained slim at 3.7% (gross) and 1.7% (operating).
- Bottom line was impacted by the absence of disposal gain ($46.8m) arising from the divestment of 30% equity interest in Cosco Shipyard in Jan '17.
- Secured $476m of new orders, taking net orderbook (excluding Stete Basil drillships) to $4.59b (+3% q/q).
- Management caution that industry outlook is still challenging despite improvement in E&P capex spending as it takes time to translate to new orders.
- Trades at 1.9x P/B.

*Mapletree Greater China Commercial Trust
- 4QFY18 DPU slipped 2.8% to 1.904¢, bringing FY18 payout to 7.481¢, in line with estimates.
- For the quarter, gross revenue and NPI fell 5.5% and 6% to $89.6m and $72.9m respectively on the weaker HKD as well as the absence of reversal in VAT.
- Distributable income of $53.8m (-1.7%) fell at a slower pace due to lower finance costs (-6.1%).
- Portfolio occupancy climbed 1.6ppt q/q to 98.5%, while aggregate leverage fell to 36.2% (-3.1ppt q/q).
- Proposed equity fund raising comprising via private placement of 311.6m new units at $1.06 each.
- Gross prceeds of $330.3m will be used to part finance the acquisition of 98.5% effective interest in a portfolio of six freehold commercial real estate assets in Tokyo, Chiba and Yokohama.
- Trades at 6.7% annualised 4QFY18 yield and 0.8x P/B.

*China Sunsine
- 1Q18 net profit soared jumped 161% to to Rmb149.5m, reaching 40% of full-year consensus estimate.
- Revenue grew 49% to Rmb856.9m on higher sales volume (+11.4%) as well as ASPs (+33.9%).
- Consequently, gross profit margin widened to 34.9% (+10.5ppt).
- Bottom line was partially pared by higher FX loss of Rmb13.5m (1Q17: Rmb1.3m).
- Trades at 8.9x FY18e P/E vs Shenzhen-listed peer Yanggu Huatai's 14.5x.

*Duty Free Int'l
- 4QFY18 net profit tumbled 47.8% to RM9.3m in absence of $4m fair value gain on option, and higher FX loss of RM4.5m (4QFY17: RM1.5m).
- This dragged FY18 earnings to RM41.7m (-42.7%).
- Revenue for the quarter climbed 13.8% to RM170.8m on stronger demand for its products and favourable sales mix.
- Gross material margin narrowed 5.5ppt to 29.2%.
- Last traded at 18.1x trailing P/E.

*Duty Free Int'l
- 4QFY18 net profit tumbled 47.8% to RM9.3m in absence of $4m fair value gain on option, and higher FX loss of RM4.5m (4QFY17: RM1.5m).
- This dragged FY18 earnings to RM41.7m (-42.7%).
- Revenue for the quarter climbed 13.8% to RM170.8m on stronger demand for its products and favourable sales mix.
- Gross material margin narrowed 5.5ppt to 29.2%.
- Last traded at 18.1x trailing P/E.

POSITIVE NEWS
*MindChamps
- Signed agreement to acquire four more early learning centres in Sydney, Australia.
- Upon completion, the group will have eight MindChamps Early Learning centres and two MindChamps Reading & Writing centres in the country.
- Its unique proprietary 3 Minds education approach will then be offered to over 500 Australian kids.

*Swee Hong
- Secured $11.3m worth of contracts with the PUB for work in respect of proposed sewers in Punggol North Area.

*Perennial
- Global provider of flexible workspace solution IWG has leased 35,000sf of space at TripleOne Somerset to operate its flagship co-working facility.
- The largest, two-floor facility will commence operation in mid '19.
- TripeOne Somerset is undergoing a $120m enhancement initiative to augment its retail offerings, including the addition of 32,000sf of medical suites.
- New two-storey retail podium is expected to receive TOP by 2H18 and is slated to be completed by '19.
- Trades at 0.52x P/B.

NEUTRAL NEWS
*Clearbridge Health
- Partnering A*STAR's Genome Institute of Singapore to offer Prosigna Breast Cancer Prognostic Gene Signature Assay to patients in Singapore.
- This is a genomic analysis procedure to better help doctors diagnose the risk of cancel relapse.
- Loss-making and trades at 4.24x P/B.

*Sapphire Corp
- Signed a MOU with Haitong Singapore to explore capital markets opportunities in the region, namely in corporate finance and investment, by leveraging on Haitong's suite of financial services and geographical network.
- Both parties will establish a cooperation mechanism to facilitate information exchange and resource sharing as new investment opportunities arise.
- The partnership is expected to benefit the group's infrastructure unit, Ranken by aiding its evaluation of long-term infrastructure projects, namely in urban rail transit projects, water environmental improvement projects, and other business opportunities.

*Keppel Corp
- Signed MOU with the MPA of Singapore and the Technology Centre for Offshore and Marine to jointly develop autonomous vessels for a variety of applications, including undertaking harbour operations such as channelling, berthing, mooring and towing operations.
- Keppel O&M will use its remote vessel monitoring and analytics programme, VesselCare, as the base platform in the initial phase to develop autonomous vessels. VesselCare is able to perform data consolidation, condition based monitoring and maintenance, mining and analytics of vessels.

*CNMC Goldmine
- Entered into a JV agreement with Yayasan Kelantan Darulnaim (YAKIN) to carry out exploration works within a 1,550ha site in Mukim Kalai, Daerah Batu Melintang, Kelantan.
- YAKIN will apply for a mining lease upon request by KelGold to carry out mining operations.
- The group has commenced exploration works at the site and both parties will enter into a mining agreement upon the issuance of mining lease.
- The group will pay RM0.1m to YAKIN upon signing the JVA and remaining payment is calculated based on RM500/ha of land.

*Healthway Medical
- Inked a non-binding MOU with UMP Healthcare to develop Care Alliance Network for selected corporate and individual customers in Hong Kong, Singapore, Beijing and Shanghai.
- Healthcare service providers can make their clinical facilities and services available through the network.
- The network is a partnership, which caters to growing affluent customers in the region seeking differentiated healthcare services overseas
- Both parties will also work together to explore cross-selling opportunities.

*AP Oil Int'l
- Appointed as an architect and project manager for JTC's premise at 18, Pioneer Sector 1, Jurong.
- Work involves the reconstruction of jetty and office building, additional warehouse