SG Market (09 May 18)

MARKET OVERVIEW
- Stocks are set a mixed start as investors assess the implications of President Trump's decision to scrap the Iran nuclear deal amid a volatile crude market. Concerns over heightening geopolitical tension could weigh on sentiment along with higher US Treasury yields and a stronger USD.
- Technically, STI likely to consolidate in the near term with immediate support at 3,500 and topside resistance is at 3,640.

CORPORATE RESULTS
*Centurion
- 1Q18 core net profit fell 27% to $9.1m, meeting expectations.
- Revenue declined 17% to $30.1m, mainly due to the expiry of the lease on Westlite Tuas in Singapore, which ceased operations in Dec '17
- Gross margin expanded 5ppt to 72% in the absence of $1.2m amortisation cost for Westlite Tuas.
- ASPRI-Westlite Papan and the six worker dormitories in Malaysia reported stronger average occupancy of close to full and about 91% respectively.
- The group has a steady pipeline of assets under development, including Westlite Bukit Minyak, dwell Adelaide and AEI at RMIT Village, which are on track to be completed by 4Q18, adding 7,040 beds to its portfolio.
- Trades at 10.3x forward P/E and 0.83x P/B

*Perennial Real Estate
- 1Q18 net profit plunged 86.7% to $5.1m due to absence of one-time $55.7m gain from the partial divestment of a 20.2% stake in TripleOne Somerset.
- Excluding TripleOne Somerset, revenue grew 10.1% to $15m, largely attributable to Perennial Qingyang Mall in Chengdu, while EBIT would have soared 184% to $24.4m, boosted by $22.8m (1Q17: $0.7m) share of results from associates WBL, Chinatown Point and a Shenyang mall.
- Completed acquisition of Capitol Singapore and finalising appointment of operator for the hotel component.
- Trades at 0.51x P/B.

*F&N
- 2QFY18 core net profit swelled 303% to $15.4m, bringing 1HFY18 earnings to $41.5m (+57.9%), representing 27.5% of full-year consensus estimate.
- Revenue grew 4.8% to $473.1m on borad-based sales f=growth in its core markets of Singapore, Malaysia and Thailand.
- EBIT jumped 63% to $36.3m, driven by higher dairy and soft drink sales, reduced operating costs and maiden contrinution from 20% owned Vinamilk.
- Maintained interim DPS of 1.5¢.

*Riverstone
- 1Q18 net profit fell 7.6% to RM31.1m, maling up 21% of full-year consensus estimate.
- Revenue edged up 2% to RM209.8m as increased demand for healthcare and cleanroom gloves was eroded by by lower ASPs.
- Gross margin narrowed to 22.4% (-2.8ppt) mainly due to a 23% hike in gas input prices.
- Bottom line was weighted by a FX loss of RM0.9m (1Q17: RM5.7m) and a RM3.9m swing in fair value loss on derivatives to RM0.7m.
- Phase 5 is in full swing, which will raise annual production capacity to 9b (+18%) by Dec '18 and plans to commence Phase 6 expansion to raise capacity to 10.4b (+36.8%) by Dec '19.
- Trades at 14.4x forward P/E.

*Ellipsiz
- Swung to 3QFY18 net loss of $1.5m (3QFY17: $0.7m profit), dragging 9MFY18 earnings to $4m (9MFY17: $0.7m loss).
- Revenue for the quarter jumped 23% to $12.5m on improved contributions from its Singapore and Taiwan operations.
- Gross margin slipped 21% (-1ppt).
- Bottomline was hit by absence of disposal gain of $1.2m recognised in 3QFY17 as well as FX loss of $1.5m (3QFY18: $0.3m).
- Trades at 12.3x trailing P/E.

*Kimly
- 2QFY18 net profit rose 20.2% to $5.5m mainly due to grant received from Wage Credit Scheme and Special Employment Credit.
- This brought 1HFY18 earnings to $11.2m (-0.1%).
- Revenue for the quarter climbed 3.8% to $49.2m on stronger contributions from its outlet management division (+$0.5m) as well as its food retail division (+$1.3m).
- Gross margin contracted to 19.6% (-1.4ppt) on higher staff costs (+10.5%) attributable to its central kitchen and outlet/stalls as well as higher operating lease expenses (+11.7%).
- Bottom line was partially shored up by lower admin expenses (-10.2%) as well as interest income of $0.2m (2QFY17: nil).
- Maintained interim DPS of 0.28¢.
- Trades at 17.2x forward P/E

POSITIVE NEWS
*Miyoshi
- 15%-owned subsidiary, Core Power (Fujian) has secured two new sales contracts with Jiangxi Changhe Automotive, a subsidiary of Beijing Automotive Group for the supply of all-electric cars.
- Under the contracts, Core Power will sell 50,000 all-electric cars to Jiangxi Changhe within three years.
- The consideration is not fixed and the parties will determine the price by reference to the then prevailing prices of raw materials such as steel, lithium batteries, etc.
- Trades at ~11x FY18e P/E and 0.6x P/B

*Oxley
- Entered a 7-year lease agreement with Córas Iompair Éireann (CIE) to develop a 1,963-ha site at Connolly Station, Dublin.
- Upon phased completion, CIE will grant Oxley a 300-year ground lease and allow the group to sub-let the premises to third parties.
- During the term, the group will pay CIE annual license fee of €2m for first 6 years and €3.05mfor the 7th year, and annual rent of not less than €3.05m for the ground lease.
- Trades at over 54% discount to RNAV

*Ausgroup
- Awarded A$11.7m contract for turnaround services at Yara Pilbara liquid ammonia plant in Western Australia

NEUTRAL NEWS
*Capitaland
- Ascott, wholly owned subsidiary of Capitaland, enters into JV with Nasdaq-listed Huazhu Hotels Group to grow Citadines brand in China.
- Ascott, Huazhu and CJIA (a subsidiary of Huazhu) will hold 50%, 10%, and 40% stake in the JV.
- Management opines the JV will accelerate Ascott's growth in China and boost its recurring fee income.
- JV has a target to sign 16,000 units under Citadines by 2025, more than triple its existing Citadines portfolio in China.
- Trades at 0.81x P/B

*Nordic
- Disposing its property at 5 Kwong Min Road to Geonamics for $2.4m. The property sits on a land area of 4,024.8 sqm.
- It is expected to reap net gain of $0.3m on the disposal.
- Proceeds will be used to repay debt and improve its overall cash position.

*FSL Trust
- In view of the current poor market conditions for vessel disposals, the Trust considers that refinancing options in respect of the Trust's chemical tankers, FSL New York and FSL London should be explored.
- As such, discussions with Banks to re-finance the chemical tankers are now in progress, and a further announcement will be made should an agreement be reached.

NEGATIVE NEWS
*Ezion
- Warned that the group is likely to record a net loss in 1Q18, due to the delays in re-deploying some of its assets even as it finalizes the refinancing exercise. While this has adversely affected the group's revenue and the profitability, it remains operationally cashflow positive.

*Raffles United
- Assisting Commercial Affairs Department (CAD) with investigations on a potential breach of the Securities and Futures Act.
- Managing Director, Executive Director, CFO, Business Development Director, Adviser, as well as staffs and former employees, were interviewed by CAD.
- To recap, requested documents and IT equipment dating back to 1 Jan '15 have been handed over to CAD.