SG Market (28 May 18)

MARKET OVERVIEW
- The market could remain on tenterhooks this week after a mixed closed on Wall Street last Fri amid the ensuing drama over US-China trade row, Trump-Kim summit. and escalating political risk in Europe following Italian election of a populist government.
- Energy counters may be in focus after crude oil posted its biggest drop in a year on potential OPEC/Russia supply increase in 2H18.
- Key economic data on tap this week include US GDP figures (Wed) and jobs report (Fri) as well as China's PMI readings (Thu), which will give early signs of manufacturing sentiment.
- Technically, STI is still finding for direction after closing just off the 50-dma at 3,512, with further downside risk at 3,500 level. while resisance is seen at 3,575.

CORPORATE RESULTS
*Valuetronics
- 4QFY18 net profit rose 7.9% to HK$47m, lifting full year earnings to HK$204.7m (+32.9%), in line with consensus estimate.
- For the last quarter, revenue crept up 1.2% to HK$644m, mainly due to the increased demand from some of its industrial & commercial customers.
- FY18 gross margin narrowed slightly to 14.5% (-0.5ppt) due to change in product mix.
- Operating cash flow dropped 60.4% to HK$63.5m, resulting in lower net cash position to HK$671.1m (HK$1.55/share)
- On outlook, management is cautious on its smart LED lighting products as its major customer recently guided for slower demand stemming from inventory reduction, which will inevitably impact its sales in FY19.
- Declared final and special DPS of HK15¢ and HK5¢, bringing full-year payout to HK27¢ (FY17: HK20¢).
- Trades at 9.1x forward P/E

*IHH Healthcare
- 1Q18 net profit plunged 88% to RM57.2m, representing 6% of full-year street estimate. Excluding exceptional items, core earnings would have tumbled 40% to RM120.5m.
- Revenue grew 6% mainly from existing operations and ramp up of newly opened hospitals (Gleneagles HK, Acibadem Altunizade).
- EBITDA margin was flat q/q at 21.3%.
- Bottom line was dragged by absence of one-off gain (RM313.4m) from disposal of 6.07% stake in Apollo Hospitals, higher other operating expenses of RM398.4m (+46%), finance costs of RM230.8m (+25%) and lower finance income of RM31.4m (-27%),
- Trades at 44x forward P/E.

*Stamford Land
- 4Q18 net profit nearly trebled to $25.6m (+187%), bringing FY18 earnings to $56.4m (+63.2%).
- Revenue for the quarter grew 14.3% to $189.7m, mainly due to increased contribution from property development (+21.8%) and trading (+15.5%), partially offset by lower contribution from hotel owning & management (-2.2%) and property investing (-7.2%).
- Operating margin widened 12.4ppt to 19.3%, due to changes in sales mix.
- Bottom line growth was shored by lower finance costs of $1.7m (-16.3%) and higher interest income of $0.8m (+27.6%).
- Maintained first and final DPS of 1¢, giving a dividend yield of 2%.
- Trades at 7.6x trailing P/E and 0.83x P/B.

*Cortina
- 4QFY18 net profit doubled to $7.8m (+105%), lifting FY18 earnings to $22.3m (+89%).
- Revenue for the quarter rose 25% to $132.9m on expansion in retail network, especially in Malaysia and Thailand.
- Sales margin climbed 0.8ppt to 23.6%.
- Bottom line was supported by lower effective tax of 20.2% (4QFY17: 25.1%).
- Trades at 6.2x trailing P/E

POSITIVE NEWS
*ComfortDelGro
- Dissolved strategic agreement to acquire 51% stake in Lion City Holdings, Uber's wholly-owned car rental subsidiary in Singapore.
- There will not be any further obligations or claims as both parties agreed to terminate the deal.
- Accordingly, application to the CCCS will be withdrawn.
- The group still intends to enter the private hire vehicle space given the increasing convergence of private hire vehicles and taxis.
- Trades at 15.8x forward P/E.

*UG Healthcare
- Acquiring a 50% stake in UGHC Brasil for a nominal BRL50,000 ($19,835) to broaden its downstream distribution business in Brazil.
- With the support of the group's local sales and marketing team as well as its own warehousing and logistics infrastructure, UG seeks to further strengthen its market presence and growth potential there.
- This will increase the market demand for its "Unigloves" range of products, which in turn drives the production volume in its upstream manufacturing facilities in Malaysia.
- Trades at 11.5x forward P/E

NEUTRAL NEWS
*Civmec
- Forming a 49:51 JV with Luerssen Australia to develop a new naval shipbuilding company, based in Henderson, Western Australia.
- The new company, AMSEG will serve as a subcontractor to Luerssen Australia in the delivery of the SEA1180 offshore patrol vessel programme.
- The group's outstanding order book at the end Mar is in excess of A$800m.
- Trades at 14.2x trailing P/E