SG Market (31 May 18)

MARKET OVERVIEW
- Local shares could rebound after US shares rallied with Treasury yields as investors view the market reaction to Italy's political crisis as overdone.
- Meanwhile, oil-related counters could be back in play after crude surged 2.2% to over US$68 a barrel.
- Technically, the STI could regain some ground towards immediate resistance at 3,510, with 3.422 (200-dma) providing underlying support.

CORPORATE RESULTS
*KSH Holdings
- FY3/18 net profit fell 28.1% to $29.5m on lower revenue of $132.6m (-33.4%) mainly due to weaker construction takings of $126.6m (-34.6%).
- Operating margin expanded 4.1ppt to 21.8% from increased interest income (+$1.3m) and FX gain (+$2.3m).
- Bottom line was dragged by a $11.6m swing to $3.1m loss from associates (FY17: $8.5m profit), partly shored by higher contributions from JV projects to $11.1m (+92.6%).
- Slashed final DPS by 40% to 1.2¢, bringing FY18 payout to 2.2¢ (FY17: 3.25¢), representing a dividend yield of 3.4%.
- Trades at 12.6x P/E and 1.1x P/B.

*Courts Asia
- Sank to 4QFY18 net loss of $3m from $4m profit a year ago, due to poor business conditions in Malaysia.
- This dragged FY3/18 earnings to $8.1m (-66.1%), well below estimates.
- Despite stronger performance in Singapore (+1.5%) and Indonesia (+9.9%), revenue fell 3.7% to $713.1m due to weaker contributions from Malaysia (-16.7%) arising from introduction of credit limits in Jan, which capped interest rate at 15%..
- Gross margin narrowed 0.4ppt to 35.9% from lower service charge in Singapore and Malaysia.
- Bottom line was negatively impacted by 48.9% spike in provision for trade receivables of $39.2m.
- Trades at 14.1x P/E and 0.5x P/B.

*Tat Hong
- 4QFY18 net loss narrowed to $5.6m (-81%), bringing FY3/18 loss to $15.9m (-58%).
- Revenue for the quarter rose 8% to $119.3m on higher takings from tower crane rental (+31%), general equipment rental (+21%) and distribution (+4%), but partially offset by lower crane rental (-6%).
- Gross margin expanded to 29% (+4.8ppt) on back of improved margins from crane/general equipment rental.
- Bottom line was shored by lower allowance for inventories (-84%), trade receivables (-62%) as well as FX loss (-82%), finance costs (-27%) and absence of impairment on investment in associates (4QFY17: $2.8m).
- Trades at 0.73x P/B.

POSITIVE NEWS
*Yangzijiang
- Announced that it is prepared to conduct ongoing share buyback on price weakness, given its cash hoard of RMB5.6b and net cash position.
- Share price fell by 13% within a week to 15-month low on heavy volume despite robust order book and stable operations.
- As sign of confidence, the group bought back 5m shares in open market on 30 May '18.
- Management remains positive on the group's outlook.
- Trades at 6x forward P/E and 0.7x P/B.

*Creative Technologies
- Publicized that its Super X-Fi technology will be showcased at Computex Taipei.
- Event will be attended by popular influencers in Taiwan and live-streamed to the rest of the world.
- The company plans to launch a software version of Super X-Fi across various platforms before selling the hardware in 3Q18.
- Trades at 16x trailing P/E and 3.4x P/B.

*Addvalue
- The group and its partner Huaan Xingke have successfully obtained the type approval for their multi-mode satellite communication terminal, S600, from the Register of Fishing Vessel under the Ministry of Agriculture, Fisheries Bureau of the PRC.
- The product is customized to meet the China governmental plan to modernize the fishing fleets and is the first-of-its kind to be certified by the China authorities for shipboard and offshore surveillance, navigation and safety operations.
- The terminals will be produced in China with certain key modules worth about US$6m to be supplied by Addvalue over the next three years, of which US$1m order to be fulfilled in FY19.
- Separately, there has been a delay in the signing of airtime service agreement as the customer has requested for additional amendments to certain terms and conditions and parties are still in negotiations.
- Trades at 3.3x P/B

NEUTRAL NEWS
*Aoxin Q&M
- Opened a new dental polyclinic Shenyang Shenhe Aoxin Stomatology.
- Polyclinic is located at Kaisa Commercial Centre, a newly built shopping mall situated along Youth Avenue, one of the busiest streets in the city.
- With a floor area of 300m^2 , the polyclinic includes 6 dental chairs and offers comprehensive dental services for adults and children.
- The group will continue to pursue growth through acquisitions and setting up polyclinics, as well as hospitals in locations with high traffic volume.
- Trades at 70.5x trailing P/E.