SG Market (13 Jun 18)

MARKET OVERVIEW
- The market is likely to remain lacklustre as as investors turn their attention to major central bank meetings this week after shrugging off Tue's Trump-Kim summit, while trade tensions continue to simmer in the background with US going to put out a list of China imports subject to 25% tariffs on Fri.
- While the Fed widely expected to raise its key interest rate by 25bps, market is more interested in the guidance if it would hike three or four times this year.
- Meanwhile, ECB meeting this Thu could touch on QE exit , while BoJ policy decision on Fri could continue to be supportive.
- Technically, the STI is testing its 200-dma at 3,430, with next support level at 3,340. Immediate resistance remains at 3,510 (near 50-dma).

MACRO WATCH
*Property
- According to real estate portal SRX property, resale prices of non-landed private property rose 1.2% m/m and 10.8% y/y in May, with the largest increase recorded in the outside of central region (+1.8% m/m).
- Resale prices have risen more than 1% every month since the start of the year, suggesting a revival of buying interest across all market segments.
- The strong upswing was attributed to the spillover effects from the en bloc sale fever, which saw several collective deals in the core central and outside central regions.
- Resale volume of 1,550 units was 0.6% lower than Apr but 25.5% higher than the transactions in May '17.
- Resale prices could see further upside in the coming months, largely driven by the higher new launch prices from pricier land acquisitions.

POSITIVE NEWS
*Sembcorp Marine
- Won first polar expedition cruise ship design contract from Brodosplit Shipyard for an undisclosed sum.
- The 128m ship, with a capacity of 200 passengers and 116 crew members, will be constructed by the Croatian yard for Quark Expeditions, which specialises in purpose-built expedition vessels to Arctic and Antarctic, with completion slated to be 3Q20.
- News wires reported that Quark Expeditions awarded Brodosplit the polar cruiseship contract for US$130m.
- Trades at 1.8x P/B.

*Sunpower
- Secured a Rmb44.6m manufacturing and services contract rom Oriental Energy, a repeat customer.
- Delivery of equipment is expected to be completed by early 2019, which will have a positive impact on the group's FY18 performance.
- Trades at 7.4x forward P/E.

*Ley Choon
- Secured contracts worth $5.3m for infrastructure works relating to installation and maintenance of pipelines.
- Trades at 25.4x trailing P/E.

*CITIC Envirotech
- Secured two industrial hazardous waste treatment projects in Xinjiang Province, with a total investment amount of Rmb680m.
- The project will commence immediately and is targeted to be completed by end 2019.
- Trades at 9.5x forward P/E

*Darco Water
- 60%-owned subsidiary was awarded 3 contracts totalling Rmb107.6m ($22.5m) in China.
- Works are expected to be completed within 24 months and will have a positive impact on FY18 results.
- Trades at 42x trailing P/E.

NEUTRAL NEWS
*Ramba Energy
- Obtained approval for the farm-out of a 15% participating interest in the Lemang production sharing contract (PSC) to Mandala Energy Lemang.
- The participating interests of Hexindo, Mandala and Eastwin Global Investment in Lemang PSC following the completion are 16%, 50% and 34% respectively.
- Trades at 1.2x P/B

*Addvalue Tech
- Spinoff of Addvalue Solutions (AVS) will be conducted via a distribution-in-specie of at least 10% of AVS shares to shareholders.
- Proposed spinoff and listing on the Catalist board will only be carried out if the valuation of AVS is at least $70m.
- Trades at and 5.8x P/B.

*Raffles Education
- Proposed acquisition of six adjacent units in a commercial property in Suzhou, China, for Rmb6.6m ($1.4m).
- The units have a combined GFA of 553.91 sqm with lease expiry in Dec 2066.
- This will enable the group to expand Gelin Nursery School of Suzhou National New & Hi-tech Industrial Development Zone, which is located in the building.
- Post-transaction, FY17 pro-forma loss per share is expected to narrow to $0.16 (from $0.19).
- Trades at 0.34x P/B.

*Keong Hong
- Appealed to Ministry of Manpower (MOM) to lift the 2-year debarment in relation to the recruitment of new foreign workers.
- MOM responded that it will shorten the debarment term to 6 months and allow the group to recruit new foreign workers after 24 Nov '18.
- To recap, the group was penalised by MOM in May for housing its foreign workers in overcrowded, dirty and unsafe conditions.
- Trades at 0.65x P/B.

NEGATIVE NEWS
*Sunvic
- Placed under SGX watch-list due to failure to meet financial entry criteria (recorded pretax losses for 3 consecutive financial years with average daily market cap of <$40m).