SG Market (19 Jun 18)

MARKET OVERVIEW
- The market could face further pressure amid escalating US-China trade tensions with latest news that US President Trump has threatened to hit China with new tariffs on USD200b of Chinese imports.
- Meanwhile, oil rose as some producers mull a smaller output boost ahead of OPEC meeting later this week..
- Technically, the STI is grossly oversold but appears entrenched in a downtrend after breaking below its 200-dm at at 3,340 and could head towards the next support at 3,280.

POSITIVE NEWS
*Lian Beng
- Awarded $95.8m contract by Tripartite Developers to build a condominium at Flora Drive.
- The development comprise nine 8-storey residential blocks, clubhouse with one basement car park, swimming pool and tennis court.
- Construction is expected to commence in Jul '18, for a period of 33 months, and contribute positively to FY5/19 results.
- This will lift its order book to $1.02b.
- Trades at 5.1x forward P/E and 0.47x P/B.

*Addvalue Technologies
- Entered into a new distribution contract with Zhongyou Century (Beijing) Technology to supply satellite communication terminals for small fishing fleets operating in China regional seas.
- Total contract value is worth at least US$1m, if terminals are fully delivered within FY3/19.
- The new contract supersedes the 3-year collaboration entered in Apr '16 to supply > 5,000 units of satellite terminals, which was later found to be inadequate for the needs.
- Trades at 5.2x P/B.

*Sysma
- Secured a $37.7m contract from Oxley Holdings for a 160-unit condominium project, The Verandah Residences, at Pasir Panjang.
- Work includes the construction of four blocks of 5-storey apartments, three 2-storey strata landed houses, and a basement car park, clubhouse, swimming pool and communal facilities.
- Construction is expected to commence in Jul for a period of 28 months.
- Net cash position of $54.9m is substantially higher than current market cap of $38.1m.
- Trades at 0.75x P/B.

*Kingsmen Creatives
- Secured $29m worth of contracts from F1 Singapore Grand Prix.
- Deals involve fabrication and construction of circuit-wide grandstand seats, paddock club, corporate suites at pit straight and hospitality facility at Turn 23 over a 4-year period, and paddock kitchen over a 2-year period.
- Works will commence from 2018 and are expected to contribute positively from FY18 to FY21.
- Trades at 11.4x trailing P/E.

NEUTRAL NEWS
*SIA
- May '18 passenger load factor (PLF) climbed 2.6ppt to 79.6% as pax traffic (+9.6%) overtook capacity expansion (+6.1%), with all regions except Europe showing an increase.
- But cargo load factor dropped 3.9ppt to 62.6% as air freight loads (-3.3%) weakened against capacity addition (+2.7%).
- Trades at 0.93x P/B.

*Ascendas Hospitality Trust
- Updated that there is no physical damage to its existing property - Hotel Sunroute Osaka Namba as well as the three hotels that it is acquiring in Osaka following yesterday's earthquake.
- Trades at 7.6% yield and 0.84x P/B

*Allied Tech
- Proposed placement of 420m new shares (31% of existing share base) at $0.06 apiece to four high net-worth investors.
- Net proceeds of $25.16m will be used for potential acquisitions to further expand and strengthen its service offerings in its new e-commerce segment, including centralised customer relationship management, loyalty program and electronic payment.
- In the longer-term, the group also aims to integrate various sub-segments of its business such as online ticketing and online corporate travel solutions.
- Based on the enlarged share capital, the stock trades at 20.4x trailing P/E and 0.78x P/B.

*No Signboard
- Acquiring remaining 20% stake in Danish Breweries for $0.4m via 10 monthly instalments.
- Upon completion, the group intends to expand its distribution (currently 300 outlets) of Danish Breweries' signature brand Draft Denmark beer in Singapore.
- Separately, the group has inked a franchise agreement to develop and operate Little Sheep restaurants in Singapore.
- Little Sheep is a well-known hot pot restaurant in China, with 280 outlets (270 franchised) in China, US, Canada and Japan.
-The group intends to open the first outlet by early 2019, while targeting to open at least one outlet per year over the next five years.
- Trades at 9.2x trailing P/E.

*UnUsUal
- Added two additional "JJ Lin Sanctuary World Tour" shows as the existing two shows were completely sold out.
- Trades at 52x trailing P/E.

*Moneymax
- Acquiring Ban Joo Pawnshop for $3.3m or at 1x P/B.
- Ban Joo operates a licensed pawn broking business at Tanjong Pagar Plaza and posted a FY17 net profit of $0.2m.
- The acquisition is in line with the group's expansion strategy.
- Trades at 8x trailing P/E.