Monday, June 25, 2018

SG Market (25 Jun 18)

- Trade issues could continue to dog the market as President Trump mull fresh tariffs against European cars and new measure to restrict Chinese investments but some reprieve may come from PBOC's reserve requirement cut to free up USD100b in liquidity before US tariffs take effect next week.
- Technically, the STI is heavily oversold with immediate support at 3,280, while resistance lies at 3,340.

**Sembcorp Industries
- Secured a 50MW project from the HDB and the EDB to build, own, operate and maintain grid-tied rooftop solar systems across 848 HDB blocks and 27 government sites in Singapore.
- Construction will begin in 3Q18, and is targeted to be completed by 2Q20.
- This deal makes Sembcorp a major solar player in Singapore with combined solar energy portfolio of 104MW across more than 1,500 sites.
- Trades at 13.2x forward P/E.

*CITIC Envirotech
- Awarded a Rmb2.5b EPC ecological restoration project in Meigu County, Sichuan province, China.
- The group will undertake the design and construction of essential housing and infrastructure including water supply, wastewater treatment, garbage disposal and other auxiliary facilities in 11 newly designated residential areas for 2,000ha of land across 36 townships.
- Work will commence in 4Q18 and is expected to be completed by Dec 2020.
- The project will contribute positively to the group's FY18-20 revenue.
- Trades at 9.5x forward P/E

*RH Petrogas
- Awarded new 20-year contract terms for both the Kepala Burung and the Salawati Kepala Burung Production Sharing Contracts (PSC) upon the expiry of their current terms in 2020.
- The new PSCs are based on the gross split model implemented by the Indonesian Government in 2017 to replace the cost recovery regime in existing PSCs.
- It currently holds a majority 60% participating interest in and operates the Basin PSC and holds a non-operated 33.2142% participating interest in the adjacent Island PSC.
- The two PSCs produce ~3,940 boepd net to the group's participating interests.
- Trades at 3.7x trailing P/E

*Noble Group
- Proposed sale of a Kamsarmax dry bulk carrier vessel, Ocean Ambition to Fairmyl Shipping for US$23.415m.
- Built in 2014, the 81,616 dwt vessel is employed to service external customers as well as the group's internal freight requirements.
- The one-off disposal gain would amount to US$0.7m based on the carrying value of the vessel of US$22.72m as at Mar'18.
- Part of the proceeds will be used to pay down the amounts owed under the relevant facility.
- The sale will not significantly impact the operations of its freight business as it intends to charter back the vessel on a time charter basis.

*Advancer Global
- Proposed subscription by Japan-listed Fullcast Holdings of 65m new shares at $0.34 each or 11.5% premium to last close.
- This represents 25.2% of the enlarged shares and proceeds will be used for business expansion and working capital purposes.
- Separately, both parties have agreed to discuss a potential JV to provide foreign labour staffing and employment in Japan.
- The proposed JV will be well-positioned to address the current labour shortage issue in Japan.
- Trades at 18x trailing P/E.

*OUE Lippo Healthare
- 50:50 JVCo with China Merchant Group (CMLHM) has entered into a framework agreement with China Changjiang National Shipping Group and Shanghai Changjiang Shipping to incorporate a new JV.
- The new 51:49 JV will manage the operations of Shanghai Changjiang Hospital in Pudong, currently operated by Shanghai Changjiang.
- Trades at 2.2x P/B.

*Singapore Kitchen
- Submitted application to SEHK for the proposed dual listing on GEM, subject to approval from HKEx, shareholders and SGX.
- Trades at 1.3x trailing P/B.

- 80% owned Acropower extended its MOU with HL Plus to 31 Jul '18.
- This relates to a project to build, own and operate an organic waste-to-energy plant on the future poultry farm site of Chew's Agriculture at Neo Tiew Road, off Lim Chu Kang.
- Trades at 2.5x P/B.

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