Wednesday, June 27, 2018

SG Market (27 Jun 18)

- The grossly oversold market may take a breather as US stocks rebounded from the worst selloff since early Apr in tandem with the rally in oil price past US$70 a barrel following reports the US is pressing allies to halt all imports of Iranian crude, which took some attention from the uncertainty over Trump's trade policy.
- Meanwhile, hard hit tech shares bounced back after Trump signalled he may rely on the Committee on Foreign Investment rather than blanket Chinese investment restrictions to protect US technology.
- Technically, the STI is just touching its former support-turned-resistance of 3,280, with short term objective at 3,340. Underlying support is at 3,200.

- Acquiring Chongqing Zhonghua Real Estate Co (CQZRE) 32-ha prime mixed-use site in Chongqing for Rmb5.7b ($459m)
- CQZRE oqns a 32-ha prime mixed-use site in Chongqing, China, which comprises two greenfield that can yield 1,900 residential units and a shopping mall with a combined gfa of 335,000 sqm (excluding car park) when fully developed by 2022; as well as brownfield sites with 223 homes and 100,000 sqm of office.
- The proposed new Xinpaifang mall will complement its 230,000-sqm Raffles City Chongqing mall and double its retail network in the city.
- Looking ahead, the group had over 8,000 residential units valued at Rmb15.1b as at Mar '18, which had been sold but not yet handed over. About 70% of this value is expected to be recognised by the end of this year.
- Trades at 0.71x P/B

- Secured $38.4m worth of new contracts from all its three business divisions, including a US$9.3m ($12.6m) project to provide move-in and related logistics services for the setting up of production lines for a large automobile product manufacturing plant in the US.
- These projects will be funded through bank borrowings and internal financial resources.
- The latest order wins and not counting those smaller projects and recurring revenue from monthly maintenance and services are expected to boost the group's FY19 results.
- Trades at 4.6x trailing P/E

*Soilbuild Construction
- Secured a $3.8m construction contract for structural building and related infrastructural work of a distribution centre in Dagon Seikkan Township, Myanmar.
- The project is expected to begin in Jun '18 and completed in 1Q19.
- Trades at 1.2x P/B.

- Gives the nod for go-ahead for companies with dual share structures to seek a listing on its main board with immediate effect, joining global exchanges in Europe, US and HK to offer investors such choice.
- With rules and safeguards in place, the exchange will enable enable founder-entrepreneurs to raise funds, while retaining the ability to execute long-term strategy.
- This move is in line with the group's strategy of attracting new economy stocks, including promising start-ups and tech firms that have shares with different voting rights to raise funds and list in Singapore.
- Trades at 20.5x forward P/E and dividend yield of 3.9%.
- MKE has a Buy with TP of $8.79.

- Acquired 378.9m shares (19% stake) in India-based Shree Renuka Sugars (SRS) from public shareholders at Rs16.29 each.
- Post acquisition, the group will hold 58% interest in SRS.
- Trades at 12.2x trailing P/E.

- Sold a 5% stake in RecruitFirst (HK) to a key employee for HKD341,807, reducing its stake to 70% from 75%.
- This is in line with management's push to turn employees into co-owners for stronger alignment of interest and motivation towards better performance.
- Trades at 17.3x forward P/E.

*Clearbridge Health
- Partners with Australian-based health information company, Genome.One.
- Under the partnership, Clearbridge clinicians will refer patients in Singapore and Hong Kong to Genome.One's GoExplore personal health genomics programme.
- Trades at 2.9x P/B.

*New Silkroutes
- Entered into separate MOU to acquire 60% stakes in six companies owned by different individuals for $11.7m, subject to adjustments after due diligence.
- These targets mainly provides medical/healthcare services in general practitioner and aesthetic clinics.
- The move is in line with management's focus to expand its healthcare division to reinforce its earnings base and strengthen its operations and financial position.
- Trades at 0.84x P/B.

*Lian Beng
- Acquiring 60% interest in United Tec Construction (UTC) for $180,000.
- UTC is principally engaged in general construction business specialising in the design for manufacturing and assembly construction.
- The deal is expected to have positive impact on the group's NTA/share and EPS for the current FY5/19.
- Trades at 4.8x forward P/E.

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