Friday, June 29, 2018

SG Market (29 Jun 18)

- The market could claw back some gains on quarter-end window dressing as trade headlines quietened down but there is still a lot of uncertainty over how the trade disputes would ultimately pan out.
- Oil-linked counters could find some support after crude pushed above USD73 a barrel, extending a recent rally that has largely been driven by supply dynamics.
- Technically, upside for the STI is capped by former support-turned-resistance of 3,280, while underlying support remains at 3,200.

*Del Monte Pacific
- 4QFY18 net profit soared 322% to US$12.3m, boosted by one-off gain from purchase of discounted DMFI loans. Excluding one-off items, the group would have incurred a net loss of US$2.1m.
- This brought FY4/18 loss to US$18.2m (FY17: US$24.4m profit) and core profit to US%12m (-73.6%).
- Revenue for the last quarter declined 8.5% to US$499m, as higher sales in Philippines was offset by decreased exports of processed pineapple and lower US sales.
Gross margin narrowed 5.9ppt to 17.4, depressed by weaker pineapple juice concentrate pricing.
- With significantly reduced inventory in its US operations, operating cash flow improved to US$217.5m (+41.8%), thereby lowering its net gearing to 2.3x from 2.9x in 2017.
- Divestiture of Sager Creek and closure of US plants would lead to better margins and stronger cash flow in FY19. As such, management has guided for FY19 to be profitable.
- Trades at 0.5x P/B

*Second Chance
- 3QFY18 net profit tumbled 61.6% to $2.1m, bringing 9MFY18 earnings to $6.2m (-27.5%).
- 9MFY18 revenue fell 7.5% to $22.6m on lower takings from apparel (-22.5%), gold (-3.4%), properties (-11.6%), partially offset by higher contributions from securities (+7.3%) businesses.
- Gross margin shrank 1.9ppt 50.1% due to changes in sales mix.
- Bottom line was dragged by a $1.8m swing to fair value loss on financial assets.
- Trades at 0.7x P/B.

*Koh Brothers
- Sold 96% of the upscale Nonhyeon I'PARK, its first 45% JV development project in South Korea, within three months of its launch.
- The freehold project is strategically located along the main commercial belt in prime Gangnam district, Seoul.
- The mixed-use development will comprise 346 upscale residential units and retail space.
- Work has commenced in 2Q18 and is expected to be completed in 2020.
- Trades at 0.4x P/B.

*Hotung Investment
- LCY Technology, an investee company, was listed on the Taiwan Stock Exchange.
- The group has invested in the copper foil supplier since May-17
- Management expects LCY's revenue to gain momentum from upward demanding the automotive and 5G network industry.
- Trades at 8.6% dividend yield and 0.6x P/B.

- Signed a major contract with Inmarsat to provide its Inter-Satellite Data Relay System (IDRS) for satellite operators to better conduct their commercial and research operations with small, near earth orbit satellites.
- With IDRS on-board, this will significantly improve the operational efficiency of their multi-satellite low orbit earth constellation and broaden the capability that they will be able to offer their users.
- The group is working to ensure its successful delivery, while it pursues other IDRS projects and further grow its customer base with some of these projects already in an advanced stage of discussion.
- Trades at 4.8x P/B

- Associated company, Clearbridge BioMedics, secured commitments of $6.6m in funding ahead of its potential listing.
- The funds will be used for business expansion, technology development, talent recruitment and expenses relating to the potential listing.
- Trades at 2.9x P/B.

*TEE Land
- Entered option agreement to acquire a 3,928.8 sqm freehold plot of land at 338-364 Upper East Coast Road for $60m.
- The group plans to build a residential development on the site, pending due diligence expected to be completed by Nov-18.
- The acquisition will be funded by internal funds and bank borrowings.
- Trades at 0.55x P/B.

*Accordia Golf Trust
- Received notification from the Japanese Ministry of Land, Infrastructure, Transport & Tourism regarding the government's infrastructure project.
- The project consist of building flood prevention embankments along the riverbank of the Arakawa River located in the surrounding area of the Northern Country Club Nishikigahara Gold Course, one of the golf courses in AGT's portfolio (3.1% of total appraised portfolio value).
- AGT may not be able to obtain renewal of its River Occupancy Permission to operate the golf course should construction work commence.
- Trades at 7.1% dividend yield and 0.69x P/B.

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