Monday, July 9, 2018

SG Market (09 Jul 18)

- Expect market to languish as investors watch developments on the Sino-US trade war and property cooling measures weigh on risk sentiment.
- Key data to look out for include 2Q18 GDP growth (est: +4.1%, 1Q18: +4.4%) due on Fri and retail sales data for May (est: +1%, Apr: +0.4%) on Thu.
- Technically, the STI could hover around the 3,190-3,200 support area, with next level at 3,110. with upside capped at 3,280.

- 3QFY18 net profit surged 75% to $0.7m from a low base following its effort to streamline costs and improve capacity utilisation.
- However, revenue fell 10.7% to $12m, as data storage sales tumbled 42.4% due to fewer customer orders.
- This is in line with its strategy to move away from the data storage and focus on the consumer electronics and automotive business segments.
- Operating cash flow improved to $3m due to better working capital management. Balance sheet remains in a net cash position.
- Pending JTC approval, the proposed sales of its industrial property will provide the group with additional funds for business opportunities and reduce bank borrowings.
- Flushed with $6.8m proceeds from recent share placement, the group is negotiating to raise its stake in Core Power (Fujian) New Energy Automobile to gain greater exposure to China's electric car boom.
- Trades at 7.8x trailing P/E

- Completed acquisition of 71% stake in Xintai Zhengda Thermoelectric for Rmb66.5m, funded by internal resources, bank loans and convertible bonds issue.
- Xintai Zhengda has an exclusive centralised steam/electricity plant serving diverse industries and residents in Xintai City in Shandong province, China.
- Currently, Phase 1 of its new facilities is under construction with design capacities of 130t/h biomass boiler and 30MW electricity generator, two 130t/h coal-fired boilers and 18MW electricity generator.
- The existing facilities will remain in operation prior to the completion of the new facilities, fulfilling the requirements of current customers in the local area.
- Trades at 7.6x forward P/E.

- Reached agreement with lender Maybank on the divestment process of Tuaspring Integrated Water and Power Project.
- The group has to find a buyer by 15 Oct and obtain approval from Maybank, PUB and High Court for the transaction by 11 Dec and shareholder nod by 4 Feb next year..
- Maybank will also become more involved in the sale process and appoint valuers for the plant, which has a book value of $1.3b.
- If the conditions are met, the bank, which is owed $518.4m, will refrain from starting enforcing proceedings against the group.
- Last traded at $0.21, the counter remains suspended.

- Disposed entire 50% stake in Gas Natural Ganamax, a Mexican entity, for US$350,000.

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