Tuesday, July 17, 2018

SG Market (17 Jul 18)

- The market looked set for a weaker open as tech stocks led US stocks lower and oil skidded more than 4% on resumption of Libyan production and talk of possible supply increases by Saudi Arabia and Russia.
- Technically, underlying support for STI lies at at 3,190-3,200 with immediate resistance seen at 3,300.

*Keppel REIT
- 2Q18 DPU remained flat at 1.42¢ on marginally higher distributable income offset by increased number of units.
- Gross revenue and NPI grew to $51.7m (+29.6%) and $43.2m (+35.5%) respectively, mainly due to increase in one-off income, and higher contribution from Bugis Junction Towers and Ocean Financial Centre partially offset by weaker contribution from 275 George Street.
- Average signing rent for Singapore office leases was approx. $10.74 psf in 1H18 (1Q18: $10.05 psf).
- Committed occupancy further eased 0.1ppt q/q to 99.3%, while aggregate leverage remained at 38.6%.
- Trades at 5.5% dividend yield and 0.8x P/B.
- MKE has a Hold with TP of $1.19.

*Soilbuild REIT
- 2Q18 DPU declined 13.8% to 1.264¢, bringing 1H18 DPU to 2.588¢ (-12.4%), in line with estimates.
- Gross revenue and NPI fell 13.1% and 13.2% respectively mainly due to lower contribution from 72 Loyang Way, a property known as KTL Offshore and West Park BizCentral.
- Portfolio occupancy rate rose modestly to 87.6% q/q while WALE stands at 2.9years.
- Negative rental reversions of 8.3% and 14.6% were recorded for renewals (including forward renewals) and new leases in 1H18 respectively.
- Aggregate leverage stood at 37.6%, which allows debt headroom of $45.9m
- Trades at 7.7% yield and 1.0x P/B

*Qian Hu
- 2Q19 net profit jumped almost six fold to $146k from $25k, driven by stronger sales of Dragon Fish, new aquaculture business in China, and higher-margin accessories.
- Revenue for the quarter inched up 1% to $21.9m, dragged by a 4.8% and 0.6% decline in Accessories and Plastics sales respectively.
- Gross margin expanded 1.0 ppt to 30.1% due to changes in sales mix.
- Bottomline was negatively impacted by higher finance costs of $131k (+33.7%) due to higher interest rates charged and increased bank borrowings.
- Trades at 47.5x trailing P/E.

- Secured a total of $11.7m worth of new contracts for both Network Infrastructure (NI) and Wireless Infrastructure (WIN) business segments.
- The deals consists of an $8.5m NI contract to provide internet service infrastructure for a leading service provider in Southeast Asia and $3.2m WIN contract to supply microwave links to a Government entity in the Middle East.
- Both contracts were awarded by repeat customers.
- Trades at 15.6x trailing P/E.

*ST Engineering
- Aerospace sector secured $510m worth of new contracts for services ranging from heavy maintenance to engine wash and aircraft interior reconfiguration.
- In addition, the group expanded its composite panel manufacturing capacity by 50% with the opening of its second plant in Kodersdorf, Saxony, Germany.
- The plant has a production capacity of 200,000 panels per annum.
- Trades at 18.1x forward P/E.

- Acquiring 180 apartments and ancillary facilities at Thamrin Nine's Tower 2 for US$56.3m ($76.3m) from PT Putragaya Wahana, which will be developed into a 180-key PARKROYAL Serviced Suites.
- Meanwhile, the group's hotel subsidiary, Pan Pacific Hotels also signed a management contract with PT Putragaya Wahana to operate a 200-key PARKROYAL Jakarta within Tower 2 of the same development.
- This will strengthen the group's hospitality footprint in Jakarta, bringing the total number of owned/managed hotels and serviced suites in the city to three and further strengthen its recurring income streams.
- Trades at 0.6x P/B.

*Datapulse / ICP
- Entered into a non-binding LOI with ICP for the proposed acquisition of MHI MY 1.
- MHI MY 1 owns a midscale hotel in Kuala Lumpur, currently operating under the "Geo Hotel Kuala Lumpur" brand.
- Upon the completion of a refurbishment programme, the hotel will debut as Travelodge Central Market, KL.
- This is part of Datapulse's plan to diversify into the hospitality industry, which has strong growth potential.
- For ICP, the proposed disposal is in line with its asset-light strategy, focusing on hotel management and franchising across Asia to expand and strengthen the Travelodge brand presence.
- Trades at 0.72x P/B and 0.9x P/B respectively.

*Raffles Medical Group
- Raffles Health insurance (RHI) launched Raffles Shield, an Integrated Shield Plan (IP) developed in partnership with a Medisave-approved IP providing coverage for hospital and surgical expenses.
- This plan comprises MediShield Life and additional private insurance coverage administered by RHI, which enhances the basic coverage of the former.
- Raffles Shield will be made available to the pubic from 1 Aug '18.
- Trades at 28.2x forward P/E.