SG Market (18 Jul 18)

MARKET OVERVIEW
- The market may track Wall Street higher after Fed chief Jerome Powell gave an upbeat assessment of the economy and signalled no change in gradual policy tightening although trade remains an uncertain dynamic.
- Technically, immediate resistance for the STI is at 3,300 with underlying support at 3,190-3,200.

CORPORATE RESULTS
*Keppel DC REIT
- 2Q18 DPU rose 4.6% to 1.82¢, bringing 1H18 payout to 3.62¢ within expectations at 47% of full year forecasts.
- For the quarter, revenue and NPI jumped to $41.9m (+21.5%) and $38.1m (+21.4%) mainly driven by acquisitions of Keppel DC Singapore 5, maincubes DC and Keppel DC Dublin 2.
- Portfolio occupancy eased 1.7ppt q/q to 92%, while aggregate leverage decreased 5.7ppt q/q to 31.7%.
- Trades at an annualised 1H18 yield of 5.4% and 1.34x P/B.

*Keppel-KBS US REIT
- 2Q18 DPU of US$0.015 beat IPO forecast marginally by 0.7%, in-line with expectations.
- Gross income of US$22.6m (forecast: US$23.1m) was worse than expected largely due to drop in rental from a tenant at Westmoor Centre which vacated ahead of lease expiry.
- NPI of US$13.8m (forecast: US$13.6m) was better than expected due to lower-than-forecast property expenses of US$8.8m (-7.2%).
- Portfolio committed occupancy improved 0.5ppt to 90.3%, while aggregate leverage eased 0.5ppt q/q to 33.1%.
- Trades at an annualised yield of 6.9% and 1.0x P/B.

*Keppel Infrastructure Trust
- Flat 2Q18 DPU of 0.93¢ on stable distributable cashflow of $36.2m (unch), within expectations.
- For the quarter, revenue fell 10% to $142.9m weakness in Basslink (-81.1%), Keppel Merlimau Cogen (-2.7%) and concessions (-2.1%) overshadowed growth in City Gas (+7.1%).
- Gearing ticked 0.4ppt q/q higher to 40.5%.
- NAV/share fell 2.7% q/q to 28.8¢ due to distributions, partially offset by marked-to-market valuation of derivative financial instruments and recognised profit.
- Trades at 7.1% yield and 1.8x P/B.

*First REIT
- 2Q18 DPU ticked up 0.5% to 2.15¢, bringing 1H18 DPU to 4.3¢ in line with estimates.
- For the quarter, gross revenue and NPI climbed to $28.9m (+5.3%) and $28.5m (+5%) on addition contribution from Buton Property, Siloam Hospitals Yogjakarta and existing properties.
- Aggregate leverage rose 0.6ppt q/q to 34.2%.
- Trades at annualised 2Q yield of 6.5% and 1.3x P/B.

IPO WATCH
*Koufu
- The food courts and coffee shops operator will make its trading debut today after receiving strong support for its IPO of 97m shares at $0.63 each with the public offer of 6.33m shares were about 17x oversubscribed.
- Separately, institutional investors such as Maxi-Harvest Group, One Hill Investments and Qilin Asset Management have also subscribed for an aggregate of 21m Cornerstone Shares.
- Out of the $70.5m in total proceeds raised, about $43m will be due to Koufu for the expansion of its retail network of F&B Outlets in Singapore and overseas; establishing a proposed integrated facility as well as expanding the provision of online food ordering and delivery services.
- Given its cashflow-generative business, the group has a robust balance sheet in a net cash position which will enable it to explore potential JVs and M&As in complementary business segments/markets.
- Although it has no fixed dividend policy, management intends to distribute dividends of at least 50% of net profit generated in FY18/19 to shareholders.
- The post-offering market cap is expected to be $349.8m, thus valuing the stock at 13x P/E, a discount to its closest peer, Kimly of 17x.

POSITIVE NEWS
*Jumbo
- Entered into franchise agreement with Ho Sing Food Co. for the establishment and operation of Ng Ah Sio Bak Kut Teh outlets in Taiwan.
- The deal has an initial term of 10 years and may be renewed for a further 10 years subject to certain terms to be determined by the group.
- Ho Sing has also committed to open at least 20 of such outlets with the first one expected to open this month at the Shin Kong Mitsukoshi (Xin Yi) Mall, Taipei City.
- Trades at 26x forward P/E.

*Nordic
- Secured several contracts with new and repeat customers, comprising MNCs and companies in the O&G and petrochemical industries for a total value of $13.0m.
- Trades at 12.5x trailing P/E

*Hyflux
- Awarded by AVIC-INTL Project Engineering Company and CPI Power Engineering to supply 2 units of desalination system for Rmb 40.3m.
- The systems are expected to provide 7,320 m3 of desalinated water per day to 2x660 MW ultra-supercritical units of Turkey Hunutlu Thermal Power Plant Project for industrial use.
- Contract is slated to be fulfilled over next 1.5 years and is not expected to contribute to FY18 results.
- The counter remains suspended.

NEUTRAL NEWS
*Singtel
- Its subsidiary, Amobee has emerged as the winner in the court supervised auction to acquire certain assets from Videology, a software provider for advanced TV and video advertising for US$101m, subject to adjustments for accounts receivable at closing, estimated to be US$20.9m.
- The acquisition, following Videology's voluntary Chapter 11 restructuring proceedings, includes Videology's technology platform, intellectual property and certain other assets of estimated net book value of US$5.3m.
- Videology has emerged as a leading provider of software that empowers advertisers and publishers to use data to optimise campaigns and spend across digital platforms and television.
- The addition of Videology's capabilities will be a further boost to Amobee's omni-channel platform and help marketers meet growing consumer demand for premium video and connected TV content.
- Trades at 15.6x forward P/E