From a chart perspective, technical support for the STI is seen at 3,445 (50-dma) with immediate resistance at 3,520.
Stocks to watch:
*OUE Commercial REIT: 1Q15 DPU of 1.44¢ was ahead of IPO forecasts of 1.40¢. Gross revenue beat IPO forecasts by 7% at $20.4m, while NPI at $15.7m was 12.1% ahead, led by higher occupancy and rental rates achieved in Lippo Plaza, while operating expenses fell mainly due to lower utilities and maintenance costs incurred, as a result of a switch to bulk purchase of electricity for OUE Bayfront from Jul '14. Overall portfolio occupancy improved to 98.6% from 98% the previous quarter, while leverage ratio stood at 38.6% with average cost of debt of 2.88% and tenor of 2.68 years. NAV/unit of $1.10.
*CitySpring Infrastructure Trust: 4QFY15 DPU was maintained at 0.82¢, taking FY15 payout to an unchanged 3.28¢. 4Q15 net profit came in at $9.0m versus a net loss of $4.4m the previous year. Gross revenue for the quarter fell 10% to $121.5m, due mainly to lower town gas tariff resulting from lower fuel costs. Total expenses fell 16.2% to $112.0m, as a result of lower fuel and electricity (-36.7%) and depreciation and amortization costs (-27.9%). Bottom-line was aided by an 86.3% decline in tax expenses to $0.7m. NAV/unit of $0.123.
*CH Offshore: 3QFY15 net profit fell 35.1% to US$3.8m, while revenue fell 13.1% to US$7.8m as two vessels were scheduled for their major overhaul. Gross margin before direct depreciation fell 1.2ppt to 82.9%. Bottom line slump was accelerated by admin expenses (+47.9% to US$1.3m) as a result of higher fees from the cash offer by Energian and an on-going legal case, and reduced share of associates profits (-49.9% to US$0.5m). Special DPS of 9¢ announced. NAV/share of US$0.330.
*ARA Asset Management: 1Q15 net profit climbed 6% y/y to $19.0m, while revenue inched down 1% to $37.7m, as increases in management fees (+1%) and acquisition, divestment and performance fees (+106%) were offset by reduced finance income (-64%). Bottom line was boosted by a share of associate’s profits that grew 4x to $3.2m, from the favorable performance from Am ARA REIT managers and Hui Xian Asset Management. NAV/share of $0.431.
*Petra Foods: 1Q15 results missed estimates, as net profit tumbled 43% y/y to US$7.7m, while revenue dropped 14% to US$106.2m, weighed by poor consumer off-take in Indonesia, which caused trade customers to reduce inventory levels. Gross margin slipped 1.6ppt to 30.3% due to higher costs of raw and packaging materials from a weaker Rupiah. Bottom line was further weighed by finance costs (+71%).
*LCD Global Investments: 3QFY15 net loss narrowed to $2.4m from $12.4m the previous year on revenue of $13.9m (-8%). The drop in revenue was largely due to a drop in hotel revenue, due to the closure of some rooms for refurbishment works in London which commenced in Jan '15, and a drop in average room rate in its Phuket hotel. Gross margin inched down 2.2ppt to 46.5%. Bottom-line was buoyed by FX gains of $1.4m, as well as an 82% decline in other operating expenses of $2.0m, due to a write off of certain capitalized costs from the previous year. NAV/share of $0.27.
*Federal: 1Q15 net profit soared 449.1% to $16m, while revenue jumped 160.9% to $57.5m, on improved contributions from the Trading business. Bottom line boost also came from gross margin expansion of 17.6ppt to 39.8%. Other income fell to $1.1m from the absence of a $3.6m gain from disposal of assets held-for-sale last year. NAV/share of 5.4¢
*M1: Spent $10.3m for a 15% stake in Integrated Telecommunications Oman SAOC (TeO), the Sultanate of Oman’s first private international gateway operator and a mobile services reseller.
*Viva Industrial Trust: Committing $20m to reposition Technopark@Chai Chee as a business park with retail and lifestyle amenities. Retail offerings could open doors as early as end 2015.
*TEE Int’l: Awarded $130m of contracts. The first is by FCL, for addition and alteration works to Centrepoint Shopping Centre in Orchard. The second is for engineering works for Fraser Tower, a 38-storey Premium Grade A office tower on Cecil Street.
*TEE Land: Awarded contract worth RM266.8m, for the execution and completion of building works for TEE Resources development project in Cyberjaya.
*Oxley: Entered JV with PT Karya Indo Batam (KIB) to construct, manage and operate a multi-storey mixed development in Batam. KIB will contribute the property, while Oxley will fund the construction, up to $21m, as well as an advance payment to KIB of $5m.
*Ramba: Second proposed private placement of new shares in a week, this time to two placees- Yeung Sau Shing Albert, chairman of Emperor Group (5m shares) and Harry Wangidjaja (4m shares), at $0.32/share. Net proceeds of $2.8m earmarked for Ramba's oil and gas work programme and working capital.
*Otto Marine: Two parties have commenced arbitration proceedings against Otto Marine for losses of ~US$8.9m, caused by an alleged breach of conditions by Otto for its refusal to co-operate fully in securing requisite financing for two vessels. Group intends to defend itself against the claim and seek further advice on counter-claims.
*Hiap Seng: 87% owned subsidiary awarded two contracts worth ~US$11m for the provision of offshore gas compressor packages. Completion is expected by Mar ’16.
*Singapore Windsor: Secured lease agreement with Ooredoo Myanmar to construct and install at least 500 telecommunications tower units in Myanmar, which will subsequently be leased and managed for Ooredoo over a 15 year term. Construction cost is estimated at US$39m, and works are expected to start in Jul '15 for an 18 month period.
*Profit warnings:
- Blumont: Expects net losses for 1Q15 due to fair value adjustments of its investments in financial assets.
- Global Palm Resources: Expects substantially lower
Thursday, May 7, 2015
Wednesday, May 6, 2015
Noble (technical)
Noble - Technical appear to be hooking downwards, indicating further downside ahead. Share price is now testing its 20 day MA of $0.87, where a close below the level could signal further downside ahead.
SGX
SGX: SGX saw a pick-up in trading volumes across its securities and derivatives platforms in Apr ’15.
Latest data revealed that total value of securities traded rose to $26.5b (+3% y/y, +6% m/m), with the average daily traded value climbing 3% y/y and 11% m/m to $1.3b. This was achieved on a achieved on the back of a market rally in small and mid caps. For the month, there were three IPOs and 39 bond listings, raising more than $11.1b.
Derivatives volume soared to 16m contracts (+89% y/y, +10% m/m), with daily trading volume of 781,782 contracts (+87% y/y, +15% m/m). Notable performers were the SGX equity index futures totalling 14.6m contracts (+105% y/y, +10% m/m), and other Asian equity contracts, which showed double digit m/m growth.
Commodities delivered a solid performance, with total AsiaClear volume of 591,263 contracts, surging more than three-fold, and up 8% m/m. The most significant performer was in iron ore derivatives and SICOM rubber futures.
SGX continues to focus on a series of transformational initiatives in the securities market, including new product launches, international distribution and moves to strengthen its regulatory and risk management capabilities.
The exchange remains on the look out for further tie-ups and JVs in the commodities and derivatives markets as it attempts to diversify from its traditional securities business and widen its product offering.
At the current price, SGX trades at 26.2x forward P/E, in line with its regional peers. Overall, the street has 7 Buy, 9 Hold and 4 Sell ratings with a consensus TP of $8.26.
Latest data revealed that total value of securities traded rose to $26.5b (+3% y/y, +6% m/m), with the average daily traded value climbing 3% y/y and 11% m/m to $1.3b. This was achieved on a achieved on the back of a market rally in small and mid caps. For the month, there were three IPOs and 39 bond listings, raising more than $11.1b.
Derivatives volume soared to 16m contracts (+89% y/y, +10% m/m), with daily trading volume of 781,782 contracts (+87% y/y, +15% m/m). Notable performers were the SGX equity index futures totalling 14.6m contracts (+105% y/y, +10% m/m), and other Asian equity contracts, which showed double digit m/m growth.
Commodities delivered a solid performance, with total AsiaClear volume of 591,263 contracts, surging more than three-fold, and up 8% m/m. The most significant performer was in iron ore derivatives and SICOM rubber futures.
SGX continues to focus on a series of transformational initiatives in the securities market, including new product launches, international distribution and moves to strengthen its regulatory and risk management capabilities.
The exchange remains on the look out for further tie-ups and JVs in the commodities and derivatives markets as it attempts to diversify from its traditional securities business and widen its product offering.
At the current price, SGX trades at 26.2x forward P/E, in line with its regional peers. Overall, the street has 7 Buy, 9 Hold and 4 Sell ratings with a consensus TP of $8.26.
Q&M Dental
Q&M Dental: Q&M Dental is exploring a possible spin-off of its China and Malaysian subsidiaries, via a listing on a reputable stock exchange. The group has hired professional parties to explore the proposed listing.
Q&M believes that the proposed listing would better reflect the value of the dental healthcare business and will also provide its subsidiaries access to an additional source of funding to capitalise on growth opportunities and increase the scale of its operations in China and Malaysia.
Maybank-KE has a Buy rating on the counter with a TP of $0.92, based on 45x FY16 P/E. This is 1SD above its five-year mean, capturing Q&M’s strong earnings growth trajectory, M&A record and scarcity value.
With $42m of cash untapped from its recent MTN, market watchers are expecting more acquisitions to come. Opportunities are abound also in the Singapore dental market, which remains very fragmented with 630 dental clinics and 1,800 dentists.
Q&M believes that the proposed listing would better reflect the value of the dental healthcare business and will also provide its subsidiaries access to an additional source of funding to capitalise on growth opportunities and increase the scale of its operations in China and Malaysia.
Maybank-KE has a Buy rating on the counter with a TP of $0.92, based on 45x FY16 P/E. This is 1SD above its five-year mean, capturing Q&M’s strong earnings growth trajectory, M&A record and scarcity value.
With $42m of cash untapped from its recent MTN, market watchers are expecting more acquisitions to come. Opportunities are abound also in the Singapore dental market, which remains very fragmented with 630 dental clinics and 1,800 dentists.
PACC Offshore
PACC Offshore: 1Q15 results were off track . Net profit crashed to almost breakeven at US$0.02m from US$36.7m in !Q14, largely due to the absence of gain of sale from five vessels (US$25.9m) booked in the previous year. This compares to Maybank-KE's FY15 profit estimates of US$70.7m and street forecast of US$98m.
Revenue rose 9% y/y to US$57.6m, mainly lifted by the OSV (+13%) and offshore accommodation (+208%) segments, but weighed by weaker transportation & installation (-55%) and harbour services & emergency response (-10%) units.
Overall gross margin dived to 13.9% from 30%, as charter and utilisation rates continue to come under pressure across most segments. The exception was the offshore accommodation (OA) segment, which commenced the charter of POSH Xanadu and POSH Endurance.
Bottom-line was further dragged by a 59% drop in JV contributions to US$1.3m, due to losses incurred in Mexico from vessels prior to their ownership transfer to the group subsidiaries.
Going forward, management guides that oil price continues to remain weak and consequently, the group does not expect any significant demand turnaround from offshore oilfield development activities. This will continue to put pressure on rates and utilisation.
Maybank-KE is maintaining its Buy with TP of $0.65 based on its depressed 0.5x P/B valuation and longer-term prospects. The house is guiding for a stronger 2H15, with US$140m worth of new charters expected to contribute from 2Q15, and a significant boost from the OA segment.
Revenue rose 9% y/y to US$57.6m, mainly lifted by the OSV (+13%) and offshore accommodation (+208%) segments, but weighed by weaker transportation & installation (-55%) and harbour services & emergency response (-10%) units.
Overall gross margin dived to 13.9% from 30%, as charter and utilisation rates continue to come under pressure across most segments. The exception was the offshore accommodation (OA) segment, which commenced the charter of POSH Xanadu and POSH Endurance.
Bottom-line was further dragged by a 59% drop in JV contributions to US$1.3m, due to losses incurred in Mexico from vessels prior to their ownership transfer to the group subsidiaries.
Going forward, management guides that oil price continues to remain weak and consequently, the group does not expect any significant demand turnaround from offshore oilfield development activities. This will continue to put pressure on rates and utilisation.
Maybank-KE is maintaining its Buy with TP of $0.65 based on its depressed 0.5x P/B valuation and longer-term prospects. The house is guiding for a stronger 2H15, with US$140m worth of new charters expected to contribute from 2Q15, and a significant boost from the OA segment.
Stratech
Stratech: PhillipCapital highlights recent developments:
Feb '15: Announced contract to install iFerret at Hong Kong International Airport (HKIA).
Apr '15: Restructured from Stratech Systems Ltd to The Stratech Group
Apr '15: Announced contract to upgrade the iFerret at Changi Airport which is estimated to contribute $1.7m revenue.
Investment Thesis:
1) Aviation safety coming under greater scrutiny. Global air traffic forecasted to grow 4.5% CAGR until 2030 (Source: ICAO). Recent aviation tragedies will likely place pressure on Aviation Authorities to tighten up on safety.
2) Adoption is inevitable, just a matter of time. The most high-profile FOD-related accident involved an Air France Concorde taking off from Paris in Jul 2000. FOD damage is estimated to cost US$4b annually from aircraft repairs & maintenance, and up to US$13b annually.
3) Key product of the iFerret appears to be gaining traction. Stratech recently announced two contracts. One for the installation of the iFerret at HKIA, and the upgrade of the iFerret at Changi Airport. The iFerret had also displaced the incumbent system at the Dubai International Airport last year.
Contingent on the successful adoption of the iFerret globally, Stratech's stock value could range from $0.04 (steady state) to $0.069 (high-growth stage) based on P/B valuation methodology.
Feb '15: Announced contract to install iFerret at Hong Kong International Airport (HKIA).
Apr '15: Restructured from Stratech Systems Ltd to The Stratech Group
Apr '15: Announced contract to upgrade the iFerret at Changi Airport which is estimated to contribute $1.7m revenue.
Investment Thesis:
1) Aviation safety coming under greater scrutiny. Global air traffic forecasted to grow 4.5% CAGR until 2030 (Source: ICAO). Recent aviation tragedies will likely place pressure on Aviation Authorities to tighten up on safety.
2) Adoption is inevitable, just a matter of time. The most high-profile FOD-related accident involved an Air France Concorde taking off from Paris in Jul 2000. FOD damage is estimated to cost US$4b annually from aircraft repairs & maintenance, and up to US$13b annually.
3) Key product of the iFerret appears to be gaining traction. Stratech recently announced two contracts. One for the installation of the iFerret at HKIA, and the upgrade of the iFerret at Changi Airport. The iFerret had also displaced the incumbent system at the Dubai International Airport last year.
Contingent on the successful adoption of the iFerret globally, Stratech's stock value could range from $0.04 (steady state) to $0.069 (high-growth stage) based on P/B valuation methodology.
Reits
Reits: MAS published a consultation paper on a set of proposed changes to the S-REIT market last Oct and Nomura believes the outcome could be announced in May. IPT and alignment between managers and unitholders appear to be the key focus of the proposed changes.
Assessing the S-REITs under Nomura's coverage based on the key proposed changes on 1) performance fee structure, 2) leverage limit, 3) development limit, 4) income support arrangements, and 5) unit buyback mandates, if adopted, key conclusions are:
Potential positive impacts:
1: CapitaMall Trust (CT). FY16-17F DPU could be raised by 2.5-4.6% if a different performance fee structure is adopted. CT could also take up a bigger stake in the redevelopment of an existing property if a higher limit on property development is set.
2: Starhill Global REIT (SGREIT). Nomura thinks SGREIT could also benefit from a higher limit on property development. In addition, proposed changes to unit buyback mandates could also be a positive since the stock is trading at a discount to NAV.
Potential negative impact:
Keppel REIT (KREIT). FY16-17F DPU could be cut by 1.1% if a different performance fee structure is adopted. The proposed changes to leverage limit and income support arrangements could also have a negative impact given the relatively high gearing of 42.4%.
Assessing the S-REITs under Nomura's coverage based on the key proposed changes on 1) performance fee structure, 2) leverage limit, 3) development limit, 4) income support arrangements, and 5) unit buyback mandates, if adopted, key conclusions are:
Potential positive impacts:
1: CapitaMall Trust (CT). FY16-17F DPU could be raised by 2.5-4.6% if a different performance fee structure is adopted. CT could also take up a bigger stake in the redevelopment of an existing property if a higher limit on property development is set.
2: Starhill Global REIT (SGREIT). Nomura thinks SGREIT could also benefit from a higher limit on property development. In addition, proposed changes to unit buyback mandates could also be a positive since the stock is trading at a discount to NAV.
Potential negative impact:
Keppel REIT (KREIT). FY16-17F DPU could be cut by 1.1% if a different performance fee structure is adopted. The proposed changes to leverage limit and income support arrangements could also have a negative impact given the relatively high gearing of 42.4%.
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