Parent Fincantieri has returned to the table with its second cash offer at $0.24/share or 4.4% premium to the last close, for the Norwegian OSV shipbuilder.
Back in 2013, Italian-listed shipbuilding group Fincantieri tried to take Vard (formerly known as STX OSV) private at $1.22/share during its heydays, before the oil market took a turn for the worse in 2H14.
Since then, Vard has fallen 90% to a low of $0.124 in Feb 2016, before recovering to its last closing price of $0.23.
The cash offer of $0.24/share values Vard at its historical -1sd of 0.67x P/B. Maybank KE views the offer price as fair in the current environment, where many related peers are trading at 0.3-0.5x.
As at 13 Nov, Fincantieri owns 55.6% of Vard and the offer will turn unconditional upon valid acceptances of over 90%.
In the latest 3Q16 results released late last week, Vard reported a pick-up in activity amid its strategy to reduce its offshore O&G exposure, which could mark a bottom in its valuations.
However, shareholders marred by the experience of seeing their shareholding value dissipate over the past three years and tired of the prolonged depressed state of the industry may consider tendering their shares to the majority shareholder.
Monday, November 14, 2016
SG Market (14 Nov 16)
Expect more volatility as Asian investors are still unclear about the possible impact of a Trump presidency amid weaker currencies, oil prices and moderating credit in China. Local corporate results will wind to an end today after a largely uninspiring quarter.
Regional bourses opened mixed in Tokyo (+0.5%), Seoul (-0.1%) and Sydney (-0.8%).Technically, STI is still hemmed between its immediate resistance at 2,840 (50-dma) and near term support seen at 2,780.
Stocks to watch:
*Vard: Received cash offer of $0.24/share, or 0.67x P/B, from parent Fincantieri to take it private. As at 13 Nov, Fincantieri owns 55.6% of Vard and the offer will turn unconditional upon valid acceptances of >90%.
*ComfortDelGro: 3Q16 results met expectations, as net profit edged up to $87.3m (+2.5%), on lower fuel (-24.4%) and material (-27.1%) costs. However, revenue slipped 3.1% to $1.02b, weighed by bus (-7.3%), automotive engineering services (-10%) and adverse FX movements, which overshadowed growth in the rail business (+26.3%), while taxi operations remained flat. EBITDA margin widened slightly to 22.2% (+0.5ppt). MKE last had a Hold with TP of $2.63.
*Olam: 3Q16 results trailed estimates although core net profit slipped 20.2% to $20.5m, bringing 9M16 earnings of $261.4m (+2.3%) to 72% of FY16 street forecast. Quarter revenue rose 6% to $4.74b, buoyed by higher overall volume (+15.8%), and sales in the food category (+1.7%) and non-food segment (+32.7%). EBITDA margin was stable at 4.3%, while bottom line was dragged by higher depreciation charges (+43.5%) due to a higher fixed asset base. NAV/share at $1.8528.
*Q&M: 3Q16 core net profit grew 3% to $2.8m, bringing 9M16 earnings of $10.2m (+10%) to 65% of FY16 street estimate. Revenue jumped 22% to $29m on contribution from existing and new dental outlets in Singapore, coupled with new acquisition of dental companies in Singapore and China. MKE last had a Buy with TP of $1.08.
*Silverlake: 1QFY17 results missed despite a 2.5x jump in net profit to RM168.6m, boosted by a RM143.7m gain from partial disposal of associate Global InfoTech. Revenue slipped 3% to RM126.7m due to weaker software licensing, software project services and sale of software & hardware products. Gross margin narrowed 2ppt to 58% on a change in sales mix. NAV/share at RM0.29.
*Haw Par: 3Q16 net profit jumped 21.3% to $42.3m, on higher revenue of $49.7m (+3.3%), driven by healthcare (+7.1%) and property (+32%) divisions, but the leisure (-76.5%) business sagged on closure of Underwater World Singapore. Gross margin expanded 5.5ppt to 65.2%, while bottom line was further lifted by an absence of disposal loss. NAV/share at $10.88.
*United Engineers: 3Q16 headline net profit soared 7.2x to $134.6m, largely boosted by $122m gains from disposal of subsidiaries, including US-listed Multi-Fineline Electronix. Earnings from continuing operations climbed 10% to $11.7m on higher other income (+89%), and increased JV/associate contributions of $2.4m. However, revenue plunged 43% to $101.7m from weaker property development sales following completion of Eight Riversuites. NAV/share at $3.06.
*Cordlife: Tumbled to 3Q16 net loss of $0.6m (3Q15: $7.2m profit) amid absence of fair value and FX gains, as well as finance income. Revenue inched up 0.8% to $14.6m on increased contribution from the relatively lower value service cord tissue banking, but was smothered by higher discounts offered for its India business to stay competitive. No dividend was declared (3Q15: special DPS 13¢). NAV/share at $0.5092..
*Cogent: 3Q16 net profit rose 13% to $7.8m on firmer revenue of $34.1m (+4%), as improvements from container depot, automotive logistics and warehouse operations continued to outweigh weakness in transport management segment, which is still reeling from the depressed O&G sector. Operating margin widened 2.8ppt to 29.8% as rental expenses (-9%) trended down. NAV/share at $0.2466.
*Sarine: Turned in 3Q16 net profit of $4m (3Q15: $1.4m loss), which brought 9M16 earnings to $13m (+515%), or 65% of FY16 street estimate. Quarter revenue soared 82% to US$17.3m, buoyed by sales in Europe (+142.9%) and India (+115.2%), primarily due to increased diamond manufacturing equipment sales, including recurring revenues from Galaxy systems. Gross margin expanded to 69% (+6 ppt). NAV/share at $0.2894.
*QAF: 3Q16 net profit leapt 84% to $19.4m, mainly from the de-consolidation of Gardenia Bakeries (KL) after a 20% stake sale to 50% in Apr. Accordingly, operating costs were reduced by 16%, while bottom line was lifted by $2.7m from the former subsidiary turned JV. Revenue slipped 13% to $212.4m from the loss of KL unit but was partially mitigated by improved contribution from all other business segments on new product launches and increased market penetration, as well as higher sales volume and ASPs from Rivalea. NAV/share at $0.843.
*Oxley: 1QFY17 net profit plunged 80% to $7.1m as revenue slumped to $126.5m (-71%) due to the completion of of industrial property Ecotech@Sunview in 1QFY16. However, gross margin improved to 37.6% (+13.7ppt) from five ongoing residential and mixed-use projects, some handover units at The Royal Wharf Phase 1 and rental properties. Total unbilled contract value amounted to $2.66b, of which $1.37b will be booked in the next 12 months. Net gearing eased from 2.2x to 2.1x as the group continued to pare its debt pile, supported by stable operating cash flow of $146m. NAV/share at $0.2695.
*Hiap Hoe: 3Q16 results turned in a net profit of $13.7m (3Q15: $3m loss), stemming from a disposal gain of $20m and FX gain of $4.4m (3Q15: $2.4m loss). However, revenue slumped 48.2% to $19.9m on the absence of contribution from development properties (3Q15: $15.2m), as well as declines across rental (-27.2%), leisure (-7.6%) and hotel (-4.9%) businesses. NAV/share at $1.4607.
*Starburst: 9M16 net loss deepened to $7.8m, despite higher revenue of $18.2m (+73%), underpinned by contribution from Singapore architectural steel project Marina One, and increased contribution from firearm shooting range projects in the Middle East. However, bottom line was dragged by higher costs and provision losses (+144.5%) for projects. NAV/share at $0.1476.
*Cosco Corp: Dismal 3Q16 as net loss deepened to $102.3m (3Q15: $82.1m loss), on
1) higher impairment of trade receivables due to rising credit risk from some customers,
2) increased FX loss and
3) a jump in finance costs (+26%). Revenue tumbled to $662.3m (-30%), on weaker shipyard (-30.3%) and shipping (-21%) businesses.
NAV/share at $0.2825.
*Fu Yu: 3Q16 net profit slumped 61.2% to $1.8m, mainly on lower FX gains of $0.8m (3Q15: $3.4m) and absence of lower rental income and liquidation gain (3Q15: $0.4m). Revenue fell 13.6% to $48.1m on a slowdown in demand from Chinese customers, while gross margin contracted to 14.6% (-1.1ppts) due to fixed overhead costs. Interim DPS of 0.25¢ maintained. NAV/share at $0.225.
*Boustead Singapore: 2QFY16 net profit fell 25.9% to $7.6m, as gross margin contracted to 31.9% (-3ppts), with pressure continuing to build up. Revenue slipped 1.4% to $113.5m on declines in energy-related engineering (-27.8%) and geo-spatial technology (-1.5%) segments, mitigated by growth in its real estate solutions (+15.6%) segment. Interim DPS shaved to 0.5¢ (2QFY17: 1¢). NAV/share at $0.583..
*SUTL: 3Q16 core net profit rose 8% to $0.5m, while revenue inched up 3% to $6.4m, on higher sale of goods and services (+4%), although membership-related fees slipped (-4%). NAV/share at $0.604.
*Food Empire: 3Q16 net profit surged 782.3% from a low base to US$5.8m (3Q15: $0.6m), as FX loss narrowed to US$0.2m from US$6.4m previously. Revenue grew 10.7% to US$68.3m, lifted by increased sales to Russia (+7.4%), Indochina (+36%) and other markets (+38.1%), while gross margin expanded 1.4ppt to 38.3%. NAV/share at US$0.283.
*EuroSports: 1HFY17 net loss widened to $3.4m (1HFY16: $1.7m loss), on a 9.7% drop in revenue to $29.4m mainly on fewer sales of new Lamborghini models (10 vs 1HFY16’s 15). Gross margin also reduced from 15.2% to 12.9% on lower profitability of sales for pre-owned automobiles. NAV/share at 6.43¢.
*GSS Energy: 3Q16 net profit halved to $1.5m (-51.7%), on absence of a $3m land compensation in China. Revenue rose 15.1% to $20.2m from higher orders in the precision engineering segment, although gross profit margin contracted to 23.8% (-3.6ppt) due to changes in product mix and price adjustment. NAV/share at 7.23¢.
*Nordic: 3Q16 net profit grew 12.1% to $3.6m on stronger gross margin of 31.4% (+3ppts), led by increased profitability in maintenance services. Revenue slipped 1.5% to $21.4m on lower contributions from project services (-12.4%). Bottomline was supported by declines in marketing & distribution (-58.1%) and admin (-9.4%) expenses. NAV/share at $0.16.
*Dyna-Mac: 3Q16 results swung back into net loss of $1m ($0.5m profit), as revenue tumbled to $34.2m (-59.2%) due to lower workload. Despite that, gross margin expanded to 32.8% (+18ppts) on higher contribution from order variation, while bottom line was dragged by a tax expense of $0.3m (3Q15: $1.5m credit). NAV/share at $0.172.
*Trek 2000: 3Q16 net profit spiked 70.7% from a low base to US$1.8m, boosted by increased gross margin of 11.1% (+2.4ppt) attributed to cost containment and lower R&D expenses. Revenue fell 1.9% to US$43.2m from decreased sales in customer solutions division and lower licensing fees. NAV/share at US$0.174.
*iX Biopharma: Narrowed 1QFY17 net losses to $0.8m (1QFY16: $2.4m), mainly from R&D tax incentives of $0.5m (1QFY16: $0.1m). Revenue slipped to $1.5m (-1.3%) on a decline in chemical analysis (-1.6%), while gross margin contracted to 22.9% (-8.3ppts) on a one-off cost for operating efficiency. NAV/share at 6.5¢.
*YuuZoo: 3Q16 jumped 50.8% to $8.4m on a $2.5m swing to FX gains of $1.3m ($3Q15: $1.2m loss), as well as lower cost of services (-53.5%), amortisation (-72%) and employee benefits (-35.6%). However, revenue fell 15.5% to $14.6m on reduced e-commerce revenue (-52.9%) and franchise sales (-8.2%). Group continued to bleed cash with operating cash outflow of $1.7m (3Q15: $3.4m inflow). Separately, it announced the resignation of its CEO after slightly more than one year at the helm. NAV/share at $0.201.
*SunMoon Food: Swung into 3Q16 net loss of $1.5m (3Q15: $0.4m profit), as gross margin tumbled to 1.1% (-6.5ppts) due to the return of frozen durian. Revenue jumped 36% to $8m on increased sales in Indonesia after the government lifted trade restrictions on fresh fruits from China. NAV/share of $2.16¢..
*Ramba: 3Q16 net loss widened to $3.7m (3Q15: $1.8m loss), on lower revenue of $13.6m (-12.7%) from reduced logistics volume. Bottom line was further dragged by one-time costs relating to a legal proceeding and lower FX gains. NAV/share of 11.58¢.
*IHH Healthcare: Divesting 29.9% stake (20.7m shares) in PCH (formerly known as Parkway China Holdings) to Taikang Insurance, for Rmb 291.1m (RM182.8m). *Silverlake Axis: Sold a block of 4m Global InfoTech shares on ChiNex via block trade at Rmb24.65/share, expected to reap RM47.5m gain from the sale.
*iFAST: Acquired Hong Kong insurance brokerage Canadian Financial Consultants for HK$5.4m. The deal is intended to expand the range of products available on its investment platform.
*Cosco Shipping: 51%-owned subsidiary Cosco Guangdong Shipyard has mutually agreed with rig owner Edrill 3, to defer delivery for a semi-submersible tender assist drilling rig by one year to 30 Nov 2017.
*ValueMax: Granted a $42m bridging loan facility as part of its moneylending business.
*Global Yellow Pages: Disposed 21.6m shares of Yamada Green Resources in a married deal at $0.31/share to substantial shareholder Sam Goi Seng Hui. Net proceeds of $6.7m is intended for general working capital purposes and/ or investment opportunities in the property market.
*QT Vascular: Secured a legal victory over Angioscore, as the Federal Court of Appeals denied a petition for a rehearing and maintained its reversal of a previous judgement for US$20m in damages payable to AngioScore.
*Swissco: Guided for losses in 3Q16 and 9M16 results, due to impairments on its fleet of vessels, rigs and receivables, as well as two 50% owned drilling rigs which continue to be off-charter.
Regional bourses opened mixed in Tokyo (+0.5%), Seoul (-0.1%) and Sydney (-0.8%).Technically, STI is still hemmed between its immediate resistance at 2,840 (50-dma) and near term support seen at 2,780.
Stocks to watch:
*Vard: Received cash offer of $0.24/share, or 0.67x P/B, from parent Fincantieri to take it private. As at 13 Nov, Fincantieri owns 55.6% of Vard and the offer will turn unconditional upon valid acceptances of >90%.
*ComfortDelGro: 3Q16 results met expectations, as net profit edged up to $87.3m (+2.5%), on lower fuel (-24.4%) and material (-27.1%) costs. However, revenue slipped 3.1% to $1.02b, weighed by bus (-7.3%), automotive engineering services (-10%) and adverse FX movements, which overshadowed growth in the rail business (+26.3%), while taxi operations remained flat. EBITDA margin widened slightly to 22.2% (+0.5ppt). MKE last had a Hold with TP of $2.63.
*Olam: 3Q16 results trailed estimates although core net profit slipped 20.2% to $20.5m, bringing 9M16 earnings of $261.4m (+2.3%) to 72% of FY16 street forecast. Quarter revenue rose 6% to $4.74b, buoyed by higher overall volume (+15.8%), and sales in the food category (+1.7%) and non-food segment (+32.7%). EBITDA margin was stable at 4.3%, while bottom line was dragged by higher depreciation charges (+43.5%) due to a higher fixed asset base. NAV/share at $1.8528.
*Q&M: 3Q16 core net profit grew 3% to $2.8m, bringing 9M16 earnings of $10.2m (+10%) to 65% of FY16 street estimate. Revenue jumped 22% to $29m on contribution from existing and new dental outlets in Singapore, coupled with new acquisition of dental companies in Singapore and China. MKE last had a Buy with TP of $1.08.
*Silverlake: 1QFY17 results missed despite a 2.5x jump in net profit to RM168.6m, boosted by a RM143.7m gain from partial disposal of associate Global InfoTech. Revenue slipped 3% to RM126.7m due to weaker software licensing, software project services and sale of software & hardware products. Gross margin narrowed 2ppt to 58% on a change in sales mix. NAV/share at RM0.29.
*Haw Par: 3Q16 net profit jumped 21.3% to $42.3m, on higher revenue of $49.7m (+3.3%), driven by healthcare (+7.1%) and property (+32%) divisions, but the leisure (-76.5%) business sagged on closure of Underwater World Singapore. Gross margin expanded 5.5ppt to 65.2%, while bottom line was further lifted by an absence of disposal loss. NAV/share at $10.88.
*United Engineers: 3Q16 headline net profit soared 7.2x to $134.6m, largely boosted by $122m gains from disposal of subsidiaries, including US-listed Multi-Fineline Electronix. Earnings from continuing operations climbed 10% to $11.7m on higher other income (+89%), and increased JV/associate contributions of $2.4m. However, revenue plunged 43% to $101.7m from weaker property development sales following completion of Eight Riversuites. NAV/share at $3.06.
*Cordlife: Tumbled to 3Q16 net loss of $0.6m (3Q15: $7.2m profit) amid absence of fair value and FX gains, as well as finance income. Revenue inched up 0.8% to $14.6m on increased contribution from the relatively lower value service cord tissue banking, but was smothered by higher discounts offered for its India business to stay competitive. No dividend was declared (3Q15: special DPS 13¢). NAV/share at $0.5092..
*Cogent: 3Q16 net profit rose 13% to $7.8m on firmer revenue of $34.1m (+4%), as improvements from container depot, automotive logistics and warehouse operations continued to outweigh weakness in transport management segment, which is still reeling from the depressed O&G sector. Operating margin widened 2.8ppt to 29.8% as rental expenses (-9%) trended down. NAV/share at $0.2466.
*Sarine: Turned in 3Q16 net profit of $4m (3Q15: $1.4m loss), which brought 9M16 earnings to $13m (+515%), or 65% of FY16 street estimate. Quarter revenue soared 82% to US$17.3m, buoyed by sales in Europe (+142.9%) and India (+115.2%), primarily due to increased diamond manufacturing equipment sales, including recurring revenues from Galaxy systems. Gross margin expanded to 69% (+6 ppt). NAV/share at $0.2894.
*QAF: 3Q16 net profit leapt 84% to $19.4m, mainly from the de-consolidation of Gardenia Bakeries (KL) after a 20% stake sale to 50% in Apr. Accordingly, operating costs were reduced by 16%, while bottom line was lifted by $2.7m from the former subsidiary turned JV. Revenue slipped 13% to $212.4m from the loss of KL unit but was partially mitigated by improved contribution from all other business segments on new product launches and increased market penetration, as well as higher sales volume and ASPs from Rivalea. NAV/share at $0.843.
*Oxley: 1QFY17 net profit plunged 80% to $7.1m as revenue slumped to $126.5m (-71%) due to the completion of of industrial property Ecotech@Sunview in 1QFY16. However, gross margin improved to 37.6% (+13.7ppt) from five ongoing residential and mixed-use projects, some handover units at The Royal Wharf Phase 1 and rental properties. Total unbilled contract value amounted to $2.66b, of which $1.37b will be booked in the next 12 months. Net gearing eased from 2.2x to 2.1x as the group continued to pare its debt pile, supported by stable operating cash flow of $146m. NAV/share at $0.2695.
*Hiap Hoe: 3Q16 results turned in a net profit of $13.7m (3Q15: $3m loss), stemming from a disposal gain of $20m and FX gain of $4.4m (3Q15: $2.4m loss). However, revenue slumped 48.2% to $19.9m on the absence of contribution from development properties (3Q15: $15.2m), as well as declines across rental (-27.2%), leisure (-7.6%) and hotel (-4.9%) businesses. NAV/share at $1.4607.
*Starburst: 9M16 net loss deepened to $7.8m, despite higher revenue of $18.2m (+73%), underpinned by contribution from Singapore architectural steel project Marina One, and increased contribution from firearm shooting range projects in the Middle East. However, bottom line was dragged by higher costs and provision losses (+144.5%) for projects. NAV/share at $0.1476.
*Cosco Corp: Dismal 3Q16 as net loss deepened to $102.3m (3Q15: $82.1m loss), on
1) higher impairment of trade receivables due to rising credit risk from some customers,
2) increased FX loss and
3) a jump in finance costs (+26%). Revenue tumbled to $662.3m (-30%), on weaker shipyard (-30.3%) and shipping (-21%) businesses.
NAV/share at $0.2825.
*Fu Yu: 3Q16 net profit slumped 61.2% to $1.8m, mainly on lower FX gains of $0.8m (3Q15: $3.4m) and absence of lower rental income and liquidation gain (3Q15: $0.4m). Revenue fell 13.6% to $48.1m on a slowdown in demand from Chinese customers, while gross margin contracted to 14.6% (-1.1ppts) due to fixed overhead costs. Interim DPS of 0.25¢ maintained. NAV/share at $0.225.
*Boustead Singapore: 2QFY16 net profit fell 25.9% to $7.6m, as gross margin contracted to 31.9% (-3ppts), with pressure continuing to build up. Revenue slipped 1.4% to $113.5m on declines in energy-related engineering (-27.8%) and geo-spatial technology (-1.5%) segments, mitigated by growth in its real estate solutions (+15.6%) segment. Interim DPS shaved to 0.5¢ (2QFY17: 1¢). NAV/share at $0.583..
*SUTL: 3Q16 core net profit rose 8% to $0.5m, while revenue inched up 3% to $6.4m, on higher sale of goods and services (+4%), although membership-related fees slipped (-4%). NAV/share at $0.604.
*Food Empire: 3Q16 net profit surged 782.3% from a low base to US$5.8m (3Q15: $0.6m), as FX loss narrowed to US$0.2m from US$6.4m previously. Revenue grew 10.7% to US$68.3m, lifted by increased sales to Russia (+7.4%), Indochina (+36%) and other markets (+38.1%), while gross margin expanded 1.4ppt to 38.3%. NAV/share at US$0.283.
*EuroSports: 1HFY17 net loss widened to $3.4m (1HFY16: $1.7m loss), on a 9.7% drop in revenue to $29.4m mainly on fewer sales of new Lamborghini models (10 vs 1HFY16’s 15). Gross margin also reduced from 15.2% to 12.9% on lower profitability of sales for pre-owned automobiles. NAV/share at 6.43¢.
*GSS Energy: 3Q16 net profit halved to $1.5m (-51.7%), on absence of a $3m land compensation in China. Revenue rose 15.1% to $20.2m from higher orders in the precision engineering segment, although gross profit margin contracted to 23.8% (-3.6ppt) due to changes in product mix and price adjustment. NAV/share at 7.23¢.
*Nordic: 3Q16 net profit grew 12.1% to $3.6m on stronger gross margin of 31.4% (+3ppts), led by increased profitability in maintenance services. Revenue slipped 1.5% to $21.4m on lower contributions from project services (-12.4%). Bottomline was supported by declines in marketing & distribution (-58.1%) and admin (-9.4%) expenses. NAV/share at $0.16.
*Dyna-Mac: 3Q16 results swung back into net loss of $1m ($0.5m profit), as revenue tumbled to $34.2m (-59.2%) due to lower workload. Despite that, gross margin expanded to 32.8% (+18ppts) on higher contribution from order variation, while bottom line was dragged by a tax expense of $0.3m (3Q15: $1.5m credit). NAV/share at $0.172.
*Trek 2000: 3Q16 net profit spiked 70.7% from a low base to US$1.8m, boosted by increased gross margin of 11.1% (+2.4ppt) attributed to cost containment and lower R&D expenses. Revenue fell 1.9% to US$43.2m from decreased sales in customer solutions division and lower licensing fees. NAV/share at US$0.174.
*iX Biopharma: Narrowed 1QFY17 net losses to $0.8m (1QFY16: $2.4m), mainly from R&D tax incentives of $0.5m (1QFY16: $0.1m). Revenue slipped to $1.5m (-1.3%) on a decline in chemical analysis (-1.6%), while gross margin contracted to 22.9% (-8.3ppts) on a one-off cost for operating efficiency. NAV/share at 6.5¢.
*YuuZoo: 3Q16 jumped 50.8% to $8.4m on a $2.5m swing to FX gains of $1.3m ($3Q15: $1.2m loss), as well as lower cost of services (-53.5%), amortisation (-72%) and employee benefits (-35.6%). However, revenue fell 15.5% to $14.6m on reduced e-commerce revenue (-52.9%) and franchise sales (-8.2%). Group continued to bleed cash with operating cash outflow of $1.7m (3Q15: $3.4m inflow). Separately, it announced the resignation of its CEO after slightly more than one year at the helm. NAV/share at $0.201.
*SunMoon Food: Swung into 3Q16 net loss of $1.5m (3Q15: $0.4m profit), as gross margin tumbled to 1.1% (-6.5ppts) due to the return of frozen durian. Revenue jumped 36% to $8m on increased sales in Indonesia after the government lifted trade restrictions on fresh fruits from China. NAV/share of $2.16¢..
*Ramba: 3Q16 net loss widened to $3.7m (3Q15: $1.8m loss), on lower revenue of $13.6m (-12.7%) from reduced logistics volume. Bottom line was further dragged by one-time costs relating to a legal proceeding and lower FX gains. NAV/share of 11.58¢.
*IHH Healthcare: Divesting 29.9% stake (20.7m shares) in PCH (formerly known as Parkway China Holdings) to Taikang Insurance, for Rmb 291.1m (RM182.8m). *Silverlake Axis: Sold a block of 4m Global InfoTech shares on ChiNex via block trade at Rmb24.65/share, expected to reap RM47.5m gain from the sale.
*iFAST: Acquired Hong Kong insurance brokerage Canadian Financial Consultants for HK$5.4m. The deal is intended to expand the range of products available on its investment platform.
*Cosco Shipping: 51%-owned subsidiary Cosco Guangdong Shipyard has mutually agreed with rig owner Edrill 3, to defer delivery for a semi-submersible tender assist drilling rig by one year to 30 Nov 2017.
*ValueMax: Granted a $42m bridging loan facility as part of its moneylending business.
*Global Yellow Pages: Disposed 21.6m shares of Yamada Green Resources in a married deal at $0.31/share to substantial shareholder Sam Goi Seng Hui. Net proceeds of $6.7m is intended for general working capital purposes and/ or investment opportunities in the property market.
*QT Vascular: Secured a legal victory over Angioscore, as the Federal Court of Appeals denied a petition for a rehearing and maintained its reversal of a previous judgement for US$20m in damages payable to AngioScore.
*Swissco: Guided for losses in 3Q16 and 9M16 results, due to impairments on its fleet of vessels, rigs and receivables, as well as two 50% owned drilling rigs which continue to be off-charter.
Friday, November 11, 2016
Noble
Noble swung into 3Q16 net loss of US$28.1m (3Q15: US$24.7m profit, 2Q16: US$54.9m loss), crimped by working capital constraints, which restricted activity in the energy segment amid a rising price environment.
This brought 9M16 loss to US$42.5m (9M15: US$193.9m profit), a far cry from full year consensus profit forecast of US$115.5m.
For the quarter, revenue tumbled 34.8% to US$11.44b, due to lower sales tonnage of 56.8mt (-20.1%), as well as lower prices across the energy spectrum.
Segment performance:
Energy - Revenue: US$10.25b (-30% y/y, -1.4% q/q); operating income: US$11m (-95% y/y, -92% q/q)
Top line was weighed by depressed oil prices, further dragged by reduced volume of 38.9mt (-5%). Operationally, working capital constraints restricted trading activity but are expected to moderate going into 2017 following significant progress to bolster liquidity.
Gas & Power - Revenue: US$151m (-22% y/y, -0.7% q/q); operating income: US$75m (-17% y/y, +44% q/q)
Sales was dragged by lower volume of 92.5m MWh (-8%) and the ongoing sale of Noble Americas Energy Solutions as well as its European gas & power book. Operating margin improved to 49.7% (+15.5ppt) on higher US natural gas and power prices due to increased power demand from rising temperatures.
Mining & Metals - Revenue: US$965m (-48% y/y, -32.2% q/q); operating income: US$117m (3Q15: US$30m loss, 2Q16: US$4m)
Top line performance was affected by the restructuring and rationalisation of the business, as well as working capital constraints. However, operating income improved, bolstered by increased volume of 7.6mt (+10% y/y, +18.8% q/q), led by Chinese demand in raw material imports, including iron ore, metallurgical coke, bulk ores and alloys, due to the resurgent real estate sector.
At group level, operating cash flow remains negative at US$46m (2Q16: US$84m outflow) although the bleeding appears to have abated. Following the recent rights issue, adjusted net debt (less readily marketable inventory) has fallen to US$1.9b (2Q16: US$2.4b), with headroom now at US$1.2b from US$0.8b in 2Q16.
With the upcoming sale of Noble Americas Energy Solutions scheduled to complete in Dec, liquidity is expected to improve further, easing the belt-tightening on the commodity trader.
At the current price, Noble is currently trading at 0.46x P/B. The street has 2 Buy and 5 Hold ratings on the stock, with average TP of $0.27.
Latest broker ratings:
Morgan Stanley retains Overweight with TP of $0.23
Credit Suisse maintains Neutral and raises TP to $0.21 from $0.15
This brought 9M16 loss to US$42.5m (9M15: US$193.9m profit), a far cry from full year consensus profit forecast of US$115.5m.
For the quarter, revenue tumbled 34.8% to US$11.44b, due to lower sales tonnage of 56.8mt (-20.1%), as well as lower prices across the energy spectrum.
Segment performance:
Energy - Revenue: US$10.25b (-30% y/y, -1.4% q/q); operating income: US$11m (-95% y/y, -92% q/q)
Top line was weighed by depressed oil prices, further dragged by reduced volume of 38.9mt (-5%). Operationally, working capital constraints restricted trading activity but are expected to moderate going into 2017 following significant progress to bolster liquidity.
Gas & Power - Revenue: US$151m (-22% y/y, -0.7% q/q); operating income: US$75m (-17% y/y, +44% q/q)
Sales was dragged by lower volume of 92.5m MWh (-8%) and the ongoing sale of Noble Americas Energy Solutions as well as its European gas & power book. Operating margin improved to 49.7% (+15.5ppt) on higher US natural gas and power prices due to increased power demand from rising temperatures.
Mining & Metals - Revenue: US$965m (-48% y/y, -32.2% q/q); operating income: US$117m (3Q15: US$30m loss, 2Q16: US$4m)
Top line performance was affected by the restructuring and rationalisation of the business, as well as working capital constraints. However, operating income improved, bolstered by increased volume of 7.6mt (+10% y/y, +18.8% q/q), led by Chinese demand in raw material imports, including iron ore, metallurgical coke, bulk ores and alloys, due to the resurgent real estate sector.
At group level, operating cash flow remains negative at US$46m (2Q16: US$84m outflow) although the bleeding appears to have abated. Following the recent rights issue, adjusted net debt (less readily marketable inventory) has fallen to US$1.9b (2Q16: US$2.4b), with headroom now at US$1.2b from US$0.8b in 2Q16.
With the upcoming sale of Noble Americas Energy Solutions scheduled to complete in Dec, liquidity is expected to improve further, easing the belt-tightening on the commodity trader.
At the current price, Noble is currently trading at 0.46x P/B. The street has 2 Buy and 5 Hold ratings on the stock, with average TP of $0.27.
Latest broker ratings:
Morgan Stanley retains Overweight with TP of $0.23
Credit Suisse maintains Neutral and raises TP to $0.21 from $0.15
SG Market (11 Nov 16)
The market is likely to be swept up by expectations of a US reflationary theme under a Trump presidency, which could revive the battered commodity and resource sectors.
Regional bourses gapped up in Tokyo (+0.9%), Seoul (-0.9%) and Sydney (+0.4%).Technically, STI could test its immediate resistance at 2,840 (50-dma), with underlying support seen at 2,780.
Stocks to watch:
*Noble: Swung into 3Q16 net loss of US$28.1m (3Q15: US$24.7m profit, 2Q16: US$54.9m loss), as revenue tumbled 34.8% to US$11.4b due to lower sales tonnage (-20.1%). While operating margin of supply chains inched up 0.1ppt to 1.76%, bottom line was weighed by higher admin costs (+44%), and loss from discontinuing businesses (US$60m). Operating cash flow remains negative, but adjusted net debt has been pared down to US$1.9b (2Q16: US$2.4b, FY15: US$2.26b), with improved liquidity headroom of US$1.2b from US$0.8b in 2Q16. NAV/share at US$0.30.
*Wilmar: 3Q16 results missed although core net profit rose 9.8% to US$384.9m on improved profitability at downstream businesses tropical oil segment (+80.7%) and oilseeds and grains (+1.9%), but sugar (-20.6%) was watered down by wet weather. Revenue rose 4.1% to US$11.1b on stronger commodity prices, despite reduced sales volume for upstream products. EBITDA margin expanded 1.8ppt to 7.2% on the shift towards the more profitable downstream segment. NAV/share at US$2.264.
*SATS: 2QFY17 net profit of $62.1m (+4%) was in line as revenue grew 3.7% to $438.5m on stronger contribution from food solutions (+4%) and gateway solutions (+3.4%). Operating margin expanded to 14.5%(+0.5ppts) on reduced cost of raw materials (-5%), as well as lower company premise & utilities expenses (-1.8%). Interim DPS raised to $0.06 (2QFY16: $0.05). MKE maintains Sell with TP of $3.76 on stretched valuations.
*Lippo Malls Trust: 3Q16 DPU of 0.86¢ (+11.7%) came in line, as revenue ($47m, +6.6%) and NPI ($43.3m, +7.6%) were bolstered by higher rents and increased carpark income. Occupancy stood was steady at 94.8%, with WALE of 4.63 years, while aggregate leverage stood at 32.7% (-3ppt q/q). NAV/unit at $0.39.
*Croesus Retail Trust: 1QFY17 DPU of 1.79¢ (+9.8%) came in line, as revenue surged to ¥3.13b (+55.8%), mainly led by new contributions from Torius (acquired in Oct '15), Fuji Grand Natalie (Apr '16) and Mallage Saga and Feeeal Asahikawa (May '16). NPI rose at a slower pace to ¥1.60b (+29.5%) due to higher expense ratios at the new malls. Portfolio occupancy remained healthy at 97.8% (-0.3ppt q/q), with WALE at 6.8 years. Aggregate leverage eased to 44.6% (-0.7ppt q/q), with average debt cost and tenor stable at 1.93% and 2.2 years, respectively. NAV/share at ¥75.14.
*UMS: 3Q16 net profit fell 20% to $6.8m, on a 15% drop in revenue to $26.1m due to reduced semiconductor sales. While gross margin expanded 2ppt to 57% from lower input costs, bottom line was weighed by an inventory provision of $1m, and reduced FX gains. Kept interim DPS at 1¢. NAV/share at $0.4512.
*UOL: 3Q16 net profit of $87.1m (-14%) missed, on an adverse $14.2m swing in JV loss to $3.9m. Revenue grew to $393.4m (+11%) on broad-based growth in property development (+19%), property investments (+2%), hotel operations (+5%) and dividend income (+2%), although gross margin slipped to 33% (-6ppts) on lower profitability in property development. NAV/share at $9.91..
*Ho Bee Land: 3Q16 net profit leapt to $26.7m (+31.8%), as revenue surged to $46.9m (44.4%) from sales recognition of two residential development projects in Melbourne and Gold Coast, Australia. However, growth at the bottom line was pared by an absence of $6.9m gain from investment property disposal. NAV/share at $4.17.
*Ying Li: 3Q16 fell to almost breakeven (3Q15 profit: Rmb2.9m) on lower interest income, bringing 9M16 net profit to Rmb21.8m or 13% of FY16 street estimate. Revenue surged to Rmb251m (+124.4%) from increased handovers for lower margin residential project San Ya Wan. Consequently, gross margin shrank 31.2ppt to 24%. Net asset value at Rmb1.94.
*Vard: 3Q16 continue to linger in the red with net loss of NOK80m (3Q15: NOK486m loss), bringing 9M16 loss to NOK96m versus FY16 street forecast of NOK138m loss. For the quarter, revenue slumped 34% to NOK1,503m due to reduced activity at its shipyards and cessation of operations in Vard Niterói, while EBITDA turned around to NOK33m (3Q15: NOK467m loss) from absence of loss provisions. Order book jumped to NOK14.08b (2Q16: NOK11.93b). NAV/share at $0.36.
*Parkson Retail Asia: Dismal 1QFY17 as it swung to a net loss of $5.2m (1QFY16: $49.5m profit), due to the absence of disposal gain (1QFY16: $46m). While revenue inched up to $93.3m (+0.7%) on increased direct sale of goods, same store sales across key markets declined between 6.6 and 28.2%. NAV/share at $0.23.
*Aspial: 9M16 net profit more than doubled to $9.4m (+113%), helped by a favorable FX swing of $19.3m. Revenue increased to $450.8m (+33%) on improved real estate (+57.2%) and financial service (+29.6%) businesses. but gross margin tumbled to 25.7% (-7.9ppt), on higher material and subcontract costs outpaced top line growth. NAV/share at $0.1655.
*Straco: 3Q16 net profit slipped 3.6% to $22.7m on a softer revenue of $47.6m (-3.4%), weighed by a contraction in overall visitor numbers (-1.1% to 2.01m) and a weaker RMB against SGD. Weakness was seen at Underwater World Xiamen and Lixing Cable Car, which more than offset improved contribution from Shanghai Ocean Aquarium and the Singapore Flyer. NAV/share at $0.2717.
*Boustead Projects: 2QFY17 net profit climbed 33% to $7.2m, on the back of a 16% jump in revenue to $62.2m, from stronger contribution from its design-and-build business, which also lifted gross margin by 1ppt to 25%. NAV/share at $0.646.
*SBS Transit: 3Q16 net profit jumped 43.2% to $7.8m, on firmer revenue of $274.4m (+4.8%), as growth in rail (+26.3%) mitigated the slight drop in bus (-1%). Operating margin widened 0.7ppt to 3.6% on savings in fuel and electricity (-26.5%), while bottom line was lifted by a 26.2% reduction in finance costs. NAV/share at $1.31.
*HMI: 1QFY17 net profit surge close to 4.5x to RM6.2m, bolstered by a RM3.5m reduction in FX losses. Revenue rose 16% to RM109.5m, mainly on higher patient load and average bill sizes at two of its key hospitals in Malaysia. Bottom line was also underpinned by a 56% drop in finance costs. Separately, HMI will buy out the remaining 51% stake in Mahkota Medical Centre in Malacca, as well as the remaining 39% stake in Regency Specialist Hospital in Johor for an aggregate RM556.5m. The acquisitions will be funded via a mix of debt and equity raising. Pro forma FY16 EPS is expected to increase by 30.4% post-completion. NAV/share at RM0.1974.
Regional bourses gapped up in Tokyo (+0.9%), Seoul (-0.9%) and Sydney (+0.4%).Technically, STI could test its immediate resistance at 2,840 (50-dma), with underlying support seen at 2,780.
Stocks to watch:
*Noble: Swung into 3Q16 net loss of US$28.1m (3Q15: US$24.7m profit, 2Q16: US$54.9m loss), as revenue tumbled 34.8% to US$11.4b due to lower sales tonnage (-20.1%). While operating margin of supply chains inched up 0.1ppt to 1.76%, bottom line was weighed by higher admin costs (+44%), and loss from discontinuing businesses (US$60m). Operating cash flow remains negative, but adjusted net debt has been pared down to US$1.9b (2Q16: US$2.4b, FY15: US$2.26b), with improved liquidity headroom of US$1.2b from US$0.8b in 2Q16. NAV/share at US$0.30.
*Wilmar: 3Q16 results missed although core net profit rose 9.8% to US$384.9m on improved profitability at downstream businesses tropical oil segment (+80.7%) and oilseeds and grains (+1.9%), but sugar (-20.6%) was watered down by wet weather. Revenue rose 4.1% to US$11.1b on stronger commodity prices, despite reduced sales volume for upstream products. EBITDA margin expanded 1.8ppt to 7.2% on the shift towards the more profitable downstream segment. NAV/share at US$2.264.
*SATS: 2QFY17 net profit of $62.1m (+4%) was in line as revenue grew 3.7% to $438.5m on stronger contribution from food solutions (+4%) and gateway solutions (+3.4%). Operating margin expanded to 14.5%(+0.5ppts) on reduced cost of raw materials (-5%), as well as lower company premise & utilities expenses (-1.8%). Interim DPS raised to $0.06 (2QFY16: $0.05). MKE maintains Sell with TP of $3.76 on stretched valuations.
*Lippo Malls Trust: 3Q16 DPU of 0.86¢ (+11.7%) came in line, as revenue ($47m, +6.6%) and NPI ($43.3m, +7.6%) were bolstered by higher rents and increased carpark income. Occupancy stood was steady at 94.8%, with WALE of 4.63 years, while aggregate leverage stood at 32.7% (-3ppt q/q). NAV/unit at $0.39.
*Croesus Retail Trust: 1QFY17 DPU of 1.79¢ (+9.8%) came in line, as revenue surged to ¥3.13b (+55.8%), mainly led by new contributions from Torius (acquired in Oct '15), Fuji Grand Natalie (Apr '16) and Mallage Saga and Feeeal Asahikawa (May '16). NPI rose at a slower pace to ¥1.60b (+29.5%) due to higher expense ratios at the new malls. Portfolio occupancy remained healthy at 97.8% (-0.3ppt q/q), with WALE at 6.8 years. Aggregate leverage eased to 44.6% (-0.7ppt q/q), with average debt cost and tenor stable at 1.93% and 2.2 years, respectively. NAV/share at ¥75.14.
*UMS: 3Q16 net profit fell 20% to $6.8m, on a 15% drop in revenue to $26.1m due to reduced semiconductor sales. While gross margin expanded 2ppt to 57% from lower input costs, bottom line was weighed by an inventory provision of $1m, and reduced FX gains. Kept interim DPS at 1¢. NAV/share at $0.4512.
*UOL: 3Q16 net profit of $87.1m (-14%) missed, on an adverse $14.2m swing in JV loss to $3.9m. Revenue grew to $393.4m (+11%) on broad-based growth in property development (+19%), property investments (+2%), hotel operations (+5%) and dividend income (+2%), although gross margin slipped to 33% (-6ppts) on lower profitability in property development. NAV/share at $9.91..
*Ho Bee Land: 3Q16 net profit leapt to $26.7m (+31.8%), as revenue surged to $46.9m (44.4%) from sales recognition of two residential development projects in Melbourne and Gold Coast, Australia. However, growth at the bottom line was pared by an absence of $6.9m gain from investment property disposal. NAV/share at $4.17.
*Ying Li: 3Q16 fell to almost breakeven (3Q15 profit: Rmb2.9m) on lower interest income, bringing 9M16 net profit to Rmb21.8m or 13% of FY16 street estimate. Revenue surged to Rmb251m (+124.4%) from increased handovers for lower margin residential project San Ya Wan. Consequently, gross margin shrank 31.2ppt to 24%. Net asset value at Rmb1.94.
*Vard: 3Q16 continue to linger in the red with net loss of NOK80m (3Q15: NOK486m loss), bringing 9M16 loss to NOK96m versus FY16 street forecast of NOK138m loss. For the quarter, revenue slumped 34% to NOK1,503m due to reduced activity at its shipyards and cessation of operations in Vard Niterói, while EBITDA turned around to NOK33m (3Q15: NOK467m loss) from absence of loss provisions. Order book jumped to NOK14.08b (2Q16: NOK11.93b). NAV/share at $0.36.
*Parkson Retail Asia: Dismal 1QFY17 as it swung to a net loss of $5.2m (1QFY16: $49.5m profit), due to the absence of disposal gain (1QFY16: $46m). While revenue inched up to $93.3m (+0.7%) on increased direct sale of goods, same store sales across key markets declined between 6.6 and 28.2%. NAV/share at $0.23.
*Aspial: 9M16 net profit more than doubled to $9.4m (+113%), helped by a favorable FX swing of $19.3m. Revenue increased to $450.8m (+33%) on improved real estate (+57.2%) and financial service (+29.6%) businesses. but gross margin tumbled to 25.7% (-7.9ppt), on higher material and subcontract costs outpaced top line growth. NAV/share at $0.1655.
*Straco: 3Q16 net profit slipped 3.6% to $22.7m on a softer revenue of $47.6m (-3.4%), weighed by a contraction in overall visitor numbers (-1.1% to 2.01m) and a weaker RMB against SGD. Weakness was seen at Underwater World Xiamen and Lixing Cable Car, which more than offset improved contribution from Shanghai Ocean Aquarium and the Singapore Flyer. NAV/share at $0.2717.
*Boustead Projects: 2QFY17 net profit climbed 33% to $7.2m, on the back of a 16% jump in revenue to $62.2m, from stronger contribution from its design-and-build business, which also lifted gross margin by 1ppt to 25%. NAV/share at $0.646.
*SBS Transit: 3Q16 net profit jumped 43.2% to $7.8m, on firmer revenue of $274.4m (+4.8%), as growth in rail (+26.3%) mitigated the slight drop in bus (-1%). Operating margin widened 0.7ppt to 3.6% on savings in fuel and electricity (-26.5%), while bottom line was lifted by a 26.2% reduction in finance costs. NAV/share at $1.31.
*HMI: 1QFY17 net profit surge close to 4.5x to RM6.2m, bolstered by a RM3.5m reduction in FX losses. Revenue rose 16% to RM109.5m, mainly on higher patient load and average bill sizes at two of its key hospitals in Malaysia. Bottom line was also underpinned by a 56% drop in finance costs. Separately, HMI will buy out the remaining 51% stake in Mahkota Medical Centre in Malacca, as well as the remaining 39% stake in Regency Specialist Hospital in Johor for an aggregate RM556.5m. The acquisitions will be funded via a mix of debt and equity raising. Pro forma FY16 EPS is expected to increase by 30.4% post-completion. NAV/share at RM0.1974.
Thursday, November 10, 2016
SG Market (10 Nov 16)
Continued volatility and uncertainty is likely to prevail over the market in the near term, in wake of Donald Trump’s shock election win and what his protectionist stance would mean for trade dependent countries like Singapore.
Regional bourses gapped up in Tokyo (+5.7%), Seoul (+1.8%) and Sydney (+3%).Technically, downside support for STI seen at 2,740 with immediate resistance at 2,840.
Stocks to watch:
*Singtel: 2QFY17 results in line. Core net profit of $978m was flat as stronger operating results from associates (+7%), Telkomsel & Airtel India, helped offset lower EBITDA (-4%) due to investments in customer acquisition and higher content costs in Australia. Revenue slid 2% to $4.09b on a decline in mobile termination rates and higher device repayment service credits in Australia, but offset by growth in mobile data, cyber security, data & internet and digital services. Interim DPS of 6.8¢ was maintained. Trimmed full year guidance for revenue growth and expects EBITDA to be stable. MKE retains Hold with TP of $4.41.
*City Dev: 3Q16 net profit of $170.3m (+60.1%) was lifted by one-offs, including the disposal gain in City E-Solutions, increased realisation of investment in a private real estate fund and a write-back following an insurance settlement for the 2011 New Zealand earthquake. This brought 9M16 earnings of $409.4m (+12.8) to 70% of FY16 street estimate. Quarter revenue rose to $922.8m (+32.4%), underpinned by the maiden contribution from both Gramercy Park in Singapore and Hanover House in UK, coupled with revenue recognition from Coco Palms, D’Nest and The Venue Residences and Shoppes. NAV/share at $9.91. MKE last had a Hold with TP of $9.17.
*ST Engineering: 3Q16 missed target as net profit tumbled to $76.7m (-42%), on asset impairment and provision for closure costs for its Chinese road construction equipment business, Jiangsu Huatong Kinetics. Revenue grew to $1.61b (+7.5%), mainly from aerospace (+11%) and electronics (+9%) segments, but EBIT margin contracted to 5.1% (-2.9ppt). Order book remained healthy at $11.4b (2Q16: $11.6b). Guided for higher FY16 revenue, but lower pretax profit. MKE has a Hold with TP of $3.17.
*Ezion: 3Q16 net profit tanked 66.4% to US$10.4m, which MKE deems to be in line. Revenue fell to US$79.8m (-7.4%) due to modifications and routine class surveys on a few jack-up rigs, reduced charter rates and project delays. Gross margin compressed to 17.5% (-11.4ppt) on increased deployment cost of additional service rigs. NAV/share at US$0.667. MKE last had a Buy with TP of $0.45.
*First Resources: 3Q16 net profit of US$28.4m (+26.2%) missed, while revenue of US$151.5m (+40.6%) was bolstered by both refinery and processing (+45.8%) and plantations (+35.1%), partially offset by reduced production volume (-8.9%) from lingering effects of El Nino. Consequently, gross and EBITDA margins contracted to 53.1% (-8ppt) and 51.1% (-6.1ppt). NAV/share at US$0.54..
*Far East Hospitality Trust: 3Q16 DPU of 1.12¢ (-6.7%) met, bringing 9M16 DPU of 3.21¢ to 75% of full year estimate. Quarter gross revenue and NPI slumped to $28m (-5.5%) and $25.3m (-5.8%), mainly due to reduced RevPAR of $142 (-5.8%) stemming from the weak operating environment for hotels, which resulted in lower average daily rates (-6.9%), despite a 1ppt increase in occupancy to 88.4%. Aggregate leverage remained stable at 32.8%, with average debt cost and tenor at 2.5% and 2.6 years. NAV/unit at $0.9279.
*Ascendas Hospitality Trust: 2QFY17 results met expectations as DPU held steady at 1.38¢ on adjusted distributable income of $15.5m (+0.1%). Revenue grew 2.5% to 55.6% while NPI advanced at a faster pace of 7.7% to $24.3m on stronger contributions from Japan (+41.6%) and China (+12.4%), but pared by contraction in Australia (-0.2%) and Singapore (-9.3%). Aggregate leverage edged lower to 32.4% (-0.8ppts q/q) with average cost of debt of 3.3% and tenor of 2.8 years. NAV/share at $0.88.
*Nam Cheong: 3Q16 would have been in the red if not for an FX gain of RM12.2m, which lifted net profit to RM0.7m (3Q15: RM6,000). Revenue plunged to RM25.8m (-86%) on slower revenue recognition of vessels sold, and gross margin got crushed to 3% (-8ppt). NAV/share at RM0.621.
*Delfi: Swung to 3Q16 net profit of US$5.9m, due to the absence of US$19.4m settlement. Revenue of US$86.6m was 2.4% higher, as improved Indonesia sales (+5.6%) offset regional markets (-4.4%). Gross margin expanded 7.1ppt to 35.5% on higher sales for its own brand, as well as other rationalization initiatives. NAV/share at US$0.333.
*Riverstone: 3Q16 results in line, even as net profit slid 15.6% to RM29.8m on a drop in FX gains. Excluding FX, core earnings would have fallen 4.1% to RM29.3m. Revenue grew 10.9% to RM166.9m on increased capacity, but gross margin narrowed 5.8ppt to 26.1% due to lower ASP for healthcare gloves, although it recovered 1.7ppt q/q on better sales mix. Net cash position remains healthy at RM110m (FY15: RM128.7m). Maybank KE last call was a Hold with TP of $0.92.
*Courts Asia: 2QFY17 results came ahead of expectations, as net profit climbed to $6.7m (+11.3%) on a $1.1m drop in FX losses. Revenue edged lower to $180.5m (-3%), as weakness in Malaysia sales (-12.9%) outweighed improvements in Singapore (+0.5%) and Indonesia (+70.2%). Gross margin shrank 1.4ppt to 33.9% on lower service charge income in Malaysia, weaker merchandise margin and a shift in Hari Raya festival to 1QFY17. NAV/share at $0.564..
*Maxi-Cash: 3Q16 net profit surged 3.2x to $3.3m, as revenue jumped to $40.9m (+28%) on higher interest income from pawnbroking business, as well as higher sales from retail and trading segment. But, net gearing rose to 2.2x from 1.8x in FY15. NAV/share at $0.1237.
*CSE Global: 3Q16 net profit slumped 52.7% to $4m on revenue of $81m (-21.6%) attributable to the lack of large greenfield projects which caused contraction across its operations in Asia-Pacific (-3.3%), Americas (-33.1%) and Europe/Middle East/Africa (-15.1%). Despite the poorer topline performance, operating expenses fell only 4.5%, narrowing operating margin to 6.9% (-3.6ppts). NAV/share at $0.453.
*Sapphire: 3Q16 net profit surged 80.3% to $2.8m, while revenue skyrocketed 415.5% to $68m from the consolidation of China rail EPC firm Ranken, which contributed the bulk of sales ($61.9m) attributable to project recognitions, that offset the 53.7% drop in mining revenue. Gross margin fell 12ppt to 14.1% in the shift in sales mix. NAV/share at 28.63¢.
*Raffles Education: 1QFY17 results swung to a net loss of $1.7m (1QFY16: $0.9m profit) due to a $1.3m drop in FX gains. Revenue fell to $24.8m (-15%), mainly weighed by discontinuation of Raffles Shanghai JV college, reduction in foreign student intake in Raffles Sydney and Raffles Singapore, as well as lower utility income from Oriental University City. NAV/share at $0.5447.
*Ellipsiz: 1QFY17 net profit dived 70.5% to $0.7m on impairment loss of $1.1m (1QFY16: nil). Revenue grew 9.4% to $27.7m on growth across its distribution & services solutions (+13%) and probe card solutions (+8.3%) segments. Bottomline was further pressured by the absence of bad debt recovery of $1.4m recorded in 1QFY16. NAV/share at $0.7747.
*SingPost: S&P Global Ratings downgrades long-term corporate credit rating to BBB+ from A-, with stable outlook, as it opines that SingPost’s emphasis on reducing leverage has diminished.*iFAST: Received in-principle approval from MAS to provide discretionary portfolio management and stock dealing services in Singapore.
*Isoteam: Acquiring a four-storey factory at Changi North Street 1 for $12.6m to consolidate the various divisions it has into a single premise. The property has land and built-in area of 3,401 and 4,232 sqm respectively, as well as 10 years of remaining leasehold tenure, with the option to renew for another 30 years.
*Swissco: Received notice from vendor X-Drill Holding that the latter has obtained a court order in the Republic of Equatorial Guinea for the arrest of the group's rigs, and thereafter subject to a judicial sale.
Regional bourses gapped up in Tokyo (+5.7%), Seoul (+1.8%) and Sydney (+3%).Technically, downside support for STI seen at 2,740 with immediate resistance at 2,840.
Stocks to watch:
*Singtel: 2QFY17 results in line. Core net profit of $978m was flat as stronger operating results from associates (+7%), Telkomsel & Airtel India, helped offset lower EBITDA (-4%) due to investments in customer acquisition and higher content costs in Australia. Revenue slid 2% to $4.09b on a decline in mobile termination rates and higher device repayment service credits in Australia, but offset by growth in mobile data, cyber security, data & internet and digital services. Interim DPS of 6.8¢ was maintained. Trimmed full year guidance for revenue growth and expects EBITDA to be stable. MKE retains Hold with TP of $4.41.
*City Dev: 3Q16 net profit of $170.3m (+60.1%) was lifted by one-offs, including the disposal gain in City E-Solutions, increased realisation of investment in a private real estate fund and a write-back following an insurance settlement for the 2011 New Zealand earthquake. This brought 9M16 earnings of $409.4m (+12.8) to 70% of FY16 street estimate. Quarter revenue rose to $922.8m (+32.4%), underpinned by the maiden contribution from both Gramercy Park in Singapore and Hanover House in UK, coupled with revenue recognition from Coco Palms, D’Nest and The Venue Residences and Shoppes. NAV/share at $9.91. MKE last had a Hold with TP of $9.17.
*ST Engineering: 3Q16 missed target as net profit tumbled to $76.7m (-42%), on asset impairment and provision for closure costs for its Chinese road construction equipment business, Jiangsu Huatong Kinetics. Revenue grew to $1.61b (+7.5%), mainly from aerospace (+11%) and electronics (+9%) segments, but EBIT margin contracted to 5.1% (-2.9ppt). Order book remained healthy at $11.4b (2Q16: $11.6b). Guided for higher FY16 revenue, but lower pretax profit. MKE has a Hold with TP of $3.17.
*Ezion: 3Q16 net profit tanked 66.4% to US$10.4m, which MKE deems to be in line. Revenue fell to US$79.8m (-7.4%) due to modifications and routine class surveys on a few jack-up rigs, reduced charter rates and project delays. Gross margin compressed to 17.5% (-11.4ppt) on increased deployment cost of additional service rigs. NAV/share at US$0.667. MKE last had a Buy with TP of $0.45.
*First Resources: 3Q16 net profit of US$28.4m (+26.2%) missed, while revenue of US$151.5m (+40.6%) was bolstered by both refinery and processing (+45.8%) and plantations (+35.1%), partially offset by reduced production volume (-8.9%) from lingering effects of El Nino. Consequently, gross and EBITDA margins contracted to 53.1% (-8ppt) and 51.1% (-6.1ppt). NAV/share at US$0.54..
*Far East Hospitality Trust: 3Q16 DPU of 1.12¢ (-6.7%) met, bringing 9M16 DPU of 3.21¢ to 75% of full year estimate. Quarter gross revenue and NPI slumped to $28m (-5.5%) and $25.3m (-5.8%), mainly due to reduced RevPAR of $142 (-5.8%) stemming from the weak operating environment for hotels, which resulted in lower average daily rates (-6.9%), despite a 1ppt increase in occupancy to 88.4%. Aggregate leverage remained stable at 32.8%, with average debt cost and tenor at 2.5% and 2.6 years. NAV/unit at $0.9279.
*Ascendas Hospitality Trust: 2QFY17 results met expectations as DPU held steady at 1.38¢ on adjusted distributable income of $15.5m (+0.1%). Revenue grew 2.5% to 55.6% while NPI advanced at a faster pace of 7.7% to $24.3m on stronger contributions from Japan (+41.6%) and China (+12.4%), but pared by contraction in Australia (-0.2%) and Singapore (-9.3%). Aggregate leverage edged lower to 32.4% (-0.8ppts q/q) with average cost of debt of 3.3% and tenor of 2.8 years. NAV/share at $0.88.
*Nam Cheong: 3Q16 would have been in the red if not for an FX gain of RM12.2m, which lifted net profit to RM0.7m (3Q15: RM6,000). Revenue plunged to RM25.8m (-86%) on slower revenue recognition of vessels sold, and gross margin got crushed to 3% (-8ppt). NAV/share at RM0.621.
*Delfi: Swung to 3Q16 net profit of US$5.9m, due to the absence of US$19.4m settlement. Revenue of US$86.6m was 2.4% higher, as improved Indonesia sales (+5.6%) offset regional markets (-4.4%). Gross margin expanded 7.1ppt to 35.5% on higher sales for its own brand, as well as other rationalization initiatives. NAV/share at US$0.333.
*Riverstone: 3Q16 results in line, even as net profit slid 15.6% to RM29.8m on a drop in FX gains. Excluding FX, core earnings would have fallen 4.1% to RM29.3m. Revenue grew 10.9% to RM166.9m on increased capacity, but gross margin narrowed 5.8ppt to 26.1% due to lower ASP for healthcare gloves, although it recovered 1.7ppt q/q on better sales mix. Net cash position remains healthy at RM110m (FY15: RM128.7m). Maybank KE last call was a Hold with TP of $0.92.
*Courts Asia: 2QFY17 results came ahead of expectations, as net profit climbed to $6.7m (+11.3%) on a $1.1m drop in FX losses. Revenue edged lower to $180.5m (-3%), as weakness in Malaysia sales (-12.9%) outweighed improvements in Singapore (+0.5%) and Indonesia (+70.2%). Gross margin shrank 1.4ppt to 33.9% on lower service charge income in Malaysia, weaker merchandise margin and a shift in Hari Raya festival to 1QFY17. NAV/share at $0.564..
*Maxi-Cash: 3Q16 net profit surged 3.2x to $3.3m, as revenue jumped to $40.9m (+28%) on higher interest income from pawnbroking business, as well as higher sales from retail and trading segment. But, net gearing rose to 2.2x from 1.8x in FY15. NAV/share at $0.1237.
*CSE Global: 3Q16 net profit slumped 52.7% to $4m on revenue of $81m (-21.6%) attributable to the lack of large greenfield projects which caused contraction across its operations in Asia-Pacific (-3.3%), Americas (-33.1%) and Europe/Middle East/Africa (-15.1%). Despite the poorer topline performance, operating expenses fell only 4.5%, narrowing operating margin to 6.9% (-3.6ppts). NAV/share at $0.453.
*Sapphire: 3Q16 net profit surged 80.3% to $2.8m, while revenue skyrocketed 415.5% to $68m from the consolidation of China rail EPC firm Ranken, which contributed the bulk of sales ($61.9m) attributable to project recognitions, that offset the 53.7% drop in mining revenue. Gross margin fell 12ppt to 14.1% in the shift in sales mix. NAV/share at 28.63¢.
*Raffles Education: 1QFY17 results swung to a net loss of $1.7m (1QFY16: $0.9m profit) due to a $1.3m drop in FX gains. Revenue fell to $24.8m (-15%), mainly weighed by discontinuation of Raffles Shanghai JV college, reduction in foreign student intake in Raffles Sydney and Raffles Singapore, as well as lower utility income from Oriental University City. NAV/share at $0.5447.
*Ellipsiz: 1QFY17 net profit dived 70.5% to $0.7m on impairment loss of $1.1m (1QFY16: nil). Revenue grew 9.4% to $27.7m on growth across its distribution & services solutions (+13%) and probe card solutions (+8.3%) segments. Bottomline was further pressured by the absence of bad debt recovery of $1.4m recorded in 1QFY16. NAV/share at $0.7747.
*SingPost: S&P Global Ratings downgrades long-term corporate credit rating to BBB+ from A-, with stable outlook, as it opines that SingPost’s emphasis on reducing leverage has diminished.*iFAST: Received in-principle approval from MAS to provide discretionary portfolio management and stock dealing services in Singapore.
*Isoteam: Acquiring a four-storey factory at Changi North Street 1 for $12.6m to consolidate the various divisions it has into a single premise. The property has land and built-in area of 3,401 and 4,232 sqm respectively, as well as 10 years of remaining leasehold tenure, with the option to renew for another 30 years.
*Swissco: Received notice from vendor X-Drill Holding that the latter has obtained a court order in the Republic of Equatorial Guinea for the arrest of the group's rigs, and thereafter subject to a judicial sale.
Wednesday, November 9, 2016
SG Market (09 Nov 16)
Much will depend on the US election voting results as they stream in during Asian trading hours, with 12 noon the earliest possible time for a winner to be called.
Regional bourses opened slightly higher in Tokyo (+0.6%), Seoul (+0.2%) and Sydney (+0.3%).Technically, upside resistance for the STI is at 2,880, with immediate support at 2,800.
Stocks to watch:
*Property: IOI Properties emerged as the top bidder for the white site at Central Boulevard with a record tender price of $2.57b ($1,689 psf ppr), 20% above a comparable site transacted in Sep 2007. This could have positive implications on capital values of office assets and REITs, which currently trades below book. CCT (Buy, TP $1.81) and KREIT (Buy, TP $1.21) are MKE's preferred exposure.
*CapitaLand: Headline 3Q16 net profit rose 28.4% to $247.5m, while core earnings of $251.8m (+54.5%) was lifted by higher fair value gain from change in a property use. This brought 9M16 earnings to 75% of full year consensus estimate. Revenue jumped 27.7% to $1.37b on increased contributions from development projects in Singapore and China, higher rental income from Singapore commercial portfolio, as well as serviced residences. Trades at 24% discount to its NAV/share at $4.01. MKE last had a Buy with TP of $3.93.
*Frasers Centrepoint: FY16 core net profit of $479.9m (-11.8%) missed estimates, dragged by lower income from JV/associates (-38.7%). Revenue slipped 3.4% to $3.44b on reduced contribution from Singapore (-16.8%) due to lower sale of residential properties, although partially offset by increased sale of completed development projects in Australia (+5.6%) and new acquisitions in hospitality (+39.4%). NAV/share at $2.30.
*Jardine Cycle & Carriage: 9M16 core net profit of US$518m (-4%) came in line, on a softer revenue of US$11.6b (-3%) due to reduced contributions from Astra's financial services, heavy equipment, and mining businesses. NAV/share at US$14.46.
*Yangzijiang: 3Q16net profit tanked 59% to Rmb281.2m, dragging 9M16 earnings to Rmb1.14b (+12%), or 60% of full year street forecast. Quarter revenue slipped 6% to Rmb3.88b, from fewer vessel deliveries and reduced net interest income. While the group recognized Rmb434m of advances from terminated contracts and Rmb107m of subsidy income, these were more than offset by impairment (Rmb750m) and JV/associates losses (Rmb95.8m). Trades at 32% discount to NAV/share of Rmb5.77.
*ARA Asset Management: 3Q16 results ahead with net profit of $31.5m (+84%), as revenue jumped 39% to $53m on higher management fees (+5%) and finance income (+352%). Operating margin widened 11.1ppt to 64.6% from increased operating scale, while the bottom line growth was further boosted by an 83% drop in finance costs. NAV/share at $0.562.
*Perennial Real Estate: 3Q16 results missed as net profit dived to $0.4m (-91.1%), on the absence of non-recurring investment income and an adverse FX swing of $1.3m. Revenue jumped to $35.1m (+53.2%) on stronger strata sales of office units at TripleOne Somerset. Gross margin narrowed 13.3ppt to 52%, while bottom line was also impacted by higher finance cost (+13.7%) due to increased borrowings. Net gearing surged to 0.62x from 0.45x in FY15, while operating cash flow tumbled 80% y/y to $10.8m. NAV/share at $1.57..
*Chip Eng Seng: 3Q16 net profit crumbled to $5.7m (-57.9%), on weak revenue of $151.8m (-4.2%), mainly weighed by muted property development (-13.7%). Gross margin shrank 7.7ppt to 17.8% on higher cost of sales (+5.8%). Net gearing spiked to 0.94x from 0.56x in FY15, as operating cash flow plummeted to $19.1m (-89.8%) from a year ago. NAV/share at $1.2083.
*Pacific Radiance: 3Q16 missed; swung to net loss of US$18m (3Q15: US$1.7m profit), partially dragged by absence of disposal gain (3Q15: US$6.6m). Revenue slumped to US$18.9m (-44%) on lower utilization and charter rates, as well as stubborn cost of sales (+2%), which resulted in gross loss of US$8.2m. NAV/share at US$0.455.
*Rotary Engineering: 3Q16 net profit dived 80.7% to $1.2m, on lower FX gains of $1m (3Q15: $5.2m). Revenue declined 12.7% to $52.6m as group gets closer to completion of major projects. Gross margin grew to 25.8% (+3.4ppts). Net cash slipped to $76.5m (-0.9% q/q) or 13.5¢, representing 35% of last closing price. NAV/share at $0.51.
*Civmec: 1QFY17 net profit fell 28.8% to $6.2m on a similar decline in revenue to $104.6m (-27.2%). Despite this, gross margin expanded to 14.7% (+2.5ppts) while bottomline was weighed on by higher admin expenses (+9.5%) as well as $0.7m in losses (1QFY16: nil) from its JV. NAV/share at $0.347.
*SGX: Securities turnover fell 5% m/m, and 15% y/y to $19.6b, with daily average turnover value of $934m (-5% m/m, -11% y/y). Derivatives volume declined to 11.5m contracts (-14% m/m, +2% y/y), dragged by reduced trading in China A50 (-9% m/m, +7% y/y) and Nikkei 225 (-38% m/m, -31% y/y) index futures.
*ARA Asset Management: CEO John Lim led consortium comprising existing shareholders Straits Trading and Cheung Kong and two new partners PE firm Warburg Pincus and China based AVIC Trust in a $1.8b buyout bid to take the company private via scheme of arrangement. Exit offer price of $1.78 is 19% above last traded price, and implies EV/AUM of 6% and EV/EBITDA of 18.2x.
*Silverlake Axis: Continued to pare down stake in Global Infotech, as it sold 4.19m shares by block trade at Rmb24.05/share or 2.8% discount to market price. Realised Rmb100.78m (RM62.5m) in cash proceeds, and disposal gain of RM48.7m..
*mm2: Proposed acquisition of Lotus Fivestar Cinemas, which owns 13 cinemas in Malaysia, for RM118m. Upon completion, mm2 will become the fourth largest cinema operator in Malaysia with 133 screens. Proforma FY15 EPS would have been higher at 0.81¢ from 0.77¢.
*King Wan: Secured new mechanical and electrical contracts worth $19m between Jul and Oct, including one for Selarang Park Complex and another for Clement Canopy. The projects are scheduled to complete by 2019.
*Global Premium Hotels: Acquiring a freehold property with land area of 4,652sqm, in Tasmania, Australia, for A$7.2m. A 4.5 star luxury boutique hotel currently sits on the site, and will continue to be leased to the operator for another two years upon deal completion. Group will explore options for the property thereafter.
*Neratel: 3Q16 slumped to a net loss of $1.3m (3Q15: $1.6m profit), despite higher revenue of $33.8m (+20.4%) from increased contributions from telecom (+1.7%) and infocomm (+36.6%). However, bottom line was dragged as gross margin compressed to 18.8% (-13.2ppts), due to devaluation of the Nigerian Naira, as well as higher equipment sales and lower write back from project closures, as well as higher distribution and selling expenses (+14.1%). Special DPS of $0.15 declared, from sale proceeds from its payment solutions business. NAV/share at $0.331.
*Asia Enterprises: 3Q16 turned into net profit of $0.2m (3Q15: $0.7m loss) mainly from the absence of inventory write-offs. Revenue fell 15.2% to $6.4m due to lower ASPs, while sales volume remained stable. Gross margin expanded to 25.6% (+11.7ppts) on lower cost of inventory. NAV/share at $0.271.
*AEM: 3Q16 net profit soared more than 4x to $2.2m on sharply higher revenue of $21.3m (+70%), largely driven by equipment systems (+77.7%) and precision components (+12.6%) divisions. Net cash position contracted 28% to $7.3m ($0.168/share) from FY15, equivalent to 34% of market cap. NAV/share at $0.598.
*China Sunsine: 3Q16 net profit climbed 32% to Rmb72.8m, as revenue grew 15% to Rmb547.3m, on increased sales volume of rubber chemical products. Gross margin increased 1.4ppt to 28.2% on higher economy of scale. NAV/share at Rmb2.79.
*Soilbuild Construction: 3Q16 net profit fell 25.8% to $2.2m, despite a 31% climb in revenue to $102m from increased construction activity from a higher mix of lower profitability HDB projects. Accordingly, gross margin narrowed to 4.8% (-3.2ppt), further dragged by increased costs for certain projects. NAV/share at $0.1411.
*Heeton: 3Q16 results sank to a net loss of $11.2m (3Q15: 5.2m profit) on a $12.9m disposal loss on the bulk sale of residential project iLiv@Grange and lower associate contribution. Revenue jumped to $18.8m (+108.7%) on increased sales at Onze@Tanjong Pagar, but gross margin crumbled 31.7ppt to 47% as cost of properties (+418.2%) outpaced top line growth. NAV/share at $1.0047..
*OKP: 3Q16 net profit surged 98.2% from a low base to $2m, as revenue grew 15.9% to $28.1m on higher contribution from construction (+32.7%), but pared by contraction in maintenance (-27.7%). Gross margin improved to 14.5% (+2ppts) on completion of several high margin maintenance projects, while bottomline was buttressed by higher other income of $0.3m (3Q15: $0.1m) and associate contribution of $0.2m (3Q15: $0.1m loss). NAV/share at $0.339.
*Wee Hur: 3Q16 net profit came in flat at $8.9m, although revenue tumbled to $39.6m (-58%) amid absence of contribution from property development. Gross margin narrowed 9ppt to 15.1%, but bottom line was buttressed by a positive FX swing of $7.6m. NAV/share at $0.37.
*Overseas Education: 3Q16 results missed as net profit plunged 84% to $0.3m, on lower revenue of $21.8m (-7.4%) from a drop in student enrolments. EBIT margin shrank 4ppt to 12.5% on increased upkeep and maintenance costs. Declared interim DPS of 0.6875¢ (3Q15: special DPS 1.375¢). NAV/share at $0.368.
*Delong: Staged a spectacular turnaround, although in-line with its previous guidance. 3Q16 net profit of Rmb229.3m (3Q15: Rmb107m loss) came on revenue of Rmb2.53b (+57.5%), attributable to significant jumps in ASPs and sales volume of hot rolled coils (HRC) in China, as well as maiden contributions from its 55%-owned Delong Thailand. Gross margin turned positive at 15%, as ASPs of HRCs rose faster than that of raw material costs. Trading at 94% discount to NAV/share of Rmb26.55.
*YuuZoo: Launched YuuTV, a video streaming platform smartphone application which will tap on content from partners such as Relativity Media.
*Profit warning:
- Asia Fashion Holdings
- Abterra
- Advanced Integrated Manufacturing
Regional bourses opened slightly higher in Tokyo (+0.6%), Seoul (+0.2%) and Sydney (+0.3%).Technically, upside resistance for the STI is at 2,880, with immediate support at 2,800.
Stocks to watch:
*Property: IOI Properties emerged as the top bidder for the white site at Central Boulevard with a record tender price of $2.57b ($1,689 psf ppr), 20% above a comparable site transacted in Sep 2007. This could have positive implications on capital values of office assets and REITs, which currently trades below book. CCT (Buy, TP $1.81) and KREIT (Buy, TP $1.21) are MKE's preferred exposure.
*CapitaLand: Headline 3Q16 net profit rose 28.4% to $247.5m, while core earnings of $251.8m (+54.5%) was lifted by higher fair value gain from change in a property use. This brought 9M16 earnings to 75% of full year consensus estimate. Revenue jumped 27.7% to $1.37b on increased contributions from development projects in Singapore and China, higher rental income from Singapore commercial portfolio, as well as serviced residences. Trades at 24% discount to its NAV/share at $4.01. MKE last had a Buy with TP of $3.93.
*Frasers Centrepoint: FY16 core net profit of $479.9m (-11.8%) missed estimates, dragged by lower income from JV/associates (-38.7%). Revenue slipped 3.4% to $3.44b on reduced contribution from Singapore (-16.8%) due to lower sale of residential properties, although partially offset by increased sale of completed development projects in Australia (+5.6%) and new acquisitions in hospitality (+39.4%). NAV/share at $2.30.
*Jardine Cycle & Carriage: 9M16 core net profit of US$518m (-4%) came in line, on a softer revenue of US$11.6b (-3%) due to reduced contributions from Astra's financial services, heavy equipment, and mining businesses. NAV/share at US$14.46.
*Yangzijiang: 3Q16net profit tanked 59% to Rmb281.2m, dragging 9M16 earnings to Rmb1.14b (+12%), or 60% of full year street forecast. Quarter revenue slipped 6% to Rmb3.88b, from fewer vessel deliveries and reduced net interest income. While the group recognized Rmb434m of advances from terminated contracts and Rmb107m of subsidy income, these were more than offset by impairment (Rmb750m) and JV/associates losses (Rmb95.8m). Trades at 32% discount to NAV/share of Rmb5.77.
*ARA Asset Management: 3Q16 results ahead with net profit of $31.5m (+84%), as revenue jumped 39% to $53m on higher management fees (+5%) and finance income (+352%). Operating margin widened 11.1ppt to 64.6% from increased operating scale, while the bottom line growth was further boosted by an 83% drop in finance costs. NAV/share at $0.562.
*Perennial Real Estate: 3Q16 results missed as net profit dived to $0.4m (-91.1%), on the absence of non-recurring investment income and an adverse FX swing of $1.3m. Revenue jumped to $35.1m (+53.2%) on stronger strata sales of office units at TripleOne Somerset. Gross margin narrowed 13.3ppt to 52%, while bottom line was also impacted by higher finance cost (+13.7%) due to increased borrowings. Net gearing surged to 0.62x from 0.45x in FY15, while operating cash flow tumbled 80% y/y to $10.8m. NAV/share at $1.57..
*Chip Eng Seng: 3Q16 net profit crumbled to $5.7m (-57.9%), on weak revenue of $151.8m (-4.2%), mainly weighed by muted property development (-13.7%). Gross margin shrank 7.7ppt to 17.8% on higher cost of sales (+5.8%). Net gearing spiked to 0.94x from 0.56x in FY15, as operating cash flow plummeted to $19.1m (-89.8%) from a year ago. NAV/share at $1.2083.
*Pacific Radiance: 3Q16 missed; swung to net loss of US$18m (3Q15: US$1.7m profit), partially dragged by absence of disposal gain (3Q15: US$6.6m). Revenue slumped to US$18.9m (-44%) on lower utilization and charter rates, as well as stubborn cost of sales (+2%), which resulted in gross loss of US$8.2m. NAV/share at US$0.455.
*Rotary Engineering: 3Q16 net profit dived 80.7% to $1.2m, on lower FX gains of $1m (3Q15: $5.2m). Revenue declined 12.7% to $52.6m as group gets closer to completion of major projects. Gross margin grew to 25.8% (+3.4ppts). Net cash slipped to $76.5m (-0.9% q/q) or 13.5¢, representing 35% of last closing price. NAV/share at $0.51.
*Civmec: 1QFY17 net profit fell 28.8% to $6.2m on a similar decline in revenue to $104.6m (-27.2%). Despite this, gross margin expanded to 14.7% (+2.5ppts) while bottomline was weighed on by higher admin expenses (+9.5%) as well as $0.7m in losses (1QFY16: nil) from its JV. NAV/share at $0.347.
*SGX: Securities turnover fell 5% m/m, and 15% y/y to $19.6b, with daily average turnover value of $934m (-5% m/m, -11% y/y). Derivatives volume declined to 11.5m contracts (-14% m/m, +2% y/y), dragged by reduced trading in China A50 (-9% m/m, +7% y/y) and Nikkei 225 (-38% m/m, -31% y/y) index futures.
*ARA Asset Management: CEO John Lim led consortium comprising existing shareholders Straits Trading and Cheung Kong and two new partners PE firm Warburg Pincus and China based AVIC Trust in a $1.8b buyout bid to take the company private via scheme of arrangement. Exit offer price of $1.78 is 19% above last traded price, and implies EV/AUM of 6% and EV/EBITDA of 18.2x.
*Silverlake Axis: Continued to pare down stake in Global Infotech, as it sold 4.19m shares by block trade at Rmb24.05/share or 2.8% discount to market price. Realised Rmb100.78m (RM62.5m) in cash proceeds, and disposal gain of RM48.7m..
*mm2: Proposed acquisition of Lotus Fivestar Cinemas, which owns 13 cinemas in Malaysia, for RM118m. Upon completion, mm2 will become the fourth largest cinema operator in Malaysia with 133 screens. Proforma FY15 EPS would have been higher at 0.81¢ from 0.77¢.
*King Wan: Secured new mechanical and electrical contracts worth $19m between Jul and Oct, including one for Selarang Park Complex and another for Clement Canopy. The projects are scheduled to complete by 2019.
*Global Premium Hotels: Acquiring a freehold property with land area of 4,652sqm, in Tasmania, Australia, for A$7.2m. A 4.5 star luxury boutique hotel currently sits on the site, and will continue to be leased to the operator for another two years upon deal completion. Group will explore options for the property thereafter.
*Neratel: 3Q16 slumped to a net loss of $1.3m (3Q15: $1.6m profit), despite higher revenue of $33.8m (+20.4%) from increased contributions from telecom (+1.7%) and infocomm (+36.6%). However, bottom line was dragged as gross margin compressed to 18.8% (-13.2ppts), due to devaluation of the Nigerian Naira, as well as higher equipment sales and lower write back from project closures, as well as higher distribution and selling expenses (+14.1%). Special DPS of $0.15 declared, from sale proceeds from its payment solutions business. NAV/share at $0.331.
*Asia Enterprises: 3Q16 turned into net profit of $0.2m (3Q15: $0.7m loss) mainly from the absence of inventory write-offs. Revenue fell 15.2% to $6.4m due to lower ASPs, while sales volume remained stable. Gross margin expanded to 25.6% (+11.7ppts) on lower cost of inventory. NAV/share at $0.271.
*AEM: 3Q16 net profit soared more than 4x to $2.2m on sharply higher revenue of $21.3m (+70%), largely driven by equipment systems (+77.7%) and precision components (+12.6%) divisions. Net cash position contracted 28% to $7.3m ($0.168/share) from FY15, equivalent to 34% of market cap. NAV/share at $0.598.
*China Sunsine: 3Q16 net profit climbed 32% to Rmb72.8m, as revenue grew 15% to Rmb547.3m, on increased sales volume of rubber chemical products. Gross margin increased 1.4ppt to 28.2% on higher economy of scale. NAV/share at Rmb2.79.
*Soilbuild Construction: 3Q16 net profit fell 25.8% to $2.2m, despite a 31% climb in revenue to $102m from increased construction activity from a higher mix of lower profitability HDB projects. Accordingly, gross margin narrowed to 4.8% (-3.2ppt), further dragged by increased costs for certain projects. NAV/share at $0.1411.
*Heeton: 3Q16 results sank to a net loss of $11.2m (3Q15: 5.2m profit) on a $12.9m disposal loss on the bulk sale of residential project iLiv@Grange and lower associate contribution. Revenue jumped to $18.8m (+108.7%) on increased sales at Onze@Tanjong Pagar, but gross margin crumbled 31.7ppt to 47% as cost of properties (+418.2%) outpaced top line growth. NAV/share at $1.0047..
*OKP: 3Q16 net profit surged 98.2% from a low base to $2m, as revenue grew 15.9% to $28.1m on higher contribution from construction (+32.7%), but pared by contraction in maintenance (-27.7%). Gross margin improved to 14.5% (+2ppts) on completion of several high margin maintenance projects, while bottomline was buttressed by higher other income of $0.3m (3Q15: $0.1m) and associate contribution of $0.2m (3Q15: $0.1m loss). NAV/share at $0.339.
*Wee Hur: 3Q16 net profit came in flat at $8.9m, although revenue tumbled to $39.6m (-58%) amid absence of contribution from property development. Gross margin narrowed 9ppt to 15.1%, but bottom line was buttressed by a positive FX swing of $7.6m. NAV/share at $0.37.
*Overseas Education: 3Q16 results missed as net profit plunged 84% to $0.3m, on lower revenue of $21.8m (-7.4%) from a drop in student enrolments. EBIT margin shrank 4ppt to 12.5% on increased upkeep and maintenance costs. Declared interim DPS of 0.6875¢ (3Q15: special DPS 1.375¢). NAV/share at $0.368.
*Delong: Staged a spectacular turnaround, although in-line with its previous guidance. 3Q16 net profit of Rmb229.3m (3Q15: Rmb107m loss) came on revenue of Rmb2.53b (+57.5%), attributable to significant jumps in ASPs and sales volume of hot rolled coils (HRC) in China, as well as maiden contributions from its 55%-owned Delong Thailand. Gross margin turned positive at 15%, as ASPs of HRCs rose faster than that of raw material costs. Trading at 94% discount to NAV/share of Rmb26.55.
*YuuZoo: Launched YuuTV, a video streaming platform smartphone application which will tap on content from partners such as Relativity Media.
*Profit warning:
- Asia Fashion Holdings
- Abterra
- Advanced Integrated Manufacturing
Tuesday, November 8, 2016
ARA
ARA Asset Management Gets Buyout Offer at S$1.78 Per Share....
JL Investment, The Straits Trading Co. and Cheung Kong Property Holdings have joined Warburg Pincus for proposed privatisation and delisting of ARA Asset Management via a scheme of arrangement, co. says in filing.
Special purpose vehicle incorporated for purpose of deal seeking to buy all shares of ARA, other than those held by Straits Trading, JLIG and Cheung Kong Property at a price per share of S$1.78 in cash.
Offerer does not intend to raise offer price.
Deal to complete in 2H next year.
JL Investment, The Straits Trading Co. and Cheung Kong Property Holdings have joined Warburg Pincus for proposed privatisation and delisting of ARA Asset Management via a scheme of arrangement, co. says in filing.
Special purpose vehicle incorporated for purpose of deal seeking to buy all shares of ARA, other than those held by Straits Trading, JLIG and Cheung Kong Property at a price per share of S$1.78 in cash.
Offerer does not intend to raise offer price.
Deal to complete in 2H next year.
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