The market might enjoy a minor bounce, backed by continued optimism on Wall Street optimism and stable oil prices.
Regional bourses opened mixed, with Tokyo (+0.7%) gaining while Seoul and Sydney were flat.Technically, STI may attempt to fill the gap at 2,953. Underlying support for the index remains at the 2,882 breakaway gap.
Stocks to watch:
*Banks: Moody’s upgraded the long-term rating of Singapore banks to “stable” as solvency pressures become manageable. However, baseline credit assessments, subordinated debt and capital instrument ratings were cut by one notch. For exposure, MKE prefers UOB (TP $18.36).
*Property: Private home sales (ex-ECs) rose 13.3% to to 860 units last month although it slid 31.4% from a 15-month high in Oct. Popular projects were Queens Peak at Dundee Road (271 units sold) and Parc Riviera at West Coast Vale (128 units).
*SIA: Group pax load factor fell 1.8ppts to 77.2% in Nov as capacity growth (+5%) outpaced traffic increase (+2.7%). Load factors deteriorated across Americas (-1.1ppts), Europe (-1ppt) and SW Pacific (-8.1ppts). Cargo load factor was flat at 66.4% as growth in carriage (+3.4%) largely matched capacity expansion (+3.3%). Subsidiary carriers Scoot (-4.5ppts to 79.1%) and SilkAir (-0.7ppts to 70.6%) also recorded lower load factors, while Tigerair improved (0.8ppt to 83.9%). MKE has Hold with TP of $9.70.
*CapitaLand: Its serviced residence unit Ascott bought the 136-unit Temple Bar Hotel in Dublin, Ireland for €55.1m to cater to rising accommodation demand from corporate and leisure travellers.
*SATS: Awarded IATA accreditation for ramp services training and will have exclusive rights to train ground handlers in 10 ASEAN countries when the programme begins in Mar ’17. Separately, it announced the use of smart watches in its technical ramp operations to streamline on-the-ground processes and enhancing communication, productivity and safety.
*Singtel: Australian unit Optus signed a five-year A$20m managed services contract with the Townsville City Council to boost its communication and IT capabilities.
*Cosco Corp: 51%-owned Cosco Shipyard deferred the delivery of a bulk carrier from 2Q17 to 2Q18 at the request of its European buyer.
*mm2 Asia: CEO Melvin Ang continues buying spree, scooping up 967,000 shares at 41.88¢ in the open market, boosting his total stake to 45.15% from 45.06%*Singapore Medical Group: Set up a 50% owned JV, SMG International Vietnam, with five individuals, to explore growth and acquisition opportunities in Singapore and ASEAN.
*Secura: Signed MOU with Custodio and Custodio Technologies (CT) to subscribe for new CT shares, representing 20% stake, for US$4.5m. CT engages in R&D of new cyber security solutions, with focus on cyber early warning technology.
*Elektromotive: The electric vehicle charging station provider is planning to acquire a 63.13% stake in South Korea-based Dream T Entertainment for $22.7m. The target is an artiste management company that has Girl's Day, MAP6, Hyun-Woo Ji and Soo-Ah Hong under its portfolio.
*Vibrant: Entered into sale and leaseback agreement with Sabana REIT for its property at 47 Changi South Ave 2 for $23m. The 10-year leaseback agreement allows Vibrant to occupy 74% of the 8,507 sqm gfa for $2.1m in the first year with rental escalation of 1% from year two onwards. It is expected to book a gain of $9.1m from the sale.
*Artivision: Divesting its digital advertisement and media solutions business arms to an undisclosed third party for $50m. It is expected to book a disposal gain of $38m, which will be used to redeem loans as well as for general working capital requirements.
Friday, December 16, 2016
Thursday, December 15, 2016
SG Market (15 Dec 16)
The market could come under pressure following Wall Street’s negative reaction to the Fed’s interest rate outlook, with REITs and yield stocks most at risk, while lower oil prices could spur profit-taking in oil-related counters.
Regional bourses opened mixed, with Tokyo (+0.9%) higher, and Seoul (-0.4%) and Sydney (-0.6%) weaker.Technically, immediate resistance for the STI is at the 2,960 triple-top, with underlying support at the 2,882 breakaway gap.
Stock highlights:
*Economy: Economists have pared 2016 GDP growth forecast to 1.4% (prior: 1.8%) on substantially weaker estimates for the finance & insurance and wholesale & retail sectors. Forecast for 2017 was also trimmed to 1.5% from 1.8%.
*Telcos: TPG Telecom emerged as the fourth Singapore telco, after winning the new entrant spectrum auction with an aggressive $105m bid (reserve price: $35m). TPG’s steep valuation may result in a price war, while its anticipated participation in the upcoming general auction could end with higher spectrum prices. This spells a tougher outlook for Singapore telcos. M1 (Sell, TP $1.90) is most vulnerable, followed by StarHub (Hold, TP $3.52) and Singtel (Hold, TP $3.68).
*Genting Singapore: The promotion bill to legalise casinos in Japan has been passed in the upper house. MKE opines that GENS’ recent share price rally may be premature, as the subsequent implementation bill has yet to be passed, while current valuations have overstretched fundamentals. Sell with TP of $0.73.
*SIA: Divesting its 10% stake in Tigerair Taiwan to China Airlines by 1Q17, as part of efforts to consolidate both Tigerair and Scoot under the "Scoot" brand.*ST Engineering: Jiangsu Huatong Kinetics, its 75:25 JV with China SOE Jiangsu Huatong Machinery, has been placed under voluntary liquidation. A $61m impairment charge was taken in 3Q16.
*Silverlake: Its stake in Chinese associate Global InfoTech was diluted to 11.92% from 12.43% after the latter completed the issue of 3.6m new shares at Rmb15.91 apiece to partly fund the acquisition of Shanghai RuiMin Internet Technology for up to Rmb300m. The target provides financial technology services and solutions in China.
*Ryobi Kiso: Secured new contracts worth $58m, bringing the ytd order win to $227m. Some of the contracts involve foundation and geoservices work for clients such as HDB, JTC, Changi Airport and NUS.
*Sabana REIT: Acquiring 107 Eunos Avenue 3 for $36.1m. The newly constructed light industrial property comes with an NPI guarantee of $3.1m p.a., and 24 years left on its lease.
*Viva Industrial Trust: Secured a $22m five-year term loan facility from UOB, with the borrowings secured against its 30 Pioneer Road property.
*Sunpower Group: Issued US$110m of convertible bonds due 2022 with an initial conversion price of $0.50 to CDH Fund V, to help fund the group's green investment-related businesses. The manager of the fund is CDH China Management Co., a PE firm that focuses on growth capital and middle market buyout investments in Greater China.
*Ace Achieve: 2QFY17 net profit slumped 30.2% to Rmb11.2m, due to sharp erosion in gross margin to 16.1% (-12.5ppt) from increased competition in the ICT system integration segment. Revenue of Rmb163.9m (+31.1%) was lifted by ICT system integration sales (+108.8%) but pared by contraction in its business support solutions (-17.9%) and maintenance & servicing (-76.6%) segments. Bottomline supported by government incentives of Rmb3.3m (2QFY16: nil). NAV/share at Rmb0.23.
*China Kangda Food: Sold its chicken and rabbit farm assets for Rmb5.7m and expects to book disposal gain of Rmb0.9m.
Regional bourses opened mixed, with Tokyo (+0.9%) higher, and Seoul (-0.4%) and Sydney (-0.6%) weaker.Technically, immediate resistance for the STI is at the 2,960 triple-top, with underlying support at the 2,882 breakaway gap.
Stock highlights:
*Economy: Economists have pared 2016 GDP growth forecast to 1.4% (prior: 1.8%) on substantially weaker estimates for the finance & insurance and wholesale & retail sectors. Forecast for 2017 was also trimmed to 1.5% from 1.8%.
*Telcos: TPG Telecom emerged as the fourth Singapore telco, after winning the new entrant spectrum auction with an aggressive $105m bid (reserve price: $35m). TPG’s steep valuation may result in a price war, while its anticipated participation in the upcoming general auction could end with higher spectrum prices. This spells a tougher outlook for Singapore telcos. M1 (Sell, TP $1.90) is most vulnerable, followed by StarHub (Hold, TP $3.52) and Singtel (Hold, TP $3.68).
*Genting Singapore: The promotion bill to legalise casinos in Japan has been passed in the upper house. MKE opines that GENS’ recent share price rally may be premature, as the subsequent implementation bill has yet to be passed, while current valuations have overstretched fundamentals. Sell with TP of $0.73.
*SIA: Divesting its 10% stake in Tigerair Taiwan to China Airlines by 1Q17, as part of efforts to consolidate both Tigerair and Scoot under the "Scoot" brand.*ST Engineering: Jiangsu Huatong Kinetics, its 75:25 JV with China SOE Jiangsu Huatong Machinery, has been placed under voluntary liquidation. A $61m impairment charge was taken in 3Q16.
*Silverlake: Its stake in Chinese associate Global InfoTech was diluted to 11.92% from 12.43% after the latter completed the issue of 3.6m new shares at Rmb15.91 apiece to partly fund the acquisition of Shanghai RuiMin Internet Technology for up to Rmb300m. The target provides financial technology services and solutions in China.
*Ryobi Kiso: Secured new contracts worth $58m, bringing the ytd order win to $227m. Some of the contracts involve foundation and geoservices work for clients such as HDB, JTC, Changi Airport and NUS.
*Sabana REIT: Acquiring 107 Eunos Avenue 3 for $36.1m. The newly constructed light industrial property comes with an NPI guarantee of $3.1m p.a., and 24 years left on its lease.
*Viva Industrial Trust: Secured a $22m five-year term loan facility from UOB, with the borrowings secured against its 30 Pioneer Road property.
*Sunpower Group: Issued US$110m of convertible bonds due 2022 with an initial conversion price of $0.50 to CDH Fund V, to help fund the group's green investment-related businesses. The manager of the fund is CDH China Management Co., a PE firm that focuses on growth capital and middle market buyout investments in Greater China.
*Ace Achieve: 2QFY17 net profit slumped 30.2% to Rmb11.2m, due to sharp erosion in gross margin to 16.1% (-12.5ppt) from increased competition in the ICT system integration segment. Revenue of Rmb163.9m (+31.1%) was lifted by ICT system integration sales (+108.8%) but pared by contraction in its business support solutions (-17.9%) and maintenance & servicing (-76.6%) segments. Bottomline supported by government incentives of Rmb3.3m (2QFY16: nil). NAV/share at Rmb0.23.
*China Kangda Food: Sold its chicken and rabbit farm assets for Rmb5.7m and expects to book disposal gain of Rmb0.9m.
Wednesday, December 14, 2016
SG Market (14 Dec 16)
The market could trade sideways, as positive sentiment from Wall Street could be capped by cautiousness ahead of the FOMC interest rate decision, as well as early-profit taking from oil-related counters.
Regional bourses in Tokyo (+0.2%), Seoul (+0.3%) and Sydney (+0.7%) tracked higher. Technically, immediate resistance for the STI is at the 2,960 triple-top, with underlying support at the 2,882 breakaway gap.
Stocks to watch:
*Genting Singapore: The Promotion Bill to legalise casinos in Japan has cleared an upper house committee, and voting is to take place today (the final day of the current Diet session). MKE opines that GENS’ recent share price rally may be premature, as the subsequent Implementation bill has yet to be passed, while current valuations have overstretched fundamentals. Sell with TP of SGD0.73.
*Sheng Siong: MKE downgrades to Sell from Hold with lower TP of $0.88 on a deal-changing rise in competition for prime selling space, which puts its new outlet expansion plan at risk. This is critical as new stores drive sales growth much more than old stores. Worst, with two big store closures coming up in 2017, it could be left with a shortage of new stores to pick up the slack.
*IHH Healthcare: Received license to set up 70%-owned JV, ParkwayHealth Chengdu with initial capital of Rmb300m. The hospital will provide specialised care and services such as obstetrics and gynaecology, paediatrics and orthopaedics. MKE has a Buy with TP of MYR6.52.
*Oxley: Launched Phase 1 of its maiden Batam project – Oxley Convention City. The 20,000 sqm land area mixed-use development comprises one hotel, three residential towers and 130 retail units.
*PACC Offshore: Following legal action to recover sums owing by Makamin Offshore Saudi, the latter has applied for a Saudi court order to 1) forbid POSH from substituting Makamin's charter contracts with Saudi Aramco, 2) compensate Makamin for various damages amounting to US$58.7m, and 3) prevent POSH from tendering for Aramco charter contracts for the same period of time which Makamin is prevented from doing so.
*GL: Paid £7.75m to landlord K/S Habro-Gatwick and original tenant Scottish and Newcastle to settle a rental claim and legal guarantee on a UK hotel property after the current tenant became insolvent. The amount was provided for in 3Q16.
*CMC Infocomm: Clinched three contracts worth $7.8m, for works that include installation of WiFi infrastructure and procurement and provision of required infrastructure, as well as maintenance services for telecom operators in Singapore and Thailand respectively.
*Ipco: 2QFY17 net profit plunged 46.3% to $2.1m, as revenue slid 10.9% to $13.9m on lower demand for burn-in boards from semi-conductor manufacturers, and a decrease in installations of natural gas supply equipment for new households in China. Bottom line was further dragged by a $3.7m drop in FX gain. NAV/share at $0.02.
*OEL: Received a winding up application from Oceanfront Trading over failure to pay US$0.6m. Legal proceedings will begin on 6 Jan.
Regional bourses in Tokyo (+0.2%), Seoul (+0.3%) and Sydney (+0.7%) tracked higher. Technically, immediate resistance for the STI is at the 2,960 triple-top, with underlying support at the 2,882 breakaway gap.
Stocks to watch:
*Genting Singapore: The Promotion Bill to legalise casinos in Japan has cleared an upper house committee, and voting is to take place today (the final day of the current Diet session). MKE opines that GENS’ recent share price rally may be premature, as the subsequent Implementation bill has yet to be passed, while current valuations have overstretched fundamentals. Sell with TP of SGD0.73.
*Sheng Siong: MKE downgrades to Sell from Hold with lower TP of $0.88 on a deal-changing rise in competition for prime selling space, which puts its new outlet expansion plan at risk. This is critical as new stores drive sales growth much more than old stores. Worst, with two big store closures coming up in 2017, it could be left with a shortage of new stores to pick up the slack.
*IHH Healthcare: Received license to set up 70%-owned JV, ParkwayHealth Chengdu with initial capital of Rmb300m. The hospital will provide specialised care and services such as obstetrics and gynaecology, paediatrics and orthopaedics. MKE has a Buy with TP of MYR6.52.
*Oxley: Launched Phase 1 of its maiden Batam project – Oxley Convention City. The 20,000 sqm land area mixed-use development comprises one hotel, three residential towers and 130 retail units.
*PACC Offshore: Following legal action to recover sums owing by Makamin Offshore Saudi, the latter has applied for a Saudi court order to 1) forbid POSH from substituting Makamin's charter contracts with Saudi Aramco, 2) compensate Makamin for various damages amounting to US$58.7m, and 3) prevent POSH from tendering for Aramco charter contracts for the same period of time which Makamin is prevented from doing so.
*GL: Paid £7.75m to landlord K/S Habro-Gatwick and original tenant Scottish and Newcastle to settle a rental claim and legal guarantee on a UK hotel property after the current tenant became insolvent. The amount was provided for in 3Q16.
*CMC Infocomm: Clinched three contracts worth $7.8m, for works that include installation of WiFi infrastructure and procurement and provision of required infrastructure, as well as maintenance services for telecom operators in Singapore and Thailand respectively.
*Ipco: 2QFY17 net profit plunged 46.3% to $2.1m, as revenue slid 10.9% to $13.9m on lower demand for burn-in boards from semi-conductor manufacturers, and a decrease in installations of natural gas supply equipment for new households in China. Bottom line was further dragged by a $3.7m drop in FX gain. NAV/share at $0.02.
*OEL: Received a winding up application from Oceanfront Trading over failure to pay US$0.6m. Legal proceedings will begin on 6 Jan.
Tuesday, December 13, 2016
SG Market (13 Dec 16)
The overbought market is likely to consolidate as investors await the FOMC’s rate decision tomorrow, although oil-related plays might enjoy continued interest from the latest non-OPEC output cut deal.
Regional bourses opened mixed, with Tokyo (-0.4%) and Seoul (-0.1%) weaker, and Sydney paring early losses to trade 0.1% higher.Technically, immediate resistance for the STI is at the 2,960 triple-top, with underlying support at the 2,882 breakaway gap.
Stocks to watch:
*Strategy: 2017 might be another lacklustre year, given sluggish economic growth, uncompelling index valuations, weak earnings recovery expectations and the unfavourable political outlook globally. Given such, we expect the STI to settle at ~3,000 by end-2017 (<2% upside). MKE prefers stock-picking, with top picks being CCT, KREIT, Venture, Raffles Medical, UOL, Jumbo, and Ezion.
*SIA: Received approval from the Competition Commission of Singapore on its proposed JV with Lufthansa. The wide-ranging agreement signed in Nov ’15 is aimed at expanding codeshare ties and deepening commercial cooperation in key markets in Europe, ASEAN and Australia. MKE has Hold with TP of $9.70.
*Olam: Denied charges by green groups Mighty Earth and Brainforest that its oil plam plantations are destroying forests in Gabon and failing to be transparent on where it sources its palm oil supplies. Olam maintains that it develops on highly logged and degraded secondary forests and sources from palm oil suppliers that complies with its no burn, no peat and no deforestation policy.
*Frasers Centrepoint: Its hospitality arm recently launched a 105-unit luxury services residence, North Park Place in Bangkok, Thailand. With the launch, its Thai portfolio will grow to four properties with over 850 units by 2019, while its global portfolio would have 140 properties in 80 cities and 23,400 units.
*Stamford Tyres: 2QFY17 net profit jumped 59.9% to $1.5m from a low base as well as a $1m swing to FX gain of $0.7m. Revenue was flattish at $57.7m (-0.6%) due to lower sales in South East Asian markets. Gross margin expanded to 26% (+0.7ppts) from 1) lower cost of sales, 2) contribution of value-added activities at its retail chains and truck tyre centres. Bottomline was further boosted by a decline in finance costs (-24.5%). NAV/share at $0.505.
*Imperium Crown: Mulling to divest its core investment properties in Japan, as yields on real estate assets are expected to be low. The group is also exploring new sources of revenue and growth.
*GK Goh: Selling its financial services arm GK Goh Financial Services for $12.5m, or 1x P/B to an international financial institution with an established Asian presence. The unit , which provides services on derivatives and leveraged FX, has been loss-making since 2013.
*IEV: Signed agreements with NanaMalaysia to proceed with a pilot scale production of zeolites (adsorbents and catalysts minerals) as well as a feasibility study on the commercialisation of the production of zeolites and other nano materials from rice husk. No initial investment cost was disclosed.
*Sinocloud: Will waive and forgive HK$42.1m of a HK$78.1m convertible loan to Lu Zhen Dong, pending approval by shareholders as it seeks to cut its losses from other business ventures apart from its core internet data centre business.
*Equation Summit: Looking to divest its energy management services, e-waste/recycling and the supply of construction materials business. It will make relevant disclosures where appropriate.
Regional bourses opened mixed, with Tokyo (-0.4%) and Seoul (-0.1%) weaker, and Sydney paring early losses to trade 0.1% higher.Technically, immediate resistance for the STI is at the 2,960 triple-top, with underlying support at the 2,882 breakaway gap.
Stocks to watch:
*Strategy: 2017 might be another lacklustre year, given sluggish economic growth, uncompelling index valuations, weak earnings recovery expectations and the unfavourable political outlook globally. Given such, we expect the STI to settle at ~3,000 by end-2017 (<2% upside). MKE prefers stock-picking, with top picks being CCT, KREIT, Venture, Raffles Medical, UOL, Jumbo, and Ezion.
*SIA: Received approval from the Competition Commission of Singapore on its proposed JV with Lufthansa. The wide-ranging agreement signed in Nov ’15 is aimed at expanding codeshare ties and deepening commercial cooperation in key markets in Europe, ASEAN and Australia. MKE has Hold with TP of $9.70.
*Olam: Denied charges by green groups Mighty Earth and Brainforest that its oil plam plantations are destroying forests in Gabon and failing to be transparent on where it sources its palm oil supplies. Olam maintains that it develops on highly logged and degraded secondary forests and sources from palm oil suppliers that complies with its no burn, no peat and no deforestation policy.
*Frasers Centrepoint: Its hospitality arm recently launched a 105-unit luxury services residence, North Park Place in Bangkok, Thailand. With the launch, its Thai portfolio will grow to four properties with over 850 units by 2019, while its global portfolio would have 140 properties in 80 cities and 23,400 units.
*Stamford Tyres: 2QFY17 net profit jumped 59.9% to $1.5m from a low base as well as a $1m swing to FX gain of $0.7m. Revenue was flattish at $57.7m (-0.6%) due to lower sales in South East Asian markets. Gross margin expanded to 26% (+0.7ppts) from 1) lower cost of sales, 2) contribution of value-added activities at its retail chains and truck tyre centres. Bottomline was further boosted by a decline in finance costs (-24.5%). NAV/share at $0.505.
*Imperium Crown: Mulling to divest its core investment properties in Japan, as yields on real estate assets are expected to be low. The group is also exploring new sources of revenue and growth.
*GK Goh: Selling its financial services arm GK Goh Financial Services for $12.5m, or 1x P/B to an international financial institution with an established Asian presence. The unit , which provides services on derivatives and leveraged FX, has been loss-making since 2013.
*IEV: Signed agreements with NanaMalaysia to proceed with a pilot scale production of zeolites (adsorbents and catalysts minerals) as well as a feasibility study on the commercialisation of the production of zeolites and other nano materials from rice husk. No initial investment cost was disclosed.
*Sinocloud: Will waive and forgive HK$42.1m of a HK$78.1m convertible loan to Lu Zhen Dong, pending approval by shareholders as it seeks to cut its losses from other business ventures apart from its core internet data centre business.
*Equation Summit: Looking to divest its energy management services, e-waste/recycling and the supply of construction materials business. It will make relevant disclosures where appropriate.
Monday, December 12, 2016
City Dev
City Dev is continuing to win plaudits for its success in monetising its assets into profit participation securities (PPS) even as luxury residential property prices remain soft.
Its latest PPS transaction entailed the injection of its 156-unit Nouvel 18 property for $977.6m, valuing the development at $2,750 psf. Under the structure, $102m PPS were issued to Green 18, a special-purpose vehicle owned by several high-net-worth individuals, offering 5% in annual returns plus additional upside if units are sold above $2,750 psf.
The move is seen largely as a de-risking of its balance sheet and also a way to avoid paying QC extension penalties. Thus far, the property developer has securitised $3.5b worth of properties since late 2014 and market watchers are anticipating more possible transactions in the pipeline. These include:
1) Its small and non-core industrial portfolio, comprising five properties. If divested for $350m, a foreign broker estimates it would lift RNAV value by $150m or $0.16/share.
2) Its six retail assets. The sizeable portfolio of six malls or retail units is currently valued at $2b and could potentially fetch more.
3) Legacy residential units. These include 58 units at Cliveden as well as its South Beach project, which has a gross development value of $3b.
While the weak market does indeed present its challenges, such securitisation moves could see the counter narrow the discount to its RNAV of $12.38.
The counter is currently trading at a 27% discount or more than 1sd from its 5-year P/B mean 1.16x. The street is relatively bullish on the counter with 19 Buy, 3 Hold and 1 Sell ratings and a consensus TP of $10.10.
Its latest PPS transaction entailed the injection of its 156-unit Nouvel 18 property for $977.6m, valuing the development at $2,750 psf. Under the structure, $102m PPS were issued to Green 18, a special-purpose vehicle owned by several high-net-worth individuals, offering 5% in annual returns plus additional upside if units are sold above $2,750 psf.
The move is seen largely as a de-risking of its balance sheet and also a way to avoid paying QC extension penalties. Thus far, the property developer has securitised $3.5b worth of properties since late 2014 and market watchers are anticipating more possible transactions in the pipeline. These include:
1) Its small and non-core industrial portfolio, comprising five properties. If divested for $350m, a foreign broker estimates it would lift RNAV value by $150m or $0.16/share.
2) Its six retail assets. The sizeable portfolio of six malls or retail units is currently valued at $2b and could potentially fetch more.
3) Legacy residential units. These include 58 units at Cliveden as well as its South Beach project, which has a gross development value of $3b.
While the weak market does indeed present its challenges, such securitisation moves could see the counter narrow the discount to its RNAV of $12.38.
The counter is currently trading at a 27% discount or more than 1sd from its 5-year P/B mean 1.16x. The street is relatively bullish on the counter with 19 Buy, 3 Hold and 1 Sell ratings and a consensus TP of $10.10.
SG Market (12 Dec 16)
Market sentiment could be lifted by the relentless run-up sentiment on Wall Street, as well as from the surge in oil price, although upside may be capped by an expected US rate hike this week, which will bode well for banks and S’pore export data due Fri.
Regional bourses in Tokyo (+0.7%), Seoul (+0.1%) and Sydney (+0.3%) opened firmer.Technically, the overstretched STI could face resistance at the 2,960 triple-top, with next objective at 3,040. Underlying support is at the 2,882 breakaway gap.
Stocks to watch:
*O&M: Offshore names could rally today, in tandem with a 4.7% surge in WTI crude to almost US$54/bbl), following news that non-OPEC producers have agreed to cut oil output, and that Saudi Arabia is signalling deeper cuts. MKE likes Ezion as early cycle beneficiary, with Buy call and TP of $0.42
*Keppel Corp: Recent sentiment-driven rally of 8.8% since the Nov OPEC deal may be unsustainable. The market, which views Keppel as an oil-related play, may be disappointed, as its earnings have now skewed towards property, while the O&M segment (26% of 9M16 profit) is a late cycle beneficiary. MKE has a Sell with TP of $4.57.
*GLP: Set up GLP US Income Partners III Fund to acquire a US$1.1b portfolio of industrial assets in the US. Trading at 0.85x P/B.
*CITIC Envirotech: Secured its first build-own-operate project for a 95,000 tpa hazardous waste treatment facility in Shandong, China with JV partner Shangdong Zhengtian Environmental Protection Technology. The 70:30 JV will undertake the project, which has a total investment value of Rmb240m, and is expected to be completed by end-2017. Trading at 21.5x trailing P/E.
*KrisEnergy: Noteholders have consented to extend the maturity dates of its $330m worth of bonds to 2022 and 2033 instead of 2017 and 2018. This is a pre-condition for KrisEnergy to tap up to $140m preferential offering of 93 zero coupon notes with 837 detachable warrants for every 1,000 shares held, which Keppel Corp is underwriting.
*iFAST: Its new FSMOne platform has stopped trading Singapore stocks after its appointed counterparty, OCBC Securities pulled the plug on giving it access to SGX quotes as FSMOne ran into direct competition with OCBC's retail brokerage business. iFAST is applying to be an SGX trading member next year, subject to relevant approval. Meanwhile, it might face difficulties finding a willing counterparty to execute its trades.
*Pacific Radiance: 51:49 JV, DOT Radiance has agreed to defer delivery of a vessel to a charterer to 31 Dec 2017. A long term charter contract worth US$140m had previously been secured ahead of the vessel’s delivery in 2016/17.
*Soilbuild REIT: Terminated Technics Oil & Gas’s lease of the property at 72 Loyang Way. It currently has up to five months (unutilised portion of bank guarantee received in May) to look for a new tenant for the property. *KLW: Following investigations by the CAD and an SGX reprimand, it has terminated a 2b new share put option agreement with substantial shareholder Prince Abdul Qawi (9.3% ownership).
*Dukang Distillers: Terminated the sale of residual assets at its Yichuan factory, following the decision to temporarily slow down its relocation exercise due to production requirements.
*Ziwo: Terminated its proposed diversification into Korean real estate through the acquisition of Longrunn Intel Incheon. Separately, it proposed to acquire a 37.8% stake in Beijing E-Star Electric Technology, which provides charging equipment for electronic vehicles, for $1.2m through the issuance of new shares at $0.019/share.
Regional bourses in Tokyo (+0.7%), Seoul (+0.1%) and Sydney (+0.3%) opened firmer.Technically, the overstretched STI could face resistance at the 2,960 triple-top, with next objective at 3,040. Underlying support is at the 2,882 breakaway gap.
Stocks to watch:
*O&M: Offshore names could rally today, in tandem with a 4.7% surge in WTI crude to almost US$54/bbl), following news that non-OPEC producers have agreed to cut oil output, and that Saudi Arabia is signalling deeper cuts. MKE likes Ezion as early cycle beneficiary, with Buy call and TP of $0.42
*Keppel Corp: Recent sentiment-driven rally of 8.8% since the Nov OPEC deal may be unsustainable. The market, which views Keppel as an oil-related play, may be disappointed, as its earnings have now skewed towards property, while the O&M segment (26% of 9M16 profit) is a late cycle beneficiary. MKE has a Sell with TP of $4.57.
*GLP: Set up GLP US Income Partners III Fund to acquire a US$1.1b portfolio of industrial assets in the US. Trading at 0.85x P/B.
*CITIC Envirotech: Secured its first build-own-operate project for a 95,000 tpa hazardous waste treatment facility in Shandong, China with JV partner Shangdong Zhengtian Environmental Protection Technology. The 70:30 JV will undertake the project, which has a total investment value of Rmb240m, and is expected to be completed by end-2017. Trading at 21.5x trailing P/E.
*KrisEnergy: Noteholders have consented to extend the maturity dates of its $330m worth of bonds to 2022 and 2033 instead of 2017 and 2018. This is a pre-condition for KrisEnergy to tap up to $140m preferential offering of 93 zero coupon notes with 837 detachable warrants for every 1,000 shares held, which Keppel Corp is underwriting.
*iFAST: Its new FSMOne platform has stopped trading Singapore stocks after its appointed counterparty, OCBC Securities pulled the plug on giving it access to SGX quotes as FSMOne ran into direct competition with OCBC's retail brokerage business. iFAST is applying to be an SGX trading member next year, subject to relevant approval. Meanwhile, it might face difficulties finding a willing counterparty to execute its trades.
*Pacific Radiance: 51:49 JV, DOT Radiance has agreed to defer delivery of a vessel to a charterer to 31 Dec 2017. A long term charter contract worth US$140m had previously been secured ahead of the vessel’s delivery in 2016/17.
*Soilbuild REIT: Terminated Technics Oil & Gas’s lease of the property at 72 Loyang Way. It currently has up to five months (unutilised portion of bank guarantee received in May) to look for a new tenant for the property. *KLW: Following investigations by the CAD and an SGX reprimand, it has terminated a 2b new share put option agreement with substantial shareholder Prince Abdul Qawi (9.3% ownership).
*Dukang Distillers: Terminated the sale of residual assets at its Yichuan factory, following the decision to temporarily slow down its relocation exercise due to production requirements.
*Ziwo: Terminated its proposed diversification into Korean real estate through the acquisition of Longrunn Intel Incheon. Separately, it proposed to acquire a 37.8% stake in Beijing E-Star Electric Technology, which provides charging equipment for electronic vehicles, for $1.2m through the issuance of new shares at $0.019/share.
Friday, December 9, 2016
SGX
SGX saw renewed market fervour on possible spillover effects from Trumponomics with securities turnover surged to $29.3b (+51%y/y, +49% m/m) in Nov albeit with one additional trading day versus Oct and two more compared to last year. Nonetheless, securities daily average value jumped to $1.3b (+37% y/y, +43% m/m).
During the month, there was one new Catalist listing (HC Surgical Specialists) which raised $8.1m. There were 24 new bond listings which raised $8.5b.
Derivatives trading volume also saw a substantial uptick to 16.6m contracts (+22% y/y, +43% m/m), reflecting the risk-on sentiment across Nifty 50 (+31% y/y, +16% m/m) and Nikkei 225 (+22% y/y, +52% m/m) index futures although performance was more mixed for the China A50 (-2% y/y, +53% m/m) and MSCI India (-72% y/y, +7% m/m) index futures.
Meanwhile, FX futures volume stood at 701,870 contracts (+51% y/y, +41% m/m), testament of the renewed volatility in currency markets following Trump's surprise election.
The Exchange's strongest growth engine continued to come from the commodities derivatives trading which bolted to 2.4m (+147% y/y, +101% m/m), buoyed by iron ore (+145% y/y, +111% m/m), forward freight (+34% y/y, +52% m/m), and rubber (+273% y/y, +42% m/m) derivatives.
While the strong trading flows were reflective of overseas events such as Trump's election win, there is little to indicate that such flows will continue with similar strength in the coming months.
SGX is currently trading at 22.2x forward P/E with indicative yield of 3.8%, seemingly cheaper to its closest peer, HKEx (38.4x, 2.6%). However, the latter's premium valuation is backed by stronger growth prospects arising from its closer proximity and ties to China coupled with two stock connects (Shanghai and Shenzhen).
The street has 8 Buy, 10 Hold ratings on the exchange with a consensus TP of $7.79, indicating little potential upside (>5%) from current prices.
During the month, there was one new Catalist listing (HC Surgical Specialists) which raised $8.1m. There were 24 new bond listings which raised $8.5b.
Derivatives trading volume also saw a substantial uptick to 16.6m contracts (+22% y/y, +43% m/m), reflecting the risk-on sentiment across Nifty 50 (+31% y/y, +16% m/m) and Nikkei 225 (+22% y/y, +52% m/m) index futures although performance was more mixed for the China A50 (-2% y/y, +53% m/m) and MSCI India (-72% y/y, +7% m/m) index futures.
Meanwhile, FX futures volume stood at 701,870 contracts (+51% y/y, +41% m/m), testament of the renewed volatility in currency markets following Trump's surprise election.
The Exchange's strongest growth engine continued to come from the commodities derivatives trading which bolted to 2.4m (+147% y/y, +101% m/m), buoyed by iron ore (+145% y/y, +111% m/m), forward freight (+34% y/y, +52% m/m), and rubber (+273% y/y, +42% m/m) derivatives.
While the strong trading flows were reflective of overseas events such as Trump's election win, there is little to indicate that such flows will continue with similar strength in the coming months.
SGX is currently trading at 22.2x forward P/E with indicative yield of 3.8%, seemingly cheaper to its closest peer, HKEx (38.4x, 2.6%). However, the latter's premium valuation is backed by stronger growth prospects arising from its closer proximity and ties to China coupled with two stock connects (Shanghai and Shenzhen).
The street has 8 Buy, 10 Hold ratings on the exchange with a consensus TP of $7.79, indicating little potential upside (>5%) from current prices.
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