MARKET OVERVIEW
- Expect rotational play into oil-related counters after WTI crude oil topped US$63/bbl for the first time since 2014, while tech manufacturers could come under pressure, weighed by the pullback in global semiconductor stocks.
- Technically, the STI has extended into overbought territory with short-term support at 3,470 and topside resistance at 3,550.
CORPORATE RESULTS
*HC Surgical Specialists (HSP SP)
- 1HFY18 net profit jumped to $2.5m (1HFY17: $0.1m), helped mainly by the absence of IPO expense and a newly-acquired associate.
- Revenue of $7.7m (+80%) was lifted by full six-month contribution from M&As.
- However, interim DPS was slashed to 1.1¢ (1HFY17: 1.8¢).
- Trades at 69.9x trailing P/E.
POSITIVE NEWS
*Tuan Sing
- Booked $44.5m in fair value gain for FY17 (FY16: $2.3m) following its annual revaluation of investment properties.
- For context, 9M17 and FY16 net profit were $13.1m and $33.6m respectively.
- Trades at forward P/E of 22.6x and pre-adjusted P/B of 0.61x.
*Hiap Tong
- Awarded a 5-year extension to a lifting services contract with ExxonMobil Asia from 1 Jan.
- Work entails the provision of crane rental and lifting services.
- The contract value will depend on the amount and scope of work to be carried out.
- Trades at 7.4x trailing P/E.
*Alpha Energy
- 36.2% owned Brooks Range Petroleum achieved a peak average of 1,292 bbls/day in production from its Southern Miluvearch Unit in Alaska, US.
- The unit is estimated to have 33.3m bbls of oil reserve.
NEUTRAL NEWS
*Spackman Entertainment
- Slated to release Golden Slumber in Korean theatres on 14 Feb.
- To recap, the estimated total production budget for the film was set at 10b won (US$8.7m).
- Trades at 14.8x forward P/E.
Wednesday, January 10, 2018
Tuesday, January 9, 2018
SG Market (09 Jan 18)
MARKET OVERVIEW
- The market could creep higher as investors take stock of the strong gains that marked the start of 2018 and await macro data releases from China and US this week and ahead of 4Q earnings season, which kicks off later in the month.
- Technically, the STI has extended into overbought territory with short-term support at 3,470 and topside resistance at 3,550.
CORPORATE RESULTS
*Cheung Woh Tech
- Dipped into a 3QFY18 net loss of $0.4m, overturning a profit of $0.3m profit a year ago.
- Turnover grew 5.8% to $21.5m from higher sales of hard disk drive components and baseplates, while demand for air-combs declined.
- But gross margin of 8.9% (-7.8ppt) was compressed by higher material and labour costs.
- Bottom line was further pressured by higher distribution & selling (+36%) and finance (+27.9%) expenses, but partially mitigated by increased sales of scrap metal (+38.4%) and a positive $1.6m swing to FX gain of $0.2m.
- NAV/share at $0.3292.
POSITIVE NEWS
*Manufacturing Integration Tech
- To dispose its semiconductor equipment business to China Fortune-Tech Capital for an unspecified amount, but not >13x FY17 P/E.
- Upon completion, group will focus on its remaining contract equipment manufacturing and customised automation business.
- Company is loss-making and trades at 1.28x P/B.
*Sarine Technologies
- Introduced DiaExpert Edge, an upgrade to existing or new DiaExpert platforms.
- The new system shortens time and improves accuracy of rough stone modelling and planning, thereby enhancing the yield of polished stones.
- Management believes it has an estimated addressable market of several thousands to 10,000 systems, at an expected ASP of ~US$6,000.
- Trades at 18.2x forward P/E.
*Jiutian Chemical
- 74% owned Anyang Jiujiu has commenced the commercial production of sodium hydrosulfite.
- The factory has received approval to operate under a temporary production permit, with regular production permit slated to be granted in 1Q18.
- The commercial production of sodium hydrosulfite for its capacity of 140,000 tons and other feedstocks would make the subsidiary the most integrated and second largest manufacturer in China.
*TIH
- Proposed voluntary unconditional privatisation offer at $0.57/share by Kaiser Union, owned by Lippo China Resources and Alexandra Road.
- The offer will be paid partially in cash ($0.125/share), and the issue of a three-year unsecured 2.25% note at par ($0.445).
*Ley Choon
- Secured $10.4m contract from PUB Singapore for the replacement of water mains for network renewal.
- Trades at 2.6x trailing P/E.
NEGATIVE NEWS
*SGX
- Total Dec securities market turnover dropped to $19.2b (-8% y/y, -33% m/m), in a seasonally weak month as daily average value fell below $1b to $959m (-4% y/y, -26% m/m).
- Total derivatives volume totalled 15.6m contracts (+18% y/y, -13% m/m), while commodities derivatives volume was 1.1m (-6% y/y, -21% m/m).
- There were two Catalist listings and 150 new bond listings, which raised $24.6m and $50.2b, respectively.
- Trading at 21.9x forward P/E.
NEUTRAL NEWS
*ST Engineering
- Injected an additional US$1.5m into subsidiary Total Engine Asset Management, bringing total investment to US$16.5m.
- The 50% owned firm is intended to support the expansion of the group's engine leasing business.
- Trades at 21.5x forward P/E.
*Neo Group
- Incorporated 70% owned subsidiary, Kim's Paradise, which specialises in confinement and nutrition meals that focus on wellness and healing.
- The group expects to reap operational synergies through tapping on its existing customer base and cost savings through resource sharing.
- Last traded at 23x forward P/E.
*Singapore eDevelopment
- Appointed Dr Roscoe M. Moore Jr as Senior Scientific Adviser to support its research of a new universal therapeutic drug platform, Linebacker, to combat a range of diseases including Alzheimer's, diabetes and cancer.
- Dr Moore is a public health expert who served under former US Presidents in various public health departments.
*Adventus
- Entered into a 51% Vietnamese JV with Panthera Company and two individuals for $56.1b dong (US$2.5m) to develop a resort.
- The project is sited on a land area of 11,797.6 sqm at Khoi Xuyen Trung, Quang Nam Province in Vietnam.
- The JV enables an entry into the Vietnamese hospitality sector.
- The market could creep higher as investors take stock of the strong gains that marked the start of 2018 and await macro data releases from China and US this week and ahead of 4Q earnings season, which kicks off later in the month.
- Technically, the STI has extended into overbought territory with short-term support at 3,470 and topside resistance at 3,550.
CORPORATE RESULTS
*Cheung Woh Tech
- Dipped into a 3QFY18 net loss of $0.4m, overturning a profit of $0.3m profit a year ago.
- Turnover grew 5.8% to $21.5m from higher sales of hard disk drive components and baseplates, while demand for air-combs declined.
- But gross margin of 8.9% (-7.8ppt) was compressed by higher material and labour costs.
- Bottom line was further pressured by higher distribution & selling (+36%) and finance (+27.9%) expenses, but partially mitigated by increased sales of scrap metal (+38.4%) and a positive $1.6m swing to FX gain of $0.2m.
- NAV/share at $0.3292.
POSITIVE NEWS
*Manufacturing Integration Tech
- To dispose its semiconductor equipment business to China Fortune-Tech Capital for an unspecified amount, but not >13x FY17 P/E.
- Upon completion, group will focus on its remaining contract equipment manufacturing and customised automation business.
- Company is loss-making and trades at 1.28x P/B.
*Sarine Technologies
- Introduced DiaExpert Edge, an upgrade to existing or new DiaExpert platforms.
- The new system shortens time and improves accuracy of rough stone modelling and planning, thereby enhancing the yield of polished stones.
- Management believes it has an estimated addressable market of several thousands to 10,000 systems, at an expected ASP of ~US$6,000.
- Trades at 18.2x forward P/E.
*Jiutian Chemical
- 74% owned Anyang Jiujiu has commenced the commercial production of sodium hydrosulfite.
- The factory has received approval to operate under a temporary production permit, with regular production permit slated to be granted in 1Q18.
- The commercial production of sodium hydrosulfite for its capacity of 140,000 tons and other feedstocks would make the subsidiary the most integrated and second largest manufacturer in China.
*TIH
- Proposed voluntary unconditional privatisation offer at $0.57/share by Kaiser Union, owned by Lippo China Resources and Alexandra Road.
- The offer will be paid partially in cash ($0.125/share), and the issue of a three-year unsecured 2.25% note at par ($0.445).
*Ley Choon
- Secured $10.4m contract from PUB Singapore for the replacement of water mains for network renewal.
- Trades at 2.6x trailing P/E.
NEGATIVE NEWS
*SGX
- Total Dec securities market turnover dropped to $19.2b (-8% y/y, -33% m/m), in a seasonally weak month as daily average value fell below $1b to $959m (-4% y/y, -26% m/m).
- Total derivatives volume totalled 15.6m contracts (+18% y/y, -13% m/m), while commodities derivatives volume was 1.1m (-6% y/y, -21% m/m).
- There were two Catalist listings and 150 new bond listings, which raised $24.6m and $50.2b, respectively.
- Trading at 21.9x forward P/E.
NEUTRAL NEWS
*ST Engineering
- Injected an additional US$1.5m into subsidiary Total Engine Asset Management, bringing total investment to US$16.5m.
- The 50% owned firm is intended to support the expansion of the group's engine leasing business.
- Trades at 21.5x forward P/E.
*Neo Group
- Incorporated 70% owned subsidiary, Kim's Paradise, which specialises in confinement and nutrition meals that focus on wellness and healing.
- The group expects to reap operational synergies through tapping on its existing customer base and cost savings through resource sharing.
- Last traded at 23x forward P/E.
*Singapore eDevelopment
- Appointed Dr Roscoe M. Moore Jr as Senior Scientific Adviser to support its research of a new universal therapeutic drug platform, Linebacker, to combat a range of diseases including Alzheimer's, diabetes and cancer.
- Dr Moore is a public health expert who served under former US Presidents in various public health departments.
*Adventus
- Entered into a 51% Vietnamese JV with Panthera Company and two individuals for $56.1b dong (US$2.5m) to develop a resort.
- The project is sited on a land area of 11,797.6 sqm at Khoi Xuyen Trung, Quang Nam Province in Vietnam.
- The JV enables an entry into the Vietnamese hospitality sector.
Monday, January 8, 2018
SG Market (08 Jan 18)
MARKET OVERVIEW
- Market rally could take a short pause to digest the sharp gains since start of the year, with only US and China inflation data due this week, although sentiment remains largely supportive.
- Technically, the STI has extended into overbought territory with short-term support at 3,470 and topside resistance at 3,550.
CORPORATE RESULTS
*SPH REIT
- Stable 1QFY18 DPU of 1.34¢ met expectations.
- Gross revenue of $53.5m (+1.7%) and NPI of $42.2m (+1.9%) were buoyed by higher rental income from Paragon and The Clementi Mall.
- While both properties continued to enjoy full occupancy, negative rental reversions were recorded at Paragon (-10.6%) and The Clementi Mall (-9.8%) for new and renewed lease, representing 3.7% of portfolio NLA.
- WALE ast at Nov '17 was 2.1 years, with 13.3% of NLA due for expiry in FY18.
- Aggregate leverage stayed at 25.4% with average tenor of 1.8 years.
- Trades at an annualised 1QFY18 yield of 5% and 1.14x P/B.
POSITIVE NEWS
*Mapletree Logistics Trust
- Acquiring the remaining 38% stake in HK logistics property, Shatin No 3 for HK$677m.
- The property, with NLA of 39,125 sqm, will be enhanced and re-positioned to generate higher yield and capital value.
- Post-completion, MLT's aggregate leverage is expected to rise to 39% (2QFY18: 33.7%).
- MKE has a Hold with TP of $1.25.
*NetLink Trust
- DBS raised its stake to 27.18% from 26.9% after acquiring 11m shares via the open market at an average price of $0.83.
- Trades at FY18 indicative yield of 5.3% and 1.04x P/B.
*Vard
- Secured a construction contract for one car-and passenger ferry for Boreal for an undisclosed sum.
- Boreal is a leading nationwide public transport provider in Norway.
- The hull will be built by Vard Braila in Romania and slated for delivery in 3Q19.
- Trades at 0.8x P/B.
NEGATIVE NEWS
*TEE Int'l/ TEE Land
- TEE Int'l issued profit warning of 2QFY18 and 1HFY18 loss on impairment losses totalling $8m stemming from the proposed disposal of TEE Land's 31.9% owned Thai associate, Chewathai, as well as unsold units at TEE Land's The Peak @ Cairnhill I.
*Alliance Mineral
- Updated that it has not received a loan advance of A$4.8m from HK-listed Burwill on 31 Dec '17 under a binding term sheet and letter of variation signed in Oct '17.
- Discussions with Burwill are ongoing since mid-Dec '17 over the timing and terms of the loan.
- Does not expect the matter to results in any material impact on its operations.
NEUTRAL NEWS
*BRC Asia
- Proposed private placement of 37m new shares (19.49% existing share capital) to 15 investors at $1.27 apiece.
- Net proceeds of $46.9m earmarked for strategic investments and working capital.
*Hyflux
- Filed a Notice of Arbitration to commence proceedings against Mitsubishi Heavy Industries Environmental & Chemical Engineering in relation to a waste-to-energy plant sub-contract dispute.
- Trades at 0.53x P/B.
*Raffles Education
- To transfer its Hong Kong listing from GEM to the mainboard.
*Vallianz
- Exercised its right to defer distribution for its US$22.5m 4% senior perpetual securities, of which the payment was due on 5 Jan '18.
- Market rally could take a short pause to digest the sharp gains since start of the year, with only US and China inflation data due this week, although sentiment remains largely supportive.
- Technically, the STI has extended into overbought territory with short-term support at 3,470 and topside resistance at 3,550.
CORPORATE RESULTS
*SPH REIT
- Stable 1QFY18 DPU of 1.34¢ met expectations.
- Gross revenue of $53.5m (+1.7%) and NPI of $42.2m (+1.9%) were buoyed by higher rental income from Paragon and The Clementi Mall.
- While both properties continued to enjoy full occupancy, negative rental reversions were recorded at Paragon (-10.6%) and The Clementi Mall (-9.8%) for new and renewed lease, representing 3.7% of portfolio NLA.
- WALE ast at Nov '17 was 2.1 years, with 13.3% of NLA due for expiry in FY18.
- Aggregate leverage stayed at 25.4% with average tenor of 1.8 years.
- Trades at an annualised 1QFY18 yield of 5% and 1.14x P/B.
POSITIVE NEWS
*Mapletree Logistics Trust
- Acquiring the remaining 38% stake in HK logistics property, Shatin No 3 for HK$677m.
- The property, with NLA of 39,125 sqm, will be enhanced and re-positioned to generate higher yield and capital value.
- Post-completion, MLT's aggregate leverage is expected to rise to 39% (2QFY18: 33.7%).
- MKE has a Hold with TP of $1.25.
*NetLink Trust
- DBS raised its stake to 27.18% from 26.9% after acquiring 11m shares via the open market at an average price of $0.83.
- Trades at FY18 indicative yield of 5.3% and 1.04x P/B.
*Vard
- Secured a construction contract for one car-and passenger ferry for Boreal for an undisclosed sum.
- Boreal is a leading nationwide public transport provider in Norway.
- The hull will be built by Vard Braila in Romania and slated for delivery in 3Q19.
- Trades at 0.8x P/B.
NEGATIVE NEWS
*TEE Int'l/ TEE Land
- TEE Int'l issued profit warning of 2QFY18 and 1HFY18 loss on impairment losses totalling $8m stemming from the proposed disposal of TEE Land's 31.9% owned Thai associate, Chewathai, as well as unsold units at TEE Land's The Peak @ Cairnhill I.
*Alliance Mineral
- Updated that it has not received a loan advance of A$4.8m from HK-listed Burwill on 31 Dec '17 under a binding term sheet and letter of variation signed in Oct '17.
- Discussions with Burwill are ongoing since mid-Dec '17 over the timing and terms of the loan.
- Does not expect the matter to results in any material impact on its operations.
NEUTRAL NEWS
*BRC Asia
- Proposed private placement of 37m new shares (19.49% existing share capital) to 15 investors at $1.27 apiece.
- Net proceeds of $46.9m earmarked for strategic investments and working capital.
*Hyflux
- Filed a Notice of Arbitration to commence proceedings against Mitsubishi Heavy Industries Environmental & Chemical Engineering in relation to a waste-to-energy plant sub-contract dispute.
- Trades at 0.53x P/B.
*Raffles Education
- To transfer its Hong Kong listing from GEM to the mainboard.
*Vallianz
- Exercised its right to defer distribution for its US$22.5m 4% senior perpetual securities, of which the payment was due on 5 Jan '18.
Friday, January 5, 2018
SG Market (05 Jan 18)
MARKET OVERVIEW
- Expect the early 2018 rally, which was led mainly by the banks and property developers, to spill over to the broader market after US markets set new index landmarks on tax reform and upbeat global economic data.
- Technically, the STI has broken above 3,500 and heading towards the post-financial crisis high of 3,550 set in Apr 2015. Downside support is now at 3,470.
POSITIVE NEWS
*CapitaLand
- Serviced residence unit The Ascott sealed contracts to manage nine properties with >2,000 units in China, exceeding its 20,000 target for 2020 and on track to achieve its global portfolio target of 80,000 units in 2018.
- Separately, the group is reconstituting its China mall portfolio and divesting stakes in 20 malls across 19 cities at an agreed value of Rmb8,365m.
- This is expected to generate a sale proceeds of $660m and net gain of $75m. Impact on recurring income is limited as these 20 malls accounted for only 4% and 7% of total and China mall valuation.
- Post divestment, its shopping mall network in China will comprise 49 assets, of which 45 are located in 1st and 2nd tier cities.
- Trades at 30.6% discount to its RNAV/share of $5.27.
*Sunpower
- Awarded an EPC contract worth Rmb35m from Yangquan Coal Industry Group.
- Contract marks its foray into the flue gas desulphurisation market and is due to be completed by end FY18.
- Last traded at 15.3x trailing P/E.
*Nordic Group
- Clinched contracts totalling $20.6m from new and repeat customers in the marine, O&G, infrastructure and petrochemical industries.
- Works scheduled to be completed by Jan '21.
- Last traded at 15.3x trailing P/E.
*ASTI
- Substantial shareholder Soh Pock Kheng acquired 6.4m shares at an average $0.086 apiece between 18 Dec '17 and 4 Jan '18.
- This raised his stake from 7.026% to 8%.
- Last traded at 48.2x trailing P/E and 0.87x P/B.
NEUTRAL NEWS
*Straits Trading
- Investing ¥9b ($106.5m) in Savills IM Japan Residential Fund.
- The fund seeks to maximise income and long-term capital appreciation through the acquisition of residential properties in the Greater Tokyo area and other key markets in Japan.
- Trades at 14.8x trailing P/E and 0.67x P/B.
*Citic Envirotech
- Acquiring the remaining 15% stake in United Envirotech Water (Changyi) for Rmb32.5m.
- The target owns and operates five industrial wastewater treatment plants with total design capcity of 200,000 m3/day in Changyi City, Shandong, China.
- Last traded at 17.2x forward P/E.
*Clearbridge Health
- To acquire a 65%-stake in Philippines-based Marzan Health Care for Php69.6m ($$1.9m).
- Marzan owns and operates a medical centre in Manila, offering a wide range of services including pathology, imaging diagnostics, dental care and renal care.
- The acquisition will be done via six tranches, of which the last two are subject to a profit guarantee of Php3.6m and Php3.5m in 2019 and 2020.
- Additionally, it intends to subscribe for Php25m in preferred shares, which will have a fixed dividend rate of 2% above the prime lending rate.
*Sarine Technologies
- Planning to initiate legal action against a manufacturer in Surat, India, for fraudulent use of the group's Galaxy inclusion mapping technology and systems.
- The manufacturer allegedly under-reported rough stone weights and underpaid amounts owed to the group for scanning of rough stones.
- Identity of the manufacturer will be disclosed upon filing of legal actions in a few weeks' time.
- Trades at 17.9x forward P/E.
- Expect the early 2018 rally, which was led mainly by the banks and property developers, to spill over to the broader market after US markets set new index landmarks on tax reform and upbeat global economic data.
- Technically, the STI has broken above 3,500 and heading towards the post-financial crisis high of 3,550 set in Apr 2015. Downside support is now at 3,470.
POSITIVE NEWS
*CapitaLand
- Serviced residence unit The Ascott sealed contracts to manage nine properties with >2,000 units in China, exceeding its 20,000 target for 2020 and on track to achieve its global portfolio target of 80,000 units in 2018.
- Separately, the group is reconstituting its China mall portfolio and divesting stakes in 20 malls across 19 cities at an agreed value of Rmb8,365m.
- This is expected to generate a sale proceeds of $660m and net gain of $75m. Impact on recurring income is limited as these 20 malls accounted for only 4% and 7% of total and China mall valuation.
- Post divestment, its shopping mall network in China will comprise 49 assets, of which 45 are located in 1st and 2nd tier cities.
- Trades at 30.6% discount to its RNAV/share of $5.27.
*Sunpower
- Awarded an EPC contract worth Rmb35m from Yangquan Coal Industry Group.
- Contract marks its foray into the flue gas desulphurisation market and is due to be completed by end FY18.
- Last traded at 15.3x trailing P/E.
*Nordic Group
- Clinched contracts totalling $20.6m from new and repeat customers in the marine, O&G, infrastructure and petrochemical industries.
- Works scheduled to be completed by Jan '21.
- Last traded at 15.3x trailing P/E.
*ASTI
- Substantial shareholder Soh Pock Kheng acquired 6.4m shares at an average $0.086 apiece between 18 Dec '17 and 4 Jan '18.
- This raised his stake from 7.026% to 8%.
- Last traded at 48.2x trailing P/E and 0.87x P/B.
NEUTRAL NEWS
*Straits Trading
- Investing ¥9b ($106.5m) in Savills IM Japan Residential Fund.
- The fund seeks to maximise income and long-term capital appreciation through the acquisition of residential properties in the Greater Tokyo area and other key markets in Japan.
- Trades at 14.8x trailing P/E and 0.67x P/B.
*Citic Envirotech
- Acquiring the remaining 15% stake in United Envirotech Water (Changyi) for Rmb32.5m.
- The target owns and operates five industrial wastewater treatment plants with total design capcity of 200,000 m3/day in Changyi City, Shandong, China.
- Last traded at 17.2x forward P/E.
*Clearbridge Health
- To acquire a 65%-stake in Philippines-based Marzan Health Care for Php69.6m ($$1.9m).
- Marzan owns and operates a medical centre in Manila, offering a wide range of services including pathology, imaging diagnostics, dental care and renal care.
- The acquisition will be done via six tranches, of which the last two are subject to a profit guarantee of Php3.6m and Php3.5m in 2019 and 2020.
- Additionally, it intends to subscribe for Php25m in preferred shares, which will have a fixed dividend rate of 2% above the prime lending rate.
*Sarine Technologies
- Planning to initiate legal action against a manufacturer in Surat, India, for fraudulent use of the group's Galaxy inclusion mapping technology and systems.
- The manufacturer allegedly under-reported rough stone weights and underpaid amounts owed to the group for scanning of rough stones.
- Identity of the manufacturer will be disclosed upon filing of legal actions in a few weeks' time.
- Trades at 17.9x forward P/E.
Thursday, January 4, 2018
SG Market (04 Jan 18)
MARKET OVERVIEW
- The market could extend its 5-day winning streak as investors cheer strong US and Singapore manufacturing data, higher oil prices and continued strength in technology shares.
- Technically, the STI could test the upside resistance at 3,470, with the next objective at 3,550 set in Apr 2015. Downside support lies at 3,380.
MACRO WATCH
*Economy
- Dec PMI came in at 52.8 (Nov: 52.9) marking its 16th consecutive month of expansion and capping a year of strong growth for the manufacturing sector.
- The marginally lower reading from a near 8-year high in Nov due to slower pace of expansion in new orders, exports, factory output and inventory, particularly for the electronics sector.
POSITIVE NEWS
*Venture Corp
- Joining the benchmark STI tomorrow, replacing GLP following its privatisation.
- Trades at prospective 17.5x FY18e P/E.
- The street is outright bullish on the electronics contract manufacturer with 7 straight buy calls and consensus TP of $23.60.
*Perennial Real Estate/BreadTalk/ Wilmar
- Established a 45%-owned JV, Perennial HC Holdings, with first close of US$500m and target fund size of up to US$1.2b.
- The JVCo will acquire and develop large-scale healthcare integrated mixed-used developments which are linked to high speed railway stations in China.
- Remaining stakes in the JVCo are held by Shun Tak Holdings (30%), Bangkok Bank (10%), BreadTalk (5%), Kuok Khoon Hong (4%), S1F (4%) and Wilmar (2%).
- Separately, Perennial reached a settlement agreement with Chesham Properties (owned by Pontiac Land's Kwee family), either party to purchase the other partner's joint stake in the The Capitol Singapore commercial project within 19 weeks.
*The Trendlines
- Portfolio company S.T Stent has received regulatory clearance from the US FDA to market its composite sinus stent.
- The product is targeted at patients suffering from chronic sinusitis, and could also be used for nose job failures, chronic allergic rhinitis and an alternative to sinuplasty.
- Last traded at 12.9x forward P/E and 0.75x P/B.
NEGATIVE NEWS
*Cheung Woh Technologies
- Issued profit warning for a 3QFY17 net loss on missed production targets.
- The miss was due to machinery down-time and repairs, as well as production disruptions caused by Typhoon Hato, which damaged some machines.
- Results slated to be released on or before 12 Jan.
NEUTRAL NEWS
*Ziwo
- Changed its name to "BM Mobility".
- To recap, the company intends to exit its loss-making raw material production business in China, and pursue more green-energy projects in China and Southeast Asia.
*Olam
- Issued 2.97m new shares in relation to a warrant exercise at US$1.09 each.
- Outstanding 47.1m warrants expires on 29 Jan 2018.
- The market could extend its 5-day winning streak as investors cheer strong US and Singapore manufacturing data, higher oil prices and continued strength in technology shares.
- Technically, the STI could test the upside resistance at 3,470, with the next objective at 3,550 set in Apr 2015. Downside support lies at 3,380.
MACRO WATCH
*Economy
- Dec PMI came in at 52.8 (Nov: 52.9) marking its 16th consecutive month of expansion and capping a year of strong growth for the manufacturing sector.
- The marginally lower reading from a near 8-year high in Nov due to slower pace of expansion in new orders, exports, factory output and inventory, particularly for the electronics sector.
POSITIVE NEWS
*Venture Corp
- Joining the benchmark STI tomorrow, replacing GLP following its privatisation.
- Trades at prospective 17.5x FY18e P/E.
- The street is outright bullish on the electronics contract manufacturer with 7 straight buy calls and consensus TP of $23.60.
*Perennial Real Estate/BreadTalk/ Wilmar
- Established a 45%-owned JV, Perennial HC Holdings, with first close of US$500m and target fund size of up to US$1.2b.
- The JVCo will acquire and develop large-scale healthcare integrated mixed-used developments which are linked to high speed railway stations in China.
- Remaining stakes in the JVCo are held by Shun Tak Holdings (30%), Bangkok Bank (10%), BreadTalk (5%), Kuok Khoon Hong (4%), S1F (4%) and Wilmar (2%).
- Separately, Perennial reached a settlement agreement with Chesham Properties (owned by Pontiac Land's Kwee family), either party to purchase the other partner's joint stake in the The Capitol Singapore commercial project within 19 weeks.
*The Trendlines
- Portfolio company S.T Stent has received regulatory clearance from the US FDA to market its composite sinus stent.
- The product is targeted at patients suffering from chronic sinusitis, and could also be used for nose job failures, chronic allergic rhinitis and an alternative to sinuplasty.
- Last traded at 12.9x forward P/E and 0.75x P/B.
NEGATIVE NEWS
*Cheung Woh Technologies
- Issued profit warning for a 3QFY17 net loss on missed production targets.
- The miss was due to machinery down-time and repairs, as well as production disruptions caused by Typhoon Hato, which damaged some machines.
- Results slated to be released on or before 12 Jan.
NEUTRAL NEWS
*Ziwo
- Changed its name to "BM Mobility".
- To recap, the company intends to exit its loss-making raw material production business in China, and pursue more green-energy projects in China and Southeast Asia.
*Olam
- Issued 2.97m new shares in relation to a warrant exercise at US$1.09 each.
- Outstanding 47.1m warrants expires on 29 Jan 2018.
Wednesday, January 3, 2018
SG Market (03 Jan 18)
MARKET OVERVIEW
- The market could extend its fine start to the year, with technology stocks in the limelight after S&P 500 and Nasdaq notched fresh records, while investors look to Dec PMI for further direction.
- Technically, STI is testing its immediate resistance at 3,430 with the next objective at 3,470, while downside support is at 3,380.
POSITIVE NEWS
*DBS
- Inked a 15-year regional tie-up with general insurer Chubb to distribute the latter's products to SME clients across Singapore, HK, China and Taiwan.
- Last traded at 1.39x P/B and MKE has a Hold with TP of $22.75.
*StarHub
- BlackRock emerged as a substantial shareholder, raising its stake to 5% from 4.99%, following the purchase of 52,700 shares in the open market at $2.91 each.
- Trades at 17.8x forward P/E and 5.9% dividend yield.
*Roxy-Pacific
- Obtained consent from all proprietors at freehold residential development Derby Court.
- To recap, Roxy emerged the top bidder for the collective sale tender of the condominium located in Novena, Singapore, for $73.9m.
- The site has a land area of 18,506 sf and gross plot ratio of 2.872, which translates to $1,390 psf ppr.
- Last traded at 2.96x forward P/E and 1.3x P/B.
*Manufacturing Integration Tech
- Secured new orders totalling $14.2m for its semiconductor equipment and contract equipment manufacturing services.
- Most of these orders are expected to complete by 1H18.
- Counter is loss-making and trades at 1.21x P/B.
*Addvalue Technologies
- Obtained type approval for the sales of mobile satellite terminal, Thuraya Atlas IP, in Russia.
- The launch of the product in Russia's maritime market is expected to commence in the next 2-3 months.
- Company believes the addressable market size is estimated to be ~2,000 vessels.
- Counter is loss-making and trades at 3.26x P/B.
*IPS Securex
- Received a letter of award for the provision of CCTV upgrading work in Singapore worth $0.6m.
- Works slated to complete by 30 Jun '18.
NEGATIVE NEWS
*Singtel
- Selling 0.15m shares in ACPL Marine for $15m, paring its stake to 16.67% from 41.67%.
- The entity owns and charters maintenance-cum-laying cableships and Singtel is estimated to record a divestment gain of $8.1m.
- Trades at 14.9x forward P/E and offers an indicative 4.9% yield.
*SIIC Environment
- Substantial shareholder Value Partners disposed 626,100 shares at an average $0.5169 apiece via the market, paring its stake from 11.01% to 10.99%.
NEUTRAL NEWS
*Cosco Shipping/ Cogent
- The $1.02/share privatisation offer for Cogent has been deemed unconditional following the receipt of 92.05% in valid acceptances.
- Cosco Shipping intends to exercise its right of compulsory acquisition.
- The offer will remain open for acceptance until 19 Jan.
*HC Surgical Specialists (HCSS)
- Proposed to acquire a 51% stake in general practitioner HMC Medical for $0.67m.
- As at Jun '17, the clinic has a net liability of $0.15m and made an adjusted net profit for $0.026m for the trailing 12 months.
- Vendors Dr. Chee Hsing Gary Andrew and Dr. Lee Peng Khow will continue to helm operations for 3.5 years.
- Following 42 months into the employment contract, the vendors will have an option to repurchase the sale shares for a nominal sum of $2.
- Last traded at 67.5x trailing P/E.
- The market could extend its fine start to the year, with technology stocks in the limelight after S&P 500 and Nasdaq notched fresh records, while investors look to Dec PMI for further direction.
- Technically, STI is testing its immediate resistance at 3,430 with the next objective at 3,470, while downside support is at 3,380.
POSITIVE NEWS
*DBS
- Inked a 15-year regional tie-up with general insurer Chubb to distribute the latter's products to SME clients across Singapore, HK, China and Taiwan.
- Last traded at 1.39x P/B and MKE has a Hold with TP of $22.75.
*StarHub
- BlackRock emerged as a substantial shareholder, raising its stake to 5% from 4.99%, following the purchase of 52,700 shares in the open market at $2.91 each.
- Trades at 17.8x forward P/E and 5.9% dividend yield.
*Roxy-Pacific
- Obtained consent from all proprietors at freehold residential development Derby Court.
- To recap, Roxy emerged the top bidder for the collective sale tender of the condominium located in Novena, Singapore, for $73.9m.
- The site has a land area of 18,506 sf and gross plot ratio of 2.872, which translates to $1,390 psf ppr.
- Last traded at 2.96x forward P/E and 1.3x P/B.
*Manufacturing Integration Tech
- Secured new orders totalling $14.2m for its semiconductor equipment and contract equipment manufacturing services.
- Most of these orders are expected to complete by 1H18.
- Counter is loss-making and trades at 1.21x P/B.
*Addvalue Technologies
- Obtained type approval for the sales of mobile satellite terminal, Thuraya Atlas IP, in Russia.
- The launch of the product in Russia's maritime market is expected to commence in the next 2-3 months.
- Company believes the addressable market size is estimated to be ~2,000 vessels.
- Counter is loss-making and trades at 3.26x P/B.
*IPS Securex
- Received a letter of award for the provision of CCTV upgrading work in Singapore worth $0.6m.
- Works slated to complete by 30 Jun '18.
NEGATIVE NEWS
*Singtel
- Selling 0.15m shares in ACPL Marine for $15m, paring its stake to 16.67% from 41.67%.
- The entity owns and charters maintenance-cum-laying cableships and Singtel is estimated to record a divestment gain of $8.1m.
- Trades at 14.9x forward P/E and offers an indicative 4.9% yield.
*SIIC Environment
- Substantial shareholder Value Partners disposed 626,100 shares at an average $0.5169 apiece via the market, paring its stake from 11.01% to 10.99%.
NEUTRAL NEWS
*Cosco Shipping/ Cogent
- The $1.02/share privatisation offer for Cogent has been deemed unconditional following the receipt of 92.05% in valid acceptances.
- Cosco Shipping intends to exercise its right of compulsory acquisition.
- The offer will remain open for acceptance until 19 Jan.
*HC Surgical Specialists (HCSS)
- Proposed to acquire a 51% stake in general practitioner HMC Medical for $0.67m.
- As at Jun '17, the clinic has a net liability of $0.15m and made an adjusted net profit for $0.026m for the trailing 12 months.
- Vendors Dr. Chee Hsing Gary Andrew and Dr. Lee Peng Khow will continue to helm operations for 3.5 years.
- Following 42 months into the employment contract, the vendors will have an option to repurchase the sale shares for a nominal sum of $2.
- Last traded at 67.5x trailing P/E.
Tuesday, January 2, 2018
SG Market (02 Jan 18)
MARKET OVERVIEW
- The market could resume its uptrend on the first trading session of the year on bargain hunting following some profit-taking activity in the last two weeks of 2017.
- Technically, STI looks to be supported at 3,360, with immediate resistance at 3,430.
SECTOR WATCH
*Economy
- Singapore economy grew 3.1% in 4Q17, lifted again by the manufacturing sector (+6.2%).
- This was higher than street estimate of 2.6% but moderated from 5.4% expansion in the preceding quarter.
- MKE is forecasting GDP growth of 2.5% in 2018.
*Banks
- Domestic bank lending climbed 7.1% to $653.7b in Nov (Oct: +6.8%), propped up by business sector (+8.8%, Oct: +9%) and consumer loans (+3.8%, Oct: +3.8%).
- Maybank KE is Neutral on Singapore banks with preference for UOB (Buy, TP $27.10) over DBS (Hold, TP $22.75) and OCBC (Hold, TP $12.00).
POSITIVE NEWS
*SATS
- 49:51 JVCo, Mumbai Cargo Service Center Airport, won a cargo handling concession contract in Chhatrapati Shivaji International Airport in Mumbai, India.
- The concession will commence in Apr '18 and run for 18 years.
- Trades at 23.1x forward P/E.
*Chip Eng Seng
- Proposed US$19.7m investment for an effective 60% stake in a real estate development project in Ho Chi Minh City, Vietnam.
- The mixed project sited on a land area of 4,829 sqm and located in District 5 is known as Soai Kinh Lam Apartment - Commerce Centre.
- Trades at 17.7x forward P/E.
NEUTRAL NEWS
*CapitaLand
- Divesting interests in six Indian malls and their property manager for 1.6b rupees ($32.7m).
- The transaction is slated to be completed in 1Q18.
- Trades at 33% discount to its RNAV/share of $5.27.
*GP Industries
- Disposing two industrial complexes in Huizhou, China, for Rmb121.3m ($24.8m).
- The assets span 29,186 sqm of build-up area and group expects to reap a net gain of $15.9m.
- Last traded at 18.7x trailing P/E and 1.04x P/B.
*Global Yellow Pages
- Entered into a conditional agreement to subscribe 50.1% stake of FundPlaces for up to $2m.
- FundPlaces leverages on block chain technology to operate an online platform, allowing investors to build a diversified real estate investment portfolio across the world.
- The strategic investment would enable the group to leverage on its platform for its property development projects.
- Last traded at 0.5x P/B.
*Halcyon Agri
- Extended the deadline for its proposed acquisition of four rubber processing factories in West Kalimantan, Indonesia, to 12 Jan.
- If completed, the deal will raise Halcyon's total processing capacity to 1.55m tonnes p.a, propelling it to be the largest crumb rubber producer and exporter in Indonesia.
- Trades at 5.5x trailing P/E.
*Far East Group
- Completed the acquisition and partial leaseback of a property at 51 Ubi Ave 3.
- Group also extended the deadline of the option-to-purchase for its proposed disposal of Third Lok Yang property to 28 Feb from 31 Dec '17.
- Trades at 0.36x P/B.
*Union Gas
- Signed a non-binding MOU to acquire certain assets from Semgas Supply.
- Assets include the business of retail distribution of bottled LPG cylinders and sale of LPG-related accessories to domestic households in Singapore.
- The acquisition will allow the group to expand its retail LPG distribution network and customer base.
- The market could resume its uptrend on the first trading session of the year on bargain hunting following some profit-taking activity in the last two weeks of 2017.
- Technically, STI looks to be supported at 3,360, with immediate resistance at 3,430.
SECTOR WATCH
*Economy
- Singapore economy grew 3.1% in 4Q17, lifted again by the manufacturing sector (+6.2%).
- This was higher than street estimate of 2.6% but moderated from 5.4% expansion in the preceding quarter.
- MKE is forecasting GDP growth of 2.5% in 2018.
*Banks
- Domestic bank lending climbed 7.1% to $653.7b in Nov (Oct: +6.8%), propped up by business sector (+8.8%, Oct: +9%) and consumer loans (+3.8%, Oct: +3.8%).
- Maybank KE is Neutral on Singapore banks with preference for UOB (Buy, TP $27.10) over DBS (Hold, TP $22.75) and OCBC (Hold, TP $12.00).
POSITIVE NEWS
*SATS
- 49:51 JVCo, Mumbai Cargo Service Center Airport, won a cargo handling concession contract in Chhatrapati Shivaji International Airport in Mumbai, India.
- The concession will commence in Apr '18 and run for 18 years.
- Trades at 23.1x forward P/E.
*Chip Eng Seng
- Proposed US$19.7m investment for an effective 60% stake in a real estate development project in Ho Chi Minh City, Vietnam.
- The mixed project sited on a land area of 4,829 sqm and located in District 5 is known as Soai Kinh Lam Apartment - Commerce Centre.
- Trades at 17.7x forward P/E.
NEUTRAL NEWS
*CapitaLand
- Divesting interests in six Indian malls and their property manager for 1.6b rupees ($32.7m).
- The transaction is slated to be completed in 1Q18.
- Trades at 33% discount to its RNAV/share of $5.27.
*GP Industries
- Disposing two industrial complexes in Huizhou, China, for Rmb121.3m ($24.8m).
- The assets span 29,186 sqm of build-up area and group expects to reap a net gain of $15.9m.
- Last traded at 18.7x trailing P/E and 1.04x P/B.
*Global Yellow Pages
- Entered into a conditional agreement to subscribe 50.1% stake of FundPlaces for up to $2m.
- FundPlaces leverages on block chain technology to operate an online platform, allowing investors to build a diversified real estate investment portfolio across the world.
- The strategic investment would enable the group to leverage on its platform for its property development projects.
- Last traded at 0.5x P/B.
*Halcyon Agri
- Extended the deadline for its proposed acquisition of four rubber processing factories in West Kalimantan, Indonesia, to 12 Jan.
- If completed, the deal will raise Halcyon's total processing capacity to 1.55m tonnes p.a, propelling it to be the largest crumb rubber producer and exporter in Indonesia.
- Trades at 5.5x trailing P/E.
*Far East Group
- Completed the acquisition and partial leaseback of a property at 51 Ubi Ave 3.
- Group also extended the deadline of the option-to-purchase for its proposed disposal of Third Lok Yang property to 28 Feb from 31 Dec '17.
- Trades at 0.36x P/B.
*Union Gas
- Signed a non-binding MOU to acquire certain assets from Semgas Supply.
- Assets include the business of retail distribution of bottled LPG cylinders and sale of LPG-related accessories to domestic households in Singapore.
- The acquisition will allow the group to expand its retail LPG distribution network and customer base.
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