MARKET OVERVIEW
- Brace for another selldown after US markets tumbled into correction territory on rising inflation expectations, and shock revelation by a S-chip of serious irregularities at its China operating units.
- A similar 10% correction from recent peak would take the STI to the 3,248 level
- From a technical perspective, STI sees underlying support at 3,370 with near term resistance at 3,470.
CORPORATE RESULTS
*Frasers Property
- 1QFY18 core net profit slumped 62% to $69.2m, while revenue dropped 23.8% to $740m on absence of significant sales and settlements of development projects in China.
- Gross margin held relatively steady at 36.3% (-0.5ppt).
- Bottom line was dragged further by lower fair value change on derivatives, higher net interest expense (+188.2%) arising from increased debt, although pared by higher JV/associate income (+26.7%) and a $13.3m rise in fair value on investment properties.
- Net gearing climbed higher to 0.84x (4QFY17: 0.7x).
- Last traded at 0.81x P/B.
*Valuetronics
- 3QFY18 net profit leapt 35.7% to HK$58.2m, beating estimates.
- Revenue jumped 34.2% to HK$788.3m as the consumer electronics segment (+48.1%) remained strong on growing demand for smart LED lighting, while the industrial & commercial electronics unit (+22.3%) also saw higher customer demand.
- Gross margin of 14.4% (-1.1ppt) and operating margin of 8.5% (+0.1%) held relatively steady.
- Trades at 12.9x FY18 P/E and offers an indicative yield of 4.1%.
*BRC Asia
- 1QFY18 net profit surged 36% from a low base to $2.6m, while revenue jumped 26% to $100.9m on higher selling prices.
- Accordingly, gross margin improved 0.9ppt to 7.5%.
- But, bottom line was partly weighed by higher distribution costs (+13%) and other operating expense (+19%) arising from mark-to-market loss of foreign currency forward contracts.
- NAV/share at $0.9166.
*Lion Asiapac
- Turned around to a 2QFY18 net profit of $0.1m (2QFY17: $0.2m loss), help by a reversal in impairment loss of $0.5m and higher interest income of $0.2m (+51%).
- Revenue jumped 55% to $3m on increased demand for lime products.
- Gross margin inched 2.2ppt higher to 37.1%.
- Notably, net cash pile of $70.7m, or $0.871/share, is 182% above the current market cap of $39m.
- NAV/share of $1.0027.
*China Star Food
- 3QFY18 net profit slumped 33.7% to Rmb8m, swinging 9MFY18 to a net loss of Rmb4.8m (9MFY17: Rmb51m loss).
- For the quarter, revenue tumbled 20% to Rmb92.3m, as its Zilaohu factory had not been producing at optimal capacity following a resumption of operations in mid Sep '17 after a production halt.
- Accordingly, gross margin collapsed 16.7ppt to 27.3%, and this was exacerbated by lower sale prices due to a change in channel management strategy.
- But, the strategy alleviated some pressure on bottom line, as it passed on substantial marketing and distribution costs (-73%) to external distributors.
- NAV/share at Rmb1.41.
*SunMoon Food
- Sank to 3QFY18 net loss of $1.25m (3QFY17: $5.3m profit) due to absence of a $5.7m gain on disposal of subsidiaries.
- Revenue jumped to $10.8m (+744%) on increased in sales to Shanghai Yiguo E-Commerce.
- But, it barely broke even with a gross profit of $0.3m (3QFY17: -$0.08m), while gross margin turned positive to 3.2% amid less discounts provided.
- NAV/share at $0.0275.
POSITIVE NEWS
*ComfortDelGro
- Acquiring remaining 51% stake in ComfortDelGro Insurance Brokers (CIB) for $22.9m, or 4.5x FY16 P/E.
- CIB provides insurance broking, risk management and claims management services in Singapore.
- The deal is earnings accretive and estimated to lift FY18e earnings by 1.6%, or $5.1m.
- MKE maintains its Buy with TP of $2.40.
*SIA Engineering
- Forming a 60:40 JV with Nasdaq-listed Stratasys to establish an additive manufacturing service centre to provide 3D printed parts for use in commercial aviation.
- The parts can be used for airline operators, MRO providers and OEMs.
- Trades at 22.1x forward P/E, near upper end of 13-24x historical range.
*King Wan
- Secured new mechanical and electrical projects in Singapore worth a total of $24.9m.
- New projects include electrical and installation works in 3 condos, 1 manufacturing support building and 1 HDB block.
- Projects are slated to complete by 2021.
- Order book stood at $173.1m with contracts lasting to 2024.
*Neratel
- Clinched a total of $3.2m worth of new contracts for its Network infrastructure business segment.
- First contract worth $2.2m was awarded by a local telco to supply and maintain IP network equipment for broadband and mobile networks.
- Second contract worth $1m is its first win with a key telco in Malaysia to design and manage the telco's internet service.
*Kingsmen
- Entered into a licensing agreement with Hasbro to create, build and operate NERF Family Entertainment Centre (FEC) attractions across Asia Pacific.
- NERF is a toy brand and has a variety of foam-based weaponry products.
- The group will co-conceptualise, build and operate NERF FEC attractions with first location to open in Singapore by 2019.
- Each indoor facility will feature multiple activity zones, merchandising and F&B areas.
*iX Biopharma
- Granted a patent for its WaferiX drug delivery tech in China, which expires ion 11 Oct '33.
- The IP rights are now secured in key Asian markets such as Singapore, South Korea, Malaysia, Indonesia and Japan.
NEGATIVE NEWS
*Midas
- Uncovered several litigations, freeze orders and undisclosed corporations within the group during an audit.
- The group highlighted that it is in the midst of fact finding and will assess whether it can continue as a going concern.
- Share price has shot up 78% YTD but financials can no longer be relied upon.
*AGV Group
- Proposed placement of up to 18m new shares (12.5% of enlarged share capital) at $0.11 apiece, 8.3% below last traded price.
- Placees are CJM Global (4.86%), China Equity Investment (3.13%), Teo Yong Ping (3.13%), Tiong Hua Ting (0.69%), and Ho Bee Ping (0.69%).
- Estimated net proceeds of $1.94m will be used for capex and general working capital.
NEUTRAL NEWS
*ST Engineering
- Aerospace arm ST Aerospace is divesting a 5% stake in ST Aerospace (Guangzhou) Aviation Services (STA Guangzhou) to Japan Airline for US$7m ($9.2m).
- Previously, STA Guangzhou is a 49:51 JVCo between the group and Guangdong Airport Authority, which provides aircraft MRO services within Guangzhou Baiyun International Airport in China.
- Post-divestment, ST Aerospace, Guangdong Airport Authority and Japan Airline will hold now 44%, 51% and 5% in the JVCo, respectively.
- The strategic investment by Japan Airline will facilitate cross-learning, enabling STA Guangzhou to enhance its safety and quality standard and better positioned for greater growth.
*Singpost
- 62.5%-owned Famous Holdings has acquired the remaining 10% stake of Famous Pacific Shipping (NZ) for NZ$0.53m ($0.51m).
- NAV of the acquired firm is NZ$2.8m as of 31 Dec '17.
*Singapore Medical Group
- Reallocated $1.7m of unutilised proceeds from its private placement for M&A opportunities and growing its existing business (prior: expansion into other South East Asia countries).
*The Trendlines
- Appointed as one of the partners along with venture cap firm, K2 Global, under the Startup SG Equity scheme (SSC) administered by SPRING SEEDS Capital, Singapore govt's investment arm.
- To recap, SSC announced $100m investment allocation to groom start-ups and issued a call to appointed partners to co-invest in health and biomedical science fields in Jul '17.
- As such, the group will collaborate with Singapore-based K2 Global to invest in medical technology seeking Series A funding.
- The partnership enables the group to leverage on its expertise in grooming medical technology companies, while K2 Global provides growth capital to support scaling of operations.
- Both parties anticipate co-investing with SSC in more than 11 companies over the next 8 years.
Friday, February 9, 2018
Thursday, February 8, 2018
SG Market (08 Feb 18)
MARKET OVERVIEW
- Expect choppy trading to persist as markets try to find its footing amid rising US bond yields and in-line results from bellwethers DBS and Singtel.
- From a technical perspective, the STI has failed to cover the 3,414-3,470 breakdown gap that occurred on 6 Feb. Underlying support now lies at 3,370 with near term resistance at 3,470.
CORPORATE RESULTS
*DBS
- 4Q17 net profit jumped 33% to a new quarterly high of $1.22b. This brought FY17 core earnings to $4.39b, in line with consensus forecast.
- For the last quarter, net interest income climbed 15% to $2.1b, driven by healthy loan expansion (+7% y/y, +3% q/q) and improved NIM of 1.78% (+7bps y/y, +5bps q/q).
- Non-interest income held steady at $958m (+0.6%) as growth in wealth management (+44%) and investment banking (+140%) was overshadowed by lower net trading income (-43%).
- Loan provisions fell significantly to $225m (-51% y/y, -72% q/q) as residual O&G support service exposures were dealt with in previous quarter.
- NPL ratio ticked up to 1.7% (4Q16: 1.4%, 3Q17: 1.7%) but capital position improved with Tier 1 CAR at 14.3% (4Q16: 14.1%, 3Q17: 14%).
- Declared final DPS of $0.60 and special DPS of $0.50, bringing FY17 total payout to $1.43 (FY16: $0.60).
- Trading at 1.42x P/B against historical average of 1.25x
*Singtel
- 3QFY18 net profit slipped 8.5% to $890m, dragged by lower contributions from associates Bharti Airtel and Globe.
- Revenue rose 4.4% to $4.6b on improved consumer (+3.1%) and digital life (+121.9%) segments helped offset lower takings from enterprise (-3.9%).
- Australian consumer operations (+8%) was lifted by increased customers, higher NBN migration payments and increased equipment sales but Singapore (-3%) suffered from continued shift from voice to data communications.
- Accordingly, EBITDA margin inched 0.4ppt to 28.1%.
- This brought 9MFY18 core earnings to $2.74b (-5.2%), barely meeting expectations.
- Lowered guidance for FY18 revenue growth from mid-single digit to low single digit, and maintained EBITDA growth in the mid-single digit level.
- Trades at 13.8x forward P/E and 5.3% yield.
*Perennial
- 4Q17 net profit climbed 7.9% to $27.6m, bringing FY17 core earnings to $48.1m (FY16: 0.3m).
- However, revenue for the quarter tumbled 25.7% to $16m in absence of takings from TripleOne Somerset as a result of the deconsolidation following the divestment of a 20.2% equity stake to 30%.
- Gross margin held steady at 56% (-0.5ppt).
- Bottom line was held up by higher fair value gains of $39.2m (+60.7%), and lower finance costs (-25.5%), as well as a jump in JV/associate income to $20.9m (+57.2%).
- NAV/share at $1.663.
*mm2 Asia
- 3QFY18 net profit jumped 52.9% to $6.4m, pushing 9MFY18 net profit to $17.4m (+56%), but at 64% of the street's FY18 forecast.
- Quarter revenue surged 190.4% to $52.4m mainly on new contributions from cinema acquisitions (Lotus Fivestar and Cathay Cineplexes), as well as increased contribution from UnUsUaL and its core business.
- Gross margin narrowed to 46.1% (-3.1ppt) on change in sales mix.
- But, bottom line was pressured by minority interests (+203.4%) and a spike in taxes (+111.7%).
- Separately, group announced an issuance of $47.9m in convertible debt securities to finance expansion plans in cinema operations.
- Last traded at 20.6x forward P/E.
*UnUsUal
- 3QFY18 results came in line as net profit surged 158% from a low base to $2.51m, bringing 9MFY18 earnings to $6.54m (+26%).
- For the quarter, revenue soared to $10.6m (+143%) on markedly stronger concert/event promotion takings (+$5.2m) and production revenue (+$1m).
- Operating margin widened 1.5ppt to 28.2%, as staff expenses (+75% to $1m), a key operating cost component, rose slower than top line.
- Trades at 53.1x forward P/E.
*Singhaiyi
- 3QFY18 net profit jumped 83.3% to $2m, bringing 9MFY18 net profit to $33.2m (9MFY17: $8.8m).
- Revenue for the quarter jumped 3.5x to $41.7m on revenue recognition following completion of its Executive Condo project, The Vales.
- Gross margin collapsed to 14.1% (-37.1ppt) on a significant shift in top line towards different geographies as well as lower margin property development projects.
- Bottom line was affected by the absence of FX gains (3QFY17: $1.9m), although mitigated by lower finance costs (-88.3%) as well as a turnaround in contributions from JVs & associates to $0.4m (3QFY17: -$7,000).
- Last traded at 0.66x P/B.
*CSC
- Continued to bleed with net loss of $2.1m (3QFY17: $5.6m loss), dragging 9MFY18 losses to $7.7m (3QFY17: $17.9m loss).
- Quarterly revenue surged 69.7% to $94.9m on higher work volume in Singapore
- Gross margin widened 1.1ppt to 4.5% due to firmer contract prices amid recovering demand for foundation engineering works.
- However, bottom line was marred by sticky administrative expense of $6m (+3.4%), but partly offset by lower tax expense (-83.4% to $0.1m) and other income (+617% to $0.9m) arising from disposal of old equipment.
- Order book swelled to $210m (3QFY17: $190m).
- Management is cautiously optimistic on its 2H18 outlook on the back of the series of en-bloc sales, positive economic condition and uptick of construction activities over the past 3 quarters.
*Neo Group
- 3QFY18 net profit jumped to $2.1m (3QFY17: $0.1m) due to the absence of a $5.2m disposal loss.
- However, revenue fell 4.2% to $44.7m on reduced trades of low margin products at its supplies & trading business (-$2.7m), and closure of non-performing outlets for the food retail segment (-$0.4m).
- Gross material margin expanded 5.5ppt to 54.9% amid an on-going strategic review across business segments to improve profitability.
- Bottom line growth was partly weighed by a $2.2m drop in tax credit to $0.3m.
- Net gearing fell from 2x in 2QFY18 but remained elevated at 1.75x.
- NAV/share at $0.224.
POSITIVE NEWS
*ComfortDelGro
- Acquiring bus and coach firm New Adventure Travel Group (NAT) for £13.4m ($25m).
- The deal for NAT translates to 5.5x EBITDA and is the group's first expansion of its scheduled bus operations outside of London.
- NAT is one of the leading operators in South Wales, UK, and has a license to operate 117 buses and coaches across 4 depots, comprises of Cardiff, Swansea, Newport and Pontypridd.
- NAT derives the bulk of its revenue from scheduled public bus service routes, with the remaining from chartered coach services.
- Trades at 14.4x forward P/E and indicative yield of 5.1%.
- MKE maintains Buy with TP of $2.40.
*ParkwayLife REIT
- Entered into a partnership with G.K. Nest to acquire a Japanese elderly nursing rehabilitation facility for ¥1.5b ($17.8m), or 7.4% below market valuation.
- The 120-room facility, Konosu Nursing Home Kyoseien, will be leased to Iryouhoujin Shadan Kouaika for 20 years at an annual gross rental of ¥112m ($1.33m).
- Acquisition is slated to complete by 1Q18.
- Offers 4.9% indicative yield and trades at 1.58x P/B.
*Ezion (suspended)
- Secured US$1.5b refinancing package from six lenders, namely DBS, OCBC, UOB, Maybank, CIMB and Caterpillar Financial.
- The package will be secured by 100m vendor shares owned by CEO Chew Thiam Keng and family (about half of their personal holdings).
- The deal include minimal fixed principal repayments over the next six years at lowered interest rates, and up to US$118m additional revolving credit facilities.
- The next step in Ezion's debt restructuring is to secure regulatory and shareholder approvals for the proposed issuance of new bonds, shares, and warrants to the relevant stakeholders.
- Ezion will apply to lift its share trading suspension after obtaining shareholders' approval at the EGM in Mar.
*OKP Holdings
- 51:49 JV with HSB Holdings to acquire a freehold nine-storey office complex at 6-8 Bennett Street, Perth, Australia, for A$43.5m.
- OKP's first overseas investment property has 10,219 sqm of NLA, occupying land area of 3,115 sqm, and currently is 68% occupied with WALE of 6.02 years.
- The property will be funded by a mix of internal funds and bank borrowings.
NEGATIVE NEWS
*Profit warning
- China Yuanbang Property
- Expect choppy trading to persist as markets try to find its footing amid rising US bond yields and in-line results from bellwethers DBS and Singtel.
- From a technical perspective, the STI has failed to cover the 3,414-3,470 breakdown gap that occurred on 6 Feb. Underlying support now lies at 3,370 with near term resistance at 3,470.
CORPORATE RESULTS
*DBS
- 4Q17 net profit jumped 33% to a new quarterly high of $1.22b. This brought FY17 core earnings to $4.39b, in line with consensus forecast.
- For the last quarter, net interest income climbed 15% to $2.1b, driven by healthy loan expansion (+7% y/y, +3% q/q) and improved NIM of 1.78% (+7bps y/y, +5bps q/q).
- Non-interest income held steady at $958m (+0.6%) as growth in wealth management (+44%) and investment banking (+140%) was overshadowed by lower net trading income (-43%).
- Loan provisions fell significantly to $225m (-51% y/y, -72% q/q) as residual O&G support service exposures were dealt with in previous quarter.
- NPL ratio ticked up to 1.7% (4Q16: 1.4%, 3Q17: 1.7%) but capital position improved with Tier 1 CAR at 14.3% (4Q16: 14.1%, 3Q17: 14%).
- Declared final DPS of $0.60 and special DPS of $0.50, bringing FY17 total payout to $1.43 (FY16: $0.60).
- Trading at 1.42x P/B against historical average of 1.25x
*Singtel
- 3QFY18 net profit slipped 8.5% to $890m, dragged by lower contributions from associates Bharti Airtel and Globe.
- Revenue rose 4.4% to $4.6b on improved consumer (+3.1%) and digital life (+121.9%) segments helped offset lower takings from enterprise (-3.9%).
- Australian consumer operations (+8%) was lifted by increased customers, higher NBN migration payments and increased equipment sales but Singapore (-3%) suffered from continued shift from voice to data communications.
- Accordingly, EBITDA margin inched 0.4ppt to 28.1%.
- This brought 9MFY18 core earnings to $2.74b (-5.2%), barely meeting expectations.
- Lowered guidance for FY18 revenue growth from mid-single digit to low single digit, and maintained EBITDA growth in the mid-single digit level.
- Trades at 13.8x forward P/E and 5.3% yield.
*Perennial
- 4Q17 net profit climbed 7.9% to $27.6m, bringing FY17 core earnings to $48.1m (FY16: 0.3m).
- However, revenue for the quarter tumbled 25.7% to $16m in absence of takings from TripleOne Somerset as a result of the deconsolidation following the divestment of a 20.2% equity stake to 30%.
- Gross margin held steady at 56% (-0.5ppt).
- Bottom line was held up by higher fair value gains of $39.2m (+60.7%), and lower finance costs (-25.5%), as well as a jump in JV/associate income to $20.9m (+57.2%).
- NAV/share at $1.663.
*mm2 Asia
- 3QFY18 net profit jumped 52.9% to $6.4m, pushing 9MFY18 net profit to $17.4m (+56%), but at 64% of the street's FY18 forecast.
- Quarter revenue surged 190.4% to $52.4m mainly on new contributions from cinema acquisitions (Lotus Fivestar and Cathay Cineplexes), as well as increased contribution from UnUsUaL and its core business.
- Gross margin narrowed to 46.1% (-3.1ppt) on change in sales mix.
- But, bottom line was pressured by minority interests (+203.4%) and a spike in taxes (+111.7%).
- Separately, group announced an issuance of $47.9m in convertible debt securities to finance expansion plans in cinema operations.
- Last traded at 20.6x forward P/E.
*UnUsUal
- 3QFY18 results came in line as net profit surged 158% from a low base to $2.51m, bringing 9MFY18 earnings to $6.54m (+26%).
- For the quarter, revenue soared to $10.6m (+143%) on markedly stronger concert/event promotion takings (+$5.2m) and production revenue (+$1m).
- Operating margin widened 1.5ppt to 28.2%, as staff expenses (+75% to $1m), a key operating cost component, rose slower than top line.
- Trades at 53.1x forward P/E.
*Singhaiyi
- 3QFY18 net profit jumped 83.3% to $2m, bringing 9MFY18 net profit to $33.2m (9MFY17: $8.8m).
- Revenue for the quarter jumped 3.5x to $41.7m on revenue recognition following completion of its Executive Condo project, The Vales.
- Gross margin collapsed to 14.1% (-37.1ppt) on a significant shift in top line towards different geographies as well as lower margin property development projects.
- Bottom line was affected by the absence of FX gains (3QFY17: $1.9m), although mitigated by lower finance costs (-88.3%) as well as a turnaround in contributions from JVs & associates to $0.4m (3QFY17: -$7,000).
- Last traded at 0.66x P/B.
*CSC
- Continued to bleed with net loss of $2.1m (3QFY17: $5.6m loss), dragging 9MFY18 losses to $7.7m (3QFY17: $17.9m loss).
- Quarterly revenue surged 69.7% to $94.9m on higher work volume in Singapore
- Gross margin widened 1.1ppt to 4.5% due to firmer contract prices amid recovering demand for foundation engineering works.
- However, bottom line was marred by sticky administrative expense of $6m (+3.4%), but partly offset by lower tax expense (-83.4% to $0.1m) and other income (+617% to $0.9m) arising from disposal of old equipment.
- Order book swelled to $210m (3QFY17: $190m).
- Management is cautiously optimistic on its 2H18 outlook on the back of the series of en-bloc sales, positive economic condition and uptick of construction activities over the past 3 quarters.
*Neo Group
- 3QFY18 net profit jumped to $2.1m (3QFY17: $0.1m) due to the absence of a $5.2m disposal loss.
- However, revenue fell 4.2% to $44.7m on reduced trades of low margin products at its supplies & trading business (-$2.7m), and closure of non-performing outlets for the food retail segment (-$0.4m).
- Gross material margin expanded 5.5ppt to 54.9% amid an on-going strategic review across business segments to improve profitability.
- Bottom line growth was partly weighed by a $2.2m drop in tax credit to $0.3m.
- Net gearing fell from 2x in 2QFY18 but remained elevated at 1.75x.
- NAV/share at $0.224.
POSITIVE NEWS
*ComfortDelGro
- Acquiring bus and coach firm New Adventure Travel Group (NAT) for £13.4m ($25m).
- The deal for NAT translates to 5.5x EBITDA and is the group's first expansion of its scheduled bus operations outside of London.
- NAT is one of the leading operators in South Wales, UK, and has a license to operate 117 buses and coaches across 4 depots, comprises of Cardiff, Swansea, Newport and Pontypridd.
- NAT derives the bulk of its revenue from scheduled public bus service routes, with the remaining from chartered coach services.
- Trades at 14.4x forward P/E and indicative yield of 5.1%.
- MKE maintains Buy with TP of $2.40.
*ParkwayLife REIT
- Entered into a partnership with G.K. Nest to acquire a Japanese elderly nursing rehabilitation facility for ¥1.5b ($17.8m), or 7.4% below market valuation.
- The 120-room facility, Konosu Nursing Home Kyoseien, will be leased to Iryouhoujin Shadan Kouaika for 20 years at an annual gross rental of ¥112m ($1.33m).
- Acquisition is slated to complete by 1Q18.
- Offers 4.9% indicative yield and trades at 1.58x P/B.
*Ezion (suspended)
- Secured US$1.5b refinancing package from six lenders, namely DBS, OCBC, UOB, Maybank, CIMB and Caterpillar Financial.
- The package will be secured by 100m vendor shares owned by CEO Chew Thiam Keng and family (about half of their personal holdings).
- The deal include minimal fixed principal repayments over the next six years at lowered interest rates, and up to US$118m additional revolving credit facilities.
- The next step in Ezion's debt restructuring is to secure regulatory and shareholder approvals for the proposed issuance of new bonds, shares, and warrants to the relevant stakeholders.
- Ezion will apply to lift its share trading suspension after obtaining shareholders' approval at the EGM in Mar.
*OKP Holdings
- 51:49 JV with HSB Holdings to acquire a freehold nine-storey office complex at 6-8 Bennett Street, Perth, Australia, for A$43.5m.
- OKP's first overseas investment property has 10,219 sqm of NLA, occupying land area of 3,115 sqm, and currently is 68% occupied with WALE of 6.02 years.
- The property will be funded by a mix of internal funds and bank borrowings.
NEGATIVE NEWS
*Profit warning
- China Yuanbang Property
Wednesday, February 7, 2018
SG Market (07 Feb 18)
MARKET OVERVIEW
- The market is likely to stabilise on bargain hunting following the overnight rebound on Wall Street but volatility may return given worries of higher interest rates and valuations.
- Investors will be looking out for key 4Q results from DBS and Singtel tomorrow.
- Technically, underlying support for STI is at 3,370, with near-term resistance at 3,470, followed by 3,520.
CORPORATE RESULTS
*Ellipsiz
- 2QFY18 net profit of $5.8m (+251%) was buttressed by disposal gain of $14.2m from sale of SV Probe.
- Revenue rose 3% to $10.5m, while gross margin widened 2ppt to 25%.
- But bottom line was weighed by higher admin costs of $8.6m (+432%) and other expenses (+280%) including one-off items ($7.6m) and FX loss ($2m) on weaker USD.
- Declared an interim DPS of 2¢ (+100%) and special DPS of 8¢ (+433%)
- Trades at 10.8x trailing P/E and 0.92x P/B.
*OKH Global
- 2QFY18 net profit surged to $3m (2QFY17: $0.8m), which helped swing 1HFY18 to a profit of $2.7m (1HFY17: $1m loss).
- Revenue for the quarter spiked 117% to $6.3m, on the back of sales from property development of $2.6m (2QFY17: nil), and higher takings from investment properties of $3.7m (+28%) due to increased occupancies.
- Accordingly, gross margin expanded 10.8ppt to 57.5%.
- The bottom line was also bolstered by lower general expenses (-33%) and higher tax credit of $0.9m (2QFY17: $0.3m), but was partly offset by higher finance costs (+19.6%).
- Net gearing remained elevated at 1.82x (1QFY18: 1.87x).
- Trading at 0.59x P/B.
*Asia Enterprises
- 4Q17 net profit of $1m (+41%) brought FY17 earning to $1.4m (-40%).
- For the quarter, revenue inched 3% higher to $6.5m while gross profit improved 20% to $1.9m, on the back of increased ASP of steel products.
- Accordingly, gross margin rose to 29.7% (+4.3ppt).
- Bottom line was partly pared by reduced other gains of $0.1m (-41%).
- Raised first and final DPS to 0.5¢ (FY16: 0.3¢).
- Notably, group is in a net cash position of $57.2m ($0.1678/share), or 93% of current market cap.
- Trades at 42.7x trailing P/E.
*Japan Foods
- 3QFY18 net profit jumped 73.1% to $2.5m on improved operational leverage.
- Revenue rose 11.4% to $18.7m on higher sales from revamped and rebranded restaurants, as well as an increase in net sales of existing restaurants.
- Gross margin held steady at 85.1% (+0.2ppt).
- Bottom line was partly pared by a 2.5% increase in selling and distribution expenses arising from higher rental, staff costs and online delivery charges.
- Net cash pile held steady at $20.5m (4QFY17: $20.2m), constituting 28% of current market cap.
- Trades at 13.5x trailing P/E.
*Capital World (former Terratech)
- 2QFY18 net profit soared 90% to RM17.4m on a 2.5x surge in revenue to RM46m. This brought 1HFY18 earnings to RM37.1m (+56%).
- The increased top line for the quarter was due to higher revenue recognition from the retail podium and serviced suites at mixed development, Capital City, in Johor.
- Gross margin slipped 7.4ppt to 74.7% on recognition of higher construction costs.
- Bottom line was impacted by higher general & admin expenses (+428%), as well as a jump in taxes (+97%).
- NAV/share at RM0.2158.
POSITIVE NEWS
*SGX
- Setting up a stock market trading link with Bursa Malaysia by year end, which could boost liquidity on both exchanges, encourage new listings and extend to other ASEAN bourses, if successful.
- This will bring together 1,600 companies with combined market cap of >US$1t.
- MKE estimates that every 10% increase in ADT would add 8-10% to SGX's securities clearing revenue.
- Maintain Buy with TP of $8.82.
*Frasers Property
- Investing $250m to develop a 200-room serviced residence on a prime freehold land in Tokyo's Ginza district.
- The property will be launched under the group's millennial-focused hotel residence brand, Capri by Fraser, and is expected to open around 2020.
- Last traded at 10.2x forward P/E and 0.81x P/B.
*ESR REIT
- To divest property at 9 Bukit Batok Street 22 for $23.9m.
- The REIT expects to record a divestment gain of $0.3m with sales proceeds earmarked for debt repayment, M&A, AEIs and/or working capital.
- Offers an indicative yield of 6.6% and trades at 0.95x P/B.
*mm2 Asia
- Appointed Matthew Crakes as its new corporate strategy advisor to improve the media group's appeal to North American investors.
- Matthew has 20 years of experience in fund management and investment banking in the US.
- He is currently the founder and managing member of US-based Canaan Valley Capital, which focuses on high-growth companies in Asian emerging markets.
- He has executed two special purpose vehicles, including private equity investments in Uber, Snap, and Airbnb.
- Trades at 20.2x forward P/E.
NEGATIVE NEWS
*OUE Lippo
- Guided for a net loss for 4Q17 and FY17 attributable mainly to operating costs and provisions.
- Results slated to be released on or before 1 Mar.
NEUTRAL NEWS
*SIA Engineering
- Signed a MOU with French aircraft engineering firm Safran to collaborate in the field of data analytics.
- The partnership includes R&D of predictive maintenance software to improve operational planning and reduce disruptions.
- Trades at 22x forward P/E.
*ST Engineering
- ST Electronics is entering into a 49:51 JV with SatixFy UK to develop a satellite antenna system that delivers enhanced in-flight connectivity for commercial aviation, to improve operational efficiencies of airline operators.
- Last traded at 20.7x forward P/E.
*Lian Beng
- Extended the deadline for its proposed A$90.2m disposal of a freehold property at 50 Franklin Street in Melbourne, Australia, to 20 Feb.
- To recap, the sale is a good opportunity for the group to realise the capital appreciation of this overseas property, which was purchased for A$51.5m in Nov '16.
- Last traded at 7.6x trailing P/E.
*Choo Chiang
- Signed a lease agreement with a third party for a property located at 17 Hamilton Road.
- Group will relocate its existing retail branch at Bendemeer Road to the new premise by Apr '18.
- The market is likely to stabilise on bargain hunting following the overnight rebound on Wall Street but volatility may return given worries of higher interest rates and valuations.
- Investors will be looking out for key 4Q results from DBS and Singtel tomorrow.
- Technically, underlying support for STI is at 3,370, with near-term resistance at 3,470, followed by 3,520.
CORPORATE RESULTS
*Ellipsiz
- 2QFY18 net profit of $5.8m (+251%) was buttressed by disposal gain of $14.2m from sale of SV Probe.
- Revenue rose 3% to $10.5m, while gross margin widened 2ppt to 25%.
- But bottom line was weighed by higher admin costs of $8.6m (+432%) and other expenses (+280%) including one-off items ($7.6m) and FX loss ($2m) on weaker USD.
- Declared an interim DPS of 2¢ (+100%) and special DPS of 8¢ (+433%)
- Trades at 10.8x trailing P/E and 0.92x P/B.
*OKH Global
- 2QFY18 net profit surged to $3m (2QFY17: $0.8m), which helped swing 1HFY18 to a profit of $2.7m (1HFY17: $1m loss).
- Revenue for the quarter spiked 117% to $6.3m, on the back of sales from property development of $2.6m (2QFY17: nil), and higher takings from investment properties of $3.7m (+28%) due to increased occupancies.
- Accordingly, gross margin expanded 10.8ppt to 57.5%.
- The bottom line was also bolstered by lower general expenses (-33%) and higher tax credit of $0.9m (2QFY17: $0.3m), but was partly offset by higher finance costs (+19.6%).
- Net gearing remained elevated at 1.82x (1QFY18: 1.87x).
- Trading at 0.59x P/B.
*Asia Enterprises
- 4Q17 net profit of $1m (+41%) brought FY17 earning to $1.4m (-40%).
- For the quarter, revenue inched 3% higher to $6.5m while gross profit improved 20% to $1.9m, on the back of increased ASP of steel products.
- Accordingly, gross margin rose to 29.7% (+4.3ppt).
- Bottom line was partly pared by reduced other gains of $0.1m (-41%).
- Raised first and final DPS to 0.5¢ (FY16: 0.3¢).
- Notably, group is in a net cash position of $57.2m ($0.1678/share), or 93% of current market cap.
- Trades at 42.7x trailing P/E.
*Japan Foods
- 3QFY18 net profit jumped 73.1% to $2.5m on improved operational leverage.
- Revenue rose 11.4% to $18.7m on higher sales from revamped and rebranded restaurants, as well as an increase in net sales of existing restaurants.
- Gross margin held steady at 85.1% (+0.2ppt).
- Bottom line was partly pared by a 2.5% increase in selling and distribution expenses arising from higher rental, staff costs and online delivery charges.
- Net cash pile held steady at $20.5m (4QFY17: $20.2m), constituting 28% of current market cap.
- Trades at 13.5x trailing P/E.
*Capital World (former Terratech)
- 2QFY18 net profit soared 90% to RM17.4m on a 2.5x surge in revenue to RM46m. This brought 1HFY18 earnings to RM37.1m (+56%).
- The increased top line for the quarter was due to higher revenue recognition from the retail podium and serviced suites at mixed development, Capital City, in Johor.
- Gross margin slipped 7.4ppt to 74.7% on recognition of higher construction costs.
- Bottom line was impacted by higher general & admin expenses (+428%), as well as a jump in taxes (+97%).
- NAV/share at RM0.2158.
POSITIVE NEWS
*SGX
- Setting up a stock market trading link with Bursa Malaysia by year end, which could boost liquidity on both exchanges, encourage new listings and extend to other ASEAN bourses, if successful.
- This will bring together 1,600 companies with combined market cap of >US$1t.
- MKE estimates that every 10% increase in ADT would add 8-10% to SGX's securities clearing revenue.
- Maintain Buy with TP of $8.82.
*Frasers Property
- Investing $250m to develop a 200-room serviced residence on a prime freehold land in Tokyo's Ginza district.
- The property will be launched under the group's millennial-focused hotel residence brand, Capri by Fraser, and is expected to open around 2020.
- Last traded at 10.2x forward P/E and 0.81x P/B.
*ESR REIT
- To divest property at 9 Bukit Batok Street 22 for $23.9m.
- The REIT expects to record a divestment gain of $0.3m with sales proceeds earmarked for debt repayment, M&A, AEIs and/or working capital.
- Offers an indicative yield of 6.6% and trades at 0.95x P/B.
*mm2 Asia
- Appointed Matthew Crakes as its new corporate strategy advisor to improve the media group's appeal to North American investors.
- Matthew has 20 years of experience in fund management and investment banking in the US.
- He is currently the founder and managing member of US-based Canaan Valley Capital, which focuses on high-growth companies in Asian emerging markets.
- He has executed two special purpose vehicles, including private equity investments in Uber, Snap, and Airbnb.
- Trades at 20.2x forward P/E.
NEGATIVE NEWS
*OUE Lippo
- Guided for a net loss for 4Q17 and FY17 attributable mainly to operating costs and provisions.
- Results slated to be released on or before 1 Mar.
NEUTRAL NEWS
*SIA Engineering
- Signed a MOU with French aircraft engineering firm Safran to collaborate in the field of data analytics.
- The partnership includes R&D of predictive maintenance software to improve operational planning and reduce disruptions.
- Trades at 22x forward P/E.
*ST Engineering
- ST Electronics is entering into a 49:51 JV with SatixFy UK to develop a satellite antenna system that delivers enhanced in-flight connectivity for commercial aviation, to improve operational efficiencies of airline operators.
- Last traded at 20.7x forward P/E.
*Lian Beng
- Extended the deadline for its proposed A$90.2m disposal of a freehold property at 50 Franklin Street in Melbourne, Australia, to 20 Feb.
- To recap, the sale is a good opportunity for the group to realise the capital appreciation of this overseas property, which was purchased for A$51.5m in Nov '16.
- Last traded at 7.6x trailing P/E.
*Choo Chiang
- Signed a lease agreement with a third party for a property located at 17 Hamilton Road.
- Group will relocate its existing retail branch at Bendemeer Road to the new premise by Apr '18.
Tuesday, February 6, 2018
SG Market (06 Feb 18)
MARKET OVERVIEW
- Brace for a further pullback after US markets suffered one of its steepest one-day correction ever and erased gains for the year amid concerns over rising bond yields and inflation as well as the expiry of the US government funding bill this Thu.
- Technology and oil-related stocks may face selling pressure after US semiconductor and energy stocks were tumbled on poor iPhone sales/rising inventory and 2% slide in crude prices respectively.
- Technically below 3,470, the next level of support for STI is at 3,380
CORPORATE RESULTS
*NetLink NBN Trust
-3QFY18 net profit of $21.7m came in 32.5% higher than IPO forecast due to lower operating and staff costs.
- Revenue of $83.4m (+0.6%) was slightly above forecast on higher monthly recurring connection fees, more ducts & manholes services and central office revenue.
- EBITDA margin of 75.7% benefitted from lower IT maintenance and professional costs, as well as staff expenses.
- As at Dec '17, it has 1.17m (+2% q/q) residential connections and 43,228 (+2.9% q/q) commercial users.
- The group is continuing to expand its network in new housing estates such as Tengah. with 42,000 new homes estimated to be developed over the next two decades.
- Aggregate leverage inched 1.6ppt higher q/q to 13.5%.
- Trades at a projected yield of 5.3% and 1.02x P/B.
*Manulife US REIT
- 4Q17 DPU of US$0.0142 was 7.6% above IPO forecast and beat street estimates.
- Gross revenue was 49.6% higher-than-expected at US$29.3m, while NPI beat by a larger margin of 54.1% to US$18.4m, following the acquisition of Plaza and Exchange, and higher rental & other income.
- Occupancy rate was stable at 95.9% (+0.2ppt q/q), while aggregate leverage crept up 0.6ppt q/q to 33.7%.
- Trades at annualised 4Q17 yield of 6.2% and 1.12x P/B.
*Hutchison Port Holdings Trust
- 4Q17 DPU slid 33.1% to HK$0.111, bringing FY17 payout to HK$0.206 (-32.7%), in line with expectations.
- For the quarter, revenue slipped 3.4% to HK$2.9b as higher container throughout volumes in HK (+0.9%) and China (+10.6%) were offset by increased concessions and tariffs revisions.
- Accordingly, operating margin slipped 5.5ppt to 27.4%, and was also dragged by an absence of govt subsidy and disposal gain.
- Net profit of HK$237.8m (-38.4%) was also marred by higher financing cost (+19.1%).
- Trades at an indicative yield of 7.6% and 0.64x P/B.
*Yoma
- 3QFY18 net profit soared to $16.8m (3QFY17: $0.3m), lifted by a net gain of $27.7m from the spin-off of its tourism business.
- Revenue was relatively flat at $24.1m (+0.1%) as the decline in sale of residences & land development rights (-77.3%) was pared by automotive & heavy equipment (+37%), consumer (+28.1%) and real estate rental and services (+2.5%).
- Gross margin compressed to 27% (-14.4ppt) on a shift in sales mix.
- Bottom line was also boosted by a positive $11.3m swing to FX gain from the weaker USD, but partly offset by higher admin costs (+32%) due to the opening of more KFC stores and Convenience Prosperity branches.
- NAV/share at $0.3959.
*FJ Benjamin
- Turned around to 2QFY18 net profit of $0.96m (2QFY17: $7.3m loss), helped by lower operating expenses (-20.3%) and FX gain of $1.2m.
- However, revenue slid 19% to $50.5m after it terminated several loss-making brands in a restructuring exercise and reduced shipments to its Indonesian associate, which started buying directly from some of its principals in Apr '17.
- Gross profit margin improved 7ppt to 46% on tighter inventory control and better full price sell through.
- Trades at 1.04x P/B.
*Vashion
- FY17 net loss widened 18.1% to $2.6m.
- Excluding net loss from discontinued operations, FY17 loss would have been $2.1m (-14.6%).
- Revenue grew 4.8% to $3.2m, largely attributed by higher contribution from the distribution division.
- Gross margin remained stable at 19.5%, but bottom line was eroded by higher operating expenses (+21.7%).
POSITIVE NEWS
*ComfortDelGro
- Acquiring 217 taxi licenses and vehicles in Liaoning Province, China, for Rmb71.6m ($15m).
- This will increase its fleet size by more than 10% to 1,503 taxis, and reinforce the group's position as the largest taxi operator in Shenyang.
- Currently, its taxi fleet is fully hired out despite competition from the private hire industry.
- The group will also invest in a new vehicle repair workshop in Jilin City for an estimated $1m.
- MKE retains its Buy rating with TP of $2.40.
*Del Monte
- Proposed secondary offering and listing of up to 30% of existing shares in Del Monte Philippines (DMPI) on The Philippine Stock Exchange.
- The group will undertake that it will continue to own at least 67% of its shareholding in DMPI for five years following the offering.
- Estimated maximum net proceeds of US$304m is earmarked for debt repayment and working capital.
NEGATIVE NEWS
*Dukang Distillers
- Guided for overall revenue and earnings to be significantly lower for 2QFY2018 due to baijiu production restrictions stemming from regulatory orders to cut emissions, inventory surplus at its distributors, as well as intensified competition in the liquor market in Henan Province due to entry of new products.
NEUTRAL NEWS
*Ascendas India Trust (AIT)
- Proposed private placement of at least 73m new units at between $1.027 and $1.083 to raise gross proceeds of not less than $75m.
- Proceeds will mainly be used to repay debt, and reduce aggregate leverage to 30.9% from 35.1%.
- AIT plans to make an advanced distribution of ~2.44¢ for the period between 1 Oct '17 and the day before the placement.
- Citibank and DBS are joint book runners and underwriters for the placement.
*Keppel T&T
- Raised stake in a logistics subsidiary Courex to 85% from 59.6% for $7.5m.
- Keppel T&T will also extend a convertible loan of up to $9.75m to Courex for working capital.
- The remaining 15% stake continues to be owned by Choa Soon Heng, managing director of Courex.
- The capital injection is to support growth in Courex's e-commerce channel management, warehousing & inventory management, and last-mile fulfilment.
*Oxley
- Acquiring a 99-year leasehold estate Huang Shi Zong Hui (Huang Clan Association) at 16 Lorong 35 Geylang for $13m.
- The 2219.6 sqm site will be developed into an eight-storey mixed-use development, comprising the association's premises in two storeys and residential flats and amenities in the remaining floors.
- Post-completion, the group will transfer the association's units to be held in trust for the association as beneficial owner.
*Amara
- Soft-opened Amara Signature Shanghai at Shanghai's historical commercial zone in Puxi.
- The 343-room-5-star hotel is within the inner core of Puxi City Centre and is adjacent to 100 AM Shanghai, a 10,500 sqm complex, comprising an office tower and retail mall which is slated to soft open in 2H18.
- The group expects the hotel to commence operations in FY18.
- Brace for a further pullback after US markets suffered one of its steepest one-day correction ever and erased gains for the year amid concerns over rising bond yields and inflation as well as the expiry of the US government funding bill this Thu.
- Technology and oil-related stocks may face selling pressure after US semiconductor and energy stocks were tumbled on poor iPhone sales/rising inventory and 2% slide in crude prices respectively.
- Technically below 3,470, the next level of support for STI is at 3,380
CORPORATE RESULTS
*NetLink NBN Trust
-3QFY18 net profit of $21.7m came in 32.5% higher than IPO forecast due to lower operating and staff costs.
- Revenue of $83.4m (+0.6%) was slightly above forecast on higher monthly recurring connection fees, more ducts & manholes services and central office revenue.
- EBITDA margin of 75.7% benefitted from lower IT maintenance and professional costs, as well as staff expenses.
- As at Dec '17, it has 1.17m (+2% q/q) residential connections and 43,228 (+2.9% q/q) commercial users.
- The group is continuing to expand its network in new housing estates such as Tengah. with 42,000 new homes estimated to be developed over the next two decades.
- Aggregate leverage inched 1.6ppt higher q/q to 13.5%.
- Trades at a projected yield of 5.3% and 1.02x P/B.
*Manulife US REIT
- 4Q17 DPU of US$0.0142 was 7.6% above IPO forecast and beat street estimates.
- Gross revenue was 49.6% higher-than-expected at US$29.3m, while NPI beat by a larger margin of 54.1% to US$18.4m, following the acquisition of Plaza and Exchange, and higher rental & other income.
- Occupancy rate was stable at 95.9% (+0.2ppt q/q), while aggregate leverage crept up 0.6ppt q/q to 33.7%.
- Trades at annualised 4Q17 yield of 6.2% and 1.12x P/B.
*Hutchison Port Holdings Trust
- 4Q17 DPU slid 33.1% to HK$0.111, bringing FY17 payout to HK$0.206 (-32.7%), in line with expectations.
- For the quarter, revenue slipped 3.4% to HK$2.9b as higher container throughout volumes in HK (+0.9%) and China (+10.6%) were offset by increased concessions and tariffs revisions.
- Accordingly, operating margin slipped 5.5ppt to 27.4%, and was also dragged by an absence of govt subsidy and disposal gain.
- Net profit of HK$237.8m (-38.4%) was also marred by higher financing cost (+19.1%).
- Trades at an indicative yield of 7.6% and 0.64x P/B.
*Yoma
- 3QFY18 net profit soared to $16.8m (3QFY17: $0.3m), lifted by a net gain of $27.7m from the spin-off of its tourism business.
- Revenue was relatively flat at $24.1m (+0.1%) as the decline in sale of residences & land development rights (-77.3%) was pared by automotive & heavy equipment (+37%), consumer (+28.1%) and real estate rental and services (+2.5%).
- Gross margin compressed to 27% (-14.4ppt) on a shift in sales mix.
- Bottom line was also boosted by a positive $11.3m swing to FX gain from the weaker USD, but partly offset by higher admin costs (+32%) due to the opening of more KFC stores and Convenience Prosperity branches.
- NAV/share at $0.3959.
*FJ Benjamin
- Turned around to 2QFY18 net profit of $0.96m (2QFY17: $7.3m loss), helped by lower operating expenses (-20.3%) and FX gain of $1.2m.
- However, revenue slid 19% to $50.5m after it terminated several loss-making brands in a restructuring exercise and reduced shipments to its Indonesian associate, which started buying directly from some of its principals in Apr '17.
- Gross profit margin improved 7ppt to 46% on tighter inventory control and better full price sell through.
- Trades at 1.04x P/B.
*Vashion
- FY17 net loss widened 18.1% to $2.6m.
- Excluding net loss from discontinued operations, FY17 loss would have been $2.1m (-14.6%).
- Revenue grew 4.8% to $3.2m, largely attributed by higher contribution from the distribution division.
- Gross margin remained stable at 19.5%, but bottom line was eroded by higher operating expenses (+21.7%).
POSITIVE NEWS
*ComfortDelGro
- Acquiring 217 taxi licenses and vehicles in Liaoning Province, China, for Rmb71.6m ($15m).
- This will increase its fleet size by more than 10% to 1,503 taxis, and reinforce the group's position as the largest taxi operator in Shenyang.
- Currently, its taxi fleet is fully hired out despite competition from the private hire industry.
- The group will also invest in a new vehicle repair workshop in Jilin City for an estimated $1m.
- MKE retains its Buy rating with TP of $2.40.
*Del Monte
- Proposed secondary offering and listing of up to 30% of existing shares in Del Monte Philippines (DMPI) on The Philippine Stock Exchange.
- The group will undertake that it will continue to own at least 67% of its shareholding in DMPI for five years following the offering.
- Estimated maximum net proceeds of US$304m is earmarked for debt repayment and working capital.
NEGATIVE NEWS
*Dukang Distillers
- Guided for overall revenue and earnings to be significantly lower for 2QFY2018 due to baijiu production restrictions stemming from regulatory orders to cut emissions, inventory surplus at its distributors, as well as intensified competition in the liquor market in Henan Province due to entry of new products.
NEUTRAL NEWS
*Ascendas India Trust (AIT)
- Proposed private placement of at least 73m new units at between $1.027 and $1.083 to raise gross proceeds of not less than $75m.
- Proceeds will mainly be used to repay debt, and reduce aggregate leverage to 30.9% from 35.1%.
- AIT plans to make an advanced distribution of ~2.44¢ for the period between 1 Oct '17 and the day before the placement.
- Citibank and DBS are joint book runners and underwriters for the placement.
*Keppel T&T
- Raised stake in a logistics subsidiary Courex to 85% from 59.6% for $7.5m.
- Keppel T&T will also extend a convertible loan of up to $9.75m to Courex for working capital.
- The remaining 15% stake continues to be owned by Choa Soon Heng, managing director of Courex.
- The capital injection is to support growth in Courex's e-commerce channel management, warehousing & inventory management, and last-mile fulfilment.
*Oxley
- Acquiring a 99-year leasehold estate Huang Shi Zong Hui (Huang Clan Association) at 16 Lorong 35 Geylang for $13m.
- The 2219.6 sqm site will be developed into an eight-storey mixed-use development, comprising the association's premises in two storeys and residential flats and amenities in the remaining floors.
- Post-completion, the group will transfer the association's units to be held in trust for the association as beneficial owner.
*Amara
- Soft-opened Amara Signature Shanghai at Shanghai's historical commercial zone in Puxi.
- The 343-room-5-star hotel is within the inner core of Puxi City Centre and is adjacent to 100 AM Shanghai, a 10,500 sqm complex, comprising an office tower and retail mall which is slated to soft open in 2H18.
- The group expects the hotel to commence operations in FY18.
Monday, February 5, 2018
SG Market (05 Feb 18)
MARKET OVERVIEW
- Trading is likely to turn jittery after the sell-off on Wall Street last Fri capped its worst week in two years as strong US jobs and wage data stoked inflation fears and worries that the Fed might raise interest rates faster than expected.
- Notable results this week include HPHT, NetLink NBN, Yoma (5 Feb), Manulife (6 Feb), DBS, Singtel (8 Feb).
- Technically, if the 3,510 level on the STI is broken, the next support would be at 3,470.
ECONOMY
- Jan manufacturing PMI rose for the 17th straight month to 53.1 (est: 52.6, Dec: 52.8), its highest reading since Dec '09.
- This was attributed to faster expansion in factory output, new orders, exports and inventory.
- Electronics PMI expanded for the 18th consecutive month but slowed for the second month in a row to 52.9 (Dec: 53.2) as order backlog contracted for the first time in 13 months.
CORPORATE RESULTS
*SIA Engineering
- 3QFY18 net profit of $54.8m (+4.2%) was lifted by associates and JVs (+29.1%) on stronger takings from its repair and overhaul centres.
- However, revenue dipped 0.5% to $271m on reduced fleet management revenue, while operating margin narrowed to 6.7% due to FX swing.
- This took 9MFY18 core earnings to $129.1m (+2.4%), broadly in line with estimates.
- MKE maintains Hold with TP of $3.50.
*GL
- 2QFY18 net profit slid 15% to US$11.6m due to higher operating cost and taxes in the hotel segment.
- This took 1HFY18 earning to US$29m (+18%), making up 31% of full year forecast.
- For the quarter, revenue climbed 2% to US$88.7m mainly from the stronger GBP and AUD against USD, while gross margin slipped 1.6ppt to 59.2%.
- Management remains cautious on the outlook of the UK hotel industry. Refurbishment and re-branding of The Cumberland Hotel into Hard Rock Hotel London will impact rooms available for rent.
- Trades at 9.2x forward P/E.
*Hwa Hong
- Turned around to 4Q17 net profit of $1.5m (4Q16: $1.1m loss), bringing FY17 net profit to $7.4m (+13.1%).
- Revenue for the quarter soared 89.9% from a low base to $5.4m, boosted by higher rental income (+10.5%) and investments (+$2.4m), mainly due to higher gains from share trading activities.
- Gross margin expanded to 76.4% (+6.2ppt) on a shift in sales mix.
- Bottom line was further supported by stronger associates/JV contributions of $1m (+484%).
- Maintained final DPS of 1¢ and declared a special DPS of 0.1¢ (4Q16: nil).
- NAV/share at $0.3019.
POSITIVE NEWS
*QT Vascular
- Entered into a term sheet with a multinational corporation with the intention to sell its coronary assets.
*Vibrant/Figtree
- 60:40 JVCo between Vibrant and Figtree has secured 100% of all available leases in Phase 2 of Fervent High Tech Industrial Park in Changshu, China.
- The JVCo acquired the 50-year leasehold 76,533 sqm industrial land in Changsu Economic Development Zone in Jiangsu Province for the development of build-to-suit (BTS) industrial factories.
- The BTS development is scheduled to be completed by 2Q19.
NEGATIVE NEWS
*Thai Bev
- Moody's has downgraded its credit rating to Baa3 from Baa2, with outlook slashed to negative from stable.
- The downgrade reflects the substantial jump in debt to fund its 27% interest in Vietnamese brewery Sabeco.
- While synergies from the acquisition are evident, Moody's believes that such synergies will only materialise in the longer term.
*Profit warnings
- ASL Marine
- Ntegrator
NEUTRAL NEWS
*Singtel
- Subscribing for Bharti Airtel's proposed preferential share allotment for Rs26.5b ($555.6m).
- Post-subscription, Singtel's economic interest in Airtel will increase to 39.5% from 38.6%.
*Spackman Entertainment
- Intends to launch its own Korean entertainment utility tokens through an Initial Coin Offering (ICO).
- The upcoming cryptocurrency, K Coins, will be used to grant holders access to premium content, fan meetings, concerts and star merchandise.
- The proposed ICO will utilise blockchain technology to leverage on the group's content and talent management platform.
*Ntegrator
-Secured four contracts worth $17.2m, including a US$2m project that supplies spare parts and ECI equipment to Ministry of Defence of Myanmar.
- Additionally, one of the contracts is for the installation and maintenance works for broadband fibre network to a regional service provider for a three year period.
*CWG
- The $0.195 apiece cash privatisation offer has received 89.08% of valid acceptances.
- Offer closes on 5 Mar, 5.30pm.
- Trading is likely to turn jittery after the sell-off on Wall Street last Fri capped its worst week in two years as strong US jobs and wage data stoked inflation fears and worries that the Fed might raise interest rates faster than expected.
- Notable results this week include HPHT, NetLink NBN, Yoma (5 Feb), Manulife (6 Feb), DBS, Singtel (8 Feb).
- Technically, if the 3,510 level on the STI is broken, the next support would be at 3,470.
ECONOMY
- Jan manufacturing PMI rose for the 17th straight month to 53.1 (est: 52.6, Dec: 52.8), its highest reading since Dec '09.
- This was attributed to faster expansion in factory output, new orders, exports and inventory.
- Electronics PMI expanded for the 18th consecutive month but slowed for the second month in a row to 52.9 (Dec: 53.2) as order backlog contracted for the first time in 13 months.
CORPORATE RESULTS
*SIA Engineering
- 3QFY18 net profit of $54.8m (+4.2%) was lifted by associates and JVs (+29.1%) on stronger takings from its repair and overhaul centres.
- However, revenue dipped 0.5% to $271m on reduced fleet management revenue, while operating margin narrowed to 6.7% due to FX swing.
- This took 9MFY18 core earnings to $129.1m (+2.4%), broadly in line with estimates.
- MKE maintains Hold with TP of $3.50.
*GL
- 2QFY18 net profit slid 15% to US$11.6m due to higher operating cost and taxes in the hotel segment.
- This took 1HFY18 earning to US$29m (+18%), making up 31% of full year forecast.
- For the quarter, revenue climbed 2% to US$88.7m mainly from the stronger GBP and AUD against USD, while gross margin slipped 1.6ppt to 59.2%.
- Management remains cautious on the outlook of the UK hotel industry. Refurbishment and re-branding of The Cumberland Hotel into Hard Rock Hotel London will impact rooms available for rent.
- Trades at 9.2x forward P/E.
*Hwa Hong
- Turned around to 4Q17 net profit of $1.5m (4Q16: $1.1m loss), bringing FY17 net profit to $7.4m (+13.1%).
- Revenue for the quarter soared 89.9% from a low base to $5.4m, boosted by higher rental income (+10.5%) and investments (+$2.4m), mainly due to higher gains from share trading activities.
- Gross margin expanded to 76.4% (+6.2ppt) on a shift in sales mix.
- Bottom line was further supported by stronger associates/JV contributions of $1m (+484%).
- Maintained final DPS of 1¢ and declared a special DPS of 0.1¢ (4Q16: nil).
- NAV/share at $0.3019.
POSITIVE NEWS
*QT Vascular
- Entered into a term sheet with a multinational corporation with the intention to sell its coronary assets.
*Vibrant/Figtree
- 60:40 JVCo between Vibrant and Figtree has secured 100% of all available leases in Phase 2 of Fervent High Tech Industrial Park in Changshu, China.
- The JVCo acquired the 50-year leasehold 76,533 sqm industrial land in Changsu Economic Development Zone in Jiangsu Province for the development of build-to-suit (BTS) industrial factories.
- The BTS development is scheduled to be completed by 2Q19.
NEGATIVE NEWS
*Thai Bev
- Moody's has downgraded its credit rating to Baa3 from Baa2, with outlook slashed to negative from stable.
- The downgrade reflects the substantial jump in debt to fund its 27% interest in Vietnamese brewery Sabeco.
- While synergies from the acquisition are evident, Moody's believes that such synergies will only materialise in the longer term.
*Profit warnings
- ASL Marine
- Ntegrator
NEUTRAL NEWS
*Singtel
- Subscribing for Bharti Airtel's proposed preferential share allotment for Rs26.5b ($555.6m).
- Post-subscription, Singtel's economic interest in Airtel will increase to 39.5% from 38.6%.
*Spackman Entertainment
- Intends to launch its own Korean entertainment utility tokens through an Initial Coin Offering (ICO).
- The upcoming cryptocurrency, K Coins, will be used to grant holders access to premium content, fan meetings, concerts and star merchandise.
- The proposed ICO will utilise blockchain technology to leverage on the group's content and talent management platform.
*Ntegrator
-Secured four contracts worth $17.2m, including a US$2m project that supplies spare parts and ECI equipment to Ministry of Defence of Myanmar.
- Additionally, one of the contracts is for the installation and maintenance works for broadband fibre network to a regional service provider for a three year period.
*CWG
- The $0.195 apiece cash privatisation offer has received 89.08% of valid acceptances.
- Offer closes on 5 Mar, 5.30pm.
Friday, February 2, 2018
SG Market (02 Feb 18)
MARKET OVERVIEW
- Stocks could face some volatility following another choppy session on Wall Street on unease over the prospect of higher interest rates as US treasury yields jumped to 2.79%, its highest since Apr 2014
- However, but sectors that will benefit from the economic upturn, such as banks and property, will continue to remain resilient.
- Technically, the STI is expected to range trade between 3,640 and 3,510.
CORPORATE RESULTS
*Sing Post
- Headline 3QFY18 net profit jumped 37.2% to $43m, boosted by asset disposal gain ($3m) and deferred tax adjustment ($6.9m) arising from US tax reform.
- Stripping out one-off items, core quarterly profit of $35.2m (+11.9%) brought 9MFY18 core earnings to $89.7m (-4.8%), meeting 78% of full year consensus forecast.
- Revenue grew 11.7% to $412.8m on the back of growth across postal (+15.8%) on stronger international mail, logistics (+1.5%) on increased last-mile deliveries, and e-commerce (+19.7%) from higher volumes and new customers.
- Core operating profit jumped 23.7% to $46.1m, driven by lower e-commerce losses and better performance at TradeGlobal, rental income from SingPost Centre retail mall (re-opened on 9 Oct), but partially offset by slimmer logistics margin and lower contributions from Quantium Solutions
- Interim DPS maintained at 0.5¢.
- Trades at 26x forward P/E.
*GuocoLand
- 2QFY18 net profit slid 25% to $42.9m due to 79% drop in FX gain to $3.3m and absence of divestment gain by an associate.
- This brought 1HFY18 earnings to $208.5m (+152%), within expectations.
- Revenue for the quarter surged 60% to $370.6m on stronger sales and higher progressive recognition from Singapore residential projects.
- Gross margin expanded 4.3ppt to 24.7%.
- Bottom line was also weighed by higher admin costs (+97%) from increased sales activities and the opening of two new hotels, as well as 60% spike in finance expenses.
- Trades at significant 39% discount to RNAV/share.
- MKE maintains Buy with TP of $2.95.
*Ascendas Hospitality Trust
- 3QFY18 DPS slumped 14% to 1.41¢, impacted by higher trust expense and retention sum, as well as absence of one-off gain.
- This brought 9MFY18 distribution payout to 4.14¢ (-3.9%), in line with latest adjusted estimate.
- For the quarter, revenue and NPI fell to $58.1m (-1.8%) and $25.2m (-4.7%) on weaker performance of the Australia portfolio, and further dragged by weakening JPY, CNY and AUD against SGD.
- RevPARs of A$160 (+1.9%) in Australia and Rmb349 (+0.9%) in China were driven by higher average daily rate, while Japan RevPAR rose 5.9% to ¥10,970 on more guests and events.
- Aggregate leverage crept up 0.6ppt q/q to 33.2%.
- Trades at annualised 3Q yield of 6.3% and 1.0x P/B.
POSITIVE NEWS
*Jumbo Group
- 51:49 JVCo, JBHG F&B Services (Beijing), will establish a new branch office and its first restaurant in Xi'An, China.
- Trades at 23x forward P/E.
*Spackman Entertainment
- "The Outlaws", co-presented by the group's 51% owned subsidiary Novus Mediacorp, exceed KRW11b in VOD sales, breaking all-time highest sales record in Korea.
- Novus owns the distribution rights of the film for the ancillary market in Korea.
*Wee Hur
- Secured a construction project worth $43m from The Diocese of Singapore and St Andrew Mission Hospital.
- The project will commence on 12 March and is slated to complete on 25 May '20.
- Trades at 18.2x trailing P/E.
*Yongnam
- Secured 4 contracts totalling $22.9m for Singapore projects.
- One of which involves structural steelwork for Health City Novena, an integrated healthcare master plan development in Singapore, with the contract expected to be completed in early 2019.
- The other three consists of works for Bright Hill, Keppel and Cantonment Station, which are slated to complete between 2018 and 2023.
- Loss-making and trades at 0.58x P/B.
*Acromec
- Signed an MOU with Malaysia-based Green Energy Resources to explore opportunities in the renewable energy segment.
- It intends to contribute expertise in the controlled environment engineering space and together, will be looking to participate in building renewable energy plants on a Build-Own-Operate basis.
NEGATIVE NEWS
*Noble Group
- Proposed disposal of vessels had been void after buyers failed to obtain approval from their respective board of directors.
- Had the disposal been completed, net proceeds post-debt repayment would have amounted to approximately US$30m.
- Group updated that the market value for the dry bulk vessels has increased by 3% since then to US$95m.
*Swiber
- Defaulting on its coupon payment due today.
- Coupon payment was for its $150m 6.5% trust certificates due 2018 comprising Series 001 issued under its US$500m Multicurrency Islamic Trust Certificates Issuance Programme.
*Infinio
- Received a letter of demand from Damodara Hazra for outstanding director's fees amounting to $55,000.
*OKH Global
- Signed a 3-year strategic cooperation agreement with China-based financial services and insurance giant Ping An Group to collaborate in developing and managing logistics facilities in China.
- OKH and its associate, Pan Asia Logistics Investments, will provide expertise in design, development, build-to-suit, leasing, asset management and client network.
- Ping An will contribute real estate resources, asset management expertise, as well as financial services such as insurance and supply chain financing to tenants of the relevant logistics facilities.
- Loss-making and trades at 0.48x P/B.
NEUTRAL NEWS
*SGX
- Macquarie Futures joined its derivatives trading and clearing membership.
- Following the addition, the exchange operator now has 58 trading and 24 clearing members for its derivatives market.
- SGX is looking to grow the derivative division, especially bulk commodities space, to Macquarie's client network in Australia and beyond.
- Last traded at 23.7x forward P/E.
*HMI
- Inked a licensing agreement with Japan's leading publishing and elderly care company, Gakken Cocofump to develop elderly care education in the region.
- Gakken produces educational content in medical, nursing and elderly care training, which have been adopted in 1,300 hospitals and old age homes in Japan.
*Mencast
- Entered into a MOU with PhDsoft Technology to provide mentorship, equipment, co-working space, and networking opportunities under its MIC Incubation Programme.
- PhDsoft involves engineering technology and creates advanced visualization software, C4D®, for the maintenance of critical assets during their operational lifecycle.
- C4D® is a solution to predict the degradation, anomalies and corrosion of complex assets using predictive analytics and AI to avoid failures, reduce accident and downtime, and attain longer asset life and a safer and cost-effective maintenance process.
*Marco Polo Marine
- Will resume trading today following since eight months of suspension since 1 May 2017.
- The group has completed its debt restructuring and recently saw the capital injection of $60m (2.1b new shares at $0.028/share) from nine strategic investors.
*ISDN
- 30% owned C&I Singapore Renewable and Innovation Tech entered into strategic cooperation agreement with Nasdaq-listed The9 which has a market cap of US$56.6m.
- The9 will provide C&I with services, solutions, and operational advice relating to blockchain technology and its application on the distribution of solar generated energy.
- The9 is a China-based developer of content for virtual communities.
- Stocks could face some volatility following another choppy session on Wall Street on unease over the prospect of higher interest rates as US treasury yields jumped to 2.79%, its highest since Apr 2014
- However, but sectors that will benefit from the economic upturn, such as banks and property, will continue to remain resilient.
- Technically, the STI is expected to range trade between 3,640 and 3,510.
CORPORATE RESULTS
*Sing Post
- Headline 3QFY18 net profit jumped 37.2% to $43m, boosted by asset disposal gain ($3m) and deferred tax adjustment ($6.9m) arising from US tax reform.
- Stripping out one-off items, core quarterly profit of $35.2m (+11.9%) brought 9MFY18 core earnings to $89.7m (-4.8%), meeting 78% of full year consensus forecast.
- Revenue grew 11.7% to $412.8m on the back of growth across postal (+15.8%) on stronger international mail, logistics (+1.5%) on increased last-mile deliveries, and e-commerce (+19.7%) from higher volumes and new customers.
- Core operating profit jumped 23.7% to $46.1m, driven by lower e-commerce losses and better performance at TradeGlobal, rental income from SingPost Centre retail mall (re-opened on 9 Oct), but partially offset by slimmer logistics margin and lower contributions from Quantium Solutions
- Interim DPS maintained at 0.5¢.
- Trades at 26x forward P/E.
*GuocoLand
- 2QFY18 net profit slid 25% to $42.9m due to 79% drop in FX gain to $3.3m and absence of divestment gain by an associate.
- This brought 1HFY18 earnings to $208.5m (+152%), within expectations.
- Revenue for the quarter surged 60% to $370.6m on stronger sales and higher progressive recognition from Singapore residential projects.
- Gross margin expanded 4.3ppt to 24.7%.
- Bottom line was also weighed by higher admin costs (+97%) from increased sales activities and the opening of two new hotels, as well as 60% spike in finance expenses.
- Trades at significant 39% discount to RNAV/share.
- MKE maintains Buy with TP of $2.95.
*Ascendas Hospitality Trust
- 3QFY18 DPS slumped 14% to 1.41¢, impacted by higher trust expense and retention sum, as well as absence of one-off gain.
- This brought 9MFY18 distribution payout to 4.14¢ (-3.9%), in line with latest adjusted estimate.
- For the quarter, revenue and NPI fell to $58.1m (-1.8%) and $25.2m (-4.7%) on weaker performance of the Australia portfolio, and further dragged by weakening JPY, CNY and AUD against SGD.
- RevPARs of A$160 (+1.9%) in Australia and Rmb349 (+0.9%) in China were driven by higher average daily rate, while Japan RevPAR rose 5.9% to ¥10,970 on more guests and events.
- Aggregate leverage crept up 0.6ppt q/q to 33.2%.
- Trades at annualised 3Q yield of 6.3% and 1.0x P/B.
POSITIVE NEWS
*Jumbo Group
- 51:49 JVCo, JBHG F&B Services (Beijing), will establish a new branch office and its first restaurant in Xi'An, China.
- Trades at 23x forward P/E.
*Spackman Entertainment
- "The Outlaws", co-presented by the group's 51% owned subsidiary Novus Mediacorp, exceed KRW11b in VOD sales, breaking all-time highest sales record in Korea.
- Novus owns the distribution rights of the film for the ancillary market in Korea.
*Wee Hur
- Secured a construction project worth $43m from The Diocese of Singapore and St Andrew Mission Hospital.
- The project will commence on 12 March and is slated to complete on 25 May '20.
- Trades at 18.2x trailing P/E.
*Yongnam
- Secured 4 contracts totalling $22.9m for Singapore projects.
- One of which involves structural steelwork for Health City Novena, an integrated healthcare master plan development in Singapore, with the contract expected to be completed in early 2019.
- The other three consists of works for Bright Hill, Keppel and Cantonment Station, which are slated to complete between 2018 and 2023.
- Loss-making and trades at 0.58x P/B.
*Acromec
- Signed an MOU with Malaysia-based Green Energy Resources to explore opportunities in the renewable energy segment.
- It intends to contribute expertise in the controlled environment engineering space and together, will be looking to participate in building renewable energy plants on a Build-Own-Operate basis.
NEGATIVE NEWS
*Noble Group
- Proposed disposal of vessels had been void after buyers failed to obtain approval from their respective board of directors.
- Had the disposal been completed, net proceeds post-debt repayment would have amounted to approximately US$30m.
- Group updated that the market value for the dry bulk vessels has increased by 3% since then to US$95m.
*Swiber
- Defaulting on its coupon payment due today.
- Coupon payment was for its $150m 6.5% trust certificates due 2018 comprising Series 001 issued under its US$500m Multicurrency Islamic Trust Certificates Issuance Programme.
*Infinio
- Received a letter of demand from Damodara Hazra for outstanding director's fees amounting to $55,000.
*OKH Global
- Signed a 3-year strategic cooperation agreement with China-based financial services and insurance giant Ping An Group to collaborate in developing and managing logistics facilities in China.
- OKH and its associate, Pan Asia Logistics Investments, will provide expertise in design, development, build-to-suit, leasing, asset management and client network.
- Ping An will contribute real estate resources, asset management expertise, as well as financial services such as insurance and supply chain financing to tenants of the relevant logistics facilities.
- Loss-making and trades at 0.48x P/B.
NEUTRAL NEWS
*SGX
- Macquarie Futures joined its derivatives trading and clearing membership.
- Following the addition, the exchange operator now has 58 trading and 24 clearing members for its derivatives market.
- SGX is looking to grow the derivative division, especially bulk commodities space, to Macquarie's client network in Australia and beyond.
- Last traded at 23.7x forward P/E.
*HMI
- Inked a licensing agreement with Japan's leading publishing and elderly care company, Gakken Cocofump to develop elderly care education in the region.
- Gakken produces educational content in medical, nursing and elderly care training, which have been adopted in 1,300 hospitals and old age homes in Japan.
*Mencast
- Entered into a MOU with PhDsoft Technology to provide mentorship, equipment, co-working space, and networking opportunities under its MIC Incubation Programme.
- PhDsoft involves engineering technology and creates advanced visualization software, C4D®, for the maintenance of critical assets during their operational lifecycle.
- C4D® is a solution to predict the degradation, anomalies and corrosion of complex assets using predictive analytics and AI to avoid failures, reduce accident and downtime, and attain longer asset life and a safer and cost-effective maintenance process.
*Marco Polo Marine
- Will resume trading today following since eight months of suspension since 1 May 2017.
- The group has completed its debt restructuring and recently saw the capital injection of $60m (2.1b new shares at $0.028/share) from nine strategic investors.
*ISDN
- 30% owned C&I Singapore Renewable and Innovation Tech entered into strategic cooperation agreement with Nasdaq-listed The9 which has a market cap of US$56.6m.
- The9 will provide C&I with services, solutions, and operational advice relating to blockchain technology and its application on the distribution of solar generated energy.
- The9 is a China-based developer of content for virtual communities.
Thursday, February 1, 2018
SG Market (01 Feb 18)
MARKET OVERVIEW
- Market sentiment is likely to remain edgy after the Fed left benchmark interest rates unchanged but signalled an acceleration of rate hikes this year due to rising inflation.
- Technically, the STI is expected to range trade between 3,640 and 3,510.
CORPORATE RESULTS
*OUE Commercial Trust
- 4Q17 DPU of 1.14¢ (-3.4%) was diluted by a larger unit base (+18.7%) following a private placement in Mar '17 and redemption of convertible perpetual preferred units (CPPU) in Nov/Dec '17.
- This brought FY17 distribution payout to 4.67¢ (-9.8%), in line with estimates.
- Revenue for the quarter slipped 2.3% to $44m from reduced rental income and one-off income, while NPI fell at a slower pace to $34.7m (-0.3%) on lower operating cost (-8.9%).
- Overall portfolio occupancy dipped 0.2ppt q/q to 96.8%, while aggregate leverage crept up to 37.3% (+0.4ppt q/q).
- Trades at an annualised 4Q yield of 6.1% and 0.82x P/B.
POSITIVE NEWS
*AEM Holdings
- Acquiring Finland-based Afore Oy, a micro-electro-mechanical systems (MEMS) test solutions provider for €7.58m, representing 10.6x P/E and 5.4x P/B.
- Purchase consideration will be satisfied by way of cash (65.6%) and 0.87m new AEM shares at $4.89/share.
- Under moratorium, 1/3 of the consideration shares can be sold after 12 months, 1/3 after 24 months and remaining shares after 36 months.
- Afore will provide the group with high performance test capabilities and solutions in MEMS, a strategic high-growth semiconductor end-market forecasted to reach US$22b in 2021.
- AEM intends to leverage on its business synergies with Afore to expand its product and customer profile in the semiconductor and industrial sectors.
*Cache Logistics Trust
- Proposed acquisition of 9 Australian logistics properties in the states of Victoria, New South Wales and Queensland for A$191m.
- With gross lettable area of 142,103 sqm and 98.1% occupancy, the portfolio is priced at an initial net property yield is 6.4%.
- This makes it the REIT's largest Australian acquisition, which will increase portfolio valuation by 15.6%, with Australian assets constituting 28%.
- Post deal, leverage is expected to climb 3ppt to 39.3%.
- Trades at a forward 7.4% yield and 1.21x P/B.
*Chip Eng Seng
- Awarded a $168m design and build contract by HDB.
- The initial design phase of the project in at Sengkang will take 10 months to complete with construction taking 32 months thereafter.
- Trades at 18.4x forward P/E.
*mm2 Asia
- To spin-off its 51% owned VFX studio, Vividthree Productions, on the Catalist board.
- Group believes the spin-off will allow Vividthree to be an independent entity and raise funds required for new growth prospects.
- Trades at 21.3x forward P/E.
*Singapore Medical Group
- 20%-owned JVCo, CHA SMG (Australia), will acquire a 65% stake in Australia-based IVF specialist group CFC Global for an undisclosed amount.
- CFC Global has seven clinics in Australia and holds more than 10% market share across the states of Queensland, Victoria and South Australia.
- Counter last traded at 30.3x forward P/E.
*Boardroom
- Acquired Australia-based Corporate Counsel for A$2.3m ($2.2m).
- Corporate Counsel engages in the business of providing corporate secretarial and corporate governance services to private and listed companies in Melbourne.
- The acquisition enables the group to expand its presence in Melbourne.
- Post-acquisition, pro-forma FY16 EPS would increase 6.4% to 3.98¢.
NEGATIVE NEWS
*Noble Group
- Defended its debt rescue plan amid criticism by one of its biggest shareholders that it enriches management.
- Separately, Fitch downgrades Noble's issuer default rating to `C' from `CC' on its debt restructuring proposal.
*Profit warnings
- Genting HK
- KLW Holdings
- Eindec
- Singapore eDevelopment
NEUTRAL NEWS
*SGX
- Seeking listing rule changes for mineral, oil and gas companies to align with industry developments.
- The proposals include updates on approval plans and development time-lines as well as simplified Qualified Person's Report that is more investor friendly.
*Keppel Corp
- Signed a non-binding MOU with global leading smart energy management company, Envision, to explore new and clean energy, and smart cities.
- Group intends to leverage Envision's technologies and expertise in the Internet of Things (IoT) and ecosystem of energy solutions to advance its integrated urban development and operations.
- Partnership will see the group integrate into Envision's EnOS, an open source energy IoT platform into the group's development worldwide, driven by sensors, applications, AI and data analytics technology.
- EnOS covers many domains including wind and solar energy generation, energy storage and network, smart buildings and electric vehicle charging.
*Rotary Engineering
- The $0.46/share privatisation offer by controlling shareholders has closed with the offeror attaining a 95.3% stake.
- Offeror intends to exercise its right to compulsorily acquire all remaining shares.
*Asia-Pacific Strategic/ IPC Corp
- AP Strat intends to acquire a 46.9% stake in IPC from Oei Hong Leong and several other individuals, via an issue of 133 shares for each IPC share.
- AP Strat believes IPC will complement its recently-acquired Huzhou entities based in China.
- Market sentiment is likely to remain edgy after the Fed left benchmark interest rates unchanged but signalled an acceleration of rate hikes this year due to rising inflation.
- Technically, the STI is expected to range trade between 3,640 and 3,510.
CORPORATE RESULTS
*OUE Commercial Trust
- 4Q17 DPU of 1.14¢ (-3.4%) was diluted by a larger unit base (+18.7%) following a private placement in Mar '17 and redemption of convertible perpetual preferred units (CPPU) in Nov/Dec '17.
- This brought FY17 distribution payout to 4.67¢ (-9.8%), in line with estimates.
- Revenue for the quarter slipped 2.3% to $44m from reduced rental income and one-off income, while NPI fell at a slower pace to $34.7m (-0.3%) on lower operating cost (-8.9%).
- Overall portfolio occupancy dipped 0.2ppt q/q to 96.8%, while aggregate leverage crept up to 37.3% (+0.4ppt q/q).
- Trades at an annualised 4Q yield of 6.1% and 0.82x P/B.
POSITIVE NEWS
*AEM Holdings
- Acquiring Finland-based Afore Oy, a micro-electro-mechanical systems (MEMS) test solutions provider for €7.58m, representing 10.6x P/E and 5.4x P/B.
- Purchase consideration will be satisfied by way of cash (65.6%) and 0.87m new AEM shares at $4.89/share.
- Under moratorium, 1/3 of the consideration shares can be sold after 12 months, 1/3 after 24 months and remaining shares after 36 months.
- Afore will provide the group with high performance test capabilities and solutions in MEMS, a strategic high-growth semiconductor end-market forecasted to reach US$22b in 2021.
- AEM intends to leverage on its business synergies with Afore to expand its product and customer profile in the semiconductor and industrial sectors.
*Cache Logistics Trust
- Proposed acquisition of 9 Australian logistics properties in the states of Victoria, New South Wales and Queensland for A$191m.
- With gross lettable area of 142,103 sqm and 98.1% occupancy, the portfolio is priced at an initial net property yield is 6.4%.
- This makes it the REIT's largest Australian acquisition, which will increase portfolio valuation by 15.6%, with Australian assets constituting 28%.
- Post deal, leverage is expected to climb 3ppt to 39.3%.
- Trades at a forward 7.4% yield and 1.21x P/B.
*Chip Eng Seng
- Awarded a $168m design and build contract by HDB.
- The initial design phase of the project in at Sengkang will take 10 months to complete with construction taking 32 months thereafter.
- Trades at 18.4x forward P/E.
*mm2 Asia
- To spin-off its 51% owned VFX studio, Vividthree Productions, on the Catalist board.
- Group believes the spin-off will allow Vividthree to be an independent entity and raise funds required for new growth prospects.
- Trades at 21.3x forward P/E.
*Singapore Medical Group
- 20%-owned JVCo, CHA SMG (Australia), will acquire a 65% stake in Australia-based IVF specialist group CFC Global for an undisclosed amount.
- CFC Global has seven clinics in Australia and holds more than 10% market share across the states of Queensland, Victoria and South Australia.
- Counter last traded at 30.3x forward P/E.
*Boardroom
- Acquired Australia-based Corporate Counsel for A$2.3m ($2.2m).
- Corporate Counsel engages in the business of providing corporate secretarial and corporate governance services to private and listed companies in Melbourne.
- The acquisition enables the group to expand its presence in Melbourne.
- Post-acquisition, pro-forma FY16 EPS would increase 6.4% to 3.98¢.
NEGATIVE NEWS
*Noble Group
- Defended its debt rescue plan amid criticism by one of its biggest shareholders that it enriches management.
- Separately, Fitch downgrades Noble's issuer default rating to `C' from `CC' on its debt restructuring proposal.
*Profit warnings
- Genting HK
- KLW Holdings
- Eindec
- Singapore eDevelopment
NEUTRAL NEWS
*SGX
- Seeking listing rule changes for mineral, oil and gas companies to align with industry developments.
- The proposals include updates on approval plans and development time-lines as well as simplified Qualified Person's Report that is more investor friendly.
*Keppel Corp
- Signed a non-binding MOU with global leading smart energy management company, Envision, to explore new and clean energy, and smart cities.
- Group intends to leverage Envision's technologies and expertise in the Internet of Things (IoT) and ecosystem of energy solutions to advance its integrated urban development and operations.
- Partnership will see the group integrate into Envision's EnOS, an open source energy IoT platform into the group's development worldwide, driven by sensors, applications, AI and data analytics technology.
- EnOS covers many domains including wind and solar energy generation, energy storage and network, smart buildings and electric vehicle charging.
*Rotary Engineering
- The $0.46/share privatisation offer by controlling shareholders has closed with the offeror attaining a 95.3% stake.
- Offeror intends to exercise its right to compulsorily acquire all remaining shares.
*Asia-Pacific Strategic/ IPC Corp
- AP Strat intends to acquire a 46.9% stake in IPC from Oei Hong Leong and several other individuals, via an issue of 133 shares for each IPC share.
- AP Strat believes IPC will complement its recently-acquired Huzhou entities based in China.
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