MARKET OVERVIEW
- The market could continue its uptrend following a positive close on Wall Street last Fri, while investors await a slew of Singapore economic data this week, including Jan industrial production and PMI for Feb.
- Technically, the STI is heading towards its near term objective at 3,575 with immediate support at 3,470.
CORPORATE RESULTS
*Genting Singapore
- 4Q17 net profit slid 17% to $132.8m but FY17 earnings of $601m (+78%) came in within expectations.
- Revenue for the quarter rose 4% to $580.1m on stronger slot and VIP volumes, despite lower hold rate, as well as improved leisure and hospitality segment, with daily average visitorship growing between 6-9%.
- Adjusted EBITDA rose 9% to $255.1m on record low provisions from a more measured credit policy.
- However, operating margin shrank 11.4ppt to 30.9% mainly on a negative FX swing to $1.5m loss (4Q16: $65.4m gain), as well as higher admin cost of $41m (+22%).
- Declared higher final DPS of 2¢ (+33.3%) to bring full-year payout to 3.5¢ (+16.7%).
- Optimistic that the Japan IR Execution Bill will be tabled in this year's Diet session, which will pave the way for the formal bidding process for Japan gaming licence.
- Trades at 20.6x forward P/E.
*Raffles Medical
- FY17 net profit of $70.8m (+0.8%) met estimates.
- Revenue was flat at $477.6m (+0.8%), as higher local patient load was offset by lower renewal of international healthcare plans by foreign patients.
- Operating margin narrowed marginally to 16.8% (-0.5ppt) on increased staff costs (+2.4%).
- Raised final DPS to 1.75¢ (+17%), bringing full year payout to 2.25¢ (+12.5%).
- Trades at 30.6x forward P/E.
*AEM Holdings
- 4Q17 net profit surged more than 11x to $9.7m (4Q16: $0.8m), boosting FY17 earnings of $31.5m (+576%) ahead of expectations.
- Revenue for the quarter jumped 202% to $59.1m on strong sales of test handlers and relevant consumables to its key semiconductor customer.
- Gross material margin widened 1ppt to 37.3% amid a favourable shift in sales mix, and change in pricing following a switch from SGD to USD billing.
- Net cash position improved to $46m (3Q17: $25m), accounting for 11% of market cap.
- Raised final DPS to 6.5¢ (4Q16: 1.3¢), bringing full-year payout to 12¢ (FY16: 1.8¢).
- Proposed a 3-for-1 bonus issue.
- Trading at 10.3x FY18e P/E.
*Asian Pay TV
- Flat 4Q17 DPU of 1.625¢ brought FY17 distribution payout to 6.5¢, meeting expectations.
- Revenue for the quarter rose 0.9% to $84.7m mainly on positive FX effects. In constant TWD terms, contribution from basic cable TV (+0.3%) improved, while broadband (-2.2%) and premium digital cable TV (-5.8%) declined.
- EBITDA margin widened to 61.1% (+1.6ppt).
- Reaffirmed FY17 DPU guidance of 6.5¢, implying 11.4% yield.
- NAV/unit at $0.83.
*HRnetGroup
- FY17 net profit crept up 0.6% to $41.3m, in line with estimates.
- Revenue rose 7.4% to $391.9m on strong growth in flexible staffing business in Singapore.
- Gross and operating margins both contracted 1.7ppt to 34.7% and 14.5%, respectively.
- Updated that M&A work is on track.
- Declared maiden final DPS of 2.3¢.
- Trades at 20.1x forward P/E.
*APAC Realty
- 4Q17 net profit jumped 59.7% from a low base to $7.9m, taking FY17 earnings to $25.9m (+63.1%), beating estimates.
- Revenue surged 62.5% to $79.8m on higher brokerage income from increased market transactions for new home sales (+162.9% to $46.8m), as well as resale and rental of properties (+34.9% to $80.7m).
- Gross margin narrowed 1.9ppt to 12.3% on higher pace of cost expansion (+66.1%) arising from higher headcount.
- Proposed maiden final DPS of 2¢.
- Trades at 14.1x forward P/E.
*CSE Global
- Sank to FY17 net loss of $45.1m (FY16: $21.2m profit), largely hurt by impairment of receivables ($11.2m) and goodwill ($27.9m), as well as a one-off settlement cost ($16.8m).
- Stripping out non-recurring items, core earnings tumbled 37.1% to $13.3m, but came ahead of estimates.
- Revenue rose 14% to $362.3m on firmer contributions from projects in Americas and Asia Pacific, but gross margin narrowed 5.7ppt to 26%.
- Proposed final DPS of 1¢ and a special DPS of 0.5¢, maintaining full-year payout at 2.75¢.
- FY17 new orders totalled $381.9m (+33.2%), although order book was depleted to $175m (3Q17: $207.6m).
- Trades at 0.82x P/B.
*BHG Retail REIT
- 4Q17 DPU edged up 0.8% to 1.32¢, bringing full-year DPU to 5.47¢ (+2.8%).
- For the quarter, gross revenue and NPI rose to $16.7m (+5.8%) and $11.1m (+8%), respectively, amid higher rental reversion and occupancy in its three multi-tenanted malls in China.
- Overall portfolio occupancy ticked up 0.7ppt q/q to 99.7%, with WALE of 7.1 years (3Q17: 8.2 years).
- Aggregate leverage pared down by 0.3ppt q/q to 32.2%, with average debt cost of 3.7% (3Q17: 3.66%).
- Offers 4Q annualised yield of 7% and trades at 0.91x P/B.
*Heeton
- FY17 net profit soared to $71m (+469%), boosted by fair value gain of investment properties of $36.5m and $28m disposal gain.
- However, revenue slid 15% to $57.1m due to lower sales recognition from residential project Onze@Tanjong Pagar.
- Bottom line was helped by absence of a divestment loss (FY16: $10.3m) and a lower effective tax rate, but pared by lower JV/ associate income (-40%).
- Maintained first and final DPS of 0.6¢, but proposed special payout of 0.4¢ (FY16: nil).
- Trades at 0.5x P/B.
*Yeo Hiap Seng
- 4Q17 net profit declined 25.6% to $7.7m, bringing FY17 net profit to $153.7m (FY16: $29m profit), which was lifted by a disposal gain of $138.4m.
- Core F&B revenue declined 8.2% to $84m due to general market weakness, competitive pricing and sales disruption in Cambodia.
- Gross profit for the F&B unit contracted a further 20.9% to $24.5m on higher costs of finished goods.
- Bottom line was further hit by lower FV gains on investment properties (-33.2%), although partially offset by a disposal gain of a China subsidiary for $3.4m.
- Maintained final DPS of 2¢, bringing FY17 payout to 4¢ (FY16: 2¢).
- Last traded at 4.6x trailing P/E.
*Tiong Seng
- FY17 net profit more than doubled to $30.9m, supported by reduced net finance costs (-37%) and lower effective tax rate of 24.4% (-10.7ppt).
- Revenue slipped 4% to $742.8m as growth in construction (+3%) was offset by lower sales of development properties (-35%) and rental income (-4%).
- Operating margin expanded to 6% (+1.9ppt) on the shift towards higher-margin construction business.
- Construction order book at $543.1m, providing sales visibility till 2020.
- Disclosed that ~$60.7m worth of development unit sales have yet to be recognised.
- Hiked first and final DPS to 1.5¢ (FY16: 0.8¢).
- Trades at 5.8x trailing P/E.
*HG Metal
- 4Q17 net profit sank to just $88,000 (4Q16: $0.8m profit) on nil associates contribution (4Q16: $0.5m).
- This brought FY17 net loss to $11.9m (FY16: $0.9m profit).
- Revenue for the quarter grew 17% to $42m as a 37% jump in ASPs more than offset a 14% decline in sales volume.
- Gross margin improved to 6.7% (+1.4ppt).
- Trades at 0.45x P/B.
*ValueMax
- FY17 net profit jumped 22.7% to $19.1m on improved operating leverage and higher associate contribution (+30.3%).
- Revenue slipped 5.5% to $239.4m due to weaker takings from retail and trading of pre-owned jewellery and gold business (-8.5%), although partially mitigated by a stronger pawnbroking (+8.9%) business.
- Gross margin expanded 3.4ppt to 17.6% on the shift in revenue mix.
- Hiked first and final DPS to 1.26¢ (FY16: 1.08¢).
- Trades at 8.4x trailing P/E and 0.92x P/B.
*GSH Corp
- 4Q17 net profit turnaround to $15.7m (4Q16: $3.7m loss), boosted by a negative goodwill of $11.7m arising from new associate Henan Zhongyuan.
- This brought FY17 earnings to $91m (4Q16: $3.6m loss).
- Revenue for the quarter surged 114% to $37.8m on higher progressive revenue recognition from Eaton Residences project in Malaysia, as well as improved takings from the hospitality segment.
- Gross margin improved 2ppt to 51% on the change in revenue mix.
- However, bottom line was partially offset by higher personnel expenses of $8.6m (+48.8%) and increased director remuneration of $1.6m (4Q16: $0.34m).
- Proposed final DPS of 1.25¢ (4Q16: nil), bringing total dividend payout to 2.25¢ (FY16: 1¢).
- Last traded at 10.7x trailing P/E.
*Kim Heng Offshore & Marine
- 4Q17 net loss contracted to $9m (4Q16: $12.9m loss), mainly on $4.6m drop in impairment of fixed assets.
- This brought full-year loss to $15.3m (FY16: $17.8m loss).
- Revenue for the quarter tumbled 30% to $5.2m on a revenue reversal stemming from a long overdue customer balance, and drop in turnover from equipment rental & material sales.
- Kim Heng barely broke even at the gross level (4Q16: 10%).
- Net gearing increased to 0.33x from 0.25x in 3Q17.
- Maintained first and final DPS of 0.07¢.
- Trades at 0.86x P/B.
*CNMC Goldmine
- Turned around to 4Q17 net profit of US$1.3m (4Q16: US$1.9m loss), helped mainly by non-core items.
- This brought FY17 earnings to US$2.8m (-69.4%).
- For the quarter, revenue slipped 6.2% to US$4.9m as higher ASP (+4.7%) was more than offset by a slump in sales volume (-10.4%).
- Swung into operating profit of US$1.5m (4Q16: US$2.3m loss) mainly from a US$3.1m swing to FX gain of US$0.7m as well as a reversal of performance bonus accruals.
- Slashed first and final DPS to 0.2¢ (FY16: 0.934¢).
- Trading at 9.3x forward P/E and 1.8x P/B.
*Jiutian Chemical
- 4Q17 net profit turnaround to Rmb28.1m (4Q16: $5.8m loss), bringing FY17 earnings to Rmb70.1m (FY16: Rmb0.4m).
- Revenue for the year jumped 59% to Rmb1.12b on higher sales volumes and selling prices of DMF and Methylamine, amid tighter industry supply arising from production stoppages by other producers due to environmental issues.
- Selling price of DMF surged 33% to Rmb5,527, while that for methylamine jumped 49% to Rmb7,558. Sales volume rose 8% and 16%, respectively.
- Accordingly, gross margin widened 7.6ppt to 13.2%.
- Bottom line was partially offset by decline in other income (-65% to Rmb3.3m) due to absence of one-off government grants, lower interest income and rental income.
- Trades at 9.7x trailing P/E.
POSITIVE NEWS
*SBS Transit
- Awarded a five-year contract by LTA to operate the Bukit Merah bus package, marking the second award for SBS Transit out of four sets of public bus services put up for tender under the bus contracting model.
- The contract can be extended by another two years.
- It comprises 18 bus services, including two cross-border services to Johor Bharu, and will commence in 4Q18.
- Last traded at 17.4x trailing P/E.
*Cordlife
- Partnered US-based PlumCare to offer genetic screening for disease management and prevention.
- Genetic testing service PlumCare™ DNA Advisor will soon be launched by Cordlife, to help families in Asia identify gene variants associated with increased risk of developing inherited conditions such as breast and ovarian cancer.
*MindChamps
- Acquired MindChamps PreSchool @ Woodlands for $1.3m.
- The deal was priced at 4.6x P/B and is in line with the group's M&A strategy.
Monday, February 26, 2018
Friday, February 23, 2018
SG Market (23 Feb 18)
MARKET OVERVIEW
- The market will likely continue to be volatile as interest rate fears ebb and flow according to movements in US treasury yields.
- Sembcorp Industries' new growth strategy could disappoint investors due to the lack of any restructuring plans for Sembcorp Marine.
- Technically, the STI is still heading toward its near term objective at 3,575 with immediate support at 3,470.
CORPORATE RESULTS
*Sembcorp Industries
- 4Q17 net profit plunged 85% to $22.8m, taking FY17 earnings to $230.8m (-42%), widely missing the mark.
- Turnover for the quarter inched 4.8% higher to $2.12b, on better utility performance (+24%), but pared by the marine division (-21%) due to lower sales recognition for rig & floaters and offshore platform projects.
- However, gross margin slumped 5.4ppt to 7% on lower profitability in both divisions.
- Bottom line was further impacted by a $25.4m provision for potential fines and claims at an overseas water business arising from an alleged environmental offence for discharge of off-specification wastewater.
- Final DPS halved to 2¢, bringing FY17 payout to 5¢ (FY16: 8¢).
- Plans utilities divestments of up to $0.5b and IPO of India energy business.
- Last traded at 13.8x forward P/E.
*ST Engineering
- 4Q17 net profit slipped 1.1% to $168.5m but FY17 earnings of $511.9m (+6%) came in at top end of estimates.
- Revenue for the quarter declined 6.5% to $1.7b on weakness across electronics (-9%), land systems (-21%), marine (-22%) and others (-14%), except aerospace (+9%).
- PBT margin held steady at 10.2% (+0.1ppt) as better profitability in aerospace, electronics and land systems divisions helped offset continued weakness in marine.
- Final DPS of $0.10 brought FY17 payout to $0.15 (unch).
- During the year, it secured $5.1b of contracts, boosting its order book to $13.2b (+14%).
- Guided for growth in its aerospace, electronics and land systems divisions, while marine will remain weak.
- Last traded at 19.7x forward P/E and 4.4% yield.
*Wilmar
- 3Q17 core net profit slumped 37% to US$373.9m but FY17 core earnings of US$1.05b (+7%) met estimates.
- For the quarter, revenue slid 3.3% to US$11.5b due to weaker performances in tropical oils (-3.3%) and sugar (-95.6%) segments, but shored by stronger oilseeds & grains (+18.2%).
- EBITDA margin was maintained at 7.2% (+0.1ppt).
- Headline net profit of US$427.5m (-23.8%) was buttressed by US$139.9m (4Q16: US$158.3m loss) in other operating items mainly arising from FX gain, but partially offset by impairment loss of US$30.6m from its Australian sugar refinery business.
- Despite a weaker set of results, final DPS was raised by 75% to $0.07, bringing full-year payout to $0.10 (+53.8%).
- Trades at 12x forward P/E and 0.91x P/B.
*Sheng Siong
- 4Q17 net profit rose 9.3% to $16.8m, taking FY17 earnings to $69.8m (+11.4%) meeting estimates.
- For the quarter, revenue rose 1.7% to $200.3m on higher same store sales growth (+3.2%) and contribution from new stores (+2.7%).
- Gross margin of 26.5% (+0.2ppt) was due to better buying prices and higher rebates from suppliers for special promotion and volume discounts.
- Bottom line was weighed by higher effective tax of 19.1% (4Q16: 18.4%).
- However, final DPS was slashed to 1.75¢ (-5.4%), bringing total dividend payout to 3.3¢ (-12%).
- Last traded at 19.7x forward P/E.
*OUE
- FY17 results beat estimates despite a 31.5% slump in net profit to $98.9m due to higher minority interests (+90.5%).
- Revenue declined 14.7% to $754.1m on absence of development property income arising from Crowne Plaza Changi Airport Extension (FY16: $250m). Excluding that, sales improved 11%
- Gross margin held steady at 35.9% (-0.3ppt).
- Bottom line was dragged by a provision for legal and related expenses of $46m related to OUE Lippo Healthcare, but was mitigated by higher fair value gain of $112.2m (FY16: 34.1m loss)
- Maintains final DPS of 2¢, bringing full year payout to 3¢ (FY16: 5¢)
- NAV/share at $4.46.
- Trades at 24x forward P/E and 0.44x P/B.
*United Engineers
- FY17 net profit jumped to $89.6m (+227%) on a revaluation gain of $44m and a $16.8m write-back.
- Revenue climbed 12% to $539.4m mainly lifted by higher property development sales (+106%) at Chengdu Orchard Villa (phase 4) in China and The Manhattan in Malaysia.
- Gross margin narrowed 3.7ppt to 36.7% amid a shift in revenue mix.
- Bottom line was also helped by a sharp drop in finance expenses to $21.2m (-41%) amid lower borrowings.
- Proposed a lower first and final DPS of 4¢ (FY16: 5¢) without any special payout (FY16: 7¢).
- Trading at 0.8x P/B.
*Riverstone
- 4Q17 net profit grew 5% to RM34.2m, bringing FY17 earnings to $129.3m (+7.4%), missing estimates.
- Revenue jumped 15.1% to RM210.7m on increased demand for both healthcare and cleanroom gloves.
- However, gross margin shrank 1.9ppt to 24.4% on increased cost of raw materials.
- Further, bottom line was partly weighed by a FX loss of RM2.8m (4Q16: RM6.1m gain) and higher taxes (+11.8% to $6m), but partially mitigated by a positive swing in fair value gain on derivatives to $1m (4Q16: $3m loss).
- Undertaking phase 5 expansion plan, which will raise annual production capacity to 9b (+18%) by Dec 2018.
- Proposing a final DPS of 5.7sen (+9.8%), taking full-year payout to 7sen (+7.9%).
- Trades at 15.1x forward P/E.
*Hotung
- FY17 results beat estimates as net profit grew 9% to NT$345.4m on reduced impairment losses (-26%) and lower effective tax rate.
- But, revenue fell 10% on lower fair value gains (-97.9%), dividend income (-7%) and higher FX losses (+126%), although partly mitigated by increased disposal gain on investments.
- Bottom line was supported by a larger decline in opex (-14%).
- Hiked first and final DPS to NT$3.42 (FY16: NT$3.10).
- NAV/share at NT$63.48 ($2.85) translates to 0.67x P/B.
*Far East Orchard
- FY17 net profit plunged 67% to $21.6m on a 83% dive in JV contribution to $11.7m, due to lower property development sales and absence of one-offs.
- Revenue fell 18% to $151.2m following the cessation of hospitality lease agreements in Australia and New Zealand in late 2016.
- Gross margin widened 2.1ppt to 34.2%.
- Bottom line was further weighed by a $3m drop in interest income.
- Maintained first and final DPS of 6¢.
- Trading at 0.5x P/B.
*ISEC Healthcare
- 4Q17 net profit jumped 44% from a low base to $2.1m, bringing FY17 earnings to $7.9m (+23%).
- For the quarter, revenue climbed 15% to $9.5m, bolstered by increased patient visits in Malaysia and Singapore, and contribution from four recently-acquired general clinics in Singapore.
- Gross margin improved marginally to 47.6% (+2.7ppt).
- Hiked final DPS to 0.7¢, bringing full-year payout to 1.2¢ (FY16: 0.33¢).
- Last traded at 21.6x trailing P/E.
*Kingsmen Creatives
- FY17 net profit slid 18% to $9.7m, partly weighed by FX loss of $1.6m (FY16: nil).
- Revenue declined 7% to $307.3m on softer takings in both exhibitions & thematic (-9.7%) and retail & corporate interiors (-5%) segments.
- Gross margin slipped 0.2ppt to 25.1%.
- Maintained final DPS of 1.5¢, bringing full-year payout to 2.5¢ (unch).
- Trading at 12.6x FY17 P/E.
*Trek 2000 International
- FY17 net profit grinded 1.5% higher to US$6.2m, helped by lower R&D, marketing and staff expenses.
- However, revenue tumbled 32% to US$112.6m on a drop in contribution from key revenue generating interative consumer solutions segment, as well as the disposal of Racer Group in 1Q17.
- Gross margin expanded 4.3ppt to 15.4% on costs containment.
- Net cash rose to US$37m (3Q17: US$33.6m), accounting for 61.8% of market cap.
- Proposed first and final DPS of 1¢ (FY16: nil).
- Trading at 9.8x FY17 P/E.
POSITIVE NEWS
*AEM
- Acquired Singapore-based IRIS Solution for $1.5m, priced at 3.6x P/E or 2.9x EV/EBITDA.
- IRIS Solution is engaged in R&D and integration of advanced machine vision solutions, which have been integrated with automated optical wafer inspection systems, die bonders and semiconductor devices inspection systems.
- Payment will be via cash over five tranches with the first $0.5m upon completion of acquisition.
- The deal will deepen and enhance the group's capabilities, product range and services to the semiconductor and industrial sectors.
- Trades at 13.1x forward P/E.
*SUTL Enterprise
- To acquire a 60% stake in Thai firm Makham Bay Marina for $5.6m, with the intention to develop ONE°15 integrated marina club in Phuket, Thailand.
- The project's total construction cost is estimated to be $24.3m and will span a total land area of 38,400 sqm and feature a 171-berth marina, 66 hotel rooms and multiple F&B outlets.
- The remaining 40% stake will be held by Bangkok-based shareholders.
- Trades at 14.3x trailing P/E and 1.08x P/B.
*SJM Intl
- Expected to turn around to a marginal FY17 net profit (FY16: $0.4m loss) on its new consultancy services business as well as a disposal gain.
NEGATIVE NEWS
*Chaswood Resources
- Guided for a more substantial loss in FY17 due to lower revenue amidst challenging market conditions and higher asset impairment as a result of closure of non-profitable outlets in Malaysia.
- Results slated to be released on or before 1 Mar.
- The market will likely continue to be volatile as interest rate fears ebb and flow according to movements in US treasury yields.
- Sembcorp Industries' new growth strategy could disappoint investors due to the lack of any restructuring plans for Sembcorp Marine.
- Technically, the STI is still heading toward its near term objective at 3,575 with immediate support at 3,470.
CORPORATE RESULTS
*Sembcorp Industries
- 4Q17 net profit plunged 85% to $22.8m, taking FY17 earnings to $230.8m (-42%), widely missing the mark.
- Turnover for the quarter inched 4.8% higher to $2.12b, on better utility performance (+24%), but pared by the marine division (-21%) due to lower sales recognition for rig & floaters and offshore platform projects.
- However, gross margin slumped 5.4ppt to 7% on lower profitability in both divisions.
- Bottom line was further impacted by a $25.4m provision for potential fines and claims at an overseas water business arising from an alleged environmental offence for discharge of off-specification wastewater.
- Final DPS halved to 2¢, bringing FY17 payout to 5¢ (FY16: 8¢).
- Plans utilities divestments of up to $0.5b and IPO of India energy business.
- Last traded at 13.8x forward P/E.
*ST Engineering
- 4Q17 net profit slipped 1.1% to $168.5m but FY17 earnings of $511.9m (+6%) came in at top end of estimates.
- Revenue for the quarter declined 6.5% to $1.7b on weakness across electronics (-9%), land systems (-21%), marine (-22%) and others (-14%), except aerospace (+9%).
- PBT margin held steady at 10.2% (+0.1ppt) as better profitability in aerospace, electronics and land systems divisions helped offset continued weakness in marine.
- Final DPS of $0.10 brought FY17 payout to $0.15 (unch).
- During the year, it secured $5.1b of contracts, boosting its order book to $13.2b (+14%).
- Guided for growth in its aerospace, electronics and land systems divisions, while marine will remain weak.
- Last traded at 19.7x forward P/E and 4.4% yield.
*Wilmar
- 3Q17 core net profit slumped 37% to US$373.9m but FY17 core earnings of US$1.05b (+7%) met estimates.
- For the quarter, revenue slid 3.3% to US$11.5b due to weaker performances in tropical oils (-3.3%) and sugar (-95.6%) segments, but shored by stronger oilseeds & grains (+18.2%).
- EBITDA margin was maintained at 7.2% (+0.1ppt).
- Headline net profit of US$427.5m (-23.8%) was buttressed by US$139.9m (4Q16: US$158.3m loss) in other operating items mainly arising from FX gain, but partially offset by impairment loss of US$30.6m from its Australian sugar refinery business.
- Despite a weaker set of results, final DPS was raised by 75% to $0.07, bringing full-year payout to $0.10 (+53.8%).
- Trades at 12x forward P/E and 0.91x P/B.
*Sheng Siong
- 4Q17 net profit rose 9.3% to $16.8m, taking FY17 earnings to $69.8m (+11.4%) meeting estimates.
- For the quarter, revenue rose 1.7% to $200.3m on higher same store sales growth (+3.2%) and contribution from new stores (+2.7%).
- Gross margin of 26.5% (+0.2ppt) was due to better buying prices and higher rebates from suppliers for special promotion and volume discounts.
- Bottom line was weighed by higher effective tax of 19.1% (4Q16: 18.4%).
- However, final DPS was slashed to 1.75¢ (-5.4%), bringing total dividend payout to 3.3¢ (-12%).
- Last traded at 19.7x forward P/E.
*OUE
- FY17 results beat estimates despite a 31.5% slump in net profit to $98.9m due to higher minority interests (+90.5%).
- Revenue declined 14.7% to $754.1m on absence of development property income arising from Crowne Plaza Changi Airport Extension (FY16: $250m). Excluding that, sales improved 11%
- Gross margin held steady at 35.9% (-0.3ppt).
- Bottom line was dragged by a provision for legal and related expenses of $46m related to OUE Lippo Healthcare, but was mitigated by higher fair value gain of $112.2m (FY16: 34.1m loss)
- Maintains final DPS of 2¢, bringing full year payout to 3¢ (FY16: 5¢)
- NAV/share at $4.46.
- Trades at 24x forward P/E and 0.44x P/B.
*United Engineers
- FY17 net profit jumped to $89.6m (+227%) on a revaluation gain of $44m and a $16.8m write-back.
- Revenue climbed 12% to $539.4m mainly lifted by higher property development sales (+106%) at Chengdu Orchard Villa (phase 4) in China and The Manhattan in Malaysia.
- Gross margin narrowed 3.7ppt to 36.7% amid a shift in revenue mix.
- Bottom line was also helped by a sharp drop in finance expenses to $21.2m (-41%) amid lower borrowings.
- Proposed a lower first and final DPS of 4¢ (FY16: 5¢) without any special payout (FY16: 7¢).
- Trading at 0.8x P/B.
*Riverstone
- 4Q17 net profit grew 5% to RM34.2m, bringing FY17 earnings to $129.3m (+7.4%), missing estimates.
- Revenue jumped 15.1% to RM210.7m on increased demand for both healthcare and cleanroom gloves.
- However, gross margin shrank 1.9ppt to 24.4% on increased cost of raw materials.
- Further, bottom line was partly weighed by a FX loss of RM2.8m (4Q16: RM6.1m gain) and higher taxes (+11.8% to $6m), but partially mitigated by a positive swing in fair value gain on derivatives to $1m (4Q16: $3m loss).
- Undertaking phase 5 expansion plan, which will raise annual production capacity to 9b (+18%) by Dec 2018.
- Proposing a final DPS of 5.7sen (+9.8%), taking full-year payout to 7sen (+7.9%).
- Trades at 15.1x forward P/E.
*Hotung
- FY17 results beat estimates as net profit grew 9% to NT$345.4m on reduced impairment losses (-26%) and lower effective tax rate.
- But, revenue fell 10% on lower fair value gains (-97.9%), dividend income (-7%) and higher FX losses (+126%), although partly mitigated by increased disposal gain on investments.
- Bottom line was supported by a larger decline in opex (-14%).
- Hiked first and final DPS to NT$3.42 (FY16: NT$3.10).
- NAV/share at NT$63.48 ($2.85) translates to 0.67x P/B.
*Far East Orchard
- FY17 net profit plunged 67% to $21.6m on a 83% dive in JV contribution to $11.7m, due to lower property development sales and absence of one-offs.
- Revenue fell 18% to $151.2m following the cessation of hospitality lease agreements in Australia and New Zealand in late 2016.
- Gross margin widened 2.1ppt to 34.2%.
- Bottom line was further weighed by a $3m drop in interest income.
- Maintained first and final DPS of 6¢.
- Trading at 0.5x P/B.
*ISEC Healthcare
- 4Q17 net profit jumped 44% from a low base to $2.1m, bringing FY17 earnings to $7.9m (+23%).
- For the quarter, revenue climbed 15% to $9.5m, bolstered by increased patient visits in Malaysia and Singapore, and contribution from four recently-acquired general clinics in Singapore.
- Gross margin improved marginally to 47.6% (+2.7ppt).
- Hiked final DPS to 0.7¢, bringing full-year payout to 1.2¢ (FY16: 0.33¢).
- Last traded at 21.6x trailing P/E.
*Kingsmen Creatives
- FY17 net profit slid 18% to $9.7m, partly weighed by FX loss of $1.6m (FY16: nil).
- Revenue declined 7% to $307.3m on softer takings in both exhibitions & thematic (-9.7%) and retail & corporate interiors (-5%) segments.
- Gross margin slipped 0.2ppt to 25.1%.
- Maintained final DPS of 1.5¢, bringing full-year payout to 2.5¢ (unch).
- Trading at 12.6x FY17 P/E.
*Trek 2000 International
- FY17 net profit grinded 1.5% higher to US$6.2m, helped by lower R&D, marketing and staff expenses.
- However, revenue tumbled 32% to US$112.6m on a drop in contribution from key revenue generating interative consumer solutions segment, as well as the disposal of Racer Group in 1Q17.
- Gross margin expanded 4.3ppt to 15.4% on costs containment.
- Net cash rose to US$37m (3Q17: US$33.6m), accounting for 61.8% of market cap.
- Proposed first and final DPS of 1¢ (FY16: nil).
- Trading at 9.8x FY17 P/E.
POSITIVE NEWS
*AEM
- Acquired Singapore-based IRIS Solution for $1.5m, priced at 3.6x P/E or 2.9x EV/EBITDA.
- IRIS Solution is engaged in R&D and integration of advanced machine vision solutions, which have been integrated with automated optical wafer inspection systems, die bonders and semiconductor devices inspection systems.
- Payment will be via cash over five tranches with the first $0.5m upon completion of acquisition.
- The deal will deepen and enhance the group's capabilities, product range and services to the semiconductor and industrial sectors.
- Trades at 13.1x forward P/E.
*SUTL Enterprise
- To acquire a 60% stake in Thai firm Makham Bay Marina for $5.6m, with the intention to develop ONE°15 integrated marina club in Phuket, Thailand.
- The project's total construction cost is estimated to be $24.3m and will span a total land area of 38,400 sqm and feature a 171-berth marina, 66 hotel rooms and multiple F&B outlets.
- The remaining 40% stake will be held by Bangkok-based shareholders.
- Trades at 14.3x trailing P/E and 1.08x P/B.
*SJM Intl
- Expected to turn around to a marginal FY17 net profit (FY16: $0.4m loss) on its new consultancy services business as well as a disposal gain.
NEGATIVE NEWS
*Chaswood Resources
- Guided for a more substantial loss in FY17 due to lower revenue amidst challenging market conditions and higher asset impairment as a result of closure of non-profitable outlets in Malaysia.
- Results slated to be released on or before 1 Mar.
Thursday, February 22, 2018
SG Market (22 Feb 18)
MARKET OVERVIEW
- The market could pull back after minutes of the latest FOMC meeting revived worries about higher interest rates and sent US 10-year yields closer to 3%.
- Rig builder Sembcorp Marine could face renewed selling pressure following its dismal 4Q results and news that a consultant linked to its US$5.5b drillship contracts with Sete Brasil was charged by the Brazilian authorities for corruption.
- Technically, the STI has almost closed its breakdown gap at 3,520, with next resistance at 3,575 and downside support at 3,460.
CORPORATE RESULTS
*Sembcorp Marine
- Sank into 4Q17 net loss of $33.8m (4Q16: $34.3m profit), which pulled down its FY17 earnings to $14.1m (-82%), well below estimates.
- Excluding a tax credit of $25.6m, the group would have ended the full year in the red.
- For the quarter, revenue slipped 21% to $655m despite the sale of nine jack-up rigs to Borr Drilling, as it suffered reduced activity for its rigs, floaters and offshore platform projects and additional cost accruals.
- This resulted in a gross loss of $48.2m (4Q16: $34.7m profit). No new provisions made in the quarter.
- Secured $696m of new orders, taking FY17 order wins to $966m (excluding $1.77b from Borr Drilling).
- Net order book contracted 8.2% q/q to $4.45b.
- Maintained 1¢ final DPS, bringing full-year payout to 2¢ (FY16: 2.5¢).
- While the industry is showing some signs of improvement, order flow remained weak amid intensified competition.
- As share price has rallied 43% ytd largely on hopes of huge order wins, we anticipate a wave of downgrades.
- Trades at 2.2x P/B.
*BreadTalk
- 4Q17 net profit jumped 14.4% to $5.1m due to lower tax rate, bringing FY17 core net profit to $17.7m (+153.3%), ahead of estimates.
- For the quarter, revenue slipped 2% to $150.3m on lower takings from core bakery (-4.5%), food atrium (-0.6%) and other (-4.1%) segments, although partially mitigated by improved contributions from restaurant (+1.4%) and F&B incubator 4orth (+13.9%).
- Overall EBITDA margin contracted 5.4ppt to 13% on slimmer profitability across bakery (-3.8ppt), food atrium (-3.6ppt) and restaurant (-2.7ppt) segments.
- Bottom line was lifted mainly by lower effective tax rate of 27.8% (-16.6ppt), and shored up by lower associate losses.
- Maintained final DPS of 2¢ but declared an additional special DPS of 1¢, bringing FY17 payout to 7¢ (FY16: 3.85¢).
- Last traded at 23x forward P/E and 4.1% FY17 yield.
*The Trendlines
- Turned around to FY17 net profit of US$3.9m (FY16: US$6.6m loss).
- This was supported by a multiple fold jump in revenue to US$15.6m (FY16: US$74,000), mainly attributable to a fair value gain of US$9.4m in its portfolio, which offset the absence of disposal gains of $2.1m.
- However, bottom line was weighed by tax expense of US$1.6m (FY16: US$3.4m tax credit).
- Trades at 0.7x P/B.
*AF Global
- FY17 net profit surged 73% from a low base to $8.3m on higher JV contribution including Knight Frank Group.
- Revenue edged up 3% to $55.7m on higher occupancies and average room rates for its hotel and serviced residence segment.
- Gross margin ticked up 0.3ppt to 48.5%.
- At the bottom line, a drop of $3.9m in asset write-off was offset by absence of $3.8m FX gain.
- NAV/share at $0.28.
*Sinwa
- Posted a substantial turnaround to FY17 net profit of $9.5m (FY16: $9.5m loss) mainly on the absence of asset impairment (FY16: $15.1m) and a $1.4m write-back.
- Revenue grew 13.4% to $172.6m on higher sales from marine and offshore supply business in Singapore, Australia and Thailand.
- However, intense competition weighed on gross margin, which contracted 1.2ppt to 23.1%.
- Net cash position slipped to $23m (FY16: $25.8m), or 28% of market cap.
- Shaved first and final DPS to 0.5¢ (FY16: 1.2¢).
- Last traded at 8.6x trailing P/E.
POSITIVE NEWS
*Silverlake Axis
- Expanded its insurance customer ecosystem platform business with five new account wins in Singapore (two), Indonesia (one) and Hong Kong (two).
- The software platform is now used by over 120 insurers across eight countries.
- Trades at 17x forward P/E.
*Weiye
- Expected to report a 70% jump in FY17 net profit due to higher 4Q gross profit (+10%) on increased handovers, as well as a 140% surge in JV profit.
- Last traded at 44.7x trailing P/E.
NEGATIVE NEWS
*Profit Warnings
- Natural Cool
- Charisma Energy
- China Haida
NEUTRAL NEWS
*Lee Metal
- Received a pre-conditional offer from BRC Asia at $0.42/share, or 1.09x P/B.
- The founding Lee family which owns 48.06% of share capital has given their undertaking for the voluntary offer.
*Viva Industrial Trust
- Requested Moody's to withdraw its credit ratings.
- At the latest, Moody's has assigned a Ba1 corporate rating on the REIT with stable outlook.
- The market could pull back after minutes of the latest FOMC meeting revived worries about higher interest rates and sent US 10-year yields closer to 3%.
- Rig builder Sembcorp Marine could face renewed selling pressure following its dismal 4Q results and news that a consultant linked to its US$5.5b drillship contracts with Sete Brasil was charged by the Brazilian authorities for corruption.
- Technically, the STI has almost closed its breakdown gap at 3,520, with next resistance at 3,575 and downside support at 3,460.
CORPORATE RESULTS
*Sembcorp Marine
- Sank into 4Q17 net loss of $33.8m (4Q16: $34.3m profit), which pulled down its FY17 earnings to $14.1m (-82%), well below estimates.
- Excluding a tax credit of $25.6m, the group would have ended the full year in the red.
- For the quarter, revenue slipped 21% to $655m despite the sale of nine jack-up rigs to Borr Drilling, as it suffered reduced activity for its rigs, floaters and offshore platform projects and additional cost accruals.
- This resulted in a gross loss of $48.2m (4Q16: $34.7m profit). No new provisions made in the quarter.
- Secured $696m of new orders, taking FY17 order wins to $966m (excluding $1.77b from Borr Drilling).
- Net order book contracted 8.2% q/q to $4.45b.
- Maintained 1¢ final DPS, bringing full-year payout to 2¢ (FY16: 2.5¢).
- While the industry is showing some signs of improvement, order flow remained weak amid intensified competition.
- As share price has rallied 43% ytd largely on hopes of huge order wins, we anticipate a wave of downgrades.
- Trades at 2.2x P/B.
*BreadTalk
- 4Q17 net profit jumped 14.4% to $5.1m due to lower tax rate, bringing FY17 core net profit to $17.7m (+153.3%), ahead of estimates.
- For the quarter, revenue slipped 2% to $150.3m on lower takings from core bakery (-4.5%), food atrium (-0.6%) and other (-4.1%) segments, although partially mitigated by improved contributions from restaurant (+1.4%) and F&B incubator 4orth (+13.9%).
- Overall EBITDA margin contracted 5.4ppt to 13% on slimmer profitability across bakery (-3.8ppt), food atrium (-3.6ppt) and restaurant (-2.7ppt) segments.
- Bottom line was lifted mainly by lower effective tax rate of 27.8% (-16.6ppt), and shored up by lower associate losses.
- Maintained final DPS of 2¢ but declared an additional special DPS of 1¢, bringing FY17 payout to 7¢ (FY16: 3.85¢).
- Last traded at 23x forward P/E and 4.1% FY17 yield.
*The Trendlines
- Turned around to FY17 net profit of US$3.9m (FY16: US$6.6m loss).
- This was supported by a multiple fold jump in revenue to US$15.6m (FY16: US$74,000), mainly attributable to a fair value gain of US$9.4m in its portfolio, which offset the absence of disposal gains of $2.1m.
- However, bottom line was weighed by tax expense of US$1.6m (FY16: US$3.4m tax credit).
- Trades at 0.7x P/B.
*AF Global
- FY17 net profit surged 73% from a low base to $8.3m on higher JV contribution including Knight Frank Group.
- Revenue edged up 3% to $55.7m on higher occupancies and average room rates for its hotel and serviced residence segment.
- Gross margin ticked up 0.3ppt to 48.5%.
- At the bottom line, a drop of $3.9m in asset write-off was offset by absence of $3.8m FX gain.
- NAV/share at $0.28.
*Sinwa
- Posted a substantial turnaround to FY17 net profit of $9.5m (FY16: $9.5m loss) mainly on the absence of asset impairment (FY16: $15.1m) and a $1.4m write-back.
- Revenue grew 13.4% to $172.6m on higher sales from marine and offshore supply business in Singapore, Australia and Thailand.
- However, intense competition weighed on gross margin, which contracted 1.2ppt to 23.1%.
- Net cash position slipped to $23m (FY16: $25.8m), or 28% of market cap.
- Shaved first and final DPS to 0.5¢ (FY16: 1.2¢).
- Last traded at 8.6x trailing P/E.
POSITIVE NEWS
*Silverlake Axis
- Expanded its insurance customer ecosystem platform business with five new account wins in Singapore (two), Indonesia (one) and Hong Kong (two).
- The software platform is now used by over 120 insurers across eight countries.
- Trades at 17x forward P/E.
*Weiye
- Expected to report a 70% jump in FY17 net profit due to higher 4Q gross profit (+10%) on increased handovers, as well as a 140% surge in JV profit.
- Last traded at 44.7x trailing P/E.
NEGATIVE NEWS
*Profit Warnings
- Natural Cool
- Charisma Energy
- China Haida
NEUTRAL NEWS
*Lee Metal
- Received a pre-conditional offer from BRC Asia at $0.42/share, or 1.09x P/B.
- The founding Lee family which owns 48.06% of share capital has given their undertaking for the voluntary offer.
*Viva Industrial Trust
- Requested Moody's to withdraw its credit ratings.
- At the latest, Moody's has assigned a Ba1 corporate rating on the REIT with stable outlook.
Wednesday, February 21, 2018
SG Market (21 Feb 18)
MARKET OVERVIEW
- The market could struggle for further gains after the quick recovery of the STI as investors look to a resumption of 4Q earnings from several index stocks for near-term direction.
- Technically, the STI has bounced off the key 200-dma to reach the 50-dma and the next move is to fill the breakdown gap at 3,520. Immediate support is now at 3,460 level.
CORPORATE RESULTS
*PACC Offshore
- 4Q17 net loss narrowed to US$193m (4Q16: US$345.4m loss), partly on lower vessel (-46% to US$108.3m) and goodwill (-49% to US$57.1m) impairments.
- This dragged FY17 net loss to US$230.3m (FY16: US$371.4m loss).
- Revenue for the quarter surged 71% to US$62.7m from the continued charter of POSH Arcadia accommodation vessel to Shell, and firmer contribution from OSV segment.
- Gross loss shrank to US$1.3m (4Q16: US$9.5m loss) on the back of POSH Arcadia's contribution and better utilisation in the transportation & installation division.
- Bottom line was partly shored by lower doubtful and bad debts, as well as reduced JV loss.
- Net gearing ballooned to 1.63x from 1.13x in 3Q17 as a result of the impairments.
- Trading at 1.15x P/B.
*TalkMed
- 4Q17 net profit fell 19.3% to $8.2m, taking FY17 earnings to $32m (-14.3%), which was above estimates.
- For the quarter, revenue declined 17.6% to $15.1m due to reduced patient visits.
- Operating overheads kept pace with the drop, with reduced staff costs of $3.5m (-19.1).
- Slashed final DPS to 1.37¢ (-40%), bringing full year dividend payout to 2.131¢ (FY16: 2.283¢).
- Trades at 28.1x forward P/E.
*Lee Metal
- 4Q net profit slumped 40.5% to $2m, dragging FY17 earnings to $7.5m (-43.6%).
- Revenue for the quarter grew 13.4% to $92.5m on higher steel prices.
- But, gross margin compressed 7.8ppt to 13.9% due a fewer sales of higher-margin value-added components.
- Bottom line was weighed by FX loss of $1.7m and higher tax expense of $1.7m (+212.6%).
- Trades at 26x trailing P/E.
*Global Investments
- 4Q17 net profit surged 6-fold from a low base to $21.8m, lifting FY17 earnings to $39m (+128%).
- For the quarter, revenue soared 255% to $21.4m on higher net gain on sale of investments of $16.8m.
- Bottom line was buttressed by a $6.1m write-back (4Q16: $2.5m impairment).
- Declared a final DPS of 0.6¢ (-13.3%), bringing total dividend payout to 1.25¢ (-16.7%).
- NAV/share of 20.95¢ (+9.8%).
POSITIVE NEWS
*Delong
- Guided for a significant increase in net profit for 4Q17 and FY17 due to higher steel ASP, amid tighter supply following production cuts and increased infrastructure and construction activities in China.
- However, top line growth is partially offset by reduced contribution from Laiyuan County Aoyu Steel, which had ceased steel-making operations in Aug '17.
- Last traded at 1.5x trailing P/E.
NEGATIVE NEWS
*Profit Warnings
- Fuji Offset Plates Manufacturing
- China Environmental Resources
NEUTRAL NEWS
*Singapore Medical Group
- Spent $0.8m of placement proceeds on the purchase of medical equipment and renovation.
- The balance $2m is earmarked for M&A opportunities.
*Koh Brothers
- Subscribing 25% of the enlarged share capital of Global KB Venture (GKV) at Rm1/share.
- GKV will subsequently acquire a 99-year leasehold site in Pulai, Johor Bahru, for Rm36m.
- The site has a gross floor area of 449,539 sf and GKV intends to develop the plot into a mixed-used property.
- Trades at 9.7x trailing P/E.
*Keppel REIT
- Obtained a $350m loan facility from RBC Investor Services Trust Singapore, bringing aggregate loan facilities to $3.76b.
*Chaswood Resources
- Extended a moratorium for 120 days until 15 Jun to facilitate the finalisation of its proposed debt restructuring in Malaysia.
- The market could struggle for further gains after the quick recovery of the STI as investors look to a resumption of 4Q earnings from several index stocks for near-term direction.
- Technically, the STI has bounced off the key 200-dma to reach the 50-dma and the next move is to fill the breakdown gap at 3,520. Immediate support is now at 3,460 level.
CORPORATE RESULTS
*PACC Offshore
- 4Q17 net loss narrowed to US$193m (4Q16: US$345.4m loss), partly on lower vessel (-46% to US$108.3m) and goodwill (-49% to US$57.1m) impairments.
- This dragged FY17 net loss to US$230.3m (FY16: US$371.4m loss).
- Revenue for the quarter surged 71% to US$62.7m from the continued charter of POSH Arcadia accommodation vessel to Shell, and firmer contribution from OSV segment.
- Gross loss shrank to US$1.3m (4Q16: US$9.5m loss) on the back of POSH Arcadia's contribution and better utilisation in the transportation & installation division.
- Bottom line was partly shored by lower doubtful and bad debts, as well as reduced JV loss.
- Net gearing ballooned to 1.63x from 1.13x in 3Q17 as a result of the impairments.
- Trading at 1.15x P/B.
*TalkMed
- 4Q17 net profit fell 19.3% to $8.2m, taking FY17 earnings to $32m (-14.3%), which was above estimates.
- For the quarter, revenue declined 17.6% to $15.1m due to reduced patient visits.
- Operating overheads kept pace with the drop, with reduced staff costs of $3.5m (-19.1).
- Slashed final DPS to 1.37¢ (-40%), bringing full year dividend payout to 2.131¢ (FY16: 2.283¢).
- Trades at 28.1x forward P/E.
*Lee Metal
- 4Q net profit slumped 40.5% to $2m, dragging FY17 earnings to $7.5m (-43.6%).
- Revenue for the quarter grew 13.4% to $92.5m on higher steel prices.
- But, gross margin compressed 7.8ppt to 13.9% due a fewer sales of higher-margin value-added components.
- Bottom line was weighed by FX loss of $1.7m and higher tax expense of $1.7m (+212.6%).
- Trades at 26x trailing P/E.
*Global Investments
- 4Q17 net profit surged 6-fold from a low base to $21.8m, lifting FY17 earnings to $39m (+128%).
- For the quarter, revenue soared 255% to $21.4m on higher net gain on sale of investments of $16.8m.
- Bottom line was buttressed by a $6.1m write-back (4Q16: $2.5m impairment).
- Declared a final DPS of 0.6¢ (-13.3%), bringing total dividend payout to 1.25¢ (-16.7%).
- NAV/share of 20.95¢ (+9.8%).
POSITIVE NEWS
*Delong
- Guided for a significant increase in net profit for 4Q17 and FY17 due to higher steel ASP, amid tighter supply following production cuts and increased infrastructure and construction activities in China.
- However, top line growth is partially offset by reduced contribution from Laiyuan County Aoyu Steel, which had ceased steel-making operations in Aug '17.
- Last traded at 1.5x trailing P/E.
NEGATIVE NEWS
*Profit Warnings
- Fuji Offset Plates Manufacturing
- China Environmental Resources
NEUTRAL NEWS
*Singapore Medical Group
- Spent $0.8m of placement proceeds on the purchase of medical equipment and renovation.
- The balance $2m is earmarked for M&A opportunities.
*Koh Brothers
- Subscribing 25% of the enlarged share capital of Global KB Venture (GKV) at Rm1/share.
- GKV will subsequently acquire a 99-year leasehold site in Pulai, Johor Bahru, for Rm36m.
- The site has a gross floor area of 449,539 sf and GKV intends to develop the plot into a mixed-used property.
- Trades at 9.7x trailing P/E.
*Keppel REIT
- Obtained a $350m loan facility from RBC Investor Services Trust Singapore, bringing aggregate loan facilities to $3.76b.
*Chaswood Resources
- Extended a moratorium for 120 days until 15 Jun to facilitate the finalisation of its proposed debt restructuring in Malaysia.
Tuesday, February 20, 2018
SG Market (20 Feb 18)
MARKET OVERVIEW
- The market could continue its recovery from the recent sell-off after Budget 2018 turned out to be a fiscal plan for the future, with investors relieved by the delay in GST hike till 2021-2025 and a small increase in stamp duty for home buyers as well as other schemes to keep the country relevant in a competitive world.
- Technically, the next move for the STI is to fill the breakdown gap at 3,520, with 3,460 now acting as the immediate support.
ECONOMY WATCH
*Budget 2018
- Overall market-friendly budget measures.
Positives:
1) Corporate income tax rebate raised to 40% this year and extended to 20% in 2019;
2) REITs to gain from proposed removal of tax on REIT ETFs,
3) Healthcare firms and education providers could benefit from increased government spending in the sectors;
4) Construction firms to benefit from increased spending on infrastructure,
5) O&M companies see a reprieve on a deferral on foreign workers' levy.
Negatives:
1) Consumer stocks, including F&B operators and retailers, as well as hospitality plays could be impacted by higher GST of 9% but only from 2021-2025, which will be mitigated by $100-300 cash handouts;
2) Property developers as the 1ppt increase in buyer's stamp duty for property values of above SGD1m could add hefty cost to en bloc deals but unlikely to dampen buying demand,
3) Utility companies and REITs could be hit by higher expenses with the introduction of carbon tax.
NEUTRAL NEWS
*ComfortDelGro
- The regulatory board will enter the second phase of the deliberation process for ComfortDelGro's proposed alliance with Uber.
- The next stage may take up to 120 working days to complete, too assess that the deal would not raise competition concerns.
- To recap, ComfortDelGro proposed to acquire a 51% stake in Lion City Rental, a private car rental firm owned by Uber.
- With the JV, the fleet of both taxis and private-hire cars will come under centralised fleet management system, which handles dispatching of vehicles to customers.
*LTC Corp
- Updated that controlling shareholders, Mountbatten Enterprises, received valid acceptances constituting 0.58% of firm, bringing its latest shareholding to 49.12%.
- The privatisation bid at $0.925/share was recently launched on 9 Feb and the offer document is still pending release.
- The market could continue its recovery from the recent sell-off after Budget 2018 turned out to be a fiscal plan for the future, with investors relieved by the delay in GST hike till 2021-2025 and a small increase in stamp duty for home buyers as well as other schemes to keep the country relevant in a competitive world.
- Technically, the next move for the STI is to fill the breakdown gap at 3,520, with 3,460 now acting as the immediate support.
ECONOMY WATCH
*Budget 2018
- Overall market-friendly budget measures.
Positives:
1) Corporate income tax rebate raised to 40% this year and extended to 20% in 2019;
2) REITs to gain from proposed removal of tax on REIT ETFs,
3) Healthcare firms and education providers could benefit from increased government spending in the sectors;
4) Construction firms to benefit from increased spending on infrastructure,
5) O&M companies see a reprieve on a deferral on foreign workers' levy.
Negatives:
1) Consumer stocks, including F&B operators and retailers, as well as hospitality plays could be impacted by higher GST of 9% but only from 2021-2025, which will be mitigated by $100-300 cash handouts;
2) Property developers as the 1ppt increase in buyer's stamp duty for property values of above SGD1m could add hefty cost to en bloc deals but unlikely to dampen buying demand,
3) Utility companies and REITs could be hit by higher expenses with the introduction of carbon tax.
NEUTRAL NEWS
*ComfortDelGro
- The regulatory board will enter the second phase of the deliberation process for ComfortDelGro's proposed alliance with Uber.
- The next stage may take up to 120 working days to complete, too assess that the deal would not raise competition concerns.
- To recap, ComfortDelGro proposed to acquire a 51% stake in Lion City Rental, a private car rental firm owned by Uber.
- With the JV, the fleet of both taxis and private-hire cars will come under centralised fleet management system, which handles dispatching of vehicles to customers.
*LTC Corp
- Updated that controlling shareholders, Mountbatten Enterprises, received valid acceptances constituting 0.58% of firm, bringing its latest shareholding to 49.12%.
- The privatisation bid at $0.925/share was recently launched on 9 Feb and the offer document is still pending release.
Monday, February 19, 2018
SG Market (19 Feb 18)
MARKET OVERVIEW
- Likely to see muted trading action as major Asian markets in China, Korea and Vietnam are still on Lunar New Year holiday.
- Nonetheless, the positive close in the US last week is likely to provide some comfort for traders today.
- All eyes will be on Budget 2018 today, with expectations of new/higher taxes (GST, e-commerce, carbon, wealth), pro-business measures to help local companies innovate, go digital and venture abroad, labour upskilling and social spending at the top of the agenda.
- Technically, the STI could reverse from oversold levels to test immediate resistance at 3,470 with downside support at 3,340.
POSITIVE NEWS
*SGX
- Intends to list successor products to its SGX Nifty family of products before Aug '18 to provide market participants with the same ability to invest and maintain exposure to Indian capital markets.
- Working with the National Stock Exchange of India to develop a link that will allow trading on NSE's International Exchange in Gujarat International Finance Tech city.
- Details will be announced by Mar '18.
- MKE last had a Buy with TP of $8.73.
NEGATIVE NEWS
*Profit Warning:
- Design Studio
- AsiaMedic
NEUTRAL NEWS
*Noble Group
- Updated that senior creditors holding ~51% (prior: 36%) of its existing senior debt instruments have indicated their broad support for its proposed restructuring of its US$3.45b debt.
- It has also reached agreement with an ad hoc group of senior creditors and ING to provide a 3-year committed US$700m trade finance facility, to be made available upon the restructuring effective date.
- Separately, the group issued a profit warning that it expects to incur a 4Q17 net loss of US$1.73-US$1.93b due mainly to further write-offs of its derivatives portfolio amounting to US$1.45-1.55b. This will lead to a net loss of US$4.78-4.98b in FY17 (FY16: US$8.7m profit)
- The expected loss will result in a negative NAV of US$650-850m.
- The FY17 results will be released on 28 Feb.
*Sembcorp Industries
- Consolidating its thermal and renewable energy businesses under a single entity, Sembcorp Energy India.
- It will hold an effective 93.7% stake in the new entity, while Gayatri Energy Ventures will hold the remaining 6.3%.
*Indofood Agri
- Set up 50: 50 Brazilian JV Canapolis with JF Investimentos via an initial capital injection of BRL23.6m (US$7.2m).
- The JV has acquired a sugar mill in Minas Gerais in Brazil with annual cane crushing capacity of 1.8m tonnes and 6,048 ha of land through a court auction due to the bankruptcy of the previous owner.
- Acquisition price for the mill is BRL137.8m (US$42m), and will be paid in four installments, with the final payment being in Jun '19.
- Canapolis expects to commence operation at the mill in 2020 after completion of cane planting and rehabilitation of the mill.
*Hyflux
- Its 30.4%-owned consumer business, HyfluxShop has received an unconditional cash offer of $0.1783/share from controlling shareholder owner, Olivia Lum.
- Lum intends to list HyfluxShop assuming growth performance remains on track and market conditions are favourable.
- Likely to see muted trading action as major Asian markets in China, Korea and Vietnam are still on Lunar New Year holiday.
- Nonetheless, the positive close in the US last week is likely to provide some comfort for traders today.
- All eyes will be on Budget 2018 today, with expectations of new/higher taxes (GST, e-commerce, carbon, wealth), pro-business measures to help local companies innovate, go digital and venture abroad, labour upskilling and social spending at the top of the agenda.
- Technically, the STI could reverse from oversold levels to test immediate resistance at 3,470 with downside support at 3,340.
POSITIVE NEWS
*SGX
- Intends to list successor products to its SGX Nifty family of products before Aug '18 to provide market participants with the same ability to invest and maintain exposure to Indian capital markets.
- Working with the National Stock Exchange of India to develop a link that will allow trading on NSE's International Exchange in Gujarat International Finance Tech city.
- Details will be announced by Mar '18.
- MKE last had a Buy with TP of $8.73.
NEGATIVE NEWS
*Profit Warning:
- Design Studio
- AsiaMedic
NEUTRAL NEWS
*Noble Group
- Updated that senior creditors holding ~51% (prior: 36%) of its existing senior debt instruments have indicated their broad support for its proposed restructuring of its US$3.45b debt.
- It has also reached agreement with an ad hoc group of senior creditors and ING to provide a 3-year committed US$700m trade finance facility, to be made available upon the restructuring effective date.
- Separately, the group issued a profit warning that it expects to incur a 4Q17 net loss of US$1.73-US$1.93b due mainly to further write-offs of its derivatives portfolio amounting to US$1.45-1.55b. This will lead to a net loss of US$4.78-4.98b in FY17 (FY16: US$8.7m profit)
- The expected loss will result in a negative NAV of US$650-850m.
- The FY17 results will be released on 28 Feb.
*Sembcorp Industries
- Consolidating its thermal and renewable energy businesses under a single entity, Sembcorp Energy India.
- It will hold an effective 93.7% stake in the new entity, while Gayatri Energy Ventures will hold the remaining 6.3%.
*Indofood Agri
- Set up 50: 50 Brazilian JV Canapolis with JF Investimentos via an initial capital injection of BRL23.6m (US$7.2m).
- The JV has acquired a sugar mill in Minas Gerais in Brazil with annual cane crushing capacity of 1.8m tonnes and 6,048 ha of land through a court auction due to the bankruptcy of the previous owner.
- Acquisition price for the mill is BRL137.8m (US$42m), and will be paid in four installments, with the final payment being in Jun '19.
- Canapolis expects to commence operation at the mill in 2020 after completion of cane planting and rehabilitation of the mill.
*Hyflux
- Its 30.4%-owned consumer business, HyfluxShop has received an unconditional cash offer of $0.1783/share from controlling shareholder owner, Olivia Lum.
- Lum intends to list HyfluxShop assuming growth performance remains on track and market conditions are favourable.
Monday, February 12, 2018
SG Market (12 Feb 18)
MARKET OVERVIEW
- Market could attempt to reclaim back some lost ground after a turbulent week but sentiment remains on edge on continued jitters of a faster-than-expected pick up in US Treasury yields, with Jan's CPI the key indicator to watch this Wed.
- From a technical perspective, the STI sees support at 3,370, with near-term resistance at 3,385.
CORPORATE RESULTS
*F&N
- 1Q18 net profit surged 16.3% to $26.1m, lifted by maiden contribution from associate Vinamilk of $17m.
- Revenue dipped 1.6% to $487.1m on a slump in soft drink sales (-16%) due to pricing pressure in Malaysia and seasonality effect on the later Chinese New Year this year.
- Gross margin shrank 2.3ppt to 34.5% on higher cost of sales (+2%).
- Bottom line was weighed by a negative swing in FX to $2.8m loss (1Q17: $4.4m) and higher net finance cost of $3.7m (1Q17: $1.5m gain).
- Trading at 24.1x forward P/E.
*KSH
- 3QFY18 net profit grew 12.9% to $10.3m, bringing 9MFY18 net profit to $20.4m (-25.2%).
- Revenue for the quarter increased 20.3% to $41.5m on increased contribution from construction (+20.3%).
- Due to lower provision for staff bonuses, operating margin expanded to 18.1% (+4.1ppt).
- Bottom line was partially impacted by lower JV/associate income (-25.6%) on reduced development sales.
- Trading at 9.8x forward P/E.
*Kimly
- 1QFY18 net profit slid 14% to $5.7m, partly due to higher administrative staff costs ($0.5m), which included bonuses for executive directors.
- Revenue rose 7% to $50.1m on higher F&B sales and increased takings from sub-leasing due to more coffee shops, food courts, and drink stalls.
- Gross margin narrowed 2ppt to 20.3% from higher direct employee costs and operating lease expenses from new coffee shops.
- Trades at 17.3x forward P/E.
*Spindex Industries
- 1HFY18 net profit fell 42.4% to 4.5m due to a negative $2.9m swing into FX loss of $0.9m stemming from the weaker USD.
- Revenue growth of 8% to $74.2m was attributable to strength in machinery and automotive systems (+20%) and imaging & print printing (+5%) segments, which helped offset by a slide in others (-6%).
- Gross margin contracted to 19.3% (-3.1ppt) due to the shift in revenue mix.
- Bottom line was further pressured by a higher effective tax rate of 29.3% (+6.7ppt) arising from increased chargeable income at its Malaysian plant.
- Net cash slid to $27.2m (Jun '17: $35.9m) or $0.236/share.
- Last traded at 11.9x trailing P/E.
*Multi-Chem
- 4Q17 net profit jumped 25% to $4.8m, which lifted full-year earnings to $10.9m (+13%).
- For the quarter, revenue leapt 23% to $118.9m on large deals clinched by the IT distribution business (+29%).
- However, gross margin edged 0.2ppt lower to 14.6%.
- Bottom line was helped by lower taxes (-24%), albeit partially offset by absence of $1m FX gain.
- Net cash rose to $51.1m (3Q17: $40.4m), constituting 68% of market cap.
- Final DPS of 3.3¢ maintained and dished out a special DPS 1.1¢ (4Q16: nil), bringing full-year payout to 5.51¢ (2016: 4.41¢).
- Trading at 6.8x FY17 P/E and offers a dividend yield of 5.3%.
*Challenger Technologies
- 4Q17 net profit surged 94% to $5.8m, partly due to absence of $1.1m impairment on financial assets.
- This lifted FY17 earnings to $16.2m (+32%).
- Revenue for the quarter climbed 7% to $88.9m, largely driven by stronger retail, trade show and corporate sales of IT products.
- Gross margin ticked up 0.4ppt to 21.7%, while bottom line was also helped by lower taxes (-11%).
- Net cash rose to $63.2m (3Q17: $49.4m), representing 43.6% of market cap.
- Proposed higher final DPS of 2.2¢ (4Q16: 1.6¢), bringing full-year DPS to 3.3¢ (2016: 2.7¢).
- Trading at 8.9x FY17 P/E and offers a 7.8% dividend yield.
*Ryobi Kiso
- Slumped into 2QFY18 net loss of $0.1m (2QFY17: $0.4m profit), bringing 1HFY18 net profit to $44,000 (1HFY17: $0.6m).
- For the quarter, revenue jumped 48% to $50.1m on higher contribution from bored piling operations (+146.8%).
- However, gross margin contracted to 9.1% (-4.2ppt) on a shift to lower margin projects.
- Bottom line was further pressured by $0.2m in losses from associates and higher finance costs (+21.8%), although partially mitigated by income tax credit of $0.2m (3QFY17: $0.4m expense).
- NAV/share at $0.2968.
*Global Yellow Pages
- 2QFY18 net profit fell 39.2% to $2.3m, bringing 1HFY18 net profit to $2m (-45.9%).
- Revenue for the quarter slumped 40.3% to $6.4m from reduced contributions from both Search and ice cream businesses.
- Bottom line was partially shored by a 42.6% fall in total expenses on lower staff (-69.7%) and printing & material (-66.5%) costs.
- NAV/share at $0.2994.
*Pan Hong
- Swung into 3QFY18 net profit of Rmb2.7m (3QFY17: Rmb3.2m loss), shored by Rmb7.7m interest income, Rmb4.2m FX gain, and lower taxes (-51%).
- Revenue plunged 55% to Rmb44.8m on weaker residential development business (-73% to Rmb25.9m), although buttressed by higher contribution from commercial development (+4.3x to Rmb18.8m).
- Gross margin widened 10.2ppt to 36.5% due to handover of residential units that command higher margin.
- Improvement to bottom line was partly offset by a spike in finance cost (+7.6x to Rmb3.9m) amid higher borrowings.
- NAV/share at Rmb4.3687.
POSITIVE NEWS
*SIA Engineering
- Signed MOU with CaseBank Technologies to collaborate in data analytics.
- Both parties will explore in the areas of R&D and commercialisation of advanced diagnostic software for use in the aviation industry, anticipated to streamline the troubleshooting process and reduce aircraft maintenance downtime and component removal costs.
*Keppel T&T
- To jointly promote end-to-end ecommerce services to retailers across Southeast Asia with ecommerce agency SmartOSC.
- Retailers on board include COURTS Singapore, Lotte, Nestlé and Friso.
*Best World
- Accepted as a member of the Direct Selling Association of UAE.
- The entry into the UAE market is part of the group's broader initiative to expand its overseas footprint.
- Through the sale of its Halal certified products, Best World intends to use its Dubai Regional Centre as a springboard into the other Gulf Cooperation Council markets of Saudi Arabia, Qatar, Bahrain, Oman and Kuwait.
*Kitchen Culture
- Clinched two contracts totalling $6.1m for projects in Singapore, expected to be executed over the next 1-3 years.
- First contract ($5.3m) involves design, supply and installation of kitchen cabinets, wardrobes, bathroom cabinets for a 735-unit residential development.
- Second contract ($0.8m) involves similar work for a 44 unit exclusive high-end residential project.
NEGATIVE NEWS
*SGX
- Three Indian bourses will terminate licensing agreements for their indices and data with foreign exchanges as part of concerted move to protect their turf and prevent trading volumes from moving overseas.
- The curbs will hit SGX's Nifty suite of derivative products, including the popular Nifty 50 index futures, in 6 months.
- MKE anticipates FY18-20e derivatives volume will be cut by 3-9% and net profits by 1-3%, but maintains Buy with lowered TP of $8.73.
*Keppel Corp
- Updated that it has not been served court papers relating to a new US$660m civil law suit brought against it by certain funds managed by EIG Global Energy Partners in the US over its participation in a Brazilian bribery case, for which Keppel reached a US$422m global settlement with prosecutors.
- EIG had sued Keppel and other firms in 2016 for inducing it invest in Sete Brasil but a US district court has dismissed the action.
*AsiaPhos
- The Sichuan Provincial Authority has rejected the group's application to renew the mining license for Mine 1 due to potential environmental damage to a nearby panda national park.
- AsiaPhos is currently negotiating for a settlement relating to the non-renewal.
*Profit Warnings
- BH Global
- AEI Corp
- GS Holdings
NEUTRAL NEWS
*Spackman Entertainment
- Invested US$0.45m into an upcoming Korean fantasy film "Now I will meet you", starring leading actors Son Ye-Jin and So Ji Sub.
- The film is based on a Japanese original novel "Be with you", which sold over a million copies in 2004.
- The fantasy melodrama movie is set to release on 14 Mar '18.
- Market could attempt to reclaim back some lost ground after a turbulent week but sentiment remains on edge on continued jitters of a faster-than-expected pick up in US Treasury yields, with Jan's CPI the key indicator to watch this Wed.
- From a technical perspective, the STI sees support at 3,370, with near-term resistance at 3,385.
CORPORATE RESULTS
*F&N
- 1Q18 net profit surged 16.3% to $26.1m, lifted by maiden contribution from associate Vinamilk of $17m.
- Revenue dipped 1.6% to $487.1m on a slump in soft drink sales (-16%) due to pricing pressure in Malaysia and seasonality effect on the later Chinese New Year this year.
- Gross margin shrank 2.3ppt to 34.5% on higher cost of sales (+2%).
- Bottom line was weighed by a negative swing in FX to $2.8m loss (1Q17: $4.4m) and higher net finance cost of $3.7m (1Q17: $1.5m gain).
- Trading at 24.1x forward P/E.
*KSH
- 3QFY18 net profit grew 12.9% to $10.3m, bringing 9MFY18 net profit to $20.4m (-25.2%).
- Revenue for the quarter increased 20.3% to $41.5m on increased contribution from construction (+20.3%).
- Due to lower provision for staff bonuses, operating margin expanded to 18.1% (+4.1ppt).
- Bottom line was partially impacted by lower JV/associate income (-25.6%) on reduced development sales.
- Trading at 9.8x forward P/E.
*Kimly
- 1QFY18 net profit slid 14% to $5.7m, partly due to higher administrative staff costs ($0.5m), which included bonuses for executive directors.
- Revenue rose 7% to $50.1m on higher F&B sales and increased takings from sub-leasing due to more coffee shops, food courts, and drink stalls.
- Gross margin narrowed 2ppt to 20.3% from higher direct employee costs and operating lease expenses from new coffee shops.
- Trades at 17.3x forward P/E.
*Spindex Industries
- 1HFY18 net profit fell 42.4% to 4.5m due to a negative $2.9m swing into FX loss of $0.9m stemming from the weaker USD.
- Revenue growth of 8% to $74.2m was attributable to strength in machinery and automotive systems (+20%) and imaging & print printing (+5%) segments, which helped offset by a slide in others (-6%).
- Gross margin contracted to 19.3% (-3.1ppt) due to the shift in revenue mix.
- Bottom line was further pressured by a higher effective tax rate of 29.3% (+6.7ppt) arising from increased chargeable income at its Malaysian plant.
- Net cash slid to $27.2m (Jun '17: $35.9m) or $0.236/share.
- Last traded at 11.9x trailing P/E.
*Multi-Chem
- 4Q17 net profit jumped 25% to $4.8m, which lifted full-year earnings to $10.9m (+13%).
- For the quarter, revenue leapt 23% to $118.9m on large deals clinched by the IT distribution business (+29%).
- However, gross margin edged 0.2ppt lower to 14.6%.
- Bottom line was helped by lower taxes (-24%), albeit partially offset by absence of $1m FX gain.
- Net cash rose to $51.1m (3Q17: $40.4m), constituting 68% of market cap.
- Final DPS of 3.3¢ maintained and dished out a special DPS 1.1¢ (4Q16: nil), bringing full-year payout to 5.51¢ (2016: 4.41¢).
- Trading at 6.8x FY17 P/E and offers a dividend yield of 5.3%.
*Challenger Technologies
- 4Q17 net profit surged 94% to $5.8m, partly due to absence of $1.1m impairment on financial assets.
- This lifted FY17 earnings to $16.2m (+32%).
- Revenue for the quarter climbed 7% to $88.9m, largely driven by stronger retail, trade show and corporate sales of IT products.
- Gross margin ticked up 0.4ppt to 21.7%, while bottom line was also helped by lower taxes (-11%).
- Net cash rose to $63.2m (3Q17: $49.4m), representing 43.6% of market cap.
- Proposed higher final DPS of 2.2¢ (4Q16: 1.6¢), bringing full-year DPS to 3.3¢ (2016: 2.7¢).
- Trading at 8.9x FY17 P/E and offers a 7.8% dividend yield.
*Ryobi Kiso
- Slumped into 2QFY18 net loss of $0.1m (2QFY17: $0.4m profit), bringing 1HFY18 net profit to $44,000 (1HFY17: $0.6m).
- For the quarter, revenue jumped 48% to $50.1m on higher contribution from bored piling operations (+146.8%).
- However, gross margin contracted to 9.1% (-4.2ppt) on a shift to lower margin projects.
- Bottom line was further pressured by $0.2m in losses from associates and higher finance costs (+21.8%), although partially mitigated by income tax credit of $0.2m (3QFY17: $0.4m expense).
- NAV/share at $0.2968.
*Global Yellow Pages
- 2QFY18 net profit fell 39.2% to $2.3m, bringing 1HFY18 net profit to $2m (-45.9%).
- Revenue for the quarter slumped 40.3% to $6.4m from reduced contributions from both Search and ice cream businesses.
- Bottom line was partially shored by a 42.6% fall in total expenses on lower staff (-69.7%) and printing & material (-66.5%) costs.
- NAV/share at $0.2994.
*Pan Hong
- Swung into 3QFY18 net profit of Rmb2.7m (3QFY17: Rmb3.2m loss), shored by Rmb7.7m interest income, Rmb4.2m FX gain, and lower taxes (-51%).
- Revenue plunged 55% to Rmb44.8m on weaker residential development business (-73% to Rmb25.9m), although buttressed by higher contribution from commercial development (+4.3x to Rmb18.8m).
- Gross margin widened 10.2ppt to 36.5% due to handover of residential units that command higher margin.
- Improvement to bottom line was partly offset by a spike in finance cost (+7.6x to Rmb3.9m) amid higher borrowings.
- NAV/share at Rmb4.3687.
POSITIVE NEWS
*SIA Engineering
- Signed MOU with CaseBank Technologies to collaborate in data analytics.
- Both parties will explore in the areas of R&D and commercialisation of advanced diagnostic software for use in the aviation industry, anticipated to streamline the troubleshooting process and reduce aircraft maintenance downtime and component removal costs.
*Keppel T&T
- To jointly promote end-to-end ecommerce services to retailers across Southeast Asia with ecommerce agency SmartOSC.
- Retailers on board include COURTS Singapore, Lotte, Nestlé and Friso.
*Best World
- Accepted as a member of the Direct Selling Association of UAE.
- The entry into the UAE market is part of the group's broader initiative to expand its overseas footprint.
- Through the sale of its Halal certified products, Best World intends to use its Dubai Regional Centre as a springboard into the other Gulf Cooperation Council markets of Saudi Arabia, Qatar, Bahrain, Oman and Kuwait.
*Kitchen Culture
- Clinched two contracts totalling $6.1m for projects in Singapore, expected to be executed over the next 1-3 years.
- First contract ($5.3m) involves design, supply and installation of kitchen cabinets, wardrobes, bathroom cabinets for a 735-unit residential development.
- Second contract ($0.8m) involves similar work for a 44 unit exclusive high-end residential project.
NEGATIVE NEWS
*SGX
- Three Indian bourses will terminate licensing agreements for their indices and data with foreign exchanges as part of concerted move to protect their turf and prevent trading volumes from moving overseas.
- The curbs will hit SGX's Nifty suite of derivative products, including the popular Nifty 50 index futures, in 6 months.
- MKE anticipates FY18-20e derivatives volume will be cut by 3-9% and net profits by 1-3%, but maintains Buy with lowered TP of $8.73.
*Keppel Corp
- Updated that it has not been served court papers relating to a new US$660m civil law suit brought against it by certain funds managed by EIG Global Energy Partners in the US over its participation in a Brazilian bribery case, for which Keppel reached a US$422m global settlement with prosecutors.
- EIG had sued Keppel and other firms in 2016 for inducing it invest in Sete Brasil but a US district court has dismissed the action.
*AsiaPhos
- The Sichuan Provincial Authority has rejected the group's application to renew the mining license for Mine 1 due to potential environmental damage to a nearby panda national park.
- AsiaPhos is currently negotiating for a settlement relating to the non-renewal.
*Profit Warnings
- BH Global
- AEI Corp
- GS Holdings
NEUTRAL NEWS
*Spackman Entertainment
- Invested US$0.45m into an upcoming Korean fantasy film "Now I will meet you", starring leading actors Son Ye-Jin and So Ji Sub.
- The film is based on a Japanese original novel "Be with you", which sold over a million copies in 2004.
- The fantasy melodrama movie is set to release on 14 Mar '18.
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