The gold miner suffered a setback in in 3Q16 as it posted a 3.6% slide in net profit to US$1.8m, taking 9M16 earnings to US$11m (+49%) or only 65% of the street's relatively bullish FY16 estimate.
For the quarter, revenue fell 15% to US$8.5m, hurt by a seven-day stop-work order (SWO) issued by the Kelantan state government, which ultimately reduced gold production to 6,285 oz (-24.3% y/y, -35.9% q/q). The drag on revenue was partially mitigated by higher average realised gold prices of US$1,345.31/oz (+12.3% y/y, +4.5% q/q).
Operationally, all-in cost escalated to US$728/oz (+29.1% y/y, +45.6% q/q), which translated to thinner margin of 45.9% (-7ppts y/y, -15.2ppts q/q). This was a result of the following factors:
1) Jump in mining-related costs to US$399/oz (+41% y/y, +26.7% q/q) due to reinstatement costs after the SWO was lifted. Overall, gold production took about 20 days before returning to pre-SWO levels.
2) Reduced capex of US$6/oz (-86.7 y/y, -65.2% q/q) after it completed a recent upgrade to one of its leaching yards.
3) Initial part payment for its 21-year mining lease extension of RM2m or US$95/oz.
Owing to the weaker operating performance, net operating cash flow was almost halved to US$3.5m. Despite this, CNMC continues to boast a solid balance sheet with net cash of US$33.4m (+51.9% y/y, +3.4% q/q).
In a post-results briefing, management flagged that the current quarter will be negatively affected by:
1) Seasonally weaker gold production due to the monsoon season. 4Q15 was a drier quarter due to the strong El Nino weather pattern, which reduced rainfall over Malaysia.
2) Cash payment of the remaining RM18m for its 21-year mining lease extension. While this is expected to affect the all-in production costs and cash margin, the cost associated with the mining lease extension will be capitalised and amortised until 2034.
3) Higher royalty and tribute expenses with management expecting the latter to increase from 3% to 4% of revenue.
In view of the above, it will be an uphill task for CNMC to meet bullish street estimates for FY16. This, coupled with the likelihood of a Fed rate hike in Dec could temper gold prices and its performance in 2017.
CNMC currently trades at 7.9x forward consensus P/E on bullish estimates with 3 Buy ratings and a consensus TP of $0.92.
Tuesday, November 8, 2016
Yoma
Yoma's 2QFY17 net profit surged to $8.5m from $0.3m last year, boosted by unrealised fair value gain of $14.7m on its telecoms towers investment. Otherwise, the group would have ended in the red.
This brought 1HFY17 earnings to $10m (+244%), meeting 38% of full year consensus estimates.
Revenue rose 25.2% to $24.9m across all segments with growth mainly coming from its property development segment, which generated $9.9m (+26%) from sale of residences and land development rights at at Pun Hlaing Estate.
Rental revenue of $5.4m (+24.4%) was underpinned by high occupancy rates at Star Residences and The Residence at Pun Hlaing. Automotive sales of $7m (+9.1%) was driven by increased vehicle hires at Yoma Fleet, while expansion of its KFC stores nearly doubled its consumer sales to $2.7m (+96%).
While gross profit grew at a slower clip to $10.3m (+15.7%) due to margin contraction from the sales shift, it was nonetheless eclipsed by admin charges of $13m (+4.8%) and $1.9m share of associates/JV losses (2QFY16: $0.5m gain), arising from beverage distributor Access Myanmar, as well as start-up losses at a cold chain provider and a Mitsubishi vehicle trader.
Bottom line was shored by $14.7m unrealised fair value gain from its 25% stake in telecom infrastructure company edotco.
Despite the red ink at the core level, management is sanguine on the outlook for Myanmar as the US decision to lift remaining sanctions could spur investments in the medium term. Regulations are also in the midst of being revised to be pro-investors.
Nevertheless, the real estate market remains slow even as urbanisation should buoy long term prospects, while continued agriculture development should help tractor sales.
Yoma opened its seventh KFC store in Oct, and is on track to reach its 12th store by March '17.
Meanwhile, the group is divesting half of its stake in edotco for US$35m. The transaction will result in an additional US$4.8m gain in upcoming 3QFY17 results. It is also spinning off its tourism-related businesses into SHC Capital Asia in a proposed $43.9m RTO deal, which will give it a 53.5% shareholding.
Yoma is currently trading at 40x FY3/17e consensus P/E and 1.6x P/B.
This brought 1HFY17 earnings to $10m (+244%), meeting 38% of full year consensus estimates.
Revenue rose 25.2% to $24.9m across all segments with growth mainly coming from its property development segment, which generated $9.9m (+26%) from sale of residences and land development rights at at Pun Hlaing Estate.
Rental revenue of $5.4m (+24.4%) was underpinned by high occupancy rates at Star Residences and The Residence at Pun Hlaing. Automotive sales of $7m (+9.1%) was driven by increased vehicle hires at Yoma Fleet, while expansion of its KFC stores nearly doubled its consumer sales to $2.7m (+96%).
While gross profit grew at a slower clip to $10.3m (+15.7%) due to margin contraction from the sales shift, it was nonetheless eclipsed by admin charges of $13m (+4.8%) and $1.9m share of associates/JV losses (2QFY16: $0.5m gain), arising from beverage distributor Access Myanmar, as well as start-up losses at a cold chain provider and a Mitsubishi vehicle trader.
Bottom line was shored by $14.7m unrealised fair value gain from its 25% stake in telecom infrastructure company edotco.
Despite the red ink at the core level, management is sanguine on the outlook for Myanmar as the US decision to lift remaining sanctions could spur investments in the medium term. Regulations are also in the midst of being revised to be pro-investors.
Nevertheless, the real estate market remains slow even as urbanisation should buoy long term prospects, while continued agriculture development should help tractor sales.
Yoma opened its seventh KFC store in Oct, and is on track to reach its 12th store by March '17.
Meanwhile, the group is divesting half of its stake in edotco for US$35m. The transaction will result in an additional US$4.8m gain in upcoming 3QFY17 results. It is also spinning off its tourism-related businesses into SHC Capital Asia in a proposed $43.9m RTO deal, which will give it a 53.5% shareholding.
Yoma is currently trading at 40x FY3/17e consensus P/E and 1.6x P/B.
Yeo Hiap Seng
Yeo Hiap Seng (YHS) posted a weaker set of 3Q16 results, after its share price rallied earlier this month following the buyout offer for Super Group, which it holds a 11.7% stake.
Net profit for the quarter plunged 45.7% to $5.1m, bringing 9M16 earnings to $18.6m (-17.5%).
Quarterly revenue declined 13.5% to $94.7m, predominantly due to deterioration in F&B sales to $93.4m (-13.7%).
Gross margin narrowed 2.5ppt to 37.5% on higher raw materials costs. Bottom line was further hit by a $4.4m drop in FX gains.
Management highlighted that business outlook remains challenging, as F&B margins may come under more pressure due to the tepid global economy, intensifying competition and uncertainty in raw material prices.
Furthermore, the group ended an exclusive bottling agreement with PepsiCo. to bottle and distribute the latter's soft drinks in the Singapore market. The cessation of the deal is expected to weigh on FY17 earnings.
Notwithstanding, YHS has provided an irrevocable undertaking to the buyout offer of Super Group for its 11.7% stake. If the takeover is successful, the group will receive $169.3m in cash proceeds and reap a book gain of $61.9m or $0.107/share. This would strengthen the group's balance sheet, and allow more flexibility for business development elsewhere.
YHS is now trading around 24x trailing P/E, which well below the 31.7x valuation offered for Super Group.
Net profit for the quarter plunged 45.7% to $5.1m, bringing 9M16 earnings to $18.6m (-17.5%).
Quarterly revenue declined 13.5% to $94.7m, predominantly due to deterioration in F&B sales to $93.4m (-13.7%).
Gross margin narrowed 2.5ppt to 37.5% on higher raw materials costs. Bottom line was further hit by a $4.4m drop in FX gains.
Management highlighted that business outlook remains challenging, as F&B margins may come under more pressure due to the tepid global economy, intensifying competition and uncertainty in raw material prices.
Furthermore, the group ended an exclusive bottling agreement with PepsiCo. to bottle and distribute the latter's soft drinks in the Singapore market. The cessation of the deal is expected to weigh on FY17 earnings.
Notwithstanding, YHS has provided an irrevocable undertaking to the buyout offer of Super Group for its 11.7% stake. If the takeover is successful, the group will receive $169.3m in cash proceeds and reap a book gain of $61.9m or $0.107/share. This would strengthen the group's balance sheet, and allow more flexibility for business development elsewhere.
YHS is now trading around 24x trailing P/E, which well below the 31.7x valuation offered for Super Group.
SG Market (08 Nov 16)
The FBI-inspired respite yesterday could be short-lived as investors are on tenterhooks for negative surprises from the closely fought US presidential elections tonight.
Regional bourses opened higher in Tokyo (+0.4%), Seoul (+0.2%) and Sydney (+0.2%).Technically, STI is hovering at its 2,800 support, just below the 200-dma, with topside resistance at 2,880.
Stocks to watch:
*GLP: 2QFY17 core net profit (ex. revaluation) jumped 44.1% to US$71.6m, bringing 1HFY17 core earnings of US$110.2m (+3.7%) to 40% of full year street estimate. For the quarter, revenue rose 12.9% to US$213.7m on completion and stabilisation of development projects in China, and higher management fee income from US and Japan, while EBIT climbed 34.5% on increased income from its Japanese associate. Achieved US$950m of development starts and management remains confident of meeting its FY17 target of US$2.1b. Trading at 25% discount to its NAV/share of US$1.96.
*Yoma: 2QFY17 net profit soared to $8.5m from $0.3m last year, bringing 1HFY17 earnings to $10m (+244%) or 39% of full year estimate. For the quarter, earnings were boosted by an unrealised fair value gain ($14.7m) from its edotco stake. Revenue rose 25.2% to $24.9m across all segments with growth mainly derived from sale of residences and land development rights (+26.1%) in Pun Hlaing Estate and more KFC stores in the consumer segment (+96%). But bottom line was weighed by JV/associate losses of $1.9m (2QFY16: $0.5m gain). Separately, the group will be divesting half its 25% interest in edotco Singapore for US$35m at US$2.4m above book value. NAV/share at $0.376.
*F&N: FY16 headline net profit slumped 82.9% to $108.1m on the absence of a $541.5m disposal gain. Excluding that, core earnings would have surged 72.9% to $109m, despite a 6.7% slide in revenue to $1.98b on weaker contributions from beverages (-10.5%), dairies (-3.7%) and printing & publishing (-9.8%) operations. Bottom line benefitted from an expansion in gross margin to 36.8% (+4ppts) stemming from a shift in sales mix, as well as increased investment income (+16.5%) and net finance income. Final DPS of 3¢ maintained, taking full year payout to 4.5¢ (FY15: 5¢). NAV/share at $1.97.
*SIIC Environment: 3Q16 net profit of Rmb94m (+5.3%) brought 9M16 earnings to Rmb284.7m (+18.2%) or 62% of full year street estimate. For the quarter, revenue slumped 21.4% to Rmb394.9m on reduced construction activities (-74.9%), partly mitigated by operating and maintenance income (+9.1%), and financial income (+9.8%) from service concession arrangements. Accordingly, gross margin expanded 7.9ppt to 45.8%. Bottom line shored by VAT refunds and disposal sale. NAV/share at Rmb2.59.
*CNMC: 3Q16 net profit slid 5.6% to US$2.2m, as revenue fell 15% to US$8.5m on reduced production (-24.3%) and sales volume (-24.3%) of fine gold due to a stop-work order between 19 and 25 Jul, although partially mitigated by higher average realised gold price of US$1,345.31/oz (+12.3%). The stop-work order also resulted in 29% rise in all-in production costs to to US$728/oz. Trading at 3.8x P/B..
*Avi-Tech: 1QFY17 net profit fell 16.9% to $1.5m, mainly weighed by a steep drop in FX gain. Revenue climbed 6.3% to $8.5m as improvement at its burn-in board manufacturing and PCBA services segment more than offset weakness from burn-in services and engineering services division. Gross margin narrowed 3.7ppt to 29.5% on changes to services mix. Net cash position jumped 82% to $4.9m, or 9.6% of current market cap. NAV/share at $0.2736.
*Chiwayland: 3Q16 net loss widened to Rmb56.6m (3Q15: Rmb6.4m loss), as revenue shrank 70% to Rmb118.1m on fewer handover of property units. Gross margin expanded 27.7ppt to 37.1% on higher ASP for its Suzhou developments. But bottom line was dragged by increased distribution (+76%), admin (+30%) and financing (+170%) costs, as well as FX losses and higher taxes (+65%). Operating cash outflow swelled to Rmb1.7b (3Q15: Rmb77.4m) on advance payments and higher trade receivables, while net gearing spiked to 4.4x from 2.4x in FY15. The group remains confident of turning profitable for FY16 and paying out DPS of 1¢. NAV/share at Rmb1.413.
*Yeo Hiap Seng: 3Q16 net profit plunged 45.7% to $5.1m on a softer revenue of $94.7m (-13.5%), amid deterioration in F&B sales. Gross margin narrowed 2.5ppt to 37.5% on higher raw materials costs, while bottom line was further hit by a $4.4m drop in FX gain. NAV/share at $1.0335.
*Hai Leck: 1QFY17 net profit jumped 65.2% from a low base to $2.6m, on better revenue of $24.5m (+32.8%) from higher maintenance activity. Separately, the group was awarded a mechanical and piping project from a new customer to fabricate, erect and surface treat piping and install equipment at facilities in Jurong Island for an unspecified sum. Together with other projects secured recently, management updated that order book has expanded by $25m. NAV/share at $0.601..
*China Star Food: Swung to 2QFY17 net profit of Rmb17.1m, due to the absence of a goodwill write-off and RTO expenses. Revenue rose 13.3% to Rmb120.7m from increased sales of candies and crisps, while gross margin dipped 0.3ppt to 45.4% on change in sales mix. NAV/share at Rmb1.49.
*SGX: Received court approval for its proposed acquisition of Baltic Exchange. SGX expects to complete the purchase today.
*ARA: Requested for extension of the trading halt, pending release of a material announcement before market re-opens on 9 Nov.
*Sunpower: Secured Rmb98.9m worth of contracts to supply fluidized bed reactors and heat exchangers for several customers, and is expected to be FY17 accretive.
*MMP Resources: Acquiring a three-storey freehold property at Aze Hinode, Japan, for ¥26m ($0.3m), funded via proceeds from recent placement. The property has close proximity to the Chisenupuri ski field, and will be redeveloped into a premium rental asset with hot spring facilities.
*Procurri: Purchased a loss-making European distributor of IT spare parts, EAF Supply Chain Holdings, for £1.5m (0.52x P/B), in a bid to expand its geographical reach.
*Anchor Resources: Invested RM2.2m ($0.7m) in a new ball mill system which would have daily processing capacity of 600t of hard rock ore.*Wong Fong: Appointed as a Public Training Organisation by Skills Future Singapore to carry out construction sector related courses.
*Global Invacom: Exploring consolidation of its China manufacturing activities to optimise cost advantages, which could result in the closure of its Shenzhen subsidiary.
*Equation Summit: Concluded the initial stage of store deployment for its DiSa Asset Protection solution with the proof-of-concept showing strong results when deployed in a live retail ecosystem.
*Profit warning:
- Tat Hong
- Pharmesis
- LH Group
- PSL Holdings
- Advanced Holdings
- A-Sonic Aerospace
Regional bourses opened higher in Tokyo (+0.4%), Seoul (+0.2%) and Sydney (+0.2%).Technically, STI is hovering at its 2,800 support, just below the 200-dma, with topside resistance at 2,880.
Stocks to watch:
*GLP: 2QFY17 core net profit (ex. revaluation) jumped 44.1% to US$71.6m, bringing 1HFY17 core earnings of US$110.2m (+3.7%) to 40% of full year street estimate. For the quarter, revenue rose 12.9% to US$213.7m on completion and stabilisation of development projects in China, and higher management fee income from US and Japan, while EBIT climbed 34.5% on increased income from its Japanese associate. Achieved US$950m of development starts and management remains confident of meeting its FY17 target of US$2.1b. Trading at 25% discount to its NAV/share of US$1.96.
*Yoma: 2QFY17 net profit soared to $8.5m from $0.3m last year, bringing 1HFY17 earnings to $10m (+244%) or 39% of full year estimate. For the quarter, earnings were boosted by an unrealised fair value gain ($14.7m) from its edotco stake. Revenue rose 25.2% to $24.9m across all segments with growth mainly derived from sale of residences and land development rights (+26.1%) in Pun Hlaing Estate and more KFC stores in the consumer segment (+96%). But bottom line was weighed by JV/associate losses of $1.9m (2QFY16: $0.5m gain). Separately, the group will be divesting half its 25% interest in edotco Singapore for US$35m at US$2.4m above book value. NAV/share at $0.376.
*F&N: FY16 headline net profit slumped 82.9% to $108.1m on the absence of a $541.5m disposal gain. Excluding that, core earnings would have surged 72.9% to $109m, despite a 6.7% slide in revenue to $1.98b on weaker contributions from beverages (-10.5%), dairies (-3.7%) and printing & publishing (-9.8%) operations. Bottom line benefitted from an expansion in gross margin to 36.8% (+4ppts) stemming from a shift in sales mix, as well as increased investment income (+16.5%) and net finance income. Final DPS of 3¢ maintained, taking full year payout to 4.5¢ (FY15: 5¢). NAV/share at $1.97.
*SIIC Environment: 3Q16 net profit of Rmb94m (+5.3%) brought 9M16 earnings to Rmb284.7m (+18.2%) or 62% of full year street estimate. For the quarter, revenue slumped 21.4% to Rmb394.9m on reduced construction activities (-74.9%), partly mitigated by operating and maintenance income (+9.1%), and financial income (+9.8%) from service concession arrangements. Accordingly, gross margin expanded 7.9ppt to 45.8%. Bottom line shored by VAT refunds and disposal sale. NAV/share at Rmb2.59.
*CNMC: 3Q16 net profit slid 5.6% to US$2.2m, as revenue fell 15% to US$8.5m on reduced production (-24.3%) and sales volume (-24.3%) of fine gold due to a stop-work order between 19 and 25 Jul, although partially mitigated by higher average realised gold price of US$1,345.31/oz (+12.3%). The stop-work order also resulted in 29% rise in all-in production costs to to US$728/oz. Trading at 3.8x P/B..
*Avi-Tech: 1QFY17 net profit fell 16.9% to $1.5m, mainly weighed by a steep drop in FX gain. Revenue climbed 6.3% to $8.5m as improvement at its burn-in board manufacturing and PCBA services segment more than offset weakness from burn-in services and engineering services division. Gross margin narrowed 3.7ppt to 29.5% on changes to services mix. Net cash position jumped 82% to $4.9m, or 9.6% of current market cap. NAV/share at $0.2736.
*Chiwayland: 3Q16 net loss widened to Rmb56.6m (3Q15: Rmb6.4m loss), as revenue shrank 70% to Rmb118.1m on fewer handover of property units. Gross margin expanded 27.7ppt to 37.1% on higher ASP for its Suzhou developments. But bottom line was dragged by increased distribution (+76%), admin (+30%) and financing (+170%) costs, as well as FX losses and higher taxes (+65%). Operating cash outflow swelled to Rmb1.7b (3Q15: Rmb77.4m) on advance payments and higher trade receivables, while net gearing spiked to 4.4x from 2.4x in FY15. The group remains confident of turning profitable for FY16 and paying out DPS of 1¢. NAV/share at Rmb1.413.
*Yeo Hiap Seng: 3Q16 net profit plunged 45.7% to $5.1m on a softer revenue of $94.7m (-13.5%), amid deterioration in F&B sales. Gross margin narrowed 2.5ppt to 37.5% on higher raw materials costs, while bottom line was further hit by a $4.4m drop in FX gain. NAV/share at $1.0335.
*Hai Leck: 1QFY17 net profit jumped 65.2% from a low base to $2.6m, on better revenue of $24.5m (+32.8%) from higher maintenance activity. Separately, the group was awarded a mechanical and piping project from a new customer to fabricate, erect and surface treat piping and install equipment at facilities in Jurong Island for an unspecified sum. Together with other projects secured recently, management updated that order book has expanded by $25m. NAV/share at $0.601..
*China Star Food: Swung to 2QFY17 net profit of Rmb17.1m, due to the absence of a goodwill write-off and RTO expenses. Revenue rose 13.3% to Rmb120.7m from increased sales of candies and crisps, while gross margin dipped 0.3ppt to 45.4% on change in sales mix. NAV/share at Rmb1.49.
*SGX: Received court approval for its proposed acquisition of Baltic Exchange. SGX expects to complete the purchase today.
*ARA: Requested for extension of the trading halt, pending release of a material announcement before market re-opens on 9 Nov.
*Sunpower: Secured Rmb98.9m worth of contracts to supply fluidized bed reactors and heat exchangers for several customers, and is expected to be FY17 accretive.
*MMP Resources: Acquiring a three-storey freehold property at Aze Hinode, Japan, for ¥26m ($0.3m), funded via proceeds from recent placement. The property has close proximity to the Chisenupuri ski field, and will be redeveloped into a premium rental asset with hot spring facilities.
*Procurri: Purchased a loss-making European distributor of IT spare parts, EAF Supply Chain Holdings, for £1.5m (0.52x P/B), in a bid to expand its geographical reach.
*Anchor Resources: Invested RM2.2m ($0.7m) in a new ball mill system which would have daily processing capacity of 600t of hard rock ore.*Wong Fong: Appointed as a Public Training Organisation by Skills Future Singapore to carry out construction sector related courses.
*Global Invacom: Exploring consolidation of its China manufacturing activities to optimise cost advantages, which could result in the closure of its Shenzhen subsidiary.
*Equation Summit: Concluded the initial stage of store deployment for its DiSa Asset Protection solution with the proof-of-concept showing strong results when deployed in a live retail ecosystem.
*Profit warning:
- Tat Hong
- Pharmesis
- LH Group
- PSL Holdings
- Advanced Holdings
- A-Sonic Aerospace
Monday, November 7, 2016
MLT
MLT:
- Reportedly secured a sizeable lease at Mapletree Logistics Hub from US eCommerce retailer Amazon.
- The site is expected to serve as a fulfilment centre for Amazon's eCommerce business, expected to commence operations in 1Q17.
- The new lease will help raise MLT's portfolio occupancy by an estimated 0.3ppts from 96.4%.
- At $1.02, MLT trades at 7.3% annualised yield and 1.06x P/B.
- Reportedly secured a sizeable lease at Mapletree Logistics Hub from US eCommerce retailer Amazon.
- The site is expected to serve as a fulfilment centre for Amazon's eCommerce business, expected to commence operations in 1Q17.
- The new lease will help raise MLT's portfolio occupancy by an estimated 0.3ppts from 96.4%.
- At $1.02, MLT trades at 7.3% annualised yield and 1.06x P/B.
SG Market (07 Nov 16)
Trading will be risk-off as markets brace for the US election outcome and a possible turbulent trading week. On the local front, investors will also be watching for a slew of results from GLP (Tue), CapitaLand (Wed), Singtel, STE, Wilmar, City Dev and SATS (all Thu) and ComfortDelGro (Fri).
Regional bourses opened sharply higher in Tokyo (+1.6%), Seoul (+0.8%) and Sydney (+0.8%).Technically, near-term support for STI is at 2,740 with immediate resistance at 2,800.
Stocks to watch:
*SingPost: 2QFY17 core net profit of $27.1m (-27.9%) missed estimates, despite a 22.3% jump in revenue to $321.7m from new contribution of recently-acquired US e-commerce subsidiaries. Operating margin compressed to 11.8% (-12.7ppt) on weakness in postal and logistics segments, and transformation costs of its e-commerce business. Bottom line was also weighed by loss of rental income due to the redevelopment of SPC Mallan and absence of disposal gains. Interim DPS slashed to 1¢ (2QFY16: 1.5¢). NAV/share at $0.7119. MKE downgraded to Hold and cuts TP to $1.75.
*Venture: 3Q16 net profit of $47.4m (+16.9%) came in at the upper end of expectations, as revenue inched up 1.8% to $705.7m on increased customer traction, while pretax margin improved to 8% (+1.2ppts) through achieving more value creation and lower R&D costs. MKE maintains Buy with higher TP of $11.00, on increased margin forecasts.
*Best World: 3Q16 topped estimates as net profit soared to $8.9m (+121.4%) as the direct seller benefitted from operating scale. Revenue doubled to $52.2m (+99%) on continued strength in direct selling (+54%) and impressive growth in exports (+366%) to China. Gross margin slipped to 71.6% (-5.5ppts) on a shift in sales mix, while net margin expanded to 17.1% (+1.7ppts) as export segment does not incur distribution costs. Management expects Taiwan and Chinese markets to continue to underpin 4Q16 performance. MKE maintains Buy with raised TP of $2.16.
*Valuetronics: 2QFY17 net profit climbed 18.2% to HK$38.1m, as revenue rose 9% to HK$573.7m, buoyed by growth in both industrial (+8.7%) and consumer (+9.2%) segments. Gross margin was stable at 14.6%, while bottom line was lifted by higher interest income, reduced FX losses and absence of derivative fair value losses. NAV/share at HK$2.20.
*Manulife US REIT: 3Q16 DPU of 2.01¢ surpassed forecast by 5.8%, on lower-than-expected utility expenses and other operating costs. However, revenue of US$28.2m was 1.1% below IPO estimate, stemming from lower recovery revenues as some operating expenses were not incurred. Occupancy stood at 97% with WALE of 6.1 years, while aggregate leverage was loweredto 34.7% (-2.1ppts). NAV/unit at US$0.84.*PACC Offshore: Plunged into a 3Q16 net loss of US$12.9m (3Q15: US$12.6m profit), as revenue dived 48% to US$41.6m (-48%) due to lower utilisation and charter rates across all segments die to the depressed O&M sector. Bottom line was further hammered by a disposal loss on a vessel and a spike in finance costs. Net gearing rose to 0.6x from 0.5x in FY15. NAV/share at US$0.5664.
*ISEC: 3Q16 net profit shot up 147% to $1.7m, bringing 9M16 earnings to $5m (+91%), meeting 71% of FY16 street estimate. For the quarter, revenue rose 18% to $7.4m, due to contribution from recently-acquired Southern Specialist Eye Centre in Dec ’15 and increased patient visits in Malaysia. With the shift in geographical sales mix from Singapore to Malaysia, gross and pretax margin both expanded to 49.4% (+6.6ppts) and 26.6% (11.6ppts), respectively. Declared interim DPS of 0.66¢ (3Q15: nil).
*Ryobi Kiso: 1QFY17 net profit rose 28.4% to $0.2m, buttressed by a $1.6m positive FX swing and lower finance costs. However, revenue tumbled 37.8% to $28.2m, mainly due to substantial completion for a majority of its projects, whilst most new projects are still in the initial stages of work. NAV/share at $0.2979.
*Addvalue Tech: Turned around to 2QFY17 net profit of US$0.3m (2QFY16: US$0.7m loss), as revenue leapt 110% to US$3.9m on improved sales of maritime terminals and increased provision of design services. Gross margin widened 6.4ppt to 48.5% on a favorable shift in product mix. NAV/share at 1.07¢.
*Federal Int’l: 3Q16 net profit jumped 74.7% to $1.1m, albeit from a low base, in tandem with the spike in revenue to $26.5m (+77.4%), on the back of higher sales from the trading segment, which was supported by sales to an associate for its ongoing projects. However, gross margin contracted to 16.4% (-18.9ppts) from the inter-group sales. Bottom line was boosted by maiden service fees ($3m) provided to an associate and increased associate contribution of $0.6m (3Q15: $0.1m). NAV/share at $0.579.
*Lee Metal: 3Q16 net profit slipped 1.5% to $4m, although mitigated by improved cost control. Revenue contracted 12.6% to $87.7m, attributable to weaker steel prices and lower volume of steel merchandising. Interim DPS maintained at 0.3¢, implying a trailing yield of 6.7%. NAV/share at $0.383.
*NSL: Proposed disposal of the dry mix business to French construction products company, Saint-Gobain Produits pour la Construction, for $142.6m (7.5x annualised 6M16 P/E). The sale includes seven manufacturing sites across three countries, with a total combined capacity of 620,000 mt of dry-mixed products. Upon completion, NSL is expected to net a disposal gain of $107.6m, although pro forma 6M16 net profit of the group will be shaved 48% to $10.4m (2.78¢/share).
*Centurion: Disclosed that the URA appeal to increase bed capacity at Westlite Toh Guan has been denied. Accordingly, beds at the dormitory will be reduced by 808 beds, which would result in a drop in net dormitory income of up to $2m/year, or 5.9% of FY15 net profit.
*SHS: Proposed 60% stake acquisition in Vietnamese firm TLC Modular Construction Joint Stock Company for US$4.2m. Pro forma FY15 NTA/share will slip 1.2% to 31.24¢, while EPS will remain flat at 1.49¢. *GMG: Offer by Halcyon Agri has received 94.39% acceptances, with the offer being extended to 11 Nov from 8 Nov.
*Elektromotive Group: Terminated agreement for the proposed acquisition of QT Interactive Technology Investments, after not being able to fulfil the conditions precedent. Separately, group entered a non-binding MOU to acquire a 63.13% stake in Korean entertainment group Dream T Entertainment for an undisclosed sum, to be paid via the issue of new shares which could result in a RTO transaction.*Declout: To divest its remaining 55% stake in AWS (Cambodia) to Ly Sakhun for $0.8m. It is expected to book a gain of $114,000 on the divestment
Regional bourses opened sharply higher in Tokyo (+1.6%), Seoul (+0.8%) and Sydney (+0.8%).Technically, near-term support for STI is at 2,740 with immediate resistance at 2,800.
Stocks to watch:
*SingPost: 2QFY17 core net profit of $27.1m (-27.9%) missed estimates, despite a 22.3% jump in revenue to $321.7m from new contribution of recently-acquired US e-commerce subsidiaries. Operating margin compressed to 11.8% (-12.7ppt) on weakness in postal and logistics segments, and transformation costs of its e-commerce business. Bottom line was also weighed by loss of rental income due to the redevelopment of SPC Mallan and absence of disposal gains. Interim DPS slashed to 1¢ (2QFY16: 1.5¢). NAV/share at $0.7119. MKE downgraded to Hold and cuts TP to $1.75.
*Venture: 3Q16 net profit of $47.4m (+16.9%) came in at the upper end of expectations, as revenue inched up 1.8% to $705.7m on increased customer traction, while pretax margin improved to 8% (+1.2ppts) through achieving more value creation and lower R&D costs. MKE maintains Buy with higher TP of $11.00, on increased margin forecasts.
*Best World: 3Q16 topped estimates as net profit soared to $8.9m (+121.4%) as the direct seller benefitted from operating scale. Revenue doubled to $52.2m (+99%) on continued strength in direct selling (+54%) and impressive growth in exports (+366%) to China. Gross margin slipped to 71.6% (-5.5ppts) on a shift in sales mix, while net margin expanded to 17.1% (+1.7ppts) as export segment does not incur distribution costs. Management expects Taiwan and Chinese markets to continue to underpin 4Q16 performance. MKE maintains Buy with raised TP of $2.16.
*Valuetronics: 2QFY17 net profit climbed 18.2% to HK$38.1m, as revenue rose 9% to HK$573.7m, buoyed by growth in both industrial (+8.7%) and consumer (+9.2%) segments. Gross margin was stable at 14.6%, while bottom line was lifted by higher interest income, reduced FX losses and absence of derivative fair value losses. NAV/share at HK$2.20.
*Manulife US REIT: 3Q16 DPU of 2.01¢ surpassed forecast by 5.8%, on lower-than-expected utility expenses and other operating costs. However, revenue of US$28.2m was 1.1% below IPO estimate, stemming from lower recovery revenues as some operating expenses were not incurred. Occupancy stood at 97% with WALE of 6.1 years, while aggregate leverage was loweredto 34.7% (-2.1ppts). NAV/unit at US$0.84.*PACC Offshore: Plunged into a 3Q16 net loss of US$12.9m (3Q15: US$12.6m profit), as revenue dived 48% to US$41.6m (-48%) due to lower utilisation and charter rates across all segments die to the depressed O&M sector. Bottom line was further hammered by a disposal loss on a vessel and a spike in finance costs. Net gearing rose to 0.6x from 0.5x in FY15. NAV/share at US$0.5664.
*ISEC: 3Q16 net profit shot up 147% to $1.7m, bringing 9M16 earnings to $5m (+91%), meeting 71% of FY16 street estimate. For the quarter, revenue rose 18% to $7.4m, due to contribution from recently-acquired Southern Specialist Eye Centre in Dec ’15 and increased patient visits in Malaysia. With the shift in geographical sales mix from Singapore to Malaysia, gross and pretax margin both expanded to 49.4% (+6.6ppts) and 26.6% (11.6ppts), respectively. Declared interim DPS of 0.66¢ (3Q15: nil).
*Ryobi Kiso: 1QFY17 net profit rose 28.4% to $0.2m, buttressed by a $1.6m positive FX swing and lower finance costs. However, revenue tumbled 37.8% to $28.2m, mainly due to substantial completion for a majority of its projects, whilst most new projects are still in the initial stages of work. NAV/share at $0.2979.
*Addvalue Tech: Turned around to 2QFY17 net profit of US$0.3m (2QFY16: US$0.7m loss), as revenue leapt 110% to US$3.9m on improved sales of maritime terminals and increased provision of design services. Gross margin widened 6.4ppt to 48.5% on a favorable shift in product mix. NAV/share at 1.07¢.
*Federal Int’l: 3Q16 net profit jumped 74.7% to $1.1m, albeit from a low base, in tandem with the spike in revenue to $26.5m (+77.4%), on the back of higher sales from the trading segment, which was supported by sales to an associate for its ongoing projects. However, gross margin contracted to 16.4% (-18.9ppts) from the inter-group sales. Bottom line was boosted by maiden service fees ($3m) provided to an associate and increased associate contribution of $0.6m (3Q15: $0.1m). NAV/share at $0.579.
*Lee Metal: 3Q16 net profit slipped 1.5% to $4m, although mitigated by improved cost control. Revenue contracted 12.6% to $87.7m, attributable to weaker steel prices and lower volume of steel merchandising. Interim DPS maintained at 0.3¢, implying a trailing yield of 6.7%. NAV/share at $0.383.
*NSL: Proposed disposal of the dry mix business to French construction products company, Saint-Gobain Produits pour la Construction, for $142.6m (7.5x annualised 6M16 P/E). The sale includes seven manufacturing sites across three countries, with a total combined capacity of 620,000 mt of dry-mixed products. Upon completion, NSL is expected to net a disposal gain of $107.6m, although pro forma 6M16 net profit of the group will be shaved 48% to $10.4m (2.78¢/share).
*Centurion: Disclosed that the URA appeal to increase bed capacity at Westlite Toh Guan has been denied. Accordingly, beds at the dormitory will be reduced by 808 beds, which would result in a drop in net dormitory income of up to $2m/year, or 5.9% of FY15 net profit.
*SHS: Proposed 60% stake acquisition in Vietnamese firm TLC Modular Construction Joint Stock Company for US$4.2m. Pro forma FY15 NTA/share will slip 1.2% to 31.24¢, while EPS will remain flat at 1.49¢. *GMG: Offer by Halcyon Agri has received 94.39% acceptances, with the offer being extended to 11 Nov from 8 Nov.
*Elektromotive Group: Terminated agreement for the proposed acquisition of QT Interactive Technology Investments, after not being able to fulfil the conditions precedent. Separately, group entered a non-binding MOU to acquire a 63.13% stake in Korean entertainment group Dream T Entertainment for an undisclosed sum, to be paid via the issue of new shares which could result in a RTO transaction.*Declout: To divest its remaining 55% stake in AWS (Cambodia) to Ly Sakhun for $0.8m. It is expected to book a gain of $114,000 on the divestment
Friday, November 4, 2016
Genting SP
Genting S'pore (GENS) delivered a stellar net profit of $106.9m (3Q15: $37.2m) reversing 2Q16 loss of $10.5m loss. This brought 9M16 earnings of $107.2m (+29%) to 50% of full year street estimate.
For the quarter, revenue of $581.5m (-9% y/y, +21% q/q) was supported by a lucky VIP win rate (3Q16: 3.3%, 2Q16: 1.7%) in the gaming business ($407.4m, -10% y/y, +23% q/q), as well as increased visitations for its RWS attractions and improved occupancy rate of over 92% across all its hotels in the non-gaming segment ($173.3m, -6% y/y, +17% q/q).
Nevertheless, Maybank KE estimates that VIP volumes fell 45 y/y and 15% q/q to $6b, while mass GGR fell 10% y/y and 5% q/q to $350m. These volumes were record lows.
Cost rationalisation, as well as lower bad debt provisions of $50.2m (-46% y/y, -6% q/q) boosted adjusted EBITDA to $233.6m (+12% y/y, +101% q/q) and drove EBITDA margin of 40.2% (+7.3ppt y/y, +16 ppt q/q) to its highest level in nine quarters.
GENS expects margins to improve further over the next few quarters as it continues to scale down the VIP business and the debt receivables. Management is confident that with the measured approach in premium mass market, GENS could see sustainable earnings growth into the next year.
A typhoon has delayed the construction of 50%-owned Resorts World Jeju. With insurance coverage, damage should be minimal. GENS still expects to be granted a gaming licence in 1Q17.
On the legislation of casinos in Japan, the group is optimistic that the Promotion Bill will be passed by the Diet on 9 Nov.
A surprise 1.5¢ interim DPS was declared (3Q15: nil).
GENS is currently trading at 11.8x EV/EBITDA, contrasting with Macau peers at 14.7x.
Latest broker ratings:
Credit Suisse maintains Outperform with TP of $1.00
UBS maintains Buy with TP of $0.95
CIMB maintains Add with TP of $0.89
JPMorgan maintains Neutral with TP of $0.85
UOB KayHian maintains Buy with TP of $0.84
Nomura maintains Neutral with TP of $0.83
OCBC maintains Hold, raises TP to $0.81 from $0.77
Deutsche maintains Hold and TP of $0.80
CLSA maintains Outperform with TP of $0.80
Morgan Stanley upgrades to Equal-weight from Underweight, raises TP to $0.78 from $0.68
Maybank upgrades to Hold from Sell, raises TP to $0.72 from $0.71
For the quarter, revenue of $581.5m (-9% y/y, +21% q/q) was supported by a lucky VIP win rate (3Q16: 3.3%, 2Q16: 1.7%) in the gaming business ($407.4m, -10% y/y, +23% q/q), as well as increased visitations for its RWS attractions and improved occupancy rate of over 92% across all its hotels in the non-gaming segment ($173.3m, -6% y/y, +17% q/q).
Nevertheless, Maybank KE estimates that VIP volumes fell 45 y/y and 15% q/q to $6b, while mass GGR fell 10% y/y and 5% q/q to $350m. These volumes were record lows.
Cost rationalisation, as well as lower bad debt provisions of $50.2m (-46% y/y, -6% q/q) boosted adjusted EBITDA to $233.6m (+12% y/y, +101% q/q) and drove EBITDA margin of 40.2% (+7.3ppt y/y, +16 ppt q/q) to its highest level in nine quarters.
GENS expects margins to improve further over the next few quarters as it continues to scale down the VIP business and the debt receivables. Management is confident that with the measured approach in premium mass market, GENS could see sustainable earnings growth into the next year.
A typhoon has delayed the construction of 50%-owned Resorts World Jeju. With insurance coverage, damage should be minimal. GENS still expects to be granted a gaming licence in 1Q17.
On the legislation of casinos in Japan, the group is optimistic that the Promotion Bill will be passed by the Diet on 9 Nov.
A surprise 1.5¢ interim DPS was declared (3Q15: nil).
GENS is currently trading at 11.8x EV/EBITDA, contrasting with Macau peers at 14.7x.
Latest broker ratings:
Credit Suisse maintains Outperform with TP of $1.00
UBS maintains Buy with TP of $0.95
CIMB maintains Add with TP of $0.89
JPMorgan maintains Neutral with TP of $0.85
UOB KayHian maintains Buy with TP of $0.84
Nomura maintains Neutral with TP of $0.83
OCBC maintains Hold, raises TP to $0.81 from $0.77
Deutsche maintains Hold and TP of $0.80
CLSA maintains Outperform with TP of $0.80
Morgan Stanley upgrades to Equal-weight from Underweight, raises TP to $0.78 from $0.68
Maybank upgrades to Hold from Sell, raises TP to $0.72 from $0.71
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