MARKET OVERVIEW
- The market could edge higher on strong US economic data but gains may be capped by light pre-holiday trading.
- Technically, downside risk for STI lies at 3,220, with immediate resistance at 3,275.
POSITIVE NEWS
*Cityneon
- Acquired the global IP rights to Jurassic World: The Exhibition for US$25m, or 5x forward P/E based on a profit guarantee for its current Chicago tour ending Jan '18.
- This is its third franchise after Avengers S.T.A.T.I.O.N and Transformers: Autobot Alliance.
- Trades at 16x forward P/E.
*Oxley
- Acquiring all six residential units at Toho Green condominium at Yio Chu Kang Road for $8.4m for redevelopment.
- The 99-year leasehold property sits on a land area of 1,313 sqm.
- Trades at 7.7x trailing P/E and 1.6x P/B.
*Yongnam
- Secured three contracts worth $70m for projects in Singapore and Myanmar.
- One of the Singapore projects involves the installation of structural steelwork for JTC Logistics Hub @ Gul, while the second project is for the supply of king posts and strutting works for Woodlands Health Campus.
- The Myanmar project is for main building works for extension of the Japan Tobacco Int'l factory.
- All projects are expected to be completed between 2018 and 2019.
NEGATIVE NEWS
*TTJ
- Terminated its agreement with the Building and Construction Authority to manage and operate Jurong Dormitory, due to unexpected complexity in the building retrofitting works.
NEUTRAL NEWS
*Sembcorp Industries
- Acquired the remaining 28% stake in Sembcorp Green Infra (SGI) from IDFC Private Equity Fund III for $301m.
- SGI has close to 1,200 MW of wind and solar power capacity in operation and under development in India and contributed net profit of $39m, or 10% of the group's FY16 earnings.
- The deal will allow the group more flexibility to drive further growth within the renewable energy sector in India.
- Trades at 13.9x forward P/E.
*Yangzijiang
- Entered placement agreement with JP Morgan for 137m new shares (3.6% existing share capital) at $1.53 apiece.
- Net proceeds of $208.8m will be used to fund new investments and working capital.
- Upon completion, net cash will be lifted to Rmb2,099.4m from Rmb1,081m.
*Hi-P
- Dismissed claims that the group has been approached for a possible buyout or strategic tie-up, in relation to an article published on Straits Times.
*Aspen
- 30% owned Aspen Vision Land completed the acquisition of a 41-acre plot of land in Penang, Malaysia for RM67.9m.
- Additionally, the associate will also acquire another 45-acre plot in the vicinity for RM98m.
- The acquisitions are in line with the group's planned development of Aspen Vision City.
*Sincap
- Proposed placement of up to 420.25m new shares at a minimum price of $0.018 apiece to raise net proceeds of at least $8m.
- The new shares represent 33.3% of the enlarged share capital.
- KGI Securities has been appointed as the agent for the proposed placement.
Thursday, August 31, 2017
Wednesday, August 30, 2017
SG Market (30 Aug 17)
MARKET OVERVIEW
- Likely to see technical rebound following yesterday's decline after US President Trump's measured response to North Korean missile launch eased fears of further geopolitical escalation.
- Technical outlook remains weak with STI trading below its 20 and 50-dmas. Downside risk lies at 3,220, while topside resistance is at 3,275.
CORPORATE RESULTS
*Cordlife
- Dipped into FY17 net loss of $2.6m from $12.3m profit last year, due to absence of FX, fair value and disposal gains.
- Revenue was muted at $59.9m (+0.6%) despite the inclusion of Malaysian-based Stemlife.
- Gross margin narrowed 1.4ppt to 64.8% on lower profitability of Stemlife, and new offering of cord tissue banking, which has lower price point to cater to the mass-market.
- Proposed final DPS of 0.5¢ (FY16: nil)
- NAV/share at $0.4831.
*DiSa
- 4QFY17 net loss narrowed to $4m (4QFY16: $7.7m) in absence of impairment loss, bringing FY17 loss to $16m (+48.3%).
- Last quarter revenue slumped 76.6% to $146,000 due to negligible sales generated from its energy management services (-94.2%), while its anti-theft systems brought in maiden contributions of $46,000 in the technology segment.
- The group burned through more operating cash outflow of $1.6m (4QFY16: -$242,000).
- NAV/share at 0.25¢.
*Dukang Distillers
- FY17 net loss swelled to Rmb112.4m (FY16: Rmb10.7m), battered by impairment loss of Rmb31m.
- Revenue fell 46.3% to Rmb464.5m on overall weaker sales volumes (-42.5%) and ASPs (-6.5%).
- Gross margin contracted to 26.1% (-8.7ppt).
- Bottom line was further hit by revaluation loss on non-current assets (Rmb4.9m), production suspension costs (Rmb6.8m) and compensation on purchases returns (Rmb8.8m).
- NAV/share shrank to Rmb16.42 (-8%).
POSITIVE NEWS
*DBS
- Launched its digibank in Indonesia that uses technology such as biometrics and AI to serve banking customers.
- Among other benefits, its customers will be able to open an account with no minimum balance and earn 3% interest.
- Its other digibank which was set up in India, has secured more than 1m customers.
- MKE last had a Hold with TP of $21.50.
*StarHub
- Partnering with tech giant Google to offer its mesh networking device, Google Wifi exclusively in Singapore.
- Mesh networking systems will allow users to enjoy coverage across various rooms and is more effective than routers.
- Customers will be able to buy a three-pack Google Wifi 24-month bundle at $15/month on selected StarHub broadband plans from 31 Aug.
- StarHub will hope the tie-up will improve its broadband segment, which last suffered a 3% decline in service revenue on a drop in subscribers (-1.3%) as well as ARPU (-2.7%) in 2Q17.
*ISOTeam
- Secured 15 projects worth a total of $24.2m, and are slated to complete progressively between 2H17 and Aug '19.
- Bulk of the contracts are for its addition & alteration ($16.8m), mechanical & electrical ($3.2m), and repair & redecoration (R&R) segments.
NEGATIVE NEWS
*Swiber
- Lodged a statutory declaration of its subsidiary, Swiber Engineering's inability to continue business.
- Meetings between the company and its creditors will begin on 8 Sep.
- Appointed KPMG as interim liquidators of the subsidiary.
NEUTRAL NEWS
*ST Engineering
- Injected $10.2m into LeeBoy India Construction Equipment, which designs and manufactures construction equipment for the infrastructure and coal industries.
- Separately, the group is also partnering Alpha Ori Tech to build two IT-based platforms to 1) consolidate smart data and apply analytics to improve fleet management for ship owners and operators and 2) provider machine learning solutions and anti-collision capabilities.
- Both partners will also look to strengthen cyber security for shipborne systems.
*Z-Obee
- Delisting from the SGX in order to save on admin and compliance costs.
- The group will keep its primary listing on the HKEx.
- Likely to see technical rebound following yesterday's decline after US President Trump's measured response to North Korean missile launch eased fears of further geopolitical escalation.
- Technical outlook remains weak with STI trading below its 20 and 50-dmas. Downside risk lies at 3,220, while topside resistance is at 3,275.
CORPORATE RESULTS
*Cordlife
- Dipped into FY17 net loss of $2.6m from $12.3m profit last year, due to absence of FX, fair value and disposal gains.
- Revenue was muted at $59.9m (+0.6%) despite the inclusion of Malaysian-based Stemlife.
- Gross margin narrowed 1.4ppt to 64.8% on lower profitability of Stemlife, and new offering of cord tissue banking, which has lower price point to cater to the mass-market.
- Proposed final DPS of 0.5¢ (FY16: nil)
- NAV/share at $0.4831.
*DiSa
- 4QFY17 net loss narrowed to $4m (4QFY16: $7.7m) in absence of impairment loss, bringing FY17 loss to $16m (+48.3%).
- Last quarter revenue slumped 76.6% to $146,000 due to negligible sales generated from its energy management services (-94.2%), while its anti-theft systems brought in maiden contributions of $46,000 in the technology segment.
- The group burned through more operating cash outflow of $1.6m (4QFY16: -$242,000).
- NAV/share at 0.25¢.
*Dukang Distillers
- FY17 net loss swelled to Rmb112.4m (FY16: Rmb10.7m), battered by impairment loss of Rmb31m.
- Revenue fell 46.3% to Rmb464.5m on overall weaker sales volumes (-42.5%) and ASPs (-6.5%).
- Gross margin contracted to 26.1% (-8.7ppt).
- Bottom line was further hit by revaluation loss on non-current assets (Rmb4.9m), production suspension costs (Rmb6.8m) and compensation on purchases returns (Rmb8.8m).
- NAV/share shrank to Rmb16.42 (-8%).
POSITIVE NEWS
*DBS
- Launched its digibank in Indonesia that uses technology such as biometrics and AI to serve banking customers.
- Among other benefits, its customers will be able to open an account with no minimum balance and earn 3% interest.
- Its other digibank which was set up in India, has secured more than 1m customers.
- MKE last had a Hold with TP of $21.50.
*StarHub
- Partnering with tech giant Google to offer its mesh networking device, Google Wifi exclusively in Singapore.
- Mesh networking systems will allow users to enjoy coverage across various rooms and is more effective than routers.
- Customers will be able to buy a three-pack Google Wifi 24-month bundle at $15/month on selected StarHub broadband plans from 31 Aug.
- StarHub will hope the tie-up will improve its broadband segment, which last suffered a 3% decline in service revenue on a drop in subscribers (-1.3%) as well as ARPU (-2.7%) in 2Q17.
*ISOTeam
- Secured 15 projects worth a total of $24.2m, and are slated to complete progressively between 2H17 and Aug '19.
- Bulk of the contracts are for its addition & alteration ($16.8m), mechanical & electrical ($3.2m), and repair & redecoration (R&R) segments.
NEGATIVE NEWS
*Swiber
- Lodged a statutory declaration of its subsidiary, Swiber Engineering's inability to continue business.
- Meetings between the company and its creditors will begin on 8 Sep.
- Appointed KPMG as interim liquidators of the subsidiary.
NEUTRAL NEWS
*ST Engineering
- Injected $10.2m into LeeBoy India Construction Equipment, which designs and manufactures construction equipment for the infrastructure and coal industries.
- Separately, the group is also partnering Alpha Ori Tech to build two IT-based platforms to 1) consolidate smart data and apply analytics to improve fleet management for ship owners and operators and 2) provider machine learning solutions and anti-collision capabilities.
- Both partners will also look to strengthen cyber security for shipborne systems.
*Z-Obee
- Delisting from the SGX in order to save on admin and compliance costs.
- The group will keep its primary listing on the HKEx.
Monday, August 28, 2017
SG Market (28 Aug 17)
MARKET OVERVIEW
- Investors will have plenty of US and China economic data to chew this week but the biggest risk issues would be Trump's renewed threat to scrap Nafta and his long-awaited tax reform agenda.
- Technically, the STI remains in oversold territory with immediate resistance at 3,275 and underlying support at 3,220.
SECTOR WATCH
*Property
- Maybank KE believes that a resurgent enbloc market offers alternative land banking opportunities for developers and could ease upwards pressure on land prices.
- Over $3b worth of deals have been concluded so far and another 30 properties are in various stages of the collective sale process.
- Together with six confirmed sites in 2H17 GLS, we see potential 12,400 units added to Singapore's residential pipeline.
- Enbloc sales also front-load demand with displaced households looking out for new properties and could potentially reduce the 16,900 unsold inventory.
- MKE is positive on property developers. UOL (Buy, TP: $9.43) and City Dev (Buy, TP: $12.05) are its top large-cap picks, while GuocoLand (Buy, TP: $2.75) offers compelling relative value.
CORPORATE RESULTS
*GuocoLand
- 4QFY17 net profit surged to $244.8m (4QFY16: $39.8m) and brought FY17 earnings to $357.2m (-41%), meeting expectations. The slide was due to absence of one-off gain arising from disposal of Dongzhimen project last year.
- For the quarter, revenue soared 90% to $407.4m on faster-than-expected sale recognition from Singapore residential projects.
- Gross margin widened 4.6ppt to 24.4%.
- Bottom line was boosted by $254.5m (4QFY16: $14.6m) fair value gain from revaluation of Guoco Tower at Tanjong Pagar Centre.
- Net gearing eased to 0.84x from 1x in Mar '17.
- Proposed final DPS of 7¢ (FY16: final 5¢, special 4¢).
- Last traded at 0.72 P/B. Maybank KE has a Buy with TP of $2.75
*Silverlake Axis
- 4QFY17 net profit tumbled 58% to RM32.7m as it incurred wider losses from associates/JVs of RM5.3m (4QFY16: -RM0.08m). This brought FY17 core earnings to RM160.7m (-41.3%), which missed estimates.
- For the quarter, revenue fell 25% to RM124.9m, hurt by lower contributions from software licensing (-88%), maintenance and enhancement services (-11%), sale of software and hardware products (-49%).
- Gross margin contracted 20ppt to 46% amid weaker software licensing business.
- Drop in bottom line was pared by a positive RM10.7m FX swing.
- Proposed final DPS of 0.3¢ (4QFY16: 1¢) and special DPS of 1¢ (4QFY16: nil), bringing full-year payout to 4.5¢ (FY16: 3¢).
- Trades at 20.1x forward P/E
*GL
- FY17 net profit fell 28% to US$49m on revenue of US$350.2m (-11%).
- Revenue decline was mainly due to lower contributions from its hotel (-10%), gaming (-53%) and property development (-67%) segments.
- RevPAR declined 10% due to the weaker GBP.
- Bottom line was further hit by a legal settlement in the UK, US$3.7m write-off on property and equipment as well as a 38% jump in net financing cost.
- Maintained first and final DPS of 2.2¢.
- NAV/share at US$0.808
*AusGroup
- Turned around to 4QFY17 net profit of A$2.4m (4QFY16: A$165.1m loss) in absence of A$130.9m impairment on fixed assets and intangibles.
- This swung FY17 results to a net profit of A$4.7m (FY16: A$258.9m loss).
- Quarterly revenue rose 18% to A$121.2m on increased work on core projects in the energy and process sector.
- Gross margin slipped to -0.9ppt to 7.8%.
- Bottom line was also buttressed by a A$5.5m net gain from partial debt restructuring, and A$4.3m drop in tax to A$2.9m.
- NAV/share at A$0.017
POSITIVE NEWS
*ST Engineering
- Acquired rig repair assets adjacent to its existing yard, VT Halter Marine in Pascagoula, Mississippi, US from World Marine of Mississippi for US$25m.
- These assets comprise a purpose-built facility of 94 acres for heavy marine fabrication, and offshore oil and gas rig upgrades, repairs and conversions.
*ISOTeam
- SG Bike, a 51:27:22 JV with Sean Tay and Andy Tay, has launched a bike sharing scheme at Bukit Panjang, which is expected to broaden group revenue base.
- The JV aims to address issue of indiscriminate parking by working out a solution with local authorities.
*Ley Choon
- Secured a PUB contract worth $1.4m relating to trial trenching works for water projects.
NEGATIVE NEWS
*SPH
- Proposing to divest 19.3m shares (~40% stake) in Mediacorp Press and 18m shares (20% stake) in Mediacorp TV to Mediacorp for $9.4m and $8.6m respectively.
- The group expects to record a write-down of $31m due to the transaction.
NEUTRAL NEWS
*UOL/Haw Par
- UOL exercised call option to acquire 60m shares of UIC from Haw Par via issue of 27.3m new shares.
- This will increase UOL's stake in UIC to about 48.94% from 44.71%.
- The transaction is expected to be completed by early Sep '17
*Tiong Seng/Ocean Sky
- 60:40 JV to acquire Sloane Court Hotel and adjacent plot of land at Balmoral Road for $80.5m or $1,292 psf ppr.
- Investors will have plenty of US and China economic data to chew this week but the biggest risk issues would be Trump's renewed threat to scrap Nafta and his long-awaited tax reform agenda.
- Technically, the STI remains in oversold territory with immediate resistance at 3,275 and underlying support at 3,220.
SECTOR WATCH
*Property
- Maybank KE believes that a resurgent enbloc market offers alternative land banking opportunities for developers and could ease upwards pressure on land prices.
- Over $3b worth of deals have been concluded so far and another 30 properties are in various stages of the collective sale process.
- Together with six confirmed sites in 2H17 GLS, we see potential 12,400 units added to Singapore's residential pipeline.
- Enbloc sales also front-load demand with displaced households looking out for new properties and could potentially reduce the 16,900 unsold inventory.
- MKE is positive on property developers. UOL (Buy, TP: $9.43) and City Dev (Buy, TP: $12.05) are its top large-cap picks, while GuocoLand (Buy, TP: $2.75) offers compelling relative value.
CORPORATE RESULTS
*GuocoLand
- 4QFY17 net profit surged to $244.8m (4QFY16: $39.8m) and brought FY17 earnings to $357.2m (-41%), meeting expectations. The slide was due to absence of one-off gain arising from disposal of Dongzhimen project last year.
- For the quarter, revenue soared 90% to $407.4m on faster-than-expected sale recognition from Singapore residential projects.
- Gross margin widened 4.6ppt to 24.4%.
- Bottom line was boosted by $254.5m (4QFY16: $14.6m) fair value gain from revaluation of Guoco Tower at Tanjong Pagar Centre.
- Net gearing eased to 0.84x from 1x in Mar '17.
- Proposed final DPS of 7¢ (FY16: final 5¢, special 4¢).
- Last traded at 0.72 P/B. Maybank KE has a Buy with TP of $2.75
*Silverlake Axis
- 4QFY17 net profit tumbled 58% to RM32.7m as it incurred wider losses from associates/JVs of RM5.3m (4QFY16: -RM0.08m). This brought FY17 core earnings to RM160.7m (-41.3%), which missed estimates.
- For the quarter, revenue fell 25% to RM124.9m, hurt by lower contributions from software licensing (-88%), maintenance and enhancement services (-11%), sale of software and hardware products (-49%).
- Gross margin contracted 20ppt to 46% amid weaker software licensing business.
- Drop in bottom line was pared by a positive RM10.7m FX swing.
- Proposed final DPS of 0.3¢ (4QFY16: 1¢) and special DPS of 1¢ (4QFY16: nil), bringing full-year payout to 4.5¢ (FY16: 3¢).
- Trades at 20.1x forward P/E
*GL
- FY17 net profit fell 28% to US$49m on revenue of US$350.2m (-11%).
- Revenue decline was mainly due to lower contributions from its hotel (-10%), gaming (-53%) and property development (-67%) segments.
- RevPAR declined 10% due to the weaker GBP.
- Bottom line was further hit by a legal settlement in the UK, US$3.7m write-off on property and equipment as well as a 38% jump in net financing cost.
- Maintained first and final DPS of 2.2¢.
- NAV/share at US$0.808
*AusGroup
- Turned around to 4QFY17 net profit of A$2.4m (4QFY16: A$165.1m loss) in absence of A$130.9m impairment on fixed assets and intangibles.
- This swung FY17 results to a net profit of A$4.7m (FY16: A$258.9m loss).
- Quarterly revenue rose 18% to A$121.2m on increased work on core projects in the energy and process sector.
- Gross margin slipped to -0.9ppt to 7.8%.
- Bottom line was also buttressed by a A$5.5m net gain from partial debt restructuring, and A$4.3m drop in tax to A$2.9m.
- NAV/share at A$0.017
POSITIVE NEWS
*ST Engineering
- Acquired rig repair assets adjacent to its existing yard, VT Halter Marine in Pascagoula, Mississippi, US from World Marine of Mississippi for US$25m.
- These assets comprise a purpose-built facility of 94 acres for heavy marine fabrication, and offshore oil and gas rig upgrades, repairs and conversions.
*ISOTeam
- SG Bike, a 51:27:22 JV with Sean Tay and Andy Tay, has launched a bike sharing scheme at Bukit Panjang, which is expected to broaden group revenue base.
- The JV aims to address issue of indiscriminate parking by working out a solution with local authorities.
*Ley Choon
- Secured a PUB contract worth $1.4m relating to trial trenching works for water projects.
NEGATIVE NEWS
*SPH
- Proposing to divest 19.3m shares (~40% stake) in Mediacorp Press and 18m shares (20% stake) in Mediacorp TV to Mediacorp for $9.4m and $8.6m respectively.
- The group expects to record a write-down of $31m due to the transaction.
NEUTRAL NEWS
*UOL/Haw Par
- UOL exercised call option to acquire 60m shares of UIC from Haw Par via issue of 27.3m new shares.
- This will increase UOL's stake in UIC to about 48.94% from 44.71%.
- The transaction is expected to be completed by early Sep '17
*Tiong Seng/Ocean Sky
- 60:40 JV to acquire Sloane Court Hotel and adjacent plot of land at Balmoral Road for $80.5m or $1,292 psf ppr.
Friday, August 25, 2017
SG Market (25 Aug 17)
MARKET OVERVIEW
- Investors could tread cautiously ahead of the weekend after seeking for safe haven markets on concerns over dysfunctional US politics and Fri's central bank summit at Jackson Hole that could signal a shift from the easy money policies.
- Technically, the STI remains in oversold territory and may test its immediate resistance at 3,275, with underlying support at 3,190.
CORPORATE RESULTS
*Wing Tai
- 4QFY17 net profit surged 5-fold to $9.5m (+406%), buttressed by a $5.3m tax credit but full year earnings of $20.1m (+184%) still came in below consensus estimate.
- FY17 revenue fell 52% to $263.2m on a 76.8% drop in contributions from development properties to just $76.4m, which resulted in a EBIT loss of $15.7m (FY16: $22.8m profit).
- Sold 399 residential units across Singapore (72), Malaysia (178) and China (149), with total sales value of $357m.
- Retail segment accounted for 55% of revenue and 28% of EBIT.
- Contributions from associates/joint ventures rose 24% to $73.4m due to higher takings from Wing Tai Properties in HK and included an impairment provision of $3.2m for additional buyer's stamp duty payable for The Crest.
- Maintained both final DPS of 3¢ and special DPS of 3¢, similar to FY16.
- Trades at 48% discount to NAV/share of $4.07.
*UG Healthcare
- 4QFY17 net profit crashed 79.5% to $0.1m, dragging FY17 earnings to $2.4m (-55.1%), below estimates.
- This came despite a 22.5% jump in quarter revenue to $16.7m driven by 26% new capacity added, which bought its total capacity to 2.4b gloves pa at end-FY17.
- However, gross margin contracted 4.1ppt to 11.6% due to significant increase in average raw materials prices, gas tariff hike, higher depreciation charge for new production lines and foreign workers' levy.
- Bottom line was also hurt by higher marketing costs from expansion efforts in China.
- Construction is underway to add another 0.5b capacity by end-FY18.
- MKE last had a Sell with TP of $0.25.
*800 Super
- 4QFY17 net profit tanked 36% to $2.7m on a swing to tax expense of $1.2m (4QFY16: $0.3m tax credit).
- This brought FY17 earnings to $17.1m (+2.2%).
- Quarter revenue slipped 3.2% to $38.6m following completion of certain cleaning contracts, but partly offset by contributions from new projects.
- Pretax margin crept 0.2ppt higher to 10.2%.
- Proposed higher final DPS of 3¢ (4QFY16: 2.5¢), bringing full-year payout to 4¢ (FY16: 2.5¢).
- NAV/share at $0.4547.
*Creative
- Swung into 4QFY17 net loss of US$5.6m, bringing FY17 loss to US$22.9m.
- Quarter revenue declined 15% to US$14.5m as the uncertain and difficult market conditions impacted sales.
- Gross margin slipped 0.6ppt to 28.1% on a write-down of excess inventories, while bottom line was dragged by the absence of a write-back of subcontract accruals of US$5m.
- Guided for 1QFY18 operating loss on similar revenue, but a turnaround to net profit due to receipt of a US$31.2m settlement from the US patent infringement lawsuit, as well as an additional US$26m for damages and losses suffered in relation to a wireless broadband project, if no appeal is made by the vendor.
- NAV/share at US$1.06.
POSITIVE NEWS
*China Everbright Water
- Secured contract for Xinyi City Waste Water Treatment Project Phase III, with total investment of Rmb71m.
- The BOT project, which comes with a 24-year concession, will have a designed daily capacity of 30,000 m3.
- It will process municipal waste water and industrial waste water produced by non-chemical enterprises in the Xinyi area in Jiangsu, China.
- Trading at 11.9 forward P/E and 0.91x P/B.
NEUTRAL NEWS
*Raffles Medical
- New substantial shareholder Aberdeen Asset Management purchased 372,300 shares via the market at $1.1367 apiece on 22 Aug.
- The transaction lifted its stake above the 5% mark from 4.9986% to 5.0196%.
- At 1.15, counter is trading at 28.8x forward P/E.
*SingPost
- Retirement of Sam Ang, the CEO of Quantium Solutions since Jul 2016, before Alibaba took a 34% stake in Oct 2016.
- The retirement took place in less than three months after new Group CEO Paul Coutts joined SingPost.
*Mary Chia
- Buyout offer at $0.111 apiece by Suki Sushi.
- This comes after Suki acquired 60.98% of share capital from controlling shareholder Mdm Chia Ah Tow Mary.
- The unconditional offer price is final and Suki intends to diversify the group's business into other complementary sectors.
*Chew's Group
- Updated that its controlling shareholder has entered into negotiations with third party for possible transaction on the group's shares.
- No definitive agreements have been signed.
*Sarine
- Seeking protection under its US patents and copyrights, which allow it file actions to preclude the importation of polished diamonds, manufactured in an infringing manner, into the US.
- Investors could tread cautiously ahead of the weekend after seeking for safe haven markets on concerns over dysfunctional US politics and Fri's central bank summit at Jackson Hole that could signal a shift from the easy money policies.
- Technically, the STI remains in oversold territory and may test its immediate resistance at 3,275, with underlying support at 3,190.
CORPORATE RESULTS
*Wing Tai
- 4QFY17 net profit surged 5-fold to $9.5m (+406%), buttressed by a $5.3m tax credit but full year earnings of $20.1m (+184%) still came in below consensus estimate.
- FY17 revenue fell 52% to $263.2m on a 76.8% drop in contributions from development properties to just $76.4m, which resulted in a EBIT loss of $15.7m (FY16: $22.8m profit).
- Sold 399 residential units across Singapore (72), Malaysia (178) and China (149), with total sales value of $357m.
- Retail segment accounted for 55% of revenue and 28% of EBIT.
- Contributions from associates/joint ventures rose 24% to $73.4m due to higher takings from Wing Tai Properties in HK and included an impairment provision of $3.2m for additional buyer's stamp duty payable for The Crest.
- Maintained both final DPS of 3¢ and special DPS of 3¢, similar to FY16.
- Trades at 48% discount to NAV/share of $4.07.
*UG Healthcare
- 4QFY17 net profit crashed 79.5% to $0.1m, dragging FY17 earnings to $2.4m (-55.1%), below estimates.
- This came despite a 22.5% jump in quarter revenue to $16.7m driven by 26% new capacity added, which bought its total capacity to 2.4b gloves pa at end-FY17.
- However, gross margin contracted 4.1ppt to 11.6% due to significant increase in average raw materials prices, gas tariff hike, higher depreciation charge for new production lines and foreign workers' levy.
- Bottom line was also hurt by higher marketing costs from expansion efforts in China.
- Construction is underway to add another 0.5b capacity by end-FY18.
- MKE last had a Sell with TP of $0.25.
*800 Super
- 4QFY17 net profit tanked 36% to $2.7m on a swing to tax expense of $1.2m (4QFY16: $0.3m tax credit).
- This brought FY17 earnings to $17.1m (+2.2%).
- Quarter revenue slipped 3.2% to $38.6m following completion of certain cleaning contracts, but partly offset by contributions from new projects.
- Pretax margin crept 0.2ppt higher to 10.2%.
- Proposed higher final DPS of 3¢ (4QFY16: 2.5¢), bringing full-year payout to 4¢ (FY16: 2.5¢).
- NAV/share at $0.4547.
*Creative
- Swung into 4QFY17 net loss of US$5.6m, bringing FY17 loss to US$22.9m.
- Quarter revenue declined 15% to US$14.5m as the uncertain and difficult market conditions impacted sales.
- Gross margin slipped 0.6ppt to 28.1% on a write-down of excess inventories, while bottom line was dragged by the absence of a write-back of subcontract accruals of US$5m.
- Guided for 1QFY18 operating loss on similar revenue, but a turnaround to net profit due to receipt of a US$31.2m settlement from the US patent infringement lawsuit, as well as an additional US$26m for damages and losses suffered in relation to a wireless broadband project, if no appeal is made by the vendor.
- NAV/share at US$1.06.
POSITIVE NEWS
*China Everbright Water
- Secured contract for Xinyi City Waste Water Treatment Project Phase III, with total investment of Rmb71m.
- The BOT project, which comes with a 24-year concession, will have a designed daily capacity of 30,000 m3.
- It will process municipal waste water and industrial waste water produced by non-chemical enterprises in the Xinyi area in Jiangsu, China.
- Trading at 11.9 forward P/E and 0.91x P/B.
NEUTRAL NEWS
*Raffles Medical
- New substantial shareholder Aberdeen Asset Management purchased 372,300 shares via the market at $1.1367 apiece on 22 Aug.
- The transaction lifted its stake above the 5% mark from 4.9986% to 5.0196%.
- At 1.15, counter is trading at 28.8x forward P/E.
*SingPost
- Retirement of Sam Ang, the CEO of Quantium Solutions since Jul 2016, before Alibaba took a 34% stake in Oct 2016.
- The retirement took place in less than three months after new Group CEO Paul Coutts joined SingPost.
*Mary Chia
- Buyout offer at $0.111 apiece by Suki Sushi.
- This comes after Suki acquired 60.98% of share capital from controlling shareholder Mdm Chia Ah Tow Mary.
- The unconditional offer price is final and Suki intends to diversify the group's business into other complementary sectors.
*Chew's Group
- Updated that its controlling shareholder has entered into negotiations with third party for possible transaction on the group's shares.
- No definitive agreements have been signed.
*Sarine
- Seeking protection under its US patents and copyrights, which allow it file actions to preclude the importation of polished diamonds, manufactured in an infringing manner, into the US.
Thursday, August 24, 2017
SG Market (24 Aug 17)
MARKET OVERVIEW
- The market could drift lower as investors take risks off the table on fears of dysfunctional politics after US President Trump threatened to shut down the government if Congress refuse to fund a border wall with Mexico.
- Technically, the STI remains in oversold territory with underlying support at 3,190 and topside resistance at 3,275.
CORPORATE RESULTS
*IHH Healthcare
- 2Q17 net profit rose 29% to RM316.6m, bolstered mainly by a disposal gain of RM241.1m from the sale of 6.1% stake in Apollo Hospital Enterprise.
- Excluding that, core earnings missed estimates, slumping 54% to RM86.2m, hurt by start-up costs and depreciation from opening of two new hospitals.
- Revenue grew 12% to RM2.77b on organic growth from existing operations and ramp-up of two new HK and Turkish hospitals, as well as the acquisition of Tokuda and City Clinic in Bulgaria.
- But core EBITDA margin narrowed to 19.3% (-3.1ppt) on higher start-up, operating and staff expenses.
- MKE maintains Hold but cuts TP by 1% to RM6.08.
*Health Management Int'l
- 4QFY17 net profit more than doubled to RM10.6m (+119%) following acquisition of remaining stakes in two key hospitals.
- This brought FY17 core earnings, excluding one-off professional fees and non-operational FX loss, to RM32.1m (+40.3%), meeting expectations.
- Revenue for the quarter climbed 5% to RM111.7m, thanks to higher patient loads (+3.7%) and average outpatient bill sizes (+7.8%), which overcome flat inpatient bills (-0.2%).
- EBITDA margin expanded 3ppt to 21.5%, on lower provision of doubtful debts.
- Bottom line was eroded by a spike in finance cost amid a $53m loan drawdown for the stake acquisitions.
- Last traded at 28.4x FY18e P/E.
*Parkson Retail Asia
- 4QFY17 net loss deepened to $43m from $14.9m last year, partly weighed by impairment charges of $25.7m, which swung FY17 results to net loss of $59.5m (FY16: $30.2m profit).
- On the flipside, quarter revenue rose 17% to $109.6m on higher sales during the Hari Raya festival, underpinned by higher same-store-sales growth in Malaysia (+15%) and Indonesia (+11%), while the Vietnam (-14%) operations deteriorated.
- However, gross merchandise margin narrowed 2.8ppt to 61.9% amid higher provision for inventories.
- No final DPS declared (FY16: 0.5¢).
- Trading at 0.56x P/B.
*ISOTeam
- 4QFY17 net profit tumbled 66.5% to $1.3m, which dragged FY17 earnings to $6.4m (-30.1%).
- Quarter revenue slumped 26.5% to $21.7m on a broad-based decline across all segments on fewer projects.
- Gross margin contracted 4.7ppt to 22.9%.
- Bottom line was further impacted by a 13.2% jump in general and admin expenses due to increased allowance for doubtful receivables from a customer under receivership.
- First and final DPS shaved to 0.65¢ (FY16: 0.75¢).
- Trades at 15.4x historical P/E.
POSITIVE NEWS
*Keppel Corp
- Secured a US$400m contract from Honolulu-based Pasha Hawaii for the construction of two LNG fuelled containerships.
- Delivery of the first vessel expected in 1Q20 and the second vessel in 3Q20.
- This brings its ytd order wins to $823m, down from peak of ~$10b in 2011/2012 and $0.5b in 2016.
*Yangzijiang
- 79.6% owned Jiangsu Yangzijiang Offshore Engineering has set up a 40:60 JVCo, Jiangsu Yangzi Chengkang Marine, with total initial capital of Rmb100m.
- The JV will be involved in steel structure fabrication of steel pipe pile for international seas, port, bridge and offshore projects.
*Boustead Projects
- Secured a design-and-build contract from Yusen Logistics Singapore for the addition of a two-floor ramp-up warehouse on an existing logistics facility in Tuas, with completion in 4Q18.
- This lifted the group's order book to $160m (Jun '17: $137m).
*Ausgroup
- 67% owned JV with Meisei Industrial was awarded a A$165m contract extension for work on the INPEX-operated Ichthys LNG Project by JKC Australia LNG.
- Scope of work includes painting, surface protection, fireproofing and insulation works for the onshore facilities.
NEUTRAL NEWS
*Q&M
- Controlling shareholder Quan Min Holdings acquired 300,000 shares at $0.64321 each on 22 Aug.
- The transaction lifted its stake from 43.92% to 43.946%.
*Aoxin
- Controlling shareholder Quan Min Holdings acquired 98,900 shares at $0.215 each on 22 Aug.
- The transaction lifted its stake from 49.61% to 49.64%.
*Ellipsiz
- CEO Melvin Chan Wai Leong acquired 1.5m shares at $0.7525 each on 22 Aug.
- The transaction lifted his stake from 3.76% to 4.65%.
*Metro
- In preliminary discussions with H-Change Real Estate for a proposed divestment of 30% owned associate Nanchang Top Spring at an undisclosed sum.
- The market could drift lower as investors take risks off the table on fears of dysfunctional politics after US President Trump threatened to shut down the government if Congress refuse to fund a border wall with Mexico.
- Technically, the STI remains in oversold territory with underlying support at 3,190 and topside resistance at 3,275.
CORPORATE RESULTS
*IHH Healthcare
- 2Q17 net profit rose 29% to RM316.6m, bolstered mainly by a disposal gain of RM241.1m from the sale of 6.1% stake in Apollo Hospital Enterprise.
- Excluding that, core earnings missed estimates, slumping 54% to RM86.2m, hurt by start-up costs and depreciation from opening of two new hospitals.
- Revenue grew 12% to RM2.77b on organic growth from existing operations and ramp-up of two new HK and Turkish hospitals, as well as the acquisition of Tokuda and City Clinic in Bulgaria.
- But core EBITDA margin narrowed to 19.3% (-3.1ppt) on higher start-up, operating and staff expenses.
- MKE maintains Hold but cuts TP by 1% to RM6.08.
*Health Management Int'l
- 4QFY17 net profit more than doubled to RM10.6m (+119%) following acquisition of remaining stakes in two key hospitals.
- This brought FY17 core earnings, excluding one-off professional fees and non-operational FX loss, to RM32.1m (+40.3%), meeting expectations.
- Revenue for the quarter climbed 5% to RM111.7m, thanks to higher patient loads (+3.7%) and average outpatient bill sizes (+7.8%), which overcome flat inpatient bills (-0.2%).
- EBITDA margin expanded 3ppt to 21.5%, on lower provision of doubtful debts.
- Bottom line was eroded by a spike in finance cost amid a $53m loan drawdown for the stake acquisitions.
- Last traded at 28.4x FY18e P/E.
*Parkson Retail Asia
- 4QFY17 net loss deepened to $43m from $14.9m last year, partly weighed by impairment charges of $25.7m, which swung FY17 results to net loss of $59.5m (FY16: $30.2m profit).
- On the flipside, quarter revenue rose 17% to $109.6m on higher sales during the Hari Raya festival, underpinned by higher same-store-sales growth in Malaysia (+15%) and Indonesia (+11%), while the Vietnam (-14%) operations deteriorated.
- However, gross merchandise margin narrowed 2.8ppt to 61.9% amid higher provision for inventories.
- No final DPS declared (FY16: 0.5¢).
- Trading at 0.56x P/B.
*ISOTeam
- 4QFY17 net profit tumbled 66.5% to $1.3m, which dragged FY17 earnings to $6.4m (-30.1%).
- Quarter revenue slumped 26.5% to $21.7m on a broad-based decline across all segments on fewer projects.
- Gross margin contracted 4.7ppt to 22.9%.
- Bottom line was further impacted by a 13.2% jump in general and admin expenses due to increased allowance for doubtful receivables from a customer under receivership.
- First and final DPS shaved to 0.65¢ (FY16: 0.75¢).
- Trades at 15.4x historical P/E.
POSITIVE NEWS
*Keppel Corp
- Secured a US$400m contract from Honolulu-based Pasha Hawaii for the construction of two LNG fuelled containerships.
- Delivery of the first vessel expected in 1Q20 and the second vessel in 3Q20.
- This brings its ytd order wins to $823m, down from peak of ~$10b in 2011/2012 and $0.5b in 2016.
*Yangzijiang
- 79.6% owned Jiangsu Yangzijiang Offshore Engineering has set up a 40:60 JVCo, Jiangsu Yangzi Chengkang Marine, with total initial capital of Rmb100m.
- The JV will be involved in steel structure fabrication of steel pipe pile for international seas, port, bridge and offshore projects.
*Boustead Projects
- Secured a design-and-build contract from Yusen Logistics Singapore for the addition of a two-floor ramp-up warehouse on an existing logistics facility in Tuas, with completion in 4Q18.
- This lifted the group's order book to $160m (Jun '17: $137m).
*Ausgroup
- 67% owned JV with Meisei Industrial was awarded a A$165m contract extension for work on the INPEX-operated Ichthys LNG Project by JKC Australia LNG.
- Scope of work includes painting, surface protection, fireproofing and insulation works for the onshore facilities.
NEUTRAL NEWS
*Q&M
- Controlling shareholder Quan Min Holdings acquired 300,000 shares at $0.64321 each on 22 Aug.
- The transaction lifted its stake from 43.92% to 43.946%.
*Aoxin
- Controlling shareholder Quan Min Holdings acquired 98,900 shares at $0.215 each on 22 Aug.
- The transaction lifted its stake from 49.61% to 49.64%.
*Ellipsiz
- CEO Melvin Chan Wai Leong acquired 1.5m shares at $0.7525 each on 22 Aug.
- The transaction lifted his stake from 3.76% to 4.65%.
*Metro
- In preliminary discussions with H-Change Real Estate for a proposed divestment of 30% owned associate Nanchang Top Spring at an undisclosed sum.
Wednesday, August 23, 2017
SG Market (23 Aug 17)
MARKET OVERVIEW
- The market is poised for a minor technical rebound from oversold levels amid cautious sentiment as investors look for potential catalysts ahead of the gathering of central bankers at Jackson Hole tomorrow.
- Technically, the STI remains oversold with underlying support at 3,190 and topside resistance at 3,275.
SECTOR WATCH
*Property
- Former HUDC estate Florence Regency has been put up for collective sale at a reserve price of $600m as the en bloc fever rages on in Singapore.
- With a balance 71-year lease, the 336-unit estate at Hougang Avenue 2 has a site area of 389,236 sf and plot ratio of 2.8, which can support a gross floor area of 1.1m sf or 1,100 homes.
- At the minimum bid price of $600m and estimated differential premium of $249m, the land cost works out to $779 psf ppr, with breakeven of ~$1,200 psf.
- This comes barely a day after Normanton Park launched its $800m en bloc offer, with Park West also mulling a sale.
- So far, there have been seven collective sales worth $2.5b compared to just three for whole of last year, totalling $1b.
CORPORATE RESULTS
*Lum Chang
- FY17 net profit fell 37% to $18.7m, dragged by lower associate income of $1m (FY16: $14.6m) following completion of an EC project last year.
- Revenue slid 13% to $369m on lower contribution from two Malaysian property development projects and completion of certain construction projects.
- Gross margin held steady at 13.5%, while the bottom line was buttressed by a $4.7m disposal gain, $2.9m reduction in fair value loss and absence of a $2.1m asset acquisition stamp duty.
- Final DPS cut to 1.2¢ (4QFY16: 1.25¢), bringing full-year payout to 1.5¢ (FY16: 2¢).
- NAV/share at $0.5791.
*Civmec
- 4QFY17 net profit slumped 35.4% to $1m, pulling down full year earnings to $8.4m (-51.7%).
- For the last quarter revenue grew 10.5% to $97.7m following the commencement of new projects.
- Gross margin held steady at 8.5% (+0.3ppt).
- Bottom line was impacted by higher admin expenses (+40.4%) to secure larger EPC projects, but was partly mitigated by a tax credit of $0.6m (4QFY16: $0.8m expense) on R&D incentives.
- Maintained first and final DPS of 0.7¢.
- NAV/share at $0.3495.
POSITIVE NEWS
*CapitaLand
- Signed agreements to manage Alibaba's Shanghai headquarters and launch an online mall on Lazada Singapore.
- The group will oversee the pre-opening and management of the retail podium and one of the four office towers at the 80,000 sqm gfa Alibaba Shanghai Center in Hongqiao CBD, slated to open in 2018.
- The group will offer a shop-in-shop platform on Lazada.SG that connects its retailers to shoppers both offline and online, complemented by a unique in-mall collection service for online shoppers.
NEUTRAL NEWS
*ComfortDelGro
- Entered exclusive discussions with Uber to form a potential strategic alliance, which could better optimise its fleet and make available its taxis on Uber's ride-hailing app.
- The last-ditch effort comes more than three years after CD's domestic taxi business was disrupted by private car hiring services.
- CD trades at 15x forward P/E and 4.8% dividend yield.
- The market is poised for a minor technical rebound from oversold levels amid cautious sentiment as investors look for potential catalysts ahead of the gathering of central bankers at Jackson Hole tomorrow.
- Technically, the STI remains oversold with underlying support at 3,190 and topside resistance at 3,275.
SECTOR WATCH
*Property
- Former HUDC estate Florence Regency has been put up for collective sale at a reserve price of $600m as the en bloc fever rages on in Singapore.
- With a balance 71-year lease, the 336-unit estate at Hougang Avenue 2 has a site area of 389,236 sf and plot ratio of 2.8, which can support a gross floor area of 1.1m sf or 1,100 homes.
- At the minimum bid price of $600m and estimated differential premium of $249m, the land cost works out to $779 psf ppr, with breakeven of ~$1,200 psf.
- This comes barely a day after Normanton Park launched its $800m en bloc offer, with Park West also mulling a sale.
- So far, there have been seven collective sales worth $2.5b compared to just three for whole of last year, totalling $1b.
CORPORATE RESULTS
*Lum Chang
- FY17 net profit fell 37% to $18.7m, dragged by lower associate income of $1m (FY16: $14.6m) following completion of an EC project last year.
- Revenue slid 13% to $369m on lower contribution from two Malaysian property development projects and completion of certain construction projects.
- Gross margin held steady at 13.5%, while the bottom line was buttressed by a $4.7m disposal gain, $2.9m reduction in fair value loss and absence of a $2.1m asset acquisition stamp duty.
- Final DPS cut to 1.2¢ (4QFY16: 1.25¢), bringing full-year payout to 1.5¢ (FY16: 2¢).
- NAV/share at $0.5791.
*Civmec
- 4QFY17 net profit slumped 35.4% to $1m, pulling down full year earnings to $8.4m (-51.7%).
- For the last quarter revenue grew 10.5% to $97.7m following the commencement of new projects.
- Gross margin held steady at 8.5% (+0.3ppt).
- Bottom line was impacted by higher admin expenses (+40.4%) to secure larger EPC projects, but was partly mitigated by a tax credit of $0.6m (4QFY16: $0.8m expense) on R&D incentives.
- Maintained first and final DPS of 0.7¢.
- NAV/share at $0.3495.
POSITIVE NEWS
*CapitaLand
- Signed agreements to manage Alibaba's Shanghai headquarters and launch an online mall on Lazada Singapore.
- The group will oversee the pre-opening and management of the retail podium and one of the four office towers at the 80,000 sqm gfa Alibaba Shanghai Center in Hongqiao CBD, slated to open in 2018.
- The group will offer a shop-in-shop platform on Lazada.SG that connects its retailers to shoppers both offline and online, complemented by a unique in-mall collection service for online shoppers.
NEUTRAL NEWS
*ComfortDelGro
- Entered exclusive discussions with Uber to form a potential strategic alliance, which could better optimise its fleet and make available its taxis on Uber's ride-hailing app.
- The last-ditch effort comes more than three years after CD's domestic taxi business was disrupted by private car hiring services.
- CD trades at 15x forward P/E and 4.8% dividend yield.
Tuesday, August 22, 2017
SG Market (22 Aug 17)
MARKET OVERVIEW
- The market may range trade as investors look for further direction on global monetary policies ahead of the Jackson Hole meeting of central bankers later this week.
- Technically, the STI is oversold with underlying support at 3,190 and topside resistance at 3,275.
SECTOR WATCH
*Property
- Amid a collective sale fever, 488-unit Normanton Park is making its second stab at selling en bloc with a $800m reserve price.
- This translates to a land cost of $989 psf ppr, which includes a development charge of $225.3m and lease top-up premium of $220.6m.
- The 99-year leasehold site near Kent Ridge Park could potentially be redeveloped into a high-rise development comprising 1,200 new residential units.
- So far, there have been seven collective sales worth $2.5b compared to just three for whole of last year, totalling $1b.
CORPORATE RESULTS
*Oxley
- 4QFY17 net profit plunged 41% to $41.5m on a 50% drop in other gains to $39.3m and associates loss of $6.9m (4QFY16: $27.9m profit). This took FY17 earnings to $218.1m (+6%).
- For the last quarter, revenue jumped 36% to $224.3m from progressive sales recognition of three projects, The Royal Wharf Phase 1A, Floraville/Floraview/Floravista and The Rise @ Oxley-Residences.
- However, gross margin shrank 13.9ppt to 19.9%, impacted by higher funding costs.
- The decline in bottom line was pared by a positive $24m FX swing and higher fair value gains on financial instruments of $4.3m (4QFY16: $14m loss).
- Net gearing stayed at 1.9x q/q.
- Final DPS raised to 0.7¢ (4QFY16: 0.25¢), bringing full-year payout to 1.5¢ (FY16: 1.4¢).
- Trades at 1.5x P/B.
*Spindex Industries
- FY17 net profit surged 38.9% to $14m on operating leverage.
- Revenue grew 14.2% to $141.8m as growth in machinery & automotive systems (+10%) and others (+42%) outweighed a 5% decline in imaging & printing contributions.
- Gross margin held steady at 23%, while bottom line was bolstered by lower opex (-1.1%).
- Increased final DPS to 3¢ (FY16: 2.3¢).
- Trades at 9.6x trailing P/E.
*Ellipsiz
- FY17 net profit fell 11% to $8.5m on impairment loss of $1.5m on a quoted investment.
- Revenue slipped 2% to $116.7m on weaker contributions from distribution & services (-1%) and probe card solutions (-2%).
- Gross margin improved to 36% on a favourable shift in revenue mix.
- Bottom line was impacted by marginal associates/JVs contributions of $0.2m (-80%) as well as a spike in income tax to $3.1m (FY16: $1.4m).
- Declared final DPS of 2¢ (4Q16: 0.8¢) and special DPS of 4.5¢ (4Q16: 1¢), bringing FY17 payout to 6.5¢ (FY16: 2.5¢).
- Proposed to dispose its probe card solutions business to Japanese manufacturer Nidec for US$65m ($88.3m) or 1.34x P/B.
- If approved, the sale will lift cash hoard to $140.9m, or 27% above its market cap of $111.1m ($0.63/share).
- Trades at 13.1x historical P/E.
POSITIVE NEWS
*The Trendlines
- Set up 51:49 Shanghai-based JVCo, China-Israel New Trend (Taizhou) Medical Technology, with Chinese PE firm Shousan Wealth.
- Plans to raise venture funds to help provide manufacturing and commercialisation support services in China to selected medical companies, both within and outside the group's portfolio.
- Required to establish the venture capital fund within 180 days or else the JV agreement may be terminated.
NEUTRAL NEWS
*Yoma
- Substantial shareholder Aberdeen acquired 8.2m shares at $0.5675 each via the open market on 18 Aug.
- This raised its stake from 9.5662% to 10.0383%.
- At last close, Yoma is valued at 1.5x P/B.
*CapitaLand
- Pared its stake in four wholly owned Vietnamese entities to 40% for US$157m ($213m) through an issue of new units.
- The entities will undertake a commercial development project in Vietnam.
*TSH Corp
- Entered non-binding term sheet with controlling shareholder Teo Kok Woon and another vendor Margaret Louise Batchelor for the proposed acquisition of four commercial properties in Brisbane, Australia, which caters to the beauty and wellness industry.
- Total purchase consideration is A$8m, including $5.2m of outstanding loans, and will be satisfied via new shares at $0.035 each.
*CWG Int'l
- Acquired a 40,612 sqm plot of land with plot ratio of 2:1, in Changsha City, Jiangsu, China for Rmb454m.
- The acquisition is part of efforts to build up its land bank in Tier-3 cities, which are seeing high sales turnover.
- Development of the land parcel is not expected to be completed before 2019.
*DiSa
- Updated that its Point-of-Sale Activation Solution will be used for undisclosed top-rated GPS and navigation products in Wal-Mart stores.
*EnGro
- 98.6% owned unit has formed a 60:40 JV with Omni-Plus System to manufacture and distribute thermoplastic compounds to serve the automotive industry in the Asia ex-China market.
- The market may range trade as investors look for further direction on global monetary policies ahead of the Jackson Hole meeting of central bankers later this week.
- Technically, the STI is oversold with underlying support at 3,190 and topside resistance at 3,275.
SECTOR WATCH
*Property
- Amid a collective sale fever, 488-unit Normanton Park is making its second stab at selling en bloc with a $800m reserve price.
- This translates to a land cost of $989 psf ppr, which includes a development charge of $225.3m and lease top-up premium of $220.6m.
- The 99-year leasehold site near Kent Ridge Park could potentially be redeveloped into a high-rise development comprising 1,200 new residential units.
- So far, there have been seven collective sales worth $2.5b compared to just three for whole of last year, totalling $1b.
CORPORATE RESULTS
*Oxley
- 4QFY17 net profit plunged 41% to $41.5m on a 50% drop in other gains to $39.3m and associates loss of $6.9m (4QFY16: $27.9m profit). This took FY17 earnings to $218.1m (+6%).
- For the last quarter, revenue jumped 36% to $224.3m from progressive sales recognition of three projects, The Royal Wharf Phase 1A, Floraville/Floraview/Floravista and The Rise @ Oxley-Residences.
- However, gross margin shrank 13.9ppt to 19.9%, impacted by higher funding costs.
- The decline in bottom line was pared by a positive $24m FX swing and higher fair value gains on financial instruments of $4.3m (4QFY16: $14m loss).
- Net gearing stayed at 1.9x q/q.
- Final DPS raised to 0.7¢ (4QFY16: 0.25¢), bringing full-year payout to 1.5¢ (FY16: 1.4¢).
- Trades at 1.5x P/B.
*Spindex Industries
- FY17 net profit surged 38.9% to $14m on operating leverage.
- Revenue grew 14.2% to $141.8m as growth in machinery & automotive systems (+10%) and others (+42%) outweighed a 5% decline in imaging & printing contributions.
- Gross margin held steady at 23%, while bottom line was bolstered by lower opex (-1.1%).
- Increased final DPS to 3¢ (FY16: 2.3¢).
- Trades at 9.6x trailing P/E.
*Ellipsiz
- FY17 net profit fell 11% to $8.5m on impairment loss of $1.5m on a quoted investment.
- Revenue slipped 2% to $116.7m on weaker contributions from distribution & services (-1%) and probe card solutions (-2%).
- Gross margin improved to 36% on a favourable shift in revenue mix.
- Bottom line was impacted by marginal associates/JVs contributions of $0.2m (-80%) as well as a spike in income tax to $3.1m (FY16: $1.4m).
- Declared final DPS of 2¢ (4Q16: 0.8¢) and special DPS of 4.5¢ (4Q16: 1¢), bringing FY17 payout to 6.5¢ (FY16: 2.5¢).
- Proposed to dispose its probe card solutions business to Japanese manufacturer Nidec for US$65m ($88.3m) or 1.34x P/B.
- If approved, the sale will lift cash hoard to $140.9m, or 27% above its market cap of $111.1m ($0.63/share).
- Trades at 13.1x historical P/E.
POSITIVE NEWS
*The Trendlines
- Set up 51:49 Shanghai-based JVCo, China-Israel New Trend (Taizhou) Medical Technology, with Chinese PE firm Shousan Wealth.
- Plans to raise venture funds to help provide manufacturing and commercialisation support services in China to selected medical companies, both within and outside the group's portfolio.
- Required to establish the venture capital fund within 180 days or else the JV agreement may be terminated.
NEUTRAL NEWS
*Yoma
- Substantial shareholder Aberdeen acquired 8.2m shares at $0.5675 each via the open market on 18 Aug.
- This raised its stake from 9.5662% to 10.0383%.
- At last close, Yoma is valued at 1.5x P/B.
*CapitaLand
- Pared its stake in four wholly owned Vietnamese entities to 40% for US$157m ($213m) through an issue of new units.
- The entities will undertake a commercial development project in Vietnam.
*TSH Corp
- Entered non-binding term sheet with controlling shareholder Teo Kok Woon and another vendor Margaret Louise Batchelor for the proposed acquisition of four commercial properties in Brisbane, Australia, which caters to the beauty and wellness industry.
- Total purchase consideration is A$8m, including $5.2m of outstanding loans, and will be satisfied via new shares at $0.035 each.
*CWG Int'l
- Acquired a 40,612 sqm plot of land with plot ratio of 2:1, in Changsha City, Jiangsu, China for Rmb454m.
- The acquisition is part of efforts to build up its land bank in Tier-3 cities, which are seeing high sales turnover.
- Development of the land parcel is not expected to be completed before 2019.
*DiSa
- Updated that its Point-of-Sale Activation Solution will be used for undisclosed top-rated GPS and navigation products in Wal-Mart stores.
*EnGro
- 98.6% owned unit has formed a 60:40 JV with Omni-Plus System to manufacture and distribute thermoplastic compounds to serve the automotive industry in the Asia ex-China market.
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