Merry Xmas & a Happy New Year.
Sharing will resume on 2 Jan 2018.
Wednesday, December 20, 2017
Tuesday, December 19, 2017
SG Market (19 Dec 17)
MARKET OVERVIEW
- Risk-on mood could spill over to the SG market, on optimism that the US tax bill could be passed in the near term.
- Technically, the STI sees downside support at 3,390, with upside resistance at 3,475.
SECTOR WATCH
*Aviation
- Singapore Changi Airport welcomed a record 60m passengers ytd, surpassing 2016's 58.7m.
- This would be positive for airport operator SATS.
POSITIVE NEWS
*Keppel Corp
- Acquiring two prime sites (13ha & 6ha) in Ho Chi Minh City to build 1,549 homes with total development cost of US$297m.
- One 13-ha site in the city south will be developed into 220 landed homes and a 1.029-unit condominium with GFA of 36,110 sqm and 141,540 sqm respectively and will cost US$235m.
- The other 6-ha plot located in District 9 will have 300 homes with GFA of 55,000 sqm, costing US$62m.
- The two projects add to its pipeline of over 20,000 homes in Vietnam.
- The group sold 1,010 homes in 9M17, four times the number it sold in the same period last year, and has received positive response for Tilia Residences, Phase 2 of Empre City, which was launched un Julu and has sold more than 90% out of 472 units launched as at Sep.
- Last traded at 15.1x forward P/E.
*Citic Envirotech
- Secured an EPC contract worth Rmb130m in Xiangban City, Fujian Province, China.
- The project involves the upgrading and expansion of an existing conventional wastewater treatment plant by 12.5% to 90,000 m3/day, and improving water quality to Grade 1A from 1B, and is slated to be completed by Jun '18.
- Trades at 17.1x forward P/E.
*Oxley
- Updated that its Royal Wharf project in UK achieved its 1,000-unit handover milestone.
- The 3,385-unit development is ~90% sold and Oxley expects to hand over another 400 units by 30 Jun '18.
- Trades at 25% discount to its RNAV/share at $0.84.
*Jumbo
- Entered franchise agreement with Ho Sing Food to establish and operate JUMBO Seafood restaurants in Taiwan.
- The franchise agreement has an initial term of 10 years, with the franchisee targeting eight outlets across Taiwan.
- The group also updated that its first JUMBO Seafood outlet in Taiwan was opened three days back.
- Trades at 21.3x forward P/E.
*MindChamps
- Signed master franchise agreement with Evergrande Group in Vietnam to open 20 PreSchool and Reading centres in the country.
- Trades at FY16 P/E of 29.9x.
*Vard
- Secured a NOK2.7b contract for the design and construction of one luxury polar expedition cruise vessel for French cruise company PONANT.
- The hull will be built at Vard Tulcea in Romania, with delivery scheduled in 2Q21 from Vard Søviknes in Norway.
- Last traded at 0.82x P/B.
*ASTI
- Entered term sheet to dispose five of its wholly-owned subsidiaries (known as STI Group) to Shanghai Pudong Science and Technology, for $100m collectively.
- The sale price is subject to net debt and net working capital adjustments, and both parties have 60 days exclusivity period for negotiation.
- At $0.088, ASTI has a market cap of $60m and trades at 51.8x forward P/E and 0.93x P/B.
NEGATIVE NEWS
*China Sports International
- Received statutory demand from legal advisor RHT Corporate Advisory in relation to the group's outstanding professional fee of $0.051m.
- RHT may commence winding up proceedings against the group if it fails to pay the due payment within three weeks.
*First Ship Lease Trust
- In negotiations with lenders of its US$480m term syndicated loan facility to extend the maturity date by one year.
- The group currently has US$165.6m outstanding loan under the syndicated loan facility.
- While majority of the lenders have indicated their support for the extension, consensus from all lenders is required for the approval.
- Last traded at 0.19x P/B.
NEUTRAL NEWS
*Olam
- Issued 698,991 new shares in relation to a warrant exercise at US$1.09 each.
- 55m outstanding warrants remains, which expires on 29 Jan 2018.
- Risk-on mood could spill over to the SG market, on optimism that the US tax bill could be passed in the near term.
- Technically, the STI sees downside support at 3,390, with upside resistance at 3,475.
SECTOR WATCH
*Aviation
- Singapore Changi Airport welcomed a record 60m passengers ytd, surpassing 2016's 58.7m.
- This would be positive for airport operator SATS.
POSITIVE NEWS
*Keppel Corp
- Acquiring two prime sites (13ha & 6ha) in Ho Chi Minh City to build 1,549 homes with total development cost of US$297m.
- One 13-ha site in the city south will be developed into 220 landed homes and a 1.029-unit condominium with GFA of 36,110 sqm and 141,540 sqm respectively and will cost US$235m.
- The other 6-ha plot located in District 9 will have 300 homes with GFA of 55,000 sqm, costing US$62m.
- The two projects add to its pipeline of over 20,000 homes in Vietnam.
- The group sold 1,010 homes in 9M17, four times the number it sold in the same period last year, and has received positive response for Tilia Residences, Phase 2 of Empre City, which was launched un Julu and has sold more than 90% out of 472 units launched as at Sep.
- Last traded at 15.1x forward P/E.
*Citic Envirotech
- Secured an EPC contract worth Rmb130m in Xiangban City, Fujian Province, China.
- The project involves the upgrading and expansion of an existing conventional wastewater treatment plant by 12.5% to 90,000 m3/day, and improving water quality to Grade 1A from 1B, and is slated to be completed by Jun '18.
- Trades at 17.1x forward P/E.
*Oxley
- Updated that its Royal Wharf project in UK achieved its 1,000-unit handover milestone.
- The 3,385-unit development is ~90% sold and Oxley expects to hand over another 400 units by 30 Jun '18.
- Trades at 25% discount to its RNAV/share at $0.84.
*Jumbo
- Entered franchise agreement with Ho Sing Food to establish and operate JUMBO Seafood restaurants in Taiwan.
- The franchise agreement has an initial term of 10 years, with the franchisee targeting eight outlets across Taiwan.
- The group also updated that its first JUMBO Seafood outlet in Taiwan was opened three days back.
- Trades at 21.3x forward P/E.
*MindChamps
- Signed master franchise agreement with Evergrande Group in Vietnam to open 20 PreSchool and Reading centres in the country.
- Trades at FY16 P/E of 29.9x.
*Vard
- Secured a NOK2.7b contract for the design and construction of one luxury polar expedition cruise vessel for French cruise company PONANT.
- The hull will be built at Vard Tulcea in Romania, with delivery scheduled in 2Q21 from Vard Søviknes in Norway.
- Last traded at 0.82x P/B.
*ASTI
- Entered term sheet to dispose five of its wholly-owned subsidiaries (known as STI Group) to Shanghai Pudong Science and Technology, for $100m collectively.
- The sale price is subject to net debt and net working capital adjustments, and both parties have 60 days exclusivity period for negotiation.
- At $0.088, ASTI has a market cap of $60m and trades at 51.8x forward P/E and 0.93x P/B.
NEGATIVE NEWS
*China Sports International
- Received statutory demand from legal advisor RHT Corporate Advisory in relation to the group's outstanding professional fee of $0.051m.
- RHT may commence winding up proceedings against the group if it fails to pay the due payment within three weeks.
*First Ship Lease Trust
- In negotiations with lenders of its US$480m term syndicated loan facility to extend the maturity date by one year.
- The group currently has US$165.6m outstanding loan under the syndicated loan facility.
- While majority of the lenders have indicated their support for the extension, consensus from all lenders is required for the approval.
- Last traded at 0.19x P/B.
NEUTRAL NEWS
*Olam
- Issued 698,991 new shares in relation to a warrant exercise at US$1.09 each.
- 55m outstanding warrants remains, which expires on 29 Jan 2018.
Monday, December 18, 2017
SG Market (18 Dec 17)
MARKET OVERVIEW
- The market could trudge higher this week as key lawmakers pledged support for the US tax cut bill, bringing it a step closer for President Trump to sign it into law before Christmas.
- Technically, the STI sees downside support at 3,390, with upside resistance at 3,475.
SECTOR WATCH
*Property
- Developers moved 785 new homes in Nov (-8.7% y/y, +3.6% m/m) on fewer sale launches.
- Including ECs, 933 units were sold (-16% y/y, -3.7% m/m).
- The slower sales were in line with MKE expectations that developers would hold back launches in a bid to raise prices to maximise returns.
- We are Positive on the property developers and maintain UOL (TP: $9.80) as the top pick, along with City Dev (TP: $13.60), GuocoLand (TP: $2.90) and Bukit Sembawang (TP: $8.25).
*Banks
- MAS has introduced The Credit Limit Management Measure, which will take effect on 1 Jan 2018.
- The new rule to encourage financial prudence will cap additional unsecured credit for individuals whose outstanding unsecured debts exceed 6x monthly income.
- Impact is minimal as consumer credit formed less than 8.8% of total loans.
- MKE remains Neutral on the sector and prefer UOB (Buy, TP $27.10) over DBS (Hold, TP $22.75) and OCBC (Hold, TP $12.00).
POSITIVE NEWS
*SIA
- Nov group passenger load factor climbed to 80.7% (+3.5ppt) as traffic growth (+7.6%) outpaced capacity expansion (+3%).
- Cargo load factor rose 4ppt to 70.4% on higher traffic (+7.1%) due to improving regional demand.
- Subsidiary carriers SilkAir (+3.3ppt to 73.9%) and Scoot (+5.2ppt to 86.3%) also notched better load factors.
- Parent airline load factor rose 3.1ppt to 80%, on improvement across routes to East Asia (+4ppt), Americas (+3.3ppt), Europe (+1.9ppt), South West Pacific (+3.9ppt), West Asia and Africa (+1.6ppt).
- Last traded at 21.8x forward P/E and 0.92x P/B.
*Starhub
- Acquiring enterprise solutions provider D'Crypt for up to $122m, to enhance its capabilities in cyber security and Internet of Things.
- D' Çrypt engages in cryptographic technology and specialises in encrypted communications, high performance computing, secure IoT and vulnerability and threat analysis.
- It serves clients in the military, security and government sectors.
- The purchase will be conducted in 2 tranches - 65% stake by Feb '18 on milestone achievements and the remaining 35% in 1H21 upon meeting profitability thresholds.
- Trades at 17.9x forward P/E and offers 5.8% indicative yield.
*CapitaLand
- Serviced residence unit, The Ascott, has secured contracts to manage two properties in the heart of Accra in its first foray into Africa.
- The 220-unit Ascott 1 Oxford Street Accra will open in phases from 2019, while the 40-unit Kwarleyz Residence will open in 4Q 2018.
- Ascott added a record of over 21,000 units in 18 new cities across nine countries in 2017.
*Cityneon
- Entered a non-binding term sheet to acquire Scorpio East Properties from SGX-listed KOP for $2.9m.
- Scorpio East owns a leasehold property at 25 Tai Seng Ave with a lot area of 2,571 sqm.
- The group intends to use the building to expand its office space as a creative design suite, as well as derive rental revenue from remaining units.
- The group is also seeking future collaboration with KOP for its expansion in the entertainment and media industry.
- Upon completion, FY16 pro forma EPS is expected to rise 4.3% to 2.92¢.
- Separately, Cityneon signed a term sheet with South Korean firm Fabulous Inc to set up an interactive, exterior digital media signage board at Cityneon's Las Vegas Marvel's Avengers S.T.A.T.I.O.N. exhibition at Treasure Island.
NEGATIVE NEWS
*GKE
- To divest its entire 50% stake in JVCo Ocean Latitude for US$1.1m.
- The JVCo owns a liquefied gas carrier vessel and will be disposed due to the challenging operating environment.
- GKE's shareholder loan of US$4.4m will be repaid in four quarterly instalments upon completion.
- The group will incur a net loss of $6.9m from the divestment.
- Loss-making and trades at 0.75x P/B.
NEUTRAL NEWS
*Clearbridge Health
- Healthcare company will make its trading debut on SGX Catalist board at 9am today.
- IPO of 88m shares solely comprises a placement tranche at $0.28 each.
- Substantial investors include Coop International and two individuals.
- Net proceeds of $21.4m will be used for the expansion of its medical clinics business and group laboratory test unit, as well as for working capital purposes.
- The market could trudge higher this week as key lawmakers pledged support for the US tax cut bill, bringing it a step closer for President Trump to sign it into law before Christmas.
- Technically, the STI sees downside support at 3,390, with upside resistance at 3,475.
SECTOR WATCH
*Property
- Developers moved 785 new homes in Nov (-8.7% y/y, +3.6% m/m) on fewer sale launches.
- Including ECs, 933 units were sold (-16% y/y, -3.7% m/m).
- The slower sales were in line with MKE expectations that developers would hold back launches in a bid to raise prices to maximise returns.
- We are Positive on the property developers and maintain UOL (TP: $9.80) as the top pick, along with City Dev (TP: $13.60), GuocoLand (TP: $2.90) and Bukit Sembawang (TP: $8.25).
*Banks
- MAS has introduced The Credit Limit Management Measure, which will take effect on 1 Jan 2018.
- The new rule to encourage financial prudence will cap additional unsecured credit for individuals whose outstanding unsecured debts exceed 6x monthly income.
- Impact is minimal as consumer credit formed less than 8.8% of total loans.
- MKE remains Neutral on the sector and prefer UOB (Buy, TP $27.10) over DBS (Hold, TP $22.75) and OCBC (Hold, TP $12.00).
POSITIVE NEWS
*SIA
- Nov group passenger load factor climbed to 80.7% (+3.5ppt) as traffic growth (+7.6%) outpaced capacity expansion (+3%).
- Cargo load factor rose 4ppt to 70.4% on higher traffic (+7.1%) due to improving regional demand.
- Subsidiary carriers SilkAir (+3.3ppt to 73.9%) and Scoot (+5.2ppt to 86.3%) also notched better load factors.
- Parent airline load factor rose 3.1ppt to 80%, on improvement across routes to East Asia (+4ppt), Americas (+3.3ppt), Europe (+1.9ppt), South West Pacific (+3.9ppt), West Asia and Africa (+1.6ppt).
- Last traded at 21.8x forward P/E and 0.92x P/B.
*Starhub
- Acquiring enterprise solutions provider D'Crypt for up to $122m, to enhance its capabilities in cyber security and Internet of Things.
- D' Çrypt engages in cryptographic technology and specialises in encrypted communications, high performance computing, secure IoT and vulnerability and threat analysis.
- It serves clients in the military, security and government sectors.
- The purchase will be conducted in 2 tranches - 65% stake by Feb '18 on milestone achievements and the remaining 35% in 1H21 upon meeting profitability thresholds.
- Trades at 17.9x forward P/E and offers 5.8% indicative yield.
*CapitaLand
- Serviced residence unit, The Ascott, has secured contracts to manage two properties in the heart of Accra in its first foray into Africa.
- The 220-unit Ascott 1 Oxford Street Accra will open in phases from 2019, while the 40-unit Kwarleyz Residence will open in 4Q 2018.
- Ascott added a record of over 21,000 units in 18 new cities across nine countries in 2017.
*Cityneon
- Entered a non-binding term sheet to acquire Scorpio East Properties from SGX-listed KOP for $2.9m.
- Scorpio East owns a leasehold property at 25 Tai Seng Ave with a lot area of 2,571 sqm.
- The group intends to use the building to expand its office space as a creative design suite, as well as derive rental revenue from remaining units.
- The group is also seeking future collaboration with KOP for its expansion in the entertainment and media industry.
- Upon completion, FY16 pro forma EPS is expected to rise 4.3% to 2.92¢.
- Separately, Cityneon signed a term sheet with South Korean firm Fabulous Inc to set up an interactive, exterior digital media signage board at Cityneon's Las Vegas Marvel's Avengers S.T.A.T.I.O.N. exhibition at Treasure Island.
NEGATIVE NEWS
*GKE
- To divest its entire 50% stake in JVCo Ocean Latitude for US$1.1m.
- The JVCo owns a liquefied gas carrier vessel and will be disposed due to the challenging operating environment.
- GKE's shareholder loan of US$4.4m will be repaid in four quarterly instalments upon completion.
- The group will incur a net loss of $6.9m from the divestment.
- Loss-making and trades at 0.75x P/B.
NEUTRAL NEWS
*Clearbridge Health
- Healthcare company will make its trading debut on SGX Catalist board at 9am today.
- IPO of 88m shares solely comprises a placement tranche at $0.28 each.
- Substantial investors include Coop International and two individuals.
- Net proceeds of $21.4m will be used for the expansion of its medical clinics business and group laboratory test unit, as well as for working capital purposes.
Friday, December 15, 2017
SG Market (15 Dec 17)
MARKET OVERVIEW
- Mounting worries of a delay on the US tax bill could cap any upside on the SG market, as profit-taking activity continues amid lower liquidity towards the end of the year.
- Technically, the STI is trading just above its near-term support at 3,430 (20-dma), with the next at 3,390. Upside resistance remains at 3,475.
SECTOR WATCH
*Telecom
- Over the past weeks the Apple Store order status for the iPhone X has gone from a 3-4 week wait to available for pick-up today.
- There has yet to be indications on incumbents' re-contracting efforts, and could be an upside risk to MKE's FY17E forecasts.
- Still, the negative view on the domestic telecom space is predicated on the thesis that the incumbents would become more aggressive with handset subsidies to re-contract postpaid subscribers before TPG Telecom gets off the ground.
- MKE has Sells on both M1 (TP $1.59) and StarHub (TP $2.17), with a Hold rating on Singtel (TP $3.87).
POSITIVE NEWS
*Frasers Commercial Trust (FCOT)
- 50:50 JV with Frasers Centrepoint to acquire Farnborough Business Park (FBP) in the UK for £174.6m.
- The 46.5 ha freehold business park in the west of London has a total net lettable area of 555,000 sf with WALE of 8.3 years and 98.1% occupancy.
- Accordingly, FCOT will expand its investment mandate to Europe, beyond existing markets Singapore and Australia.
- The REIT offers an indicative yield of 6.7% and trades at 0.9x P/B.
*Oxley
- Made three property acquisitions totalling $1.09b.
- Deals include a CBD commercial building Chevron House ($660m, or $2,526 psf), the collective sale of residential development Vista Park ($418m, or $1,096 psf ppr) and a stake in a residential project in Dong Nai province in Vietnam ($16.2m).
- Oxley trades at 1.81x P/B.
NEUTRAL NEWS
*TMC Education
- Mandatory unconditional cash offer at 6.75¢/share, following a management stake buyout of 51% by hotelier and property magnate Koh Wee Meng.
- The offer price is final and the offeror intends to maintain the listing of the education provider.
- Firm is loss-making and the offer price translates to 0.89x P/B.
*Zhongmin Baihui Retail
- Diluting its stake in a 51% JV which will operate and manage the retail component at Changsha Mingfa International City in China.
- Group formed a separate 48:52 JV with Chongqing Sasseur Outlets Commercial Management, to take over its earlier 51% stake for Rmb9.5m.
- The move reduces its effective stake to 24.5%.
- Operations at the 200,000 sqm gfa shopping centre is expected to commence by end-2018.
- Last traded at 14.8x trailing P/E.
*Viva Industrial Trust
- The right of first refusal granted by Kim Seng Holdings (KSH) to income-producing properties has ended, following its cessation as a shareholder in the REIT manager.
- Offers an attractive 7.9% indicative yield and valued at 1.2x P/B.
- Mounting worries of a delay on the US tax bill could cap any upside on the SG market, as profit-taking activity continues amid lower liquidity towards the end of the year.
- Technically, the STI is trading just above its near-term support at 3,430 (20-dma), with the next at 3,390. Upside resistance remains at 3,475.
SECTOR WATCH
*Telecom
- Over the past weeks the Apple Store order status for the iPhone X has gone from a 3-4 week wait to available for pick-up today.
- There has yet to be indications on incumbents' re-contracting efforts, and could be an upside risk to MKE's FY17E forecasts.
- Still, the negative view on the domestic telecom space is predicated on the thesis that the incumbents would become more aggressive with handset subsidies to re-contract postpaid subscribers before TPG Telecom gets off the ground.
- MKE has Sells on both M1 (TP $1.59) and StarHub (TP $2.17), with a Hold rating on Singtel (TP $3.87).
POSITIVE NEWS
*Frasers Commercial Trust (FCOT)
- 50:50 JV with Frasers Centrepoint to acquire Farnborough Business Park (FBP) in the UK for £174.6m.
- The 46.5 ha freehold business park in the west of London has a total net lettable area of 555,000 sf with WALE of 8.3 years and 98.1% occupancy.
- Accordingly, FCOT will expand its investment mandate to Europe, beyond existing markets Singapore and Australia.
- The REIT offers an indicative yield of 6.7% and trades at 0.9x P/B.
*Oxley
- Made three property acquisitions totalling $1.09b.
- Deals include a CBD commercial building Chevron House ($660m, or $2,526 psf), the collective sale of residential development Vista Park ($418m, or $1,096 psf ppr) and a stake in a residential project in Dong Nai province in Vietnam ($16.2m).
- Oxley trades at 1.81x P/B.
NEUTRAL NEWS
*TMC Education
- Mandatory unconditional cash offer at 6.75¢/share, following a management stake buyout of 51% by hotelier and property magnate Koh Wee Meng.
- The offer price is final and the offeror intends to maintain the listing of the education provider.
- Firm is loss-making and the offer price translates to 0.89x P/B.
*Zhongmin Baihui Retail
- Diluting its stake in a 51% JV which will operate and manage the retail component at Changsha Mingfa International City in China.
- Group formed a separate 48:52 JV with Chongqing Sasseur Outlets Commercial Management, to take over its earlier 51% stake for Rmb9.5m.
- The move reduces its effective stake to 24.5%.
- Operations at the 200,000 sqm gfa shopping centre is expected to commence by end-2018.
- Last traded at 14.8x trailing P/E.
*Viva Industrial Trust
- The right of first refusal granted by Kim Seng Holdings (KSH) to income-producing properties has ended, following its cessation as a shareholder in the REIT manager.
- Offers an attractive 7.9% indicative yield and valued at 1.2x P/B.
Thursday, December 14, 2017
SG Market (14 Dec 17)
MARKET OVERVIEW
- The 25bps interest rate hike by the Fed was in line with expectations, while the dovish statement by Fed chief Janet Yellen could encourage some risk-taking in hopes of a stronger Capricorn effect.
- Technically, the STI is approaching the upper end of its uptrend channel at 3,475, with underlying support at 3,390.
SECTOR WATCH
*Property
- Collective sales maintain its strong momentum with hotly-contested tenders at two private residential developments Derby Court and Parkway Mansion.
- Derby Court saw a top bid of $73.9m ($1,390 psf ppr) from Roxy-Pacific, amongst seven bidders, 19% above owners' reserve price.
- Parkway Mansions' sale price of $147m ($1,536 psf ppr) was 6.5% above the guide price, and was sold to a consortium led by privately-owned Sustained Land.
- MKE maintains positive on the property developers and reiterates UOL (TP: $9.80) as its top pick, along with City Dev (TP: $13.60), GuocoLand (TP: $2.90) and Bukit Sembawang (TP: $8.25).
POSITIVE NEWS
*Singtel
- 36.5% owned Bharti Airtel is divesting 20% stake in wholly-owned pay TV operator Bharti Telemedia for US$350m to global PE firm Warburg Pincus.
- Bharti Telemedia is one of the largest direct-to-home paid TV service providers in India, with 14m subscribers and ~US$550m in annual revenue.
- The move frees up capital to bolster its balance sheet.
- Singtel offers 4.6% indicative yield and trades at 27.7x forward P/E.
*Roxy-Pacific
- Top bidder for the collective sale tender of freehold residential development Derby Court in Novena, Singapore, for $73.9m.
- The site has a land area of 18,506 sf and gross plot ratio of 2.872, which translates to $1,390 psf ppr.
- Trades at 1.3x P/B.
*SIIC Environment
- 91.2% owned subsidiary was awarded the HuangQiao Industrial BOT wasterwater treatment project in Taixin City, Jiangsu Province in China.
- The plant has a design capacity of 20,000 tpd and a base tariff of Rmb5.83/ton, with a concessionary period of 30 years.
- Project also includes a reclaimed water facility with a design capacity of 6,000 tpd and tariff of Rmb2.5/ton.
- The project will have an initial guaranteed minimum treatment volume of 17,000 tpd and subsequently increased to 20,000 tpd in the fourth year onwards.
*GSS Energy
- Struck oil in its Trembul operating area in Central Java, Indonesia.
- At a depth of 1,255 metres, eight columns of hydrocarbon (2 gas and 6 oil zones) bearing sandstone reservoir with 37m of total net pay zone were confirmed.
- Indo state-owned energy firm Pertamina, which holds an 11% economic interest in the site, has agreed to commence commercialisation of the gas zones.
- Management hopes to produce ~200 barrels of oil per day by 3Q18.
- Trades at 12.8x trailing P/E.
*CWG International
- 95.8%-owned Bluesky Parramatta is disposing a land plot at 14-20 Parkes Street Harris Park, Australia, for A$40m.
- Total land area of the plot is 2,878 sqm, with a plot ratio of 8:1.
- The sale would result in an estimated gain of A$9m.
- Trades at 3.8x trailing P/E and 0.64x P/B.
NEUTRAL NEWS
*Asiaphos
- Ceased operations at Feng Tai mine after its exploration licence expired on 12 Dec.
- The group has submitted an application for the licence renewal.
*Far East Group
- To dispose a warehouse and land located at 13th Mile Sungai Besi Road in Selangor, Malaysia, for RM11.5m.
- Upon completion, disposal gain of $2.5m is expected, with FY16 pro forma NTA/share to rise 12% to $0.2115.
*Olam
- Issued 264,642 new shares in relation to a warrant exercise at US$1.09 each.
- 55.7m outstanding warrants remains, which expires on 29 Jan 2018.
- The 25bps interest rate hike by the Fed was in line with expectations, while the dovish statement by Fed chief Janet Yellen could encourage some risk-taking in hopes of a stronger Capricorn effect.
- Technically, the STI is approaching the upper end of its uptrend channel at 3,475, with underlying support at 3,390.
SECTOR WATCH
*Property
- Collective sales maintain its strong momentum with hotly-contested tenders at two private residential developments Derby Court and Parkway Mansion.
- Derby Court saw a top bid of $73.9m ($1,390 psf ppr) from Roxy-Pacific, amongst seven bidders, 19% above owners' reserve price.
- Parkway Mansions' sale price of $147m ($1,536 psf ppr) was 6.5% above the guide price, and was sold to a consortium led by privately-owned Sustained Land.
- MKE maintains positive on the property developers and reiterates UOL (TP: $9.80) as its top pick, along with City Dev (TP: $13.60), GuocoLand (TP: $2.90) and Bukit Sembawang (TP: $8.25).
POSITIVE NEWS
*Singtel
- 36.5% owned Bharti Airtel is divesting 20% stake in wholly-owned pay TV operator Bharti Telemedia for US$350m to global PE firm Warburg Pincus.
- Bharti Telemedia is one of the largest direct-to-home paid TV service providers in India, with 14m subscribers and ~US$550m in annual revenue.
- The move frees up capital to bolster its balance sheet.
- Singtel offers 4.6% indicative yield and trades at 27.7x forward P/E.
*Roxy-Pacific
- Top bidder for the collective sale tender of freehold residential development Derby Court in Novena, Singapore, for $73.9m.
- The site has a land area of 18,506 sf and gross plot ratio of 2.872, which translates to $1,390 psf ppr.
- Trades at 1.3x P/B.
*SIIC Environment
- 91.2% owned subsidiary was awarded the HuangQiao Industrial BOT wasterwater treatment project in Taixin City, Jiangsu Province in China.
- The plant has a design capacity of 20,000 tpd and a base tariff of Rmb5.83/ton, with a concessionary period of 30 years.
- Project also includes a reclaimed water facility with a design capacity of 6,000 tpd and tariff of Rmb2.5/ton.
- The project will have an initial guaranteed minimum treatment volume of 17,000 tpd and subsequently increased to 20,000 tpd in the fourth year onwards.
*GSS Energy
- Struck oil in its Trembul operating area in Central Java, Indonesia.
- At a depth of 1,255 metres, eight columns of hydrocarbon (2 gas and 6 oil zones) bearing sandstone reservoir with 37m of total net pay zone were confirmed.
- Indo state-owned energy firm Pertamina, which holds an 11% economic interest in the site, has agreed to commence commercialisation of the gas zones.
- Management hopes to produce ~200 barrels of oil per day by 3Q18.
- Trades at 12.8x trailing P/E.
*CWG International
- 95.8%-owned Bluesky Parramatta is disposing a land plot at 14-20 Parkes Street Harris Park, Australia, for A$40m.
- Total land area of the plot is 2,878 sqm, with a plot ratio of 8:1.
- The sale would result in an estimated gain of A$9m.
- Trades at 3.8x trailing P/E and 0.64x P/B.
NEUTRAL NEWS
*Asiaphos
- Ceased operations at Feng Tai mine after its exploration licence expired on 12 Dec.
- The group has submitted an application for the licence renewal.
*Far East Group
- To dispose a warehouse and land located at 13th Mile Sungai Besi Road in Selangor, Malaysia, for RM11.5m.
- Upon completion, disposal gain of $2.5m is expected, with FY16 pro forma NTA/share to rise 12% to $0.2115.
*Olam
- Issued 264,642 new shares in relation to a warrant exercise at US$1.09 each.
- 55.7m outstanding warrants remains, which expires on 29 Jan 2018.
Wednesday, December 13, 2017
SG Market (13 Dec 17)
MARKET OVERVIEW
- Stock prices could nudge higher as Wall Street pushed to fresh records from banking gains but sentiment remained wary of the impending Fed rate hike tonight and signs of more tightening in 2018 as well as upcoming policy stance of ECB at a central bank meeting on Thu.
- Technically, the STI is approaching the upper end of its uptrend channel at 3,475, with underlying support at 3,390.
MACRO WATCH
*Economy
- Retail sales dipped 0.1% (est: +1%) in Oct, marking its second straight decline in seven months, on weaker takings from computer & telecom equipment (-23.4%) and food retailers (-3.9%).
- Stripping out motor vehicles, consumer spending grew a slower 0.8% against 3.3% expansion in Sep.
- Bright spots were in supermarkets (+7.2%), which bodes well for Dairy Farm and Sheng Siong.
CORPORATE RESULTS
*Vibrant Group
- 2QFY18 net profit plunged 60% to $3.6m due to a higher cost base from the consolidation of Blackgold Int'l as well as absence of disposal gain and lower fair value gains.
- Revenue surged 284% to $172.7m lifted by the acquisition, but gross margin shrank 22.4ppt to 11.6% amid markedly lower profitability at the new commodity logistics and trading entity.
- Bottom line was also dragged by lower associate contribution of $1.1m (-71%)'following the disposal of property investment arm Plaza Ventures in Apr '17.
- Trades at 2.1x trailing P/E and 0.6x P/B.
POSITIVE NEWS
*Vard
- Appeal for the Brazilian tax claim has been upheld by the authorities and the long-standing overhang is now over.
- The NOK200m claim dated since Aug '14 relates to transfer pricing of goods and services delivered from the group's Norwegian entities to Vard Niterói in FY10.
- No provision had been made for the tax claim. Thus the decision will not have any impact on its financials.
- Counter is loss-making and last traded at 0.81x P/B.
*Ley Choon
- Secured new contract worth $19.6m from PUB for the supply and laying of steel potable water pipelines around Singapore.
- Project to commence in 2018 for a 24-month period.
- Last traded at 2.4x trailing P/E and 1.28x P/B.
*TA Corp
- Awarded main contract worth $180m by JTC for building development.
- Contract period lasts 28 months and work is slated to commence by 26 Dec.
- Loss-making and trades at 0.61x P/B.
NEUTRAL NEWS
*Lippo Malls Trust
- Granted an extension of master leases over certain areas of Lippo Mall Kemang (carpark, casual leasing space and Avenue of the Stars) to three lessees for two years to 16 Dec '19.
- Trades at 8.3% indicative yield and 1.17x P/B.
*Datapulse
- Acquired Wayco Manufacturing, a Malaysian-based producer of haircare, cosmetics and other homecare chemical products, for $3.5m.
- The consideration translates to an annualised 1H17 P/E of 32.9x and 1.39x P/B.
- Wayco owns three production facilities in Johor Bahru and Selangor and the acquisition will enable the group to diversify into the beauty/wellness industry.
- Post-acquisition, pro forma FY17 EPS is expected to rise 3.6% to 1.43¢.
- Continuing operations are loss-making and trades at 1.45x P/B.
*Jubilee Industries
- Acquiring a 70% stake in Honfoong Plastic Industries for $3.5m via $1m cash and 55.6m new shares at 4.5¢ each.
- Honfoong manufactures plastic moulding, PCB assembly, tooling finishing and plastic precision engineering parts.
- Adding the 93 plastic injection machines from Hanfoong's plant in Batam to the 32 new machines at its Johor Baru facilities, the group plans to expand its production capacity from 26 units currently to 150 in FY3/18.
*Delong
- Received Rmb160m from People's Government of Laiyuan County for the cessation of operations of Laiyuan County Aoyu Steel, as part of China's effort to reduce capacity in steelmaking.
- The compensation is part of the Rmb968m consideration due, with the outstanding amount at Rmb600m.
- Trades at 1x trailing P/E and 0.31x P/B.
- Stock prices could nudge higher as Wall Street pushed to fresh records from banking gains but sentiment remained wary of the impending Fed rate hike tonight and signs of more tightening in 2018 as well as upcoming policy stance of ECB at a central bank meeting on Thu.
- Technically, the STI is approaching the upper end of its uptrend channel at 3,475, with underlying support at 3,390.
MACRO WATCH
*Economy
- Retail sales dipped 0.1% (est: +1%) in Oct, marking its second straight decline in seven months, on weaker takings from computer & telecom equipment (-23.4%) and food retailers (-3.9%).
- Stripping out motor vehicles, consumer spending grew a slower 0.8% against 3.3% expansion in Sep.
- Bright spots were in supermarkets (+7.2%), which bodes well for Dairy Farm and Sheng Siong.
CORPORATE RESULTS
*Vibrant Group
- 2QFY18 net profit plunged 60% to $3.6m due to a higher cost base from the consolidation of Blackgold Int'l as well as absence of disposal gain and lower fair value gains.
- Revenue surged 284% to $172.7m lifted by the acquisition, but gross margin shrank 22.4ppt to 11.6% amid markedly lower profitability at the new commodity logistics and trading entity.
- Bottom line was also dragged by lower associate contribution of $1.1m (-71%)'following the disposal of property investment arm Plaza Ventures in Apr '17.
- Trades at 2.1x trailing P/E and 0.6x P/B.
POSITIVE NEWS
*Vard
- Appeal for the Brazilian tax claim has been upheld by the authorities and the long-standing overhang is now over.
- The NOK200m claim dated since Aug '14 relates to transfer pricing of goods and services delivered from the group's Norwegian entities to Vard Niterói in FY10.
- No provision had been made for the tax claim. Thus the decision will not have any impact on its financials.
- Counter is loss-making and last traded at 0.81x P/B.
*Ley Choon
- Secured new contract worth $19.6m from PUB for the supply and laying of steel potable water pipelines around Singapore.
- Project to commence in 2018 for a 24-month period.
- Last traded at 2.4x trailing P/E and 1.28x P/B.
*TA Corp
- Awarded main contract worth $180m by JTC for building development.
- Contract period lasts 28 months and work is slated to commence by 26 Dec.
- Loss-making and trades at 0.61x P/B.
NEUTRAL NEWS
*Lippo Malls Trust
- Granted an extension of master leases over certain areas of Lippo Mall Kemang (carpark, casual leasing space and Avenue of the Stars) to three lessees for two years to 16 Dec '19.
- Trades at 8.3% indicative yield and 1.17x P/B.
*Datapulse
- Acquired Wayco Manufacturing, a Malaysian-based producer of haircare, cosmetics and other homecare chemical products, for $3.5m.
- The consideration translates to an annualised 1H17 P/E of 32.9x and 1.39x P/B.
- Wayco owns three production facilities in Johor Bahru and Selangor and the acquisition will enable the group to diversify into the beauty/wellness industry.
- Post-acquisition, pro forma FY17 EPS is expected to rise 3.6% to 1.43¢.
- Continuing operations are loss-making and trades at 1.45x P/B.
*Jubilee Industries
- Acquiring a 70% stake in Honfoong Plastic Industries for $3.5m via $1m cash and 55.6m new shares at 4.5¢ each.
- Honfoong manufactures plastic moulding, PCB assembly, tooling finishing and plastic precision engineering parts.
- Adding the 93 plastic injection machines from Hanfoong's plant in Batam to the 32 new machines at its Johor Baru facilities, the group plans to expand its production capacity from 26 units currently to 150 in FY3/18.
*Delong
- Received Rmb160m from People's Government of Laiyuan County for the cessation of operations of Laiyuan County Aoyu Steel, as part of China's effort to reduce capacity in steelmaking.
- The compensation is part of the Rmb968m consideration due, with the outstanding amount at Rmb600m.
- Trades at 1x trailing P/E and 0.31x P/B.
Tuesday, December 12, 2017
SG Market (12 Dec 17)
MARKET OVERVIEW
- Market might take cue from fresh record gains on Wall Street as investors position in banks ahead of the impending Fed rate hike tomorrow.
- Technically, the next resistance for the STI is at 3,550, with 3,390 as the underlying support.
POSITIVE NEWS
*Keppel Corp
- Secured projects from repeat customers, Petrobras and SOFEC, worth a combined value of $130m.
- Works include installation of equipment and cables for the hull of FPSO P-69, as well as fabrication of a turret mooring system for a newbuild FLNG vessel.
- Last traded at 15.9x forward P/E.
*China Everbright Water
- Won the bid for the Rmb70m Dezhou waste water pipeline network BOT project in Shandong, China, with concession period of 22 years.
- This is the first public-private-partnership project implemented by Lingcheng district government.
- Trades at 12.9x forward P/E.
*KSH/ Lian Beng
- 48%/ 42% owned Development 24 is acquiring 12 freehold properties at Lorong 24 Geylang Singapore for $60m.
- The properties are sited on 26,188 sf of land area and can be redeveloped into an 8-storey residential project with max gfa of 73,325 sf.
- KSH trades at 10.6x forward P/E, while Lian Beng is valued at 7.1x trailing P/E.
*Oxley
- Purchasing all eight freehold residential units at 21 Meyappa Chettiar Road in Singapore for $21.5m.
- The group intends to redevelop the property that is sited on residential land area of 898.1 sqm.
- Trades at 11.2x forward P/E and 1.78x P/B.
*TEE Intl
- Awarded new engineering contracts worth $65m between Sep and Nov '17.
- Works include sub-contracts from Dragages Singapore for the air-conditioning and mechanical ventilation system and building management system, as well as electrical works for the commercial development at Market Street, slated to be completed by end-2020.
- This brought total outstanding order book to $318m.
*MindChamps
- Signed a master franchise agreement with Myanmar firm Passion Capital Venture (PCV).
- PCV intends to launch 10 MindChamps PreSchool centres and five MindChamps Reading Centres with the first centre expected to be completed in Yangon in Aug '18.
*Sapphire Corp
- Secured three new rail transit contracts worth Rmb280m in Chengdu.
- Projects include construction of two tunnels of close to 3km, as well as certain open cut earthworks worth Rmb253m, and the supervision of construction across 25km of tracks worth Rmb27m.
- Projects are slated to complete between 31 Dec 2018 and 31 Dec 2020.
- Order book remained unchanged at Rmb3.4b.
- Last traded at 7.4x trailing P/E.
*First Ship Lease Trust
- Sold 14-year old containership FSL Santos for US$6.2m, netting a disposal gain of US$0.8m.
- Net proceeds will be used to repay outstanding debt.
- Loss-making and valued at 0.18x P/B.
NEUTRAL NEWS
*SingHaiyi
- Acquring 3.45% of stapled securities in ASX-listed Cromwell Property Group (CPG) for A$59.1m.
- CPG is the sponsor of SGX-listed Cromwell European REIT, of which SingHaiyi's non-executive director, Gordon Tang, and managing director, Celine Tang, also hold a combined 13.9% interest.
- Pro forma FY3/17 EPS is expected to rise 14.4% to 1.24¢.
*Top Global
- Acquired 32.5% stake in 5Footway Founders for $0.8m, raising its total stake to 83.75%.
- The target is in the business of hospitality management for hostels, hotels, and service apartments across China, Japan, and Singapore.
- Loss-making and trades at 0.29x P/B.
*Progen
- Proposed a 2-for-1 renounceable non-underwritten rights issue at $0.045 each (36.6% discount to last close).
- Maximum net proceeds of $5.9m earmarked to finance the redevelopment of recently-acquired land at 17 Balmoral Road and working capital.
*Asia Fashion
- Proposed 1-for-1 renounceable non-underwritten rights issue at $0.112 each (6.7% discount to last close).
- Maximum net proceeds of $9.4m intended for potential projects or investments and working capital.
- Market might take cue from fresh record gains on Wall Street as investors position in banks ahead of the impending Fed rate hike tomorrow.
- Technically, the next resistance for the STI is at 3,550, with 3,390 as the underlying support.
POSITIVE NEWS
*Keppel Corp
- Secured projects from repeat customers, Petrobras and SOFEC, worth a combined value of $130m.
- Works include installation of equipment and cables for the hull of FPSO P-69, as well as fabrication of a turret mooring system for a newbuild FLNG vessel.
- Last traded at 15.9x forward P/E.
*China Everbright Water
- Won the bid for the Rmb70m Dezhou waste water pipeline network BOT project in Shandong, China, with concession period of 22 years.
- This is the first public-private-partnership project implemented by Lingcheng district government.
- Trades at 12.9x forward P/E.
*KSH/ Lian Beng
- 48%/ 42% owned Development 24 is acquiring 12 freehold properties at Lorong 24 Geylang Singapore for $60m.
- The properties are sited on 26,188 sf of land area and can be redeveloped into an 8-storey residential project with max gfa of 73,325 sf.
- KSH trades at 10.6x forward P/E, while Lian Beng is valued at 7.1x trailing P/E.
*Oxley
- Purchasing all eight freehold residential units at 21 Meyappa Chettiar Road in Singapore for $21.5m.
- The group intends to redevelop the property that is sited on residential land area of 898.1 sqm.
- Trades at 11.2x forward P/E and 1.78x P/B.
*TEE Intl
- Awarded new engineering contracts worth $65m between Sep and Nov '17.
- Works include sub-contracts from Dragages Singapore for the air-conditioning and mechanical ventilation system and building management system, as well as electrical works for the commercial development at Market Street, slated to be completed by end-2020.
- This brought total outstanding order book to $318m.
*MindChamps
- Signed a master franchise agreement with Myanmar firm Passion Capital Venture (PCV).
- PCV intends to launch 10 MindChamps PreSchool centres and five MindChamps Reading Centres with the first centre expected to be completed in Yangon in Aug '18.
*Sapphire Corp
- Secured three new rail transit contracts worth Rmb280m in Chengdu.
- Projects include construction of two tunnels of close to 3km, as well as certain open cut earthworks worth Rmb253m, and the supervision of construction across 25km of tracks worth Rmb27m.
- Projects are slated to complete between 31 Dec 2018 and 31 Dec 2020.
- Order book remained unchanged at Rmb3.4b.
- Last traded at 7.4x trailing P/E.
*First Ship Lease Trust
- Sold 14-year old containership FSL Santos for US$6.2m, netting a disposal gain of US$0.8m.
- Net proceeds will be used to repay outstanding debt.
- Loss-making and valued at 0.18x P/B.
NEUTRAL NEWS
*SingHaiyi
- Acquring 3.45% of stapled securities in ASX-listed Cromwell Property Group (CPG) for A$59.1m.
- CPG is the sponsor of SGX-listed Cromwell European REIT, of which SingHaiyi's non-executive director, Gordon Tang, and managing director, Celine Tang, also hold a combined 13.9% interest.
- Pro forma FY3/17 EPS is expected to rise 14.4% to 1.24¢.
*Top Global
- Acquired 32.5% stake in 5Footway Founders for $0.8m, raising its total stake to 83.75%.
- The target is in the business of hospitality management for hostels, hotels, and service apartments across China, Japan, and Singapore.
- Loss-making and trades at 0.29x P/B.
*Progen
- Proposed a 2-for-1 renounceable non-underwritten rights issue at $0.045 each (36.6% discount to last close).
- Maximum net proceeds of $5.9m earmarked to finance the redevelopment of recently-acquired land at 17 Balmoral Road and working capital.
*Asia Fashion
- Proposed 1-for-1 renounceable non-underwritten rights issue at $0.112 each (6.7% discount to last close).
- Maximum net proceeds of $9.4m intended for potential projects or investments and working capital.
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