Buy AEM, Keppel Corp and Samudera Shipping
- Key highlight this week is the commencement of the China CPC on 18 Oct (Wed), where investors will focus on the direction to be set by top leader Xi Jinping for the country over the next five years.
- Technically, the STI sees immediate upside resistance at 3,320, with the next objective at 3,355. Downside support is at 3,275 followed by 3,250.
- 3QFY17 DPU dipped 1.8% to 1.374¢, bringing 9MFY17 DPU to 4.329¢ (-4.2%).
- Quarter revenue grew 4.1% to $20.5m on higher takings from Bukit Batok Connection, West Park BizCentral, Solaris, Tuas Connection and Tellus Marine, but was partially offset by reduced income from 72 Loyang Way.
- NPI rose at a slower clip to $17.8m (+3%), on higher property expenses (+11.3%) at Loyang Way and Bukit Batok Connection.
- Occupancy rate improved 1.5ppt to 94.1%, while average debt cost was slightly lowered to 3.32% (2QFY17: 3.37%).
- NAV/unit at $0.71.
*Transit Mixed Concrete
- 1H17 net profit crashed 93% to $0.8m, alongside by a 27% fall in revenue to $8.6m on keen competition and slowdown in construction activities in Singapore and Malaysia.
- Consequently, gross margin slumped to 11.1% (-9.6ppt), while bottom line was further dragged by a 77% dive in other income to $0.6m.
- Management expects weak demand and stiff competition to persist.
- Slashed interim DPS to 1¢/share (1H16: 1.5¢).
- Last traded at 19.4x trailing P/E.
- Guided for higher FY17 pretax operating profit of at least $32m from $24m previously.
- The raise was due to higher sales, better profit margin, and improved operational efficiency.
- AEM is under-researched with only one broker coverage with a Buy and TP of $3.43.
- Last traded at 8.2x forward P/E prior to the 33% earnings upgrade.
*Lippo Malls Indonesia Retail Trust
- To acquire Lippo Plaza Jogja and Kediri Town Square for $98.1m.
- The slightly accretive deal will boost its portfolio to 30 properties in Indonesia with a valuation of over $2b and NLA of 921,026 sqm.
- Pro forma FY16 DPU of 3.43¢ (+0.6%) translates to an implied yield of 7.9%.
- Exploring the sale of property assets on Molokai Island in Hawaii.
- The assets are listed for sale at US$260m, consisting of 55,000 acres of land and operations which provides water and wastewater services.
- Last traded at 16.7x trailing P/E.
- Invited to further negotiate with the Norway government for the construction of three new coast guard vessels.
- Tender for the project is scheduled for approval by the Norwegian Parliament in 2018 and the first vessel is slated for delivery in 2022.
- Last traded at 0.77x P/B.
- Formed a 70:20:10 JV with Progen Industrial and Seacare Property Development.
- The JVCo will undertake the redevelopment of the properties at 17 Balmoral Road.
- Group's judicial management has been extended to 31 Oct '18.
- Judicial managers have also been granted an extension to 31 Mar '18 to send proposals to creditors for its debt restructuring.
- Secured a revolving credit facility worth US$1.75b from a consortium of banks.
- Proceeds to be used towards refinancing of existing loans.
Singapore Stocks to Watch
* First REIT (FIRT SP): To Buy Hospital Component Of Property In Yogyakarta
*GL Ltd (GLL SP): To explore sale of Hawaii assets worth $260m
*Lippo Malls Indonesia Retail Trust (LMRT SP): Agrees to buy two retail malls in Indonesia
*Noble Group (NOBL SP): Filings warn of bankruptcy risk at two subsidiaries
*Olam (OLAM SP): Secures $1.75b revolving credit line
*Pan-United (PAN SP): Proposes separate concrete and cement, port business
*Poh Tiong Choon Logistics (PTC SP): Some shareholders accept Poh Tiong Choon stake takeover offer
*SBI Offshore (SBIO SP): To sell Solar Africa Investments
*Vard (VARD SP): Vard Invited To Negotiate For 3 Coast Guard Vessels For Norway