Category: SG Stocks And Shares

STI 3100? Is this Rally actually sustainable?

 Market sentiment will be driven by whether Wall Street can sustain its red-hot rally as the local corporate results season drawing to close, with attention turning to US President Trump’s first address to Congress tomorrow for more details on his fiscal plans, and China’s manufacturing data mid-week.

In addition, Yellen will be addressing this Sat morning 2 am (SG timing). This will be the last address to have some rough gauge and estimate if Feds will be hiking the rates on March 15.

Stocks and bonds are again moving in tandem after diverging in recent months—a sign some investors may be losing faith in the so-called reflation trade. This has been happening since last year. By definition, stocks and bonds should be in opposite directions. But it is not the case, which can be worrying and confusing. I think one of the possible reasons could be foreign investors buying into US bonds, taking some exposure on USD. Personally, I am still waiting on the sidelines for US shares; most of my holdings are in SG as I have better insights.
 
Relooking at STI index, I personally feel that it has been on the high side for quite
some time. It seems possible and logical for some profit takings, STI pulling back to 3050 range. Depending how fast the pullbacks are, preferably it should not break the yellow channel. If not, it is possible to challenge the 3000 mark again. Chart as attached.

Fundamentally, I think the US may not increase rates without knowing Trump’s policies. Thus if Trump did not address and present his policies in detail tomorrow, there may be a chance that Feds may not hike and hold back that option on 15th March.  Yet again, my guess is as good as yours.

In other news, Nokia seems to be making a comeback, relaunching the iconic model of 3310. It promises a battery life lasting up to a month, which is awesome in today’s context. Should you be keen to buy Nokia shares in Finland market, it is available for your trading account too. Nokia Corp (HEL:NOKIA)


click to enlarge












Stocks to watch:
*Venture: 4Q16 net profit jumped 20.6% to $54.1m, taking full year earnings to $180.7m (+17.3%), surpassing estimates; Quarter revenue rose 23.1% to $854.6m from new products/programmes, and growth from existing products. Pretax margin was maintained at 7.6%, while bottom line was partially weighed by a $22.6m legal settlement cost. First and final DPS of $0.50 was maintained. MKE maintains buy with TP of $11.50.

*UOL: FY16 net profit declined 27% to $287m, missing estimates. Revenue climbed 13% to $1.44b, lifted by strong property development sales (+27%) on higher progressive recognition of Riverbank@Fernvale, Botanique at Bartley and Principal Garden. Hospitality operations (+2%) benefitted from better performance at Australian hotels. But bottom line was weighed by lower share of profits from JVs of $4.3m (FY15: $29.1m) and a $9.7m fair value loss on investment properties (FY15: $60.9m gain). Maintained first and final DPS of $0.15. Trading at 0.66x P/B. MKE last had a Buy with TP of $7.39.

*Golden Agri: 4Q16 net profit of US$46.3m (+136.7%) brought FY16 earnings to US$399.6m (FY15: US$10.4m), within expectations. For the quarter, revenue grew 37.8% to US$2.1b on the back of a 37% jump in CPO prices and 7% increase in output. But earnings were hit oilseeds losses and a US$34.3m impairment in China. Bottom line was buttressed by a US$62m deferred tax income arising from tax-based asset revaluations. First and final DPS raised to 0.635¢ (FY15: 0.502¢).

*CWT: FY16 net profit tumbled 32% to $73.6m, below estimates. Revenue slipped 7% to $9.3b, as commodity marketing (-7.2%) was impacted by lower ASPs and volumes, while logistics (-4.2%) suffered from slower trade flow. Excluding exceptional items, largely comprising expenses accrued to an ongoing project and a $6.7m withholding tax, operating profit was $110.1m. Slashed first and final DPS to 3¢ (FY15 total payout: 9¢). Trading at 43% premium to its NAV/share of $1.456.

*Pacific Radiance: 4Q16 net loss deepened to US$36.2m (4Q15: US$2.6m loss) on impairments (US$12m), FX loss (US$2.2m) and disposal loss (US$6.8m). This pulled FY16 net loss down to US$118.6m (FY15: US$3.8m profit), below estimates. Revenue for the quarter sank 44% to US$12.1m amid lower utilisation and reduced charter rates for OSVs, while bottom line was further dragged by a spike in finance costs (+69%) on higher borrowings. Net gearing leapt to 1.6x (FY15: 0.86x). No DPS declared (FY15: 1¢). NAV/share fell 28.8% to US$0.408..

*QAF: FY16 net profit surged 129% to $120.4m, bolstered by a $59.4m gain from a partial 20% stake sale in Gardenia Bakeries KL (GBKL). Revenue fell 11% to $889.5m from the deconsolidation of GBKL, but all other segments saw healthy sales. Final DPS of 4¢ maintained, bringing full year payout to 5¢ (unch). NAV/share at 93.8¢.

*Sinarmas Land: Swung into 4Q16 net profit of $46.5m (4Q15: $7.8m net loss), bringing full year earnings to $114.9m (-19.7%). FY16 revenue fell 8.2% to $878.4m from lower sales of land for commercial and industrial purposes, offset by higher residential unit handovers. Gross margin fell 2.2ppt to 66.5% from decreased sales of higher margin land parcels. First and final DPS of 0.19¢ maintained. NAV/share at $0.47.

*Asian Pay TV: 4Q16 DPU slumped 27.8% to 1.625¢, bringing FY16 payout to 6.5¢ (-21.2%). Quarter revenue slipped 2% to $83.9m, dragged by lower contribution in all three segments consisting basic cable TV (-2.1%), premium digital cable TV (-3.3%) and broadband (-1.1%), on the back of lower ARPU and reduced churn rate, despite a 2.2% increase in overall subscribers. Accordingly, EBITDA margin narrowed 2.3ppts to 59.5%. Guided for FY17 DPU of 6.5¢, implying an attractive indicative yield of 13.8%. NAV/unit at $0.85.

*Sunningdale Tech: 4Q16 net profit spiked 63.3% to $21.5m, bringing FY16 earnings to $39.1m (-7.2%). For the quarter, revenue inched 3.4% higher to $184.1m, as higher sales from automotive (+10%) and consumer/IT (+9.6%) was offset by lower contribution from healthcare (-3.4%) and mould fabrication (-16.7%). Gross margin was stable at 13.6% (+0.3ppt), while the bottom line was boosted by one-off gains for FX ($8.4m) and disposal ($5.1m). Raised first and final DPS to 6¢ (5¢). NAV/share at $1.87.

*Sarine: 4Q16 spiked to US$5.0m (+238.5%), lifting FY16 earnings of US$18.0m (+401%) to come in line with consensus estimate. In the quarter, revenue jumped 52.6% to US$18.9m, primarily due to increased diamond manufacturing equipment, Galaxy family systems, in India, as well as higher recurring income. MKE last had a Buy with TP of $1.97.

*SingMedical: Turned in FY16 net profit of $2.4m (FY15: $0.1m loss), lifted by a re-measurement gain of $1.6m. Revenue rose 34.3% to $41.6m from new acquisitions Novena Radiology and Lifescan Imaging, acquired in Apr ’16 and Sep ’16, while gross margin expanded 4.6ppts to 35.8%.*Tiong Seng: FY16 net profit jumped 49% to $15.3m, on higher revenue of $774.3m (+37%) from increased construction contracts (+31%) and sales of development properties (+92%). Bottom line impact from the absence in disposal gains from car park lots and fixed asset were mitigated by a turnaround in JV contribution to $0.9m (Fy15: -$3.1m). Construction order book shrank to $1b (FY15: $1.3b). Raised first and final DPS to 0.8¢ (FY15: 0.5¢). NAV/share at $0.5731..

*Cosco Corp: 4Q16 net loss narrowed 35% to $313m, bringing full year loss to $466.5m (+18%). Quarter revenue of $409.8m (-43.5%) was dragged by reduced income from shipyard (-44%) and shipping (-3.3%). Gross loss worsened to $467.5m from $336.1m, on inventory writedowns. Bottom line saw a $65.4m net writeback of trade receivables (4Q15 impairment: $304.6m), but was partly offset by a 443% surge in taxes to $155.5m from de-recognition of deferred tax assets. NAV/share at $0.1501.

*Soo Kee: 4Q16 net profit growth of 38.4% to $3.1m was partially pared by FX loss of $0.8m. This brought FY16 earnings to $6.5m (-22.6%). Quarter revenue soared 50.2% to $54.7m from contribution of gold and silver dealer SK Bullion, acquired in Apr ’16. While pretax margin was stable around 7%, bottom line was drag by higher taxes (+199%). Maintained first and final DPS of 0.5¢. NAV/share at $0.095.

*Money Max: 4Q16 net profit surged 42.1% to $1.5m, doubling FY16 earnings to $6.2m. For the quarter, revenue of $34.7m (+34%) was led by stronger pawnbroking business and retailing of pre-owned items. Maintained first and final DPS of 0.5¢. NAV/share at $0.1816.

*SUTL: 4Q16 net profit rose 49% to $2.0m, as revenue climbed 9% to $8.1m on increased F&B sales and berthing income, but partly offset by lower membership transfers, entrance fees and subscription base. Expenses (+2%) rose at a slower pace on increased operating leverage. First and final DPS of 2¢ declared (FY15: nil).

*Raffles Medical: MOU signed to explore cooperation between Chongqing Liangjiang New Area Administrative Committee and the Company on healthcare-related projects.*Duty Free Int’l: Proposed placement of 15.6m shares at $0.38 each, to raise net proceeds of $5.7m. The bulk (90%) will be for M&A and/ or potential business opportunities, with the remaining for working capital.

*Koh Brothers Eco Engineering: Awarded a subcontract by Keppel Seghers for civil, structural, piping, marine and architectural landscaping works for Singapore’s fourth desalination plant at Marina East. The contract is scheduled to complete by Jan ’20, and will lift group’s order book to $576.8m from $569.5m.

*Hong Leong Asia: 40.2% owned China Yuchai announced that Saudi Arabia has ordered 321 Xiamen Kinglong buses, which are powered by Yuchai’s heavy-duty engines.

*Yoma: 15:85 JV with Metro Group Wholesale & Food Specialist, to establish a one-stop food distribution platform in Myanmar.

*KS Energy: 80.09% owned KS Drilling was awarded a US$5m contract, utilising the KS Discoverer 6 land drilling rig in Indonesia for eight months.

*Profit warnings:
– Progen
– PSL Holdings
– Midas
– Resources Prima

 

Q&M Dental

morning,

been watching QnM dental since eons. Target price 0.90-1.00 by some of the houses report. But prices havent move much ever since. Possible that there are events happening underway or upcoming in the weeks/months to come. After all, companies have a planned schedule of announcements. 

Link below shared with me by a friend.

Meanwhile, a few clients asking me on Nico steel. Should you have info and insights, do share with me too.

Q&M Dental Group (Singapore) Limited is conducting a strategic review of its business, and has appointed Religare Capital Markets Corporate Finance to help with the task.
In an exchange filing late on Thursday evening, the group said that the independent review of options available for its business is in line with its commitment to enhance shareholder value.
“As part of the strategic review, the company, through Religare Capital Markets, may undertake preliminary discussions with various parties to evaluate the viability of options available for its business,” it said.
Q&M added that there is no assurance any transaction will materialise from the strategic review, and the company will make an announcement if there were any material developments.

http://www.businesstimes.com.sg/companies-markets/qm-dental-conducts-strategic-review-to-enhance-shareholder-value?xtor=CS3-24

*China Aviation Oil: 4Q16 net profit surged 57% to US$17.9m, bringing full year net profit to US$88.9m (+45.1%), beating street estimates. For the quarter, revenue grew 65.2% to US$3.3b from the increase in volume traded, while gross profit rose at a slower clip to US$10.6m (+32.3%). Further, bottom line was lifted by lower other operating expenses of $0.8m (-57%), as well as a spike in associate contribution (+36.7%) led by Shanghai Pudong International Airport Aviation Fuel Supply Company. Hiked first and final DPS to 4.5¢ (FY15: 3¢).

*Hyflux: FY16 net profit crashed 91% to $4.8m, despite revenue more than doubling to $987m (+121.7%), from contributions by TuasOne waste-to-energy project, Qurayyat Independent Water Project and Oman Tuaspring power plant. However, profits generated by the higher EPC projects were substantially wiped out by losses from the weak Singapore power market and electricity prices. Slashed final DPS to 0.25¢, bringing full year DPS to 0.45¢ (FY15: 1.7¢). NAV/share at $0.451.

*Far East Orchard: FY16 net profit surged to $65m (+123%), boosted by the development completion for commercial property project, SBF Center, as well as increased JV contribution. However, revenue fell 31.7% to $184.9m, on lower takings in both property development and hospitality. Gross margin widened 6ppts to 32.1% on a shift in mix, while the bottom line was also supported by the absence of a $4.9m goodwill impairment and positive FX swing of $11.1m. Maintained first and final DPS of 6¢. NAV/share at $2.91.

*ISEC: 4Q16 net profit spiked from a low base to $1.5m (4Q15: $0.1m), bringing FY16 earnings to $6.5m (+136%), slightly below forecast. For the year, revenue jumped 15% to $30.8m, from contribution of recently-acquired Southern Specialist Eye Centre and increased patient visits in Malaysia, but mitigated by the closure of loss-making International Specialist Eye Centre in Singapore. Accordingly, gross margin expanded 3.3ppts to 47.9%. Final DPS of 0.11¢ declared, bringing FY16 payout to 0.99¢ (FY15: 0.44¢). MKE last had a Buy with TP of $0.42.

*Memtech: 4Q16 net profit climbed 5.9% to US$4m, as revenue rose 25.5% to US$47.9m, led by improvements from consumer electronics and automotive segments, which outweighed weakness from telecommunication. Pretax margin narrowed 2ppt to 8.6% on higher staff and goods transportation costs, as well as an absence of a write-back of doubtful trade receivables. Healthy net cash of US$24m accounts for 39% of market cap. However, group cut its first and final DPS to 2.5¢ (FY15: 3.3¢).

*Frencken: 4Q16 net profit surged 5x to $4.4m, lifted mainly from the absence of an impairment loss. Revenue climbed 7.8% to $111.2m on stronger sales in mechatronics (+15%), but partially weighed by lower contribution from IMS (-2.3%). However, a 2.5ppt dip in gross margin to 14.6% negated the sales uplift. Higher first and final DPS of 1.2¢/share declared (FY15: 0.75¢). NAV/share at 0.5229.

*Q&M: Undertaking an independent strategic review and has appointed Religare Capital Markets as financial adviser. MKE last had a Buy with TP of $1.00.

*Global Premium Hotels: Received conditional privatisation offer at a final price of $0.365/share, representing 14% premium to last traded price, from Chairman Dr. Koh Wee Meng, who has secured undertakings for 71% of shares. The offer values the group at 0.53x P/B.

*Tritech: Awarded a Rmb10.5m contract to design, install and construct a waste water treatment plant in Hebei, China, with a capacity of 2,500 cubic meters per day.

Amara- Interesting reward risk proposition!!!

For a more detailed report on this, please let me know.

Think it presents good risk reward, buy now, pray for breakout, cut loss at S$0.385
TP : S$0.52-0.58

Play on earnings growth– with operational and interest rate savings plus contribution and ramp up of china and thailand hotels that come on board in 2017 and 2015 respectively. (although not sure y interest expense is falling – maybe lower interest rate nego)

With 4 hotels now, and possibly 1 more with JV at Myanamar- spinoff in future as REIT?

Trading in a tight range of S$0.395-0.425 for 11 months.   Noted that since Jun 16- Oct 16, abit of heightened volume. Last week, heightened volume again. Currently on the verge of breakout at S$0.425, 
__________________________________________________________________________
Amara (Price: 0.425, mkt cap: S$244m)- 4 hotels (2 in Sg, 1 in Shanghai, 1 in Bangkok) + 1 retail mall in sg

Properties include:
1)      Amara hotel at Tanjong Pagar-388 guest room
2)      343 guest room at Shanghai + adjoining office and retail mall- to be opened soon,
3)      Amara Sentosa 140 guest room,
4)      Amara BangKok-250 guestroom- opened in mid 2015
5)      Freehold 2-storey terrace house at Hoot Kiam Road
NAV: S$0.6457, P/B: 0.66x; RNAV: S$1.356, P/RNAV: 0.31x – Stock trading near an all time low in terms of P/B.
_____________________________________________________________

Investment highlights:
1)      NAV: S$0.6457, P/B: 0.66x; RNAV: S$1.356, P/RNAV: 0.31x – Stock trading near an all time low in terms of P/B.
2)      More diversified earnings + earnings boost with 2 new hotels – opening of Amara Bangkok in Apr 15 (gradual rampup?), opening of Amara Shanghai (expected in early 2017)
3)      2.8% dividend yield (DPS: S$0.012)
4)      Operational efficiency to start showing for next 3 quarters? Of note 3Q16, showed other expenses dropping 25% yoy (S$1.7m savings)- this was not evident in 2Q16. Interest expense also continue to fall for 2 consecutive quarters. With a 4% growth in sales and cost savings from other expenses, net profit for 3Q16 rose 44% yoy. – annualized 3QFY16- net profit = S$15.8m (PE about 15.4x, have not included China yet which is not yet operational)
5)      Vote of confidence from management
·         CEO bought 100,000 shares at S$0.42 on Aug 16- family owns 72.3% of co. (remuneration not overly high though, with just 1 director with remuneration of S$750k-1m, the rest are below)
·         Management has also constantly state that co. is undervalued (back in 2015, engaged in active buybacks, and price then was S$0.545, now is S$0.425)
Risks:
1)      Increased competition for crown jewel (Tanjong Pagar Hotel) with opening of Clermont hotel
2)      High net D/E of 75% (although we do note, it is backed by properties)

Technicals
·         Trading in a tight range of S$0.395-0.425 for 11 months.
·         Noted that since Jun 16- Oct 16, abit of heightened volume. Last week, heightened volume again. Currently on the verge of breakout at S$0.425,

P/B
TP
upside
0.60
0.39
-8.8%
0.65
0.42
-1.3%
0.70
0.45
6.3%
0.75
0.48
13.9%
0.80
0.52
21.5%
3 year average
0.85
0.55
29.1%
0.90
0.58
36.7%
5 year average
0.95
0.61
44.3%
1.00
0.65
51.9%