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Market Inching Up

MARKET OVERVIEW
– The market could creep higher as US stocks after blowout earnings from Facebook lifted the broader technology sector, while bond yields pulled back below the critical 3% level.
– Technically, the STI could re-test the last high of 3,610. Downside support is at 3,510.

CORPORATE RESULTS
*Mapletree Logistics Trust
– 4QFY18 DPU rose 4.1% to 1.937¢ despite an enlarged unit base (+22.3%). This brought FY18 payout of 7.618¢ (+2.4%) in line with with estimates.
– For the quarter, gross revenue and NPI grew 11.4% and 13.7% to $107.4m and $91.3m from organic growth, newly acquired HK property and completed redevelopment of Mapletree Pioneer Logistics.
– Achieved FY18 average rental reversion of 2.6%.
– Portfolio occupancy improved to 96.6% (+0.4ppt q/q) on higher occupancies in Singapore, South Korea and China.
– Aggregate leverage held steady at 37.7%, with average debt tenor of 4.5 years and stable interest rate of 2.4%.
– Separately, MLT is acquiring a 50% interest in 11 logistics properties in China for Rmb985.3m ($205.3m) from its sponsor, Mapletree Investments.
– The implied NPI yield of 6.4% is higher than the average 6.2% yield of MLT’s existing China portfolio.
– The acquisition will double its footprint in China to 8.8m sf and increase its e-commerce revenue exposure from 18% to 42%.
– To be funded with equity and debt, the deal is expected to be DPU-accretive and will extend the WALE of its China portfolio to 2.7 years.
– Trades at an annualised 4Q yield of 6.1% and 1.1x P/B.
– MKE last has a Hold with TP of $1.25

*Yangzijiang
– 1Q18 net profit met estimates despite slipping 11% to Rmb595.1m, hurt by a FX loss of Rmb141m and a fair value loss of Rmb57m on financial assets.
– Revenue grew 6% to Rmb4963.3m, largely driven by its trading business (+7.6%) and investment in financial assets (+45.3%), while core shipbuilding (+1.5%) worked on larger containerships but delivered fewer vessels.
– Gross margin for shipbuilding sharnk to 17% (-6ppt) due to appreciation of yuan against USD and increase in raw material prices.
– Ytd, the group secured new orders for nine vessels with total contract value of US$268m and order book stood at US$4.5b comprising 121 vessels.
– Balance sheet remained in a net cash position.
– Trades at 9.6x forward P/E and 0.84x P/B

*GuocoLand
– 3QFY18 net profit climbed 7% to $31.5m due to $8m share of losses absorbed by minority interests.
– This brought 9MFY18 net profit to $240.1m (+114%), which came in at 67% of full-year consensus forecast.
– For the quarter, revenue fell 15% to $230.6m on weaker sales recognition of Singapore residential projects due to lower inventory of completed unsold units.
– Gross margin edged higher to 26% (+3ppt) on the change in revenue mix.
– Drop in other income to $6.4m (-61%) arising from FX and fair value changes of currency hedges was matched by the jump in contributions from associates/JVs to $12m (+481%).
– Trades at about 40% discount to RNAV/share.
– MKE last had a Buy with TP of $3.00

*CapitaLand Retail China Trust
– 1Q18 DPU edged up 0.4% to 2.75¢ on an expanded unit base (+9.1%), topping street estimates.
– Gross revenue and NPI slid 7.9% and 7.7% to $55.4m and $37.2m respectively due to divestment of CapitaMall Anzhen in Jul ’17 and lower income from CapitaMall Grand Canyon, which was affected by disruptions to trading activities, and lower occupancy at CapitaMall Minzhonglequan.
– Portfolio occupancy slipped to 94.9% (-0.5ppt q/q), while aggregate leverage surged to 32.5% (+4.1ppt q/q) after it drew down on debt for the Rock Square acquisition.
– Trades at annualised 1Q yield of 7.2% and 0.95x P/B.

*Starhill Global
– 3QFY18 DPU declined 7.6% to 1.09cts, missing estimates, mainly due to lower NPI and higher withholding taxes.
– Gross revenue dropped 3% to $51.7m on weaker contributions from its office portfolio, asset redevelopment works at Plaza Arcade in Perth and lower income from Myer Centre Adelaide.
– NPI also dipped 2.3% to $40.3m, largely in line with the lower revenue but partially offset by lower expenses mainly from its China property.
– Aggregate leverage stood at 35.3% with average debt maturity of 3.8 years and no refinancing requirement until Jun ’19.
– Trades at annualised 3Q yield of 6% and x 0.78x P/B.
– MKE maintains Sell with TP of $0.60

*Ho Bee Land
– 1Q18 net profit of $49.4m (-12.3%) met expectations.
– Revenue grew 14.8% to $48.7m on higher rental income (+6.1% to $37.8m) as well as sale of development properties (+60.5% to $10.9m).
– Sold a small development site in Gold Coast for A%5.5m against acquisition cost of A$2.9m.
– Bottom line was dragged by absence of disposal gains of $7.8mfrom sale of Rose Court as well as lower contributions from associates -12.7% to $28.5m) and JVs (-6.7% to $1.7m).
– Trading at 0.53x P/B and 0.54x P/RNAV.
– MKE has Buy and raises TP to $3.30 from $3.15

*Soilbuild Construction
– 1Q18 net profit slumped 64.3% to $0.1m on lower sales and tax swing.
– Revenue slid 40.4% to $39.7m following the completion of major projects in Singapore, while existing ones have not reached advanced stages.
– However, gross margin expanded to 6.3% (+2.3ppt) on additional contract revenue on two HDB projects as well as other cost savings.
– Bottom line was hit by FX loss of $0.4m (1Q17: $0.1m).
– Trades at 1.2x P/B.

*Hong Leong Finance
– 1Q18 net profit jumped 57% to $25.9m, beating consensus estimates.
– Net interest income grew 37% to $49.7m on the back of higher loan yield and lower interest expenses (-14.3%) amid a larger customer loan base (+9.7%).
– Bottom line was further supported by slower growth in operating expenses of $22m (+4.5%).
– Trading at 0.7x P/B.

POSITIVE NEWS
*Lee Metal
– Received a voluntary conditional cash offer from BRC Asia at $0.42 apiece, subject to the Offeror receiving valid acceptances of more than 50% by the closing date
– The Lee family has given their undertakings to accept the offer, comprising 48.06% of the entire issued Shares.
– Upon completion, the Offeror may undertake a strategic and operational review of the group with a view to …

April 27, 2018

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