The Trading Floor - Q1 2019

Discussion in 'The Trading Floor' started by Amator, Jan 1, 2019.


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  1. Amator

    Amator Well-Known Member

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    SINGAPORE (Apr 24): The Singapore Exchange Regulation (SGX RegCo) says that it is aware of the short-sell reports on Best World that was published earlier today, which led to a 9.0% plunge in Best World shares to close at $1.62 on Wednesday.

    Trading of shares in Best World has been halted.

    In an email to The Edge Singapore, SGX RegCo says, “SGX RegCo is aware of Bonitas Research’s short-sell report on Best World. We posed earlier today a Trading Query to the company and its shares have since been halted. We expect the company to call for a full independent review of all matters raised in the report so that shareholders will have a complete picture and can make informed decisions. We expect to be consulted on the terms of reference of the review and will require the reviewer to report directly to us and the company’s Audit Committee.”

    Earlier today, SGX RegCo posed a Trading Query to Best World regarding its unusual price movements today.

    It asked the group if it was aware of any information not previously announced concerning the group, and if the group was aware of any possible explanation for the trading.

    SGX RegCo also asked the group to confirm its compliance with the listing rules.


    This is the second query issued to Best World in the past three months.

    To recap, Best World was hit by damning reports by two separate short sellers on Wednesday morning: Bonitas Research and Valiant Varriors.

    Bonitas says Best World is a “fraud” and alleges its sales in China are a fraction of what was reported to its shareholders. It suggests that Best World fabricated at least $31 million of its reported 2017 sales to its “one major customer” called Changsha Best.


    Separately, Valiant Varriors, in its short sell research blog, has published the first instalment of a two-part report that alleges Best World continues to engage in multi-level marketing (MLM) in China, which is illegal.
     
  2. Amator

    Amator Well-Known Member

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    SINGAPORE (Apr 24): Best World International, the distributor of skincare, nutritional and wellness products, has been hit by damning reports by two separate short sellers on Wednesday morning: Bonitas Research and Valiant Varriors.

    As at 1pm, shares in Best World are down 16 cents to $1.62 with 8.8 million shares traded.

    Bonitas says Best World is a “fraud” and alleges its sales in China are a fraction of what was reported to its shareholders.

    According to its website, Bonitas is founded by Matthew Wiechert, who also started Glaucus Resesarch who in 2013 issued a short seller report attacking vegetable processor China Minzhong which was later take private by its largest shareholder, Indonesian tycoon Anthoni Salim's Indofood Sukses Makmur.

    “We are short Best World stock and believe its stock price will go lower,” says Bonitas in a Wednesday report.

    In its report, Bonitas also questioned the motive of Best World’s management to appoint auditors PricewaterhouseCoopers (PwC) to conduct a limited, one-year independent review of its 2018 China franchise operations.


    The move came after The Business Times in February raised concerns over the challenges in tracking sales Best World’s DR's Secret line of premium skincare products in China.

    “We think Best World management purposely focused PwC’s investigation solely on 2018 in an attempt to both divert attention from, and ultimately further conceal, previously reported fake sales and profits from its China operations,” says Bonitas.

    Bonitas also alleges filings in China suggest that Best World fabricated at least $31 million of its reported 2017 sales to its “one major customer” called Changsha Best.


    According to Bonitas, Changsha Best is an “entity Best World management secretly controlled and exclusively created to be Best World’s off-books China counterparty”.

    “Excluding fabricated sales to Changsha Best, we calculate that Best World overstated its 2017 net profits by at least 130%,” says Bonitas.

    Bonitas also said it had, since January, communicated with 24 separate Best World China member representatives and have conducted field visits to 12 BWL Lifestyle Centers or 36% of Best World’s listed franchisee locations to better understand Best World’s sales model.

    "Our findings suggest there exists very little end user consumer demand for DR’s Secret skin care products in China,” says Bonitas.

    In addition, Bonitas says evidence suggests that since the publication of the BT article on Feb 18, online vendors on both JD.com and Taobao.com appear to have artificially inflated their online review counts and transaction history to give a false appearance of online sales activity.

    “We found that 8 of the 12 BWL Lifestyle Centers we visited did not sell individual products to non-members,” says Bonitas.

    Investigators working for Bonitas also said employees at BWL Lifestyle Centers disclosed and acted as though they were not accustomed to interacting with walk-in customers.

    “We were told by on-site employees at one BWL Lifestyle Center that we were their very first walk-in customer despite their lifestyle center being open since October 2017,” says Bonitas.

    Bonitas also alleges Best World’s founders exponentially accelerated their combined annual take home pay by 20 times in five years, from less than $2 million in 2013 to $40+ million in cash in 2018!

    In the three years since implementing the scheme, Bonitas says Best World’s co-chairmen and presidents Doreen Tan and Dora Hoan collectively took home $85 million in cash, while Best World exited 2018 with its trade and payables balance at an all-time high of $95 million and its receivables touching all-time lows at $5.2 million.

    Separately, Valiant Varriors, in its short sell research blog, has published the first instalment of a two-part report that alleges Best World continues to engage in multi-level marketing (MLM) in China, which is illegal.

    In May last year, Valiant Varriors took a shot at Venture Corp, claiming the manufacturer derived a whopping 30% of revenue from Philip Morris in 2017, putting itself at risk by depending on one single large e-cigarette buyer.

    “So how is Best World operating in China? Just one way: Best World has been and continues to operate an MLM scheme. We know this because of a simple reason: it continues to engage sales staff through a commissions-based model,” says Valiant in a blog called “Best World: The Worst Investment” which was available online at 10am.

    According to Valiant, under China laws, parties who introduce, lure or force others to join in MLM could have its relevant assets and illegal income confiscated. Those found guilty could also face a fine of up to RMB500,000 ($101,095) while serious violators could also face jail sentences of up to five years.

    Among other infractions, Valiant says Best World operates a total of four bonus mechanisms as well as more than seven tiers of selling in its China operations when the law only allows for three tiers of direct selling.

    And although Best World says it has a direct selling licence, Valiant says the licence only applies in Hangzhou. But even on this front, Best World has been selective with the truth.

    “In China, the direct selling scheme cannot exceed three layers as stipulated clearly by law. In BWI’s model, there are eight,” says Valiant, adding that all 33 franchisees listed on the Best World website are essentially owned and operated by salespeople who have attained the highest tier/level of Platinum Director.

    And while Best World claims that it no longer operates a direct selling model and that its franchises now sell their products through a retail presence, Valiant alleges the physical stores are just a front for its MLM business.

    “The so-called ‘lifestyle centres’ are actually training centres for their lower-tiered sales people,” says Valiant, “Many of these centres are completely new, situated in residential apartment units. These spaces are used to recruit and train fresh blood and new sales people.”

    The short seller cites the example of former MLM company Quanjian which tried to skirt around China’s MLM rules by setting up 7,000 shops nationwide.

    “But it was busted and today the 3 billion-dollar business no longer exists,” says Valiant.
     
  3. Amator

    Amator Well-Known Member

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  4. Amator

    Amator Well-Known Member

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    SINGAPORE (Apr 24): The manager of CapitaLand Mall Trust (CMT), reported CMT has achieved a net property income (NPI) of $140.1 million for the 1Q19 ended March, an increase of 11.5% from 1Q18.

    Distributable income for 1Q19 was $106.3 million, 7.4% higher than 1Q18. DPU was 2.88 cents, up 3.6% year-on-year.

    CapitaLand Mall Trust Management Limited (CMTML) says the increase in gross revenue was mainly due to the completion of the acquisition of the remaining 70% stake in Westgate on Nov 1, which contributed $19.1 million to gross revenue.

    Bedok Mall and Tampines Mall also contributed to the increase in gross revenue. The increase was partially offset by lower gross revenue from Sembawang Shopping Centre, which was divested on June 18 2018.

    Property operating expenses for 1Q19 increased 6.3% to $52.6 million, mainly due to the acquisition, partially offset by the divestment of Sembawang Shopping Centre.

    Management fees at $12.4 million were 12.9% higher than 1Q18.

    Finance costs for 1Q19 of S$27.7 million were 13.9% higher mainly due to interest on Infinity Mall Trust’s bank borrowings which was consolidated at CMT Group after the acquisition and term loans drawn down to part finance the acquisition. The increase was partially offset by the refinancing of EMTN of US$400 million in March 2018 at lower interest rates through loan drawdowns.

    As at Mar 31, CMT’s average cost of debt was 3.2% and aggregate leverage was 34.4%.

    In its outlook, CMTML expects Funan, opening in mid-2019 and about 90% leased, to contribute progressively to CMT’s earnings from 2H 2019.

    Amid slowing down of the global and Singapore economies, the manager remains cautious in its outlook. The coming on stream of new retail space of about 1 million sf -- excluding Funan -- in Singapore this year is expected to intensify competition among shopping malls.
     
  5. Amator

    Amator Well-Known Member

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    SINGAPORE (Apr 24): ARA Trust Management, the manager of Suntec REIT, has declared a 1Q19 DPU of 2.434 cents, flat compared to the 1Q18 DPU of 2.433 cents.

    Distributable income was a slight 0.8% higher at $65.4 million from $65.0 million a year ago.

    Gross revenue dropped by 1.1% to $89.7 million from $90.7 million in the previous year, mainly due to lower convention revenue from Suntec Singapore and lower revenue from 177 Pacific Highway due to the weakened Australian dollar. This was partially offset by an increase in retail and office revenue from Suntec City.

    With property expenses increasing 13.5% y-o-y to $31.5 million, net property income came in 7.6% lower at $58.2 million, compared to $63.0 million last year.

    Income contribution from joint ventures increased by 5.7% y-o-y to $24.0 million

    The REIT’s portfolio includes Suntec City Mall – retail and office units; 60.8% interest in Suntec Singapore Convention & Exhibition Centre; one-third interest in One Raffles Quay; one-third interest in Marina Bay Financial Towers 1 & 2 and Marina Bay Link Mall (collectively MBFC properties); 30% interest in 9 Penang Road; 100% interest in 177 Pacific Highway in Sydney; 50% interest in Southgate Complex, Melbourne; and 50% interest in a commercial building to be developed at 477 Collins Street in Melbourne.

    As at Mar 31, the overall committed occupancy for the office and retail portfolios stood at 98.9% and 97.4% respectively.

    To recap, the REIT on Apr 17 announced that UBS has pre-leased 100% of 9 Penang Road.

    Chong Kee Hiong, CEO of the manager says, “Looking ahead, the mall is poised to continue to perform well, notwithstanding the continuing challenges in the retail sector.”

    “In view of the higher interest rate environment, we will continue with our prudent capital management strategy, improve underlying performance of our assets and source for accretive acquisitions to enhance unitholders value,” adds Chong.


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  6. nottibird

    nottibird Moderator

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  7. Amator

    Amator Well-Known Member

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  8. Amator

    Amator Well-Known Member

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    SINGAPORE (Apr 23): OCBC Investment Research is keeping its “buy” call on Keppel Corporation and raising its fair value estimate to $7.83, after the offshore and marine (O&M), property, infrastructure and asset management conglomerate turned in a set of 1Q19 results deemed to be in line with expectations.

    Keppel Corp saw its earnings fall 39.9% to $202.9 million for the quarter ended March, on the back of the absence of a $289 million gain in 1Q18 arising from the en bloc sale of Keppel Cove in Zhongshan, China.

    However, 1Q19 revenue grew 4.1% to $1.53 billion, underpinned by higher revenues from power and gas sales, infrastructure projects in Singapore and Hong Kong, asset management and the consolidation of M1.

    The way analyst Low Pei Han sees it, a long-awaited turnaround in Keppel Corp’s O&M division could be key to better time ahead for the group.

    “Revenue from the offshore & marine division was at the same level as 1Q18, but the segment turned in net profit of $5.9 million compared to losses of $109.3 million and $22.8 million in 4Q18 and 1Q18,” says Low.

    “Since late 2014, the group has been right-sizing the segment, but looking ahead, there are plans to recruit about 1,800 full-time staff in 2019 – the first time in a number of years,” she adds.

    As at end March, O&M’s direct headcount stood at around 10,800.

    Excluding the Sete rigs, the O&M division’s net order book currently stands at $4.6 billion, according to Low.

    However, she points out that the group’s net gearing has increased to 0.72 time as at end March 2019, compared to 0.48 time as at end FY18.

    This is mainly due to higher working capital requirements, financing for the acquisition of M1, and as a result of the inclusion of lease liabilities due to the adoption of the new accounting standard on leases, Low says.

    Looking ahead, she notes that the group has announced a mid- to long-term ROE target of 15% -- just below its average ROE of 17.7% from 2009-2018.
     
  9. Amator

    Amator Well-Known Member

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    SINGAPORE (Apr 23): Despite continued weakness in its core media business, UOB Kay Hian is staying positive on Singapore Press Holdings (SPH) on the back of its foray into the student accommodation segment.

    SPH last week announced it has acquired a portfolio of three purpose-built student accommodation (PBSA) assets in the UK for £134 million ($237 million).

    The assets span three cities in the UK – Southampton, Sheffield and Leads – and has a total capacity of 1,243 beds, bringing SPH’s total portfolio to over 5,000 beds.

    The acquisitions also take SPH’s total PBSA assets under management (AUM) to over $600 million – establishing the group as a leading player in the UK.

    “The PBSA acquisitions serve to arrest the earnings decline arising from the media business, which have fallen by $21 million over 2017-18,” says lead analyst Lucas Teng in a report on Apr 18.

    “SPH’s current acquisitions in PBSA amount to slightly above $20 million in net profits and growth may be expected upon further acquisitions,” he adds.

    The way Teng sees it, SPH is poised to extract greater economies of scale on the back of an enlarged platform.

    “SPH’s cash-yielding acquisitions will enhance recurring income for the group, now more so with its sizeable asset portfolio. Overall, the recent acquisitions are trending towards selective regions where the corresponding universities are dependable upper-mid-tier institutions with robust demand,” he says.

    The analyst points out that Leeds and Southampton have slightly higher-than-average rental rate growth, with rental growth rates of 2.7-6.5% in 2018. At the same time, the Southampton asset could also capitalise on a low supply pool in the region, with the developmental pipeline of beds forming only 11% of current supply.

    “On a pro-forma basis, the acquisition adds an estimated $7.4 million to SPH’s net earnings,” Teng says. “Assuming similar debt levels of 60% for the acquisition, this would raise our net profit estimates slightly for FY19 and FY20 to $210 million (+1%) and $204 million (+2%) respectively.”

    “We remain positive on the group’s transitional strategy into a defensive portfolio, which is largely underappreciated,” he adds.

    UOB Kay Hian is keeping its “buy” call on SPH with a slightly higher target price of $2.86, raised from $2.82 previously.
     
  10. plutus2

    plutus2 Well-Known Member

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    thank you Bro Amator for the reports
     
  11. Amator

    Amator Well-Known Member

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    SINGAPORE (Apr 23): As part of its asset recycling strategy, CapitaLand is divesting its stake in the group of companies that own and manage the group’s self-storage business StorHub to an unrelated third party.

    The transaction is based on an agreed value of $185 million for StorHub’s portfolio of properties.

    StorHub is one of Singapore’s largest self-storage networks, with a presence in China. Its portfolio comprises 12 storage facilities – 11 in Singapore and one in Shanghai – with a total lettable area of 800,000 sf.

    Jason Leow, President & Chief Executive Officer of Singapore & International, CapitaLand Group, says: “The divestment of StorHub is in line with CapitaLand’s disciplined approach towards capital recycling... In 2018, CapitaLand divested $4 billion worth of assets and deployed $6.11 billion into new investments. We will stay disciplined in recycling our assets for reinvestment and capital redeployment, with an annual divestment target of at least $3 billion."
     
  12. nottibird

    nottibird Moderator

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  13. Amator

    Amator Well-Known Member

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    SINGAPORE (Apr 22): The manager of Mapletree Industrial Trust (MIT) has announced a weighted average distribution per unit (DPU) of 3.08 cents for the 4Q18/19 ended March, some 4.4% higher than DPU of 2.95 cents a year ago.

    This brings full-year DPU for FY18/19 to 12.16 cents, up 3.5% from DPU of 11.75 cents for FY17/18.

    4Q18/19 gross revenue grew 9.3% to $98.8 million, from $90.4 million a year ago.

    This was largely due to new contribution from 18 Tai Seng, 30A Kallang Place and Mapletree Sunview 1, partially offset by lower occupancies in the Flatted Factories and Stack-up/Ramp-up Buildings segments.

    Property operating expenses were 2.0% higher at $23.0 million, compared to $22.5 million a year ago.

    This was mainly attributed to higher marketing commission, partially offset by lower utilities.

    Consequently, net property income rose 11.7% to $75.9 million for 4Q18/19, from $67.9 million a year ago.

    Net fair value gain on investment properties and investment property under development was halved to $30.8 million in 4Q18/19, compared to $65.5 million a year ago.

    Share of joint venture fell 37.4% to $13.2 million, from $21.0 million a year ago.

    Amount available for distribution in 4Q18/19 was 8.0% higher at $59.9 million, compared to $55.5 million a year ago.

    Average portfolio occupancy increased to 90.2% in 4Q18/19, from 88.2% in the preceding quarter.

    As at end March, cash and cash equivalents stood at $40.0 million.

    Looking ahead, the manager says it remains focused on tenant retention to maintain a stable portfolio occupancy, as business sentiment among local companies continue to wane.

    The group says weaker external demand affecting the wholesale trade and manufacturing sectors, as well as the chain effects of a slowdown in China, have weighed on the outlook within the region.

    Meanwhile, it expects upcoming supply of competing industrial space to moderate both the market rents and occupancy rates.
     
  14. Amator

    Amator Well-Known Member

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    SINGAPORE (Apr 22): DBS Group Research is maintaining CapitaLand Commercial Trust (CCT) at "buy" and raising its target price from $2 to $2.10, saying CCT remains undervalued "ahead of a multi-year upturn in office rents in Singapore" and limited supply over the next three years.

    Based on data from CBRE, Core Grade A CBD office rents rose 3.2% q-o-q to $11.15 ppm in 1Q19, the sixth consecutive quarter whereby rents grew more than 3% q-o-q.

    The $11.15 ppm achieved at the end of 1Q19 was also 25% higher than from first-half 2017 lows, which the brokerage says should generate higher investor interest in CCT.

    CCT's property valuations are below physical market transactions, and its expansion into Europe provides another growth avenue, DBS adds.

    On the other hand, OCBC Investment Research is maintaining its “hold” on CCT saying its valuations are not appealing though 1Q19 results met expectations and implying room for favourable rental reversions ahead.

    Based on CCT’s trading price of $1.93 at 3.36pm and its forecasts, CCT is trading at P/B ratio of 1.05x FY19F distribution yield of 4.7% or 1.4 standard deviations below its 8-year average forward yield of 5.6%.

    RHB Research is also maintaining CCT at “neutral” as its valuation of 1.1x P/BV and FY19F yield of 5% are “not compelling enough” despite its positive outlook.

    “We recommend investors to buy the stock on dips,” says RHB analyst Vijay Natarajan.

    To be sure, CCT’s 1Q19 results came within expectations, at 24% and 24.2% of RHB and OCBC’s full-year forecast.

    In 1Q19, gross revenue and NPI rose 3.5% and 3.4% y-o-y to $99.8 million and $79.8 million, respectively. Growth was driven largely by Gallileo and Asia Square Tower 2 (AST2), but partially offset by the divestment of Twenty Anson. DPU grew 3.8% y-o-y to 2.20 cents due to lower finance costs and a distribution of tax-exempt income of $3.4 million or 0.091 cents per unit.

    Positive rental reversions were largely achieved in 1Q19, according to OCBC. Committed rents (psf/month basis) at AST2, Six Battery Road, One George Street and CapitaGreen were $11.00-$12.50, $11.70-$13.50, $9.50- $10.80 and $12.30-$13.30, versus average expired rents of $10.20, $11.85, $9.91 and $12.13, respectively.

    “We believe this was underpinned by CCT’s good quality assets and continued momentum in Singapore’s office market,” says lead analyst Andy Wong Teck Ching.

    Looking ahead, CCT’s average expiring rents of $10.44 psf/month in 2019, $9.60 psf/month in 2020 and $10.72 psf/month in 2021 are currently below the market spot rent of $11.15 psf/month, implying room for favourable rental reversions ahead, especially in 2020.

    Portfolio occupancy remains high at 99.1%, versus 99.4% as at end-FY18.

    RHB’s Natarajan says CCT signed leases for 225,000 sqf, of which 18% were new leases. The tenant mix of new leases was also well diversified across seven sectors.

    “We believe that most of the lease renewals were higher than expiring rental rates (5-10%). Based on CBRE preliminary data, Grade-A office rental rates rose 3.2% q-o-q in 1Q19 to $11.15 psf, continuing on its 15% y-o-y increase in 2018.

    With limited supply in the pipeline, Natarajan expects Grade-A property rental rates to rise 5-15% in 2019. CCT currently has about 11% of leases by rental income due for renewal in 2019, which should benefit from the current momentum.

    Meanwhile, with HSBC – currently the sole tenant of the property – vacating the premises on Apr 2020, CCT could potentially look at redeveloping the property and tapping into any additional benefits from the CBD rejuvenation theme in the draft master plan (2019).

    CCT has highlighted that the immediate focus will be on refurbishment and re-letting the premises. Management has, however, noted that it doesn’t expect any significant increase to the current GFA, based on the draft master plan for 2019.
     
  15. Amator

    Amator Well-Known Member

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    SINGAPORE (Apr 22): ST Engineering announced that its Aerospace and Electronics sectors have won new contracts with a combined value of $2.1 billion for 1Q19.

    The Aerospace sector secured $1.3 billion in contracts, including the 10-year service agreement from a long-time customer, a major North America operator to provide heavy maintenance checks for its entire fleet of A300 and Boeing 757. This agreement, as announced on 25 February 2019, covers over 160 widebody and narrowbody aircraft to be serviced at the sector’s US facilities in San Antonio and Pensacola, US from 2020.

    The Aerospace sector also secured contracts from new airline customers in Africa and Europe to provide component repair services to support their Bombardier Q400. Other contracts cover engine wash and equipment leasing solutions to customers in the Middle East and Europe.

    A total of 2,562 engine washes were carried out in 1Q19.

    Meanwhile, the Electronics sector has secured $818 million worth of contracts for mobility, satellite communications, Internet of Things (IoT), cybersecurity, public safety and security, and defence.

    Some of the global contracts secured in smart rail mobility included the supply of an Automatic Fare Collection System for Bangkok MRT Gold Line, maintenance and enhancement works for Bangkok MRT Purple Line, an Integrated Supervisory Control System for Wuxi Metro Line 3, and a Passenger Information System for Taiwan Railway Authority’s trains.

    New rail mobility projects included a mobile communications network for passengers of Downtown Line 3 Extension while new defence projects included engineering support services for communications and sensor equipment.
     
  16. nottibird

    nottibird Moderator

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  17. Amator

    Amator Well-Known Member

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    SINGAPORE (April 19): The manager of CapitaLand Commercial Trust (CCT) has reported a 1Q19 distribution per unit (DPU) of 2.20 cents, rising 3.8% y-o-y from 2.12 cents due to higher contributions from Gallileo and Asia Square Tower 2.

    Gross revenue and net property income (NPI) for the quarter increased by 3.5% and 3.4% to $99.8 million and $79.8 million, respectively.

    This comes after booking contributions from Gallileo – an office building in Frankfurt, Germany which the trust acquired a 94.9% stake in during June 2018 – as well as higher occupancy at Asia Square Tower 2, both of which more than offset gross revenue and NPI loss from the divestment of Twenty Anson last year.

    As such, distributable income grew 8% to $82.7 million from $76.6 million a year ago, with a distribution yield of 4.6% based on the annualised 1Q 2019 DPU and CCT’s closing price per unit of $1.93 on 18 April.

    As at end-March, portfolio occupancy rate was 99.1%.

    CCT also signed 225,000 sq ft of new leases and renewals over the quarter under review, of which 18% were new leases mainly from tenants from diverse trade sectors.

    While over half of the trust’s 2019 expiring leases have already been committed, the manager expects negative rent reversions for leases signed in prior quarters are expected to flow through as seen in the year-on-year gross revenue for CapitaGreen and Six Battery Road in 1Q19 – which may impact overall portfolio revenue growth in 2019.

    Notably, CCT received a compensation sum of $40.7 million upon returning Bugis Village’s leasehold interest to the State on 1 April this year. It also signed a one-year master lease with the State for the property with a projected net income of $1 million.

    Going forward, CCT’s manager expects Singapore’s office market to see continued rental growth in 2019, and the prime office market rent in Frankfurt to remain resilient with record-low vacancy rates in Frankfurt’s Banking District, where Gallileo is located.

    “With monthly Grade A office rent trending upwards and limited new supply coming onstream from now until 2021, it is an opportune time to ride the positive office market cycle. CCT will focus on maintaining a high portfolio occupancy, signing office rents above market levels and securing positive rental reversions. We will also be ramping up marketing activities for CapitaSpring, with plans to open an interactive marketing showsuite in 2Q19,” says Kevin Chee, CEO of the manager.
     
  18. Amator

    Amator Well-Known Member

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    SINGAPORE (Apr 18): Keppel Corporation saw its earnings fall 39.9% to $202.9 million for the 1Q19 ended March, from $337.5 million a year ago.

    The decline was mainly attributable to the absence of a $289 million gain in 1Q18 arising from the en bloc sale of Keppel Cove in Zhongshan, China.

    In 1Q19, the group recorded gains of $174 million from the divestment of a 70% interest in Dong Nai Waterfront City, Vietnam and the re-measurement of previously held interests in M1 at acquisition date

    Consequently, other operating income was halved to $145.6 million in 1Q19, from $300.0 million a year ago.

    1Q19 revenue grew 4.1% to $1.53 billion, from $1.47 billion a year ago.

    The increase was underpinned by higher revenues from power and gas sales, infrastructure projects in Singapore and Hong Kong, asset management and the consolidation of M1, offset by lower contributions from property trading in Singapore.

    Keppel Corp’s Offshore & Marine (O&M) Division registered a net profit of $6 million for 1Q19, compared to a net loss of $23 million a year ago.

    This was due mainly to a share of results from associated companies which turned profitable year on year, as well as lower taxes.

    The Property Division – the largest contributor to the group’s 1Q19 net profit – recorded a net profit of $132 million, 65% lower than $378 million a year ago.

    This was due mainly to the absence of gains from the en bloc sale of Keppel Cove in Zhongshan, China and lower contribution from Singapore property trading. The decline was partly offset by gains from disposing a partial interest in Dong Nai Waterfront City, Vietnam.

    The Infrastructure Division’s net profit of $16 million for 1Q19 was 38% lower than a year ago.

    This was mainly due to lower contributions from the energy infrastructure and logistics businesses, as well as a share of losses from Keppel Infrastructure Trust in the current period.

    Earnings per share (EPS) fell 40% to 11.2 cents.

    As at end March, cash and cash equivalents stood at $1.72 billion.

    “The main pieces of our strategic transformation are in place. Our focus is now on execution. When we have successfully executed on our strategy, Keppel will be a powerhouse of urbanisation solutions, with not only higher profits, but also higher quality, recurrent earnings,” says Loh Chin Hua, CEO of Keppel Corp.

    “We will work all our engines hard towards achieving a mid-to-long term ROE target of 15% for the group,” he adds.
     
  19. Amator

    Amator Well-Known Member

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    SINGAPORE (Apr 18): DBS Group Research continues to rate Suntec REIT a “buy” with a target price of $2.12.

    This came on the back of the REIT (30%) along with its JV partners – SingHaiYi Group (35%) and Haiyi Holdings (35%) – securing UBS as a sole tenant for 9 Penang Road. Haiyi Holdings is a private vehicle of Gordon and Celine Tang who own a majority stake in SingHaiyi Group.

    UBS has fully pre-leased the 381,000 sq ft of net lettable area (NLA), with fit out expected to commence after TOP in 4Q19. It expects to move in the premises in 2H20.

    For the remaining 15,000 sqft of retail space at 9 Penang Road, discussions are ongoing with various specialty shops and food and beverage outlets. Suntec REIT expects to co-curate the retail tenant mix with UBS.

    The building comprises eight floors of office space in two wings from levels three to 10, with the first floor designated for retail space. Carparks are located in the basement and on the second floor.

    In a Friday report, lead analyst Mervin Song says, “We understand UBS has signed a long lease in a mid-term rental review. While the exact length of the lease has not been disclosed, large anchor tenants in Singapore typically sign leases for 10 years or more.”

    Song expects the total development cost of 9 Penang Road to come up to about $800 million with the gross development value of the project assessed at $940 million.

    “We believe this news is net positive for Suntec REIT as it removes some uncertainty over the ability of Suntec REIT to fill 9 Penang Road and crystallises an estimated development yield in the low 4% which is higher than the sub- and mid-3% yields for stabilised office assets in Singapore,” says Song.

    With UBS’ move to 9 Penang Road, Suntec REIT will lose UBS as a tenant at Suntec City Tower 5 and at One Raffles Quay. But given the tight office market and one- to two-year lead time, Song believes that the REIT should be able to backfillt he spaces vacated by UBS.

    Now with 9 Penang Road 100% pre-leased, this opens up the possibility for Suntec REIT to further deepen its exposure to Singapore by buying out its 70% JV partners.

    As part of the initial JV agreement, Suntec REIT and SingHaiyi/Haiyi Group have the option to acquire a wing in the development from the JV but with only a single tenant for the whole development, it may be more difficult though not impossible to split the agreement with UBS into two leases.

    “We believe while Suntec REIT is exploring acquisition opportunities in Australia, investors would be more supportive of buying assets in Singapore rather than Australia,” says Song.
     
  20. Amator

    Amator Well-Known Member

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    SINGAPORE (Apr 18): UOB KayHian now believes Singapore Airline’s B737 Max aircraft is likely to remain grounded beyond the research house’s initial July estimate.

    Six of SilkAir’s B737 Max aircraft -- accounting for 20% of its current seat capacity -- have been grounded by SIA since mid-March. Two B787-10 jets have also been grounded due to wear and tear on engine blades.

    On Apr 5, Boeing announced it will be reducing the production of B737 Max aircraft from 52 to 42 aircrafts monthly. UOB says this means the airline does not expect a quick solution and also could be expecting further order cancellations.

    While SIA should be compensated for loss of revenue, UOB believes there is downside risk to revenue, profits and cash flow, given capacity constraint will worsen with the grounding of two of SIA’s nine B787-10 aircraft while future delivery of 38 outstanding orders could also be affected due to engine shortage.

    UOB is maintaining its “hold” on SIA. “We continue to value SIA on an SOTP basis, with the airline operations valued at 0.75x book value. Our fair value remains at $10.10. Suggested entry price remains at $9.00,” says analyst K Ajith in a recent report.

    “We have made marginal changes to our net profit assumptions for FY19 (+1.5%) and FY20 (+2.5%) due to slightly higher-than-expected full-year operating statistics,” says Ajith.

    To recap, group overall passenger traffic in 4Q19 remained robust, with SIA’s passenger traffic rising 6.6% y-o-y for March and 8.8% y-o-y for 4Q19. However, cargo traffic declined y-o-y for seven straight months so uncertainty regarding the grounded aircraft is likely to limit upside over the next three months.

    SIA also saw an 8.8% y-o-y rise in passenger traffic in 4Q19. SIA’s passenger carriage rose 7.8% y-o-y indicating strong underlying demand. Passenger load factor however declined 1.2 ppt y-o-y in March but edged up 0.5 ppt y-o-y in 4Q19.

    Except for West Asia and Africa, there was a broad-based decline in pax load factors for the parent airline, with flights to and from the Americas showing the biggest y-o-y weakness of 3.4ppt in March. SIA indicated that the 1.9% decline in SilkAir’s capacity was due to B737 Max’s temporary withdrawal.

    Cargo traffic declined y-o-y for seven straight months, while load factor fell y-o-y for five straight months. Cargo load factors declined 2.2ppt y-o-y in March. All routes reported lower cargo load factors in Mar 19, with South West Pacific registering the largest decrease of 4.1 ppt y-o-y mainly due to weakening global PMI and slowing intra-Asia trade.

    Although YTD rise in jet fuel costs to US$82.60/bbl also poses risk to profitability, Ajith says this is in line with his estimated average fuel price of US$82/bbl for FY20. SIA has also hedged 65% of jet fuel requirement for FY20 at US$74/bbl. Every US$5 rise in average jet fuel price will result in a $297 million change in PBT for FY20, estimates UOB.
     
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