SATS Ltd’s Latest Quarterly Results - Positives & Negatives

Singapore - SATS Ltd is an SGX listed company which is specialized in providing food solutions and gateway services solutions. SATS caters to the needs of the aviation sector and a host of other businesses in hospitality, food, healthcare, freight, and logistics industries besides the governments. With an experience over 70 years and a growing regional presence, SATS is poised for a new phase of growth, creating value for our customers, partners, and shareholders, in Singapore and beyond also a good share investment.

SATS Ltd’s Latest Quarterly Results - Positives & Negatives

Recently the company disclosed it's latest quarterly results for the year ending 31 March 2019. There are some positive and some negative of its quarterly results that investors should know, let's talk about the positive and negatives of the SATS Ltd.


The quarterly results of the SATS Ltd

Below image shows the consolidated income statement from SATS for the principal quarter of FY18/19- 

Source - SATS’ Results Presentation

In general, we see that the two sales and profit after tax and minority interest (PATMI) were superior to those of a similar period a year ago.

The positives of the SATS Ltd - 

Let's take a look at the revenue of the company the Food Solutions revenue increased 2.7% multi-year to S$239.5 million and the Gateway Services revenue increased by 3.4% multi-year to S$199.6 million.

The operating expenditure of this stock investment increased at a slower rate as compared to the revenue of the company which caused the expansion of the operating margin to 14.8% from 12.5% in this quarter.

The free cash flow for the quarter was S$72.3 million, up from S$27.7 million in the same period last year, mainly due to the higher operating cash flow.

The balance sheet of the SATS Ltd's remained strong with cash and short-term deposits of S$439.7 million and debt of S$106.1 million, as at 30 June 2018.


The negatives of the SATS Ltd -

There is just a single negative point that investors should know from the most recent quarterly results, which is the weaker execution in SATS' partners and joint ventures. Partners and joint ventures benefit after assessment commitment declined hardly by 1.3% to S$15.3 million. The fall was chiefly because of weaker execution from Gateway Services, where benefit after assessment descended by 8.3% to S$11.1 million.

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Questions to be asked when assessing dividend stocks!

SINGAPORE- The Singapore stock market is outstanding for its high dividend paying firms and REITs (real estate investment trusts) is one of such groups. As plenty of high dividend paying firms are present in the market and are so popular among the investors. What methods or How should assess such high dividend paying companies?

Generally, investors make mistakes while doing stock investment by and large too focused on the dividend yield of companies. This is frequently an issue in light of the fact that the yield just enlightens you concerning the past and not what's to come. While the profit installments may have been high before, it doesn't consequently bring about high-profit installments later on. 

Questions to be asked when assessing dividend stocks!

Let's we take a look at questions investors should ask of a dividend paying company when they assess it, which is a crucial SGX stock tip.

Do profit adequately cover the dividend amounts? 

For any company to pay dividends, it needs to profit; that is entirely self-evident. In this way, the principal check financial specialists should make is to guarantee that the organization's income are adequate to cover its dividend effortlessly. 

For REITs in Singapore, the payout rate is typically 90-100%. This implies the REIT is paying out near the entirety of its profit as profits. In such a circumstance, it turns out to be significantly more vital to assess the strength of the business or rental wage. 

For organizations other than REITs or any other stock recommendation, the payout proportion ought to be checked altogether. Organizations with a payout proportion of underneath 75% are generally esteemed to be moderately traditionalist in my view. Financial specialists should remember that organizations that compensation out at least 100% of their income as profits ought to be seen with some distrust except if they are only erratic instalments. 

Are the dividends stable? 

The following component investors should concern at is the strength of the profit. Most financial specialists who purchase profit stocks do as such for the chance to get repeating pay from these stocks. In such a case, isn't the strength of the profit vital? 

When taking a gander at the profit history, financial specialists should watch out for emotional cuts in profit or the most pessimistic scenario, a missed instalment. How about we have a snappy take a gander at what could cause these. 

For a REIT or equity picks a drop in the payout could be intelligent of the poor request from its properties, bringing about lower rents. This could imply that the property is not any more aggressive and along these lines, can't summon high rental pay pushing ahead except if the supervisor finds a way to enhance the property. 

Another purpose behind a drop could be because of the offer of a property. In such a case, financial specialists need to assess what the chief does with the business continues. On the off chance that it is reinvested into another property, the rental salary ought to have the capacity to make up for the lost pay. 

For organizations other than REITs, a drop in profit could be intelligent of testing business conditions. In such a case, financial specialists need to reconsider the income advancing. Another purpose behind a drop in instalment could be because of a modification of the organization's payout approach. On the off chance that this was the situation, the administration ought to have a reasonable clarification for the decrease. 

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Final Thought-

The questions which are discussed above are only the beginning stages from which investors ought to assess high dividend paying stocks. The questions will guarantee that speculators give careful consideration to an organization's or REIT's capacity to pay a steady dividend, maintaining a strategic distance from any potential traps meanwhile.

Hope this article was helpful to you. Keep up to date with our Singapore stock blog for receiving best Singapore stocks investment and stock signals.


Leave a feedback in the comment section. Thank you for reading!

Stock Market Today:Singapore on track for GDP growth recovery to 2.4% this year

Singapore With Singapore's export orders and local business investment figures appearing to gain positive momentum this year, Institute of Chartered Accountants in England and Wales (ICAEW) is edging up its gross domestic product (GDP) growth estimates for the city state to 2.4%, up from 2% and 1.9% in 2016 and 2015 respectively.

This is according to ICAEW's latest Economic Insight: South East Asia report, which infers from Singapore's monthly trade data that exports are beginning to recover.

For example, Purchasing Managers Index (PMI) manufacturing and electronic surveys have registered above 50 for six consecutive months with new orders pointing to 

ongoing demand for exports, notes the institute in a Wednesday press release.

ICAEW also observes tentative signs that local business investment may be beginning to recover, as fiscal spending is forecast to be mildly stimulatory following Singapore's Budget announcement that a number of infrastructure projects will be going forward.

As a result, the institute believes investment is likely to be a lesser drag on growth this year as government spending picks up.However, ICAEW cautions that given the uncertain global backdrop, unstable recovery in external trade is to be expected.

This includes the risk of what the institute deems "significant knock-on effects" in the case of increased protectionism as advocated by US president Donald Trump, in addition to further rate hikes from the US such that domestic interest rates could "snuff out any recovery in business investment before it gathers traction".

There are various factors limiting Asia's economic recovery, so we remain cautious on the outlook for the region," comments ICAEW economic advisor & Oxford Economics lead economist, Priyanka Kishore.

We do expect export contribution of net export growth to fall slightly this year, with the bulk of growth in Asia generated by domestic demand. This is similar to trends visible since 2011.

Adds Mark Billington, regional director, ICAEW South East Asia While there is an overall improvement in confidence, there are wider global and political factors that continue to pose a risk, not least in the US. Countries in South East Asia will need to focus on sustaining their recovery and hedge against the potential ripple effects.

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Stock Market Today:Parkway Life REIT sees 9.6% rise in 1Q DPU to 3.3 cents

SINGAPORE:Parkway Life REIT's (PLife REIT) manager today posted a distribution per unit (DPU) of 3.28 cents for the first quarter ended March 31, up 9.6% from the 2.99 cents declared a year ago.

Gross revenue for the quarter remained comparable to that of the previous year at $26.9 million, in spite of the REIT's divestment of four Japan nursing homes in Dec 2016.

This was largely due to the contribution from the REIT's acquisition of a nursing home in March 2016, higher rent from the Singapore properties, and the appreciation of the Japanese yen. Additionally, PLife REIT's five new properties acquired in Japan on Feb 24 this year also began contributing to group revenue during 1Q17.

After deducting property expenses, which increased slightly by 2.3% to $1.8 million from $1.76 million in the previous year, net property income (NPI) for the quarter was 25.1 million, relatively unchanged from 1Q16.

The gain from PLife REIT's divestment of its four nursing homes in Japan last Dec will be equally distributed over the four quarters FY17, with a payout of 0.22 

Singapore cents for 1Q 2017, says the manager in a Tuesday filing to the SGX.

As part of ongoing efforts to strengthen the REIT's balance sheet, all its long-term loans which were due in FY18 had been successfully termed out in 1Q17, while there will be no long-term refinancing need till FY19.

Gearing remains at 37.6% with a low effective all-in cost of debt of 1.3% as of end March.As we continue to build on our proven strategies, we are pleased to deliver another quarter of steady DPU growth since IPO, says Yong Yean Chau, CEO of the manager.

Our rejuvenated portfolio of assets following the 2nd asset recycling and reinforced capital structure has strengthened our foundation as we look forward to delivering further growth in the year ahead.Units of PLife REIT closed flat at $2.53 on Monday.

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Stock Market Today:Burwill to pay A$25 mil for exclusive selling rights to Alliance Mineral Assets' Bald Hill lithium

Hong Kong-listed Burwill Commodity announced in a regulatory filing on Thursday that it has entered into offtake agreements with Alliance Mineral Assets, Lithco No. 2, and Tawana Resources.

Burwill will advance by instalments A$25 million ($26.3 million) for exclusive selling rights to the lithium concentrate flowing from the Bald Hill Project in Western Australia for a five-year term, and pre-emptive rights for subsequent five years.

Burwill has made an initial advance payment of A$7.5 million upon signing of the agreement, and will make two further advance payments of A$8.75 million each in July and Sept 2017.

The advance payment is a non-interest bearing advance from Burwill to the sellers, which will be repaid in full within the first two years of the five year term, by way of set-off against the purchase price for each delivery of the lithium concentrate.

In the first two years starting Feb 2018, Burwill will purchase at least 200,000 dry metric tonnes of high-grade lithium concentrate at a fixed price, worth approximately US$200 million ($279.5 million).

Lithium concentrate is raw material for lithium carbonate processing. Lithium carbonate is widely used in mobile phones, digital products, military, as well as industrial and large capacity domestic energy storage systems.

Alliance Mineral Assets is the registered holder and beneficial owner of the Bald Hill Lithium Mine Project, and has formed a joint venture with Lithco.

Separately, the SGX-listed Alliance Mineral Assets requested for a trading halt after market close on Thursday "pending for release of an announcement".Shares of Alliance Mineral Assets last closed at 31.5 cents.

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Stock Market Today:Singapore is Asia's best in attracting talent amid digital push

Singapore ranks the highest in Asia in attracting and developing talent, reflecting not only its world-class education system but how it’s adapting skills in the digital era.

The city-state took the No. 2 spot behind Switzerland on the Global Talent Competitiveness Index, published yesterday by the French business school, INSEAD. Australia 

was the only other Asia Pacific country ranked in the top 10.

The index assesses a country’s ability to enable, attract, grow and retain talent, as well as develop global knowledge and vocational and technical skills. High-

ranking countries share some key advantages: employment policies that favour flexibility, good education systems and technological competence.

Singapore’s government is seeking to build the economy into a regional high-tech hub. It’s helping small businesses adopt new technologies and supporting workers in getting re-skilled. With immigration curbs in place, the city state is pushing for automation of some low-skilled jobs, such as cleaners.

Digital technologies will help small and exposed economies like Singapore punch above their weight by creating means for their businesses and talent to reach out to the global market, said Su-Yen Wong, chief executive officer of the Singapore-based Human Capital Leadership Institute, which helped compile the index.

Some of Asia’s biggest economies ranked much lower on the index. Japan dropped three spots to No. 22 globally, while China was ranked at 54 and India at 92.

A big challenge for China lies in their ability to attract talent, and they both face the issue of local higher-skilled workers leaving to live and work abroad, said Bruno Lanvin, executive director of global indices at INSEAD and co-editor of the report.Malaysia had the highest ranking of upper middle-income countries and came in at No. 28 on the global index, beating wealthier nations such as South Korea, Spain and 

Italy. The Southeast Asian nation scores high because of its vocational and technical skills and being open to foreign talent, according to the study.

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Stock Market Today:SGX Resources Inc (SXR.V) Moves 0.00%

Shares of SGX Resources Inc (SXR.V) are moving on volatility today 0.00% or $0.00 from the open. The TSXV listed company saw a recent bid of 0.02 and 25000 shares have traded hands in the session.

Now let’s take a look at how the fundamentals are stacking up for SGX Resources Inc (SXR.V). Fundamental analysis takes into consideration market, industry and stock conditions to help determine if the shares are correctly valued. SGX Resources Inc currently has a yearly EPS of -0.05. This number is derived from the total net income divided by shares outstanding. In other words, EPS reveals how profitable a company is on a share owner basis.

Another key indicator that can help investors determine if a stock might be a quality investment is the Return on Equity or ROE. SGX Resources Inc (SXR.V) currently has Return on Equity of -4.20. ROE is a ratio that measures profits generated from the investments received from shareholders.

In other words, the ratio reveals how effective the firm is at turning shareholder investment into company profits. A company with high ROE typically reflects well on management and how well a company is run at a high level. A firm with a lower ROE might encourage potential investors to dig further to see why profits aren’t being generated from shareholder money.

Another ratio we can look at is the Return on Invested Capital or more commonly referred to as ROIC. SGX Resources Inc (SXR.V) has a current ROIC of -1.90. ROIC is

calculated by dividing Net Income – Dividends by Total Capital Invested.

Similar to ROE, ROIC measures how effectively company management is using invested capital to generate company income. A high ROIC number typically reflects positively on company management while a low number typically reflects the opposite.

Turning to Return on Assets or ROA, SGX Resources Inc (SXR.V) has a current ROA of -368.53. This is a profitability ratio that measures net income generated from total company assets during a given period. This ratio reveals how quick a company can turn it’s assets into profits. In other words, the ratio provides insight into the

profitability of a firm’s assets. The ratio is calculated by dividing total net income by the average total assets.

A higher ROA compared to peers in the same industry, would suggest that company management is able to effectively generate profits from their assets. Similar to the other ratios, a lower number might raise red flags about management’s ability when compared to other companies in a similar sector.

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Stock Market Today:Strong regional headwinds spell trouble for Japfa's earnings ahead

CIMB Research is downgrading its call on Japfa from add to reduce, lowering its price target on the counter to 69 cents from $1.41 previously on strong headwinds in the industrial agri-food company's two largest markets, Indonesia and Vietnam.

In a report last Thursday analyst Jonathan Seow says Japfa's "stellar FY16" is unlikely to be repeated this year as poultry prices in Indonesia have weakened considerably in 1Q17 due to oversupply, with broiler prices now at loss-making levels.

This is in addition to depressed swine prices in Vietnam, which prove contrary to CIMB's initial expectations of a recovery after they first began falling in 4Q16, recalls Seow.

While we remain positive on the long-term macro and industry prospects, we also note that these current headwinds are especially troubling because Indonesia (72% of FY16 revenue) and Vietnam (12%) are Japfa's two largest markets, says the analyst.

CIMB has therefore updated its earnings per share (EPS) forecasts to account for the weak selling price environment and lower margins, such that its FY17-19F EPS projections have fallen by 36-42%

Noting that Japfa continues to trade near its historical level of 11.9 times and significantly above its historical mean of 8.7 times despite underperforming since its dismal 4Q16 results, Seow believes the stock is currently "way too expensive and unjustified" given the multiple near-term headwinds.

The company's 1Q17 results are due to be announced on April 27, which CIMB expects to disappoint.As at 11am, shares of Japfa are trading 6.8% lower at 75 cents.

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Stock Market Today:Chinese backers planning Singapore's third derivatives exchange

Singapore may be set to get a third derivatives exchange, this time backed by China.If the new bourse, which would be called Apex, goes ahead, it would be operated by Asia Investment, according to people with knowledge of the matter.

Asia Investment is majority-owned by former China Financial Futures Exchange and Dalian Commodity Exchange chief Eugene Zhu Yuchen, with a minor stake held by the firm of hedge fund manager Ge Weidong, according to corporate records in the city-state.

Apex would be a potential challenger to Intercontinental Exchange Inc. and Singapore Exchange, which already operate bourses in the city. A Chinese-backed offshore exchange would dovetail with Beijing's drive to raise the country's status in global financial markets and bolster the presence of its companies around the world. A mainland firm is seeking to buy the Chicago Stock Exchange, while the Shanghai Stock Exchange is reportedly close to acquiring a stake in Pakistan's national bourse.

Zhu's Asia Pacific Holdings holds a 97.8% stake in Asia Investment, according to the firm's corporate records, while Ge's Hong Kong-based Chaos Investment owns 1.6%. Asia Investment has paid-up capital of US$12.2 million ($17 million). Zhu declined to comment when asked about the new venue. Officials in Chaos Investment's Hong Kong office didn't respond to requests for comment.

We are still in the process of working with the Monetary Authority of Singapore to obtain a license as an approved exchange," Asia Investment said in a March 13 letter to Singapore's Accounting and Corporate Regulatory Authority. The firm was appealing to change its name to Asia Pacific Exchange Pte. and to reserve the name for at least a year.

The bourse could list commodity futures and interest rate options and swaps, according to two of the people, who asked not to be named because the talks are private. Details haven't been finalized, the people said, and the plans are still at an early stage.

CME Group Inc., the world's biggest exchange operator by market value, was approached to take a stake in the venture but discussions didn't advance, according to another person. A CME official declined to comment.

Singapore, where Mandarin is widely spoken, is a popular Chinese travel and investment destination. Mainland firms form the biggest group of foreign-listed companies on the Singapore Exchange, while the FTSE China A50 Index Futures is the most active derivatives contract in the city-state.

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Stock Market Today:SGX partners China bank to raise Singapore capital market's profile

Singapore Exchange (SGX) has entered into a memorandum of understanding (MOU) with Shanghai Pudong Development Bank (SPDB) to raise the profile of Signapore's capital market.

In the agreement signed at the third Singapore-Shanghai Financial Forum, both entities will collaborate on leveraging SGX for international fund-raising. SPDB will recommend Chinese companies to raise funds through initial public offerings, listing of Reits and business trusts, and the issuance of offshore renminbi bonds.

Both will also work together on financial and commodity markets, with SPDB exploring opportunities in SGX's gold futures.

Some activities planned include internal trainings and an exchange programme between SGX and SPDB staff, which will provide opportunities for both parties to share knowledge on the business environments of both countries as well as SGX's listing requirements.

Our partnership with SPDB which is well-regarded in China's capital market for its outstanding performance and business innovation will not only raise Singapore's profile as an offshore centre and international exchange, but also support Chinese companies capital-raising needs as they seek international opportunities and profiling, he added.

Cui Bingwen, SPDB executive vice-president, said that by working with SGX, the bank hopes to better serve Chinese corporates going global and help them tap international capital markets.

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Stock Market Today:Opting to pay fees in partial cash a good move for this REIT

SINGAPORE :DBS is maintaining its buy call on SPH REIT with a higher target price of $1.04 after the REIT manager has elected to pay 40% of base management fees in 3Q17 in cash.

We factored in future fees payable in cash in our model. We believe this decision will be favourable to unitholders as the dilutive impact is now less," says analyst Derek Tan in a Tuesday report, who says investors are now looking at a dividend yield of at least close to 6% and upside potential of 6%.

Meanwhile, Tan believes this is an opportune time for SPH REIT to consider acquiring The Seletar Mall for $500 million from its sponsor, ideally within the next six months prior to the completion of The Seletar Mall's first renewal cycle at the end of 2017.

Following the acquisition, there could be a 3-4% lift in DPUs on the assumption of an optimal funding scenario which involves a partial equity fund raising of $200 million, says the analyst.

Post acquisition, gearing will increase slightly from 26% to 31% but still conservative compared to the peer average of 34%. But most importantly, the stock's liquidity should improve, which will be positive for stock prices.

With The Seletar Mall, we are positive that SPH REIT's portfolio will see stronger performance in the medium term, says Tan.SPH REIT will also derive a higher proportion of its income from necessity shopping, which adds to its resilience.

Despite c.3% drop in DPUs in the next few years, our TP for SPH REIT increases by 1% and DPU growth is strengthened and more sustainable, says Tan, Total potential return increases to 12.3% from 11.5%.Units of SPH REIT are up 1 cent at 99 cents.

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Stock Market Today:Tuan Sing to buy Sime Darby Centre for $365 mil

SINGAPORE:Property group Tuan Sing Holdings is purchasing Sime Darby Centre for $365 million.Located at 896 Dunearn Road, the property sits on a part freehold and part 999 years leasehold commercial land of 140,886 sf.

It has an allowable gross plot ratio of 1.8 and a maximum permissible gross floor area of 253,595 sf.Currently, the property is about 96% occupied over a net lettable area of 202,712 sf.

Wholly-owned subsidiary, Gerbera Land on Friday signed the purchase agreement with Sime Darby Property (Dunearn) to purchase the property.

A sum of $1 million has been paid towards the deposit with the balance deposit of 10% of the consideration sum less $1 million to be paid within 10 business days of the date of signing of the agreement.

The transaction is expected to be completed within 10 weeks from April 7.The transaction will be financed by internal and external resources and is not expected to have any material impact on the net tangible assets or earnings per share of Tuan Sing for the FY ending Dec.

None of the directors or the controlling shareholder of the group has any interest, direct or indirect, in the transaction, it adds.Tuan Sing shares closed at 34 cents.

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Stock Market Today:Singapore Myanmar Investco to start retail, F&B operations at Junction City

Singapore Myanmar Investco announces that it will start retail and F&B operations in Junction City, the integrated development in Yangon.

With a five-year lease, the group is targeting to open up and operate up to 10 retail brands and F&B concepts in the retail & entertainment complex of Junction City.

At level 1 of Junction City, SMI will open and operate 7 retail outlets featuring Coach, Aigner, Pandora, Love Moschino, Furla, Bering and Versace Versus. The total size of these retail stores at level 1 is 7,200 sf.

In addition, the group plans to open up a large Benetton fashion retail store of 2,000 sf at level 2 of Junction City. Notably, SMI will open a Shiseido counter in Junction City and it will be the group's first Shiseido counter in Myanmar since securing the exclusive distribution agreement with Shiseido Asia Pacific in February 2017.

For F&B, the group is opening Crystal Jade Kitchen as well as Japanese ramen restaurant IPPUDO within Junction City.

Junction City has a built-up area of 260,000 sqm, and comprises Grade-A offices, a five-star luxury hotel and a retail & entertainment complex, as well as serviced residences.

Thursday's annoucement follows the successful roll-out of SMI's duty-free retail operations at Yangon International Airport New Terminal 1 since September 2016, this will be the group's next major retail and F&B venture in Myanmar.

Shares of Singapore Myanmar Investco closed 2 cents lower at 52 cents.

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Stock Market Today:Asia Pacific continues to dominate the global IPO scene in 1Q17

The Asia-Pacific region continued to dominate global initial public offering (IPO) activity in 1Q17 to account for 70% of the global number of IPOs and 48% by global proceeds.

This is according to findings from the latest quarterly report by EY, Global IPO Trends: Q1 2017, which also reflects a 92% y-o-y increase in the global number of IPOs with a 146% growth in global proceeds in the first three months of 2017.

Greater China hosted 182 IPOs during the quarter alone, with the Shenzhen and Shanghai exchanges being most active and accounting for 20% and 19% of the global number of IPOs at 73 and 70 IPOs respectively.

In a Thursday press release, EY also observes a healthy set of listings across the public markets in Japan (27 IPOs), Australia (23), Asean (14) and South Korean (12) over the course of 1Q17.

The organisation also expects Greater China, and by extension, Asia-Pacific, to continue its dominance as the China Securities Regulatory Commission (CSRC) is anticipated to clear an extensive backlog of listings by increasing the pace of IPO approvals throughout this year.

There may however be a slowdown in new listings for other markets such that the region will see a temporary drop in activity, adds EY, but overall activity is still expected to rebound in 4Q17.

IPO activity in Asia-Pacific has been powering ahead due to the region's relative insulation from political uncertainty elsewhere in the world, ample liquidity in emerging markets, and strengthening investor sentiment on the back of reduced volatility and steady stock market gains," observes Max Loh, EY Asean and Singapore managing partner, Ernst & Young LLP.

On the outlook for the IPO market in Singapore, Loh notes an increasing interest from companies wanting to list on the Singapore Exchange (SGX), with the consumer products, industrials, healthcare and REITs sectors showing listing potential.

Although other forms of fundraising, such as crowdfunding and private equity, are viable alternatives for capital-raising and expansion, local entrepreneurial companies ultimately have a preference for a Singapore listing as a platform for growth, says Loh.

Following three large REITs IPOs last year, which raised US$1.4b in total, the trend continued in Q1 2017 with the US$108 million IPO of Dasin Retail Trust on the Mainboard, he adds.

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Stock Market Today:Bumitama Agri upgraded to buy on strong FFB output growth and attractive valuation

RHB is upgrading Bumitama Agri to "buy" from neutral despite falling CPO prices ahead on strong double-digit FFB output growth over the next few years plus attractive valuations at current levels.

In a Friday report, RHB believes CPO prices are on a downtrend given the abundant supply of CPO coming into the market in 2H17, as well as the fourth bumper crop of soybean coming out of South America from April.

As the market is forward looking, RHB advises investors to lock in profits. The price gap between CPO spot and futures prices widened to MYR200/tonne ($63/tonne) while the price gap between CPO and soybean oil prices widened back to around USD60/tonne ($84/tonne) currently. While the price premium between soybean oil and CPO is still far from historical averages of US$100-150/tonne, RHB believes there is still room for the premium to widen.

In addition, RHB says demand is not likely to recover in 2017, with the global economy still struggling to grow and domestic consumption still at sluggish levels. Therefore, despite the fact that inventories of CPO at the importing countries of India and China are at low levels currently, the house does not expect restocking to occur in a significant manner in the coming months.

Given the height CPO prices had achieved in the first two months of this year, RHB is raising its CPO price forecast for 2017 to MYR2,600/tonne ($821/tonne). However, it is lowering its price assumption for FY18 to MYR2,400 to account for its expectation that prices would continue to be weak.

We raise our target price slightly to 89 cents, based on 13x 2017 P/E , which implies an EV/ha of US$9,000/ha, below its peers of US$10,000-15,000/ha, says RHB.Shares of Bumitama are trading flat at 80 cents.

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Stock Market Today:This well established industrial group has grabbed the attention of CIMB

SINGAPORE CIMB Research has issued a non-rated report on NSL Limited following the release of the industrial group's FY16 annual report last Wednesday.

NSL's key business segments comprise precast and prefabricated bathrooms (PBU) and environmental services.

The SGX-listed group has a majority 72.1% stake in marina club Raffles Marina, as well as a 33.33% stake in an associate in Germany, PEINER SMAG Lifting Technologies GmbH.

As at FY16A, NSL's net cash stood at $430.3 million. It declared a final dividend per share (DPS) of 5 cents in addition to a special DPS of 20 cents for the period.

In a note on Thursday, analyst William Tng highlights NSL's precast and PBU division as a market leader in manufacturing precast concrete components in Singapore, Malaysia and Dubai, with the business being a dominant producer in Scandinavia.

"Management guided that the precast business in Singapore and Malaysia remains very competitive, with downward pressure on project margins. However, management notes that the precast operation in Dubai and the PBU business in Finland are expected to perform satisfactorily, underpinned by a healthy order book," he recalls.

Meanwhile, Tng also notes the environmental services division as a key player in integrated environmental services in Singapore, in addition to being a major distributor of automotive diesel oil and other petroleum products in Singapore.

Management guided that business for this segment is likely to remain stable in light of the recovery of the manufacturing sector, adds the analyst.As at 11.14am, shares of NSL are trading flat at $1.74.

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Stock Market Today:Why UOB is upgrading Wilmar to hold

UOB KayHian is upgrading Wilmar to "hold" from "sell" with a $3.50 target price after its recent share price correction as core businesses are still operating as usual and the house expects better 2017 earnings on the back of steady growth from all three key divisions on higher sales volumes.

Our SOTP-based target price remains at $3.50. Entry price: $3.20, says UOB. As at 10.31am, shares of Wilmar are trading 6 cents higher at $3.58.

Wilmar share price has fallen 11.6% from a high of $3.98 on Jan 2 to $3.52 on Tuesday. The drop might be due to weakening commodity prices. Sugar prices dropped the most, followed by CPO spot prices and soybean prices which dropped 11.6% and 6.1% respectively in the same period.

In a Wednesday note, UOB says sugar prices were weighed down by ample supply but weaker demand while weakening CPO prices were mainly due to the market expecting a strong production recovery but demand growth is lagging.

The dip in soybean prices was largely due to better-than-expected production in South America and expected higher soybean planting in the US.

We think Wilmar's recent share price correction was driven by poor sentiment on weakening commodity prices. However, Wilmar's core businesses are still operating as usual and we expect all three key divisions to grow steadily in 2017, supported by higher sales volumes," says UOB.

However, UOB expects 1Q17 to be Wilmar's weakest quarter for the year due to weaker demand for consumer products post-Chinese New Year, lower soybean crushing margin due to slowdown in demand, weaker q-o-q FFB production due to seasonality and weaker contribution from the sugar division as sugar milling activity should only start contributing from 2H17 as the sugar cane crushing season in Australia only starts in 2H.

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Stock Market Today:Ezion acquires existing JVs & assets in efforts to improve earnings

SINGAPORE In a bid to improve its long-term earnings and reduce costs, Ezion Holdings has acquired its remaining 50% equity stakes in existing joint venture (JV) companies Strategic Offshore (SOL) and Strategic Excellence (SEL) for $3.5 million and $1.5 million respectively.

For the purpose of acquiring certain assets from the subsidiaries of SOL, the group has also established three wholly-owned subsidiaries in Labuan, Malaysia, for US$2 ($2.80) each, namely Teras Atlas (TAL), Teras Fortuna(TFL) and Teras Orizont (TOL) - all three of which are principally engaged in rig owning and the provision of rig services.

Through the three new subsidiaries, Ezion will be acquiring a vessel, charter contract and receivables each from SOL's subsidiaries GSP Atlas Limited (GAL), Strategic Fortuna (SFL) and GSP Orizont (GOL) for the respective sums of US$18.7 million, US $24.5 million and US$18.7 million, in addition to charter and payment guarantees from GAL and GOL.

In a Tuesday premarket announcement, Ezion says it intends to utilise the assets owned by the JV companies by working closely with their existing customers - in addition to improving the group's earnings in the long-term by, amongst other things, working towards cost-reduction through the realisation of economies of scale with its own fleet of assets.

While the Malta-incorporated SOL is an investment holding company and does not have an estimated carrying value of Ezion's 50% equity, SEL is incorporated in the Bahamas and its remaining 50% equity interest has an approximate carrying value of $5.2 million as at Dec 31, and is principally engaged in rig owning and chartering.

Both companies are JVs between Scott and English Energy (S&E), a wholly-owned subsidiary of Swissco Holdings, as well as Ezion Holding's subsidiary, Ezion Investments (EIPL).

Ezion explains that as SOL and SEL were not able to meet their obligations partially due to the "financial situation" faced by EIPL's joint venture partner S&E, the JV companies have not been able to operate effectively and therefore its purchase was necessary to ensure their continued operations and engagement with their existing customers.

The transactions will be funded through bank loans and international resources of Ezion, says the group, and are expected to have an impact on the company's financial statement in FY17.

Assuming that the acquisitions had been effected on Dec 31, Ezion's net asset value (NAV) per share would increase from 63.43 cents to 63.60 cents. Should they have been effected from Jan 1, 2016, Ezion's basic loss per share for the year ended Dec 31 would narrow from 2.30 cents to 1.40 cents.Shares of Ezion closed flat at 33 cents on Monday.

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Stock Market Today:Singapore telco sector's likely return to 3-player oligopoly viewed as favourable

UOB Kay Hian is reiterating its "buy" call on Singtel with a target price of $4.53, while keeping its overweight view on telecommunications sector after assessing the impact of increased competition with the entry of the fourth mobile operator, TPG Telecom.

In a Monday report, analyst Jonathan Koh says although TPG will bring about an increase in competitive intensity within the mobile space, this risk is offset by potential consolidation of Singapore's mobile industry within the next 3-5 years.

Although the industry is unlikely to consolidate in the near-term, Koh nevertheless sees prospects of a return to a three-player oligopoly as favourable.

The research house has, however, kept its "hold" recommendation on StarHub with a target price of $2.50, noting that the telco's share price has bottomed.

Competition will intensify with TPG Telecom entering the mobile market as the 4th mobile operator in 2018. The dire outlook has forced StarHub into exploring network sharing as a means to reduce capex and opex, says Koh.

Conversely, the analyst believes the overall impact on Singtel is likely to be marginal as its mobile business in Singapore accounted for only 7% of revenue, considering its proportionate share of revenue from tis regional mobile associates.

He also notes how shareholders of Singtel will be able to receive up to 17.5 cents per share in the form of a special dividend resulting from the initial public offering (IPO) proceeds of NetLink Trust, which it is to reduce its stake in to below 25% by April 18.

Highlighting TPG's recent set of good 1H17 results with all business units registering growth, the analyst observes that the new mobile entrant's recruitment and network planning activities are "progressing well", having already set up its local office as well as hired network engineers and project managers to oversee the rollout of its mobile network in Singapore.

As at 12.16pm, shares of Singtel, StarHub and M1 are trading at $3.89, $2.88 and $2.16 respectively.

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Stock Market Today:Here's why CityDev is still RHB's preferred pick

SINGAPORE RHB is keeping City Developments (CDL) at buy with a higher target price of $11.30, from $10.50 previously, despite the property developer's share price having already climbed 23.6% year-to-date.

Despite a share price outperformance, CDL remains our preferred pick for its asset monetisation ability, nimble capital management and acquisition potential," says RHB analyst Vijay Natarajan in a Thursday report.

In addition, CDL's residential projects in Singapore have seen a pick-up in sales momentum following a policy relaxation in the city-state.The government earlier this month announced minor tweaks to the property cooling measures by way of a reduction of Seller's Stamp Duties (SSD) and changes to the Total Debt Servicing Ratio (TDSR).

Singapore also aligned the stamp duties for transactions by residential property-holding entities (PHEs).Significant owners of PHEs will now be subject to the usual stamp duties when they transfer equity interest in such entities, similar to if they were to buy or sell the properties directly.

According to Natarajan, CDL saw a healthy take-up of residential units across its Singapore projects over the weekend, with the majority of the 20 units sold coming from its mass to mid-range projects.

This is in line with our view that residential volumes are to see a near-term pick-up as more marginal buyers enter the market, says Natarajan.CDL is expected to launch two more projects - New Futura and South Beach Residences - in the second half of this year.

In addition, CDL could have more room for acquisitions ahead due to its strong balance sheet.According to Natarajan, CDL's net gearing has improved to 16% as at FY16, compared to 26% a year ago. Assuming a comfortable gearing level of 50%, this would give CDL debt headroom of over $3 billion.

In 2017, CDL has so far deployed a total of $304 million for the acquisition of a 24% equity stake in China's co-working space operator Distrii, a UK residential site, and a commercial project in Shanghai, says Natarajan.

We expect management to continue this acquisition spree (likely in Singapore, Japan and UK markets), capitalising on current market opportunities, he adds.As at 12.07pm, shares of CDL are trading 4 cents lower at $10.19.

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