S&P/ASX 200 5,725 (4.0) 0.9 2 June 2017 Global Market Watch · Technical Analysis : ... Consumer...

Page | 1 | PHILLIP SECURITIES RESEARCH (SINGAPORE) MCI (P) 75/10/2016 Ref. No.: SG2017_0127

Phillip Singapore Monthly

June 2017: Economic momentum rolling over

2 June 2017

Market: STI was up 1.1% in May. We remain Neutral. Our STI target was tweaked up to 3270

(15x PE FY17e), following revisions to our bank target prices. Our target implies a 15x PE

FY17e. There are two broad reasons for our Neutral stance:

1) Latest data points suggest economic momentum is stalling in Singapore, in particular

industrial production and exports. The two recent sources of global growth have been a

recovery in commodity prices and China’s fixed-asset investments. We need a third source.

We were initially hopeful that China would surprise on the upside, instead the authorities

are tightening liquidity conditions and property purchases. This will dampen economic

activity. We also do not see much of a pick-up in the U.S., where the flattening of the yield

curve reflects a downgrade of growth expectations. Europe is a bright spot, but not a

sufficient spark for global growth, especially when the recovery centres around exports; 2)

Technology and Internet stocks have been behind the driving force behind the record highs

for U.S. and MSCI World Indexes. Regretfully, STI does not have any technology exposure.

Another equity markets that have touched a new high were emerging markets such as India

and Indonesia, driven by strong domestic demand. Whilst our domestic economy is

improving, it does not share the same growth dynamics.

The event to look out for in June will be the Fed meeting on the 14th. The market is pricing

in a 90% probability of a 25 bps rate hike. Our base case is the Fed is assuming the U.S.

economy is at full employment. And will gradually raise interest rates to eventually a zero

‘”real” rate, of around 2%.

Global Market Watch

Asia-Pacific Level 1M (%) YTD (%)

Nikkei 225 19,651 2.6 3.6

KOSPI 2,347 6.3 15.7

CSI 300 3,493 1.5 5.5

HSCEI 10,603 3.7 12.9

Taiex 10,041 1.7 8.5

Hang Seng 25,661 4.2 16.6

Sensex 31,146 4.1 17.0

Nifty 9,621 3.4 17.5

SET 1,562 (0.3) 1.2

KLCI 1,766 (0.1) 7.6

STI 3,211 1.1 11.5

JCI 5,738 0.9 8.3

Phil Comp 7,837 2.3 14.6

S&P/ASX 200 5,725 (4.0) 0.9

US/Europe Level 1M (%) YTD (%)

DJIA 21,009 0.5 6.3

NASDAQ Comp 6,199 1.8 15.1

S&P 500 2,412 1.0 7.7

FTSE 100 7,520 4.4 5.3

DAX 12,615 1.4 9.9

CAC 40 5,284 0.3 8.7

Euro STOXX 50 3,555 (0.1) 8.0

VIX 10 3.0 (25.9) *Prices as at 31 May 2017

Paul Chew (+65 6212 1851) Head of Research

[email protected]

Recommendation: Our key picks are yield and property. For yield, we prefer Asian PayTV,

Croesus REIT and KeppelDC REIT. For momentum, we like high end property developers such

as CDL and CapitaLand. Another BUY is Sinarmas Land. Indonesia’s recent sovereign upgrade

will trigger capital inflows, narrow interest-rate spreads and provide support to the

currency. These are fertile grounds for the property sector. We initiated coverage on

SembCorp Industries with an Accumulate. The ongoing strategic review by management

should provide opportunities to narrow its inherent conglomerate discount.

Sector/Corporate: It was all about results in May. Our observations were: 1) banks and

electronic manufacturers fared better than expected. Banks’ upside surprise came from

wealth management and lower provisions; 2) Indonesia was a source of earnings growth for

several companies; 3) results from the other sectors were within expectation but sluggish;

4) the big earnings miss came from transport, namely SIA; 5) two government linked

companies - SembCorp Industries and SIA - are reviewing their strategies and operations.

This is not just a response to cyclical but also structural headwinds.

FSSTI Top Performers (1 Month)

FSSTI Top Gainers S$ 1M (D) 1M (%) YTD (%)

Yangzijiang 1.270 0.120 10.4 55.8

OCBC 10.490 0.690 7.0 17.6

Genting (S) 1.180 0.065 5.8 30.4

DBS 20.470 1.120 5.8 18.1

UOB 22.980 1.180 5.4 12.6

SIA Engineering 3.910 0.170 4.5 16.0

FSSTI Top Losers S$ 1M (D) 1M (%) YTD (%)

ComfortDelgro 2.400 (0.340) (12.4) (2.8)

SPH 3.170 (0.300) (8.6) (10.2)

Jardine C&C 43.820 (3.410) (7.2) 6.3

ThaiBev 0.875 (0.050) (5.4) 2.9

CapitaLand 3.560 (0.200) (5.3) 17.9

UOL 7.000 (0.240) (3.3) 16.9

Singapore Indices Market Watch

Singapore Indices Level 1M (%) YTD (%)

FTSE ST Straits Times 3,211 1.1 11.5

FTSE ST Financial 899 2.8 15.2

FTSE ST Real Estate 805 (0.4) 15.1

FTSE ST Industrials 791 (2.4) 10.2

FTSE ST Consumer Service 781 (3.8) 6.2

FTSE ST Telecommunicate 952 0.4 2.9

FTSE ST Oil & Gas 361 (0.1) 8.8

FTSE ST Consumer Good 515 (1.5) (0.7)

FTSE ST Utilities 378 2.9 5.0

FTSE ST Healthcare 1,437 1.0 (0.5)

FTSE ST Technology 217 (4.9) 0.1

FTSE ST Basic Material 100 (9.2) 2.0

FTSE ST Mid-Cap 726 (1.5) 7.0

FTSE ST Catalist 489 (4.0) 10.9

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Page | 2 | PHILLIP SECURITIES RESEARCH (SINGAPORE)

Phillip Monthly Report June 2017

Technical Analysis : Straits Times Index – Correction next STI Weekly Chart Current Sentiment: Bearish/correction

Source: Bloomberg, Phillip Securities Research Pte Ltd Red line = 20 period moving average, Blue line = 60 period moving average, Green line = 200 period moving average

Since January 2017, the Straits Times Index (STI) has been on a steady in an uptrend after it broke above the 2964 triple top resistance. However, the current bearish price action suggests some exhaustion from the bullish momentum as the 2380 resistance area is currently causing some obstruction for the bulls.

We believe the STI is entering a correction phase as shown by the Bearish Engulfing Bar rejection off the 2380 resistance area on the week ended 19 May 2017. Moreover, the Weekly Relative Strength Index (RSI) has been hovering above the 70 overbought region for the past 11 weeks signaling an imminent correction.

The previous few times the RSI on the STI stretched above the 70 overbought region and dipped back below it, the STI went through some significant correction in the range of 8% from November 2010 to April 2011 and 9.3% from April 2013 to June 2013.If history repeats itself, combining the bearish price action on the week ended 19 May 2017 together with the RSI rolling over from the 72 overbought territory, there is a high chance the STI will head into a correction next in the range of 2% - 5% to possibly test the 3104 support area followed by 3000.

The Phillip 20 Portfolio - Our top technical picks

Company Name Ticker L Entry Date Entry price Stop Loss Last price Current gain/loss (%)

CHINA AVIATION G92 Long 29-Mar-17 1.520 1.555 1.710 12.50%

COGENT KJ9 Long 22-Mar-17 0.780 0.725 0.795 1.92%

F & N F99 Long 24-Mar-17 2.220 2.220 2.350 5.86%

GENTING SING G13 Long 16-Feb-17 1.000 0.970 1.170 17.00%

METRO M01 Long 9-Mar-17 1.105 1.060 1.170 5.88%

SHENG SIONG OV8 Long 5-Apr-17 0.985 0.895 0.985 0.00%

SINGAPORE O&G 41X Long 7-Apr-17 0.665 0.600 0.670 0.75%

SINGMEDICAL 5OT Long 6-Dec-16 0.445 0.495 0.575 29.21%

SUNPOWER 5GD Long 30-Mar-17 0.825 0.595 0.755 -8.48%

THAIBEV Y92 Long 14-Mar-17 0.955 0.825 0.885 -7.33%

UNITED ENGINEERS U04 Long 31-Mar-17 2.870 2.610 2.740 -4.53%

UPP HOLDINGS LTD UO9 Long 24-Mar-17 0.300 0.250 0.270 -10.00%

*Average gain is calculated based on equal weight placed on each trade

Average Gain: 5.51%

Cumulative Gain: 42.78%

Monthly Phillip 20 realized performance: May 17 performance 3.37%

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https://internetfileserver.phillip.com.sg/POEMS/Stocks/Research/EconomicPulse/SG/Portfolio20170602.pdf



PHILLIP SINGAPORE SECTOR UNIVERSE

Best performing sectors in May17 were: Finance, shipping and REITs (office). The gains in finance was broad based, all three banks were up 5% to 7%. Shipping was supported by a jump in Yangzijiang (+10.4%). Major gainer in REIT (office) was Keppel REIT (+ 4.2%). Worst performing sectors in May17 were: Healthcare, Consumer and Transportation. In healthcare, weakness was in Q&M (-7.6%) and IHH (-5.6%). Consumer saw losses in Dairy Farm (-10.1%), Jumbo (-9.5%) and Thai Beverage (-7%). The drop in transportation came from ComfortDelGro (-12.4%).

SUMMARY OF SECTOR AND COMPANY VIEWS

1. Commodities Overweight with BUY calls on China Aviation Oil (aviation growth in China), Geo Energy (increased production volume) and CNMC Goldmine (rising gold prices).

2. Conglomerate Neutral. We initiated coverage on SembCorp Industries with an Accumulate and target price of S$3.50. The upcoming strategic review is an opportunity to re-rate the company and remove the inherent conglomerate discount.

3. Consumer Overweight. Our top picks are Sheng Siong and Old Chang Kee. We are expecting a recovery in consumer spending from improving macro environment. We upgraded F&N to Accumulate from their increased exposure to Vinamilk.

4. Finance Underweight. We have a Reduce recommendation for all 3 banks. Banks have already re-rated over expectations of higher interest rates and improvement in bad debt provisions.

5. Healthcare Overweight. Our key BUY calls are HMI and Singapore O&G. The weakness in hospital traffic in Singapore is an increasing concern.

6. Industrial Overweight. 7. Property Overweight. Our preference is high end Singapore residential developers such as CapitaLand and CDL. Property

sales momentum has been better than expected. 8. REIT – Hosp. No coverage at present. 9. REIT – Ind. Neutral. We recently downgraded Mapletree Industrial to Neutral. At P/NAV of 1.3x, any growth upside is already

priced in. 10. REIT – Office Neutral. We expect rents to only bottom in 2018. Our only coverage is CapitaLand Commercial Trust. 11. REIT – Retail Neutral. Coverage is Frasers Centrepoint Trust and CapitaLand Retail China. Rental reversions remain under

pressure in China and Singapore. Shopper traffic and tenant sales have been sluggish. 12. REIT - Others Overweight. We have BUY call on Asian Pay TV with a BUY. We find the 12% dividend yield and monopolistic

conditions extremely attractive. Other foreign trust we have an Accumulate is Croesus Retail. Our preference is businesses with overseas assets, where the operating environment is more favorable compared to Singapore.

13. Shipping Neutral. We upgraded SembCorp Marine to Neutral as we expect a recovery in its order-book, albeit modest. Ezion is a Accumulate as we expect day rates and utilization levels to improve.

14. Telecomm. No coverage at present. 15. Transport. Neutral. We have an Accumulate on ComfortDelGro. Whilst, taxi business is under pressure, the operating

environment for buses and rail is improving.

Phillip Singapore Sectors 1 Mth 3 Mth YTD PSR Target Mkt Cap PE P/BV Dividend ROE EPS Growth Weight

(104 companies) Perf. Perf. Perf. Recomm % change (US$ m) FY16 FY17e FY18e FY16 Yield FY16 FY17e FY18e %

Commodities - Plant./Others 0.8% -2.8% -2.0% Overweight 12.3% 27,062 14.4 12.9 11.6 2.0 1.9% 8.5% 11% 11% 5.3%

Conglomerate -1.4% 5.8% 18.3% Neutral 1.7% 119,163 27.1 24.1 22.1 1.2 2.2% 11.2% 12% 9% 23.3%

Consumer - F&B/Gaming/Media -3.7% 0.3% 12.0% Overweight 12.3% 44,985 24.6 22.3 20.6 4.2 3.0% 18.2% 10% 8% 8.8%

Finance 5.7% 8.5% 15.5% Underweight -16.0% 102,149 12.6 11.3 10.7 1.6 3.2% 11.4% 12% 5% 20.0%

Healthcare -4.9% -1.1% -10.6% Overweight 12.2% 13,842 61.5 45.0 36.0 2.6 0.7% 6.0% 37% 25% 2.7%

Industrial - Electronics/Others 0.8% 9.0% 23.7% Overweight 8.3% 12,528 21.6 19.0 17.6 4.2 3.8% 19.1% 14% 8% 2.5%

Property -2.2% 6.9% 21.1% Overweight 9.2% 59,486 13.8 15.0 15.2 1.0 2.7% 8.6% -8% -2% 11.7%

REIT - Hospitality 1.8% 5.3% 9.4% N/A 1.1% 6,244 24.7 18.0 16.9 0.9 6.9% 4.0% 37% 7% 1.2%

REIT - Industrial 2.3% 6.6% 12.4% Neutral 0.5% 14,903 20.1 15.4 14.7 1.2 6.5% 6.6% 30% 4% 2.9%

REIT - Office 3.1% 6.2% 10.1% Neutral -4.2% 11,318 17.3 20.1 20.6 0.9 5.8% 5.0% -14% -3% 2.2%

REIT - Retail -0.2% 3.9% 8.4% Neutral 5.3% 15,922 12.9 17.8 16.8 1.0 5.8% 8.1% -27% 6% 3.1%

REIT - Others/Foreign/Biz Trust 1.4% 7.9% 6.5% Overweight 3.9% 7,160 16.0 18.2 17.7 0.9 10.3% 5.7% -12% 3% 1.4%

Shipping - Yards/Vessel owners 5.5% 14.6% 34.8% Neutral -0.5% 6,847 -75.2 20.0 18.0 3.2 8.5% 2.4% n.m. 11% 1.3%

Telecommunications 0.4% -4.3% 2.9% N/A 10.2% 49,183 15.7 15.3 14.6 3.3 4.9% 22.2% 3% 5% 9.6%

Transportation -2.5% 1.3% 4.8% Neutral 3.0% 19,570 25.7 22.3 22.1 2.0 2.9% 10.8% 15% 1% 3.8%

0.3% 4.4% 13.1% 1.8% 510,362 17.9 16.7 15.8 1.9 3.4% 11.9% 8% 6% 100.0%



ECONOMY Singapore GDP for 1Q17 revised upwards from 2.5% (flash estimate) to 2.7% YoY. This is off the 4Q16 pace of 2.9% YoY. By sector, manufacturing was the fastest growing at 8% YoY, moderating from the 11.5% in previous quarter. In terms of expenditure, it was government spending (up 5.5% YoY) that drove GDP in 1Q17. Private consumption (-0.4% YoY) and gross fixed investment (-0.3% YoY) remain subdued. Singapore 2016 wage growth are at 7-year lows. Total wages, including employer CPF, of private-sector employees last year grew at its slowest pace since the financial crisis. It was up by 3.1% in 2016, compared with the 4.9% increase in 2015.

SECTOR RESULTS SUMMARY COMMODITY/MATERIALS China Aviation (Singapore) Oil (S$1.70 / Target px: S$2.00 / BUY) • 1Q17 earnings in line with expectation. Total trading volume from jet fuel and other oil

products are still on an uptrend. Trading efficiency improved, resulting in a better GPM. • Share of profits from associates and joint ventures continue to contribute substantially

to the bottom line. • CAO hoarded US$276.1mn in cash that enables the Group to capture M&A opportunities. CNMC Goldmine Holdings (S$0.27 / Target px: S$0.68 / BUY) • 1Q17 earnings missed our expectations significantly. Though realised average gold price

was up 11.4% YoY to $1,287/oz in 1Q17, the lower ore grade drastically dragged down production volumes.

• Solutions to resolve the current issues: 1. Monetise other minerals such as silver, lead, and zinc; 2. Establish carbon-in-leach plant to ramp up ore processing capacity as well as recovered rate.

• Pulai project and Kelgold mine may enhance profitability in the future. Geo Energy Resources (S$0.25 / Target px: S$0.45 / BUY) • 1Q17 earnings were in line with expectation. Management proposed to make an early

redemption of its MTN (S$100mn, yield: 7%). The MTM is due in Jan-18. To incentivise note holders to approve the proposal, Geo will grant a consent fee of 0.5%. The current covenants of the MTN prevent Geo from taking other loans.

• China is considering to impose curbs on importation of low grade coal. The policy is expected to impact more on coal price rather sales volume for Geo.

• Geo is expanding domestic sales, and its 10mn tonnes per annum sales target remains unchanged.

CONSUMER Fraser and Neave (S$2.33 / Target px: S$2.31 / Upgrade to NEUTRAL) • 1H17 EBIT missed expectation due to higher operating expenses. • Upgraded from Reduce to Neutral on change of valuation model due to increased stakes

in Vinamilk. • Additional stake in Vinamilk to 18.74% means investment will be accounted as associate

and contribute to earnings in 2HFY17.

Sheng Siong Group (S$0.97 / Target px: S$1.06 / ACCUMULATE) • 1Q17 earnings in line with expectations. • Recently won a 11,000 sft store in Woodlands with a bidding price of S$14.65 psf,

according to the results released on the HDB HBiz website. This new retail space will partially mitigate the closure of Woodlands Block 6A store (closure date: Aug-17).

• The irrational bidding prices for new supermarket premises seen in end-2016 (as high as c.S$21 psf) have eased. However, competition for new sites remained. We continue to observe active biddings from NTUC Fairprice and Giant, as well as smaller competitors

such as U Stars Supermarket and Ang Mo Supermarket.

Chen Guangzhi Investment Analyst (Oil & Gas / Energy) [email protected] DID: 6212 1859

Soh Lin Sin Investment Analyst (Healthcare / Consumer) [email protected] DID: 6212 1847

mailto:[email protected]




FINANCE DBS (S$20.47 / Target px: S$17.24 / REDUCE) • Earnings were above expectations. Earnings surprise came was from non-interest income

(wealth Management (WM), transaction services and investment banking) and lower than expected specific provisions.

• We see unfavourable loan rate dynamics coming from the competitive corporate business segment. WM enjoyed a strong performance on the back of risk-on momentum in early 2017. Non-performing loans (NPLs) formation expected to be stable for the year as offshore vessels used in standard operations are realising values within the expected range. Downside risks to NPLs come from offshore vessels used in specialised operations.

• We raised our target price to S$17.24 (previously S$16.73). OCBC (S$10.49 / Target px: S$8.48 / REDUCE) • Earnings were above expectations. Beat from non-interest income segment: WM and

insurance. • Expect OCBC to tactically drive consumer and corporate business wherever competition

recedes. Therefore, to be prepared, OCBC is likely to maintain ample deposits for USD and SGD to fund lending opportunities in these two segments and this may add some upward pressure on funding costs. We see stiff competition to OCBC’s regional corporate business from at least one large universal bank which is also competing in other similar areas of insurance sales and wealth management. This universal bank has a strong presence in the Pearl River Delta region in China, which is also an area of interest for OCBC Wing Hang.

UOB (S$22.98 / Target px: S$19.20 / REDUCE) • Earnings beat our expectations. Beat on Non-interest income segment: WM and trading

Income. • We opine that UOB is taking more risk on its loans books for higher returns to help

improve net interest income growth. In that aspect, we see non-performing loans formation gathering pace in the SME and consumer loans. But tighter funding liquidity and higher deposit costs may pose risks to net interest income growth.

• We raised our target price to S$19.20 (previously S$18.92). SGX (S$7.27 / Target px: S$7.45 / Downgrade to NEUTRAL) • Earnings were in line with expectations. • Securities daily average volume was higher as risk on momentum continued post US

Presidential Election. But Equity Derivatives volumes were lower due to less hedging activities by market participants at the beginning of 2017 as market uncertainty and volatility receded. We see higher operating expenses weighing down 4QFY17e PATMI and there are no observable catalysts to boost the revenue line to offset this higher cost item. We expect 4QFY17e PATMI to be in the range of S$75mn to S$80mn. 4QFY16 PATMI was S$76.8mn.

• Downgrade to Neutral from Accumulate rating. Target price lowered to S$7.45 (previously S$7.75).

iFAST Corporation (S$0.84 / Target px: S$0.78 / Upgrade to ACCUMULATE) • Earnings were in line with expectations. • iFAST’s asset under administration (AUA) growth in 1Q17 alone accounted for almost half

of our full year YoY AUA estimates. The surge in AUA was supported by higher AUA valuations and strong net sales both in B2C and B2B segments. This is unlike 2016 when staff costs surge to an average of 47.4% of revenue, as more headcount was added to grow the business but the soft markets kept AUA growth weak and resulted in lower net revenues. We estimate FY17e average staff cost margin to be lower at c.44% as we do not expect headcount to grow at the same pace we saw in 2016 while net revenues improve on stronger AUA growth because of improved market sentiments.

• Upgrade to Accumulate from previous Neutral rating.

Jeremy Teong Investment Analyst (Banking / Finance) [email protected] DID: 62121863




HEALTHCARE Health Management International (S$0.61 / Target px: S$0.83 / BUY) • 9MFY17 earnings was below our expectations, dragged down by one-offs (FX impact,

professional fees and other costs relating to the consolidation transaction) • Both local and foreign patient volumes continued to grow. Trend of local patients softer

as patients delaying on elective procedures amidst cautious spending environment in Malaysia, or switching to public hospitals for inpatient services.

• Expansion is on track with 14% additional bed capacity by 1HFY18 and construction of new hospital extension block in Regency by end-FY20.

• Company has completed consolidation of the ownership of its two hospitals in March 2017. Earnings from both hospitals will be fully attributable to equity holders beginning 4QFY17.

Raffles Medical Group (S$1.39 / Target px: S$1.49 / ACCUMULATE) • 1Q17 earnings below expectation, due to softer contributions from both hospitals and

clinics businesses. • Two new hospitals in China with aggregate bed capacity of 1,100 are slated for

completion by end-2018. RafflesHospital Shanghai (400-bedder) and RafflesHospital Chongqing (700-bedder) are expected to start operations with 200 private beds each.

• Expect staff costs to remain elevated as Raffles Medical gears up for their expansion. We reduced target price to S$1.49 (previously S$1.60) on higher operating expenses and capital expenditures for RafflesHospital Chongqing. Better-than-expected margins from its China hospitals could lead to a re-rating.

Singapore O&G (S$0.68 / Target px: S$0.79 / Downgrade to ACCUMULATE) • 1Q17 earnings below expectation. First quarter is seasonally the slowest quarter of the

year. Management expects a recovery in birth numbers later in the year, in tandem with the abating negative sentiment arising from Zika Virus outbreak.

• New and complementary paediatric clinic to commence in 1 Jul-17. We expect the Group to start with one consultant and a clinic located in Parkway East Hospital, close to its O&G specialists.

• Recent corporate action: Completed two-for-one share split in 9 May 2017. • Downgrade to Neutral from Accumulate rating due to recent stock run-up.

INDUSTRIAL 800 Super Holdings (S$1.30 / Target px: S$1.57 / ACCUMULATE) • 3QFY17 earnings above expectation, due to lower than expected labour cost. • Waste to energy (WTE) project will only have a meaningful contribution at the end of

2017, due to ramp-up phase. Sludge treatment project to drive earnings higher in FY20. • Winning the tender for the consolidated Bedok and Pasir Ris-Tampines sectors Public

Waste Collection (PWC) contract would re-rate the stock. Cogent Holdings (S$0.78 / Target px: S$1.18 / BUY) • 1Q17 earnings above expectation, from higher than expected revenue outpacing cost

increase. • Three projects have turned operational: Jurong Island Container Depot, gantry crane

system at the roof-top container depot, and second warehouse in Port Klang Free Zone, Malaysia.

• Next phase of growth from the Jurong Island Chemical Logistics Facility.

PROPERTY CapitaLand (S$3.56 / Target px: S$4.19 / ACCUMULATE) • 1Q17 earnings came within expectation, as China property development projects

continues to be handed over on schedule • China residential projects have been rapidly absorbed but sales volume unlikely to

accelerate as Chinese Government maintains a tighter grip • Singapore office rent decline is abating and we maintain view that rents will be bottoming

out in 2018.

Soh Lin Sin Investment Analyst ( Healthcare / Consumer) [email protected] DID: 6212 1847

Richard Leow Investment Analyst (Transport/ REITs (Industrial)) [email protected] DID: 6212 1848

Peter Ng Investment Analyst (Property / Infrastructure) [email protected] DID: 6212 1850






City Developments (S$10.65 / Target px: S$11.07 / ACCUMULATE) • 1Q17 earnings met 11% of our full year estimates but remain within our expectation, as

higher revenue recognition from unit handovers can be expected in the next few quarters.

• ABSD woes significantly reduced for Commonwealth Towers/The Venue Residences as sales volume pick up.

• Strong take up rate at Gramercy Park suggests recovery in CCR market segment, bodes well for New Futura’s launch in 2H17.

Chip Eng Seng Corp (S$0.72 / Target px: S$0.90 / Upgrade to BUY) • 1Q17 earnings beat our expectation as results were boosted from higher unit sales of

Singapore property development projects. • New HDB contract worth S$110.8mn was secured and boost construction order book by

24.2% to S$568.2mn. • Construction of a PPVC plant in Tuas Basin is expected to generate long term cost savings

and create new revenue stream. • Upgrade to Buy from previous Accumulate rating. The vibrant property sales in Singapore

will better help realise our RNAV estimate. Hock Lian Seng Holdings (S$0.52 / Target px: S$0.57 / Upgrade to ACCUMULATE) • 1Q17’s earnings were below our expectations but expect earnings to improve as work at

Changi Airport JV project is expected to accelerate and boost revenue in the next few quarters.

• Performance in Civil Engineering segment remains stable with order book standing at S$915mn, which can sustain till FY22.

• Construction of industrial property development project, Shine@Tuas, is on track for completion in FY18, expect sales to accelerate as sentiments improve.

• Upgrade to Accumulate from previous Neutral rating due to its sizeable order book with a revenue visibility till FY22.

Sinarmas Land (S$0.45 / Target px: S$0.73 / BUY) • 1Q17 earnings were in line with expectation as a higher number of residential units were

handed over in BSD city, Indonesia. • Expect more land sales in particular industrial land amid improving economic landscape

in Indonesia. • Strong sales traction from soft launch of property development project in Batam, as 65%

of units that were soft launched were sold out. UOL Group (S$7.00 / Target px: S$7.64 / ACCUMULATE) • 1Q17 earnings were within our expectations where the Group has fully sold two out of

five property development projects on hand. • Stable performance in Singapore property development arm with steady sales in

Principal Garden and The Clement Canopy. • Three new property development projects (SG:2 and China:1) in the pipeline slated for

launch in CY18 where strong take-ups in these new projects would re-rate the stock. Global Logistic Properties (S$2.90 / Target px: S$2.87 / NEUTRAL) • FY17 earnings exceed our expectations amid higher revaluations from Japan, US and

Brazil properties. • Development starts and completion targets in FY18 largely unchanged from FY17 as key

markets face near term supply challenges. • Management to focus on revitalising current portfolio amid declining lease ratio and

rents. The strategic review is still ongoing.

Ho Bee Land (S$2.34 / Target px: S$2.64 / ACCUMULATE) • Higher profits from Australian and China residential development projects boosted 1Q17

revenue. • Asking prices for projects in Shanghai and Zhuhai trending up. Management expressed

intention to continue holding five remaining assets in UK for recurring income as these assets enjoy long leases (5-10years).

• Sentosa Cove properties continue to be an interim leasing strategy. Average occupancy for projects stand at c.70%.

Dehong Tan Investment Analyst (Property / REIT(Commercial, Retail, Healthcare)) [email protected] DID: 6212 1849




REIT – INDUSTRIALS • Generally negative rental reversions seen across the board. • e-Shang Redwood Limited possibly laying the foundation for a major merger among the

Industrial REITs. • Sabana Shari’ah Compliant REIT, Cambridge Industrial Trust and Cache Logistics Trust are

the likely candidates for such a consolidation.

REIT - OFFICE CapitaLand Commercial Trust (S$1.66 / Target px: S$1.63 / NEUTRAL) • 1Q17 results within our expectations. Key weakness in Raffles City offset by increase in

NPI from CapitaGreen. • Lesser leasing activity in the quarter due to minimal lease expiry (5%) for FY2017. This

mitigates downside risk for 2017. But 2018 could be worse for rental reversions. • Pace of office rental decline abating. We expect bottoming out in 2018.

REIT - RETAIL Frasers Centrepoint Trust (S$2.12 / Target px: S$2.04 / NEUTRAL) • 1H17 results within our expectations. Northpoint Mall is on track to achieve a targeted

9% increase in rents post AEI in September 2017. • Generally weak tenant sales in CY1Q17 due to shortened window between Christmas and

Chinese New Year, in line with channel checks across other mall operators. Management guided for stronger numbers for March vs Jan-Feb.

• Drop in financing costs as a result of falling 3m SOR from 1.10% in Dec 15 to current 0.99%. 57% of borrowings hedged on fixed interest rates.

CapitaLand Retail China Trust (S$1.56 / Target px: S$1.44 / NEUTRAL) • 1Q17 results within our expectations. Top-line boosted by new acquisition, without the

acquisition revenue would have come in flat. • Executed well on recent acquisition CapitaMall Xinnan, as promised there was

improvement in NPI yield on cost through tenant rejuvenation. • Slowing tenant sales and high occupancy costs is an overhang for rental reversions.

Rental reversion weakened to 3.6% in 1Q17, continuing a downward trend since the double digit growth years from 2011-2014.

REIT – OTHERS/FOREIGN/BUSINESS TRUST Croesus Retail Trust (S$1.02 / Target px: S$1.08 / ACCUMULATE) • 3Q17 results within our expectations. Stable portfolio performance and occupancy rates. • Favourable SGD/JPY hedging rate in the quarter for FY19 distributions to improve DPU

YoY for FY19. • Potential takeover offer should be at higher premium. Price appears inexpensive even

after rally. First REIT (S$1.32 / Target px: S$1.32 / Downgrade to NEUTRAL) • 1Q17 results within our expectations. Top-line boosted by acquisition in an otherwise flat

organic growth portfolio. • 34.2% debt due in Nov-Dec 2017 but interest costs not expected to spike. Management

guided for flat to slightly higher interest rate based on initial negotiations with banks. • Uptick in CPI at turn of year to boost forward rental increments of Indonesian hospitals. • Downgrade to Neutral from Accumulate rating due to the run-up in stock price. Asian Pay TV (S$0.58 / Target px: S$0.64 / BUY) • 1Q17 results below expectations due to several non-cash items due to stronger Taiwan

dollar. • Management re-affirmed DPS guidance of 6.5cents for FY17, to be paid quarterly. We

believe this DPU is sustainable new few years due to the monopolistic nature of the business.

• New trustee manager has managed immediately renegotiated for lower interest rates with the bank. The 30bps interest savings or around S$4m is almost 5% of distributable dividends per annum.


Dehong Tan Investment Analyst (Property / REIT(Commercial, Retail, Healthcare)) [email protected] DID: 6212 1849

Paul Chew Head of Research [email protected] DID: 6212 1851






SHIPPING / OIL AND GAS Ezion Holdings (S$0.26 / Target px: S$0.40 / BUY) • 1Q17 earnings were below expectation. There were two units that completed upgrading

works and planned for deployment in Middle East but subsequently postponed. Some players in Middle East are confronted by a liquidity crunch.

• Lower utilisation rate of existing fleets and FX losses worsened the performance. The turnaround may not be seen until 3Q17.

• Upstream clients postponed maintenance work to focus on production. This resulted in clients delaying taking delivery of units from Ezion.

Sembcorp Marine (S$1.69 / Target px: S$1.58 / Upgrade to NEUTRAL) • FY17 earnings slightly above expectation. Shrinking order books continue despite the

recovery in oil price to c.US$50/bbl. Drillship contacts from Sete Brasil remain frozen. • SMM has increasing enquires on near shore gas infrastructure solutions (floating LNG).

The company is expected to win some contracts in this segment. • Upgrade to Neutral from previous Reduce rating, as we expect better contract flows from

commercialization of Gravifloat LNG solutions.

TRANSPORT ComfortDelGro Corp (S$2.40 / Target px: S$3.02 / ACCUMULATE) • 1Q17 earnings in line with expectation, but the magnitude of the QoQ change in taxi idle

rate was a negative surprise. Taxi fleet continues to contract QoQ, with corresponding reduction in capital expenditure.

• 75%-owned subsidiary, SBS Transit, had better earnings YoY, following the transition to the bus contracting model. Positive developments in the pipeline are the opening of Downtown Line Stage 3 on 21Oct17 and start of operations for the Seletar bus package (1Q18) on the bus contracting model.

• Award of Thomson-East Coast Line tender would re-rate the stock. SATS (S$5.14 / Target px: S$5.08 / NEUTRAL) • FY17 earnings below expectation, dragged down by higher costs in 4Q17. Airline yields

affecting pricing power, and margins for SATS could compress in FY18. • Cargo tonnage processed by the Group was higher due to the Hanjin Shipping

bankruptcy. • Strategy of inorganic growth through partnerships (associates/JVs) continue to deliver

bottom line growth. Management reaffirmed its “progressive and sustainable” dividend policy based on an increasing pay-out when cash flow requirements allow.

SIA Engineering (S$3.91 / Target px: S$3.70 / NEUTRAL) • FY17 earnings in line with expectation. Trend of more maintenance being done on the

apron instead of in the hanger is driving line maintenance segment revenue. • Lower fuel prices had incentivised operators to delay retiring the less fuel efficient B747

fleet and lifted associate Eagle Services profit. • Positive surprise came from a 5 cents special dividend (FY16: nil). Total dividend for FY17

of 18 cents was higher than previous year’s 14 cents.

Chen Guangzhi Investment Analyst (Oil & Gas / Energy) [email protected] DID: 6212 1859






CORPORATE NEWS AusGroup is proposing a debt-to-equity conversion for its S$110mn notes due 2018, and on a shareholder loan from Ezion Holdings. Steel mesh manufacturer BRC Asia said certain shareholders have received unsolicited offers that might or might not lead to an acquisition of the company's shares. Activist investment fund Quarz Capital Asia published an open letter, saying that HG Metal should consider selling its 22.6 per cent stake in BRC Asia and return money to HG's shareholders. Lucrum 1 made a pre-conditional mandatory offer for Cityneon Holdings. This comes after it entered into a conditional share purchase agreement with Star Media worth S$115.6mn for 52.5% stake in Cityneon at S$0.90 per share. Croesus Retail Trust updated that discussions with regards to the potential acquisition of the Trust are still ongoing and there is no certainty or assurance that these discussions will result in any transaction. The first announcement for this potential offer was made on 26 April. Marco Polo Marine has recommended that the trading of the shares to be suspended. This is due to an increasing number of reservation of rights letters and demand letters, including a statutory demand, from creditors. Pan-United is to spin off China ports business in HK listing and raise up to S$60.9mn from a rights issue to pay off port-related debt. Netlink Trust, the fibre broadband network owned by SingTel, has started briefing analysts ahead of an initial public offering. Government regulators have given Singtel an April 2018 deadline to cut its NetLink Trust stake to less than 25%. Wing Tai Holdings launches RM291mn takeover bid for Malaysian counterpart Wilmar is considering listing its China business in Shanghai to boost its profile on the mainland and potentially pave the way for deals. Citic Envirotech has, through a joint venture, secured a three billion yuan (S$610mn) river-restoration project in an eastern Chinese city. Sembcorp Industries will undertake a strategic review of its business model and strategic direction. Singapore Airlines is undertaking a major review of its business and is open to shifting the balance of power away from its trademark premium carrier to its regional and budget airlines. SingPost said it has launched a review of the circumstances surrounding the acquisition of Trade-Global, and whether sufficient due diligence was carried out. S&P Global Ratings cut its long term rating on Noble Group by three notches from B+ to CCC+, and warned of more trouble ahead. This was after downgrades two notch downgrade by Moody's to Caa1 and Fitch cut its long-term rating on the company to BB- from BB+. Container shipping line CMA CGM posted higher first-quarter profits, helped by a turnaround at recently acquired NOL. A net profit of US$26mn for the former NOL business represented a first quarterly net profit for NOL since 2011. Source: Bloomberg, Business Times, Straits Times, SGX announcements

Corporate Finance Activities

Contracts won

Other updates



On the ground in Singapore – excerpts from our various conversations

F&B - retail 1. Rental rates still rising but at a much slower pace. Average lease term is three years. Recent renewals are at 5% rise (over three years) from a peak of 20%. This implies rental growth tapered down to a 2-3% per annum rise from the peak of 5-6%. Because mall owner knows how much sales their tenant generates, they know how much to "squeeze" the tenant. Rental is around 30% of sales, and there is a percentage share of sales generated, whichever is higher. 2. Online delivery commission is 20-30% of sales. It is a trend that cannot be avoided. Important to balance delivery and not affect customers in-premise which is the priority. Delivery mostly to suburbs. On-line delivery companies are many such as Uber Eats, Honest Bee and deliveroo. 3. Staffing situation not as bad as three years ago, but still have to worry if there is sufficient quota to employ foreigners when expanding. Current quota is two Singaporeans to one foreigner. Foreign levy is S$300 to $700 depending on education level. Labour is around 20% of sales. 4. Stores need to be conveniently located to capture the mall flow. Under the present challenging conditions, more F&B stores are closing. As a results, malls are offering more good locations to potential tenants. Marine: OSV 1. Whole eco-system from subcontractors to equipment manufacturers is still facing a liquidity squeeze and little credit extended. Some in the supply chain want cash upfront terms due to the large number of corporate failures. Suppliers and customers ae fearful each party will default. 2. The worry ahead is more listed names go underwater and this will tighten further bank credit lines. Even selling vessels with contract attached have been rejected by banks. 3. OSV bids for contract are now at levels sufficient to just cover operating expenses and keep the vessel afloat. 4. Upstream operators oil and gas operators are deferring maintenance work and using this window of higher prices to push production. Property developer: Australia exposure 1. Risk of foreign Chinese buyers walking away from their 10% deposit. This is due to capital controls. This is unlike local buyers which are still liable to property purchased. 2. Another risk is inability by developer to secure financial close because of local buyer quota set by the bank is not met. Every bank sets quota on proportion of local and foreign buyers E.g. some banks will not release construction loans if sales is less than 65% to locals. 3. Property development is cash-flow negative until project completed. This is because developer has to pay the agent upfront and even the 10% deposit is in escrow with the lawyers. An advantage Australian developments have over Singapore is the cheaper cost of the land-bank and ability to somewhat defer the development if pre-sales does not meet expectations. Property developer: Singapore residential 1. Demand is returning, on the first day of launch, a project can be 50% sold. There is pent up demand from buyers waiting on the sidelines the past 1-2 years. But because this is pent up demand, never clear the sustainability in view of the soft economy. 2. Cost structure of property development has declined: a) construction cost is lower than expected, at S$220 psf from S$280 psf in the past; b) lending spread over SIBOR has also contracted by as much as 40-50bps; 3) professional fee is now 2% of project cost from 4.5-5% in the past. 3. On land acquisition, good locations are the key. Supply cannot be increased in good locations and will not bid in commodity sites Punggol and Clementi where there is more government land site supply. Better to target the large land sites because bidding per square feet is more conservative since less competitive.

Paul Chew Head of Research [email protected] DID: 6212 1851



1. SINGAPORE ECONOMICS - PMI and loans growth healthy; IPI, exports and retail weak

Business Activity

Industrial production rolled over in

April. Growth of 6.7% in April is off 1Q17

pace of 8.4%. Nevertheless, the April

figure is the best in 7 years, since Apr10

industrial production growth of 49%.

Electronics remain the most vibrant

component of industrial production, up

48%.

PMI and new orders PMI deteriorated

marginally in April. Current PMI levels

are the highest in more than two years.

Trade/Consumer

After a robust 15% YoY growth in 1Q17

and five consecutive months of growth,

NODX in April collapsed to a negative

0.7% YoY. This was below the expected

13% increase. Electronic exports remain

healthy, rising 4.8% in April, marginally

softer than the 5% in March.

The source of weakness was 40% plunge

in pharmaceutical exports.

Credit card billings growth slowed to 6%

in Apr17. YTD, credit card billings is up

7%. However, this is not reflected in

retail sales which recovered in March

with 2% rise but for 1Q17, retail sales

only up 0.7%. This is below the 2-3%

trend growth in 2014-16.

Tourism

Visitor arrivals recovered in March.

1Q17, visitor arrivals are up 4% YoY. This

is still below the 2016 visitor arrival

growth of 7% YoY. Sharp increase in

Chinese visitor arrivals, up almost 10%

in March. 1Q17 visitor arrival from China

is up a healthy 14% YoY. This is still half

the rate of 36% YoY growth rate in 2016.

On revpar, encouraging that there is

some stability in March. Recall that

revpar has been on negative territory

since 2013.

Source: CEIC, PSR

-50.0%

-30.0%

-10.0%

10.0%

30.0%

50.0%

70.0%

Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16

Singapore - Industrial production (% YoY)

SG: IPI SG:IPI Electronics

Month IPI IPI-Elec

Previous Mar-17 11.0% 38.6%

Latest Apr-17 6.7% 48.0%

40.0

45.0

50.0

55.0

60.0


Singapore - PMI

SG:PMI SG :PMI New orders

Month PMI Order

Previous Mar-17 51.2 51.7

Latest Apr-17 51.1 51.5

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

Mar-07 Mar-09 Mar-11 Mar-13 Mar-15 Mar-17

SG - Non-oil domestic exports in US$ (% YoY)

SG:NODX

Month SG:NODX

Previous Mar-17 16.5%

Latest Apr-17 -0.7%

-10.0%

0.0%

10.0%

20.0%

30.0%

Jan-06 Jun-07 Nov-08 Apr-10 Sep-11 Feb-13 Jul-14 Dec-15

SG - Consumer spending (% YoY)

SG:Credit Card Billing SG:Retail Sales

Month Credit Card Retail

Previous Feb-17 6.1% -2.5%

Latest Mar-17 9.2% 2.1%

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%


SG - Vistor Arrivals (% YoY)

SG: Visitor Arrival SG: China Arrivals

Month Visitors China

Previous Feb-17 1.9% -3.2%

Latest Mar-17 5.1% 9.7%

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%


SG - Hotel and Travel (% YoY)

SG: Hotel Revpar SG: SIA Passengers Carried (m)

Month Revpar SIA

Previous Feb-17 -0.4% 0.7%

Latest Mar-17 0.5% 2.9%



Monetary

Loans growth continued its upward

trajectory. April loans growth was 7%

YoY, the 7th consecutive month of

increase. YTD, loans grew 5%, the fastest

pace in 2 years. Business loans is the

fastest growing category, driven by

working capital needs as the external

environment improves. Housing loans is

growing at slower pace, 4% YoY.

Liquidity conditions in Singapore remain

robust with the rise in FX reserves and

M3 growth.

Healthcare

Hospital admissions are trending down.

YTD hospital admission for private sector

is up 2%. This is far below the 10% YoY

growth enjoyed in 2016. The softness is

due to a combination of slower medical

tourist arrivals and switching to public

hospitals.

Outpatient admissions for dental and

specialist are relatively stable. YTD,

dental and specialist admission grew 2%

and 4% respectively. This compares with

2016 growth of 5% for both these

segments.

Note# No new updates on this dataset. Our

last available data point was 24Mar17.

Construction/Property

Construction activities in Singapore still

weak. 1Q17 construction contracts

awarded is down massive 54%, whilst

RMC* demand is down 12% YoY.

YTD property transactions (primary and

secondary) are up 63%. The 2895

transactions in April, is some of the

highest since April 2013. In the peak year

of 2012, the monthly average total

transaction was 3329. Even secondary

transaction was strong in April at 1015

units, the highest in more than four

years.

* RMC = Ready Mixed Concrete; SGX listed

RMC producers are Pan United and Hong

Leong Asia.

Source: CEIC, Realis, PSR

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14 Jan-16

SG - DBU Loans (% YoY)

SG:Total Loans SG:DBU Business loans

Month Total Business


Latest Apr-17 7.0% 9.5%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

-20,000

-15,000

-10,000

-5,000

0

5,000

10,000

15,000

Jan-06 Sep-07 May-09 Jan-11 Sep-12 May-14 Jan-16

SG - Liquidity

SG:Reserves net change (U$m) SG:M3 YoY

Month FX M3

Previous Feb-17 0.6 7.7%

Latest Mar-17 6.3 7.2%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%


SG - Hospital Admissions 3MMA (% YoY)

SG:Hosp. Total SG:Hosp. Private

Month Total Private

Previous Jan-17 4.8% 2.8%

Latest Feb-17 3.4% 2.8%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

Jan-08 Jan-10 Jan-12 Jan-14 Jan-16

SG - Outpatient Admissions 3MMA (% YoY)

SG:Outpatient dental SG:Outpatient Specialist

Month Dental Specialist

Previous Jan-17 -4.1% -2.0%

Latest Feb-17 9.0% 11.1%

-50.0%

0.0%

50.0%

100.0%


SG - Construction demand (% YoY)

SG:Const. Contracts 6MMA SG: RMC Demand

Month Const RMC

Previous Feb-17 -18.6% -4.0%

Latest Mar-17 -42.3% -14.0%

0

1000

2000

3000

4000

5000

Jan-10 Jan-12 Jan-14 Jan-16

SG - Private Resi. Primary & Secondary (Units)

SG:Total Sales SG:Total Sales - 6MMA SG: Monthly Average

Month Total Primary Secondary

Previous Mar-17 3311 2353 958

Latest Apr-17 2895 1880 1015



2. US ECONOMICS - Jobs and port activity are up; ISM ,loans, retail and auto weak

Business Activity / Jobs

ISM new order index has again rolled-

over. This is 2nd consecutive month of

decline after the peak of 65 in Feb17.

Nevertheless, the Apr17 reading of 57.5

(l/term average: 55) is still healthy and at

an expansionary mode.

Payrolls recovered after disappointing

March number. The 211k increase in

payrolls was better than the expected

185k. US unemployment rate at 4.4% is

the best since May 2007. With low

unemployment rates, it is interesting

that wage growth is not improving. We

can only assume that low wage work

growth lead by leisure, hospitality and

healthcare.

Trade / Banking

Port activity recovered strongly in April,

the 2nd consecutive month of growth. US

imports in Mar improved to 9% from

feb17 1% rise. Expect stronger import

numbers in April following the jump in

port activity.

Loans growth continues to trend

downwards. The more important C&I (or

business) loans growth is also soft. This

is contrary to optimism of an investment

with Trumponomics.

Sentiment / Consumer

Consumer confidence in April is off its

record highs achieved in March of 124.9.

Small business optimism remains

elevated or 12 year highs. This is

essentially the Trump effect.

Retail sales excluding auto was weaker in

April. Retail sales are up 3.8% YTD. This is

a faster pace than 2016 3% growth.

Auto sales continue to decline, the 4th

consecutive month of decline and down

almost 3% YTD. Auto sales were flat in

2016.

Source: CEIC, PSR

-20

0

20

40

60


US - ISM Index

US:ISM new ordersUS: PMI new orders less inventory

Month New New - Inv.


Latest Apr-17 57.5 6.5

1%

2%

3%

4%

-1,000

-500

0

500

Mar-07 Mar-09 Mar-11 Mar-13 Mar-15 Mar-17

US - Jobs

US: Net payrolls sa(000s)US: Av. Hourly earnings YoY

Month Payrolls Hourly

Previous Mar-17 79 2.6%

Latest Apr-17 211 2.5%

-40%

-20%

0%

20%

40%


US - Import Activity (% YoY)

US:Imports US: LA Port Throughput (3MMA)

Month Imports Port


Latest Apr-17 0.0% 16.5%

-20%

-10%

0%

10%

20%


US- Loans Growth (% YoY)

US: Total Loans growth US:C& I Loans Growth

Month Total C&I


Latest Apr-17 4.4% 2.6%

80

85

90

95

100

105

110

20

40

60

80

100

120

140


US - Sentiment Index

US: Cons. Confidence US: Small Bus. Optimism

Month Consumer Small Biz.


Latest Apr-17 119.4 104.5

-50%

-30%

-10%

10%

30%

-10%

-5%

0%

5%

10%


US - Consumer Demand (% YoY)

US: Retail Sales Ex-Auto (3MMA) US: Auto Sales

Month Retail Auto

Previous Mar-17 3.7% -2.0%

Latest Apr-17 3.4% -4.9%



3. CHINA ECONOMICS - Steel and reserves are up; Electricity, railway freight and property down

Business Activity

After touching a five year high of 51.8 in

March, the PMI corrected back to 51.2

and remain stable in April. This is the

tenth consecutive reading above 50.

Non-manufacturing PMI improved after

touching similar highs in Mar17.

Freight traffic grew slower in Apr17 but

still at several year highs. YTD, railway

freight traffic is up almost 16% (2016: -

1%). Freight traffic has never been this

robust except 2010, the year when China

has a massive fiscal stimulus. Electricity

consumption is up 6% in April, this is

back to 2016 trend growth of around 7%.

Month Elect. Railway


Latest Apr-17 6.1% 15.5%

Construction/Property/Monetary

Steel production rebounded in April, up

almost 5%. This is back to 4Q16 growth

levels after the weak March figure.

Residential space sold slowed to 5%. This

is off the 2016 surge of 27%. The

widening property curbs is beginning to

impact demand.

After 7 months of consecutive decline of

~US$200b, the last 3 months of Feb-

Apr17 has seen reserves turning a

positive U$31.1b.

Loans growth is decelerating to the

slowest pace in 10 years.

Inflation/Retail

3rd consecutive month of rising inflation

but still around 2 year lows. Collapse in

food prices (vege and meat) is

suppressing headline inflation.

Retail sales in China still growing at

healthy pace of almost 11% YoY. Online

sales still growing at a stellar rate of

above 30% YoY.

Source: CEIC, PSR

30.0

40.0

50.0

60.0

70.0


China - PMI

CH:PMI CH:PMI new Orders CH:PMI Non-Manuf

Month PMI NewOrd. NonManuf.

Previous Apr-17 51.2 52.3 54.0

Latest May-17 51.2 52.3 54.5

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Sep-10 Sep-12 Sep-14 Sep-16

China - Activity Indicator (3MMA - YoY %)

CH:Electricity consumption CH:Railway Freight

-20.0%

0.0%

20.0%

40.0%

60.0%

Jan-10 Jan-12 Jan-14 Jan-16

China - Construction Activity (YoY %)

CH:Steel production CH:Residential Sold (space)

Month Steel Resi.


Latest Apr-17 4.8% 5.0%

-200

-150

-100

-50

0

50

100

150

10%

15%

20%

25%

30%

35%


China - Monetary Conditions

CH:Net Change Reserves (U$b) CH: Loans growth (% YoY)

Month Reserves Loans

Previous Mar-17 4.0 12.4%

Latest Apr-17 20.4 12.9%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

-4%

-2%

0%

2%

4%

6%

8%

10%


China - Inflation (% YoY)

CH:CPI CH:PPI

Month CPI PPI


Latest Apr-17 1.2% 10.1%

30%

31%

32%

33%

34%

35%

36%

37%

38%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Jan-09 Jan-11 Jan-13 Jan-15 Jan-17

China - Retail Sales (YoY %)

CH:Retail Sales CH:Online Sales

Month Retail Online


Latest Apr-17 10.7% 35.6%



Contact Information (Singapore Research Team) Head of Research Research Operations Officer

Paul Chew – [email protected] Mohamed Amiruddin - [email protected]

Consumer | Healthcare Property | Infrastructure Macro

Soh Lin Sin - [email protected] Peter Ng - [email protected] Pei Sai Teng - [email protected]

Transport | REITs (Industrial) REITs (Commercial, Retail, Healthcare) | Property Technical Analysis Richard Leow, CFTe, FRM -

[email protected] Dehong Tan - [email protected] Jeremy Ng - [email protected]

Banking and Finance US Equity Oil & Gas | Energy Jeremy Teong - [email protected] Ho Kang Wei - [email protected] Chen Guangzhi - [email protected]

Contact Information (Regional Member Companies) SINGAPORE

Phillip Securities Pte Ltd Raffles City Tower

250, North Bridge Road #06-00 Singapore 179101 Tel +65 6533 6001 Fax +65 6535 6631

Website: www.poems.com.sg

MALAYSIA Phillip Capital Management Sdn Bhd

B-3-6 Block B Level 3 Megan Avenue II, No. 12, Jalan Yap Kwan Seng, 50450

Kuala Lumpur Tel +603 2162 8841 Fax +603 2166 5099

Website: www.poems.com.my

HONG KONG Phillip Securities (HK) Ltd

11/F United Centre 95 Queensway Hong Kong

Tel +852 2277 6600 Fax +852 2868 5307

Websites: www.phillip.com.hk

JAPAN

Phillip Securities Japan, Ltd. 4-2 Nihonbashi Kabuto-cho Chuo-ku,

Tokyo 103-0026 Tel +81-3 3666 2101 Fax +81-3 3666 6090

Website: www.phillip.co.jp

INDONESIA PT Phillip Securities Indonesia

ANZ Tower Level 23B, Jl Jend Sudirman Kav 33A Jakarta 10220 – Indonesia

Tel +62-21 5790 0800 Fax +62-21 5790 0809

Website: www.phillip.co.id

CHINA Phillip Financial Advisory (Shanghai) Co Ltd

No 550 Yan An East Road, Ocean Tower Unit 2318,

Postal code 200001 Tel +86-21 5169 9200 Fax +86-21 6351 2940

Website: www.phillip.com.cn

THAILAND Phillip Securities (Thailand) Public Co. Ltd

15th Floor, Vorawat Building, 849 Silom Road, Silom, Bangrak,

Bangkok 10500 Thailand Tel +66-2 6351700 / 22680999

Fax +66-2 22680921

Website www.phillip.co.th

FRANCE King & Shaxson Capital Limited

3rd Floor, 35 Rue de la Bienfaisance 75008 Paris France

Tel +33-1 45633100 Fax +33-1 45636017

Website: www.kingandshaxson.com

UNITED KINGDOM King & Shaxson Capital Limited

6th Floor, Candlewick House, 120 Cannon Street, London, EC4N 6AS

Tel +44-20 7426 5950 Fax +44-20 7626 1757

Website: www.kingandshaxson.com

UNITED STATES Phillip Capital Inc

141 W Jackson Blvd Ste 3050 The Chicago Board of Trade Building

Chicago, IL 60604 USA Tel +1-312 356 9000 Fax +1-312 356 9005

Website: www.phillipusa.com

AUSTRALIA Phillip Capital Limited

Level 10, 330 Collins Street Melbourne, Victoria 3000, Australia

Tel +61-03 9629 8288 Fax +61-03 9629 8882

Website: www.phillipcapital.com.au

SRI LANKA Asha Phillip Securities Limited 2nd Floor, Lakshmans Building,

No. 321, Galle Road, Colombo 03, Sri Lanka Tel: (94) 11 2429 100 Fax: (94) 11 2429 199

Website: www.ashaphillip.net

INDIA PhillipCapital (India) Private Limited

No.1, 18th Floor, Urmi Estate 95, Ganpatrao Kadam Marg

Lower Parel West, Mumbai 400-013 Maharashtra, India

Tel: +91-22-2300 2999 / Fax: +91-22-2300 2969

Website: www.phillipcapital.in

TURKEY PhillipCapital Menkul Degerler

Dr. Cemil Bengü Cad. Hak Is Merkezi No. 2 Kat. 6A Caglayan 34403 Istanbul, Turkey

Tel: 0212 296 84 84 Fax: 0212 233 69 29

Website: www.phillipcapital.com.tr

DUBAI Phillip Futures DMCC

Member of the Dubai Gold and Commodities Exchange (DGCX)

Unit No 601, Plot No 58, White Crown Bldg, Sheikh Zayed Road, P.O.Box 212291

Dubai-UAE Tel: +971-4-3325052 / Fax: + 971-4-3328895

CAMBODIA

Phillip Bank Plc Ground Floor of B-Office Centre,#61-64, Norodom Blvd Corner Street 306,Sangkat Boeung Keng Kang 1, Khan Chamkamorn,

Phnom Penh, Cambodia Tel: 855 (0) 7796 6151/855 (0) 1620 0769

Website: www.phillipbank.com.kh

Important Information












http://www.poems.com.sg/

http://www.poems.com.my/

http://www.phillip.com.hk/

http://www.phillip.co.jp/

http://www.phillip.co.id/

http://www.phillip.com.cn/

http://www.phillip.co.th/

http://www.kingandshaxson.com/

http://www.kingandshaxson.com/

http://www.phillipusa.com/

http://www.phillipcapital.com.au/

http://www.ashaphillip.net/

http://www.phillipcapital.in/

http://www.phillipcapital.com.tr/

http://www.phillipbank.com.kh/



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S&P/ASX 200 5,725 (4.0) 0.9 2 June 2017 Global Market Watch · Technical Analysis : ... Consumer...

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Transcript of S&P/ASX 200 5,725 (4.0) 0.9 2 June 2017 Global Market Watch · Technical Analysis : ... Consumer...