STI ends lower than Friday's close

As the sun rises on another week of earnings results, The Straits Times Index (STI) continued swinging around the 3,300-point line, opening below it but ending above it at 3,310.80 points, 0.1 per cent lower than last Friday's close.

The market was digesting last week's raft of reports and awaiting those ahead.

The blue-chip index was weighed down by falls in OCBC Bank, DBS Bank, Genting Singapore and CapitaLand, against a rise in United Overseas Bank, Singtel, Ascendas Reit and CapitaLand Mall Trust.

Penny action stayed strong. About 3.26 billion shares worth $958 million changed hands, which worked out to an average unit price of 29 cents a share.

Losers outnumbered gainers 264 to 185.

Conglomerate Keppel Corp, which reported results last week, traded down a cent to $6.57. Keeping a "neutral" call on the counter, Citi Research said lower work volume for Keppel's offshore and marine division has led to the group relying on other business segments.

"Looking ahead, the novation of construction contracts for five jack-ups from Transocean to Borr Drilling (effective last month) should increase work volume in Q3 2017," Citi said.

In the region, a contrarian call on Astra International came from CIMB Research, which downgraded the stock from a "buy" to a "hold" last Friday.

Astra is a major component of the Singapore Exchange-listed Jardine Cycle & Carriage (C&C), which owns half of the Indonesian automotive conglomerate.

Four-wheeler retail sales were soft in the first half of the year, below industry expectations, it said. Astra's market share might come under threat with rivals Mitsubishi and Wuling launching new products, it said.

Jardine C&C rebounded slightly yesterday after a drop last Friday.

In the real estate investment trusts (Reits) sector, warehouse play Cache Logistics Trust fell five cents to 89 cents after reporting a 9.5 per cent drop in distribution per unit (DPU) last Friday.

The Reit has rich valuations given its challenges, said OCBC Investment Research analyst Deborah Ong, one of two analysts who downgraded the counter to a "sell".

"Cache is trading at what we consider an unattractively low 7.6 per cent 2017 forecast yield, relative to other industrial Reits with healthier operating prospects like Viva Industrial Trust (8.4 per cent) and Soilbuild Business Space Reit (8.4 per cent)", she said.

Speaking of yield stocks, SGX mega newcomer, NetLink NBN Trust, traded flat at 80.5 cents. Deutsche Bank initiated coverage on the stock last Thursday with a "buy" call and a target price of 95 cents.

It targeted a 5 per cent estimated yield in FY2019, 70 to 100 basis points lower than the average yield of the Singapore Reits it covers, due to lower cash flow risk.

"We expect mid-term DPU growth at 6 per cent a year post 2019," Deutsche said.

In the second-liners, film and TV content producer mm2 Asia fell three cents to 52.5 cents after its bid to acquire 50 per cent of the Golden Village cinema chain fell through. mm2 and the seller are discussing their options.

The issue is not around funding, but more from the seller, said DBS Group Research analyst Ling Lee Keng in a note.

Even without the acquisition, earnings per share is still expected to grow by 7 per cent for the 2018 financial year, and 24 per cent in the 2019 financial year, Mr Ling said.

Construction player Swee Hong continued to shoot up after a spate of good news.

It announced last Thursday that it had discharged its obligations with its creditors under a 2015 scheme of arrangement.

It followed up the next day with an announcement that it has completed a sale of Kranji land to UOB for $3.1 million.
haoxiang@sph.com.sg

This article appears in The Business Times today. For full listings of SGX prices, go to btd.sg/BTmkts