Singapore Pre-Market Friday: StarHub, BreadTalk, Great Eastern

Singapore’s shares will start Friday trade with weak leads, as regional markets already trading were nose down and Wall Street had a middling finish overnight.

Japan’s markets were closed for the Greenery Day holiday. South Korea’s shares opened lower, trading down 0.48 percent at 8:26 A.M. SGT.

Wall Street retraced sharp intraday losses on Thursday to end flat to tad down. The Dow Jones Industrial Average ended up 0.02 percent, the S&P 500 shed 0.23 percent and the Nasdaq was off 0.18 percent. Futures for the three indexes were nose down.

Concerns over earnings weighed on U.S. markets. AIG’s results disappointed, with its first quarter profit falling 21 percent on higher catastrophe and bad weather claims, Reuters reported, adding that management was left on the defensive over its strategy.

The U.S. dollar index, which measures the greenback against a basket of currencies, was at 92.4410 at 8:14 A.M. SGT on Friday, down a tad overnight.

“The dollar remains in a long-term secular uptrend, but tonight’s action shows that the pair may be slightly overbought and will need a further catalyst from data to push higher,” Boris Schlossberg, managing director of foreign-exchange strategy at BK Asset Management, said in a note on Thursday.

Markets will be watching for the outcome to trade talks between the U.S. and China, with Bloomberg reporting that a White House economist had said the first day was “fairly positive.” But the talks will pit figures such as former CNBC commentator turned White House economic adviser Larry Kudlow against China’s trade professionals.

U.S. jobs and wages data, due later in the global day, will also be a key focus.

StarHub

StarHub reported its net profit after tax for the first quarter fell 13 percent on-year to S$63 million, while total revenue fell 4.7 percent on-year to S$561.0 million, mainly on lower revenue from mobile and pay TV services, coupled with lower equipment sales.

Mobile revenue fell 7.1 percent in the quarter to S$205.1 million, with both pre-paid and post-pair ARPUs (average revenue per user) falling by S$2 to S$13 and S$43 respectively, the telco said in an SGX filing after the market close. Pay TV revenue fell 10 percent on-year to S$80.7 million as the customer base fell by 38,000 to 449,000 households, it said; ARPU was S$1 lower at S$51, it said.

The telco guided for 2018 service revenue to be 1-3 percent lower on-year, with the service EBITDA margin expected at 27-29 percent after the adoption of new accounting rules. EBITDA stands for earnings before interest, taxes, depreciation and amortization.

StarHub declared an interim quarterly dividend of 4.0 Singapore cents a share, unchanged from the year-earlier quarter.

Great Eastern

Insurer Great Eastern reported that its group profit attributable to shareholders for the first quarter was up 68 percent on-year at S$152.9 million. But total weighted new sales fell 17 percent on-year in the quarter to S$231.1 million on lower single premium sales in Singapore, the insurer said in a filing to SGX before the market open on Friday.

Operating profit from the insurance business rose 32 percent on-year in the quarter to S$159.3 million on positive performance from the life insurance business, it said.

In 2017, Great Eastern contributed S$968 million of OCBC’s S$4.15 billion full-year net profit.

BreadTalk

BreadTalk reported its first-quarter net profit tumbled 89.1 percent on-year to S$1.2 million, while revenue edged up 0.5 percent on-year to S$148.5 million.

The revenue increase was due to a “continual focus on pursuing sustainable growth and eliminating underperforming assets which improved earning quality,” the company said in an SGX filing after the market close on Thursday. It said it brought forward the early closure of eight bakery outlets in China and one Food Atrium outlet in Hangzhou.

The core food and beverage business net profit, excluding effects from a capital gain and asset write offs, was up 89.4 percent on-year at S$2.9 million, the company said, noting that was despite the bakery division’s weaker profitability and initial start-up losses at the 4orth division.

Overall interest expense rose 81.6 percent on-year to S$2.5 million, it said, pointing to interest expense for S$100 million of the five-year, 4.0 percent medium-term note it issued in January. Those funds will be used for planned capex this year, it said.

In its outlook, the company said, “We expect short term earnings volatility as certain capital and operating expenditures will need to be incurred and invested to realise our medium to long term goals.”

Raffles United

Raffles United, a mainboard-listed distributor of bearings and seals, said in an SGX filing before the market open on Friday that it and its subsidiary Kian Ho, received a letter earlier this week from Singapore’s Commercial Affairs Department (CAD) on an investigation into an offence under the Securities and Futures Act.

The company said it had handed CAD the requested documents, information and IT equipment dating from January of 2015.

Lippo Malls Indonesia Retail Trust

Lippo Malls Indonesia Retail Trust reported first-quarter net property income fell 4.6 percent on-year to S$43.95 million, while the distribution per unit (DPU) fell 24.7 percent to 0.67 Singapore cent. That was due in part to Indonesia’s rupiah dropping 9.1 percent on-year against the Singapore dollar.

In rupiah terms, net property income rose 4.1 percent on-year to 450.95 billion rupiah, LMIRT said in a filing to SGX after the market close on Thursday. But results were also hurt by higher property expenses and an income tax increase due to a new Indonesian regulation, which levied a 10 percent tax on outsourced service charges and utilities recovery charges, it said.

“With the Monetary Authority of Singapore’s recent policy stance on the slight increase of the slope of the S$NEER band from zero percent previously, we expect further depreciation of the Indonesian rupiah in the coming quarters,” Chan Lie Leng, CEO of the REIT manager, said in the statement. “We are closely monitoring the exchange rates and constantly exploring new ways to mitigate this inherent foreign exchange risks,” she said.

In its outlook, the trust pointed to the Indonesian economy’s strong growth prospects and expectations for  higher private consumption.

OUE Lippo Healthcare

OUE Lippo Healthcare issued a profit warning, saying it expected to report a net loss for the first quarter, mainly due to operating costs. The results are due to be released on or before May 15, the company said in a filing to SGX after the market close on Thursday.

Daiwa, in a February report, noted that OUE Lippo Healthcare posted losses in 2017 and that the bank expected the unit to post operating losses through 2018-2020. It said that when valuing OUE, it assumed zero value for OUE Lippo Heathcare.

Tiong Seng

Tiong Seng said it landed a S$49.9 million contract with Singapore’s Ministry of Education (MOE) to build a new primary school in Punggol, with construction set to being in May.

The contract will bring the group’s construction order book size to around S$540.9 million, extending into 2020, the company said in an SGX filing after the market close on Thursday.

This article was originally published at 8:44 A.M. SGT on Friday, May 4, 2018; it has since been updated to add Raffles United news.