Singapore stocks to watch Friday: UOB, Sembcorp Industries, hotels, Ascendas Hospitality

Singapore waterfront scene in 1968; photo taken by Leonard Shaffer.

These are the Singapore stocks likely in focus on Friday, 3 August 2018.

UOB

Singapore bank UOB reported on Friday that its second-quarter net profit rose 28 percent on-year to a fresh high of S$1.08 billion, above some analysts’ forecasts, amid strong overall operating income.

UOB said net interest income for the quarter rose 14 percent on-year to S$1.54 billion, supported by 10 percent loan growth and a rise in the net interest margin to of 8 basis points to 1.83 percent.

Net fee and commission income in the quarter rose 11 percent on-year to S$498 million on broad-based growth in loan-related, fund management, credit card and trade-related fees, it said. Other non-interest income for the second quarter decreased 3 percent on-year to S$302 million, mainly on a lower net gain from investment securities, UOB said.

Daiwa had forecast net profit of S$964 million, with net interest income of S$1.499 billion, non-interest income of S$807 million and fee income of S$507 million, with a net interest margin of 1.82 percent.

Read more: UOB reports 2Q18 net profit rose 28 percent to S$1.08 billion, above some forecasts

UOB

Singapore bank UOB said on Friday that it would launch a digital bank to target “mobile first” and “mobile only” customers in Southeast Asia in a bid to spur growth in its regional customer base.

The digital bank is aiming for a customer base of three million to five million over the next five years, with a steady-state cost-to-income ratio of 35 percent, it said, adding launch details would be announced soon.

Read more: UOB plans to launch digital bank in Southeast Asia to target ‘mobile first’ customers

Sembcorp Industries

Sembcorp Industries reported on Friday that second-quarter net profit rose 46.8 percent on-year to S$81.92 million, despite a loss in the marine division as the utilities segment’s contribution nearly doubled.

“Utilities continues to be the key net profit contributor,” it said.

Turnover for the second quarter rose 46.6 percent on-year to S$3.3 billion, mainly on higher revenue from the marine and utilities divisions, it said in a filing to SGX before the market open on Friday.

Utilities revenue rose to S$1.7 billion in the quarter, up S$95 million on-year, mainly from Singapore, China, India and U.K. operations, it said. The segment’s net profit for the quarter rose 97.8 percent on-year to S$85.0 million, with the India operation delivering S$39.4 million in profit, it said.

Read more: Sembcorp Industries 2Q18 net profit rose 46.8 percent despite marine segment loss

Singapore hotels

The Competition & Consumer Commission of Singapore (CCCS) on Thursday issued a proposed infringement decision (PID) against several Singapore hotels for allegedly entering into agreements or practices to discuss and exchange confidential, sensitive and specific information on hotel accommodation for corporate customers.

CCCS alleged that sales representatives of Capri by Fraser Changi City Singapore and Village Hotel Changi and Village Hotel Katong discussed and exchanged information on hotel accommodation in Singapore for corporate customers from at least 3 July 2014 through 30 June 2015.

In response, Frasers Hospitality said in an SGX filing after the market close on Thursday, “We do not condone any of our employees engaging in such conduct and we take such matters seriously. We are studying the PID and will respond to the CCCS in due course.”

CCCS also alleged that sales representatives for the Capri and Crowne Plaza hotels shared information on corporate customers from at least 14 January 2014 to 30 June 2015.

In a filing to SGX after the market close on Thursday, Far East Orchard Ltd. said it would cooperate fully with CCCS in the investigation.

“The group takes legal compliance very seriously and is committed to compliance with all applicable laws. It has and continues to take various steps to review and implement rigorous compliance and training programmes to ensure that its business practices are and continue to be fully compliant with all applicable laws,” Far East Orchard said in the statement. “The group is unable to make any further comment on matters which are part of the ongoing investigations.”

OUE Hospitality Trust, OUE Limited and Inter-Continental Hotels (Singapore) didn’t immediately return Shenton Wire’s emailed requests for comment, which were sent outside of office hours.

Read more: Singapore competition authorities allege possible infringement by some hotels

Keppel Corp.

Keppel Corp. said on Thursday its wholly-owned subsidiary, Keppel Capital Senior Living entered a conditional deal to acquire a 50 percent stake in U.S. senior living operator Watermark Retirement Communities and 50 percent of the minority interests held by Watermark’s owners in certain retirement communities it manages for around US$77.3 million.

Read more: Keppel Corp proposes buying stake in Watermark Retirement Communities for US$77.29 million

Singapore Post

Singapore Post reported on Friday that its fiscal first quarter net profit dropped 40.4 percent to S$18.72 million on an exceptional fair value loss on warrants from an associated company, reflecting changes in their market value, and higher tax.

Operating profit, excluding one-off items, rose 1.2 percent on-year in the quarter ended 30 June to S$39.2 million, it said in a filing to SGX before the market open on Friday.

Read more: Singapore Post reports fiscal 1Q net profit dropped 40.4 percent on fair value loss, higher tax

Ascendas Hospitality Trust

Ascendas Hospitality Trust reported on Thursday that its fiscal first quarter net property income fell 9.3 percent on-year to S$20.2 million after the divestment of the two hotels in Beijing, a lower contribution from its Australia portfolio and as the Singapore dollar strengthened.

Gross revenue for the quarter ended 30 June fell 9.8 percent on-year to S$48.2 million, but income available for distribution rose 3.9 percent on-year in the period to S$16.4 million on the divestment proceeds and lower finance costs, it said in a filing to SGX after the market close on Thursday.

Read more: Ascendas Hospitality Trust fiscal 1Q net property income falls 9.3 percent on divestment, FX

Hi-P

Contract manufacturer Hi-P bought back 100,000 shares in the market on Thursday at S$1.11 each for a total consideration, including other costs of S$111,177.60, it said in an SGX filing after the market close.

On Wednesday, Hi-P reported its second quarter net profit fell 18.7 percent on-year to S$12.28 million, despite an increase in revenue, as margins narrowed on more competitive pricing and a change in the product mix.

That pushed the stock sharply lower on Thursday and it closed down 9.45 percent at S$1.15 after touching a low of S$1.00.

Since the April 2018 start of the buyback mandate, Hi-P has bought back 3,828,700 shares, or 0.474 percent of the issued shares excluding treasury shares, the filing said.

OUE Commercial REIT

OUE Commercial REIT reported on Thursday its second-quarter net property income fell 2.4 percent on-year to S$33.93 million, mainly on lower retail revenue from One Raffles Place Shopping Mall as a result of transitional vacancy from the departure of an anchor tenant, partially offset by lower utilities cost.

Revenue fell 2.2 percent on-year in the quarter to S$43.1 million, it said in a filing to SGX after the market close on Thursday. But the amount available for distribution to unitholders fell 7.5 percent on-year in the quarter to S$16.5 million, due to higher interest expense from higher borrowings, partially offset by higher drawdown of income support and lower CPPU distribution, it said.

The distribution per unit (DPU) fell 7.8 percent to 1.06 Singapore cents, it said.

Ascendas REIT

Ascendas REIT plans to acquire a logistics property, Cargo Business Park, at 56 Lavarack Avenue in Brisbane, Australia, for A$33.5 million, or around S$33.9 million, from TS1 (Qld) Pty., the REIT manager said in an SGX filing on Thursday.

The property is 87.4 percent occupied and TS1 (Qld) will provide a 12-month rental guarantee for the vacant spaces, it said. Property tenants include Commonwealth of Australia (Bureau of Meteorology), Asics and Nike, the filing said. Cargo Business Park has one four-storey and two three-storey buildings on freehold land, it said.

The proposed acquisition will be funded through internal resources and/or existing debt facilities, Ascendas REIT’s manager said.

Far East Orchard

Far East Orchard reported on Friday its net profit for the second quarter rose 44.0 percent on-year to S$1.554 million, despite its sales for the period slipping 0.6 percent on-year to S$35.795 million.

Lower sales in the hospitality business in Australia arose from weak market conditions in Perth and Melbourne, with the impact on sales revenue partially offset by an increase in sales from Oasia Suites Kuala Lumpur and Orchard Parade Hotel, it said in a filing to SGX before the market open on Friday.

But the lower sales were offset by a higher gross profit contribution from Oasia Suites Kuala Lumpur and operational improvement measures, it said.

In a separate filing on Friday, Far East Orchard said it has signed hotel management contracts for 1,920 rooms across nine properties in Australia (Adelaide, Hobart, Melbourne), Germany (Wiesbaden) and Singapore in the first six months of 2018.

Read more: Far East Orchard reports 2Q18 net profit up 44 percent, plans to double hospitality portfolio

Sunpower

Sunpower Group said on Thursday it secured manufacturing and services (“M&S”) contracts of a total 135 million yuan with Hengli Petrochemical (Dalian) Co., a subsidiary of Hengli Group, to manufacture core equipment for its PTA project, which has a production capacity of 2.5 million tons per year.

The contract was expected to have a positive impact on Sunpower’s results this year and next, it said in a filing to SGX after the market close on Thursday.

Perennial Real Estate

Perennial Real Estate Holdings reported on Friday that its second-quarter profit after tax and minority interests fell 49.5 percent on-year to S$8.6 million on lower fair value gain recognized for the China portfolio, higher finance costs attributable to the consolidation of Capitol Singapore’s debt following the acquisition of the remaining 50 percent stake to own 100 percent of the asset, and loans to fund new investments.

Revenue rose 1.6 percent on-year to S$18.1 million, mainly on the consolidation of Capitol Singapore’s revenue from May 2018, improved performance from Perennial Qingyang Mall and Perennial Jihua Mall, and new revenue stream from Perennial International Health and Medical Hub in Chengdu, which commenced operations in June 2018, it said in a filing to SGX before the market open on Friday.

Lippo Malls Indonesia Retail Trust

Lippo Malls Indonesia Retail Trust, or LMIRT, reported on Thursday that net property income for the second quarter fell 7.8 percent on-year to S$43.15 million, even as total gross revenue rose 5.5 percent on-year in the period to S$52.65 million, boosted by contributions from three acquisitions in 2017, partially offset by the expiry of the master leases over the seven retail spaces.

Distributable income to unitholders for the second quarter fell 33.8 percent on-year to S$16.82 million, it said in a filing to SGX after the market close on Thursday. The distribution per unit for the quarter fell 34.4 percent to 0.59 Singapore cent, it said.

In rupiah terms, gross revenue rose 15.9 percent on-year in the second quarter to 551.0 billion rupiah and net property income rose 1.3 percent on-year to 452.0 billion rupiah, it said, noting the rupiah depreciated 9.7 percent on-year against the Singapore dollar.

Property operating expenses in the quarter rose by S$6.4 million on-year to S$9.5 million, mainly on the termination of outsourced maintenance services for five malls on 1 May, it said. LMIRT also said there was a net allowance of S$1.2 million for doubtful debts in the quarter, compared with a net reversal in the year-earlier period, resulting in a 7.8 percent on-year reversal in net property income.

It also noted that income tax expense rose to S$7.6 million in the quarter, from S$5.2 million in the year-earlier quarter on the implementation of new tax regulations, which impose a 10 percent tax on outsourced service charges and utilities recovery charges.

Japan Foods

Japan Foods reported on Thursday that its fiscal first quarter net profit fell 7.6 percent on-year to S$1.0 million, mainly due to lower earnings from associated companies, which led to a 62.5 percent on-year fall in the share of profits from associates to S$57,000.

Revenue for the quarter ended 30 June rose 2.7 percent on-year to S$16.6 million, the  Singapore-based Japanese restaurant chain said in a filing to SGX after the market closed on Thursday.

“The improvement in its overall revenue in [the fiscal first quarter of 2019] was mainly result of higher sales generated by restaurants operating under the ‘Menya Musashi’ brand as well as restaurants operating under the ‘Shitamachi Tendon Akimitsu,’ ‘Curry is Drink’ and ‘Konjiki Hototogisi’ brands,” it said.

Ajisen Ramen, its flagship brand and main revenue generator, posted lower net sales of S$6.1 million, down from S$6.8 million in the year-earlier quarter, mainly due to converting a restaurant from the Ajisen Ramen brand to the Menya Musahi brand in November 2017, the closure of a foodcourt outlet at Marina Bay Sands Shoppes Premium Food Precinct in February 2018, and lower net sales at some existing restaurants.

This article was originally published on Friday 3 August 2018 at 8:13 A.M. SGT; it has since been updated to include items on Singapore Post, Far East Orchard, Ascendas REIT, OUE Commercial REIT, Sunpower Group, Keppel Corp., Lippo Malls Indonesia Retail Trust, Japan Foods and Perennial Real Estate.

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