Daily Morning Note – 30 January 2019


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M1 Limited – ARPU Pressure offset by subscriber growth

Recommendation: NEUTRAL (Maintained), Last Done: S$2.06

Target Price: S$2.06, Analyst: Alvin Chia

– Overall results are in line with our expectations

– Full year dividend of 11.2 cents, a mild 2% contraction from a year ago

– ARPU contracted 4.3% YoY in 4Q18 but was offset by subscriber growth of 7.1%. Post-paid subscribers
rose a record 92k.

– We maintain our NEUTRAL recommendation with an unchanged TP of S$2.06. Shareholders should accept
the VGO

Micro-Mechanics (Holdings) Ltd – 2018 a difficult comp

Recommendation: ACCUMULATE (Downgraded), Last Done: S$1.67

Target Price: S1.70, Analyst: Paul Chew

– We maintain our NEUTRAL recommendation with an unchanged TP of S$2.06. Shareholders should accept
the VGO Revenue and PATMI were below our expectations. We are lowering our FY19e revenue and
PATMI by 5% and 12% respectively.

– Top-line has been hurt by a general slowdown in semiconductor demand, exarcebated by uncertainty over
trade talks between US and China.

– In-line with our lower earnings estimate, we have reduced our target price on MMH to S$1.70 (previously
S$2.05). We peg our valuations to 15x FY19e PE. This is in-line with back-end semiconductor supply chain
valuations. We lowered our recommendation to ACCUMULATE.


Oil prices up 2% following US sanctions on Venezuela. International Brent crude oil futures were up US$1.39 to settle at US$61.32 a barrel, a 2.32 per cent rise, while US West Texas Intermediate (WTI) crude futures increased US$1.32, or 2.54 per cent, to settle at US$53.31 a barrel. Venezuela is among the world’s largest heavy crude oil producers, and the United States has been its biggest client, taking about half the country’s export volumes.

Federal Reserve’s Powell works Congress as Trump stews over rate hikes. US Federal Reserve Chairman Jerome Powell has been meeting with lawmakers at a faster clip than his two predecessors, a push that appears to be earning him allies as he navigates tricky monetary policy waters and vocal White House criticism. In his first 10 months on the job, and beginning well before President Donald Trump began publicly chastising him and the US central bank for raising interest rates, Mr Powell logged more than 40 hours on the phone or in person with Republican and Democratic lawmakers, his calendars show.

Singapore Changi Airport registered a strong performance in 2018, handling a record 65.6 million passenger movements (+5.5%) for the year with 386,000 landings and take-offs (+3.4%). Airfreight throughput increased by 1.4% to reach 2.15 million tonnes for 2018.

Advance SCT acquires 40% of N&T Engineering Enterprises for up to S$3.5m. Advance SCT is a supplier of copper-related products that is diversifying into the business of mechanical and electrical (M&E) engineering for mission-critical infrastructure (MCFI) and systems. The firm said in a Singapore Exchange filing that N&T is a Singapore-based M&E company specialising in design, customisation, operation, installation and maintenance of MCFI and Smart City systems. Its clients are mainly government agencies, government linked companies, multinational corporations and higher learning institutions.

M1 takeover bid leaves Malaysian wireless giant Axiata in a bind. Axiata, M1’s biggest shareholder, has less than three weeks left to decide whether to tender its stock into a takeover offer valuing the target at S$1.9 billion. Axiata sees that there isn’t enough time left to pull together its own counteroffer, the people said. The Malaysian company also considers it unlikely a rival bidder will emerge at this point, one of the people said. Still, Axiata plans to wait until close to the Feb 18 deadline before making a final decision to accept, the person said, asking not to be identified because the information is private.

Thomson Medical shareholders recommended to accept RSP TopCo’s general offer. This is based on the opinion of the independent financial adviser, Provenance Capital, that the financial terms of the offer are “fair and reasonable”. RSP TopCo is offering S$0.006006 in cash for each RSP Holdings share.

Raffles United sells unit at Citimac Industrial Complex for S$6.1m as part of collective sale. The completion of the sale of the property, which has a freehold tenure with a land area of 436 square metres, will take place on March 6, 2019 provided that all owners comply with the execution of documents related to the collective sale by Jan 30, 2019. The fair value of the unit as at Dec 31, 2018 was about S$3.6 million. Based on the latest announced unaudited consolidated accounts of the group for the full year ended Dec 31, 2018, the sale of property will result in a net gain of about S$2.5 million after deducting related expenses.

Source: Changi Airport Group, SGXNet

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