the current market condition does not favor investors to hold on to stocks as low gets lower. While investing requires to hold shares, I am suggesting to sell a part of shares to lock in the profits and to hold the rest for dividends and hopefully capital growth in the long run.
Similarly, for investors looking for dividends, you will find that REITs will be your preferred choice. under REIT dividend law, the REIT company must have the bulk of its assets and income connected to real estate investment and must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends.
Stocks to watch:
*O&M/Banks: Swiber decision to drop its liquidation filing in favour of judicial management could offer some respite to the hard hit offshore services players, especially highly geared ones such as Ezra, Marco Polo Marine, Pacific Radiance, as well as banks that are exposed to the company and sector.
*MGCCT: 1QFY17 results met estimates, as DPU leapt 9.1% to 1.85¢ on distributable income of $51.3m (+10.6%). Revenue and NPI rose to $84.9m (+11.9%) and $69.4m (+11.2%) respectively, bolstered by acquisition of Sandhill Plaza and increased rental income from Festival Walk. Portfolio occupancy slid to 97.8% (-0.8ppt q/q), with WALE at 2.6 years, while aggregate leverage crept up 0.6ppt q/q to 40.1%, with average debt cost at 2.87% (+0.04ppt q/q) and debt tenor of 3.03 years. NAV/unit $1.183.
*Frasers Hospitality Trust: 3QFY16 results were in line. DPU dipped 3% to 1.51¢ (-3%) on an enlarged unit base, while distributable income rose 11.3% to $20.9m. Revenue of $31.7m (+33.9%) and NPI of $27m (+40.5%) were boosted by new contributions from Sofitel Sydney Wentworth and Maritim Hotel Dresden, which helped offset weaker London performance. Aggregate leverage hovered at 38.3% (-0.7ppt q/q) with effective borrowing cost of 2.6%. NAV/unit at $0.7997.
*Starhill Global: Flat 4QFY16 DPU of 1.29¢ met expectations. Revenue of $53.6m (+3.6%) was driven by higher contribution from Myer Centre Adelaide, but NPI stayed flat at $41.4m (+0.2%) on higher property expenses. Portfolio occupancy slipped to 95.1% (-0.5ppt q/q), aggregate leverage stood at 35% (-0.4ppt q/q) with average interest rate of 3.09%. NAV/unit at $0.92.
*Jardine C&C: 1H16 results fell short of estimates as net profit stumbled 9% to US$328m on lower revenue of US$7.7b (-6%), amid weaker contribution from Astra's heavy equipment, mining, agribusiness and Toyota operations. Maintained interim DPS of US$0.18. NAV/share at US$14.05.
*Swiber: Withdrew its liquidation application to opt for judicial management, which will allow the debt-laden group to continue operations under court-sanctioned supervision and give it another shot at survival. Meanwhile, it received additional letters of demand, bringing total claims to US$50.5m.
*Vallianz: Controlling shareholder (18.7%) and strategic JV partner Rawabi reaffirmed its commitment to Vallianz and the group's prospects. Group disclosed that its order book of US$1.2b are not related to Swiber and is made up of long-term charter contracts to third parties in the Middle East. Revenue related to Swiber constituted 34.6%/20% for FY15/1Q16.
*United Industrial Corp: 2Q16 net profit surged to $111.9m (+90%) due to fair value gains on investment properties. Revenue jumped 24% to $236.5m on higher sales of trading property, including residential projects Alex Residences and Mon Jervois. Gross margin narrowed 5.5ppt to 33.5%. NAV/share at $4.31.
*GMG Global: 2Q16 net loss widened 45.3% y/y to $13.3m due to a disposal loss ($14.1m) at an associate, while revenue fell 17.1% to $137.1m on weaker sales volumes (-9.9%) and rubber ASPs (-8%). Gross margin slipped 0.4 ppt to 9.9% and the bottom line was further dragged by a more than doubling of finance costs due to increased borrowings. NAV/share at $0.89.
*Pacific Radiance: Expects to make provision for doubtful debts of US$10.1m in FY16, due to Swiber-related entities, which has been placed under provisional liquidation.
*Sinarmas: To jointly develop parts of Nuvasa Bay, a high-end integrated residential and mixed-use development in Nongsa, Batam, with KOP Properties. In Phase 1, the development is expected to incur capex of ~Rp4t ($400m) over the next five years, starting at the end of 2016.
