SG Market

SG Market: Flat session on Wall Street suggest Spore stocks not expected to make much headway, although pockets of strength could still surface given positive newsflow from some companies. Resistance for STI expected at year-to-date high of 3200 with support tipped at 3136. Strong liquidity & funds flow could continue to support shares, but impact of hot money tend to be short term & risk sharp corrections if economic conditions, especially in US, does not show sustained improvement.

*Keppel group will be in focus with Keppel Land emerging the better beneficiary of an asset swap with sister company K-Reit, reaping $321m gain from divesting its 1/3 stake in Marina Bay Financial Centre at a good price ($2,450 psf) & buying over the latter’s 2 office properties (Keppel Towers, GE Tower) on the cheap ($1,200 psf).
Meantime KepCorp secured a $341m EPC contract for the 2nd phase of an energy-from-waste project in UK, which will be completed by 2014-15.
This is the engrg unit’s 1st contract for long while.

*SembMarine could get a lift after clinching a its 1st long-term contract with Carnival Corp, the world's largest cruise firm.
*Selected oil & gas plays with exposure to Australia such as Ausgroup, Ezion may get hit by escalating cost hikes facing LNG projects there.

*NOL may come under pressure after latest operating data show sequential decline in freight rates, reflecting softening conditions on long haul Asia-Europe & Transpacific routes.

#Freight Links: Could see trading interests after announcing it has entered into a Proposed Sale and Leaseback transaction with Sabana Investment Partners for Five Properties in a total consideration of $192.95m vs book value of $91m, which could potentially unlock shareholders value…..
Aggregate purchase price of $192.95m amounts to approximately 129.3% of grp’s market cap. Assuming completion had take place on 30th Apr10, effect on consolidated NTA of the grp would increase by 66% from 6.77c to 11.24c, while effects on assumed May FY10 would have results in EPS increase by 69.2%, from 0.65c to 1.1c….
Proposed sale and leaseback will enable grp to realize to the fair value of its investments in the properties, while enabling grp to participate in the Surbana REIT through its equity stakes in the REIT management and property manager.

#Commodities: Commodity plays could take a breather, with the Dollar index having found some near-term support from its mth long decline. However, broad sector demand/supply imbalance continues to support prices, pushing the CRY index to 52 wk highs…..
Nomura, in its O&G report noted that further quantitative easing could increase money supply and weaken the US$ while pushing inflation higher, which could result in strong fund inflows into commodities as investors hedge against the decline in the US$.

#Lian Beng: Grp reported 1Q11 net profit of $10.92m +107% yoy as revenue rose 32% yoy to $112.3m driven by progressive revenue recognition from existing projects. Grp also saw higher contribution from its recently expanded ready-mixed concrete business. We note that grp currenty trades at 5.2XE FY11 PE vs peers average of 6.1x.

#Tiger Airways: Grp saw 17% rise in Sept passenger numbers for the month of September, despite technical issues with two aircraft in Singapore which resulted in a number of flight cancellations. We note that the 2 troubled planes are back in service from 4 Oct, however investors are still wary that grp’s recent spate of flight cancellations, rising operating costs could be reflected in its Sept quarter results…..
RBS recently highlighted in a report that TGR cancelled 38% and 36% of its flights on 1-3 Oct respectively, however CEO highlights that fwd bookings for the grp remain strong, in particular during the peak travel period from Dec-Feb….
Technically, we note that stock is down 11.5% from last 3 week, with Stochastics and RSI looking oversold. Near term support at $1.87 (150 Day MA) and resistance at $2.04 (20 Day MA).