Friday, December 17, 2010

SG Market

SG Market: Spore shares may gain slightly at open on the positive cue from Wall Street, which rose on further signs of the US economy pulling through, though subdued and directionless trade likely to persist in the local market as many players seem to have withdrawn for the holiday period…

STI closed flat yday at 3148, after ranging between 3137-3158. Technically, all eyes still on the forming head & shoulders pattern, which if completed, would signal a downward trend. UOBK notes the last line of defense at the STI support line at 3118, which if breached, could lead to a drop of up to 200 pts. Tips resistance at 3218.

Stocks in focus:
* STX OSV: may extend gains after securing NOK 600m (~US$101m) contract to build an offshore subsea construction vehicle for delivery in 2012. Recall Goldman Sachs initiated at Buy with $1.54 target two days ago.
*Contel: to lift halt at 9am. Possible concept play; to buy Solar Silicon Resources, a silicon miner in US$1.2b reverse takeover. To issue 3.1b consolidated new shares at $0.505/sh to seller. Deal effectively carried out at 68% premium to last closing price at 3cts (10-to-1 consolidation not done yet).
* Noble: to pay 1.6b reais (US$936m) for 2 sugar cane mills in Grupo Cerradinho, Brazil. Separately, 65% owned AU-listed Gloucester Coal was newly rated at Buy by BOA-ML.
*Yangzijiang: to buy a Chinese shipyard for Rmb 420m (S$82.5m). Acquisition likely earnings accretive as done at 7.8x annualized P/E, vs YZJ 12.7x P/E.
* SIA: premium travelers in Oct grew 10.9% yoy, largely driven by routes to and from Asia, according to IATA. Earlier this week, IATA upgraded its profit forecast for the global aviation industry by ~70% to US$15.1b, up from US$8.9b previously.

Stock ratings:
* Super Group: UOBK initiates at Buy with $1.66 target.
* Olam: UOBK maintains Buy with $3.80 target. No chg in view following African timber business acquisition.
* NOL: Phillip downgrades to Hold from buy, but raises target to $2.41 from $2.36.
* Yangzijiang: DMG upgrades to Buy from hold, raises target to $2.20

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