Friday, February 8, 2013

SG Market (8 Feb 13)

SG Market: S’pore shares are likely to see continued profit-taking following the unconvincing close on Wall Street and ahead of the long Chinese New Year holidays. Investors are also wary about the mixed bad of results with Olam and StarHub booking better-than-expected earnings but SIA, Biosensors and Amtek are among some that disappointed. Sembcorp marine will be in the spotlight after bagging a $900m offshore platform contract. Expect the STI to trade within the 3240-3300 range. Among stocks in focus: *Olam: 2Q13 results surprised on the upside with net profit of $154.1m (+20% yoy, +257% qoq) thumping street estimates of $84m, boosted by one-off $18.1m gain from the sale and leaseback of almond orchards in California. Healthy growth in the food category (esp grains) and a recovery in the cotton business within the industrial raw materials segment drove revenue +9% to $4.9b, while beverage continued to be hurt by falling coffee prices. Net profit margins are back on track at 3.1% after dipping to a low of 0.9% in 1Q. Having being a target of short-seller Muddy Waters on allegations of accounting irregularities, aggressive spending and high debt levels, company intends to review its capex plans and has called off a US$240m investment in a Brazilian sugar mill. *SIA: Not flying the friendly skies as 3Q13 net profit of $142.5m (-17% yoy) missed expectations. Revenue (-0.4%) was hit by lower cargo sales due to depressed yields (-3.5%) and poorer loads (-10%). Pax revenue improved as promotional activities boosted pax carriage by 7.8%, partially offset by lower yields (-5.7%). Management expects persistent weakness in the global economy will continue to put pressure on loads and yields amid historically high fuel prices. *StarHub: Net profit of $87.9m for 4Q12 beat forecasts as revenue grew 7% but mobile, which represents 51% of sales, saw little growth with 20k new customer additions. Ebitda margins slipped to 31.2% while free cash flow plunged to $19m from $151m in 3Q. There was no change in DPS of 5¢. CEO Neil Montefiore is stepping down end Feb 13. *Biosensors: 3Q13 results were below par with net profit of US$24.9m vs consensus US$28.2m. Revenue declined 4% as a 9% increase in drug-eluting stent sales was offset by a 38% drop in licensing and royalty sales from Japan. Gross margins improved to 82% from 80% in 2Q13 and 70% in 3Q12. Management keeps its forecast of a 15-20% revenue growth for FY13. *F&N: Booked a net profit of $4.9b for 1Q13, largely due to a $4.8b exceptional gain from disposal of APB. Without the APB contribution, a stronger revenue helped lift pretax profit by 14% to $161m. Its beverage business enjoyed sales growth of 4.8%, dairies +25.4%, commercial property +6.3% but publishing -3.4% and development property sales -8.4% declined. Group will be entering into a new era under new owners TCC Assets, which now has effective 76.2% control. *Jaya Holdings: Results for 2Q13 was weaker-than-expected. Net profit of $6.5m is significantly higher than the $0.9m reported in 2Q last year but lower than the $10.1m achieved in 1Q13. Revenue surged 7-fold due to higher charter utilization of 80% vs 62% yoy, better day rates and delivery of 2 vessels worth US$83.3m. Sees lower utilization is expected in 3Q given the glut in OSVs, cabotage rule in Indonesia and monsoon season but demand may pick up later in the year. Strong net cash position allows the group to propose a 0.5¢ DPS. *Amtek Engrg: Weak set of 2Q13 results with net earnings -27% to US$5.9m on flat revenue of US$155.2m due to gains from disposal of Indon subsidiary and FX gains the previous year. Excluding the one-off items, operating profit would have been comparable to 2Q12 performance. Sales from the casing, consumer electronics and tooling divisions were offset by declines in the mass storage, imaging/printing and automotive segments. Despite the weaker results, recommends an interim DPS of 1.3¢. Management is cautious on 2013 outlook and relocating facilities to Batam. *Sembcorp Marine: Wholly owned SMOE has secured a $900m contract to build an offshore platform for Norway’s Det Norske. Construction is expected to commence in Dec 13 and delivery scheduled in Mar 16 for deployment to the Ivar Aasen development in the North Sea. *SP AusNet: Announces the successful pricing of 2 bond issues totaling A$430m – a new A$300m 7-year bond and additional A$130m tranche of existing June 2022 bonds. The proceeds will be used to refinance existing debt and to fund future capital expenditure. Following the bond issues, the group will have a net debt of A$5b against total equity of A$3.4b.

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