SG Market (28 May 13)

SG Market: S’pore shares are expected to be open on an indifferent note with no fresh leads from Wall Street due to Memorial Day holiday and mixed closures on Asian bourses with Japan slumping 3.2%. Comments by Chinese President Xi Jinping about the slowing Chinese economy and concerns over a possible funds outflow from Asia back to US may continue to weigh on sentiment. Immediate support for the STI still rest at the 3,380 level, followed by 3,320, while overhead resistance is tipped at 3,424. Stocks to watch for: *Sembcorp Marine: Secured a landmark US$596m ultra-high specification jack-up rig from Noble Corp, with option for an additional unit. This is probably the largest order for a jack-up rig, costing 50% more than a harsh environment unit and 3x that of a standard one. Delivery is scheduled for 1Q16. SMM is currently constructing six F&G JU300N class jack-up rigs worth a total of US$1.3b for Noble. The latest rig order will bring the total value of contracts bagged so far this year to $2.5b. *SPH: Received approval from SGX to list two of its shopping malls Paragon and Clementi Mall worth $3.1b through a Reit. The Reit could raise $1b, of which $540m could come from the equity offering and the remainder from debt financing. SPH will next seek shareholder approval at an EGM on 18 Jun. The group plans to retain 70% of the Reit ownership and distribute a special dividend of $0.18 to shareholders after the listing, expected in July. *KSH Holdings: Delivered stellar FY13 results with net profit almost doubling to $36.3m on the back of a 42% jump in revenue to $206.1m and a turnaround in associates’ contributions from a $0.1m loss to a $16.6m profit. The construction segment contributed 89% of the group revenue, while progress billings from JV property development projects, The Boutiq, Cityscape@Farrer Park and Rezi 26 boosted its bottom-line. Group boasts an enviable construction order book of $446m. Final DPS of 1.15¢ was declared, bringing full year dividend payout to 2.5¢. *Hiap Seng: 4QFY13 net loss doubled to $4.5m despite revenue climbing 19% to $46.9m, mainly due to labour and material cost increases as well as a reversal of a gain on equity amounting to $2.8m which was recognized in 1QFY13 from the acquisition of additional interest in a Thai subsidiary. But full year earnings swelled 76% to $7.5m, underpinned by higher recognition of project revenue in FY13 and contributions by two new subsidiaries in Thailand and Malaysia. The group has an outstanding order book of $256m. Final DPS of 0.5¢ was declared, bringing total FY13 dividends to 1¢. *Healthway Medical: Placing up to 97.5m new shares at $0.1026 each (10% discount to last closing price) to raise $9.7m to fund the its expansion plans in China and obligations in associate Healthway Medical Development, which is undergoing a restructuring with plans for a listing. The placement shares represent 4.41% of current existing share base. *SIA: SIA Cargo is grounding another B747-400 freighter from Jun 13 till May 14 as it continued to face the squeeze from weak air cargo market and overcapacity putting pressure on rates. This will be the second freighter aircraft mothballed by SIA, the first was in Dec 12 and reduce its cargo capacity by ~8%, leaving the carrier with an operational fleet of 11 B747-400Fs. This comes in the wake of its sub par FY13 results, which saw a 20% drop in operating loss, weighed by a contraction in cargo loads (-6%) and yields (-4.3%). *Technics O&G: Awarded $10.6m contracts for the supply of air spread systems from S’pore. This comes on the back of a series of contract wins this year, including a leasing contract for two gas compressor packages from Malaysia worth $3.6m, and another two contracts for the supply of compressor packages, to be deployed in offshore Vietnam and Thailand, worth a total of $6.6m. *Fragrance Group: Setting up a $1b multicurrency medium term note program arranged by DBS. As at Mar 13, the group had a net gearing of 1.62x with total debts of $1.54b.