SG Market (30 May 13)

SG Market: S’pore shares are likely to come under continued pressure after Wall Street erased its previous day’s gains amid concerns about global economic growth and the Fed scaling back its stimulus program. The losses came after OECD trimmed its 2013 world economic growth forecast to 3.1% from 3.4% and IMF shaved its projection for China’s GDP to 7.75% over the next two years from 8% this year and 8.2% in 2014. Defensive and high dividend yields stocks were hit as bond yields spike amid growing fears of a liquidity withdrawal, as in S’pore, which saw telecom and Reits bore the brunt of selling yesterday. There appears to be a two-tier market opening up in S’pore with the blue-chips and index-linked stocks being sold down on a possible funds pullout (as evidenced by the weak SGD) but the penny stocks being pushed up by some traders trying to draw investor interest. The big black candle on the STI, which closed below last week’s low, may signal more downside risk with the next support at the 3,320 level. Overhead resistance is at 3,420, represented by the 20-day moving average, which the benchmark index failed to clear yesterday. Stocks to watch for: *Biosensors: 4QFY13 revenue was flat at US$88.8m but net profit of US$29.6m (+9% y/y) masks a 20% earnings drop due to a US$8.4m tax reversal. Excluding exceptional items, FY13 net profit of US$111.6m missed estimates of US$118m. Revenue climbed 15% to US$336.2m on stronger volume growth (+32%), while royalty income shrank (-29%) due to lower DES sales in Japan. Gross margin improved to 81% from 73% in FY12 by virtue of a more favourable geographical and product mix, as well as greater economies of scale. Net cash jumped to US$337m from US$276.5m a year ago. Group is proposing a maiden DPS of US$0.02. *Midas: 32.5% JV Nanjing SR Puzhen Rail Transport Co has been awarded a Rmb420m contract to supply 56 train cars for the Shenzhen Metro Line 4, with delivery slated from 2013 to 2014. The latest order win takes the total value of contracts secured to over Rmb1.4b in the year-to-date. *Yongnam: Following its earlier pre-qualification, the consortium comprising Yongnam, Changi Airport Planners & Engineers and JGC Corp has submitted a proposal to the Myanmar authorities for the Hanthawaddy Int’l Airport (HIA) concession on the basis of a public-private partnership agreement. HIA will be the fourth international airport in Myanmar, after those in Yangon, Mandalay and Nay Pyi Taw. *Oxley: Purchased shell company TCK Capital Sdn Bhd (TCK) with no business operation from two individuals for RM77.9m. TCK, in turn, will be acquiring from the Malaysian government a 99-year land parcel at Jalan Hang Tuah in KL at an agreed price of RM190m tendered in Apr 2011. The 4.73-acre plot is zoned for mixed development. The purchase consideration of RM267.9m or $111m will be funded by internal resources and bank borrowings. *Kingwan: Buoyant 4QFY13 results with revenue leaping 123% y/y to $29.6m and net profit turning around to $2.9m vs loss of $0.7m a year ago. Revenue for FY13 rose 16% to $66.3m but net profit declined 10% to $6.1m on tighter gross margins for its M&E engineering contracts, lower contribution from associates, and absence of one-off disposal gains. Order book remains intact with M&E engineering contracts worth $166.6m, to be completed over 2013-16. Final DPS of 1¢ adds to 0.5¢ interim giving full year DPS of 1.5¢. *Swing Media: Revenue for FY13 rose 5% to HK$904.5m, supported by growth in CD-R sales (+13%) and trading activities (+18%), while DVD-R, which form 70% of sales, was relatively unchanged. Net profit of HK$58m (+15%) was underpinned by a HK$91.7m income from leasing of machinery in Taiwan, maiden contributions from its solar energy business and lower tax expense. Group is paying a first and final DPS of 0.15¢ compared to 0.2¢ in FY12. *Hai Leck: Won a mechanical maintenance services contract following the successful completion of CCD/Chang Chun’s Jurong Island facilities in Mar 13. The contract will require the group to maintain an allyl alcohol plant, cumene plant, acetate monomer plant, tank farm and utilities area. *UE/WBL: UE’s offer for WBL @ $4.50 closes successfully with UE and concert parties taking 96.3% control of WBL. UE does not intend to maintain the listing status of WBL and will not undertake or support any action for the trading suspension of WBL shares to be lifted. *DeClout: Director Winston Koh purchased 1m shares at $0.25 each via married deal and lift his total stake to 4.3% from 3.8%. CEO Vesmond Wong reduced his stake from 34.7% to 30.3% via married deals at $0.25. *Shanghai Asia: Trading will continue till 3 Jun, following which the company will be delisted from the SGX with effect from 4 Jun.