SG Market (31 May 13)

SG Market: S’pore shares are likely to creep up in tentative steps following the modest rebound on Wall Street after weaker-than-expected economic data on weekly jobless claims and pending home sales raised hopes that the Fed will not ease off its stimulus measures so quickly. For now, sentiment is expected to swing between the bulls who continue to see central banks pouring liquidity into the rally and the bears, who believe the party is over once the 10-year bond yields spike above 2%. In Singapore, this is compounded by a possible capital flight with funds moving back to US, where 1Q GDP growth of 2.4% outpaces S’pore’s pedestrian 0.2%. The STI has corrected almost 5% from its intra-day peak of 3,465 on 22 May to yesterday’s low of 3,303 but still remains largely in a corrective mode. Look for the index to stabilize above the 3,320 support in the coming days with upside capped at the 3,420 resistance. A break above that would reinstate the short-term uptrend. Stocks to watch for: *Sembcorp Marine: Subsidiary PPL Shipyard has secured a US$220.5m Pacific Class 400 jack-up rig contract from BOT Lease, part of the Mitsubishi UFJ Financial Group with delivery scheduled by end Jan 15. The price tag is 6% higher than the three similar orders This is the fifth jack-up rig order won by the group to-date and brings the total value of contracts bagged so far this year to $2.8b. *SIA: Places US$17b order for 30 Airbus and 30 Boeing aircraft, in its largest ever deal for the carrier. For Airbus, the firm order for 30 A350-900s comes with options for 20 more planes, which can be converted into larger A350-1000s. Delivery is slated from FY16/17. The agreement with Boeing comprises 30 firm orders for the yet-to-be launched B787-10X (longer version of B787 Dreamliner). Delivery for the B787-10Xs starts from FY18/19. The mega order underscores SIA’s determination to stay ahead of the pack as it battles intense competition from both the Gulf premium airlines and regional budget carriers. *Rowsley: Incurred inconsequential net loss of $5.9m for FY13 after accounting for $0.3m dividend income, $3m impairment on financial assets and $1.1m loss from an associate. As a result, NAV dipped marginally to 3.6¢ from 3.72¢ the previous year. Group is still working on the proposed $545m acquisitions of RSP Architects Planners & Engineers and a 9.23-ha land in Malaysia’s Iskandar region with completion of deal expected in 2H13. *SingHaiyi: Reported FY13 net profit of $4.3m on revenue of $17.1m, mainly from progress payments (27% of project value) of its fully sold 21-unit Charlton Residences cluster housing project and fair value gain of $3.7m on its investment properties. Net gearing stood at 0.5x with NAV of 1.21¢. *Second Chance Properties: Proposed acquisition of a 10-storey hotel, Hotel Noble with one retail floor at Jalan Tunku Abdul Rahman Road in Kuala Lumpur, Malaysia for RM46.5m. The group intends to use part of the retail area for its apparel business and lease out the remaining space for rental income.