SG Market (03 May 13)

SG Market: S’pore shares may continue its upward march following the sharp rebound on Wall Street on an expected ECB interest rate cut and a surprisingly good US jobless claims data. S’pore manufacturing expanded in Apr with PMI dipping 0.3 points to 50.3 but still above the 50 mark for the second consecutive month, signaling a possible pick-up in 2H. Earnings reports were mixed bag with UOB posting better-than-expected 1Q results but Genting S’pore may face selling pressure as its win rate disappointed in contrast to rival Marina Bay Sands and Macau casinos. The STI broke past the 78.6% retracement of its 2008/09 meltdown at 3380 with the next significant hurdle at 3580. Underlying support is seen at 3320. Stocks to watch out for: *UOB: 1Q13 net profit reached a record $722, +5% y/y was 9% higher than street estimates. Performance was underpinned by robust fee and commission income (+25%), which mitigated lower trading and investment income (-22%). Net interest income fell 4% as stronger loan growth (+13%) was muted by a 28 bps slide in net interest margin to 1.7%. Credit quality remains healthy with NPL ratio improving to 1.3%. Tier 1 CAR rose to 14.3%, while book NAV stood at $15.18. *Genting S’pore: 1Q13 net profit of $115.9m, -44% was below consensus. Adjusted EBITDA for RWS dipped 34% to $255.4m in line with the 14% drop in revenue, which was dragged down by gaming turnover (-20%) due to a weaker win rate for its VIP business. With new attractions, the non-gaming business performed well (+17%) and accounted for 21% of overall sales vs 16% in 1Q12. *City Dev: 55% hotel arm, M&C reported 29% y/y decline in 1Q13 net profit to £13m despite smaller 4% revenue drop as its high operating leverage impacted the bottom line. While RevPAR grew 1.6%, sales was affected by ongoing hotel refurbishments, geopolitical tensions in Korea, harsh weather conditions in Europe and US, increased room supply and cost pressures in the S’pore market. *GuocoLand: Slipped into the red in 3Q13 with net loss of $13.3m due to change of main contractor for its Goodwood Residence and Sophia Residence projects, which led to higher construction costs. Loss would have been deeper were not for a $32m fair value gain from revaluation of its investment properties. Latest NAV stood at $2.13. *Oxley Holdings: 3Q13 net profit leapt 142% to $13.2m as revenue jumped 42% to $70.6m with contributions from 10 of its 13 projects and rental income from The Corporate Office and McDonald’s Place at King Albert Park. Propose nominal DPS of 0.1¢. *Ezra: Subsea unit EMAS awarded a US$75m engineering, procurement, construction and installation contract from Statoil for the Smorbukk South Extension project in the Norwegian Sea. Offshore work will commence in 2Q14 and last through 2015. *Elec & Eltek: 1Q13 net profit -28% to US$4m, revenue -5% to US$115.8m due to lower shipment volume amid dwindling labour supply and tighter gross profit margin of 11.5% vs 13.1% in previous year. *China Energy: Continued to bleed in 1Q13, incurring net loss of Rmb58.7m vs Rmb59.7m in prior year on lower revenue of Rmb473.6m (-4%), attributable to reduced volume of DME sold (-2%) and decrease in average selling price (-7%). Notably, NAV slumped 38% to Rmb0.365. *CNA Group: Major shareholder and Sedco affiliate, PacificQuest disposed its 40m shares or entire 14.8% stake but continues to hold shareholdings in 2 of CNA’s Mid-East units.