SG Market (05 Jun 13)

SG Market: S’pore shares are likely to stay cautious in the wake of the retreat on Wall Street amid concerns worries of a widening US trade deficit and ongoing worries over the direction of Fed’s monetary policy. Volatility has heightened in the past weeks as Fed officials question when the central bank will curtail its bond buying program. Part of the answer may come this week as investors look ahead at the private sector employment data out on Wed and monthly jobs report out on Fri. Markets will also be anticipating Japan’s PM Shinzo Abe to give more details on his growth strategy, his so-called “third arrow” on structural reforms in an address today. The STI may have found some support after hitting a intraday low of 3,260 yesterday but a firmer support base is at 3,320 level. While momentum indicators have crossed over to the oversold territory, there are no clear signals of a reversal pattern developing just yet. Interest would probably be still centred on the mid to small caps and Myanmar-linked plays, which has outperformed the market of late. Stocks to watch for: *Keppel Corp: Secured a US$800m contract to build a harsh environment semi-submersible drilling rig for State Oil Company of Azerbaijan Republic. Based on the DSS 38M design, rig is scheduled for delivery in 4Q16 and will be deployed in the Babak, Absheron and Shah Deniz fields in the Caspian Sea. This is Keppel’s first semi-submersible rig order this year and takes its year-to-date contract wins to $3.2b. *KS Energy: Ordered a jack-up drilling rig for US$165.5m with delivery expected in 1Q14. The acquisition will be funded by a combination of internal resources and borrowings. The group currently has three jack-up rigs and six land rigs in operation. *mDR: JV partner, Golden Myanmar Sea (GMS) has been appointed by Nokia as a distributor of Nokia's products in Myanmar. Associate, mDR Myanmar will provide consultancy and retail franchisee procurement services to GMS. This will allow mDR and GMS to make inroads into the emerging telco business in Myanmar. *PEC: Secured new contracts worth $64m; its 70% Malaysian unit clinched a contract from a new client to provide mechanical construction works for a process plant in an LNG complex in Sarawak, which are expected to be completed in Dec 14. The second contract coming from an oil major is to undertake piping and steel structure fabrication and installation for a petrochemical plant on Jurong Island, with completion by Jul 14. Group also secured three other contracts involving pipeline installation and provision of compressor and utility lines for gas plants in S’pore. *UniFiber: Terminated the original agreement to acquire 97% of PT Golden Energy Mines (GEMS) for $2.24b, citing difficulties relating to the financial affairs of subsidiary, Poh Lian Construction, which is under judicial management. Separately, the group entered into a new heads of agreement with vendor PT Dian Swastatika Sentosa to acquire its 67% stake in GEMS for $1.79b, via issue of 94.14b new UniFiber shares at $0.019 each, representing 93.8% of enlarged share base. NAV of GEMS is US$296.3m, with NTA of US$199.4m. The long stop date of the reverse takeover will be no later than 31 Dec 2013. *Cacola: Inked two separate MOUs to acquire goldmines in China, which may result in a reverse takeover. Under the first MOU, the group will acquire Gold Depot Investments, which has an indirect interest in a goldmine located in Guizhou province, for $250m via $40m in cash and $210m in new Cacola shares at a 10% discount. The second MOU involves the acquisition of Shanxi Han Yin Huanglong Gold, which has an indirect interest in a goldmine located in Shanxi province, for $130m, payable via $20m cash and $110m Cacola shares at $0.03 each. *Wee Hur: 51% owned subsidiary Wee Hur-Lucrum (WHL) has granted a six-month extension till 3 Dec 13 for consenting owners of Thomson View to obtain the order for sale to approve the collective sale of the condominium. The collective sale is subject to approval of the High Court as some owners have objected to the tender award in Sep 12. The five-day hearing of the case is set to begin 24 Jun. *Xpress: Launches a new business concept under a new brand called “88 Biz Butler” (ie. open from 8am to 8pm). Xpress intends to proliferate the 88 Biz Butler business model in the Asia Pac region through franchising particularly in the B2C sector and has been granted approval from IE Singapore to appoint consultants to develop its franchise framework. *CitySpring Infrastructure Trust: Moody’s has downgraded the credit rating of three of its Basslink bonds expiring 2015, 2017 and 2019 to Baa3/stable outlook from Baa2/negative outlook. S&P retains its BBB-/negative outlook rating. *Stratech: Placed on SGX Watchlist wef 5 Jun 2013.