SG Market (19 Jun 13)

SG Market: S’pore shares are expected to push higher following the extended advance on Wall Street as investors bet that the Fed will stay the course in its monetary stimulus policy when Ben Bernanke gives his press conference on Wed after the two-day FOMC meeting. The Fed will likely thread a careful path between preparing the market for tapering and avoiding laying out a time frame a scaling back the asset purchases. The light trading volume suggests that traders were adopting taking a wait-and-see attitude and there could be potential for significant volatility if there are any surprises from the announcement. Markets took little direction from data that showed consumer prices rose in May and housing starts expanded 6.8%. Yields on 10-year Treasury notes were little changed at 2.18% after climbing 5 bps the previous day and the yen slipped to 95.36 against the greenback. The STI has broken clear of the 200-day moving average, hitting topside resistance at 3,230. Short term technical indicators are reversing from oversold levels and pointing to further upside with the next target capped at 3,280, represented by its 50-day moving average. Near term support is now seen at 3,192. Stocks to watch for: *CapitaLand: Acquiring a 70% stake in Shanghai Guang Chuan Property Co (SHGC), a unit of Shanghai Shentong Metro Assets Management for Rmb1.95b. SHGC owns two plots of land with a site area of 25,427 sqm and total gross floor area of 110,000 sqm in the Zhabei district in Shanghai, which is slated to be developed into a mixed residential, office cum retail complex. The prime site sits above a metro interchange and has a waterview of the Suzhou River. The project will commence in 2015 and is expected to be completed in 2017. *Keppel Land: Acquired 17.5ha residential site in Shanghai's Sheshan district for Rmb1.33b ($266m). The group plans to develop ~200 villas ranging from 250-350 sqm each, with a fully-equipped clubhouse and an auxiliary retail component. 1st phase of homes expected to be launched in 2H14. Site is ~20km from Shanghai Hongqiao Int’l Airport and 32km from city centre, with easy access to A9 expressway and 3km from Metro Line 9 Sheshan station. This will be KepLand’s ninth project in the city. *ST Engineering: ST Aerospace has been awarded an exclusive US$28m maintenance contract by low cost carrier Spring Airlines Japan to undertake component repair management support for fleet of 22 B737-800 aircraft over eight years. Meanwhile, its training academy has been awarded a five-year multi-crew pilot licence (MPL) training contract by Qatar Airways. This is its second MPL contract following the successful completion of the S’pore MPL programme in 2011. *Soilbuild Construction: Secured a $20m contract to design and build a new HQ for Rigel Technology. The project is expected to take 14 months to complete subject to land sale and design approvals by JTC. This is the third Changi Business Park project that has been awarded to the group. *Aspial Corp: Property arm World Class Land submitted top bid of $156.7m in URA public tender for a 99-year land parcel at Faber Walk, near IMM, JCube and Jem. The 162,808 sf site has a plot ratio of 1.4, giving a maximum gross floor area of 227,936 sf, which works out to a land cost of $687 psf ppr. The winning bid was 1.1% and 1.9% above the second and third highest bids respectively. *RH Petrogas: Completed its review of the seismic survey results of Block M-1 in offshore Myanmar and decided against exercising its option to acquire 50% participating interest in the production sharing contract, which has since lapsed on 7 Jun. The US$3.6m paid for the seismic option will be written off in the 2Q results. Nevertheless, the group remains keen on new opportunities in Myanmar and has qualified to participate in the second onshore bid for 18 blocks. It has also recently applied for pre-qualification in the offshore bid round for 30 blocks. *Dynamic Colours: Intraco is extending the deadline of its mandatory conditional cash offer by another two weeks to 5.30 pm on 2 July 2013. There will be no further extensions or revisions to the offer price of $0.185 unless a competitive situation arises. As at 17 Jun, Intraco and concert parties own and control 39.9% of the total DCL shares in issue. DMG, the independent financial adviser to the deal has indicated that the offer price, while reasonable in relation to its historical price and earnings valuation, does not appear fair from a revalued NTA basis. *ISDN: Proposed to acquire equity stakes in two Indonesia energy-related companies - 41% and 80% stake in PT Prisma Karun Energy and PT Potensia Tomini Energi respectively, allowing the group a valuable foot the country’s fast expanding energy sector. Karun Energy has inked a power purchase agreement (PPA) with Indonesia’s state-run power distribution company, PLN, to develop a 10MW hydropower plant in South Sulawesi, while Potensia is in the process of signing a similar agreement in Central Sulawesi.