SG Market (26 Jun 13)

SG Market: S’pore shares are likely to tick following overnight gains on Wall Street on upbeat US economic data and as concerns over China’s credit crunch eased. While bond yields continue to push higher, investors were focused on signals that showed the US recovery is picking up. New orders for durable goods rose 3.6% in May, while housing prices surged 12.1% y/y in Apr, the most since Mar 2006 and sales of new homes climbed 2.1% in May to the highest level in almost five years. In addition, the Conference Board’s index of consumer confidence jumped to 81.4 in Jun from 74.3 in the prior month. Bolstering sentiment, China’s central bank stepped in yesterday to calm markets and add some liquidity to the banking system. With the Jun quarter coming to a close, we might see some window dressing among the index-linked stocks. Bank stocks may rise on bargain hunting as fears of a cash squeeze in China abates. The market is also in a technically oversold position, which points towards a possible a short term technical rebound. Reflecting this, the SGD rallied on Tue against the greenback after recently sliding to its lowest levels in a year. Upside resistance for the STI is tipped at 3,195 with support at 3,065. Stocks to watch for: *Yongnam: Secured two specialist civil engineering subcontracts worth HK$166m ($27m) to supply steel for bridge construction on Hong Kong’s Central-Wan Chai Bypass Tunnel (completion due Apr 14) and steel struts for two MTR stations along the Shatin to Central Link (completion by 2016). The contracts are expected to contribute positively to the group’s financial performance for FY13. *Swissco: Announced $8.2m worth of contracts for three of its crew boats. Delivered in Apr, Swissco Cheetah has been deployed on a 12-month charter (with sale option) to Brunei, while Swissco Spear secured a six-month charter extension in Malaysia and Swissco Spur a minimum 90-day charter with an oil major in Brunei. Swissco Puma will be completed in Jul, bringing its crew boat fleet to eight vessels. In all, the group has 14 vessels under construction in the chartering segment, of which seven will join in 2H13 and six in FY14. *Sunpower: Secured a Rmb130m EPC contract from Shanxi Lu’an Group to supply flare systems for an oil-chemical-power-heat integrated project. This contract is the largest by far for the group and is expected to be delivered in 2014. *Baker Technolgy: Divested its 20.3% stake in Discovery Offshore to Hercules Offshore for NOK199.3m ($41.4m). Discovery’s main assets are two Keppel FELS Super A Class high specification harsh environment jack-up rigs. The first rig was delivered in Jun and delivery of the second rig due in Oct. The group will reap a net gain of $8.8m from the sale, which would lift its NTA and EPS by 1.2¢ *WE Holdings: Acquired a JV company, WE Dragon Resources to assess potential petroleum, oil and gas and related resources business opportunities in Myanmar. In addition, the group has entered into a non-binding MOU with Myanmar businessman Nay Win Tun for a proposed collaboration to carry out petroleum operations projects (including exploration, drilling, extraction, recovery and trading of petroleum products) in five target oilfields in Myanmar. *Goodland Group: Announced that Phase 1 of its 50/50 JV residential project Golden Dragon Condominium (GDC) in Myanmar has been sold out. GDC is a 12-storey condominium comprising 66 apartments in downtown Yangon and is the group’s first property development in Myanmar. The launch of 12 units under Phase 1 in May was fully taken up. *Enviro-Hub: 51% owned EH Property will acquire F2S1 Investment for ~$164.5m (net of debt and other assets). F2S1 holds the PoMo building located at Selegie Road – a 99-year nine-storey retail and office commercial building with 177,400 sf NLA. As at FY12, F2S1 recorded NTA and book value of $116.9m (against market valuation of $273m) and net profit of $7.4m. The acquisition is in line with the group’s diversification strategy into the property sector. *DeClout: Wholly owned subsidiary Acclivis, an IT solutions and hosting services provider has been appointed by Microsoft as its first partner in Asia ex-Japan to offer partner hosted secured private cloud services to Microsoft’s customers. *Ellipsiz: Entered into business transfer agreement to purchase the business and assets of financially-stricken probe card manufacturer Tokyo Cathode Lab (TCL) for US$3.5m against its adjusted book value of US$6.1m. TCL has a production and distribution network in Japan, Taiwan, China, Hong Kong and Singapore. The group believes the acquisition would expand its product offerings and customer base in Japan. *Annaik/TEE Int’l: Both have entered into a MOU to evaluate the possibility of investing in sewage treatment facilities/wastewater treatment plant in Huzhou, China. *Leader Environmental: Proposes placement of 31.7m new shares (6% of enlarged share base) at issue price of $0.063 each to six individuals and one corporation. Half of the $2m net proceeds will be used for investment opportunity through acquisition, JV and strategic alliances, and the remaining half will be used for working capital. *Genting HK: Newswires report that GENS’ 50% owned Travellers has deferred its US$842m IPO to Sep or Oct, in view of local and global stock market weakness. GENS shares dropped 4.6% to US$0.415 yesterday. *SPH: Declined to shed light on media claims that it has delayed the IPO and listing of its retail Reit amid turbulent market conditions. The group recently obtained shareholder approval for the Reit IPO and a 18¢ special dividend.