SG Market (27 Jun 13)

SG Market: S’pore shares are poised to extend its mild rebound as US stocks rallied after a surprisingly sharp downward revision to 1Q GDP growth raised hopes that the Fed would hold back from withdrawing its bond purchases. US economy grew at only 1.8% in 1Q, down from the prior estimate of 2.4%. In addition, moves by China’s central bank to calm bank liquidity fears and supportive comments by ECB on the need for continued stimulus helped underpin sentiment. 10-year Treasury yields lost 7 bps to 2.54%, while gold and silver slumped more than 3% as the Dollar Index climbed. At home, banking and property stocks will be in focus, especially the index-linked names on 2Q window dressing. News that Myanmar has postponed the award of its two highly anticipated telco licenses would be disappointing to the two Singapore bidders, SingTel and Yoma. Despite the recent market sell-off, the STI remains in oversold territory with overhead resistance seen at around 3,150 and the 200-day moving average at 3,196 and underlying support at 3,065. Stocks to watch for: *SingTel/Yoma: Myanmar's Parliament has voted to delay awarding two highly coveted telecoms licenses until a new telecommunications law governing the industry is passed. A new rule is being proposed that only foreign companies with a local joint-venture partner be granted a telecoms license. Among the two Singapore firms out of 11 bidders in the running, SingTel has tied up with local partners KBZ and M-Tel, while the Yoma/Digicel/Quantum consortium is helmed by prominent Myanmar businessman Serge Pun. *Wilmar Int’l/Golden Agri: Both have admitted doing business with some of the eight named companies under investigation by the Indonesian authorities for allegedly starting haze-related fires on their lands and are currently in the midst of reviewing their business dealings with these companies. Both have reiterated that they strictly adhere to a zero-burn policy. *Tuan Sing: Acquired Robinson Point, a 21-storey freehold commercial building with a net lettable area of 135,270 sf for $348.9m or $2,576 psf ppr. The deal would be funded mainly by bank borrowings, which will push its net gearing to 0.97x from 0.48x. The purchase is in line with the group's strategy of expanding its core property business and securing recurring income business. *Keppel Reit: Acquired 50% interest in 8 Exhibition Street, a freehold prime office building in Melborne’s CBD for A$160.2m ($192.4m). The 35-storey property has a net lettable area of 480,309 sf with 3,304 sf of ancillary retail space, which is 100% occupied on a weighted average lease expiry of five years. Funding for the acquisition would be via a combination of equity and debt. On a pro forma basis, the deal is 2.4% DPU accretive to unitholders. *Asian Pay Television Trust: Announced that its sole asset, Taiwan Broadband Communications (TBC) has received approval from the Taiwan authorities to expand its cable network in one of its five franchise areas. If implemented, the expansion would add enable TBC to penetrate another 400,000 homes in the greater Taichung area. Separately, the trust has refinanced its primary debt facilities with a NT$27b ($1,129m) seven-year senior revolving credit facility, resulting in an effective interest cost of less than 4% per annum. *Mirach Energy: Proposed private placement of 152m new shares (representing 19.8% of existing share base) to 10 individuals at $0.1242 each, or 11.3% discount to its last closing price of $0.14. Part of the $18.1m proceeds (net of 4% referral commission) will be used to redeem its $16.9m 3% senior convertible bonds due 2014. At the same time, the group has granted a two-year 7% convertible loan of up to $36m to six of the above individuals. The first tranche of the loan will be used to repay the interest payable on the bond redemption and the rest to expand the group’s business, including possible acquisition of new production oilfields. *Heeton Holdings: Proposing a 1-for-5 bonus issue with 1 free bonus warrant. Exercise price of the warrants is set at $0.70 with an expiry period of two years. *UIC: Parent UOL purchased another 390,000 shares at an average price of $3.00, raising its stake to 43.5%.