Friday, June 28, 2013

SG Market (28 Jun 13)

SG Market: S’pore shares are likely to nudge higher as Wall Street rallied for a third straight day on positive economic data and reassurances by several Fed governors that the central bank would keep its easy monetary policy in pace until the economy is back on its feet. The gains followed a drop in weekly jobless claims, rebound in consumer spending and rise in personal income in May, while pending home sales jumped to its highest level since 2006. Ten-year Treasury yields lost six basis points to 2.47% as Italian and Spanish bonds rose. Oil surged 1.6%, while gold dipped to a 34-month low below $1,200/oz. Expect some short term disappointment to weigh on Yoma and SingTel after both missed out on the two highly coveted Myanmar telecoms licenses but it may be a bad outcome, given the huge investment outlay required and long gestation period. Interest may now spill over to the possible subcontracts that will be dished out by the two winners to deliver the massive infrastructural rollout under tight schedules. Some of the potential beneficiaries could include SGX-listed NeraTel, Ntegrator, Polaris and mDR, all of which have business exposure in Myanmar. Some quarter end window dressing and technical rebound from oversold levels are expected to keep the STI on a firmer note with immediate resistance tipped at 3,150, followed by 3,196, while underlying support sits at 3,065. Stocks to watch for: *SingTel/Yoma: Both SingTel and Yoma are out of the running after Myanmar awarded two highly sought mobile licences to Norway's Telenor and Qatar's Ooredoo. The two winners will operate alongside Myanmar's two existing telecommunications operators. The new licenses are valid for 15 years and require holders to meet population and geographical coverage targets. *ISDN: Inked a MOU to acquire 80% stake in three Indonesian energy-related companies, PT Anggocci, PT Parduaan, and PT Sisira, for a combined US$2.45m. PT Sisira has entered into a 20-year power purchase agreement (PPA) with Indonesia’s state-run power distribution company PT PLN to build, own and operate a 4.6MW mini hydro electric power plant in Sumatra. PT Anggocci and PT Parduaan are at the signing stage of entering into PPAs with PT PLN to also build, own and operate a 9MW and 10 MW mini hydroelectric power plants respectively in Sumatra. *Freight Links: FY13 net profit grew 19% to $38.4m, while revenue climbed 15% to $171.1m. The better performance was attributable higher warehousing and chemical logistics sales and fair value gains of $13.8m from its investments in Sabana REIT and Sentosa Asian Credit Offshore Feeder Fund. Group proposes a first and final DPS of 0.5¢ versus 0.45¢ the previous year. *Popular Holdings: FY13 net profit dipped 25% to $23.3m on the back of a 8% slide in revenue to $524.2m due to the closure of four stores, absence of annual bookfest event at Suntec and no new property launches. Final DPS of 1¢ proposed, down from total of 1.3¢ in FY12. *XMH Holdings: FY13 net profit rose 20% to $11.4m on 57% jump in revenue to $97.6m. However, gross margins slipped to 23.5% from 25.2% in FY12 due to higher sales from its lower margin distribution business. For 4QFY13, the group turned in net profit of $3.5m (+22%) on revenue of $29.7m (+13.4%). Group declared a final plus special DPS totaling 1.2¢, up from 1¢ a year ago. *TEE Land: Buying a 96,649 sf freehold site with an industrial building in Petaling Jaya, Malaysia for RM40m ($16.3m), which has potential to be re-zoned for commercial use and redeveloped into a mixed-development project with 4x potential plot ratio. *SATS: Disposing its 40% stake in Adel Abuljadayel Flight Catering Co for US$18.4m ($23.4m) against its book value of $24.1m. Group will continue to pursue other attractive investment opportunities in the Middle East region. *China Fishery: Disclosed that it is commencing arbitration proceedings against Veramar for the transfer of its call option shares but gave the assurance that this will not affect the new offer for Copeinca. Even without Veramar’s stake, the group owns 8.22% of Copeinca shares and has received pre-acceptances for 57.04%, giving it effective control of 65.26% of the Peruvian fishmeal producer. *CosmoSteel: Entered into non-binding MOU with Myanmar-based group of companies to explore a potential strategic business relationship in the areas of production, sourcing, distribution of piping system components and other steel products in the energy, marine and other industries in Myanmar. *Advance SCT: Proposing a 2-for-5 renounceable non-underwritten rights issue at $0.008 per rights share. Net proceeds of ~$9.2m will be used to finance the expansion of the group’s business and repay borrowings. *Chemoil: Signs US$800m syndicated banking facilities with several international financial institutions from Asia, Europe and US to finance general corporate and working capital requirements. As at Mar 13, the group has a net gearing of 0.68x. *China Gaoxian: Shareholders has approved its Rmb2.2bn project to expand its polyester production capacity. The Huaxiang project is expected to commence polymer production of differentiated polyester yarn and polythene terephthalate chips by 3Q this year.

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