SG Market (16 Jul 13)

SG Market: S’pore shares are unlikely to take the lead from Wall Street as US stocks edged higher on solid earnings from Citigroup but the gains were tempered by weak retail sales. Investors will be keeping watch for Fed chairman Ben Bernanke’s congressional testimony on Wed and Thu. Expect local stocks stay in a mixed mode as the STI enters overbought territory with topside resistance at 3,260 and underlying support at 3,200. Stocks to watch for: *Keppel Corp: Secured US$206m contract to build a 5th KFELS B Class jack-up rig for repeat customer Grupo R to be delivered in 4Q15. Grupo R had previously ordered four rigs from Keppel Mar 13 for US$820m, which will be progressively delivered between 2Q-4Q15. this marks the 9th rig on order from Mexican customers. In total, the group has won $3.7b worth of orders this year, including nine jack-ups and one semi-submersible. *SPH: Turned in 3QFY13 net profit of $187.5m, which included fair value gains on investment properties ($111.4m) and impairment loss on certain investments ($26.2m). Stripping out these one-off items, net earnings of $100.5m (-3.1% y/y) came in slightly ahead of street estimates. Core publishing business was hit by declining adex and circulation sales but reductions in newprint and staff costs stemmed the revenue impact. *Keppel Reit: 2Q13 distributable income $52.8m (+6.1% y/y); DPU 1.97¢ (+1.5%) for 5.8% annualized yield. NPI rose 3.1% due to improved performance from Ocean Financial Centre, boosted by higher associate contributions from MBFC Phase 1 and One Raffles Quay but partially offset by lower rental support and higher borrowing costs. Portfolio attained occupancy of 99.2% from 98.7% in 1Q13 with weighted lease to expiry of 6.6 years. NAV stood at $1.29 as at end Jun. *K-Green: 2Q13 net profit slid 10.7% y/y to $3.2m, while revenue dropped 27% to $16.8m following the completion of the flue gas treatment upgrade last year and some slippage in finance and operations & maintenance income. Group maintained its DPU of 3.15¢ for 1H13. NAV dipped to $1.02 from $1.05 as at end 2012. *Fortune REIT: 2Q13 distributable income HK%153.7m (+12.5% y/y); DPU HK9¢ (+11.9%). 1H13 revenue and NPI grew 13.4% and 14.5% to HK$609.2m and HK$437.6m respectively, due to strong rental reversion of 18.2%, full contributions from Belvedere Square and Provident Square acquired in Feb 2012 and completion of AEIs. Portfolio occupancy across 16 retail properties remained at a healthy 97.8%, passing rents went up 7%. NAV rose to HK$10.01 from HK$8.82 last quarter. *SIA: Passenger load factor fell 1.5 ppt in Jun to 81.5% as traffic rose 2.5% and capacity expanded at a faster 4.4%. Load factors remains weak across most regions except Europe (+6.6 ppt) and East Asia (+0.5 ppt). Cargo traffic dropped 6.3% even as capacity was slashed by 5.6%, sending load factor down by 0.5 ppt to 63.1%. Keppel T&T: Acquired 60% stake in a 22.7 ha river port in Foshan, China for Rmb165.7m; balance 40% stake in Foshan Sanshui Port Development Co will be held by the Sanshui local government. This will be its second integrated port logistics facility in Foshan city and will complement the group’ s existing Lanshi Port to serve the rest of Guangdong and the nearby trading hubs in Hong Kong and Shenzhen. *Oxley Holdings: Entered into 50/50 JV with Worldbridge to develop a mixed property project on a 10.2 ha site in Phnom Penh, Cambodia. Worldbridge will contribute the land, while Oxley will provide an initial US$35m towards the project cost with any additional funding to be borne equally between the two parties. *Mencast: Entered into an MOU with Takamul Investment Co to explore downstream ventures within the Sultanate of Oman. The first potential project involves the engineering, procurement, installation and commissioning (EPIC) of a downstream treatment plant. The group aims to derive significant portion of revenue from the Mid-East in future. *OKH Global: Signed an MOU with Pan Asia Logistics Singapore (PAL) to establish a 40/60 JV to develop, own and manage modern logistic properties across Asia. For a start, the proposed JV shall acquire three properties from PAL located in Singapore, Malaysia and Korea.