SG Market (17 Jul 13)

SG Market: S’pore shares are likely to pace the retreat on disappointing Coca Cola sales and hawish comments by a Fed official, a day ahead of Fed chairman Ben Bernanke delivers his testimony to Congress on monetary policy. Economic data showing CPI picking up 0.5% in Jun for its largest gain since Feb and industrial production climbing the most in four months, while homebuilder confidence rose in Jul to its highest level since Jan 06 all added to growing evidence that the economy is improving for the central bank to consider pulling back its stimulus. Nevertheless, Bernake is expected to keep to his recent statements about prolonging the bond purchases for the foreseeable future despite Kansas Fed President Esther George remarks that cuts to the quantitative easing program are appropriate as the economy is picking up steam. The STI is expected to reverse course after its recent run-up, weighed by weaker-than-expected Jun non-oil domestic exports aand overbought technical indicators. Suupport is seen at 3,200 with overhead resistance at 3,260. Stocks to watch for: *M1: Rang in 11.2% y/y increase in 2Q13 net profit to $39.2m on 8.9% rise in service revenue to $207.3m, led by growth in mobile customers, mobile data and fixed services. Non-voice services contributed 40.4% (+3.9 ppt) of service revenue. EBITDA margin slid to 37.1% from 38% in 2Q12 and 39.5% in 1Q13 due to higher staff and marketing expenses. The group added 55,000 customers in 2Q13, bringing its mobile customer base to 2.1m, of which 307,000 were 4G customers, while fibre broadband customers rose by 7,000 to 67,000. Management expects modest growth in earnings this year. Board has declared an interim DPS of 6.8¢ vs 6.6¢ paid in 1H12. *Asendas REIT: 1QFY14 distributable income climbed 11.3% y/y to $85.2m, while DPU edged up 0.6% to to 3.55¢. NPI rose 6.8% to $108m due to maiden rental income from The Galen and positive rental reversions averaging 9.6% across all segments of its portfolio. Portfolio occupancy dipped a little to 93.6% with weighted lease to expiry of 3.9 years. Aggregate leverage stayed comfortable at 28.6% with with 68.1% of debt is fixed for average term of four years. Full year performance is expected to be on par with previous year. *CapitaCommercial Trust: 2Q13 distributable income ticked up 1.9% y/y to $59.6m, while DPU came in at 2.07¢ (+0.5%), helped by positive rent reversions and interest savings. Portfolio occupancy remained stable at 95.8% vs 95.3% in the previous quarter. Average committed office portfolio rentals rose to $7.96 from $7.83 psf/pm. Balance sheet remains robust with low gearing of 28.9% and average cost of debt at 2.8%. *United Fiber System: Revised the terms of its proposed reverse takeover of 67% stake in PT Golden Energy Mines (GEMS) to $1.88b (previously $1.79b) via issue of 98.9b (from 94.14b) new UFS shares at 1.9¢ each, representing 94.06% of its enlarged share base. This values GEMS at 11.1x P/B based on its FY12 NTA of US$199.4m ($252.4m). Meanwhile, UFS will undergo a 30-into-1 share consolidation. The long stop date of the proposed transaction has been extended to 31 Jan 2014. *Federal Int’l: Signed MOU with Firstlink Investments Corp to restart its waterplant in Panzhihua, China. Federal will also grant Firstlink the option to acquire up to 60% of the waterplant. Operations at the waterplant has been suspended since Sep 12 due to certain disputes with the local authorities. *Top Global: Launching its 139-unit freehold condominium development, The Quinn at Bartley Road at the end of July at prices starting from $1,500 psf. TOP date for the project is expected by Dec 16. *See Hup Seng: Boardroom tussle continues as key executives of wholly owned subsidiary TAT Petroleum threatened to quit if their chairman Jimmy Tan is ousted as MD of SHS at the 22 July EGM. Jimmy Tan has clashed with SHS’s founder Thomas Lim, who is not supporting the latter’s re-election over differing views over the direction of the company.