SG Market (18 Jul 13)

SG Market: S’pore shares are unlikely to react to the modest gains on Wall Street adter Fed Chairman Ben Bernanke reassured lawmakers in Congress that the timeline to scale back its stimulus program is not on a preset course and the central bank can pace its bond purchases as economic conditions warrant. His remarks offered no surprises and largely echoe a restatement of views he and other Fed officials have been making in recent weeks to try and calm turbulent markets. Bernnke is set to testify before the Senate banking committee later today and we expect him to reiterate the flexibility of the Fed’s monetary policy. Meanwhile the Fed’s Beige Book business survey pointed to the US economy growing at a modest to moderate pace, bolstered by industries from housing to manufacturing. But lending support to the argument that the economic recovery is still patchy, housing starts fell 9.9% in Jun to its lowest rate sine Aug 12. The STI is expected to remain in a holding pattern, having crossed into overbought territory with upside resistance capped at 3,260 and underlying support at 3,200. Stocks to watch for: *Keppel Land: 2Q13 results broadly in line. Net profit of $95.5m (+0.9% y/y) brought 1H earnings to $192.1m (-18.8%). Revenue surged 154% to $330.5m, supported by strong sales momentum from its S’pore (Lakefront Residences, Luxurie) and China (The Springdale, 8 Park Avenue) projects. The revenue growth outpaced eanings as last year’s bottomline was boosted by contributions from Reflections at Keppel. For 1H13, the group sold 210 homes (vs 190 in 1H12) in S’pore and 1,940 homes in China (1,650 for 2012). In the commercial space, commitment for MBFC 3 rose to 90% from 86% in 1Q13. Overseas earnings accounted for 34.9% of group’s bottomline vs 6.1% a year ago. NAV stood at $4.06. *Sabana REIT: Steady 2Q12 results with distributable income +7.5% y/y to $15.6m, DPU +5.7% to 2.4¢. Gross revenue and NPI grew 6% due to from rental income from a hi-tech industrial property acquired in Oct 12. It boasts 100% occupancy for its portfolio of 21 properties, which has a weighted lease to expiry of 1.7 years. Management expects to renew at least one master lease in Nov this year, while negotiations on four others are ongoing. Aggregate leverage was at 37.1% with an average debt tenor of 2.7 years, while NAV was at $1.09. *CapitaRetail China Trust: 2Q13 results in line with distributable income of $17.9m (+7.5% y/y) and DPU of 2.38¢ (-1.2%) due to dilution from placement in Oct 12. NPI rose 6.2% to $26.4m driven by strong rental reversion of 17.3%. Occupancy fell slightly to 97.1% with weighted lease to expiry of 5.3 years. Gearing lowered 1.9 ppts to 23.5% with average term of debt at 2.5 years and cost of debt of 2.58%. NAV of $1.47 per unit. *Keppel T&T: 2Q13 net profit improved 15% y/y to $16.4m in tandem with the 15% growth in revenue to $39.6m due to better performances from its data centre and logistics operations. This takes its 1H13 earnings to $31.4m (+9.5%) on revenue of $76.6m (+12.4%). Ongoing projects included the Tianjin Eco City Distribution Centre, Jilin Food Logistics Park, a Tampines logistics facility and two data centres in Singapore and the Netherlands. The group also acquired a 60% stake in the Shansui river port in the Foshan China. *Cosco: 51% owned subsidiary Cosco Nantong has secured a US$200m contract to build a harsh environment semi-submersible accommodation vessel for Mexican offshore services company Cotemar. The vessel is one of two options awarded by Cosco in Mar 12 when the first unit was ordered and is expected to be delivered in 24 months time for deployment in the Gulf of Mexico and the North Sea. *Ley Choon: 51% owned unit has clinched B$29m worth of contracts for the construction of a flyover bridge and infrastructural works for the supply and installation of sewerage systems in Brunei. Since late 2011, the group has won six contracts in Brunei worth a total of $54m. *mDR: Appointed as an authorized after-market service provider for Nokia’s products in Myanmar. 50% owned unit MDR Myanmar is also providing consultancy and retail franchisee procurement services to Nokia distributor Golden Myanmar Sea Co to expand its distribution and retail channels in Myanmar.