SG Market (22 Jul 13)

SG Market: S’pore shares are likely to consolidate within a trading band following the mixed close on Wall Street, mainly on earnings news as better-than-estimated results from General Electric overshadowed disappointing earnings from Google, Microsoft, AMD and Intel. Yields on the 10-year Treasuries fell 4 bps to 2.49%, the US dollar slid against most major currencies and gold advanced 0.7%. Oil settled 1% higher at US$108.05 per barrel after swinging between gains and losses during the trading session. US equity ETFs have been getting money at the fastest rate since Sep 08 as stock investors shrug off concern that the Fed is poised to slow stimulus. About US$27.9b came pouring in the last 13 days, about four times the amount last month and the most in almost five years. The ETF flows show that investors are gaining confidence in the US economic recovery and beginning to favor shares. In Asia, investors will be weighing the lifting of lending rates by China’s central bank and the election victory by Japan’s PM Shinzo Abe in the upper house, which will strengthen his hand to carry out his plans for monetrary easing, fiscal stimulus and deregulation. Overhead resistance for the STI is seen at 3,250, while downside support remains at 3,200. Stocks to watch for: *Suntec: 2Q13 distributable income fell 4% y/y to $50.9m and DPU dipped 4.7% to 2.249¢, which included capital distribution of $7.8m from the sale proceeds of Chijmes. Gross revenue -33.9% to $46.9m, NPI -38.5% to $28m due to partial closure of Suntec City Mall and Suntec S’pore for AEI works. Office revenue contributed to 72% of gross revenue. Strong occupancy of 99.7% and 99.6% achieved for office and retail portfolio respectively. Leverage ratio stood at 36.5% with cost of debt of 2.68% and average term of expiry of 2.28 years (assuming full drawdown of new $500m loan facility). NAV ended at $2.06. *Raffles Medical Group: 2Q13 results were in line with revenue at $86.8m (+13% y/y) and net profit at $14.5m (+16%). Top-line was led by its hospital services segment which rose 17%, while healthcare services grew 6.5%. More specialist consultants recruited and higher patient acuity contributed to the better performance with operating margin improving from 19.5% in2Q12 to 20.3%. Balance sheet remains healthy backed by net cash position of $126.4m. Interim DPS of 1¢ maintained. *Ying Li: Announced its next growth phase to capitalize on its comparative advantage in Chongqing (30m population) and strengthen its foothold by expanding into district CBDs and suburban centres. Group plans to expand into 2nd/3rd tier cities in China, with focus on one or two initial cities which co has good relationships with the local government and partners. Also seeking to start and build its property capital management business as part of strategy to recycle capital such as through REITs, optimize capital leverage and broaden recurring income. *Lasseters: Disposing the loss-making property, assets and business of wholly owned CLG Group, comprising freehold land, villa leases, golf course operation and two pieces of development land in Hunter Valley in New South Wales, Australia to Hunter Valley Management for A$10m. The group is expected to book an estimated loss of A$0.5m from the sale and proforma NTA will increase 4% to A$0.2433. *Tee Land: Entered into MOU with Supachai Suthipongschai to jointly develop, build and operate a series of boutique industrial estates in Thailand. Suthipongschai is the MD of the Western Property Group, a diversified group with interests in property development and manufacturing of electrical appliances. *Blumont: Profit warning for 2Q13 due to unrealised losses from fair value readjustments to its financial assets, as well as a provision to be made for impairment on its investments and assets affected by recent volatility and downturn in the global economy. *Zhongmin Baihui: Obtained approval-in-principle from SGX to transfer its listing from Catalist to Mainboard.