SG Market (26 Jul 13)

SG Market: No fresh leads for the S’pore market as the advance on Wall Street lacks conviction amid mixed earnings and a positive durable goods report, with perhaps the bright spark coming from Facebook’s stellar results, which sent its stock soaring 30% to US$34.36. Meanwhile, homebuilders sank 4.8% after PulteGroup. and DR Horton reported lower-than-forecast orders. In economic news, US orders for durable goods jumped 4.2% in Jun, three times the median forecast but stripping out the volatile transport equipment sector, the numbers were not so hot, suggesting a tepid recovery still. Jobless claims rose 7,000 to 343,000 last week, meeting expectations. Asian markets ended with losses even as the Chinese government announced a mini stimulus plan to boost specific sectors of the economy, including small businesses and railway investments. The STI index appears to be correcting from its overbought levels, with downside support seen at 3,210 (200-day moving average) and overhead resistance at 3,260. Stocks to watch for: *SIA: Logged 56% rise in 1QFY14 net profit to $121.8m, which included gains from aircraft sales ($13.9m), sale of 51% Virgin Atlantic stake ($336m) and impairment charge ($293m) on four marked-for-sale freighters taken off the fleet. Group revenue edged up 1.7% to $3.84b on higher pax carriage (+1.8%) but weaker yields (-2.6%) due to intense competition and unfavourable FX impact, while cargo was affected by lower loads (-5.3%) and yields (-5.5%) due to overcapacity and slower global economic growth. Jet fuel, which accounted for 38% of total expenditure, fell 4% to $1.44b, sending operating profit up 13.5% to $81.7m. Forward pax bookings are expected to pick up in coming months in line with capacity growth but yields and demand for cargo will remain depressed. Book value climbed 1.3% q/q to $11.30. *SATS: 1QFY14 results were spot on, chalking net profit of $46.2m (+11.9%) on flat revenue of $434.5m (-0.8%) as sales were affected by reduced contributions from food solutions (-5.6%) due to a decline in airline catering unit TFK’s volume, which was impacted by weaker JPY and lower load factor of China routes. Volume of meals produced also declined after Qatar Airways shifted its transit hub from S’pore to Dubai. However, operating cost savings, higher contributions from associates and JVs (+6.8%) and a tax write-back helped lift the bottom-line. Balance sheet remains in a net cash position of $364m or $0.325 per share. *Mapletree Industrial Trust: 1QFY14 distributable income +9% y/y to $40.2m, DPU +7.5% to 2.43¢. Gross revenue jumped 12.3% to $75.1m, while NPI rose 8.5% to to $52.5m due to higher rental rates secured across all property segments with higher occupancies in flatted factories, business parks and hi-tech buildings. Average passing rents improved to $1.71 psf/month from $1.68 last quarter with occupancy steady at 95.5% and rentention rate of 84.1%. Aggregate leverage increased slightly to 35.8% with weighted debt tenor of 2.5 years and average fuding costs of 2.4%. *CDLH Trust: 2Q13 results reflect challenging Singapore and Australia environment. NPI -4.4% y/y to $32.6m were largely due to lower contributions from its S’pore hotels, and FX translation loss from the Australian hotels due to a weaker AUD. This was mitigated by a $1.9m revenue boost from the Angsana Velavaru resort in the Maldives, which was acquired in Jan 13. Distributable income fell 6.4% to $29.4m; DPU dropped 6.8% to 2.72¢. Operationally, the Singapore hotels recorded lower average occupancy of 87.7% (-1.6 ppt) and RevPAR of $193 (-8.5%), due to softer corporate demand, especially for corporate meetings and conferences. Gearing stood at 29.7%. *Stamford Land: 1QFY14 net profit +41.3% to $6.3m, revenue +5.8% to $64.4m. Despite a strong performance from its Sydney hotel, its hotel business was affected by lower sales and FX translation losses from its two Adelaide hotels, while its property development segment reported higher sales and profits from the sale of two apartments in TSRA, one commercial unit and one apartment from the Stamford Residences & Reynell Terraces compared to four apartment sales in the same period last year. *First Ship Lease Trust: 2Q13 loss widened to US$7.2m from US$2.5m in previous period as revenue dropped 27.2% y/y to US$21.3m due to default in lease payments for two crude oil tankers. Its other 23 vessels remained gainfully deployed under bareboat/time charters and pool employment. The fleet has a a weighted average lease period of eight years. Net gearing stood at 119%. The group is still seeking replacements for its CEO and CFO, both of whom resigned end of Jun. *WE Holdings: CEO Sim Mong Keang resigned but will remain as consultant for three years. Executive chairman Terence Tea will assume the interim CEO role. Group has been actively exploring business opportunities in Myanmar this year, announcing plans to look into the cement and oil and gas sectors. *Keppel REIT: Requests trading halt pending announcement on possible cash call to fund purchase of 8 Exhibition Street in Melbourne or perhaps, potential acquisition of one-third stake in Marina Bay Financial Centre Tower 3.