Monday, July 29, 2013
SG Market (29 Jul 13)
SG Market: S’pore shares may continue to grind along following Wall Street’s dramatic recovery from earlier losses last Fri on optimism that the Fed will keep its easy monetary policy in play a while longer. Speculation over who will succeed Fed Chairman Ben Bernanke had caused some anxiety in the market but news that President Obama had not reached a decision on the next appointment, Fed Vice Chair Janet Yellen or the more hawkish ex Treasury Secretary Lawrence Summers. soothed the market somewhat. Earnings were mixed with Starbucks beating forecasts while Expedia missed estimates. But investors are likely to look ahead to this week’s FOMC meeting, GDP and monthly jobs reports for further clues on the Fed’s intended timeline for scaling back its quantitative easing. Meanwhile, consumer prices in Japan excluding food rose 0.4% in Jun, reducing the need for Japan to bosst stimulus, while China directed more than 1,400 companies in 19 industries to cut excess capacity by year-end in an effort to restructure the economy by shifting to a slower but more sustainable growth. The STI index appears to be entering a corrective phase with stochastics pulling back from overbought levels and both RSI and MACD losing momentum. Expect the benchmark index to range trade between 3,210 (200-day moving average) and 3,260 in the near term. Stocks to watch for: *First REIT: 2Q13 distributable income +26.6% to $12.7m, DPU +16.4% to 1.85¢ (including advance DPU of 0.99¢ paid pre-rights issue). Gross revenue and NPI surged 43.4% and 41.7% to $20.1m and $19.7m respectively, largely due to contributions from four recently acquired properties - Siloam Hospitals Makassar and Siloam Hospitals Manado & Hotel Aryaduta Manado, as well as partial contributions from Siloam Hospitals Bali and Siloam Hospitals TB Simatupang, acquired in Nov 12 and May 13. Gearing rose to 33.4% with NAV of $0.90. *Lian Beng: FY13 results slightly missed estimates; net profit was 24.3% lower at $39.4m due to a $7.9m gain from sale of industrial property last year. Excluding this one-off item, core earnings fell 7.1% despite a 13.6% increase in revenue to $505.6m as higher ready-mixed concrete was offset by lower construction margins, sales, which led to a 3.6-ppt drop in gross margin to 12.9%. Construction order book remained robust at $1.3b but gearing reversed from net cash to 0.38x as the group took on debt to finance its development projects at Spottiswoode Suites, The Midtown, M-Space and the Mandai workers' dormitory. Final DPS of 1.25¢ proposed vs 2¢ in FY12. *GMG Global: 2Q13 net profit plunged 90% y/y to $1.2m despire revenue showing a 5% drop to $260.5m on higher volume of 63,342 tons (+5.5%) sold. For 1H13, earnings slumped 39% to $14.1m as revenue fell 11.2% to $494.1m on a 20.8% slide in rubber prices to $3,621 per ton due to the weak demand US and China. This was partially cushioned by a 12% increase in sales tonnage to 136,449 tons as a result of higher contribution from its Ivory Coast subsidiary, ITCA, and 35%-owned Belgium associate, SIAT SA. Gearing is lowered marginally to 0.14x (from 0.15x as at Dec 12). *Kori Holdings: Acquired three acres (130,680 sf) land from Johor Corp for RM3.3m for the establishment of a new storage yard as the lease on its existing storage yard will expire in Aug 13. The medium-industrial land is located at Pasir Gudang Industrial Area, Johor, and has a lease of 60-years. Kori will fund the acquisition via its IPO proceeds as planned. *China Fishery: Tightened grip on Peruvian fish meal producer Copeinca, raising its stake to 74.3% from 65.3% after settling a dispute with Peruvian investor Veramar Azul, which had earlier refused to honour a call option agreement with China Fishery. *Otto Marine: Group sold and leased back two AHTS for $170m for an eight-year period. The two vessels are currently under construction at Otto's shipyard in Batam, Indonesia. Group has been trying to strengthen its balance sheet via rights issue and sale and leaseback agreements. *AsiaMedic: Issued profit warning for 1H13 due mainly to the increase in operating costs and initial development expenses for China and Myanmar. *Sino Grandness: Proposed a 1-into-2 share split to increase liquidity and broaden shareholder base.