SG Market (30 Jul 13)

SG Market: S’pore shares are likely to be sidelined as investors braced for a busy week of economic and corporate news. In the US, the Fed will weigh in with its policy statement on Wed with the monthly jobs report slated on Fri. In between are reports on 2Q GDP report and home prices. In S’pore, the corporate earnings season will be getting into full swing with all three local banks reporting their 2Q results later this week, along with SMRT Sembcorp Marine, Cosco, HiP, Golden Agri and SingPost. Bank earnings are not expected to shine with analysts looking for downside risks from bond holdings and slowdoen in non-interest income. Near term upside for STI index remains capped at 3,260 with underlying support at 3,210 (200-day moving average). Stocks to watch for: *United Envirotech/Memstar: UEL is proposing to acquiring 100% of Memstar for $293.4m (or 11¢ per share) via issue of 200.1m UEL shares at $1.10 each and $73.4m cash. This will entitle Memstar shareholders to 1 UEL share for every 10 shares held plus a cash distribution and can vote to maintain the listing status of Memstar or delist via liquidation. The proposed transaction is subject to approval by shareholders of both companies. *Yoma: 1QFY14 net profit tumbled 80.6% y/y to $0.4m, impacted by increased headcount and higher staff costs to meet the group’s expansion plans. Revenue rose 11.6% to $15.2m, driven mainly by sale of residences and land development rights. Gross margin widened to 39.3% from 37.1% a year ago. The group has $61.1m of sales bookings from Star City, of which only $7.2m has been recognized. Cash and bank balances stood at a healthy $72.5m as at Jun. *OKP: Barely broke even for 2Q13 with net profit of $0.7m (-77%) despite achieving higher revenue of $62.1m (+28%) as margins were hurt by higher sub-contracting and labour costs as well as cost overruns on some sewer-related projects. Gross margins shrank to 8.2% from 24.3% in 2Q12. As of Jun, order book grew to $428.8m, lasting till 2015, with free cash of $42.5m and NTA of 30.13¢. *Blumont: Sank into the red with a 2Q13 loss of $22.4m vs net profit of $11.9m in 2Q12 on negligible revenue of $0.7m. The negative botton-line was almost entirely due to marked-to-market fair value losses of $26.6m from the 50% plunge in share price of its 8.65% stake (252.3m shares) in Innopac during the 2Q. To replenish the paper loss, group is proposing a 1-for-2 rights issue at $0.05 (96.5% discount to last close) to raise net proceeds of $42.7m, of which 80% will be earmarked for business expansion and 20% for working capital. *LionGold: Acquiring Acadian Mining Corp at CAD$0.12 each or up to $9.1m. Acadian is listed on the TSX Venture Exchange with multiple gold tenements in Nova Scotia, Canada. Its two main projects hold a combined gold resource of 1.333m oz with open pit development potential. *Global Palm: Issued a profit guidance to warn of of a substantially weaker 2Q13 and 1H13 earnings due to lower sales. The group reported net profit of Rp20.3b on revenue of Rp106.4b in 2Q12.