SG Market (13 Aug 13)

SG Market: S’pore market may look to Asia for direction after Wall Street closed little changed as investors looked to a busy week on the economi front that includes data on retail sales, housing and industrial production to figure out the next catalyst and reaction from the Fed on the scaling back of its monetary stimulus. Despite disappointment over Japan’s 2Q growth rate, Nikkei rallied this morning on news that PM Shinzo Abe is considering a corporate tax cut, while the latest trade and industrial output data in China suggested that the economy may be stabilizing. With corporate reporting still throwing up a mixed bag of results and technical indicators exhibiting signs of deterioration, the STI is expected to remain range-bound with immediate resistance at 3,260 and underlying support at 3,200. Stocks to watch for: *Nam Cheong: 2Q13 results largely in line with bullish estimates with net profit surging to RM40.7m (+81% y/y, +14% q/q) on robust revenue of RM275.3m (+84% y/y, +17% q/q). The strong performance was led by shipbuilding, which saw progressive sales recognition from seven PSVs sold with healthy gross margin of 20%. As at Aug 13, group has an order book of RM1.4b with 22 vessels contracted for delivery up to 2015. *Bumitama Agri: 2Q13 net profit declined 19.2% y/y to Rp154.7b despite strong revenue growth of 18.8% to Rp984.6b on increased sales volume of CPO (+44.5%) and palm kernel (+22.2%) but lower prices of CPO (-16.2%) and PK (-23.3%). The higher top-line was mitigated by higher cost of sales arising from an expanded nucleus mature planted area, higher purchases of FFBs, fertilizers, wage and repair/maintenance costs, and operating expenses from higher selling and freight/loading costs as well as withholding tax. Interim DPS of 1.2¢ declared vs nil in 1H12. *Ho Bee: 2Q13 net profit crumbled 64% y/y to $26.2m, almost entirely contributed by a $25.9m gain from the sale of Hotel Windsor. Revenue collapsed 96% to $6.1m due to dearth of development properties upon full recognition of Orange Grove project and completion of One Pemimpin last year. Net gearing stayed at 0.17x, while NAV climbed to $2.70 from $2.58 as at Dec 12. *Mewah: 2Q13 net profit shrank to US$4.1m (-35% y/y, +3% q/q), in line with the revenue decline to US$707.3m (-30% y/y, -18% q/q), on lower sales volume and average selling prices for both its bulk (-40%) and consumer pack (-2%) segments. Operating margin contracted 8% to US$31.70/tonne. Weaker demand from Mid-East affected its bulk segment, while its downstream consumer pack business enjoyed impressive sales growth. Interim DPS of 0.12¢ proposed. *Geo Energy: 2Q13 net profit expanded 7% to US$5.1m on the back of a 25% increase in revenue to US$32.2m on higher coal sales from BEK mining concessions, coal trading, mining services and equipment rental offsetting the termination of coal cooperation contracts in Sep 12 and a 24% drop in average selling price to US$43.90/tonne from lower grade coal produced. Gross margin slid 8bps to 30% due to the lower margins commanded by coal trading and mining services. *Courts Asia: 1QFY14 net profit rose 5.1% to $7m with revenue up 1.6% to $191.1m. Revenue from S’pore (69% of group sales) improved 1.9% due to better performances from the relaunched megastore in Tampines and a Toa Payoh branch with same store sales exhibiting robust growth of 7.6%. Sales in Malaysia were affected by the haze situation and general election, resulting in a 4.2% dip in same-store sales although this was cushioned by higher service income. Gross margin remained at a healthy 30.6% with strong cash balance of $184.2m and net gearing of 0.49x. *Chip Eng Seng: 2Q13 net profit slipped 8% y/y to $6.8m despite revenue jumping 32% to $109.1m from ongoing construction projects (+14%) and My Manhattan property development (+79%). But higher staff costs and a $1.2m FX loss from AUD weakness ate into its profitability. Meanwhile, group has been awarded $38.5m contract by HDB for balance of building works to construct two blocks of flats at Tampines Neighbouhood 4 over 13 months. *Guthrie GTS: 2Q13 net profit soared 254% y/y to $69.4m but excluding fair value gains on investment properties of $55.5m, core earnings would have slid 5% to $13.9m. Reveue jumped 42% to $97.9m, with higher engineering and property sales partially offset by lower contributions from leisure. Group booked revaluation gains from Jurong Point ($23.2m), Heartland Retail properties ($15.9m), Wisma Nusantara Jakarta ($15.3m) and Guthrie House ($8.4m), driving NAV up from $0.97 in FY12 to $1.05. *Del Monte: 2Q13 net profit edged up 2% y/y to US$6.1m on 11% revenue growth to US$121m driven by better sales in both branded (+8%) and non-branded (+18%) businesses. The favourable volume and sales mix coupled with lower equity loss in FieldFresh in India led to 12% improvement in operating income to US$10.2m although this was eroded by one-off listing fees and unrealized FX loss at the net level. Declared interim DPS of US0.62¢ vs US0.72¢ for 1H12. *Sound Global: Won bid for the build-own-transfer sewage treatment plant project in Baoding High-Tech Industrial Development Zone, Hebei province in China. Total investment for Phase 1 of the 30,000 tpd project is over Rmb70m with concession period of 30 years.