SG Market (15 Aug 13)

SG Market: S’pore market is expected to trade within tight range as Wall Street closed broadly lower amid growing investor caution about the economic outlook after US producer prices in July and Macy’s results came in below par. Uncertainty over the timing of the withdrawal of Fed stimulus also kept stocks on edge as investors appear to be holding back on making any big moves until the next policy meeting in Sep. There is also talk that global funds may be shifting to Europe after the eurozone clawed out of recession in 2Q with a 0.3% growth, led by Germany and France. Among S’pore stocks, the spotlight may be on Midas and Sino Grandness, both of which posted refreshing results, while IndoAgri continued to be plagued by industry woes. Topside resistance for the STI is seen at 3,260 with underlying support at 3,200. Stocks to watch for: *ComfortDelgro: 2Q13 net profit grew at a 6% y/y clip to $68.9m on a slower 2.7% increase in revenue to $908.4m, which was partly impacted by a weaker AUD and GBP. Excluding the FX effect, revenue would have advanced 3.8% to $918.4m. Despite an increase in ridership, SBS Transit continued to incur an operating loss of $3m, hit by lower fares and rising costs, while the rail business slipped into a loss due to start-up costs associated with the Downtown Line but this was more than offset by its overseas bus operations and taxi business. Overseas operations accounted for 46.8% of total operating profit of $112.6m (+6%) with bus contributing 32.6% and taxi 14.2%. Interim DPS of 3¢ has been declared vs 2.9¢ in 1H12. *GLP: 1QFY14 net profit of US$204m (+33.3% y/y) reached 65% of FY14 estimate, mainly boosted by gains of US$135m (1QFY13: US$44.8m) from revaluation of its Japanese assets. Stripping out one-time gains, pretax profit fell 18% to $109.7m, in tandem with the 20% drop in revenue to US$137.2m due to the sale of 33 properties to GLP J-REIT in Nov 12, depreciation of JPY and lease cancellation by a tenant in Japan. But revenue from China surged 40% to US$78.9m (58% from 33% share in 1QFY13), driven development completions and rental growth. Balance sheet remained sturdy with leverage of 9.2%, average debt maturity of 4.9 years and NAV of US$1.79. *Sino Grandness: Kept to its growth trajectory with 2Q13 net profit of Rmb103m (+24% y/y, +47% q/q) along with the 27% jump in revenue to Rmb595.2m. The stellar performance was led by a 48% surge in beverage sales to a record Rmb346.3m on strong orders for Garden Fresh bottled juices and expanded retail points, and equally impressive 34% spike in domestic canned product sales to Rmb51.3m. Gross margin dipped to 35.8% from 40.5% in 1Q13, possibly due to rising cost of raw material for its canned product segment. *Midas: Positive results as 2Q13 net profit swelled to Rmb14.9m from Rmb1.6m last year, reversing from a Rmb4.9m loss in 1Q13. The 29% y/y and 40% q/q spurt in revenue to Rmb284m was mainly propelled by aluminium alloy extrusion train profiles, which raked in sales of Rmb189.4m (+113%). Gross margin was lower at 22.5% vs 31.5% in 2Q12 and 25.2% in 1Q13 due to a change in product mix. Notably, associate NPRT contributed Rmb3.1m, swinging around from a Rmb14.1m loss in 2Q12. Interim DPS of 2.5¢ maintained. *Indofood Agri: 2Q13 revenue tumbled 11% y/y to Rp3.36t despite higher sales volume of CPO, which was more than offset by lower ASP of key plantation crops (palm oil, rubber, sugar) and lower edible oils sales. Net profit dived 74% to Rp65.9b, hurt by gross margin compression to 16.1% from 28.9%, due to the adverse effect of lower ASPs, and further impact from higher production cost arising from rising wages and newly matured plantations. *Armstrong: 2Q13 net profit slumped 83% y/y and 38% q/q to $0.4m despite a 14% improvement in gross profit as the group was hit by losses on hedging and FX contracts and higher tax provisions. Revenue crept up 3% to $56.8m, driven by a buoyant automotive sector (+21%) but this was offset by contractions in the data storage (-14%) and consumer electronics (-8%). China operations grew 34% but Singapore, Indonesia and Thailand all shrank, while sales from Malaysia and Vietnam remained flat. Meanwhile, the exit offer of $0.40 and delisting proposal by AGP Asia Holding is till pending SGX approval. *Jaya: FYJun13 net profit edged up 5% y/y to US$46.1m, while revenue soared 145% to US$201.8m. The improved top-line was attributable to vessels sales (3 vs 1 in FY12) and better charter utilization. The offshore support services division also benefited from higher average daily charter rates of US$13,624 (+30%) but this was dampened by losses from offshore engineering services due to a US$8.6m vessel reconfiguration costs. This coupled with the absence of write-backs (FY12: US$6.3m) and reduced tax credit of US$1.4m (FY12: US$8.2m) led to the flattish bottom-line. Future income is backed charter book of US$255m, up from US$195m a year ago. Final DPS of 3.5¢ proposed, bringing total DPS for the year to 4¢ vs nil in FY12. *Ying Li: Sank into 2Q13 loss of Rmb17.2m vs Rmb39.6m y/y. Revenue tanked 39% yoy to Rmb 89.4m, property sales halved to Rmb 62.3m as bulk of projects were sold and booked in prior periods, which more than offset the 34% rise in rental income to Rmb 27.1m. Earnings were also hit by a big jump in admin expenses and finance costs. NAV stood at Rmb1.46 with net gearing of 48.1%.