SG Market (16 Aug 13)

SG Market: S’pore market may face some selling pressure as funds continue to take profit after Wall Street tumbled on weaker earnings, higher interest rates and geopolitical concerns. Improving economic data, which saw US weekly jobless claims fall to a six-year low and inflation rising broadly in July could draw the Fed to trim its bond buying program soon and sent the benchmark 10-year Treasury yields to a two-year high. Adding to the sell-off, both Cisco and Wal-Mart reported poor results and cut their outlook. Oil prices also spiked 1% to US$107.87/barrel as spiraling violence in Egypt raised concernes that supplies could be threatened. The negative external factors, coupled with the 0.7% drop in non-oil domestic exports are expected to weigh on the local market. Should the 3,200 support be brached, the next level of defence for the STI is seen at 3,160. Topside resistance STI at 3,260. Stocks to watch for: *SIA: Passenger load factor ticked up 0.3 ppt y/y in Jul to 80.8% as traffic accelerated 4.4% during the traditional summer peak, faster than capacity growth of 3.9%. Load factors improved across most key markets except Americas (-1.5 ppt) and West Asia (-5.7 ppt). But cargo traffic remained weak, dropping a sharp 9.1% even as capacity was slashed by 6.7%, sending load factor down by 1.5 ppt to 61.5%. Carrier cautioned that the operating environment remained challenging and efforts to stimulate demand to boost loads are expected to place downward pressure on yields. *ISDN: Named by Myanmar government as the new partner for Tun Thwin Mining Co in a 85/15 JV Kalewa coa-fired power plant, replacing China Guodian Corp. The 540MW energy project will be developed in two phases and will use clean coal technology. It is also near a 4,500 coal mine concession that will be jointly developed by ISDN and TTMC. *Ntegrator: Incorporated an indirect wholly-owned subsidiary in Myanmar to ease in the application for licenses and import equipment. The group has recently signed reseller agreements with new and existing vendors for the distribution of equipment in the Myanmar market. In addition, Ntegrator is in the process of finalizing distributorship agreements with several key suppliers to offer enterprise solutions. *XHM: Secured orders worth $4.6m from repeat Indonesian customer to supply 50 engines, 10 gearboxes and 50 marine power gensets to be installed on tugboats. Delivery will be from end 2013 to end 2014. *Elektromotive: Entered into a binding MOU with various parties, namely MA Builders and several individuals, to acquire 51% stake in Asia Galvanizing for $7.65m via cash of $3.6m and 162m new Elektromotive shares at $0.025 each. Asia Galvanizing provides high quality hot dip galvanizing services to the building and construction, oil & petrochemical, marine offshore and general steel fabrication industries in S’pore. *Qingmei: Warned of a loss for FYJun13 vs a net profit of Rmb133.2m in FY12, citing a slowdown in domestic demand for its products amid intensified competition, consolidation of its downstream business, excessive inventory, unfavourable business environment in the shoe industry in China and tighter credit conditions, have resulted in a drop in sales revenue. *Asia Fashion: Proposed placement of 100m new shares, representing 15.4% of enlarged share base, to four PRC investors at $0.029 each. The net proceeds of $2.7m will be used for working capital purposes. *Hengxin Technology: Chairman makes $0.17/share exit offer to delist the company from SGX, while keeping its HK listing, citing weak share liquidity in S’pore, unjustifiable costs of maintaining a dual listing, and company’s ability to continue tapping on HK's capital markets for funds. Also offering HK$1.04/share to HK shareholders. *Soilbuild REIT: Debuts today at 2pm. The IPO was 5.4x subscribed. Based on the IPO price of $0.78 per unit, the REIT has a forecast annualized distribution yield of 7.5% for FY13, rising to 7.7% in FY14.