SG Market (19 Aug 13)

SG Market: S’pore market are expected to remain nervous after US bond yield rose to two-year highs last Fri amid bets that the Fed will start scaling back its monetary stimulus in Sep, sending Wall Street t its biggest weekly fall in 14 months. The market sell-off was checked after data showed US consumer sentiment declined in Aug, while housing starts rose less than expected in July. According 65% of economists in a Bloomberg survey, the Fed is likely to reduce its bond purchases next month. The market confusion is further compounded by the anticipated volatility in the HK and Shanghai markets after a trading error by Everbright Securities led to a spike in stock prices on both bourses. S’pore shares are likely to open in a subdued tone with the STI sitting just under the previous key 3,200 support level. The next support is at 3,160. Above 3,200, topside resistance is at 3,260. Stocks to watch for: *Infrastructure: At the National Day Rally speech, PM Lee unveiled Project Jewel, an iconic dome at the open-air carpark fronting Changi Airport Terminal 1, with shops, restaurants and an indoor garden that will be a major attraction for both locals and visitors. All three existing terminals at the airport will continue to be upgraded, while a 4th and 5th terminal is expected to double current capacity. Potential beneficiaries for the airport expansion projects include CMA, Yongnam (structural works), Hock Lian Seng (aircraft parking aprons and taxiways, Ley Choon (airfield construction) and OKP (airport runway). *CapitaMalls Asia: Entered into an MOU with Changi Airport Group to jointly develop the concept and plans for the proposed redevelopment of the car park site fronting Terminal 1 at Singapore Changi Airport. The project will involve the construction of a new mixed-use complex offering aviation and travel-related facilities, a wide range of retail offerings, as well as unique leisure attractions. *GK Goh: Acquiring a 47.62% stake in Domain Principal Group (DPG), a leading Australian aged care group from AMP Capital for A$136.7m. DPG is one of the largest providers of residential aged care services in Australia with 55 facilities totaling more tha 4,500 bed spaces or 2.5% market share and in a sector that is expected to grow by 40% over the next decade. The purchase price values DPG at a pro forma FY13 EV/EBITDA of 9.1x and P/E of 22.5x. *Hoe Leong Corp: Associate Semua Int’l has been awarded two three-year charter contracts worth up to RM150m from an oil major for two oil tankers with another two-year options. The vessels have commenced work on 1 Aug. *Sim Lian: Acquiring a freehold commercial property with existing NLA of 8,664 sqm located at 50 Margaret Street, in the financial precinct of Sydney, Australia for A$65.3m. The property is the group’s first commercial asset in Australia and may provide opportunity for further redevelopment potential in future. *Cedar Strategic: Proposed a renounceable non-underwritten 1-for-2 rights issue at $0.005 per share, a 37.5% discount to the closing price of $0.008, to raise up to $14.7m. Separately, the group has named China Gezhouba Group as its main contractor for all its real estate and infrastructure construction projects in the PRC for a three-year period. The collaboration is in line with the group’s ambition to establish itself as a regional real estate player, having announced plans to acquire a Guizhou property player Hua Cheng group in May 13 via a reverse takeover deal. Gezhouba is a leading construction player based in Hubei and was ranked the 42nd largest contractor by revenue globally in 2012. *Rex: Jointly-controlled entity, Lime Petroleum, is on track to drill its first two wells in Block 50 Oman by 4Q13. Lime’s subsidiary, Masirah has awarded a drilling rig contract to Aban for the execution of its drilling programme in the Oman concession. The contract will be effective for a minimum period of 50 working days, which is anticipated to commence between mid-Oct and mid-Nov this year.