SG Market (23 Aug 13)

SG Market: S’pore shares may see a slight technical rebound from oversold levels after US stocks finished higher despite a 3-hour shutdown on Nasdaq due to a technical glitch. The upturn was led by buoyant manufacturing data from China and eurozone with US also reporting solid housing, employment and economic indicators. HSBC’s PMI for China’s manufacturing sector jumped to 50.1 in Aug, up from July’s 11-month low of 47.7, gave investors some optimism, while a survey of European PMIs showed business activity picking up in Aug, suggesting that the eurozone is on the mend. In the US, weekly jobless claims climbed 13,000 to 336,000 in line with median forecast but the monthly trend continued to decline to its lowest since Nov 07, while home prices surged 7.7% in Jun, showing improvements on both the labour and housing fronts. Meanwhile, the Conference Board’s index of leading economic indicators increased 0.6% in July, beating expectations. The STI may push to close the gap at 3,108 but gains are likely to be limited with downside support at 3,100. The downtrend remains intact with mid-term objective of 3,065. Stocks to watch for: Saizen: FY13 revenue and NPI grew 9.7% and 13.6% to ¥3.8b and ¥2.7b respectively driven by 7 new property acquisitions and 2 divestments. But operating income was affected by a one-off loan refinancing costs of ¥283.3m. Average occupancy across its portfolio was stable at 91.9% but overall rental reversion of new contracts declined 0.5%. Gearing rose to 38% from 31.4% in FY12. Distributable income jumped 33% to ¥1.4b. DPU of 0.63¢ declared for 2HFY13, taking FY13 total to 1.29¢ vs 1.24¢ in prior year. However, NAV dropped to $0.25 from $0.30 due to the weakening of the JPY against SGD. *Sabana REIT: Proposed to acquire a 7-storey light industrial building (land area: 113,690 sf, GFA: 327,575 sf) at 508 Chai Chee Lane for $68.2m. The property has a remaining tenure of 46.5 years vs Sabana’s existing portfolio of 38.8 years. Post sale, the vendor will lease back at least 50% of the total rentable area of the property, for a term of 10 years with two options to renew for further terms of four years and 3.5 years each. The property is currently 100% occupied by the vendor. *Centurion: Submits highest tender price of $80.8m among 13 bids for a 9,542 sqm site at Woodlands Avenue 10. The 30-year leasehold land is for a proposed development of a workers’ dormitory with a capacity of 4,100 beds for foreign workers in the marine, process and manufacturing industries. *Global Logistic Properties: Pre-leased 24,000 sqm of space to a global consumer goods company establishing its national distribution centre at GLP Park Jiangning in Nanjing, China. With this new customer, the facility will be 99% leased. *Falcon Energy: Sold 45.5% indirect stakes in two Gusto MSC CJ46-X100 jack up drilling rigs (currently under construction) to COSL Drilling, a unit of Chinese state owned CNOOC Group for undisclosed sum. The newbuild rigs were ordered from a Chinese yard China Merchants Heavy Industry in Oct 2011. This will leave the group with another two Gusto MSC CJ50-X120 harsh environment jack-up rigs (with options for two more units) recently ordered from China Shipbuilding Industry Corp at a cost of US$218m each. *CitySpring/SingTel: Wholly owned subsidiary CityNet, the trustee-manager of NetLink Trust, announced that the SingTel unit is acquiring OpenNet from its partners Axia NGNetworks Asia (30%), SPH (25%) and SPT Net (15%) for $126m. OpenNet was set up to build and operate the fibre infrastructure of S’pore’s Next Generation Nationwide Broadband Network, while NetLink owns and manages the passive infrastructure assets used by OpenNet and exchange buildings. Following the acquisition by NetLink, CityNet will receive an additional $2m to its annual management fee of $2.1m. SingTel will reduce its 100% stake in NetLink to <25% by Apr 2018. Yanlord/Ho Bee: Broke ground for its landmark residential development, Yanlord Marina Peninsula in Zhuhai, China. The waterfront site with potential GFA of 500,000 sqm was acquired at a cost of Rmb3b in 2011 and will be developed into a prime residential district in the rapidy expanding Pearl River delta region with comprehensive amenities such as golf courses, universities, parks, and linked to custom checkpoint and high-speed railway station. *China Environment: Proposed placement of up to 65m new shares (representing 10.2% of the issued share base) and 20m vendor shares at $0.2513 each or 10.3% discount to the last done price. Of the net proceeds of $15.9m raised, $2m will be used to fund its strategic investments and JVs in China, $2m will be for fixed asset acquisition, while the balance will be for working capital. Post placement, vendors Propser Big Int’l and Ma Ong Kee will reduce their stakes to 6.4% and 0.3% from 7% and 0.4% respectively. *Geo Energy: Investment guru Jim Rogers acquired 1.7m shares at $0.355 each on 22 Aug. Coincidently, the stock saw a sharp spike in trading volume to 152.9m shares yesterday, which was about 15x the average daily volume in the past three months.