Monday, August 26, 2013

SG Market (26 Aug 13)

SG Market: S’pore shares may regain some temporary composure as US stocks edged higher on Fri after new home sales plunged 13.4% in July to 394,000 units, well below expectations, easing concerns that the Fed might slow down its massive stimulus next month. Yields on US Treasuries traded lower but still near two-year highs, while gold rallied and the USD weakened. In Europe, Gemany reported that its economy grew 0.7% in 2Q, while Britain revised it growth rate upwards. Emerging market equities gained for the first time in seven days. The Nikkei and ASX also opened slightly in the positive territory. Near term, the STI may attempt to close the breakdown gap at 3,108 set on 22 Aug but upside will be capped given the uncertainty over interest rates, capital outflows and economic growth. The key index is also trading well below its 20, 50 and 200-day moving averages, which reaffirms the bearish sentiment. Immediate downside support is at the 3,065 level. Stocks to watch for: *Sound Global: 2Q13 net profit slipped 4.3% y/y to Rmb111.9m even as revenue rose 29% to Rmb955.3 as certain BOT projects started operations and on higher turnkey sales. Gross margin was relatively stable at 28.6% but declined 4.3 ppt sequentially. Other income jumped 93% to Rmb21.69m but this was marred by a Rmb33.6m loss blamed on currency forward contracts and interest rate swaps as well as a doubling in finance costs to Rmb66.4m due to USD senior notes issued in 3Q12. Meanwhile, controlling shareholder and Chairman Wen Yibo is still in discussions with financiers and regulators over a possible exit offer and delisting of the company. *Amtek Engineering: 4QFY13 net profit jumped 25% y/y, 146% q/q to US$10.9m, aided by US$6m gains from disposal of assets and properties, while revenue slid 7% y/y but +9% q/q to US$160.7m. The results brought FY13 earnings to US$26.9m (-20%) and revenue to US$626m (-7%). Apart from its casing products and tooling sales, group suffered from weak end market demand in other segments, lower capacity utilization and high fixed cost. In view of challenging market conditions, group is cutting its final DPS of 2¢, taking FY13 DPS to 3.3¢, down from 4.5¢ in previous year. *Tiong Woon: Robust FY13 results, turning around from a loss of $4.8m to a net profit of $17.6m, driven by a 36% y/y rise in revenue to $200.5m, as the group saw substantial sales improvement across most of its business segments, in particular, the heavy lift and haulage division (+35%) and the engineering services division (+121%). *Raffles Education: FY13 net profit turned around to $26.7m from a loss of $66.3m in prior year but revenue eased to $128.4m (-2%). The weaker top-line was due mainly to a decline in PRC revenue but offset by an increase in Asia-Pacific sales, which saw a steady rise in student enrollment. Earnings masked a $14.6m gain from sale of land in OUC (China), $7.3m government grant, $37.6m net reversal of provision for land restructuring cost and $41.7m fair value gain recognized on Raffles Education Square ($1.4m), Iskandar land ($1.7m) and OUC ($38.6m). Stripping these out, the group would have remained in the red. *CWT: Proposed acquisition of Sinsenmoh Transportation for $19m. Sinsenmoh is an established chemical logistics player in S’pore that will bring strategic competencies and expanded customer base comprising chemical and petrochemical companies. The acquisition is part of CWT’s ongoing efforts to enhance its chemical storage, handling and transportation capabilities and will be funded by borrowings. Excluding short term trade financing of $702m as of Jun, group has negligible net gearing. *Interra: Commenced drilling on the development well TMT-56 at the Tanjung Mining Timur field in South Sumatra, Indonesia. Group has a 100% operating interest in the tehnical assistance contract of the TMT field and estimates that results of the drilling should be available in eight weeks. *PCRT: Announced the official opening of its Perennial Jihua Mall (PJM) in Foshan, Guangdong on 23 Aug. The mall is part of PCRT’s IPO portfolio of assets, and also PCRT’s first 100% owned operational asset. To-date, PJM has achieved a committed occupancy of 93%, underpinned by anchor tenants Yonghui Superstore supermarket and Jinyi Media Corp Cineplex, and international brand names such as Massimo Dutti, Bershka, Stradivarius, Oysho, Monki, Asobio and Daiso. *Cedar Strategic: Terminated the original RTO agreement with the Hua Cheng Group (HCG) and entering into a new deal to acquire only certain assets in HCG. Under the new agreement, Cedar has proposed the acquisition of all shares of Trechance Holdings for Rmb22.5m, via issue of 128.6m new Cedar shares at $0.007 each plus a $3.6m, 5% bond due 2015. Trechance, owned by Mr Ji Yu Dong and his daughter Ms Ji Lei, is involved in property development and property invmt in the PRC. Trechance (and its subsidiaries), is itself currently undergoing a restructuring exercise such that Trechance will own certain property development and property management and leasing businesses in Guizhou province (belonging to the Hua Cheng group). The assets, with an estimated gfa of ~270k sm under devt and/or held for future devt, have an NTA of ~Rmb 20.5m as at Jun ’13.

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