SG Market (28 Aug 13)

SG Market: S’pore shares are headed downwards for a breakdown after Wall Street ended sharply lower amid mounting worries of a US-led military action against Syria and a potential spillover to the rest of Mid-East. Oil surged to a 18-month high, bonds rallied and gold jumped 2% to US$1,420/oz as investors flocked to safety. Adding to the selloff, US Treasury Jack Lew warned that the government would hit its debt limit by mid-Oct. But the market brushed aside economic reports on consumer confidence, home prices The STI has broken below its monthly uptrend since its low in Mar 2009 and is poised for further downside with immediate support at 2,990, near the psychological 3,000 level and topside resistance at 3,108. Stocks to watch for: *Property: Property market may cool further after government tightened loan limits and restrictions on PRs on purchases of HDB resale flats. With immediate effect, HDB will shorten the maximum loan tenure to 25 years from 30 years and cut the mortgage servicing ratio limit to 30% from 35% ofgross monthly salary. PRs now have to wait three years before being allowed to buy a resale flat. *F&N: Plans to spin off its property business via distribution-in-specie of 2 Frasers Centrepoint (FCL) shares for every F&N share held, which will be listed on SGX, targeted for Nov/Dec. FCL owns $9b worth of property assets as end Jun 13, and is currently in talks to potentially acquire and manage TCC's hotels outside Thailand. Post exercise, F&N's remaining key businesses will be F&B, printing & publishing, and the group will have net cash of $903m vs $1.2bn net debt pre-deal. *Wing Tai: 4QFY13 net profit surged 72% y/y to $275.8m, taking FY13 earnings to a whopping $531.1m (+102%), while 4Q revenue of $307.8m lifted full year revenue to a record $1.3b (+113%). The sparkling performance was attributable to progressive sales recognized from Foresque Residences, L’VIV in S’pore and Verticas Residences in Malaysia. The group also booked fair value gains of $52.1m vs $15.7m last year as well as higher share of associate contributions from Wing Tai Properties in HK. Net gearing dipped to 0.15x from 0.17x, while NAV climbed 27%% to $3.62. Group is proposing a DPS of 12¢ or 71% higher than the 7¢ in FY12. *Dukang: Reported scintillating 4Q13 results, raking in net profit of Rmb79.2m (+221% y/y) and revenue of Rmb622.9m (+37%). This propelled FY13 earnings to Rmb389.7m (+79%) on Rmb2.4b (+32%). The improvement in sales was achieved on the back of higher sales volume and rising average selling price for products under the Dukang brand, in particular ‘Luoyang Dukang’, which saw sales volume soar 125% to 33,910 tons in FY13. *Goodpack: FY13 results beat estimates with net profit of US$51.3m (+13.4%) on revenue of US$190.9m (+7.7%) as a result of new customer conversion and increased demand from existing clients in the non-rubber and synthetic rubber sectors, which grew by 18% and 13% respectively. Ebitda margin expanded to 46.7% from 43% but bottom-line earnings was dampened by a 112% spike in finance costs to US$12.1m. DPS of %¢ maintained. *AusGroup: 4QFY13 net profit dived 94% y/y to $0.5m as revenue sank 22% to $137.6. Consequently FY13 earnings missed estimates, sagging 58% to $9.7m on lower revenue of $582.7m (-8%). The dim full year results were attributed to reduced integrated services sales due to scaling back of capex by the resource sector, thinner gross margins, increased overhead costs and lower contributions from a JV. No dividends declared for FY13 compared to 1¢ paid in FY12. *Sim Lian: FY13 net profit came in 27% lower at $166.9m, while revenue dipped 3% to $742.2m due to lower sales from its property development division (-2% to $586m) as the UB.One industrial development was almost fully sold and booked while its construction division (-19% to $128.3m) suffered from fewer projects undertaken during the period. There was also a margin squeeze arising from higher contract costs (+15%). End Jun NAV stood at $0.854. FY13 DPS cut to 4.6¢ from 7.5¢ in prior year. *ISOTeam: Maiden FY13 earnings double to $6.0m, on the back of a 36% rise in revenue to $48.2m, underpinned by contribution from Neighbourhood Renewal Programme (NRP) projects for town councils of Marine Parade, Tampines, Chua Chu Kang and Pasir Ris-Punggol. The group also recorded a one-off gain of $4.2m from the disposal of its leasehold property at Kaki Bukit, which more than offset the $1.1m in IPO-related expenses. Margins narrowed to 17% from 18.1% a year ago, due to the higher sub-contracting costs. Final DPS of 1¢ declared. *Global Logistic Properties: Leased 32,000 sqm of space at GLP Park SND in Suzhou, China to new customer Yunda Express, one of China’s largest express delivery companies. Yunda will establish a sorting and distribution centre at the facility to meet increasing e-commerce delivery services in Suzhou and Wuxi, two major consumption centres in eastern China. *KSH Holdings: Awarded a $98.94m construction contract from Oxley Holdings for the construction of NEWest, a mixed-use development located at West Coast Drive. Construction is expected to commence in Sep 13, with completion expected within 30 months. Year-to-date, KSH has won construction projects amounting to $301.1m in S’pore and Rmb157m in Beijing, China, lifting its order book to $478m. *Mirach Energy: Struck a new untapped oil zone, below its old production oil layer at its Kampung Minyak oilfield in Indonesia. With the success of shown by the KM-607 well, group intends to apply to Pertamina to drill deeper wells to confirm other potential pay zones. *China Aviation Oil: Leasing storage facililties at Jurong Island from Horizon S’pore Terminals to expand its fuel oil business. Under the terms of the agreement, CAO will lease five storage tanks with a combined capacity of 174,000 m3 for a period of three years wef Sep 2013. *Olam: IFC approves a 5-year US$120m loan for Olam to finance upgrades and expansion of five food processing facilities in Nigeria and India. The projects will benefit local communities by generating rural employment and creating new opportunities for small-scale farmers to sell their crops. IFC financing will support activities such as sugar milling, spice processing, flour milling, mechanical cashew processing and sesame hulling. Management notes, the IFC’s endorsement represents a vote of confidence for Olam, given the IFC’s rigorous environmental and social review of a range of Olam’s policies, procedures and management initiatives.