SG Market (30 Aug 13)

SG Market: S’pore shares may inch higher in line with positive US leads although sentiment remains fragile amid lingering worries over the seething Syrian crisis and Fed tapering next month. The prospect of an imminent attack on Syria faded as UK failed to win parliamentary backing for military strikes. Investors thus turned their attention to the better-than-forecast US 2Q GDP growth of 2.5% and 6,000 drop in weekly jobless claims to 331,000. Over in S’pore, focus will be on Olam and China Minzhong, which released results. Overhead resistance for the STI is seen at 3,065 with downside support at 2,990. Stocks to watch for: *Olam: Poor 4QFY13 results, which came in below estimates. While revenue grew 26% y/y to $6.5b, net profit plunged 48% to $56.8m, hit by challenging market conditions and higher tax charges. Without the tax effect, pretax profit rose 25%, in line with topline growth. Similarly, FY13 net profit of $362.6m slid 2% despite revenue gaining 22% to $20.8b, bolstered by a 50% rise in sales volume to 16m tonnes, mainly from the food category (+84%) and industrial raw materials (+18%). EBITDA margin improved slightly to 3.7% y/y but saw a sharp drop from 6.5% in 3Q. Adjusted net gearing climbed to 0.55x vs 0.37x last quarter. DPS of 4¢ maintained. *China Minzhong: Reoprted unaudited 4QFY13 net profit of Rmb162.7m (-5%), while revenue was flat at Rmb811m. Topline growth in its proceessed vegetables (+10%) and beverages (+51%) was was mitigated by the contraction of its fresh vegetables produce (-14%) as a result of lower yielding crops from the normalized weather patterns. For the full year, earnings grew 11.1% to Rmb755.1m while revenue expanded 26.4% to Rmb3.2b. Gross margins from processed vegetables declined due to higher processing costs, while its fresh vegetables segment was affected from lower contribution from new productive farmland. Maiden DPS of 1¢ declared. Company did not issue any new response to the Glaucus report. *Yamada: 4QFY13 net profit broke even at Rmb0.2m vs Rmb19.5m loss in previous year, which was impacted by fair value loss on biological assets, while revenue slid 5% to Rmb55.8m. This brought FY13 earnings to Rmb69.2m (-50%) on revenue of Rmb509.2m (-8%). Bottomline was hit by lower sales volume of self-cultivated mushrooms due to unfavourable weather conditions affecting yields and weak gross margin, which narrowed to 22.2% from 37.6%, as the average selling price of shiitake mushrooms did not keep pace with rising cost of raw materials. DPS of Rmb0.013 proposed. *Hankore: FY13 earnings slipped 3% to Rmb99.5m despite achieving a 50% jump in revenue to Rmb369.1m. This was due to a higher value of reversal on impairment of intangible assets and financial assets made in the previous year, as well as professional fees for capital activities and staff bonuses. Otherwise, core earnings would have surged 199% from higher construction revenue (+130%) and recurring water treatment income (+16.2%). *KrisEnergy: 2Q13 revenue declined 22% y/y to US$36.8m on lower production and sales volumes, and average realized oil and gas prices. The decrease in production is in line with the anticipated decline in the Kambuna field as it approached the end of its economic life. In addition, the producing areas in Gulf of Thailand faced scheduled and unplanned shutdowns, exacerbated by bad weather causing delays to on going work. Operating costs fell by a lesser 9.6%, resulting in a wider net loss of US$8.7m from slightly below breakeven levels last year. *GuocoLand: Booked 4QFY13 net profit of $32.2m (-49%) on revenue of $168.6m (-47%), bringing full year earnings to $40.5m (-36%) and flat revenue of $677.4m. The results masked a $32m fair value gain on its investment properties and a $42m income from forfeiture of of customer deposit for the purchase of certain units in Goodwood Residence. Without these one-off gains, group would have ended up in the red. Overall performance was affected by a change in the main contractor for its Goodwood Residence and Sophia Residence projects, which led to higher construction costs. NAV as at Jun stood at $2.20 and DPS of 5¢ maintained. *Guocoleisure: FY13 net profit dropped 43% to US$44m, while revenue edged up 3% to $380.3m. Excluding the one-off items arising from a US$5.5m royalty settlement, write-back of deferred tax last year and compensation of from a hotel lease termination received this year, core earnings would have seen a smaller decline of 12%. Topline growth in the hotel segment was dampened by volatility in the gaming sector. Lower oil and gas royalties from Bass Strait, coupled with higher staff and operating expenses led to the weaker bottomline. NAV last stood at US$0.84. A DPS of 2¢ was declared, similar to that paid in FY12. *Global Logistic Properties: Signed new agreements to lease another 21,000 sqm of space at GLP Park CDHT (11,000 sqm) in Chengdu and GLP Park Qingdao Airport West (10,000 sqm) to one of the largest e-commerce companies in China. GLP currently counts Amazon (taking 5.7% of leased space), VANCL (1.9%) and 360buy (1.4%) among its top e-commerce tenants. *Ntegrator: Secured two contracts worth $6.5m from repeat customers, Myanmar Radio and Television and the Viettel Group to supply communications equipment to Myanmar and Vietnam, taking its year-to-date order wins to a record high of $71m. Both contracts are slated for delivery in the current financial year and are expected to contribute positively to its FY13 results. *Tritech: Propose to acquirie Anhui Clean Environment Biotech for Rmb10m, which will enable the group to further its venture into the water and waste water business in China by tapping on Anhui's existing licenses, management, track record and clientele. #OKH announced 4Q13 results which saw the group register a net loss of $2.4m versus a net profit of $20.7m, as revenue plunged 98% to $2.1m. Result brings FY13 net loss to $0.9m versus a net profit of $16.2m. The dismal performance was mainly due to lower revenue from its property development division, partially offset by increase in revenue from its construction division.