SG Market (19 Sep 13)

SG Market: S’pore shares may follow the rally on Wall Street after the Fed unexpectedly refrained from winding down its massive monetary stimulus, citing the need to see more evidence of sustained economic growth. Furthermore, Fed chief Ben Bernanke refused to commit to any preset timeline, stressing there is no fixed calendar schedule and any tapering will be data dependent. Market watchers had anticipated the Fed to trim its US$85b monthly bond purchases by US$5-10b. While downside risks have diminished, the central bank expressed concerns that recent sharp rise in interest rates has slowed the economy and cut its GDP growth forecast for 2013 and next year accordingly. Reflecting the tightening conditions, housing starts rose 0.9% to an 891,000 annual rate, following the prior month’s 883,000 pace that was weaker than estimated. Investors reacted by propelling US stocks to record highs and driving down bond yields. 10-year Tresaury yield dropped 16 bps to 2.69%, while gold rallied 2.3% to US%1,340.79/oz and Asian markets opened 0.7% to 1.1% higher in early trading. From a short term perspective, continued Fed stimulus provides a reprieve for the interest rate sensitive stocks like Reits and property developers, which have been particularly hard hit in recent months. Topside resistance for STI is now moved to 3,234 (200-day moving average), then 3,275 (Jul high), while support sits at 3,200. Stocks to watch: *Keppel Corp: Secures two FPSO conversion contracts from repeat customers, SMB Offshore and Malaysia’s M3nergy Offshore, worth a combined $190m. Year-to-date, Keppel has secured ~$4.5b of new orders, on track to meet the street’s forecast of $5.5-6.5b of FY13e order wins. *Yanlord: Announces a strong start to Sep ’13, with pre-sales of ~Rmb2.6b accumulated in the first two weeks of the month, mainly driven by the launch of two projects –Yanlord Yangtze Riverbay Town (Phase 3) in Nanjing and Yanlord Sunland Gardens (Phase 2) in Shanghai. *CapitaLand: Launched the Sky Vue condo project at Bishan central over the week end. Jointly developed with Mitsubishi Estate, Sky Vue comprises two 37-storey towers with 694 units. The price range for the Phase 1 units is between $1,380 and $1,550 psf. *BBR: Secured $105.8m worth of contracts since end Mar ‘13. These include a contract for the construction and maintenance of Phases 14 and 15 of the mixed-use development at The Springside at Jalan Ulu Seletar/Sembawang Road, and a number of specialised engineering contracts in Singapore and Malaysia. *OUE Hospitality Trust (OUE-HT) / OUE: OUE-HT, which has the right of first refusal for certain hotels owned by parent, OUE, has declined an offer to acquire the Meritus Mandarin Haikou for $58.7m, and Meritus Shantou China for $49.3m, as this would not be accretive. The offer was triggered after OUE received an unsolicited offer for the hotels from an unrelated third party. *Consumer F&B: Maybank-KE notes that the latest US$2.1b acquisition of Lucozade and Ribena by Suntory highlights the keen interest in the sector; believes there are more of such deals to come, and heightened M&A activities will drive overall sector valuations higher. Tips Del Monte Pacific, Yeo Hiap Seng, Super Group as attractive targets. *Nam Cheong: To invest US$1.5m to own 49% of a JV company, in partnership with PT Bahtera Niaga Internasional (BNI) and Ms Nelly, an Indonesia citizen. The JV will own, operate and charter marine vessels for transportation, exploration and production activities in the oil and gas industry, and also provide vessel maintenance and offshore marine services. This venture is inline with Nam Cheong’s intention to grow its presence in the Indonesia market. *Blumont: Has teamed up with Ms Ines Scotland, one of Australia’s most successful mining executives in the copper sector, to set up a 85/15 JV company to be named Blumont Copper that will be involved in identifying undervalued opportunities in the global copper industry for acquisition and investment. Separately, Blumont has called for a trading halt, following a query by SGX on its trading activity. *Hyflux: Together with PUB, has officially opened Singapore’s second and largest desalination project. With a capacity of 70m gallons, or 318,500 cubic metres of desalinated water per day, the Tuaspring Desalination Plant marks another major step in Singapore’s journey towards water sustainability. *Sembcorp Industries (SCI): Acquired 60% stake in E-OSM for $4.5m. The target is a design, engineering and manufacturing company that develops high-performance building materials in specialist construction works. *Logistics Holdings: Substantial stakeholder Pai Keng Pheng raised his stakes to 5.596% (from 4.971%) after acquiring 1.1m shares @ $0.22 in an off-market deal. *Equation: Proposes share consolidation of every four existing shares into one.