SG Market (27 Sep 13)

SG Market: S’pore shares likely to see cautious trading after Wall Street snapped its 5-day losing streak and edged up on an encouraging jobs report but gains were slim amid concerns that Congress will fail to reach a budget compromise to avert a government shutdown and debt default. But if the past were any guide, expectations are for lawmakers to take the standoff to the wire and strike a stop-gap deal only at the last minute. The buying came on the heels of positive news that initial jobless claims fell 5,000 to 305,000 last week, near 6-year lows, while separate data showed the US economy grew an unrevised 2.5% in the 2Q and pending home sales fell 1.6% in Aug, slowing for a third month in a row but below the 2.3% decline expected. Expect the STI to test the 3,200 psychological resistance but gains will be limited with the US funding and debt issues overhanging the market. Underlying support lies at 3,166 (50-day moving average) with overhead resistance at 3,275. Stocks to watch for: *SATS: Acquires S’pore Cruise Centre (SCC) from Temasek for $110m via subsidiary SATS Airport Services (92%) and 60/40 JV SATS-Creuers (8%) to hold effective 96.8% stake. SATS-Creuers has a call option to purchase 42.3% of SCC, which will reduce SATS’ interest to an effective 79.9% by Mar 14. SCC, which operates the international cruise terminal at HarbourFront and 2 ferry terminals at Tanah Merah and Pasir Panjang, reported revenue of $45m and pretax profit of $16.7m for FYMar13. *Sembcorp Industries: Raised OMR53m ($173m) from the IPO of 33.4m shares, representing 35% of the share capital of Sembcorp Salalah Power & Water Co in Oman, which was oversubscribed and will commence trading on the Muscat Securities Market on 10 Oct. The company owns and operates the US$1b Salalah Independent Power & Water Plant. Post-listing, the group will hold a 40% stake (down from 60%) in Sembcorp Salalah and recognize a total gain of $117m (EPS +6.6¢), comprising a $37m divestment gain and $80m fair value gain. *Hartawan Holdings: Two-year long proposed acquisition of Wilton Resources Holdings has been brought back to life. The $300m acquisition will be via the issue of 1,5b shares @ $0.20 and would result in a RTO, transforming Hartawan from a property leasing and hospitality group into a gold-mining company. Post acquisition, Hartawan proposed a 12-into-10 share consolidation. Thereafter, Hartawan Holdings will be known as Wilton Resources Corp. *Sysma: Secured $7.5m contract to build a two-storey good class bungalow (GCB) at Jervois Hill over 18 months commencing Oct 13. This follows an earlier $10.4m contract won last month to erect a GCB at Nassim Road. *Tritech: Proposed 1-into-2 share spilt in a bid to improve liquidity. Following the share split, Tritech will issue bonus 5-year term warrants on the basis of 1-for-2 with an exercise price of $0.20/share. The estimated gross proceeds of $77.3m , assuming full exercise of warrants, will be used for the group's future expansion plans in its engineering and water-related businesses and general working capital. *Rowsley: Substantial shareholder Peter Lim Eng Hock boosts stake to 49.64% from 29.9% after being allotted shares as partial consideration for the sale of Iskandar land to Rowley. *TTJ: Both FY13 net profit and revenue declined 11% to $14.9m and $127.4m respectively, mainly due to lower revenue from structural steel business. DPS of 0.9¢ proposed.