SG Market (30 Sep 13)

SG Market: S’pore shares are poised to a choppy session as Wall Street fell last Fri amid concerns that the political brinksmanship and impasse over the federal budget has brought the government closer to its first shutdown in 17 years, which would hurt the economy. Tthe Democrat-led Senate stripped a House funding bill of a provision to defund a health care law and sent it for approval only for the Republican Congress to amend the bill with a one-year delay on Obamacare, which the White House is likely to veto. The risk is if the House fails to pass a funding bill today (Washington time), the government officially shuts down. While essential services will remain in place, many departments will operate on a skeleton crew and many businesses will see government contracts suspended. Latest economic data showed consumer spending in the US rose in Aug for a fourth consecutive month, climbing 0.3% but consumer confidence dimmed to a five-month low in Sep. Focus will be on Friday's jobs data. Economists expect jobs growth to accelerate in Sep, with the economy likely adding more than 200,000. Any number much higher or lower than that key milestone could trigger a stock slide. Lower than 200,000 and the recovery looks shaky again; higher, and the Fed may reduce bond purchases sooner rather than later. Expect the STI to range trade between the 3,200 psychological resistance and underlying support at 3,166 (50-day moving average). Stocks to watch for: DBS: Its new POSB HDB loan package is a big hit with HDB flat buyers and now accounts for 25% of new bookings, and makes up for some of the slack in the private-home loan market. Over 80% of customers are refinancing from the HDB, or are first-time bank customers. DBS has the highest HDB loan market share at 30% of new loans and its HDB loan portfolio is almost $10b, or ~25% of the bank's S’pore mortgage book. *CapitaLand: Sold 430 out of 505 units at initial sales launch of Sky Vue at Bishan Central, with average selling price of 1,500 psf. The group’s strategy of building shoebox units to attract buyers seeking lower total price quantums appears to have panned out for Sky Vue. The strong response fuelled cautious hopes of a pick-up in market sentiment following several rounds of property cooling measures. UOL/SingLand: Its JV 99-year leashold Thomson Three project sold 90 more units to take total to 250 sold out of 320 units released to-date at an average selling price of $1,350 psf. *SPH: Telenor, Norway's leading telco operator, is buying a one-third stake in media company 701Search, at an enterprise value of €180m ($303m) from present joint owners, SPH and Schibsted Classified Media. SPH will receive $16.9m for its 701Search shares. *SMRT: S&P cuts its rating to negative from positive although its AAA rating was affirmed. The credit agency noted that SMRT's financials have deteriorated more than it had expected because of larger operating expenses and high capital spending over the 12 months to Jun 13. *YHM: Secured a 20-year contract worth >US$37m to lease a set of hydro-electric power generation equipment to a national utility board in South Asia. The group expects the lease to commence after the commissioning of the power plant which is expected to be before end 2013. Meanwhile, YHM proposes to raise up to $50m via placement of up to 1b new listed warrants at an issue price of $0.025 per warrant, with exercise price of $0.025 each. The bulk of the proceeds will be deployed toward the oil & gas business (80%), and the remainder toward the above energy services project (10%) and working capital (10%). *Tritech: Plans to raise $77.3m to fund future expansion in engineering and water-related businesses, including potential M&A via a proposed 1-into-2 stock split, to be followed by a 1-for-2 issue of up to 386.57m non-renounceable bonus warrants. Each warrant is convertible to 1 new share at $0.20 exercise price. *SingHaiyi: Acquired Tri-County Mall in Cincinnati, Ohio for US$45m valuing the mall at a 77% discount to its net book value, and translates to US$43.5psf of effective retail area. The mall has 1.26m sf of lettable retail space, of which 0.23m sf is owned by Macy’s, a leading department store and sits on a total site of ~3.3m sf with 7,118 parking lots. With a current occupancy rate of 84%, Tri-County Mall reported EBITDA of US$5.7m in FY12, and US$2.6m for 1H13, which translate to gross yields of 12.7% and 11.5% respectively. *Otto Marine: Reached an amicable agreement to end the disputes and all the arbitrations with its customer, the Mosvold Supply Group, arising out of the terminated contracts of four AHTS vessels constructed by Otto. The parties have agreed to settle without admission of liability and on a confidential basis. *China Merchants: Entered into a conditional share sale and purchase agreement with China Merchants Properties Development to divest its non-core property development business in New Zealand for HK$356m. This divestment is part of the group’s strategy to focus on its core business of toll road operations. *SATS: Singns MOU with Oman Air and Oman Airport Management Co to explore potential joint venture to develop and operate cargo facilities in Oman. *China Fishery: Launched a second general offer at NOK68.17 for Copeinca, equalling the cash offer of its earlier acquisition, which gave it control of 99.1% of the Peruvian fishmeal producer. The acceptance period expires on 25 Oct 13.