SG Market (02 Oct 13)

SG Market: S’pore shares may open firmer after US markets shrugged off the first partial government shutdown in 17 years amid hopes that it would be short-lived and would have limited impact on the economy. If history is any guide, the S&P 500 rose 11% on average in the 12 months following past government shutdowns since 1976. Most investors are taking a sanguine view that a speedy resolution would include a deal to extend the federal debt limit by 17 Oct to avoid default and the likelihood that the political gridlock will spur the Fed to delay stimulus cuts. But lawmakers have not scheduled any further negotiations on spending legislation. Better-than-estimated manufacturing activity also helped drive US stock gains. The ISM factory index unexpectedly rose to 56.2 for Sep, the strongest level since Apr 2011, and up from from 55.7 in Aug. However, an extended government stoppage may prevent the release of payrolls and jobs reports on 4 Oct, data watched by investors to help gauge the outlook for reductions in Fed asset purchases. Expect the STI to remain range trade bound between 3,200 and 3,136. Stocks to watch for: *Keppel Corp: Bagged repeat order from Clearwater Capital Partners for a pair of KFELS B Class jack-up rigs worth US$440m. The rigs are scheduled to be completed in 4Q15 and 1Q16. *Yangzijiang: Secured new shipbuilding orders for four 208,000 dwt bulk carriers with options for additional two similar vessels. Another 13 options consisting of five 82,000 dwt and three 64,000 dwt bulkers plus five 10,000-TEU contanierships (by Seaspan) have been converted into effective orders with scheduled deliveries in 2015 and 2016. Together, the total contract value of the 17 vessels is worth US$871m. As of Sep, the group has 28 outstanding options valued at US$1.36b, of which 11 are containerships worth US$850m and 17 are bulk carriers worth US$510m. *Yoma: The group has, together with parent SPA and First Myanmar Investment Co, signed a MOU with Mitsubishi Corp, Japan’s largest trading company, to jointly explore business opportunities in Myanmar as well as invest in its landmark project in Yangon. Yoma already partners Mitsubishi Motors to operate an after sales service centre in Yangon and SPA has been the exclusive distributor of Mitsubishi elevators and escalators for the Myanmar market since 1998. *Genting HK: The Philippines stock exchange has approved the IPO application by Travellers, which will comprise an offer of up to 1.57b shares and an over-allotment option of up to 236m, at an issue price of up to P$23.38 (US$0.54) per share. GENHK presently has a 50% stake in Travellers, which is expected to be diluted to 45% (assuming no over-allotment) or 44.3% (with over-allotment). All existing Travellers shareholders holding at least a 10% stake will be subject to lock-up of 180 days after listing. The tentative date for Travellers’ to commence trading is 5 Nov 2013. *Tuan Sing: Updated that the vendors have failed to obtain an order of sale for its collective purchase of all strata units and the common property of Gilstead Court from the Strata Titles Board, as mediation efforts at STB between the vendors and non-consenting vendors have not been successful. The vendors will proceed to make an application to the High Court for an order of sale to sanction the contract. *Darco Water: Recently concluded the sale of its land use rights in SongJiang District, Shanghai, comprising an area of ~6,960 sqm together with properties situated on the land to a third party purchaser. Based on FY12 numbers, Darco will record a gain on disposal of $1.9m; NTA will rise from 5.8¢ to 6.5¢, and the net loss per share will narrow from 2.5¢ to 1.81¢. Management intends to use the sale proceeds of Rmb15m for working capital. *Blumont: SIAS has called for a "speedy investigation" into the unusual share price rise, which comes even after Blumont responded to an SGX query yesterday that it was unaware of any unannounced reasons that could explain its phenomenal share price performance. SIAS believes that Blumont shareholders should know if the stunning price rise in Blumont is supported by any fundamentals, with Blumont trading at 500x P/E and 60x P/B.