SG Market (29 Oct 13)

SG Market: S’pore shares are expected to drift in directionless market after Wall Street closed narrowly mixed in lacklustre trading as investors were hesistant to take big bets following a batch of mixed earnings reports and ahead of the Fed’s two-day policy meeting starting today although most traders are not expecting any change in its monetary stance. On the exonomic front, industrial production rose 0.8% in Sep, looging its largest increase in seven months but pending home sales plunged 5.6% for its fourth monthly decline. While the STI managed to eke gains yesterday, the underlying broad market was weak with losers overwhelming gainers. With technical indicators exhibiting signs of deterioration, the index is expected to head towards its downside support at 3,150 with the 200-day moving average at 3,238 posing as stffl resistance. Stocks to watch for: *Straits Trading/ARA: Straits Trading is acquiring a 20.1% stake in ARA Asset management from ARA CEO John Lim and Cheung Kong for $294.4m or $1.7326/share with the aim to seed and expand its property business in the longer term. Post transation purchase, Straits Trading will become the largest shareholder in ARA, followed by John Lim (19.25%) and Cheung Kong (7.84%). Separately, it will set up 90/10 co-investment company, with initial capital commitment of $200m that may rise up to $950m. The new vehicle will have the mandate to invest in real estate and real estate-related opportunities in SE Asia, Australia and China and help Straits Trading transform its low-yielding assets into potentially higher-return ones. *ST Engineering: Signs three-year line maintenance contract to support Jetstar Asia’s existing and future fleet of Airbus A320 aircraft. The group has been supporting Jetstar since 2004 for a wide range of maintenance services. *SGX: Launches Asian foreign exchange futures from 11 Nov, starting with six currency pairs – AUD/USD, AUD/JPY, USD/SGD/ INR/USD, KRW/USD and KRW/JPY. In addition to these Asian FX futures, SGX was the first central counterparty in Asia to clear OTC non-deliverable FX forwards in seven Asian currencies and interest rate swaps. *Boustead: Awarded design-build-lease contract for integrated maintenance repair and overhaul remanufacturing and office facility at Tukang Innovation Park. To be completed in 1Q15, the facility will have a gross floor area of 24,800 sqm and will be the group’s fourth industrial facility added in the past three months and 13th industrial leasehold facility, taking its portfolio size to over 152,000 sqm GFA. *TEE Int’l: Signed letter of intent with main contractor Hyundai Engineering & Construction to deliver a $142m M&E package for Marina One, a landmark mixed development project in Marina South by M+S, a JV between Malaysia’s Kazanah Nasional and S’pore’s Temasek Holdings, within 28 months. The project will take its engineering order book to $317m *King Wan: Secured five new M&E engineering contracts in S’pore worth $26m between Aug-Oct period for Alexandra Echelon condominium, Tampines HDB project, Overseas Family School, Buangkok Jewel condominium and Water Woods EC. To be completed by 2016, the latest projects will bring its order book to $168.9m, stretching till 2016. *OKP: Weak 3Q13 results with net profit of $0.3m (-88% y/y) despite revenue rising 8% to $30.7m, which was weighed by poorer pricing for new and current projects, rising manpower and sub-contracting costs as well as cost overruns on some sewer-related projects. Gross margins shrank to 6.5% from 22.6% in 3Q12. As of Sep, order book grew to $447m, lasting till 2015, with free cash of $32.2m and NTA of 30.2¢. *Healthway Medical Corp: 3Q13 net profit of $10.1m was boosted by a $22.4m gain on distribution-in-specie of HMI, while revenue held steady at $20.4m (+3.3%). At the operating level, HMC recognized an impairment of $13m for its loan receivables in China, which resulted in a core operating loss. Management will continue its focus to open new clinics in the specialist sector, as well as the primary care sector. *Grand Banks: 1QFY14 losses narrowed to $0.6m compared to $1.4m in prior year. Revenue rose 46.3% y/y to $9.5m amid signs of a recovery in the US luxury boat market and the successful introduction of new boat models, while gross profit margin improved 1ppt to 18.6%. Group's net order book expanded 7% q/q to $14.2m on the back of better market traction in recent quarters. Its recent rights issue proceeds of $12.3m will be used to strengthen the group's financial position, as well as its investment initiatives for its business operations. *Great Eastern: Booked lower 3Q13 net profit of $282.8m as last year’s results was lifted by a $421.6m gain from sale of APB and F&N. Excluding the one-off gains, core net profit would be 43% higher on better profit from insurance business and higher net investment income across all insurance funds. Total weighted new sales rose 38% to $274.7m, led by the continued growth in S’pore and Malaysia operations. *Genting HK: 37.7% owned Norwegian Cruise Line 3Q13 results showed total revenue +18% y/y to US$797.9m and EPS +17% to US$0.84. Passengers carried rose 12% to 449,615, while occupancy edged up 1.2ppt to 114% even as capacity days expanded 15% to 2.8m. *BH Global: Issued profit warning for 3Q13 mainly due to FX losses from the significant depreciation of IDR against SGD, resulting in a net loss.