SG Market (05 Nov 13)

Market Roundup: US stocks eked out slight gains in light trading as ExxonMobil and US Steel led a commodity rally while investors awaited data on employment and economic growth. On the economic front, US factory orders rose 1.7% in Sep, in line with estimates, after declining 0.1% in the prior month.The government is expecting to release its 3Q GDP this Thu with forecast of 2% growth, while the non farm payrolls report due Fri is estimated to rise 125,000 last month after a 148,000 gain in Sep. In corporate news, Blackberry tumbled 16% after calling off its planned sale to Fairfax and will instead raise a US$1b bond issue and replace its CEO, while Twitter raised its IPO price range to US$23-25 per share, suggesting strong demand for the social media company. In S’pore, the slump in penny stocks has taken a heavy toll on overall market sentiment and investor confidence with the STI decoupling from the US market. With the latest batch of corporate results not offering any strong catalysts for a re-rating, the STI is expected to continue hovering within its current 3,150-3,238 trading range. Stocks to watch for: *Genting S’pore: 3Q13 net profit swelled to $193m (75% y/y, +38% q/q) as revenue jumped to $776.8m (+16% y/y, +10% q/q). Gaming turnover up 15% to $606.7m on robust VIP volume (+58% y/y, +19% q/q)) and normalization of win rate despite a 6-7% decline in mass market. Non-gaming segment climbed 27% to $169.7m on strong visitation (>18,000 daily) to its attractions, while hotels achieved 94% occupancy. Adjusted EBITDA came up to $347.4m (+15% y/y, +12% q/q) meeting expectations. Bottomline was boosted by various divestment gains and fair value of financial derivatives. *Viking Offshore: Despite reporting higher 3Q13 revenue of $15.4m (+9%) on an increased order backlog, net profit barely broke at $0.2m (+15% y/y) as gross margin contracted 3.6ppts to 31% due to poorer business mix. Separately, the group is acquiring a 30% stake valued at US$5.4m in Smart Earl, which has ownership rights to a US$180m drilling jack-up rig currently being constructed by China Merchants Heavy Industries. To fund the purchase, Viking is placing out 40m new shares at $0.08 each to ex-founder and chairman of Labroy Marine, Tan Boy Tee including a 90-day option for another 40m shares. *Hiap Hoe: 3Q13 net profit soared 150% y/y to $33.2m as revenue doubled to $81.1m driven by progressive sale recognition from its residential projects, Signature at Lewis, Skyline 360o and Waterscape at Cavanagh. There was also a significant increase in other income contributed by fair value gain of $2.9m from quoted investments. NAV rose 21% to $0.787 per share. *Superbowl: 3Q13 net profit slumped 61.3% y/y to $1.1m mainly due to the sharp 65% drop in contributions from a JV property development project The Beverly as well as higher staff costs. Revenue improved 8% to $4.6m, driven by its bowling (+17%) and property rental (+6%) segments but partially mitigated by the lower sales from Funworld (-1%) and SuperCue (-14%) due to stiff competition from alternative home-gaming recreational facilities. *Hupsteel: 1QFY14 net profit more than doubled to $0.7m from a low base as revenue dipped 5% to $33.1m on weaker demand for structural steel products. Gross margin of 14.7% was an improvement over the 13.5% achieved in 1QFY13 due to its focus on spot sales but was lower than the 16.4% in 4QFY13 owing to intense completion. A FX gain of $0.8m vs a loss of $0.2m contributed to the better profitability. *Technics O&G: 40.2% associate Norr Offshore Group has been awarded its first micro LNG plant project worth $21m for the supply of process equipment and accessories in Indonesia. *Ascott Residence Trust: Proposed an underwritten renounceable 1-for-5 rights issue @ $1.00 (22.5% discount to last close) to raise $253.7m, of which 81% will be utilized to pare down debt, 17.7% will be used to fund capex, AEIs and working capital purposes and the rest going into rights issue fees and expenses. *HanKore: Proposing a 10-into-1 share consolidation to rationalize the share capital of the company. *China Great Land: Announced that owing to weak market conditions and new piling regulations, two out of the three piling related services contracts (Rmb83.6m) secured in Apr 13 worth Rmb55.4m have been terminated by mutual consent. *Swee Hong: Issued a profit guidance that it expects to report a loss for 1QFY14 due to a decline in revenue coupled with significant cost increases.