SG Market (07 Nov 13)

Market Roundup: US stocks advanced sending the Dow to a record close at 15,745 and S&P 500 to just 2 points shy of its all time high at 1,775 on upbeat European data and optimism that the Fed would continue its stimulus longer than thought ahead of economic reports this week on GDP and jobs data. The gains came after European markets rallied following positive German orders and UK industrial ouput in Sep, and on hopes that the ECB will cut its key interest rate this Thu. In the absence of bad news, a report showed the Conference Board’s index of US leading indicators rose 0.7% in Sep. Two separate papers by the Fed board also called for a lower unemployment threshold than 6.5% for hiking the fed funds rate. In S’pore, KepCorp may be in focus after clinching a US$1.1b contract from Transocean, while Yoma’s better-than-expected 3Q results may provide some excitement. The STI expected to consolidate within its 3,150-3,238 trading range. Stocks to watch for: *Keppel Corp: Secured repeat US$1.1b order to build five KFELS Super B class jackup rigs for Transoceean plus options for another five similar rigs. The rigs are scheduled to be delivered progressively from 1Q16 to 3Q17. This brings its total contract wins this year to $6.7b comprising 18 jackups, two semi-submersibles, two FPSO conversions and one topside module. *CWT: 3Q13 net profit halved to $19.1m (-53% y/y) although revenue surged 52% to $2.2b, largely contributed by sales of energy products and base metals under its commodity supply chain management (SCM) business, which typically commands thinner margin. As a result, core operating margins dipped to 17.6% (3Q12: 20.7%, 2Q13: 16.5%). Other income dwindled to $0.8m as there was a $22.5m gain on sale and leaseback of a logistics property in 3Q12. Adjusted net gearing was a very comfortable 0.14x. *BreadTalk: 3Q13 net profit stayed flat at $3.4m due to a 90% spike in tax expenses. Otherwise, pretax profit gowth of 21.7% kept pace with revenue increase of 22.2% to $142.6m. Revenue for 9M13 jumped 18.9% to $389.4m led by sales from food atrium (+29%), bakery (+15%) and restaurant (+17%) businesses. There were significant bottomline improvements in its S’pore food atriums and bakeries in China, HK and Thailand. Year to date, the group’s network, including franchised outlets, expanded 14% from 686 to 782 outlets. *STATS ChipPAC: 3Q13 net income was US$13.3m vs US$3.2m in 3Q12 and net loss of US$52.2m in 2Q13. The better performance included flood-related insurance settlement of US$19.6m, without which the group would have ended in the red. Revenue of US$400.8m (-1.8% y/y, +1.1% q/q) continued to see a divergence in the smartphone market with sluggish demand in the high end segment partially offset by strength in the low cost segment. Gross margin slipped to 14.2% vs 16% in 3Q12. NAV at end Sep was US$0.45. *Yoma: 2QFY14 net profit hits $3.3m, reversing from the $4.2m loss a year ago, while revenue more than doubled to $27m, driven by the continued strong sales of residences and land development rights (LDRs) as demand for high quality homes continues to outstrip supply. As at Sep, 99% of the units in Star City’s Buildings A3 and A4 were sold, amounting to $60.9m, of which $49.4m of revenue is expected to be recognized within the next 15-21 months. *Jardine C&C: 3Q13 net profit and revenue slid 31% and 13% y/y to US$222m and US$4.6b respectively. For 9M13, net profit slumped 19% to US$675m while revenue fell 9% to $15b on lower earnings from Indonesian motor unit Astra and FX impact an 8% decline in the rupiah, partially offset by a lower withholding tax charge on dividends from Astra. Astra’s motor car market shrank to 53% from 55% but it strengthened its position in the motorcycle market from 58% to 60%.. Improved contributions from its financial services, mining contracting and motorcycle activities were more than offset by lower contributions from its heavy equipment, palm oil and car businesses. *Tiong Woon: 1QFY14 net profit climbed 11% y/y to $4.6m on revenue of $44.6m (+3%) with its core heavy lift and haulage division contributing to 81% of sales and 94% pf pretax profit. The only blot was the 56% drop in engineering sales due to the completion of Tuas Desalination project and lower percentage of completion of Tuas New Yard Phase 1 project. Gross margin expanded to 33% from 26% in 1QFY13 but a $2.5m FX loss pared its bottomline. *CSC: 2QFY14 net profit declined 14.6% y/y to $1.1m, in line with the 13.1% drop in revenue to $125.8m given the exceptional spike in business in 2Q1Fy13. Compared to 1Q14, sales from Malaysia operations jumped 38% and contributed to 20% of group revenue, up from 14%, driven by strong domestic demand in the Malaysian construction sector. Gross margin improved improved to 7.9% from 7.2% a year ago and 6.7% in 1Q14 amid intense competition and high construction costs. *Halcyon Agri: Acquiring JFL Agro, which holds 17,652.8 acres of cultivable land in Kelantan for RM143.2m, to be funded by $37.4m cash and 26m new shares @ $0.72. Meanwhile, group is raising $28.8m via a private placement of 40m new shares or 12% of existing share base to seven institutional and nine individual investors at $0.72 each, representing a 4% discount to its last close on 1 Nov. Substantial shareholder Credence Capital will take up 12.5m placement shares, increasing its stake from 12.1% to 13.3% of the enlarged share base. *Memstar: 1QFY14 net profit shed 4% y/y to Rmb16.4m (-4%) on weaker revenue of Rmb47.4m (-13%). The revenue decline was attributed to to the decrease in sales of membrane products arising from project delays, while gross margins of 60.9% was marginally higher than the comparative quarter. *Baker Tech: 3Q13 net profit tanked 37% y/y to $3.6m, while revenue slipped 5% to $20.7m on the general slowdown in order in-take between 2H12 and 1H13. That, plus a decline in gross margins by 5 ppt to 32% brought down bottomline. Order book rose to US$55m from US$33m last quarter.