SG Market (08 Nov 13)

Market Roundup: US stocks retreated, with the Dow halting its record advance and Twitter's market debut hogging the spotlight, as investors reacted to an unexpected rate cut by the ECB and a better-than-expected 3Q US GDP growth. Markets initially rose after the ECB cut its key interest rate to 0.25% to quell deflationary threat but fell into the red on concerns that the stronger US GDP growth of 2.8% may prompt the Fed to pull back its monetary stimulus. Meanwhile, jobless claims fell 9,000 last week to 336,000, in line with consensus. The latest batch of corporate results in S’pore was a mixed bag with ST Engineering falling slightly short. The STI expected to trade sideways within its 3,150-3,238 consolidation range. Stocks to watch: *ST Engineering: 3Q13 results trailed estimates with net profit of $131.4m (-10% y/y, -11% q/q) due to an $23.7m impairment charge for a marine project. Revenue was a subdued $1.55b (+1% y/y, -3% q/q) as buoyant shipbuilding sales were dampened by slower land system business. Aerospace earnings dipped 6% due to a $10.1m inventory writeback in 3Q12. Group will deliver $1.5b of its order book in 4Q13, which stood at $12.5b as at end Sep. *Wilmar: 3Q13 net profit grew 2.5% y/y to US$416m despite revenue falling 4.2% to US$11.8b as strong growth from its sugar business offset weak contributions from the plantation segment. Its sugar business saw a 49% surge in pretax profit to US$151.2m due to high crushing volumes in Australia, while the palm and laurics division also reported 17% rise in earnings to US$211.9m boosted by improving margins. But plantations and mills remained affected by lower production yield and CPO prices and recorded a 50% drop in pretax profits to US$57.9m. *Starhub: 3Q13 results fell within expectations with net profit of $95.3m (+1% y/y) on slightly lower revenue of $578.8m (-1.2%) due to lower equipment sales but mitigated by higher mobile revenue from post-paid services. Both pay TV and broadband faced weaker sales and ARPU due to price competition. EBITDA margin narrowed to 33.6% from 33.9% in 3Q12 and 34.1% in the preceding quarter. Quarterly DPS of 5¢ is maintained. *SIA Engineering: 2QFY14 net profit climbed 5.8% y/y to $71m as revenue frew 3.3% to $293.9m, underpinned by an increase in airframe and component overhaul work. Operating profit slipped 10% to $28.5m, weighed by higher staff and subcontract costs but strong contribution from associates and JVs of $48.5m (+25%) lifted the bottomline. Balance sheet remains solid with cash balance of $465.8m ($0.418 per share) with no debt. NAV as at Sep was $1.169. Interim DPS of 7¢ has been declared. *OUE: 3Q13 net profit tumbled 43.9% to $13.4m due to higher operating expenses from htel upgrading works, IPO expenses for OUE H-T and a one-off $5m loss from sale of two China hotels. There was also a fair value loss of $72.2m on OUE Bayfront, which was matched by a $73.1m gain on US Bank Tower. Revenue rose 16.7% y/y to $119.1m on sale of units at Twin Peaks residential development, healthy occupancy of its hotels and Mandarin Gallery and maiden rentals from US Bank Tower acquired in Jun 13. Proceeds from listing of OUE H-T and hotel disposals added $83m to its balance sheet, raising its cash balance to $687.6m. *NeraTel: 3Q13 net profit plunged 42% y/y to $3.3m, while revenue rang in 4% higher at $50.1m as its bottomline was impacted by a 93% drop in other operating income to $0.05m and sharply higher operating costs (+27%) from distribution and selling, and staff-related expenses. Higher revenue from telecom (+29%), which came mainly from higher sales of microwave equipment in the wireless infrastructure network business, was partially offset by lower turnover from the infocomm business segment. *Swissco: 3Q2013 net profit rose 85.2% y/y to $6.4m although revenue slipped 45.4% to $13.8m, due to a absemce of contrinutions from maritime services. Vessel chartering and ship repair revenues were relatively flat at $12.4m and $1.3m respectively. Gross margins were higher at 44.3% vs 29.6% in 3Q12. A $2.3m asset disposal gain, coupled with a general decrease in expenses lifted the bottomline. *Hyflux: 3Q13 profit surged 74% y/y to $25.2m on revenue of $187.7m (+26%), due to the completion of municipal projects across Asia. China contributed 4% to its total revenue, a drop from 14% a year ago. Margins benefitted from better cost management. As at Sep, net gearing was at 1.06x, with a cash position of $318.8m. *Raffles Education: 1QFY14 results deflated to a net loss of $2.6m as the group absorbed costs and costs related to discontinued operations in Vietnam, higher finance charges of $2.7m and a net FX loss of $1m. Weaker revenue of $31.8m (-3%) was blamed on declining sales in China. *Cosco: 51% owned Cosco (Qidong) Offshore has secured a letter of intent from Prosafe to build two semi-submersible accommodation vessels each in excess of US$200m, with options for four more units. The vessels are scheduled for delivery in 2016. As at 3Q13, Cosco had orderbook of US$7.2b and secured US$2.2b orders ytd. *Sino Grandess: Announced that its in-house beverage brand Garden Fresh has been valued at Rmb3.5b by Asia Brand Association. The brand value exercise is based on analysis of four criteria, namely brand performance in the market, growth potential in brand value, quality control and level of efficiency. Meanwhile, the group has launched a new micro-film to promote its brand equity and awareness for its garden Fresh juices, and uploaded it across multiple platforms in China, including adapting it for TV commercials. *Abterra: Issued a profit warning that it expects to report a lower loss for 3Q13 compared to a year ago.