SG Market (22 Nov 13)

Market Roundup: US stocks rebounded, sending the Dow to its first close above 16,000 after economic data pointed to an improving labour market and tame inflation. The gains come on the heels of a drop in weekly jobless claims to 323,000, below the 335,000 estimate and a 0.2% fall in producer prices for the second straight month in Oct, indicating inflationary pressure remain muted. This prompted St Louis Fed President James Bullard to remark that the inflation data gives the central bank more leeway to keep its accommodative monetary policy in place. US consumers also became less pessimistic about the economic outlook in Nov as the Bllomber consumer comfort index showed the gap between positive and negative expectations for the economy sharnk to -14 from -31 in Oct. The market is also becoming more comfortable with tapering talk and expectations that the Fed could cut its bond purchases but not raise interest rates have steepened the yield curve. Investors are also pouring more money into stock mutual funds than they have in 13 years, and pulling out of bonds. About US$172b flowed into US stock funds in the first 10 months, the highest amount since 2000. The S’pore market may get a slight lift from Wall Street’s rally and firmer openings from Asian bourses with Nikkei (+0.7%) and ASX 9+1%) but sentiment remains lackadaisical after the penny stock fiasco followed by a dull corporate results season. The STI has penetrated below its 50-day moving average at 2,188 but remains largely bounded within the wider 2,120-3,234 trading band. Stocks to watch: *Biosensors: Majority shareholder Shandong Weigao has agreed to dispose its entire 21.7% stake in Biosensors to CB Medical Holdings for US$312.3m. This values Biosensors at $1.05 per share, a premium of 12% to its last closing price. *SingTel: Secured IDA approval to acquire a 100% indirect ownership of OpenNet via CityNet for $126m. Separately, SingTel has also been granted an extension till Apr ’18 (originally Apr ’14) to pare down its stake in NetLink Trust, which owns the fibre network infrastructure in S’pore to below 25%. *Tigerair: Reported to have faced issues with its website booking system over the past two days, which management says has been resolved. Market watchers note that Tigerair’s website bookings could contribute up to 80% of the budget carrier’s ticket sales. *Lippo Malls: Raising ~$95m net proceeds via the issue of 246.9m new placement units at $0.405 apiece, representing a 5.8% discount to the last closing price. This will be used to fund acquisitions, asset enhancement initiatives and refinancing of existing asset linked debts, and for working capital. The new units will commence trading on 29 Nov. *CosmoSteel: 4QFY13 net profit halved y/y to $1.2m, despite revenue growth of 24% to $33.6m, mainly due to gross margin compression (to 19% from 25.9%) arising from an increase in allowance for slow-moving steel stock, as well as FX losses. Final DPS of $0.01 is 20% lower from a year ago. *KLW: Secured 3 contracts valued at $6.4m to supply and install timber doors for 1,499 apartments in 3 residential developments – Hillsta ($1.1m), Water Bay EC ($1.9m) and Topiary EC ($3.4m). The projects are expected to be completed in 2H15. *Aussino: Reaching the end of the road, after receiving SGX's rejection with regards to its application for a time extension to be removed from the Watch-List. The counter will be suspended from trading from 21 Dec. While the company has to provide a reasonable exit offer to shareholders within one month, there may not be any meaningful return of capital given Aussino’s negative equity of 0.8¢. *WE Holdings: Extended the long-stop date for its $20m acquisition for a 20% stake in Myanmar cement producer, Dragon Cement, from 21 Nov ‘13 to 20 Feb ‘14. This is the fourth extension for the deal which was originally slated to be completed on 16 Aug ‘13. *Internet Technology Group: Revised its exit offer price to $0.138/share from $0.127. *SP Windsor: Receives SGX's in-principle approval for its proposed placement of 24.5m new shares at $0.22 apiece. *Linair: Flagged that its engineering revenue for FY13 would not be maintained at 2012 level as earlier guided due to fewer contracts secured and some project delays.