SG Market (09 Dec 13)

Market Roundup: US stocks rose sharply, halting a 5-day slide as a robust jobs report gave confidence that a strengthening US economy would be able to cope with a taper scenario. Both the Dow and S&P 500 regained lost ground above the 16,000 and 1,800 milestones respectively. Employers added 203,000 jobs last month after a revised 200,000 advance in Oct, which helped lower the unemployment rate to a 5-year low of 7% from 7.3% in Oct. The jobs data followed other upbeat signals last week on housing, manufacturing and economic growth. Adding to the bullish news, consumer spending climbed a more-than-forecast 0.3% in Oct, suggesting that the economy is gaining momentum from firming employment, while the Thomson Reuters/University of Michigan consumer sentiment index for Dec jumped to 82.5 from 75.1 a month earlier, beating expectations. Opinion is still divided as to when the Fed will scale back its bond purchases but most believe policy makers will wait to see a longer trend of improving economic data before they start winding down. Meanwhile, Bill Gross of Pacific Investment Management, the world’s biggest bond fund, believes there is a 50% chance that the Fed will taper this month. After forming a bullish star last Fri, the STI may make a move back above its previous support at 3,122 following the bounce on Wall Street and tracking regional bourses in Japan and Korea. But the overall trend still remains fragile with near term resistance at 3,160. Stocks to watch: *CapitaLand: Has bought back an aggregate of 2m shares in an on-market shares buyback exercise on 6 Dec, at the weighted average price of $3.00 per share. *Cordlife: Acquired a further 11.9% interest in its associate, StemLife Bhd, for cash consideration of RM17.7m, lifting its stake to 31.8%. Cordlife believes the acquisition will simultaneously facilitate Cordlife’s expansion into M’sia, and boost the group’s product offerings to its existing markets. *ValueMax: Posted a 33% y/y drop in 3Q13 net profit to $3.0m, in tandem with a 38% fall in revenue to $81.4m. This was driven by a slump in revenue from the retail and trading of pre-owned jewellery and gold, which declined 40% to $75.0m, mainly due to the decline in gold price. *Low Keng Huat: 3QFY14 net profit slumped 62% y/y to $10.4m, as revenue fell 32% to $22.2m mainly due to a decrease in construction activity and fall in hotel occupancy. Contributions from associates further weighed down bottom line, with lower contributions from the Minton, which was offset by lower marketing expenses for Paya Lebar Square and Parkland Residences. *Stamford Tyre: swung to a net profit of $4.9m for 2QFY14 from a net loss of $3.0m a year ago, even as revenue dipped 12% y/y to $71.5m. The stronger bottom-line was driven by the lower cost of sales and higher contributions from value-added services at its Stamford Tyres Mart retail chain and truck tyre centres. *Hiap Seng Engineering: Awarded a ~US$10m turnaround maintenance contract in Vietnam, involving the maintenance, overhaul and repair services, including inspection, testing and cleaning of process equipment for the Dung Quat Refinery. Works are scheduled to commence and complete in 1QFYMar15. *Cacola: Proposed to issue 2% equity linked redeemable structured convertible notes due 2016 with aggregate principal amount of $60m to Advance Opportunities Fund, a 4.48% shareholder of the company. The proceeds will be used for development and exploration of new investment opportunities, including possible acquisitions (60-70%), as well as general corporate and working capital (15-20%) and the remaining for payment of professional fees (15-20%). *GP Industries: Profit warning that it might incur a net loss for 3QFY14, taking into account impairment loss of its 45% investment in the Vectrix group of companies. *IPCO: Profit warning for 1HFY14, due to declines in the value of its financial assets, most significant of which is its 9.74% stake in Blumont. *Eastgate Technology: Completed its 10% investment in Espressif for US$3.3m cash.