SG Market (16 Jan 14)

Market Roundup: US stocks rose, pushing the S&P 500 to a new all-time high after upbeat economic data and robust earnings reports led investors to believe that the economy was on solid ground. Markets rallied after World Bank expects global economic expansion to accelerate to 3.2% in 2014 from 2.4% in 2013 on the premise that a recovery in advanced economies will temper the effects of tighter monetary conditions on developing markets. The IMF also concurred that momentum in the world economy seen in 2H13 should continue into 2014 and plans to raise its own global growth forecasts later this month. Stocks added to gains after the Fed of New York’s general business conditions index for Jan climbed to its highest level in 20 months, while a separate report showed wholesale prices rising 0.4% in Dec, the biggest increase since Jun. In its Biege Book survey on business activity, the Fed pointed to a pick-up in growth throughout the US. On the corporate front, BofA rose 2.3% after its 4Q earnings topped estimates, while Apple added 2% after China Mobile flagged millions of iPhone pre-orders by Chinese customers. The S’pore market is likely to take cue of the positive close on Wall Street with the STI attempting to test near term resistance at 3,160. But sentiment remains fragile with no strong catalyst to push the market either direction. Downside support still lies at the 3,120/3,100 levels. Stocks to watch: *Property: Sales of new private homes plunged nearly 80% m/m in Dec '13, lowest since Jan ’09 as developers held off new property launches. According to URA, just 259 units of new private homes were sold, down from the 1,271 units transacted in Nov '13. This takes 2013 tally to 15,015 units (-32.4%). Going forward, consultants expect sales to recover in Jan due to launch of projects such as The Panorama in Ang Mo Kio and The Hillford in Upper Bukit Timah but property prices are projected to weaken by 5-8 % in 2014. *SIA: Passenger traffic rose 1.4% against capacity growth of 0.9% in Dec ‘13, lifting load factor by 0.3 ppt to 82.5%. Load factors improved in Europe (+2.6 ppt) and Amercias (+1.8 ppt) but softened in SW Pacific and Asia. Despite capacity cut of 3.1%, cargo traffic remained weak, declining 5.1%, which led to a 1.4 ppt drop in cargo load factor to 63%. The airline continue to flag that the operating environment remain challenging and efforts to stimulate demand to boost loads will place downward pressure on yields. *Vard: Secured a contract from an international customer to design and construct a diving support and construction vessel, scheduled for delivery in mid-2016. While no contract value was disclosed, the group clinched an order for a similar vessel in Dec ’13 from the Harkand Group worth more than Nok1b (US$163m). *Ezra: Received a letter of intent with a contract value of up to ~US$94m over a five-year period to provide a service rig to be used by a Southeast Asian based national oil company to support its oil & gas activities. The rig is expected to be deployed in SE Asian waters by 1Q16. *OEL: Acquiring two property investment companies S’pore Service Residence and Expat Residences for $53.9m via $10m in cash and issue of $43.9m convertible bonds. The combined portfolio of properties held under the two companies include 27 SOHO units and one retail unit located at North Bridge Road and seven condo units at Dakota Crescent. As at FYMar13, both target companies had a combined net asset of $42m and were just about breakeven. Post acquisition, OEL’s proforma FY12 NTA will rise from 4.42¢ to 10.93¢ and EPS from -4.38¢ to 0.11¢. *KSH Holdings: A 40% owned associate is acquiring 26 plots of freehold land totaling 679,460 sf in Klang, Malaysia for RM91.7m. The sites (with potential plot ratio of 1.5) may be developed into a mixed development, including hotel, serviced apartment, SOHO and shopping mall and form part of a proposed business park with residential and commercial spaces. *TriTech: Awarded a $3.75m instrumentation contract for the supply, installation and maintenance of a real-time waterway monitoring system by the PUB with expected completion in Apr ’17. *Global Logistic Properties: Developing GLP Yachiyo, a 72,000 sqm facility in Greater Tokyo, which is expected to be completed in Oct ’15 at a development cost of US$106m. Project is the 9th development under GLP Japan Development Venture, a 50/50 JV with Canada Pension Plan Investment Board. For FY14, the group has initiated new developments totaling 430,000 sqm with a combined development cost of US$665m). *Koh Brothers/Heeton: A JV between both companies has won the hotly contested tender to develop a 99-year land parcel in Jurong West into a 480-unit Executive Condominium. The JV had submitted a bid of $198.9m or $382 psf ppr for the 186,000 sf site. Breakeven cost is estimated at $750 psf with sale price of $820 psf. *ASL Marine: Proposed listing of its associate PT Capitol Nusantara Indonesia (CNI) on The Indonesia Stock Exchange on 16 Jan. PT CNI is offering 208.4m new shares @ Rp200 to raise gross proceeds of $4.5m. Post IPO, the group will retain a 27% equity interest in PT CNI, down from 36%. *Sarin: Launched Galaxy Ultra diamond inclusion scanning service at its service centres in Surat, India and Tel-Aviv, Israel. The service will be rolled out to other service centres as its Galaxy Ultra systems are delivered to customers later in 2014. *Transu: Terminated its exclusive distributorship agreement with Nanomizer to market and sell Nanomizer’s nano-emulsion fuel system and its related products around the world.