SG Market (20 Jan 14)

Market Roundup: US stocks ended broadly lower amid a mixed batch of corporate earnings and economic reports. The greenback rose to a four-month high while the yield on 10-year Treasury dropped to 2.82%, the lowest since Dec ’10. The market is taking cue from results releases with many investors watching for company guidance on what 2014 will bring. Intel lost 2.6% after its 1Q revenue forecast raised concerns about wavering PC demand. GE sank 2.3% after 4Q earnings met estimates but margins disappointed. But Mrogan Stanley (+4.4%) and American Express (+3.6%) jumped on solid quarterly earnings that beat expectations. In economic news, industrial production rose for a 5th month in Dec, capping the strongest quarter since 2010 and housing starts slowed less than forecast. But consumer sentiment unexpectedly fell. Fed President of Richmond Jeffrey Lacker repeated that policy makers are likely to consider more reductions to the pace of bond buying. Meanwhile, President Obama finally signed a US$1.1t spending bill, putting an end to the threat of a repeated government shutdown. With the STI closing at a day high last Fri, the S’pore market may be attempting to build up some festive cheer ahead the corporate results season and Lunar New Year holidays. Topside resistance remains at 3,180/3,200 levels with downside supports at 3,120 and 3,100. The Keppel group of companies will kick off its 4Q results this week. Stocks to watch: *Asecendas REIT: 3Q13 distributabble income rose 4.9% y/y to $85.1m but DPU slipped 2.2% to 3.54¢. Gross revenue grew 6.4% to $154.4m, lifting NPI 3.7% higher to $108.6m on positive rental reversions of 9.7% across all segments of its portfolio. Occupancy dipped to 89.7% from 90.1% in preceding quarter due to addition of new sapce following AEI completions at 1 Changi Business Park Ave 1 and Techplace II. Aggregate leverage stood at 30.1% with average debt maturity of 3.2 years. NAV/share was $1.98 as at Dec ’13. *First REIT: 4Q13 distributable income jumped 26.2% y/y to $14m and lifted DPU to a record 1.97¢, taking FY13 DPU to 7.52¢, up 14.3% (excluding divestment gains) of an Adam Road property). Gross revenue and NPI surged 48.2% and 41.6% respectively on contribution from two newly acquired hospitals in Bali and Simatupang. Gearing ratio stood at 32.3% with no financing needs till 2016. NAV/share was 96.64¢ as at Dc ’13. *Guocoleisure: 2QFY14 net profit rose 12.3% y/y to US$13.7m on a 7.3% increase in revenue to US$106.7m, which was generated by improved room rates and land disposal by its hotel and property segments respectively. But volatility in the gaming sector and reduction in Bass Strait oil and gas oil and gas royalties (-18.8%) due to lower oil prices and production tempered its overall performance. NAV/share climbed to US$0.90 from US$0.839 in Jun ’13. *OUE: Launched OUE Commercial REIT on SGX Main Board, offering 208m units (151.8m placement, 56.3m public) at $0.80 each, which translates to forecast DPU yields of 6.8% for 2014 abd 5.89% for 2015 and a 24% discount to NAV. IPO portfolio comprises OUE Bayfront and Lippo Plaza (Shanghai) with total valuation of $1.6b. Offer closes 12 pm on 23 Jan and trading will commence 2pm on 27 Jan. *Aspial: All 281 units at The Hillford, S’pore’s first retirement resort in Upper Bukit Timah have been snapped up within first day of launch at an average price of $1,100 psf. *Osim: Raised stake in TWG Tea to 70% from 53.7%, after TWG undertook a rights issue to raise $25m. Investment expected to be earnings accretive for the group this financial yr. TWG has ~27 stores as at end' 13 spread across S’pore, Hong Kong, Indonesia, Dubai, London, and plans to launch ~20 tea boutiques and shops in Asia and Mid-East this year. *Advanced Holdings: Entered into MOU to acquire BD Crane and Engineering from its three owners to expand its existing engineering and design capabilities in the crane business. The terms of the proposed acquisition are subject to a definitive sales and purchase agreement, yet to be signed. *Tritech: Terminated agreement for the proposed acquisition of Moya Asia, citing non-fulfilment of certain conditions. *Armarda: Expects to report a loss for 3QFY14, mainly attributed to low sales and higher expenses.