SG Market (24 Jan 14)

Market Roundup: US stocks tumbled on China growth worries amid another mixed set of results. Market sentiment was rattled after the flash HSBC/Markit Purchasing Managers’ Index for Jan contracted below the key 50 level, suggesting a sharp slowdown in China’s factory output. Conversely, a euro-area manufacturing index climbed to 53.9 from 52.7 in Dec. Stocks to watch: *Keppel Corp: FY13 and 4Q13 results missed estimates with core net profit of $1.41b (-26%) and $332m (+9%) on revenue of $12.4b (-11%) and $3.6b (+20%) respectively. While the O&M and property segments performed well, further large provisions in infrastructure were a drag on bottomline. For 4Q13, the O&M segment reported a sharp 35% q/q jump in revenue to $2.1b, as more jackup projects reached recognition milestones. O&M operating margin slipped 2.3 ppt q/q to a still healthy 14.2% due to fewer rig deliveries and change in revenue mix. End Dec order book was $14.2b, with visibility till 2019. Infrastructure incurred a $11m loss from large provisioning charges of ~$150-200m arising from cost overruns and other costs at its Doha and Manchester EPC projects. Property earnings were about flat. Final DPS of 30¢ brings FY13 payout to 49.5¢ (inclusive of Keppel REIT distribution-in-specie). *Tiger Airways: Turned in a 3QFY14 net loss of $118.5m reversing from $2m net profit in same period last year, quadrupling 9MFY14 net loss to $127.5m. Bottom-line was dragged largely by exceptional charges of $88.3m, including a $30.3m loss on the planned disposal of Tigerair Philippines and an $58m impairment on associates. Operating performance was also hit by industry overcapacity which led to lower yield and load factors. Tigerair S’pore came under pressure with revenue declining 3% to $168m and reported an operating loss of $170m vs $27m profit a year ago. *Suntec REIT: 4Q13 distributable income climbed 11% y/y to $58.2m alongside a 10.1% increase in DPU to 2.56¢ (including 0.175¢ from capital distribution support), taking FY13 DPU to 9.33¢. NPI surged 62.9% to $49.8m after gross revenue jumped 30.2% to $71.6m, boosted by the opening of Suntec City Mall (Phase 1) and Suntec Singapore following renovation works. Office portfolio occupancy was stable at 99.6% and retail portfolio at 97.3% with weighted lease to expiry of 2.4 years. Aggregate leverage stood at 38% with an average financing cost of 2.5%. End 2013 NAV was $2.13 per unit. *Mapletree Greater China Commercial Trust: 3QFY14 distributable income exceeded IPO forecast by 16.6% to $40.6m with DPU of 1.518¢. Gross revenue came 9.9% above estimates to $65.7m while NPI beat by 13.2% to $53.8m, on the back of better than expected rental uplift for both Festival Walk in Hong Kong (+20%) and Gateway Plaza in Beijing (+78%), new committed leases, as well as lower operating expenses. Overall portfolio occupancy dipped 1.1 ppts to 97.9% with weighted average lease expiry of 2.6 years. Aggregate leverage of 40.5% with debt maturity of 3.2 years at 2.0% cost of debt. End Dec NAV was $0.94. CapitaLand: Acquired a prime residential site on the Chinese coastal city of Ningpo for Rmb1.1b ($232m) in a government land tender. The 617,514 sf site can yield 1.36m sf of GFA on which the group plans to build 1,100 small to medium-sized units to target first-time homebuyers and upgraders. The tender price works out to Rmb809 psf ppr. Construction will start in 3Q14 with first phase is scheduled for launch next year. *Swee Hong: Expects to report a loss for 2QFY14 attributed to decline in revenue from operations and significant costs increases.