SG Market (06 Feb 14)

Market Roundup: US stocks ended a choppy session modestly lower as a weaker-than-expected ADP jobs report and hawish comments from a Fed official overshadowed a pick-up in the service sector. The markets opened lower after ADP data showed the US private sector added 175,000 jobs in Jan, below the 185,000 estimate as abnormally cold weather limited job openings. Separately, the ISM non-manufacturing index came in at 54 in Jan from 53 the prior month, indicating that service industries expanded at a slightly faster pace. Investors were cautious with the US nonfarm payroll report looming on Fri. Last month’s surprising low number was discounted as an aberration due to severe weather but other data have been uninspiring and another weak report could raise concerns about the economic outlook. Also weighing on sentiment, Philadelphia Fed President Charles Plosser urged the central bank to speed up its tapering end the stimulus program before mid-year, while Atlanta Fed President Dennis Lockhart views the market as in a correction mode after getting ahead of itself. Some technicians note that the S&P 500 may have hit some technical support at 1,740 level but this may unravel quickly if markets trade lower this week. Despite being in deep oversold territory, the S’pore bourse remains very much hostage to the volatility afflicting global markets. Upside resistance for the STI is capped at 2,990 with support at around the 2,920 level. Stocks to watch: *CH Offshore: 2QFY14 net profit dived 33.2% y/y to US$6.8 in line with a 35.7% decline in revenue to US$9.2m due to lower bareboat charter rates secured for two vessels compared to higher time-charter rates in previous period. Balance sheet remained debt free with cash of US$69.7m. Group is still mired in a legal suit to recover a US$56m debt from PDV Marina and Astivenca. Interim DPS of 0.5¢ has been declared (1HFY13: nil). *SingPost: 3QFY14 net profit was flat at $39.4m although revenue surged 30.2% to $222.6m, which was underpinned by contributions from acquisitions and growth in e-commerce activities across its business segments. Excluding new acquisitions, revenue grew 9.3%. However, margins were squeezed by a higher cost base arising from new subsidiaries, strong growth in international traffic and low margin volume business. Interim DPS of 1.25¢ maintained. *Dukang Distillers: Warns that 2QFY14 revenue and earnings would be significantly lower due to lower average selling prices and volumes sold for Luoyang Dukang and Siwu products, hit by Chinese austerity measures, and higher advertising and promotional expenses. *Hock Lian Seng: Secured a $105.5m project from Changi Airport Group for the construction of taxiways, aircraft parking stands and other associated works at the former south end reservoir site. The project will commence in Mar ’14 and is expected to be completed by Sep ’18. *Tritech: Awarded a $4.5m contract to undertake site investigation works for LTA projects. The three-year contract is expected to be completed by Feb ‘17. *TEE Land: Proposed acquisition of a 59,200 sf freehold land in Bangkok, Thailand for Bt103.1m ($4m), which will be redeveloped into an eight-storey low-rise residential development. *Interra: Completed drilling development well YNG 3265 in the Yenangyaung oilfield in Myanmar where it has a 60% working interest. Group expects results to be available in about six weeks. *Blumont: Announced deferment of proposed acquisition of 135m shares by chairman-designate Alexander Molyneux, supposed to be completed by 6 Dec '13 from Chairman Neo Kim Hock and another investor. Meantime, Neo and CEO James Hong have continued paring down their stakes, disposing another 9.6m and 7.9m shares respectively in the open market since start of the year.