SG Market (10 Feb 14)

Market Roundup: US stocks rose with the S&P 500 capping its best two-day rally since Oct amid optimism that the economy may be robust enough to accommodate stimulus despite a weak jobs report for Jan. The broad-based index has surged 2.6% in the past two days, trimming its decline from a record on Jan 15 to 2.8% from as much as 5.8%. The VIX index fell 11% to 15.29 for its biggest weekly drop since Oct. Nonfarm payrolls added 113,000 jobs in Jan, well shy of the 185,000 estimate but the unemployment rate unexpectedly dipped to a five-year low of 6.6%, the lowest level since Oct ’08. Investors downplayed the weak jobs data, blaming it partly on severe winter weather and opted to focus on economic growth and rising labour force participation rate. The 10-year Treasury yield edged down 2 bps to 2.68%, while oil jumped US$2.09 to US$99.93 per barrel. Despite the more positive openings in regional bourses, sentiment on the S’pore maket may be muted by the slew of proposals put forward by the regulators to curtail contra trading. Upside resistance for the STI is seen at at 3,024 with support at the 2,990 level. Stocks to watch: *SGX: MAS and SGX plans to introduce a slew of measures to curb speculative trading, including proposals to to shorten settlement period from 3 days to 2 days by 2016 and requiring brokers to impose 5% collateral from customers’ open positions. To improve liquidity, SGX will cut clearing fees by 0.75 bps to 0.0325% from 2 May, and remove existing $600 cap for contracts above $1.5m. *Genting S’pore: Entered into a 50/50 JV with HK-listed Landing Int’l Development to develop and operate an integrated resort (IR) in South Korea’s Jeju island. With a land area o 2.3m sqm, the US$2.2b IR is scheduled to open by phases from 2017 and will be Jeju’s largest tourism resort to-date. As a guide, Jeju attracts ~10m visitors annually, of which about 20-25% are foreign visitors. Up to Oct’13, foreign visitorship to Jeju grew about 50% y/y and is expected to continue to grow strongly in the next few years. *Vard Holdings: Secured a contract with repeat customer Bourbon for the design and construction of one arctic AHTS vessel, scheduled for delivery from Vard Brattvaag in Norway in 1Q16. While no contact value was given, we estimate the vessel cost to be in the range of NOK500-700m, given the high specifications. Vard’s orderbook currently stands at ~NOK20b, providing revenue visibility over the next 2-3 years. *Otto Marine: Clinched a US$40m long term contract for its newly completed 24,000 bhp AHTS vessel, Go Pegasus for operations in the Noth Sea. The term contract, which commences from Sep ’14 also comes with options for extension. *Chasen: Adds two new contracts worth $2.5m comprising servicing parts and replacement of central air-conditioning for a REIT and linstallation of main piping of a the boiler system for a coal-fired plant in Johor. *Oxley: 2QFY14 net profit more than doubled to $25.1m (+121%) on the back of a 238% surge in revenue to $202.2m, primarily driven by revenue recognition on its 131-unit commercial and industrial development, The Commerze@Irving and 12 other mixed-residential projects. Interim DPS of 0.3¢ declared. NAV doubled to 16.87¢. *Global Yellow Pages: 3QFY14 results reversed from a $114m loss to a net profit profit of $6.9m due to absence of restructuring costs. But revenue declined 19.3% to $14.7m as higher income from S’pore River Explorer was offset by weaker phone directory sales. Bottomline was supported by $1.7m contribution from Yamada Green Resources vs $0.1m loss in 3QFY13. *Chuan Hup: 2QFY14 net profit rose 9.5% y/y to US$5.8m as revenue jumped 26.1% to US$53.4m on increased sales contribution from electronics manufacturing services business and additional sale of its Adagio apartment units. NAV at end Dec was US31.86¢. *Bukit Sembawang: 3QFY14 net profit fell 20.8% y/y to $18.5m in tandem with a 14% drop in revenue to $69.3m, taking 9MFY14 net profit to $93.0m (+4.6%). The revenue decline was largely due to lower profit recognition on development projects. Going forward, the group expects the residential market conditions to be challenging and this will adversely affect its sales performance in the year ahead. As at Dec’13, its NAV/share stood at $4.69. *Loyz Energy: Maiden 2QFY14 revenue of $6.8m, arising from the recognition of drilling revenue upon the delivery of three wells in the US. While the group was operationally loss-making, other credit of $5.9m (2QFY13: $0.1m) from waiver of loan by non-controlling interest, helped bolster net profit to $1.6m. NAV stood at $0.21. *Blumont: Seeking to raise project finance for Cokal and Celsius Coal to bring its projects into production in two years. The Indonesia-based Cokal project would need US$80m, while Australia-based Celsius Coal project would need US$30m. Group is also considering a zinc and lead metal acquisition and an oil acquisition but declined to reveal more. Last week, it launched a takeover bid for ASX-listed Genesis Resources, a precious metals miner. *Epicentre: Warns of a loss for 1HFY14 despite revenue growth, mainly due to deterioration in its profit margin.