SG Market (11 Feb 14)

Market Roundup: US stocks extended its bounce with modest gains as investors took a wait-and-see attitude before new Fed chair Janet Yellen delivers her first congressional testimony on Tue. The general expectation is that Yellen will continue the current monetary policy with regards to tapering while keeping key interest rates near zero. House Republican leaders will also meet to formulate legislation on the debt ceiling after the Treasury warned that it could a cash crunch after Feb 27. In other markets, Asian stocks closed higher, while European stocks ended mostly flat after last week’s brutal selling. S’pore market is also likely to stay in a cautious mood in cue with overseas markets ahead of Yellen’s policy statement. Immediate resistance for the STI remains at 3,024 with support at 2,990. Stocks to watch: *Property: MAS announces that with immediate effect, refinancing of loans for owner-occupied homes and investment properties bought before 29 Jun '13 will be exempted from total debt servicing ratio cap of 60%. However, borrowers of investment homes have to refinance loans before 30 Jun ‘17, and must commit to a debt reduction plan. The concessions do not apply to new mortgages and should not ve viewed as a relaxation of the property cooling measures. *MTQ: 3QFY14 net profit of $6.4m reverses a $1m loss a year ago, which was dragged down by accounting loss of $4.8m and disposal loss of $0.9m associated with the acquisition of Neptune Marine Services in Dec ’12. Revenue doubled to $75.1m (+106%) due to the inclusion of Neptune subsea business and organic growth from its oilfield engineering segment but tempered by weaker engine systems owing to the depreciation of the AUD. *Longcheer: 2QFY14 net profit surged 86% y/y to Rmb36.4m alongside a 89% jump in revenue to Rmb1.9b, taking 1HFY14 net profit to Rmb58.3m (+173%). The revenue increase came on the back of a 63% rise in total shipment to 7.8m units and 16% rise in average selling prices to Rmb242, attributable to the group's strategy of product rationalization with focus on high value 3G smartphones. Sales of 3G smartphones accounted for 73% of total shipment and 59% of revenue. Gross margin remained stable at 7.6%. *Valuetronics: 3QFY14 net profit surged 45% to HK$35.5m, as revenue increased 14% to HK$576.8m, driven by growth in both the consumer electronics and industrial & commercial electronics segments. Gross margin rose from 12.7% to 13.6% thanks to positive changes in the product sales mix. *CitySpring Infrastructure Trust: Declared 3QFY14 DPU of 0.82¢ on lower cash earnings of $14.7m (-38% y/y) due to a time lag in the adjustment of gas tariffs to reflect the increased fuel cost for City Gas and lower contributions from Basslink. Net profit declined 25.4% to $4.8m weighed by higher legal fees incurred for Basslink and property tax for City Gas, as well as increased staff costs. Revenue dipped 1% to $129.4m from lower sales at Basslink, partially mitigated by higher volume of gas sold at City Gas. *k1 Ventures: 2QFY14 net profit collapsed 98% y/y to $0.7m, while revenue tumbled 57% to $20.8m due to the sharp decline in investment income from investee company Knowledge Universe Holdings (12.2% stake) and higher depreciation charges at rail equipment leasing subsidiary Helm Financial following the acquisition of rail assets and locomotive upgrades. NAV was $0.15 as at Dec ’13. No interim DPS declared vs 1¢ paid in 1HFY13. *Metro: 3QFY14 net profit soared 91.2% y/y to $29.3m on a 7.7% rise in revenue to $50.6m, mainly due to higher rental income derived from its five investment properties, boosted by a one-off negative goodwill gain of $19.1m on acquisition of an additional interest in EC Mall in Beijing. As at Dec ’13, NAV stood at $1.42. *Jasper Investments: 3QFY14 net proft tanked 91% y/y to US$0.6m on revenue of US$24.6m (3QFY13: nil) due to the absence of US$32.7m gain on disposal of a jack-up rig. Revenue was derived from drilling operations in offshore Congo. For 9M14, the group incurred a loss of $12.4m on revenue of US$57.1m. *Soilbuild Construction: Awarded a $56.6m contract by XMH to design and build a seven-storey industrial building with ancillary office and facilities at Tuas Crescent. The project is expected to commence this month and complete by 2Q15. This contract lifts Soilbuild’s order book to $406.4m, which will be substantially completed over the next 24 months. *Cityneon: Wins $15m contract for the design and construction of Qatar’s National Pavilion at the World Expo Milano in 2015. *Sysma: Secured its second contract for 20114, worth $13.1m to erect a bungalow at Third Avenue, taking it net order book to $60m. Construction is expected to commece in Feb ’14 and will take 22 months to complete. *Jason Holdings: Awarded a total of $11.7m new contracts to supply timber flooring/decking and stones/tiles to eight residential projects and one mixed development in S’pore. *City Dev: 59% owned Millennium & Copthorne is acquiring the Novotel NY Times Square, a 34-storey freehold building situated in the heart of Manhattan's theatre district, for US$273.6m. The property comprises a 480-room four-star hotel, office/retail space and a penthouse. This will be M&C's fourth hotel in Manhattan, the others being One UN NY, Millennium Broadway Hotel NY and Millennium Hilton NY. *Genting HK: Inked a second shipbuilding contract with Meyer Werft GMBH to build a £697.2m ($1.2b) luxury passenger cruise vessel (1,682 passenger cabins) for Star Cruises with delivery expected in Oct '17. *Yongmao: 3QFY14 net profit spiked up 491.4% y/y to Rmb12.3m while revenue climbed 8.9% to Rmb198.5m mainly from improvement in Asia (outside the PRC) and USA & Europe sales. While expenses increased overall, the revenue growth plus improved gross margins (+ 8ppt to 33%), lifted the towercrane manufacturer’s bottomline significantly. NAV as at end Dec was Rmb1.1689. *Luzhou Bio-Chem: Is expecting a net loss for FY13, and guides that results will be announced on or before 28 Feb.