SG Market (13 Feb 14)

Market Roundup: US stocks ended mostly mixed as investors took a breather after a four-day winning streak and upbeat China trade data was overshadowed by declines in Procter & Gamble and Amazon. The market initially opened higher on positive Chinese trade data which showed exports rising 10.6% in Jan, beating forecast of a 0.1% gain. Sentiment was also lifted by the Senate vote to extend the US debt ceiling through Mar 2014, averting a potential headwind that could have rattled markets. Stocks to watch: *Ezion/Ocean Sky: Ezion has terminated its pre-conditional mandatory cash offer of $0.108 for Ocean Sky to inject its marine supply base business in Australia. Group has earlier proposed to acquire a 49.5% stake in Ocean Sky via subscription of 440m new Ocean Sky shares at $0.108 each. *SingTel: 3QFY14 results came in above street estimates, with core net profit at $910 (+4% y/y) vs consensus of $873m. Reported net profit gained 6% to $872m, buoyed by continued strong performance in S’pore mobile and mio TV services, cost management at its Australian consumer operations which improved margin, and higher contribution from Bharti. Revenue declined 7% to $4.26b, mainly dragged by Australia’s Optus duw to weak AUD and lower mobile revenue *Biosensors: 3QFY14 results missed estimates as net profit tumbled 55% y/y to US$11.1m on flat revenue of US$82.5m (+1%). Growth in product revenue (+6%) was offset by lower licensing revenue (-21%). EMEA and Asia-Pacific markets continued to lead DES sales volume but gross margin slid to 74% from 82% in 3QFY13 due to distribution activities in Japan for its Nobori stents and inclusion of its cardiac diagnostics business. Higher operating expenses, particularly from admin (+10%) and R&D (+77%) were major drags on profitability. *Mermaid Maritime: 1QFY14 net profit swelled to US$13.2 vs US$0.1m net loss a year ago and reached 80% of FY13 earnings. Revenue soared 58% to US$83.8m, propelled by a 71% jump in subsea sales, underpinned by the US$530m Saudi Aramco diving services contract. Vessel utilization rate saw a significant improvement to 85.9% from 50.6% in 1QFY13. Associate contributions swung to US$7.1m from US$0.4m loss boosted by jack-up rigs AOD I, II, and II. *Tiong Woon: 1QFY14 net profit surged 75% y/y to $8.8m, lifted by a $3.2m gain on disposal of an oil and gas subsidiary in Oct ’13. But revenue fell 20% to $44.4m due to reduced contributions from engineering services and trading segments, while its core heavy lift and haulage division slipped 3% to $38.8m on fewer projects undertaken in the Asia-Pacific region. Gross margin improved to 39% from 30% due to absence of cost overruns, which the group incuured for its Tuas New Yard project last year. *Sin Heng: 2QFY14 net profit collapsed 90% y/y to $0.3m despite a 28% growth in revenue to $53.1m generated by lower margin trading business. Bottomline was also weighed by lower servicing income, higher selling and admin expenses and an unrealized fair value loss on forward currency contracts related to equipment orders. Interim DPS of 0.35¢ maintained. *Ellipsiz: 2QFY14 net profit edge up 4% y/y to $1.2m on higher revenue of $40m (+11%), mainly from newly acquired probe card solutions (PCS) business from Japan and Taiwan. In line with the growth in higher value-added PCS business, gross margin improved 1.2 ppt to 22.5%.An interim DPS of 0.18¢ has been declared vs nil in 1HFY13. *Lottvision: 3QFY14 net profit slumped 93% y/y to HK$0.4m as revenue shrank 39% to HK$13.1m due to some major customers of 55% owned Chengdu health food firm Nutryfarm Biomedicine Int’l postponing their orders to 4QFY14. *Informatics: 3QFY14 net profit widened to $0.4m from $0.2m in previous period as revenue declined 11% to $5.6m on lower student enrollment in S’pore and e-learning operations. *LionGold: Continues to bleed with 3QFY14 net loss of $11.5m vs $7.6m profit of $7.6m a year ago, taking 9MFY14 loss to US$53.8m. Revenue dipped 2.6% to $34.2m, of which 44% was attributable to gold mining operations. The vast disparity in bottomline was largely due to plunge in other income from $21.9m to $2m. *King Wan: 3QFY14 net profit tumbled 96% y/y to $69.5m although revenue surged 128% to $25m through higher recognition of M&E contracts. But gross margins slumped to 7.8% from 30.7% dragged by contracts with lower margins in the quarter. *Koh Brothers: Awarded a $98m HDB contract for building and contingency works at Vine Grove @ Yishun. The BTO project comprises of five 13-storey blocks and one seven-storey block, totalling 696 residential units. Work is expected to commence in Mar ’14 for a duration of 31 months. *KSH Holdings: Won a $76.9m contract from Oxley Holdings to build a seven-storey mixed use development, Kap & Kap Residences at King Albert Park, which the group has a 12.6% effective stake. Construction will commence in Apr ’14 and targeted to be completed by Aug ’16. The award of this contract takes it order book to over $460m. *Otto Marine: Clinched a US$11.3m long term charter contract for its 2,800 bhp AHTS vessel, Go Emerald, to be deployed in Western Australia. *KrisEnergy: Acquires 1,300 km of 2D seismic data in the East Muriah PSC in the East Java Sea, Indonesia. Group holds a 50% working interest in the East Muriah PSC, which contains the East Lengo gas discovery and covers 3,751 sqm km in offshore East Java. This seismic acquisition preceds the drilling of an appraisal well planned for 3Q14. *Sin Heng Machinery: 2QFY14 net profit tumbled 90.6% y/y to $291,000, although revenue increased 28.3% to $53.1m, due to increase in trading revenue, offset by the decrease in equipment rental revenue. Gross margins, which fell from 17.4% to 13.7%, lower servicing income, and general increase in expenses weighed on bottomline. NAV at end Dec was 20.97¢ #Sky One: 3QFY14 net loss narrowed to HK$1.2m from HK$51.4m on higher gross profit margin as a result of the value-added services such as packaging provided by the airfreight division. Revenue grew 9.4% to HK$55.6m on higher volumes and ASP at the express land transport and coal logistics divisions. Group updated that the due diligence for the proposed acquisition of Energy Prima is in progress, with reports on the coal reserves, value, financials and other material matters are being prepared and reviewed. The acquisition is subjected to Sky One's disposal of its existing business to Dicky Suen, the controlling shareholder and CEO. *PEC: 2QFY14 net profit was down 34% y/y to $1.7m, while topline fell 22% to $112m on revenue decrease in project works from the Middle East and Singapore, partly offset by an increase in maintenance segment. Other operating income also halved to $1m due to the absence of one-off gains this quarter. *CCM Group: Investing US$4.3m to purchase a 136-acre land parcel in Houston, Texas. . Group intends to own 60% of th land with the remaining 40% held by independent third parties. The acquisition will be financed from the potential $41m proceeds raised from the issue of up to 3.42b warrants and exchangeable notes. *ISR Capital: Is expecting a loss arising from net fair value and impairment due to increased investment in clinical trial and R&D activities, and consolidation of expenses from the cardiac diagnostic business unit. *IFS: Expecting a net loss for 4Q13 on higher specific allowances for loan losses and receivables set aside by the Malaysian operations #Hoe Leong: Announced termination of existing joint venture in Aries Group with Otto Marine, on various disputes, with assets to be divided on amicable settlement basis.