SG Market (19 Feb 14)

Market Roundup: US stocks edged up on merger activity with S&P 500 coming just 0.4% off its record high and Nasdaq Composite rising for its longest streak since Jul ’13 as investors disregarded downbeat economic reports as weather-related. Economic reports were disappointing, following a recent pattern but the soft data was dismissed by the market and blamed on the weather. Manufacturing in the NY region was weaker-than-expected as the Empire State general business conditions index fell to 4.5 in Feb from 12.5 in Jan, below the 8.5 estimate. Shares of homebuilders came under pressure after homebuilder confidence suffered its largest one-month drop in Feb as poor weather hit sales. But the healthcare sector gained support on the US$25b acquisition of specialty pharmaceutical firm Forest Labs by generic drug maker Actavis. Asia markets closed mixed after the BOJ boosted its lending programs but China’s central bank sold repo contracts for the first time since Jun, draining funds from the banking system. The STI may continue to creep towards the next resistance at 3,100 with downside support at 3,024. Stocks to watch: *CapitaLand: 4Q13 results broadly in line, with net profit of $142.9m (-45.6%) taking FY13 earnings to $849.8m (-8.7%). Revenue dipped to $1.1b (-2.3%) mainly due to the deconsolidation of Australand and lower contribution from S’pore operations (-37%), partially mitigated by higher sales from China which more than doubled, CMA (+39.7%) and development projects in Vietnam. Other operating income jumped 46.5% led by a 173% surge in fair value gains of $138m on its investment properties in Singapore, China, Japan and Malaysia, although this was offset by 639% spike in other operating expenses to $234.4m, arising from the losses of sale from Australand and Technopark@Chai Chee, as well as higher impairment and FX losses. As at Dec ’13, NAV stood at $3.78. *GLP: Signs deal with consortium of Chinese SOEs and financial institutions, which includes Bank of China, a large Chinese insurance company and HOPU Funds, for up to US$2.5b investment in the group. The new strategic partners will invest US$163m in 74.3m new shares @ $2.755 (1.5% of existing shares), with balance up to US$2.35b in new shares of GLP China, giving them a stake of up to 30.3%. Group will use the proceeds to support its growth and expansion in China, Brazil and Japan. *Pan United: 85.5% owned Changshu Xinghua Port (CXP) will acquire a 90% stake in an adjacent multi-purpose port, Changshu Changjiang Int’l Port (CCIP) for Rmb436.5m ($91.3m). CCIP will increase CXP’s overall handling capacity by 60% to 16m tpa, expand the current berth length from 1.7 km to 2.8 km and warehousing space by 67% to 175,000 sqm. With the two multi-purpose ports in its stable, the group expects to increase its market share and boost its position as one of China’s key logistics hubs serving the industrial hinterland along the Yangtze River. *Del Monte: Successfully completed its US$1.675b purchase of the consumer food business from US-based DMF. Management remains excited about this “game-changing” transaction which is expected to quadruple Del Monte’s sales from US$0.5b to more than US$2b. Del Monte’s FY13 results are due 25 Feb. *UOB: Plans to divest its 33.4% indirect shareholding un Uni-Asia General Insurance Bhd for RM374.5m ($143.3m). Both UOB M’sia and Msia's DRB-Hicom Bhd is selling their stakes in the insurance unit to Liberty UK and Europe Holdings. *Charisma Energy: Barely broke even in 4Q13 with net profit of $0.2m vs $0.7m loss a year ago, narrowing FY13 net loss to $0.4m from $1m in FY12. FY13 revenue fell 13% to $5.2m (4Q13: $1.4m) on challenging scaffolding business, industry, while bottomline was aided by a $0.6m contribution from other operating income, attributable to the write-off of long overdue liabilities. *Serial System: Strong FY13 results as revenue surged past the $1b mark for the first time to US$817m (+24% y/y). For 4Q13, revenue climbed 34% y/y to US$216.8m, driven by higher contribution from existing product lines and expansion of customer base. Net profit surged 63% to US$3.1m, as internal efficiencies led to lower costs. Final DPS of 0.3¢ declared, bringing full year payout to 0.79¢. *Baker Tech: 4Q13 net profit leapt 340% y/y to $4.2m as it benefitted from higher efficiency, lower admin expenses (-34%) and a $1m FX gain from a stronger USD and EUR. But revenue slipped 6% to $15.4m due to the general slowdown in orders. Order book of US$54m is expected to be completed within the next 12-18 months. Final DPS of 1¢, topped with special DPS of 4¢ declared. *Sinotel: Expects to report a loss for FY13 due to reduced contribution from outdoor wireless coverage solutions and emergency mobile communications system, impairment of plant and equipment and potential provisions for doubtful trade receivables. *SuperBowl: Voluntary offer declared unconditional. The offeror, Hiap Hoe, has received valid acceptances of 79.2% and has no intentions to revise the offer price nor extend the offer beyond 5.30pm on 4 Mar 2014.