SG Market (20 Feb 14)

Market Roundup: US stocks retreated in a late selloff with the Nasdaq Composite snapping an eight-day winning streak on disappointing Fed minutes and housing data. The markets initiaally opened higher with the S&P 500 coming within one point of its record but turned south when the minutes of the latest FOMC meeting showed that policy makers have unanimously agreed to stay the course to taper the Fed’s monthly bond purchases with some officials seeking an early hike to benchmark rates. Housing starts tumbled 16% in Jan to a 880,000 rate, its lowest since Sep and steepest drop in three years. This comes after the drop in home builder sentiment, indicating the unusually harsh winter has taken a toll on housing projects. Markets were lacklustre in Asia and tepid in Europe on Wed. The STI may continue to creep higher although upside may be capped at 3,100 with downside support at 3,024. Stocks to watch: *SIIC Environment: 4Q13 net profit slumped 45.3% y/y to Rmb31.3m, taking FY13 net profit to Rmb150.1m (+15%). Revenue surged 54.9% to Rmb436.6m, led by a 103% and 25% rise in construction and water treatment/supply sales respectively, on back of contributions from the Nanfang Group and the completion of certain projects. Bottomline was however weighed by Rmb25.5m decline in finance income to Rmb51.5m, due to the revision of accounting income, financial income and repayment of financial receivables and other expenses at $6.8m, attributable to the impairment of goodwill relating to the EPC unit. *Ezion: 4Q13 results beat street estimates. Net profit nearly doubled to US$40.5m, as revenue spiked 60% to US$83.8m, propelled by additional service rigs under its liftboat and jack-up rig segment, and higher OSV services for three projects in Australia. Gross margins improved 7.7ppt to 48.7%, lifting the bottomline. FY13 net profit soared 103% to $160.4m, while EPS improved to 16.38¢ from 7.95¢ a year earlier. Final DPS of 0.1¢ maintained. *Sing Holdings: 4Q13 slipped into a net loss of $0.5m vs $13.8m net profit a year back, taking FY13 net profit to $28.9m (-30%). The quarter saw an absence of revenue, as sales from The Laurels was fully recognised by 3Q13 upon the development obtaining TOP in Sept '13, while sales of Waterwoods EC, will not be recognised until TOP is obtained. The group has also not launched its other development properties for sale and did not sell its trading properties in 4Q13. End Dec ’13 NAV was $0.563. *Maxi-Cash: 4Q13 net profit crumbled 74% y/y to $0.3m, on weaker revenue of $28m (-3%) due to slower sales from the trading of pre-owned jewellery and watches business and falling gold prices, which dipped below US$1,200/oz in Dec ‘13. Group also incurred higher rental costs for new pawnshops and retail outlets. Final DPS shaved to 0.25¢, down from 0.68¢ last year. Separately, a 1-for-5 bonus issue has been proposed. *PSL Holdings: 4Q13 net profit turned around to $4.8m from $1.7m loss a year ago as revenue grew 11% to $3.3m, due mainly to higher sales generated from earthmoving services. Earnings from its core business (trading of hardware and repair of machinery parts and earth moving works and excavation services) accounted for $1m of net earnings with the rest derived from discontinued operations which were divested in FY13. Group remains committed to exploring coal and minerals mining opportunities. Final DPS of 0.5¢ declared. *EMS Energy: Swung to a FY13 net profit of $3.8m, reversing from a loss of $16.9m a year ago on revenue of $21.1m (+13%). Despite weaker revenue and operational losses in 1H13, accelerated progress of ongoing projects and new wins in 2H13 helped the group recover lost ground and lifted full year gross margin to 19.8% from 1.9% in FY12. Bottomline was further boosted by a one-time gain of $7.1m arising from the disposal of a 40% stake in its 60% owned subsidiary, as well as and significant cost reductions. Order book-to-date stands at $55m, mostly for delivery over the next 12 months. EPS rose to 0.48¢ with NAV at 2.93¢. *SATS: Acquiring a 41.65% stake in Indonesia-listed PT Cardig Aero Services (CAS) for $118m, valuing the Indonesian food solutions and gateway services provider at 21.5x CY14 P/E. CAS is the leading player in the Indonesia aviation market with presence across 17 airports in Indonesia and derives 73% of its sales from its PT JAS, its 49.8% JV with SATS. *Memstar: Alan Wang's Asdew Acquisitions has mopped up another 24.1m shares in the open market between 13 Feb and 18 Feb at an average price of $0.123. This takes his stake past the 10% mark to 10.1%. *Sin Heng: Awarded exclusive distributorship of Arcomet’s self-erecting cranes in S’pore and several SE Asian countries, which will widen its scope of lifting solutions. *WE Holdings: Enters into two MOUs to on-sell iron ore lumps and fines produced in Malaysia to two China-based companies, valid for one year, and renewable contingent on the mutual agreement of all parties. *Unionmet: Lodged OIS for its renounceable non-underwritten 1-for-2 rights issue of 306.8m new shares at $0.065 each. Trading of nil-paid rights will commence on 28 Feb till 10 March.