SG Market (24 Feb 14)

Market Roundup: US stocks ended on a session low on futures and options expiration and a drop-off in existing home sales. The market had a positive start on upbeat earnings from HP and Priceline as investors shrugged off a 5.1% decline in Jan home sales to an 18-month low of 4.62m annual pace. But equities erased gains after influential Fed officials Richard Fischer of Dallas and James Bullard of St Louis indeciated that the central bank is unlikely to slow the pace of stimulus cuts. The Spore may struggle after last Fri’s Budget 2014 did not offer much relief for the corporate sector with labour costs expected to rise further following hikes in CPF rates and foreign worker levies. Topside resitance for the STI is seen at 3,150 with support at 3,070. Stocks to watch: *Noble: FY13 net profit of US$243.5m (-48%) missed estimates but 4Q13 net profit of US$116.5m (+28% y/y, +409% q/q) was its best quarterly showing since 2Q12. 4Q13 revenue was flat at US$24b but dipped 5% sequentially on higher sales volume of 69.1m MT (+20% y/y, +28% q/q), led by metals, minerals & ores (MMO) and energy markets offset by weaker selling prices (-16% y/y, -26% q/q) especially in hard commodity prices. While overall gross margin was stable at 1.5%, the agriculture and MMO segments benefitted from significant margin improvements. Adjusted net gearing dipped marginally to 48.9%, while NAV was US$0.79. *Mencast: 4Q13 net profit improved 25% y/y to $6.5m on flat revenue of $28m (+1%). This brought FY13 earnings to $15.7m (+19%) in tandem with revenue of $99.2m (+18%)., mainly driven by increased orders in offshore and engineering services (+40%) but dampened by slower marine sales in sterngear repair and diving services (-10%). Bottomline was shored up by a negative goodwill gain from its S&W acquisition. End Dec order book climbed 41% to $33.5m. First and final DPS of 1¢ plus special DPS of 2¢ declared vs total 1.2¢ in FY12. Hanwell: Swung to a FY13 net profit of $6.6m from $27.2m loss as FY12 results were impacted by provisions for doubtful receivables ($2.4m), impairment of financial assets ($10.6m) and amounts due from associates ($9.1m). Revenue rose 6.6% to $403.3m, mainly contributed by the packaging business (+20%) but partially offset by lower turnover from the consumer business (-5%). Gross margin widened to 21.3% vs 19.9% in FY12. *Ntegrator: Incurred FY13 net loss of $3.6m vs net profit of $0.4m in previous year even as revenue soared 47.6% to $48.4m on increased project sales (+34.5%) and project management and maintenance services (+75.2%). But earnings were hit by a development project write-off in Indochina ($2.8m) and cost overruns ($1.9m). *ValueMax: FY13 net profit slumped 35.8% to $9.2m, in tandem with a 31% drop in revenue to $353.1m. Revenue from the retail and trading of pre-owned jewellery and gold declined by 31.6%, while pawnbroking sales fell 8.1% due to drop in gold price. Gross margin improved from 5.1% to 6.4% due to higher revenue mix from pawnbroking business, although this was offset by a 526% jump in other operating expenses, arising from provisions for doubtful trade receivables and inventory write-down. *UIC: FY13 net profit declined 19% to $316.1m on a 14% fall in revenue to $609.6m, which was attributable to lower sales of trading properties (-56%), partially offset by higher revenue from the hotel operations (+53%) following the re-opening of Pan Pacific hotel. Fair value gain on investment properties was down 21% to $196m versus $247.3m in the prior period. *Rowsley: 9MFY14 net loss deepened to $226.3m from $5.9m, on revenue of $22.5m, mainly due to a $221.2m non-cash goodwill writedown on the purchase of RSP Architects. Bottomline was also marred by higher professional fees and project expenses ($14.3m). Balance sheet has no debt, while NAV tripled to 10.87¢ per share. *GSH Corp: Tipped into a FY13 net loss of US$1.2m from a net profit of US$4.3m in FY12 as revenue declined 12.9% to US$89.4m amid consolidation and stiff competition in its distribution business, while its property projects have yet to commence development. Gross margin came under pressure, dipping to 5.2% from6% previously. Bottomline was also impacted by a US$1.4m expense relating to the recent acquisition of Sutera Harbour in Kota Kinabalu. Post rights NAV strengthened to 3.21¢ per share. *QAF: FY13 net profit fell 13% to $30.2m while revenue rose 4% to $1b, mainly contributed by bakery and primary production segments which grew at the same rate. Bakery segment grew on new products, increased production capacity and increased market share, while primary production was mainly attributed to higher sales volume. Expenses weighed on bottomline, primarily higher input prices and an FX loss of $5.4m due to the weakening of AUD. *OCBC: Extended the exclusitivity period for deal talks with regards to the terms of a takeover offer for HK’s Wing Hang Bank till end Mar, pushing back the deadline for the second time. *RH Petrogas: Updated that it will make combined write-offs and goodwill impairment totalling US$52.6m in 4Q13. This compares with the group’s net assets of US$167m at end 3Q13. *Geo Energy: Expecting to report a loss for 4Q13 and FY13 due to the downward trend in global coal prices and weak demand for coal with low calorific values. *Q&M Dental: Update to proposed acquisition of specialized dental materials manufacturer Qinhuangdao Aidite High Technical Ceramic. Total consideration of Rmb80m comprises of Rmb38m to be paid in cash and Rmb42m to be injected as capital into Aidite for expansion. For FY12, Aidite reported NTA of Rmb30m, revenue of Rmb23.8m and net profit of Rmb8.1m. Q&M will fund the purchase with internal resources, an IFC loan facility granted in Apr ’11, and /or issue of new shares. *Intraco: Reversed its losses for the past two years to report an FY13 net profit of $1.1m. Although revenue decreased 21% to $127.9m, bottomline was boosted by a series of one-off gains. The group continues to boast a healthy balance sheet, with cash of $51.3m vs an asset base of $81.5m. NAV of $0.63 compares with the counter’s last close of $0.42. *AEM Holdings: 4Q13 net loss widened to $3.2m from loss of $2.5m in 4Q12, despite revenue growth to $12.4m (+4.4% y/y), on the back of higher equipment sales in Singapore. Meanwhile, staff costs increased 11.2% on higher headcount in its engineering team, new product R&D and new substrates program. Although the semiconductor industry remains very challenging in 2014, the group expects higher sales from purchase orders of $7.2m from its equipment business and a ramp up in volume for moulded interconnect substrates. No dividends declared. *Kitchen Culture: FY13 net profit turnaround of $1.3m (from $0.4m loss) on a 52% growth in revenue to $33m, due to the recognition of 13 new projects and 26 ongoing ones under its residential segment, which contributed $26.2m (+91%). This was offset by a decline in its distribution and retail segment of $6.8m (-15%) due to a slowdown in Singapore and Malaysia. Overall gross profit margin eased 5.4ppts to 43.5% from higher cost for certain residential projects. The kitchen equipment distributor is expected to commence operations in Jakarta by 1H14 and is exploring to establish a presence in Chengdu, China. Orderbook stood at $43.7m as at 31 Jan 14, expected to be fulfullied over the next 2-3 years. *Hengyang Petrochemical Logistics: Expects loss for FY13 due to a one-off expense of Rmb7.9m in professional fees, FX loss of Rmb4.8m, on top of lower revenue from its storage business. Group expects to release its results on or before 28 Feb. *Hiap Hoe: 4Q13 net profit slumped 48% y/y to $7.2m despite revenue growth of 101% to $49.1m from progressive revenue recognition on the sale of residential project, Waterscape at Cavenagh. The bottomline was hit by an absence of fair value gains (-76%), higher acquisition costs from Melbourne properties and property tax and maintenance fees for unsold units of completed projects. NAV grew 23% to 79.59¢. Group declared final dividend of 0.8¢/share (from 0.5¢ in FY12), bringing FY13 total dividend to 2¢/share. *Heeton Holdings: 4Q13 net profit dived 85% y/y to $6.1m, while revenue deteriorated 44% to $13.2m. This brings FY13 earnings to $18.4m (-65%) and revenue to $60.4m (+15%), on the back of higher contribution from residential projects- Lincoln Suites and the Britton in London. Bottomline for the year was mainly boosted by an increased share of profits from associates (+2568%) due to higher dividend income, forfeiture of deposit, increased progressive profit recognition from The Boutiq, revaluation gain on 223 Mountbatten and a gain from asset disposal. This was partially offset by lower fair value gain (-88%) at the group level. First and final dividend of 1.3¢/share maintained. *Figtree: FY13 net profit accelerated 126.5% to $8.6m, on 70% revenue spike to $101.8m. The better topline came from two major projects with Tech-Link Storage Engineering and Seo Eng Joo Frozen Food, awarded in Apr and May '12, partially offset by a project completion with Second Development. Gross profit margin grew 4.6ppts to 14.2% on better efficiency, which covered the increase in admin expenses (+184%) from the group's listing and higher headcount to support the group's activities. Order book rose to $249.7m from $91.9m since its IPO in Oct'13. First and final dividend of 1.2¢ declared *Asiaphos: 4Q13 net loss of $1.2m despite revenue spike of 185% to $2.7m, on the back of higher sales from both upstream and downstream segments. However, with the group's ramp up of operations for expansion, related operational costs spiked, coupled with one-off listing expenses, translating into a 59% cost increase.