SG Market (03 Mar 14)

Last Friday saw a strong Feb finish for US stocks. The S&P500 ended 4.3% higher for the month, extending to a fresh record of 1,859.53, amid improving US consumer confidence gleaned from Feb data. Expectations for the Fed to continue supporting the economy also buoyed markets, after Janet Yellen strongly indicated that the Fed is “by no means stuck to a firm taper”, and may change its strategy for reducing asset purchases should the economy weaken. Nevertheless, rising tensions in Ukraine have cast a dampener on Asian markets this morning. At 8.32am, Japan’s Nikkei is down 2%, and Korea’s Kospi is down 0.8%. As the 4Q13 corporate reporting season comes to an end, S’pore stocks may take a breather. While the rising RSI and positive MACD indicators suggest further upward momentum in the near term, gains in the STI may be capped by the big overhead resistance at the 3,150 level. Downside support at 3,070. Stocks to watch: *Golden Agri: 4Q13 core net profit of US$113m (+212% y/y, 199% q/q) came ahead of consensus, mainly attributable to exceptional China soybean crush margins and an 18% rise in CPO prices. Revenue grew 25% y/y to US$1,901.8m, driven by the expansion of the downstream business. Final DPS of 0.515¢, brings FY13 total payout to 1.1¢ (FY12: 1.19¢). *Midas: FY13 net profit spiked 71% to Rmb47.7m, as associate Nanjing SR Puzhen Rail Transport reversed last year’s loss to post a profit of Rmb13.6m. Group revenue accelerated 32% to Rmb1.15b, driven by higher sales volume of aluminium extrusion products. Gross margin however, dipped to 24.5% (-4.4ppts) due to a change in product mix. Final DPS of 0.25¢, brings FY13 payout to 0.5¢, similar to FY12. *UMS: 4Q13 net profit ballooned nine-fold y/y (+128% q/q) to $11.0m, as revenue spiked 59% (+36% q/q) to $34.5m, mainly due to higher semiconductor component and integrated system sales. Gross margin improved 22ppts to 54% on better product mix and lower inventory provisions. Management sees strong demand for semi equipment to continue into 2014. Final and special DPS of 2¢ and 1.5¢, lifts FY13 total payout to 6.5¢ (FY12: 5¢). *Sunvic: 4Q13 net profit spiked 81% y/y to Rmb135.4m, while revenue accelerated 33% to Rmb1.84b. This lifted FY13 earnings to Rmb369.9m (+282%) and revenue to Rmb6.33b (+46%), driven by higher ASP and sales volume of acrylic acid & acrylate esters (AA & AE). Full year gross margin expanded to 14.8% (+2.5ppts). Management expects the long term sales contracts signed with certain major customers to underpin the high utilisation at its plants over the next few years. No dividends declared. *Straco: 4Q13 net profit surged 79% y/y to $5.6m, taking FY13 net profit to $34.1m (+73%). 4Q13 revenue grew 32% to $14.6m, led by increased visitation to its two aquariums (+17% to 0.59m visitors). Other income jumped 21.2% to $1.3m mainly due to higher retail concessionaire income and certain government subsidies and cash awards received by the group's two aquariums. Final and special of 1.25¢ and 0.75¢ respectively, brings full year payout to 2¢ (FY12: 1.25c). *GMG Global: Swung into a 4Q13 net loss of $6.9m, versus a net profit of $5.1m a year ago, dragged by lower gross margin (-3.6ppts to 9.7%) and loss from associates ($7.4m) and FX adjustment loss ($4.8m). Revenue grew 15% y/y to $280.2m on higher tonnage sold (+32%), which helped offset a 13% decline in ASP. First and final dividend 0.1¢ (FY12: 0.135¢). *Loyz Energy: marking its first foray into producing concessions, Loyz has signed an agreement with ASX-listed E&P company, Carnavon Petroleum, to acquire a 20% stake in three onshore concessions located in Thailand’s Phetchabun Basin for US$65m. Currently the three concessions are producing at a rate of around 1,200-1,400bopd in total. Production is expected to rise to 3,000bopd by Jun ’14 and 5,000bopd by Dec ’14. *Swissco: Proposed to acquire Scott and English Energy (S&E), which is in the business of owning and leasing mobile offshore drilling units and service rigs, and majority-owned by Kim Seng Holdings. Consideration of $285m will be satisfied by the issue of 452.4m consolidated Swissco shares at issue price of $0.63 each, post a 2-into-1 share consolidation exercise. *AP Strategic: will acquire Coeur Gold Armenia for ~$500m in a reverse take-over transaction from a 51/49 JV between China Global Energy & Resources and businessman George Richmond. Coeur holds the mining explorations rights in the Azatek and Sofi Bina Mineral Deposits , Armenia in respect of gold, silver, antimony and copper. The consideration shall be satisfied by the issue of 1.35b new shares at $0.371 a piece. *GLP: signed a strategic partnership with Bank of China (BOC). BOC will provide supply chain financing to GLP’s customers, and work with GLP to develop solutions to lower logistics costs for customers. *Cordlife: signed a strategic alliance agreement with CellResearch Corp and US-listed China Cord Blood Corporation to provide umbilical cord tissue storage services to certain territories in the PRC, on an exclusive basis. *Q&M Dental: to acquire 70% of NGDC, a M’sian private dental practice, for cash consideration of RM0.5m.