SG Market (13 Mar 14)

US shares spent most of the day in red before recovering almost all its losses at the close, with the S&P500 inching up 0.03% to close at 1,868. With no major economic data, investors had their eyes on China where slowing growth and falling copper prices raised concerns that China is heading towards a credit crisis. Separately, Ukraine interim Prime Minister, Arseniy Yatsenyuk met President Obama at the white house, where the president ensured Ukraine that its territorial integrity will be maintained. Industrials and financials were the worst performing of the major sector groups, with utilities and technology faring the best. Shares of Fannie Mae and Freddie Mac tumbled, following the Senate Banking Committee announcement to wind down government owned mortgage financiers. Regional markets opened slightly higher this morning, with the ASX up 0.7%, Kospi up 0.2% and Nikkei up 0.1% as at 8.40 am. Following the overnight muted performance, the STI is expected to open relatively flat with the trend channel resistance found near the 3,150 level, while downside support is tipped at 3,092 (50d simple moving average). Stocks to watch *Vard: Continues its recent order win momentum as the group announced it has secured contracts with an undisclosed customer for the construction of two offshore support vessels. The total value of the contracts amount to NOK600m and delivery is scheduled from in 3Q15 and 4Q15. The hulls of the vessels will be delivered from Vard Braila in Romania. *Otto Marine: Secured a charter contract amounting to US$24.9m for 3 offshore support vessels. AHTS vessels Redfish 4 and Go Canopus will begin their charter on May’14 deployed in Mexico, while the third AHTS vessel Go Altair was contracted for short term towage project from Singapore to West Africa. *KrisEnergy: Awarded 45% non-operating working interest in the production sharing contract (PSC) for the shallow sea block SS-11 offshore Bangladesh. The PSC has an initial 5 year term, with an associated work commitment of the acquisition and processing of 1,893 km 2D seismic date and 300 sq km 3D seismic data and the drilling of an exploration well. *Metax Engineering: Has been awarded a total of ~$33m worth of palm oil bio-refining and bio-energy engineering projects in Malaysia and Thailand. The addition of these Projects brings the Group’s current order book to $60m to date, which is expected to be realised in the next 24 months. *Mapletree Industrial Trust (MINT): Acquired a light industrial building at Changi North for an aggregate $14.1m. The four-storey building located at 2A Changi North Street 2 has a total gfa of 67,800 sf and has 17 years remaining on the tenure up to 2031, with an option to extend an additional 30 years. The property will be leased to the vendor, Stamping Industries, for five years with annual rental escalations and an option to renew for an additional three years. Assuming the acquisition is fully funded by debt, the aggregate leverage ratio is expected to increase marginally from 36.3% to 36.5%. Upon completion of the acquisition, MINT’s portfolio will increase to 84 properties with an estimated book value of $2.9b. *First Reit: Proposed to acquire Siloam Hospitals Purwakarta located in West Java for $31m, a 17% discount to independent valuation. The acquisition will expand First Reit’s portfolio to 15 properties worth an aggregate $1.09b, and lift overall bed capacity by 8.8% to 2,521. The deal will be financed by an 85/15 mix of drawdown from the Reit’s committed debt facility and issuance of new units. The new property offers a current rental yield of ~11%, higher than First Reit’s other existing properties, and will raise pro forma FY13 DPU by 0.3% to 7.54¢.