SG Market (08 Apr 14)

US stocks ended lower Monday, with the S&P500 tumbling 1.1% to close at 1,845. Internet stocks were the biggest losers, as investors took profit after the sector’s recent outperformance and switched to defensive counters; financial stocks also lagged on expectations of an earnings slowdown. In Europe, stocks were weighed by a sluggish US morning session. Investors were also disappointed that while the central bank is sketching out plans for asset purchases if warranted, an immediate program launch doesn’t appear likely. In the region, the Nikkei and Kospi are both down 0.9% and 0.3% respectively, this morning. Expect the STI to take cue from the developed markets and open on a softer note. The STI reversed down sharply yesterday, after peaking out at 3,229. Meanwhile, the RSI indicator has turned back down after briefly touching an overbought level, while the Stochastics also appears poised to dip lower. In aggregate, these signals bode negatively for the near term price action of the index. In a pullback, the STI may test the 3,150 support. Today’s headlines report that the proposed KL-Singapore high speed rail link is making progress, with a site to be decided on as early as next year. SGX-listed contractors that specialize in MRT construction-related projects include: Tiong Seng, TTJ, Yongnam, CSC, Hock Lian Seng, CNA, Koh Bros, Lum Chang.OKP and Swee Hong. Stocks to watch: *Sembcorp Industries: Will own 95% stake in a JV with the Duodao district government to build, own and operate an industrial wastewater treatment plant in the Jingmen Chemical Industrial Park under a 30-year exclusive concession. To be built at an investment cost of Rmb98.7m, the facility will have an initial capacity of 10,000 cubic metres per day with capabilities to treat multiple streams of industrial wastewater. Completion is slated for 1H16. *GLP: Its 50% owned GLP Japan Development Venture JV has signed an agreement to develop GLP Kobe-Nishi, a 37,000sqm build-to-suit facility for Trinet Logistics. The customer, a major third-party logistics provider in Japan, will use the facility as its main distribution center in Greater Osaka. Expect completion of construction by Jan ’15. *Midas: Secured Rmb318m ($64.4m) worth of contracts from CNR Tangshan Railway Vehicle to supply high-speed train car body components, with delivery slated for this year. *Tritech: Awarded a $6.3m contract to provide instrumentation and monitoring for the Great World and Havelock stations for the upcoming Thomson MRT line. *Pacific Radiance: Entered into a JV with Westsea Marine to acquire two deepwater platform support vessels and provide offshore marine related services to the offshore oil & gas sector in Australia. *SGX: Will start clearing of non-deliverable interest rate swaps in Ringgit and Thai Baht wef 7 Apr. *Q&M Dental: Finalizes the terms of its previously proposed acquisition of Foo & Associates. The consideration of $5.5m will be satisfied via the issue of 15.1m new Q&M shares issued at $0.345 apiece. The purchase comes with an annual profit guarantee of $0.525m over a 10-year period. Post deal, Q&M’s proforma NTA is expected to grow 11% to 7.44¢, and EPS to rise 10% to 1.27¢.