SG Market (09 Apr 14)

US stocks ended higher after ending a three-day losing streak, led by the Nasdaq which closed up 0.8%, as investors moved in to scoop hammered social media and Internet shares. Semiconductor stocks outperformed, with the benchmark Semiconductor index up 1.3%, while safety sectors Utilities and consumer discretionary sector stocks also continued to edge higher. Gains on the Dow were however weighed by a decline in bank stocks, following moves by regulators to limit banks reliance on debt. Kicking off the earnings season, Alcoa reported a loss in its 1Q15 results after the bell weighed by restructuring charges, although the stock rose more than 2% in extended-hours trade. Bell-weather JP Morgan Chase and Wells Fargo is scheduled to release their results Friday. In the region, the Nikkei is down 1.1% but the Kospi is 0.1% higher as at 8.40am. S’pore may take cue from the US to open on a slightly positive note. The STI appears to have made a near term top after reversing from the recent 3,229 peak. Meanwhile the key indicators are starting to taper down from relatively overbought levels. In a pullback, the STI may test the 3,150 support, before making an attempt to head back higher. Stocks to watch: *SPH REIT: 2QFYAug14 DPU of 1.39¢ came in above IPO forecast by 4.5%. Net property income (NPI) grew 8.6% y/y to $38.8m, driven by positive rental uplift across both Paragon (+13.6%) and Clementi Mall (+5.1%), as well as lower utilities expenses. The REIT retained its portfolio occupancy of 100% with a weighted average lease expiry of 2.3 years. Gearing remained healthy at 26.9% with an average cost of debt of 2.33%, and average term to maturity of 4.5 years. NAV/unit stands at $0.90. *JES: Will put on hold the previously proposed acquisition of Mineriver, a Xinjiang mining exploration firm which claimed to have magnesium resources worth over US$500b. JES now proposes to acquire a 51% stake in SCIBOIS for consideration of up to US$65m. SCIBOIS holds an effective 75% stake in a license to harvest ~230,000ha of forest in the Republic of Congo up till May 2036. The vendors estimate the forestry asset to be worth more than US$3b. The first US$35m tranche payment will be satisfied by the issue of new JES shares amounting to 20% of JES’ enlarged share base (target 31 May completion), and the remaining US$30m will be payable in cash (target 15 Jul completion). SCIBOIS will provide a guarantee of at least US$170 in pretax profit over four years, and aims to seek a listing within this timeframe. Separately, JES has proposed to raise $6.1m via placement of 42m new shares at $0.14463 each, to four parties. *Blumont: Alexander Molyneux does not intend to proceed with the acquisition of 135m Blumont shares (5.2% stake) at $0.40 each. The board will also make a decision on Molyneux’s current position as Chairman-designate. #Frasers Centrepoint Trust (FCT): To acquire Changi City Point for $305m. The mall has a net lettable area of ~207,000sf, with 97.8% occupancy as at end Feb. The acquisition is expected to be DPU-accretive, and will boost FCT’s portfolio to six malls, and increase total assets by ~14% to $2.4b. *Gems TV: Chairman and substantial shareholder (22.4%) Jason Choo will make an unconditional cash offer Gems TV shares at $0.00408 each, equivalent to the NTA of the company. Gems TV, which is currently suspended and has no operating assets, has been directed to delist from the SGX. *Darco Water: Will receive RM3m from a settlement agreement with Grober Industrial Services and KIJ Ultra Supreme Filtration, in relation to its lawsuit against its former employees. *Noble: Acquired 65% stake in ship owner, Panacore Investments, for US$11.8m, compared to the latter’s attributable book value and NTA of US$16,718. *CCM: Completed the acquisition of 5 out of 7 parcels in a 136-acre development in Texas and has received pre-sales letters of intent from US developers to buy 285 lots, worth ~US$28.5m, out of the total 545 lots. Infrastructure development of the 285 lots are expected to be completed by 4Q14, with recognition of sales and profits to begin in 2HFY14 *Q&M: Completed acquisition of 70% stake in NG GK Dental Surgery. On its Foo and Associates acquisition, Q&M has updated that on a pro forma basis, assuming the acquisition was done on 1 Jan’13, FY13 EPS would have been lifted from 1.15¢ to 1.27¢, and NTA would have been lifted from 6.71¢ to 7.44¢ *Z-Obee: ANZ Bank files bankruptcy petition against co.; sues over $6.78m loan