SG Market (11 Apr 14)

US shares plummeted as the S&P500 tumbled 2.1% to close at 1,833. The tech-heavy Nasdaq experienced its biggest drop in two-and-a-half years, sparked by another selloff in biotech and momentum stocks. Sentiment was weighed by negative trade data from China which showed that exports slid 6.6% and imports declined in Mar, fuelling concerns that growth in the world’s second largest economy is slowing down. Meanwhile, tensions between Russia and the EU rose after Russia announced plans to halt gas supplies to Ukraine and Europe. Investors continued to unload stocks, targeting counters with the biggest gains over the past five years of the US bull market, on concerns about excessive valuations. In the region, the Nikkei plunged 2.6%, and the Kospi shed 0.9%, as at 8.33 am this morning. S’pore shares may succumb to the macro risk-off sentiment in the developed markets to open weaker. For the STI, the key indicators are starting to taper down from relatively overbought levels, indicating a near term downtrend. The immediate support at 3,180 (20day moving average) may prove to be thin defense in the face of higher selling pressure. Firmer support lies at ~3,150 (200day moving average). Stocks to watch: *Lian Beng: 9MFYMay14 revenue and net profit both surged 67% y/y to $585.6m and $50.3m, respectively, driven mainly by the full recognition of revenue from the group’s fully-sold 55% owned industrial property development, M-Space, which received TOP in Jan. Lian Beng’s construction order book stands at $1.1b, with activity stretching through FY17. Management believes the group is “on track for a bountiful FY14 with record revenue and profit”. *Ezra: 2QFYAug14 revenue jumped 22% y/y to US$300m, mainly driven by an increase in fleet capacity and the value and number of projects undertaken by its subsea services arm (EMAS AMC) which helped offset a decrease in segment contribution from the offshore support services division (EMAS Marine). Net profit however, fell 34% to US$19.6m, due to the absence of a one-off disposal gain US$33.8m from a year ago, which more than offset higher associate contributions from EOC. Group orderbook remains healthy backed by more than US$2b of contracts, the majority of which is expected to be executed over the next 12 to 18 months. Management sees further earnings growth in 2014, as the group leverages on its economies of scale. 1HFY14 EPS: US2.66¢; NAV per share: US$1.20 *Ezra: Awarded a subsea contract from Noble Energy to perform the offshore installation of pipelines, umbilicals and ancillary equipment for the Gunflint Project in the US Gulf of Mexico. Project preparation activities have commenced and offshore works are scheduled to be carried out during 2015. *Triyards: 2QFYAug14 net profit climbed 9% y/y to US$7.8m, even though revenue fell 6% to US$74.5m. Gross margins improved 3ppt to 18% on higher contributions from ship repair projects and completion of one unit of turret during the quarter. 1HFY14 EPS: US5.11¢; NAV per share: US$0.534. *Grand Banks Yachts: To acquire Australian boat builder Palm Beach Motor Yacht for up to A$10m in the group’s first ever acquisition. Palm Beach’s founder Mark Richards will be appointed CEO of the enlarged group. *Palm oil: The Malaysian Palm Oil Board’s (MPOB) Mar 2014 inventory of 1.69m MT (+2% m/m, -22% y/y) came in above consensus estimates of 1.6m MT. Stockpiles were higher-than-expected largely due to a strong rebound in CPO output (+17% m/m, +13% y/y) as rainfall returned in Mar after a dry spell in Feb. Exports were down to 1.24m MT (-8% m/m, -19% y/y) while domestic consumption remained strong at 0.24m MT (+13% m/m, +66% y/y) *Wilmar: To purchase Huntsman’s European commodity surfactants business comprising an ethoxylation facility in Lavera, France. In addition, Wilmar will enter into a multi-year arrangement to purchase sulphated surfactant products from Huntsman’s facilities in St Mihiel, France and Castiglione delle Stiviere, Italy. *Rex Int’l: Its 64.17% owned Caribbean Rex has scheduled a five-well onshore drilling program at two of its three concessions – South Erin Block and Cory Moruga – to commence in the next six weeks. Management estimates the current production from its South Erin and Inniss-Trinity concessions are 130 bopd. *CNMC: Updates that its JORC compliant gold resources (reserves inclusive) and reserves as at end 2013 has increased by 13% and 14%, respectively. For FY14, CNMC intends to accelerate its exploration activities to expand resources base for gold, silver, lead and zinc at the Sokor Gold project, and initiate exploration activities for tin resources in Perak, Malaysia *Progen / Logistics Holdings: Progen has decided to erect an 8-storey single-user industrial building at 28 Riverside Road for its internal use. The construction work, valued at $10m, has been awarded to Logistics Holdings, with targeted completion by Aug ’15.