SG Market (14 Apr 14)

Market Roundup: US stocks suffered steep losses to close out a rough week with tech-rich Nasdaq again bearing the brunt of the selling, sinking 1.3% below its psychological 4,000 level. The blue-chip Dow tumbled 0.9% to 16,027, while the broader-based S&P 500 shed 1% to 1,816. The VIX index of Wall Street’s fear gauge jumped another 7.1% to 17.01. Prominent technology and Internet names continued to slump with Twitter (-3.1%), Amazon (-1.7%), Feacebook (-1.1%), Apple (-0.7%) and Priceline (-1.8%) all down. US banking giant JPMorgan (-3.7%) was hard hit by its disappointing results, while General Motors (-4.1%) endured another flogging in the wake of a disastrous vehicle recall. The broadening selloff sparked fears that the pullback, triggered by the overvaluation of high-flying technology and biotech stocks, may have morphed into a bigger market correction. Investors shrugged off positive economic data that showed consumer sentiment rising in Apr to a nine-month high. In Asia, both the Nikkei (-0.3%) and Kopsi (-0.1%) saw softer openings in early morning trades. S’pore shares are likely to open on the downside, taking cue from the global market weakness, even as 1Q14 GDP growth of 5.1% met expectations. The STI is expected to breach immediate support at 3,190 and find firmer footing at the 3,150 level, near the intersection of the 20 and 200-day moving averages. Stocks to watch: *SPH: 2QFY14 net profit climbed 7.5% y/y to $81.3m, boosted by a one-off partial divestment gain from 701Search, despite an impairment on its portfolio investments. Revenue fell 1.2% to $278.8m, due to contraction from the core adverting (-7% y/y) and circulation (-3%) revenues, which more than offset higher rental income (+3%) and growth from the other exhibitions, online classifieds and radio businesses. Interim dividend of $0.07 declared. *Goodpack: The Business Times understands that KKR may be the latest private equity firm interested in buying a stake in Goodpack. Other firms tipped to be eyeing Goodpack include Blackstone and Carlyle, China Int’l Marine Containers, and Brambles. Founder David Lam, who owns a 32% stake in Goodpack, “is said to be open towards a takeover offer”. #Ramba Energy: PT Sugih Energy has withdrawn its $0.65/share partial offer for Ramba, citing inability to obtain confirmation of financial resources to launch the offer. Separately, Ramba issued the results of an independent evaluation of its oil and gas asset portfolio. Notably, for its key Lemang block, the evaluation projected a production of between 11k-57k bpd of oil and 26-101m mmscfd of natural gas. Total gross capex is estimated at between US$45m and US$263m, with US$10-20m in annual operating expenditures. Ramba has been instructed by SKK Migas, Indonesia’s oil and gas regulator, to work on hydrocarbon production as soon as possible. First hydrocarbon production is expected sometime in 2H15 or early 2016. *Giken Sakata: Entered MOU to acquire 51% of PT Cepu Sakti Energy for $48m via cash and shares. PT Cebu owns the rights to operate and produce oil from two oilfields in Central Java, Indonesia, with a total of 148 oil wells currently producing a minimum of 300 barrels of crude oil per day. The $23-28m consideration satisfied by shares will be issued at no more than $0.30/share. *EnGro: Its 80%-subsidiary, EAPL has entered into a 43/57 JV with Qingdao Iron & Steel Group to engage in the production of environmentally friendly ground granulated blast furnace slag (GGBS). In the initial phase, EAPL will inject Rmb27.5m in the JV to build a 1.2m tpa GGBS manufacturing plant with a 0.5m tpa steel slag pre-treatment facility. Total project costs are estimated at Rmb160, with operations scheduled to start by 1H15. The project will be funded internally with bank financing. *Tigerair: Tigerair Singapore recorded a 14.6% y/y increase in traffic to 878m RPK in Mar. Capacity rose 24% to 1,109m ASK, and accordingly pax load factor fell 6.5ppt to 79.2%. The number of pax carried grew 16.7% to 482,000. *Lian Beng: Its 80% owned subsidiary Wealth Assets had been awarded the tender to purchase a property along Leng Kee Road and Alexandra Road for a consideration of $46.2m. *AusGroup: Receives a A$20m conditional term credit facility from Wingate Group, and a A$50m banker’s guarantee facility from DBS. Together with the private placement completed in Jan ’14, management believes that the group has effectively extended the maturities of its debt and enhanced its capital structure. *Innopac: CEO Wong Chin Yong has surrendered his passport to the CAD in their investigation into the offence of false trading and market rigging. The company and five of its subsidiaries have also been served orders to handover computers, data storage devices, files and financial records and has cooperated fully with the CAD. *CNA Group / China Energy: Auditor warns existence of a material uncertainty which may cast significant doubt to the groups’ ability to continue as a going concern.