SG Market (15 Apr 14)

US stocks rebounded on strong retail sales and positive earnings from banking giant Citigroup. The Dow rallied 146 pts to 16,173, while the broad based S&P 500 gained 0.8% to 1,831. Oil and gold rose on geopolitical concerns in Ukraine and Libya. Asian markets opened firmer in early morning trades with Tokyo, Seoul and Sydney all advancing between 0.2% and 0.9%. Following yesterday’s Jardine and bank-led recovery, the STI is expected to hold its ground above 3,190, buoyed by another M&A deal involving Hotel Properties and Wheelock Properties. Immediate resistance lies at the 3,230 recent peak with the next hurdle at 3,267. Stocks to watch: *CapitaLand / CapitaMalls Asia: Proposes to privatize CMA at an offer price of $2.22. The offer is subject to CapitaLand receiving acceptances that will result in it holding more than 90% of CMA shares. Currently, CapitaLand holds 65.3% of CMA. *CapitaLand / CCT: ~81.000 sf or 12% of the 700,000 sf NLA at upcoming development CapitaGreen has been pre-committed to three tenants - Cargill (51,000sf), Swiss private bank Bordier & Cie (12,000sf) and an international gym operator (18,000). *Wheelock / Hotel Properties Ltd: A consortium comprising Wheelock and HPL founder Ong Beng Seng makes a cash offer for HPL at $3.50 per share. The offer is conditional upon the offeror (combined 41.9% stake) acquiring more than 50% control over HPL. The offeror intends to keep HPL listed, but may reevaluate its options for compulsory acquisition if it receives more than 90% acceptances. *M1: 1Q14 results broadly in line. Operating revenue dipped 1.2% y/y to $240.2m, but net profit climbed 4.4% to $42.8m, helped by a reduction in handset costs. Service revenue grew 2.1% to $203.9m on growth in mobile data usage and customer base, but was offset by lower handset sales. EBITDA margin improved to 33.8%, the highest in almost four years. M1’s mobile customer base grew 2.9% y/y to 2.1m, while monthly churn was stable at 1.1%. The telco added 5,000 new fibre customers to lift its user base to 90,000. *Keppel REIT: 1Q14 DPU unchanged at 1.97¢, broadly in line. Distributable income grew 5.5% y/y to $55.1m, as net property income expanded 14.7% to $39.5m, driven by better performance at OFC, Prudential Tower and new contributions from its 50% interest in 8 Exhibition Street acquired in Aug ’13. Portfolio occupancy remains high at 99.8% with WALE of 6.4 years. Aggregate leverage stands at 42.4%, and NAV per unit at $1.37. *K-Green Trust: 1Q14 net profit climbed 9.4% y/y to $3.5m, although revenue dipped 1.3% to $16.8m, mainly due to a drop in finance income. Bottom line was helped by lower operating expenses, arising from lower electricity costs and trust expenses. NAV per unit declined to $0.96 (4Q13: $1). *ST Engineering: ST Electronics secured $581m worth of contracts in 1Q14 for intelligent transportation, satellite and broadband communications, and advanced electronics and ICT solutions. #Sinjia Land: Its JV has been granted by JV partner Real Time Engineering (RTE), an exclusive license for a patent relating to the process and assembly for the production of hydrogen gas and syngas, as well as shareholder loans of up to $1m. The JV will engage in the installation of fuel cell systems in S’pore buildings. *United Envirotech (UEL): KKR China Water Investments Holdings stake rises to 26% from 16.6%, after the allotment of 173.8m UEL shares from the dividend-in-specie by Memstar, as well as another 137m shares issued from the conversion of convertible bonds. *Infinio: Entered into a 60-day MOU pertaining to the acquisition of up to 70% equity in PT Bahana Nada Gemilang, which holds the mining licenses, permits and beneficial interest in a Sipongi copper and gold mine located in North Sumatra. The 2,333 ha mine consists of 190 ha that have been surveyed and is currently in small-scale production. *CCM Group: To form a 51-49 JV with Spanish architecture firm, ART Proyectos Y Arquitectura (ART), in relation to its overseas property development business. ART, through the JV Co, will advise CCM Group on all design, quality and building management matters for future property development projects. *ISOTeam: Awarded four contracts worth a combined $18m, for HDB repair and redecoration works and neighbourhood renewal programme. This brings the group’s order book to $84.6m. *Tritech: MOU with Shandong Jining Water Supply Group to acquire a 49% stake in Jining Zhongshan Public Utility Company (JZPUC). JZPUC has a 25 years remaining license to operate to treat and supply drinking water and waste water-treatment activities in Jining City. Tritech proposes to fund the acquisition via a $42m convertible loan at an indicative 12% interest, to be repaid by the issue of new shares at $0.28 apiece or 10% discount to the VWAP 7-days prior to the end of every six months after the loan drawdown.