SG Market (17 Apr 14)

US Market: US stocks rallied for a third session, lifted by positive and corporate earnings news, sending the S&P 500 (+1.1%) into positive territory for the year. The Fed’s Biege Book survey on economic conditions confirmed the US economy rebounding from the harsh winter in recent weeks with modest or moderate expansion in most regions, while Fed Chair Janet Yellen reiterated the central bank will continue to support the recovery based on employment and inflation. Economic data showed industrial production (+0.7%) rose more than forecast in Mar after an upward revision for Feb but housing starts (+2.8%) came in below expectations. In earnings news, Yahoo soared 6.3% after its earnings topped estimates on robust sales at 24% owned Chinese e-commerce firm Alibaba but BofA retreated 1.6% after reporting a quarterly loss. Other financial stocks did better with Visa (+2.6%), Amex (+1.6%) and Goldman Sachs (+1.5%). After the bell, Google sank 5.7% in extended trading after missing earnings expectations, while IBM dropped 3.5% as its sales fell an eighth straight quarter. In Asia, both the Nikkei (+0.1% and Kopsi (+0.2%) opened relatively muted in early morning trades. Japan investors will get a key reading on consumer sentiment when the monthly consumer confidence index is released today. S’pore shares are likely to consolidate its gains after Mar non-oil exports fell in Mar against consensus forecast of flat growth. With technical indicators approaching overbought levels, the STI may pull back to immediate support at 3,230 with further support at 3,210. Topside resistance is seen at 3,267. Stocks to watch: *Keppel Corp: 1Q14 results slightly missed; O&M performed well but property, infrastructure and associates (ie. Floatel) dragged. Group net profit fell 5.1% y/y to $338.7m, even as revenue climbed 8.6% to $3b. Top line was boosted by a sharp 13% jump in O&M contribution to $1.9b, due to higher revenue recognition on both semi-sub and jackup projects. O&M EBIT margins expanded 0.5ppt to a healthy 14.6%. O&M order book continued to rise grow to a record $14.4b, with deliveries up to 2019. *Sabana REIT: 1Q14 DPU dropped 22% y/y to 1.88¢, dragged by lower NPI (-9%) due to higher property expenses and straight‐line adjustments on rental income for a major tenant that was given free rent. Gross revenue however, rose 14% to $24.6m following the recent acquisition of 508 Chai Chee Lane (Sep ’13) and higher rental revenue from 151 Lorong Chuan on conversion from single to multi tenanted lease arrangements. Portfolio occupancy dipped 0.6ppts to 90.6%; WALE stands at 2 years. Aggregate leverage increased marginally (+0.1ppts) to 37%, with an average 4.1% interest cost and weighted average tenor of 2.7 years. NAV/unit is $1.09. *GLP: Leases 34,000 sqm of space to a leading Chinese smartphone manufacturer at its GLP Parks in six cities across China. The customer is an existing customer which is leasing more space to service rising domestic demand for its mobile handsets and other products sold online. *UOL: Its JV with sister company Kheng Leong, has made the highest bid of $463.1m ($821 psf ppr) for a site at Prince Charles Crescent, below the $900-$1000 psf ppr for recent transactions in the area. The 99-year leasehold site can accommodate a 24-storey development with ~750 units. *CapitaLand: To acquire an additional 80% effective interest in the Beaufort, a residential development site located at Chaoyang district, Beijing from its 37.5% owned associate CCDF, for Rmb220.2m ($45.1m). The adjusted consolidated NAV of the acquired stake is ~$60m. The acquisition is slated for completion by 2Q15. *Keppel REIT: The Business Times says a consortium that includes private equity group KOP may be conducting exclusive due diligence on a potential purchase of K-REIT’s 92.8% stake in Prudential Tower. The pricing is tipped to be ~$2,340 psf nla, which implies a deal size of ~$520m, broadly in line with market expectations. *StarHub: Will be the first telco to end its free 4G promotion and start charging mobile subscribers $2.14/mth for its 4G services from Jun.