SG Market (21 Apr 14)

US stocks ended mostly higher amid a plethora of earnings reports that generally met or exceeded expectations and easing tensions in Ukraine. The S&P 500 advanced 0.1% to 1,865, while the VIX or gauge for investor anxiety fell 5.8% to 13.36. The measure has lost 22% last week, the most since Jan ’13. The market turned higher afte four-way talks in Geneva on Ukraine crisis ended with an accord aimed at taking the first steps to de-escalate the conflict with Russia. In economic news, jobless claims edged up a lower-than-expected 2,000 to 304,000 last week as the labour market continues to strengthen. Among companies that reported results, Morgan Stanley (+2.9%), GE (+1.7%) and flash memeory maker SanDisk (+9.4) beat estimates but Google (-3.7%) and IBM (-3.3%) missed forecasts. In Asia, stocks in Japan, Korea and China rose on Fri in thin trade. While markets in Europe, Australia and HK remain closed today for the Easter holiday, Nikkei (+0.2%) and Kopsi (-0.1%) had muted openings. S’pore shares are unlikely to see any big movement with most markets still on holiday. While upward momentum of the STI may still push it towards the 3,267 resistance, technical indicators are overbought and a near term pullback to immediate support at 3,230 appears imminent. Stocks to watch: *ValueMax / Maxi-Cash/ MoneyMax: The licensed moneylending sector faces stricter lending rules that could kick in by end 2015. Operators will have to conduct compulsory credit checks on potential borrowers. Meanwhile, there will be lending caps on borrowers that restrict an individual’s aggregate loan quantum from across all licensed moneylenders. *CapitaMalls Asia (CMA): 1Q14 results in line. Revenue rose 5% y/y to $125m, and net profit improved 3% to $75.3m, largely due to, i) better performances from China funds contributed by new malls that opened in 2013, ii) new contributions from Bedok Mall and Westgate, iii) profit recognition for units sold in Bedok Residences, iv) share of higher rental revenue, and lower finance costs of ION Orchard, and v) improved property management fee business in Singapore. NAV/share stands at $1.87. *CapitaCommercial Trust (CCT): 1Q14 DPU increased 7.2% y/y to 2.08¢ while distributable income rose 7.6% to $59.9m. NPI came in at $50.7m (+1.5%), driven by higher revenue contribution from all properties except One George Street, as the latter’s yield protection income had ceased. Portfolio occupancy remained strong at 99.4% (+0.7% q/q) with a weighted average lease to expiry of 7.9 years. Aggregate leverage stands at 30%. NAV per unit at end Mar was $1.68. *Far East Orchard: Its JV with sister company, Far East Civil Engineering, and Skisui House has been jointly awarded a $634m tender by the URA to develop a land parcel at Woodlands Square for commercial development. The land has a site area of 18,569 sqm, and permissible gfa of 64,991 sqm. *Hafary Holdings: Has entered into an agreement with Foshan Shenghui Plastics Materials to acquire a property in Foshan, Guangzhou for Rmb49.8m ($10m). The property, which has a remaining 37-year lease with 40,940 sm total land area, will be used to hold Hafary's inventory of tiles, which are currently held at warehouses in Singapore. *CCM Group: Proposed to dispose its loss-making construction business, CCM Industrial (CCMI), for $1. The disposal will allow the group to put greater focus on its property development business. Proforma net tangible loss per share will be reduced to 2.38¢ (from 6.9¢), while loss per share will narrow to 0.73¢ (from 16.1¢). *Goodpack: Updates that discussions with parties related to a possible transaction are still ongoing and there is no certainty that these discussions will result in any transaction. *SIA: The Competition Commission of Singapore has approved the proposed strategic alliance with Air New Zealand, paving the way for Air New Zealand to fly the Auckland-Singapore route again, and for SIA to operate the Airbus A380 to New Zealand for the first time. The proposed alliance remains subject to approval from the New Zealand Minister of Transport. *SGX: Reported to be in talks with the Taiwan Stock Exchange regarding the potential cross-trading of selected shares listed on both bourses to reduce overall trading costs. *Rex Int’: Provides a comprehensive update on each of its underlying oil & gas assets. In addition, management emphasizes that going forward, the group will only invest in assets that have used its Rex Virtual Drilling (RVD) technology. The group will continue to have a diversified portfolio with ideal equity stakes of between 5% and 30% exposure to underlying assets. *Pteris Global: CIMC, which holds a 15% stake in Pteris, says it will not negotiate further to change the terms of the proposed RTO of its Shenzhen CIMC-Tianda Airport Support in return for a 75% shareholding in Pteris. Warns that if the existing five directors are removed at the EGM or not re-elected, CIMC will view this as a lack of support from shareholders for the proposed RTO and will take the necessary steps to protect its interests. Meanwhile, co-founder Low Kok Hua and director Soon Kong Ann, who together hold 12% stake in Pteris, have formally expressed the full support for the RTO in a filing with SGX. Separately, Pteris has been granted a waiver for breach of certain bank covenants, subject to the banks receiving an executed financial support undertaking provided by CIMC to the company, and that Pteris’ board of directors to remain substantially unchanged until completion of the RTO. *Transcu: Signed an agreement for the potential reverse takeover of Straits Construction Group. The consideration of between $325m and $338m, is based on the target’s FY13 net profit of not less than $42m, and will be satisfied by the issue of new Transcu shares at $0.50 per consolidated share. The consideration shares will amount to not less than 79.9% of the enlarged share base of Transcu. Previously, Transcu proposed a 65-into-1 share consolidation, to be immediately followed by a renounceable 5-for-1 rights-cum-warrants issue, at $0.008 per rights share.