SG Market (23 Apr 14)

US Market: US stocks continued to grind higher, supported by strong corporate and a flurry of high profile deals in the healthcare sector. Both the S&P 500 (+0.4%) and Nasdaq (+1%) extended gains for the sixth straight session. Investors welcomed better-than-expected results from Netflix (+7%), Comcast (+1.9%), Harley-Davidson (+6.4%), Travelers (+0.6%) and United Tech (+0.8%). Healthcare led the gains, boosted by Canadian drug maker Valeant Pharmaceutical’s (+7.5%) US$45b takeover offer for Botox producer Allergen (+15%) and over US$20b of deals involving GlaxoSmithKline (+4%), Novartis (+1.3%) and Eli Lilly (+1.4%). Tech stocks reemerged as leaders after languishing for much of Mar and early Apr with Facebook (+2.9%) and Tesla Motors (+7%). Biotechs also rebounded, sending the Nasdaq Biotechnology Index 3.2% higher. The DJ Transportation Index rallied 0.6% to an all-time high as United Continental (+4.6%) and Delta Air Lines (+3%) advanced as oil prices slumped 2.6%, the most in three months. In the regions, Nikkei (+0.8%) and Kopsi (+0.2%) opened firmer in early morning trades as US President Obama begins his Asian tour from 23-29 Apr making stops in Japan, South Korea, Malaysia and the Philippines. Despite its overbought position, the STI pushed past its 3,267 resistance at 3,267 in a broad-based rally with the mid-caps such as water stocks and and property counters jumping back to life. Next objective is at 3,320 with near term support at 3,230. Stocks to watch: *CMT: 1Q14 DPU rose 4.5% y/y to 2.57¢, implying 5.2% yield, in line with consensus. Gross revenue grew 5.8% to $164.7m, while NPI increased 5.3% to $114.3m, driven by higher rent reversions. Portfolio occupancy remained high at 98.8%. Aggregate leverage at 35.1%, with average term to maturity of 4 years. Next AEIs include works at IMM to increase the number of outlet stores, and reconfiguration of Level 2 of JCube to include more than 50 retail units. NAV/unit stood at $1.74. #Mapletree Industrial Trust: 4QFY14 distributable income rose 9.5% y/y to $42.6m, while DPU climbed 5.9% to 2.51¢. Gross revenue increased 4.2% to $75.2m and NPI accelerated 7.5% to $53.3m, due mainly to higher rental rates secured for leases across all segments (except business parks), higher occupancies in flatted factories, as well as lower operating expenses. Portfolio occupancy declined 1.2ppts q/q to 91.3% mainly due to an increase in leasable area after completion of the AEI at Toa Payoh North 1 Cluster, with overall portfolio WALE of 2.5 years. Aggregate leverage ratio lowered 1.9ppts to 34.4% on weighted average tenor of 2.6 years and average funding cost of 2%. NAV/unit stood at $1.20. *Stats ChipPAC: Swung into a 1Q14 net loss of US$15.8m, from a net profit of US$3.5m a year ago. Revenue fell 10% to US$365.5m, on weaker demand in the wireless communications market which targets the high-end smartphone market, but partially offset by strength in the low-cost smartphone segment. Gross margins shrank 5.4ppt to 10%. The company also recorded a US$2.3m impairment during the quarter for a 200mm wafer packing equipment. *Aztech: 1Q14 net profit jumped 5-fold to $1.7m, albeit from a low base a year ago. Revenue nearly doubled to $85.6m (+93% y/y), primarily driven by the execution of two contracts for the supply of infrastructure materials which boosted the materials supply segment revenue to $43.8m (from $4.2m a year ago). Revenue from the electronics segment (involving the sale of data communication products) remained broadly flat at $39.3m. Going forward, management expects its business activity in 2Q14 to increase, driven by orders from existing customers for data communication products and LED lighting. NAV per share at $0.177. *SATS: 4QFYMar14 operating data. Number of flights handled grew 6.7% y/y, while unit services increased by 3.2%. Cargo throughput improved 4.4%, with express cargo and perishable segments recording the higest y/y growth. Pax handled rose marginally to 10.5m. Gross and unit meals declined 8.2% and 6.3% respectively, due primarily to Qantas Airways moving its hub for European flights away from Changi. *Rex Int’l: Its 64.2% owned subsidiary Carribean Rex has completed the acquisition of the remaining 25% stake in Jasmin Oil and Gas and in turn, now holds a 100% working interest in the South Erin block in Trinidad. *GLP: Signed two lease agreements with RT-Mart, one of the largest hypermarket operators in China totaling 38,000 sqm. Separately, GLP has also leased 11,500 sqm to Tquim in Sao Paulo. *Tritech: Awarded a $10m contract from LTA to provide instrumentation and monitoring for a 1.5km section of the Thomson Line contract. *Ley Choon: Secured $7.3m worth of contracts from PUB to supply and lay NEWater and Industrial water mains, and install water connection works in S’pore over the next 18 months. *Yoma: To hold a 20% stake in a JV with Mitsubishi Corporation (60%) and First Myanmar Investment Co (20%), that will supply and install imported elevators, escalators and related products in Myanmar. *Yanlord: Formed a JV with Haimen City in Jiangsu to develop an ~10 sqkm eco hi-tech city. *Pteris Global: Non-executive director Winston Tan has filed for resignation, with withdrawn his requisition for the removal of the five directors. * China Sky Chemical Fibre:Cautiously optimistic it will be profitable in 1Q14 *LH Group: issued profit warning, expecting a loss for 1Q14.