SG Market (25 Apr 14)

US Market: US stocks finished higher in a choppy session with S&P 500 (+0.2%) and Nasdaq (+0.5%) advancing as tech shares rallied, led by Apple, but escalating tensions in Ukraine held the broader market in check. The market had opened higher on stronger durable goods orders, which jumped 2.6% in Mar, ahead of 2% estimate although this was weighed by higher-than-projected rise in weekly jobless claims. Much of the volatility was driven by growling concerns over the violent anti-separatist offensive in Ukraine, which prompted Russia to begin military drills near its border. At the centre of attention, however, was Apple (+8.2%), which lifted the technology sector (+1.1%) after it reported surging iPhone sales, raised dividends and unveiled a 7-for-1 stock spilt and US$30b share buyback plan. Homebuilders (+3.8%) jumped after results from DR Horton (+8.3%) and PulteGroup (+2.3%) beat forecasts. Caterpillar (+1.8%) rose on better-than-expected 1Q results. Limiting the gains was the telecom sector (-1.7%), dragged by earnings concerns of Verizon Communications (-2.4%), AT&T (-3.8%) and Qualcomm (-3.5%). United Airlines (-9.8%) sank after reporting a US$609m loss. After the closing bell, Microsoft (+2.4%) and Amazon (+0.5%) advanced after both posted quarterly results. With both Nikkei (-0.3%) and Kopsi (-0.4%) opening on a weak note, S’pore shares may see some profit-taking with the STI heading towards near term support at 3,230 with upside resistance capped at 3,320. Stocks to watch: *Genting SP: Positive read-across from Las Vegas Sands 1Q14 results last night. LVS’ Marina Bay Sands property saw a rebound in visitors, and S’pore EBITDA jumped 9.7% to US$435m. *SMRT: Replied to SGX’s query that it is not aware of any information which might explain the movement in its share price. Market watchers speculate two possibilities: 1) favorable policy announcement regarding the Railway Financing Framework, and 2) nationalization of SMRT via a general offer. *New IPO – POSH (PACC Offshore Services): Debuts today at 9am with TP $1.15; public offering of 40m shares was 3x subscribed. *Olam: Temasek’s $2.23 per share offer has turned unconditional, after acceptances cross the 50% level. The offer will be extended till 23 May. *Suntec REIT: 1Q14 DPU was roughly flat at 2.229¢, slightly below consensus. Revenue rose 32.8% to $66m, while net property income surged 42.7% to $43.8m, driven by the opening of Suntec Singapore Convention & Exhibition Centre upon completion of asset enhancement (AEI). Office revenue grew 4.1% to $33.2m, aided by positive rental reversions, while retail revenue dipped 4.3% due to ongoing AEI. Full opening of Suntec City retail by 1Q15. Suntec maintained near full portfolio occupancy for both office (99.4%) and retail (98.7%). Aggregate leverage improved to 38.4% from 39.1%. NAV/unit at $2.076. *Sheng Siong: 1Q14 net profit expanded 19.3% y/y to $12.5m, while revenue increased 5% to $189.7m, driven by higher same store sales (+3%), and contributions from 8 new stores. Gross margin improved 1.3ppt to 23.8%. *Hong Leong Finance: 1Q14 net profit slipped 5.4% y/y to $14.4m, while revenue dipped 2.6% to $64.1m, dragged by lower net interest income (-0.5%), and fee and commission income (-23%). Management noted that pricing for lending products remained under some pressure, but was mitigated by an overall growth in the total loan book (+1.3% to $9.1b). Net interest margin improved 0.7ppts to 59.1%, helped by lower prevailing interest rates and a lower deposits base. NAV/share at $3.75. *Hwa Hong: 1Q14 net profit jumped 31.4% y/y to $2.4m, boosted by a $1.4m unrealized FX gain from a UK investment. Revenue however, fell 34.8% to $5.7m, mainly due to a decrease in investment revenue income arising from a decline in share trading activities. *Ascendas India Trust: 4Q13 DPU increased 17% y/y to 1.22¢. Revenue rose 3% to $31.5m, helped by higher rental income from Aviator, but offset by a stronger SGD against the INR (+11%). Net property income grew 14% to $19m as total property expenses declined by 10% in SGD terms. Portfolio occupancy was 97%. Aggregate leverage was 22%. NAV/unit at $0.62. *Union Steel: Proposed to acquire eight parcels of land from Chye Hup Heng Sdn Bhd (CHH) for an aggregate RM41.8m ($14.4m), which includes the buildings, plant, machinery, equipment and vehicles used for CHH's metal recycling business, in line with the group’s plans to expand its current recycling business. The acquisition will be funded by bank loans and internal funds. Pro forma EPS is expected to increase by 6.3% to 1.7¢. *OKP: Won a $37.7m contract from LTA to widen Tanah Merah Coast Road. Expected completion by 2017. *Metech Int’l: Hired to Lim & Tan Securities as the agent for its placement of 160m new shares (6.8% of enlarged share base) at 1.44¢ a piece. The net proceeds of $2.3m will be used for general working capital (60%) and to expand business operations in the US and Asia (40%).