SG Market (28 Apr 14)

US Market: US stocks slumped on Fri after a dim earnings outlook from Amazon sparked a sell-off on Nasdaq (-1.8%) and heightened tensions in Ukraine, prompted the G7 to prepare new sanctions against Russia and S&P to downgrade its credit rating. Losses were heaviest in technology shares that have posted the biggest gains in the five-year bull rally. Amazon sank 9.9% to its lowest level since Oct after projecting a 2Q operating loss. Other tech names that saw big drops included Facebook (-5.2%), Linkedin (-7.8%), Netflix (-6.4%), Priceline (-4.9%) and and Broadcom (-4.4%) Consumer sentiment for Apr topped expectations but market reaction was dampened by a batch of disappointing results, which saw Visa (-5%) and Ford (-3.3%) slid after revenue and earnings missed estimates. Asian equities mostly lost ground in early morning trades with Nikkei (-0.9%) and Kopsi (+0.1%) and investors looking for more guidance on interest rates when the Fed meets on Tue. S’pore shares are likelt to take cue from the Wall Street’s retreat with the STI expected to find near term support at 3,230, while upside resistance seen at 3,320. Stocks to watch: *CapitaLand: 1Q14 net profit broadly in line at $182.8m (-1.7%), on revenue of $612.6m (-3.4%). All business units recorded higher revenue except for CapitaLand Singapore, due to absence of two residential projects in S’pore which obtained TOP, as well as absence of rental income from TechnoPark@Chai Chee which was divested in Nov '13. Revenue from CapitaLand China jumped 56.2% as more apartment units were delivered to home buyers. NAV stood at $3.86 per share. *Raffles Medical: 1Q14 revenue and net profit both climbed 8% y/y to $87.6m and $14.6m, respectively, driven by an increase in patient load from the expansion of RafflesMedical clinic network and from more corporate contracts secured in Singapore, higher volume of healthcare insurance series and additional of more specialist consultants to its group practice. *Yeo Hiap Seng: 1Q14 net profit slumped 63% y/y to $7.3m, as gross margins shrank 5.2ppt to 36%, mainly due to higher inventory written off. Revenue declined 18% to $111.6m, due to absence of contribution from the property division following the sale of its last property in Dec, while the F&B business fell 0.9%. NAV stood at $1.253. *QAF: 1Q14 net profit fell 15% y/y to $13.5m, while revenue dipped 3% to $243m, mostly due to a stronger SGD relative to the domestic currencies that the group operates in. Excluding currency effects, Rivalea (integrated meat producer in Australia) and Bakery division achieved higher sales. NAV stood at $0.756. *GMG Global: 1Q14 net profit plunged 80% y/y to $2.6m due to net loss on 35%-owned associate, SIAT SA, resulting from FX losses. Gross margin also fell to 9.4% (-3.6ppts), due to a higher proportion of raw materials sourced externally on increased downstream processing. Revenue dipped 3% to $226.5m, as a decline in rubber prices (-23%) offset higher sales tonnage (+26%). Management expects natural rubber prices to fluctuate near current levels in the current 2Q14. *Grand Banks: Second consecutive profitable quarter in 3QFY14, with net profit of $0.54m (net loss of $0.72m a year ago). Revenue however, fell 20.8% y/y to $8.1m. The significantly improved gross margin of 21.0% (+8.4ppts) was driven by higher factory utilization and continued efforts to cut operating and selling costs. Management sees a continued recovery in the US luxury boat market, as well as a pick up in buying interest in Singapore and Japan. Net order book rose to $10.6m from $9m in 2QFY14. *Wilmar: Australian food company Goodman Fielder received but has rejected a takeover offer proposal from Wilmar and HK-listed First Pacific Co, saying that the offer undervalues the company. *Ramba: Received proposals from interested bidders for the acquisition of the minority interest in the Lemang Block, which the group has a 51% working interest in. Management will evaluate the proposals with a view of selecting the best bid. *Sapphire Corp: Will sell its entire PRC steel-making business (including vanadium production) for $70m ($20m cash plus $50m 5% coupon bond) and use the proceeds to propel its push into mining services, while looking out for strategic investments into other value-added engineering-related businesses. Sapphire expects to book a divestment gain of $3.8m. *Chaswood Resources: Secured exclusive rights to develop and operate 4 TGI Fridays restaurants in Shenzhen, China by 2017. The group currently operates 19 TGI Fridays restaurants across M’sia, S’pore and Indonesia, and is the largest TGI Fridays franchisee in South East Asia. *Moya Holdings Asia: The IFC has terminated its financing agreement for Moya's build-transfer-operate project in the Tangerang City area in the Banten province, Indonesia, after a revision on the master construction and business plan of the project. *Kingsmen Creatives: Subsidiary Kingsmen (Beijing) was ordered to pay Rmb7.6m ($1.5m) to Guang Zhou Audio Visual Communication for an accident which occurred during the construction of an exhibition construction project at Chengdu. *UIC/Sing Land: Offer for Sing Land has closed, with UIC receiving valid acceptances that bring its total shareholding to 97.27%. Sing Land will be suspended wef 9am, today.