SG Market (05 May 14)

US stocks lost ground Fri. with the S&P 500 easing 0.1% as escalating conflict over Ukraine overshadowed a surprisingly strong jobs growth last month. Stocks initially rose after data showed the US economy added 288,000 jobs in Apr for its fastest gain in two years, while the unemployment rate plunged from 6.7% to 6.3%, its lowest level since Sep 2008. But headline news from Ukraine rattled investors, following deadly clashes between Ukraine troops and pro-Russian rebel forces, which led to an emergency UN Security Council meeting and the US threatening severe sanctions against Russia. Oil rose on the mounting Ukraine violence, lifting ExxonMobil and some energy shares. But Chevron (-0.2%) slid after reporting an earnings drop. Healthcare shares (-0.8%) were among the biggest drags, as Pfizer (-1.3%) dropped after its sweetened bid for UK drugmaker AstraZeneca was rejected. Another pharmaceutical giant Merck (-2.4%) fell after halting a cancer clinical trial. Linkedin (-8.4%) tumbled after giving a disappointing quarterly sales forecast. With both Japan and Korea closed today for holidays, S’pore shares will be looking to HK/China markets for direction and may get a slight lift from China’s better-than-expected non-manufacturing PMI, which came in at 54.8 last month, beating median estimate of 50.5. The STI is likely to range-trade between 3,285 and 3,230 in the near term. Stocks to watch: *Sembcorp Marine (SMM): 1Q14 missed consensus. Net profit plunged 33% q/q to $122.5m (+3% y/y), even as revenue surged 27% y/y to $1.3b due to higher revenue recognition from rig building and offshore platform projects. Operating margin at 11.1% remained flat q/q and fell 2.6 ppt y/y. Year-to-date, SMM secured $1.6b of new orders, bringing net order book to $12.9b with deliveries stretching till 2019. Market watchers remain concerned about further margin pressures ahead, in view of potential hiccups at SMM’s new Brazil yard and teething issues arising from its maiden drillship projects. *Tigerair: 4QFY14 net profit deepened $95.5m from $15.4m a year ago, as revenue plunged 33% y/y to $161.9m due to declining yield and lower load factor. Bottom line was weighed by a provision for aircraft leases ($25m) and aggregated associates’ losses ($47.4m). Tigerair is reviewing its investment in Tigerair Mandala, while Tigerair Taiwan (10% stake) is expected to be operational by end 2014. *Rickmers Maritime: 1Q14 net profit fell 8% y/y to US$9.8m, as revenue declined 4% to US$33.9m, due to lower fleet utilization (-5.4 ppt to 94.3%) and reduced charter rates on redelivered vessels. *Gallant Venture: Following the financial consolidation of PT Indomobil Sukses Internasional (IMAS), revenue stepped up to $526.2m from $41.5m a year ago. Nevertheless, the group remained in the red with a 1Q14 net loss of $2.9m (1Q13: net loss of $3.3m). Management cites increasing labour cost, FX volatility and the potential surcharge on natural gas purchases, which may impact its industrial parks and utilities margin. In addition, the group remains cautious of the weakening Rupiah, potentially higher interest rate and the general slow down in manufacturing activities. *Sim Lian: Awarded an $88m contract by HDB for proposed building works at Jurong West neighbourhood 1, comprising construction of five blocks of residential buildings with 528 units, a multi-storey carpark and other communal facilities. *Declout: 77.1%-owned subsidiary, Procurri Corp, agreed to purchase Verity Solutions Sdn Bhd for $3.5m via an issue of 7.3m new Declout shares at $0.2055 each and 1,890 new shares in Procurri Corp (29.1% of enlarged share base) at $1,079.37 apiece. Verity provides a wide range of hardware maintenance and professional services offerings for enterprise data centres in Singapore, Malaysia and Indonesia. As at 31 Dec 2013, Verity's NAV stood at RM2.3m and recorded a full year net profit of RM0.8m. *Darco Water: Subsidiary Darco Engineering Taiwan has received additional tax assessments and penalties from the Taiwanese tax authorities amounting to NT$42.8m ($1.8m) and NT$38.5m ($1.6m) due to fraud committed by its previous management over FY06-09. Darco intends to contest the claims. *Straits Trading / Suntec REIT: Straits Trading purchased 35.1m units of Suntec REIT (1.4%) from the open market at an average price of $1.72 each. *Golden Agri: Silchester sold 10m shares in the open market at an average $0.602 apiece, reducing its stake to 5.93% from 6.01%. *Metax Engineering: Company name changed to Koh Brothers Eco Engineering. Trading counter to be renamed “Koh Eco” wef today. *Geo Energy: Profit warning. Expects lower y/y profit in 1Q14 due to weak coal demand and lower coal prices. *Delong: Profit warning. Expects 1Q14 net loss due to weaker steel prices and lower volume of hot-rolled coils and steel billets sold. Results due 9 May. *Luzhou Bio-Chem: Profit warning. Expects 1Q14 net loss. *Lotte Shopping: Will postponing its up to US$1b REIT-listing in Singapore, due to lackluster market appetite for IPOs.