SG Market (06 May 14)

US Market: US stocks edged up with the S&P 500 advancing 0.2% as investors focused on strength in the services sector, shrugging off earlier worries over poor manufacturing data from China and deteriorating situation in Ukraine. Volumes were light, with markets closed in for holidays in Japan and UK. China’s growth picture worsened after HSBC/Markit PMI showed a fourth straight month of contraction to its lowest level in eight months. Meanwhile, fighting between government forces and pro-Moscow separatists intensified in Ukraine with Russia warning that the violence is putting peace in Europe in peril. The market erased its early decline after the ISM non-manufacturing index grew at its fastest clip in eight months to 55.2 in Apr from the prior month’s 53.1, giving further evidence of a spring rebound. Utilities, healthcare and energy shares led the gains with Biogen and Gilead Sciences jumping at least 22.7%, while ExxonMobil (+0.9%) and Chevron (+0.5%) also advanced. Apple climbed 1.4% to cross above US$600 for the first time since Oct 2012. On the downside, JPMorgan declined 2.5% after warning of a trading slump in 2Q, dragging down other investment banks Goldman Sachs (-1.6%) and Morgan Stanley (-2%), while Pfizer shed 2.6% on disappointing sales. Retail giant Target dropped 3.5% after its CEO resigned in the wake of a customer data breach last year. S’pore shares are likely to drift with little positive news to spur the market higher, except for Genting S’pore 1Q14 results, which surprised on the upside. The STI is likely to range-trade between 3,285 and 3,230 in the near term. Stocks to watch: *Genting SP: Solid 1Q14 results. Adjusted EBITDA of $400m (+60% y/y) handily beat street estimates of $350m, underpinned by its highest-ever VIP rolling chip volume of $23.2b (+10%) and above average win rate of 3%. This helped offset a decline in mass gross gaming revenue (GGR), as a stronger SGD deterred tourists. GENS is finalizing its development plans for its US$2.2b casino resort JV on Juju Island and expects to break ground in Jul with targeted soft launch by early 2017. Meanwhile, management has set up a dedicated project team, and intends to partner a Japanese firm to participate in a proposal to develop an integrated resort in Japan. *SIA Engineering: 4QFY14 net profit dipped 1% y/y to $65.2m, missing consensus, despite posting a 10% rise in revenue to $311.1m, dragged by lower contribution from associates and dividends on long term investments. The higher top line was boosted by airframe and component services. Final dividend of $0.13 and special dividend of $0.05, brings full year payout to $0.25 (FY13: $0.22). *Healthway Medical Corp: 1Q14 net profit declined 6.4% y/y to $1.4m, due to an unrealised FX loss and loss on disposal of available-for-sale financial assets. Revenue improved 8.7% to $22m, driven by the specialist & wellness healthcare segment, which helped offset lower revenue from the primary healthcare segment. *Beng Kuang Marine: 1Q14 net profit more than halved to $0.1m (-55% y/y), as revenue dropped 14% to $17.6m, due to the absence of a sizeable shipbuilding and fabrication contract under its infrastructure and engineering business, lower demand for hardware in its supply & distribution segment, and lower utilisation of its tug and barges due to mandatory docking. *Asia Enterprises: 1Q14 net profit tumbled 64% y/y to $0.6m, as revenue fell 46% to $21.9m, due to lower orders of steel products from marine and offshore customers, which experienced slower shipyard activity. Gross margin improved 3.9ppts to 13.7% on higher average selling prices. *City Spring Infrastructure Trust: 4QFY14 DPU steady y/y at 0.82¢. Cash earnings dipped 2.7% to $15.3m, mainly due to the absence of a write-back of a provision related to the Hydro Tasmania dispute in the previous year. Revenue rose 5.5% to $135m driven by higher volume of gas sold by City Gas, and higher average despatch of desalinated water to PUB. NAV/unit of $0.234. *Oxley: Together with its Cambodian partner, Worldbridge Land, will launch The Bridge, a 45-storey freehold mixed development in Phnom Penh, by month end. The project will offer 2,317 units in total (33% residential, 42% small office, 26% retail and F&B). Price start from US$150,000. *Olam: Temasek does not intend to increase its offer price of $2.23 per share. The offer is unconditional and closes 23 May. *Biosensors: Received conditional investigational device exemption (IDE) approval for US-based clinical trial of its BioFreedom polymer-free drug-coated stent system. *PSL Holdings: Profit warning for 1Q14, due to a reduction in sales arising from stiffer competition and one-off restructuring cost. *China International: Profit warning. Expect loss for 1Q14.