SG Market (07 May 14)

US Market: US stocks retreated as a sell-off in Twitter revived worries about the tech sector and disappointing earnings from AIG hit financial stocks. Traders also kept an eye on the developments in Ukraine, which is sliding closer to war The blue-chip Dow fell 130 pts to 16,401 (-0.8%), while the broader-based S&P 500 slid 17 pts to 1,868 (-0.9%) and the tech-heavy Nasdaq lost 57 pts to 4,081 (-1.4%). Technology, small cap and biotechnology companies were among the biggest losers as investors rotated out of the fastest growing industries towards safety in firms with stable earnings and dividends. The sole US economic report showing a narrowing trade deficit in Mar failed to lift sentiment. Twitter plunged 17.8% after the expiration of a six-month lockup period that had restricted the sale of 82% of its shares by pre-IPO investors. Other Internet names were punished with Yelp (-13%), Panadora Media (-8.9%), Linkedin (-5.7%), Netflix (-5.2%) and Facebook (-4.4%) all closing in the red. But Yahoo gained 1.2% in after-hours trading as Alibaba filed for what could be the largest US IPO ever. AIG declined 4.1% as rising claims contributed to a 27% drop in earnings and sparked selling in BofA (-2.3%), JPMorgan (-1.6%) and other banks. Homebuilders also fell 2.1% as a group. In earnings news, Office Dept surged 15.8% after raising its 2014 profit outlook, while Walt Disney rose 2.2% after its quarterly results beat estimates. Groupon fell 3.3% in extended trading on top of an earlier 2.5% decline after reporting wider losses. S’pore market will be bracing for some selling pressure in tandem with the Wall Street tumble and weaker starts for regional bourses in Tokyo (-1.9%), Seoul (-0.2%) and Sydney (-0.6%). Expect the STI to test downside support at 3,230 with next line of defence at 3.206. Topside resistance is capped at 3,285. Stocks to watch: *OSIM: 1Q14 results were in line. Net profit expanded 15% y/y to $29m, on the back of higher operating efficiency and economies of scale, representing its 21st consecutive quarter of earnings growth. Revenue grew 15% to $173m, driven by higher consumer demand for its products (ie. uAngel, uShape) globally, as well as maiden consolidation of TWG as a 70% subsidiary. Interim dividend of 1¢/sh. *Sembcorp Industries: 1Q14 net profit was broadly in line at $184.8m (+4.5% y/y). Revenue rose 11.8% to $2.6b, mainly due to higher contribution from Sembcorp Marine (+27% to $1.3b). Utilities saw a 3% slip to $1.2b, on the deconsolidation of Salalah, but was otherwise firm on a core basis thanks to overseas contributions. Nevertheless, net profit growth was spurred by contribution from Urban Development, which surged 192% to $19.5m on strong contributions from its Nanjing Eco Hi-tech Island project in China. *CMA: 1Q14 net profit up 2.8% y/y to $75.3m, as higher income from associates (+19%) and jointly-controlled entities (+45%) helped to offset a drop in other operating income (-41%). Revenue grew 4.8% to $125m, buoyed by higher property income from Olinas Mall in Japan and operating malls in China, and new contributions from Bedok Mall and Westgate in S’pore. NAV of $1.87 per share. *Wing Tai: Weak 3QFY14 results were largely expected. Net profit plunged 59% y/y to $38.4m, in tandem with a 66% decline in revenue to $153.2m, on lower contribution from development properties. Revenue comprised sales of L’VIV, progressive sales of Foresque Residences, and additional units sold at Helios Residences in Singapore, and contributions from Jesselton Hills in Penang, and The Lakeview in Suzhou. NAV of $3.62 per share. *PRCT: 1Q14 available DPU was flat y/y at $0.95 (distributions made half yearly), comprising drawdown from existing earn-out deeds. Revenue and NPI was $2m and $0.2m, respectively (1Q13: nil revenue), contributed by Perennial Jihua Mall Foshan, which commenced operations in 3Q13. Aggregate leverage stood at 28.3%. Completed asset portfolio occupancy stood at 79.2%. PRCT’s second operational asset Perennial Qingyang Mall in Chengdu officially commenced trading on 25 April with committed occupancy of 94.8%. NAV of $0.73 per unit. *Silverlake Axis: 3QFY14 net profit accelerated 33% y/y to RM62.9m, keeping pace with a 25% rise in revenue to RM136m, driven by higher contribution from software licensing, maintenance and enhancement services, sale of software and hardware products, and new contribution from insurance processing contributed by Merimen Group. Third interim dividend of US$0.02. *Rowsley: 1Q14 net profit turned around to $1.8m from loss of $4.7m a year ago. Revenue was $21.8m from nil in 1Q13, boosted by maiden contribution from RSP Architects (acquired Sep '13). On the iconic Vantage Bay development in Iskandar, Rowsley is still in the midst of applying for the advertising permit & developer’s licence for the sale of apartments. Meanwhile, RSP continued to rake in new projects, including: extension of Changi Airport T1, and the master planning of West Xi’an in China. *C&G Environmental Protection: 1Q14 net profit surged 241% y/y to HK$13m, driven by robust growth in waste handling volume and rise in electricity generated due to the opening of phase 2 at Anxi plant. Revenue improved 16% to HK$136.3m. Management updated that the Rmb1.85b sale of its WTE business in China to Grandblue is progressing well. NAV of HK$1.79 per/sh. *Wheelock: To cuts prices by up to 10%, for the upcoming relaunch of its 698-unit The Panorama condo project in Ang Mo Kio. *SingTel: Fined $6m (the industry’s largest) for the fire that took place at the Bukit Panjang exchange on 9 Oct ’13 that resulted in severe outage of “unprecedented” magnitude. *Memstar: Yeo Chung Sun has emerged as a new substantial shareholder, after acquiring 174.8m shares at an average price of $0.0182 per share on 5 May, raising his stake from 0% to 6.6%. *Atlantic Navigation: Acquired a new self-propelled self-elevating liftboat vessel for US$46m, as part of its upgrade and expansion programme. The new vessel, to be delivered Dec ’15, is the group’s second liftboat, and will add to its current fleet of 14. *CosmoSteel: Option to purchase a warehouse in Tuas Crescent from Drydocks World-Singapore, for $6.8m. The single storey JTC warehouse has 6 years remaining lease, and sits on a land area of 10,988 sqm. *Amplefield: 40% associate, Citybuilders (VN), has been awarded a civil & structural contract worth US$23m, for the main infrastructure construction on a 63.8ha parcel of land at Lang Le, Le Minh Xuan Ward, Binh Chanh District, Ho Chi Minh City in Vietnam. Works are expected to be completed within 12 months following the handover of land.