SG Market (08 May 14)

US Market: US stocks ended mostly higher in a volatile session on optimism that the Fed remain supportive of the economy and concilatory overtures by Russian president Putin over the Ukraine crisis but weak earnings from some technology stocks pushed the Nasdaq into the red. The blue-chip Dow climbed 118 pts to 16,519 (+0.7%), while the broader-based S&P 500 rebounded 10 pts to 1,878 (+0.6%) after briefly slipping below its 50-dma. But the tech-heavy Nasdaq lost 13 pts to 4,068 (0.3%), paring an earlier drop of 1.5%. Investors liked Fed chair Janet Yellen’s testimony before Congress where she reaffirmed that the central bank would continue to spur economic growth as inflation and employment are far from ideal and a high degree of monetary accommodation remains warranted even as the US economy is on track for solid growth in the 2Q. Geopolitical tensions over Ukraine eased after Putin called on pro-Moscow separatists to postpone a secession vote. Financial and ututlities were among the biggest gainers but Internet stocks suffered another bout of selling after disappointing results from Groupon (-20.7%), AOL (-20.8%) and FireEye (-22.7%) dragged down Twitter (-3.7%), Facebook (-2%) and Amazon (-1.6%). Yahoo tumbled 6.6% after the IPO filing of Chinese e-commerce portal Alibaba valued its 22.6% stake well below market estimates. S’pore shares may see some near term relief from dovish comments by Yellen and Putin’s move to defuse tension in Ukraine but upside for the STI is expected to be capped at upper end of 3230-3,285 trading range. Below that, the next key support base lies at the 3,180 level. Stocks to watch: *StarHub: Subdued 1Q14, as net profit fell 8% y/y to $84.2m, due to lower NBN adoption grants and a higher tax provision. Revenue dipped 1.5% to $571.4m, dragged by a slump in broadband revenue (-14%) on lower ARPU (-14%), a decline in prepaid mobile revenue (-12%) and competition in Pay TV (-1%), which outweighed growth in post-paid mobile revenue (+5%). 5¢ interim dividend as expected. *Ezion: 1Q14 results broadly in line. Core net profit spiked 62% y/y to US$45.2m (excluding a one-off disposal gain in 1Q13), as revenue surged 72% to $94.4m, on the back of the deployment of additional service rigs. Ezion also announced a new charter contract win, worth ~US$64m over five years to support an oil major in the Middle East. Maybank-KE maintains Buy with TP $2.70. *UOL: 1Q14 net profit surged 69% y/y to $120.8m, in tandem with a 65% jump in revenue to $408.8m, mainly boosted by the sale of land at Jalan Conlay in KL, which raked in $218.5m in revenue and added $44.3m to the bottom line. The group also recorded higher hotel revenue (+8% to $107.2m) bolstered by Parkroyal on Pickering, and improved revenue from property investments (+16% to $48.7m) underpinned by Pacific Serviced Suites Beach Road. NAV of $8.93/sh. *ARA Asset Management: 1Q14 net profit rose 6% y/y to $17.8m. Revenue grew 11% to $29.7m, driven by higher REIT managing fees on better asset REIT performance post AEIs, Cache’s acquisition of Precise Two, and Fortune REIT’s acquisition of Kingswood. *Vallianz: 1Q14 net profit surged 8-fold y/y to US$4.7m, as revenue ballooned 10-fold to US$27.7m, on financial consolidation of new subsidiary, Rawabi Swiber Offshore Service. Vallianz ended Mar ’14 with an order book of US$442m (from US$470 a quarter ago). Management is optimistic on outlook and reiterates that it is bidding for ~US$1.2b of projects in Asia, Middle East and Latin America. NAV of US$0.045/sh. *Ausgroup: Incurred a net loss of A$1.3m in 3QFY14, reversing from a profit of $0.1m a year ago. Revenue tumbled 47% y/y to A$73m, due to the significant downsizing of the business over the past six months. Order book jumped 83% to A$395m, following a shift in focus from construction services to the mining and oil & gas sector. Management eyes increased opportunities in LNG construction and maintenance projects over the next 12-24 months. NAV of A$0.299/sh. *Petra Foods: Swung to a US$13.5m net profit in 1Q14, from a loss of US$14.9m a year ago, mainly due to the absence of previous losses from its divested Cocoa Ingredients business. On a core basis, earnings would have slipped 1.6% to US$13.9m for the group's remaining Branded Consumer business, as revenue dipped 3.3% to US$122.7m, primarily due to a weaker rupiah. Operationally, the group continued to do well, underpinned by the vibrant consumption for chocolate confectionery and the group’s successful brand-building initiatives and route-to market capabilities. Gross margin held steady at 31.9%. *DeClout: Subsidiary Procurri Corp intends to raise $10m in gross proceeds via the issue of new shares representing 7.1% of enlarged share capital to pursue its international growth plans. Upon completion by end May, DeClout will own a 68% stake in Procurri. DeClout targets to spin-off Procurri, which specializes in IT asset recovery, by end 2016. *ASJ: Taiwan-listed Ralec Electronic Corp has made a $0.065 per share cash privatisation offer. Together with secured irrevocable undertakings from key shareholders, Ralec will have control over a 53% stake, effectively rendering the offer unconditional. Ralec plans to use ASJ’s distribution channels in SE Asia to expand into the region. *Scorpio East / KOP Properties: KOP has completed the reverse takeover of Scorpio East, paving the way for the latter counter to be renamed KOP wef 9 May. KOP will conduct a compliance placement of up to 80m shares at a minimum price of $0.21 each. *Abterra: Profit warning for 1Q14.