SG Market (09 May 14)

US Market: US stocks turned mostly lower as the S&P 500 neared its record high before a late selloff in technology shares erased the earlier rally. Optimism over the better-than-expected jobless claims, which dropped 26,000 to 319,000, and assurances by US and European central banks to keep interest rates low, faded in the late session. Utility and energy (-1.2%) shares led the losses, while telecom companies (+1.5%) were the best performers. Priceline fell 2.1% after reporting better 1Q results but gave a below par 2Q profit guidance, while Tesla Motors tumbled 11.3% after giving a disappointing outlook. Among the tech declines were Amazon (-1.5%), Facebook (-1.1%) and Apple (-0.7%). S’pore shares may open flat with a downward bias following below par earnings reports from Wilmar, SIA, Sino Grandness and Parkson Retail. A downward breach of its 20-dma may take the STI to next support at 3230, while topisde resistance is at 3,285. Stocks to watch: *SIA: 4QFY14 results missed, though special dividend may pacify. Revenue was flat at $3.6b, but operating loss widened to $60.3m, from the $44.2m loss a year ago, due to lower passenger and cargo carriage, and weaker yields. Both SIA parent and SIA Cargo reported operating losses for the quarter. Meanwhile, its associates (mainly Tigerair) continued to bleed. Net profit of $27m (-60% y/y) was boosted by a $70.9m tax write-back and $19.8m of exceptional gains (mainly additional stake sale in Virgin Atlantic). Management remains concerned about competitive yield pressures. Declared special dividend of $0.25, on top of a final dividend of $0.11. *Wilmar: 1Q14 net profit of US$162m (-49% y/y, -56% q/q) disappointed, making up only 11% of street estimates. Impacted by a triple whammy in 1) palm oil - tight supply of CPO and lower refining margins, 2) soya beans – oversupply of soy beans and negative crushing margins in China, and 3) sugar – seasonal losses exacerbated by unrealised losses from sugar hedges. *ST Engineering: 1Q14 revenue flat y/y at $1.55b, with commercial sales making up 62% of the mix. Net profit edged up 2% to $137.2m, boosted by a near doubling of government wage credit incentive ($19.4m) and near tripling of share of profit from associates and JVs ($21.1m). At the business sector level, Aerospace and Electronics earnings were flat, while Marine earnings helped offset lower contribution from Land Systems. Record orderbook of $13.4b as at end Mar, of which $3.3b to be delivered for rest of 2014. STE remains optimistic to achieve higher revenue and pretax profit for FY14. *Sino Grandness: Uninspiring 1Q14 results. Revenue of Rmb477.6m declined for a third consecutive quarter. Even though revenue was up 28% y/y on higher beverage and canned product sales, net profit dipped 2.7% y/y to Rmb68.6m, weighed by distribution and selling expenses which doubled to Rmb70.7m. #UMS: 1Q14 net profit surged 63% y/y to $8.6m as revenue jumped 23% to $34.3m on strong customer demand in semiconductor components, which was sustained since 4Q13. Gross margin expanded 4ppts to 53% on change in product mix to higher component sales. Group expects its core front-end semiconductor equipment business to continue on a robust trajectory into 2Q14. Maintained 1¢ interim DPS. #Hyflux: 1Q14 net profit soared almost five-fold to $37.9m, boosted by a $54.1m disposal gain of of its investment in Hyflux Marmon Development. Otherwise, the group would have sunk into a loss as revenue slumped 29%, reflecting timing of projects commencement in 2014. Other expenses jumped 182% to $34m due to higher utilities cost for Tuaspring plant from the delay in connecting the national power grid to connect to its plant, and a $10.7m provision for receivables. *Fortune REIT: 1Q14 DPU of HK$0.10 (+15% y/y). Revenue and NPI rose 34% and 33%, to HK$403.9m and HK$289.2m, respectively, boosted by new contribution from Kingswood (acquired Oct ’13) and strong rental reversions, and good returns from AEIs. Portfolio occupancy was 99.3%. Aggregate leverage stood at 32.9% with effective interest cost at 2.22%. NAV at HK$10.24/unit.