SG Market (14 May 14)

US Market: US stocks eked out marginal gains amid low volumes as the Dow and S&P 500 notching up record highs for a second day in a row even as the Nasdaq fell on concerns that technology stocks are overvalued. The DJIA advanced 20 pts to 16,715, while the S&P 500 added 0.8 pt to 1,897 after briefly topping 1,900 for the first time. But the tech-heavy Nasdaq lost 13 pts to 4,130. Retail sales grew a soft 0.1% in Apr after surging 1.2% in Mar due to pent-up demand caused by harsh winter weather. Homebuilders (+0.7%) and transportation (+0.5%) shares rallied, while small caps slumped. In China, the Shanghai Composite eased 0.1% after data showed industrial production slowed in Apr and retail sales fell in Mar, both slightly missing forecasts. S’pore shares may see a slight rebound, tracking the record highs on Wall Street over the past two days, as well as positive closes in Tokyo and Hong Kong yesterday but upside gain on the STI is likely to be capped at 3,285 with 3,220 acting as immediate support, followed by 3,180. Stocks to watch: *Comfort Delgro: 1Q14 results in line with street estimates. Net profit climbed 10% y/y to $63.3m, in tandem with revenue growth of 9% to $950.8m, due to broad-based growth in its key businesses. Operationally, bus segment margin held steady at 8.2% (+0.4ppts), while taxi margin fell 0.6ppts to 10.7% on negative translation effect of a weaker AUD. Management maintained its guidance for a broad-based growth, but indicated that cost pressures will continue to be felt. *Goodpack: 3QFY14 net profit leapt 20% y/y to US$13.1m, on the back of a 14% increase in revenue to US$51.2m, driven by new customer conversion and increased demand from existing customers. *Q&M: 1Q14 net profit soared 37% y/y to $1.5m, as revenue expanded 28% to $19.5m, driven by higher contribution from clinics (+20% to $17.8m) and a surge in dental equipment sales (+471% to $1.7m). *Aspial: 1Q14 net profit more than doubled y/y to $27.8m (+160%), boosted by a $25.1m fair value gain on its East Village investment properties. Revenue spiked 36% to $128m, mainly from progressive revenue recognition of sales from 8 Bassein, The Hillford and Urban Vista and final recognition of sales from East Village and Cardiff Residence. The group expects to make substantial profits from its upcoming development projects to be launched within the next 12 months, comprising four residential & commercial developments in Australia and two in Singapore. NAV at $0.184/sh. *Kim Heng Offshore: 1Q14 net profit rose 16% y/y to $3.9m, while revenue climbed 10% to $23.6m, driven by an increase in chartering and towage income and more projects in marine offshore support services, partially offset by the absence of bunker oil sale in 1Q13. *Penguin: 1Q14 net profit surged 356% to $7.1m, as revenue ballooned 55% to $30.8m, driven by an increase in shipbuilding, ship repair and vessel chartering activities. Other operating income also doubled to $2m, due to gains from the sale of vessels. *Cordlife: 3Q14 results disappointed due to softness in S’pore and Hong Kong client deliveries, which more than offset strong performance in the Philippines, India and Indonesia (acquired Jun ’13). Net profit rose 24% y/y to $1.5m, failing to keep pace with the 64% growth in revenue to $11.8m, due to a surge in selling expenses (+82%) and admin expenses (+42%). *ValueMax: 1Q14 net profit fell 17% y/y to $2.9m, weighed by a 36% jump in admin expenses. Revenue remained flat at $91.4m (+1%), while gross margin held steady at 7.0%. *Longcheer: 3QFY14 net profit plunged 38% y/y to Rmb10.9m, dragged by a decline in gross margin to 6.9% (-0.5 ppt), and higher income tax (+20%). Revenue dipped 5% to Rmb 998.4m, led by a 30% decline in total shipment to 3.7m units. *Dukang: 3QFY14 net profit plummeted 93% y/y to Rmb7.5m, on a 45% slump in revenue to Rmb352.2m, as baijiu sales continued to be crimped amid China’s on-going anti-corruption drive and austerity measures to curb luxury spending. *Lantrovision: 1Q14 net profit nearly doubled y/y to $2.6m, even though revenue fell 11% to $32.2m on lower structured installation projects in Singapore. Gross margin normalized to 34.4%, from 24.8% a year ago, as the group was previously hit by a margin squeeze on projects undertaken. *SATS: Will not proceed with the proposed $106m acquisition of Singapore Cruise Centre from Temasek, citing market developments in Asia. *Rex: Its jointly controlled, HiRex Petroleum, has signed a 3-month option with 3D Oil and Carnarvon Hibiscus, to acquire a 20% working interest in the 448 sq km concession VIC/P57, located in northwest offshore Gippsland Basin, Australia. If the option is exercised, exploration drilling is expected to commence in 1H15. *Neo Group: Appointed as one of the official caterers for two one-year contracts from corporate clients – Singapore Expo and The Star Performing Arts Centre – for its “”Orange Clove” brand. *A-Sonic: Expects to report 1Q14 loss.