SG Market (16 May 14)

US Market: US stocks etumbled with the Dow and S&P 500 sinking the most in a month as small caps shares extended their retreat amid concerns that investors are switching from stocks to bonds. Stocks to watch: *Noble: Blowout 1Q14 results with net profit soaring to US$152.3m (+269% y/y) as robust energy and metal segments offset agriculture losses. Group achieved its second highest quarterly income of US$475m (+47%) from supply chains with significant margin recovery across all three businesses. Energy segment posted a record high operating profit of US$437m (+19%) on improved margins from natural gas volatility due to the harsh winter, while that of metals, minerals and ore more than quadrupled its operating income to US$70m on record aluminum premiums. Agriculture narrowed its operating loss to US$42m due to poor crush margins in China. Adjusted net gearing dipped marginally to 47.9%, while NAV was US$0.79. *HanKore: Incurred a 3QFY14 net loss of Rmb111.9m from profit of Rmb31.8m a year ago after accounting for fair value losses of Rmb109.9m for contingent liabilities on shares issued for an earlier acquisition and legacy warrants exercised by certain shareholders. Group was also hit by M&A expenses related to China Everbright RTO and higher finance costs. Stripping out these one-off items, recurring net profit would have been 15% higher at Rmb21.8m on revenue of Rmb125.7m (+56%), buoyed by higher construction revenue (+152%) *Sunvic: 1Q14 net profit halved y/y to Rmb39m despite revenue growth of 6% to Rmb1.56b. Earnings were dampened by FX loss of Rmb11.1m (+61%) and lower gross margin of 10.9% (-1.7ppts) due to the higher cost of propylene and lower selling prices of glyphosate. Topline was driven by glyphosate and other chemical products, partially offset by lower sales of AA and AE due to major upgrading works at Yancheng plant. *Ascendas Hospitality Trust: 4QFY14 DPU fell 28% y/y to 1.21¢, while distributable income fell 7.5% to $12.5m. Revenue and NPI increased 9.7% and 19.3% respectively to $52.9m and $22m respectively, on the back of improved performance of Australia portfolio and new income contribution from Park Hotel Clarke Quay, acquired in Jun’13. Distributable income fell largely due to a $2m cost incurred for the partial unwinding of the cross-currency swaps for the Australia Portfolio. Aggregate leverage stood at 35.6%. NAV at end Mar was $0.77. *CapitaMalls Asia: Parent CapitaLand has raised its final offer price for CMA to $2.35 from $2.22 per share and extended the closing date to 9 Jun. The offeror and concert parties currently hold 70.4% of CMA shares in issue. *Wilmar: Wilmar and HK-listed First Pacific has sweetened their takeover bid for Goodman Fielder to A$0.70 from A$0.65 per share, valuing the deal at A$1.37b after the Australian F&B giant rebuffed an earlier offer. Both bidders currently hold a combined 19.9% stake in Goodman with Wilmar owning 10.1% and have given the board of Goodman until 16 May to support the revised offer. *STATS ChipPAC: Received non-binding expression of interest to a possible takeover. *Keppel REIT: Divests its 92.8% interest in Prudential Tower to a JV comprising KOP, Lian Beng, KSH Holdings and Centurion for $512m ($2,496 psf of net lettable area) or 4.5% above valuation. The sale will results in an estimated gain of $9m and the proceeds will be used to repay existing debt. Post divestment, aggregate leverage will drop from 42.1% to 38.8%. *China Environment: Secured 8 contracts worth Rmb166.8m to supply electrostatic precipitators and hybrid dust collectors to various companies in Shanxi, Inner Mongolia, Anhui, Hebei and Shandong provinces in China. *Logistics Holdings: Awarded $72m contract to construct 4 blocks of HDB flats and ancillary facilities in Yishun, with completion due in 27 months. The contract takes its order book to $329.8m with projects stretching till FY17. *Linc Energy: Awarded Kobiór-Północ Coal exploration license in the central Upper Silesian Coal Basin, Poland. According to Polish Geological Institute, the 46 sqm area contains anticipated economic resources of 1.2b tonnes of coal. A first phase of exploration is currently being finalised to commence in 2015. This is its third coal exploration license in Poland, taking the company's total coal reserves in the country to over 5b tonnes. *Yongnam: 1Q14’s net loss of $1.9m reversed net profit of $11.5m in 1Q13, while revenue saw a 12.4% slump to $71.8m following the completion of MCE at end FY13. Specialist Civil Engineering revenue fell 22%, with contributions mainly from MRT DTL 2 and 3, as well as HK MTR. Structural Steelwork revenue fell 4.5%, and was contributed by Sports Hub, National Art Gallery, Market Street and Marina One. Yongnam won $54.3m of orders in the quarter, bringing order book to $316m at end Mar. *United Engineers: 1Q14 net profit rose 3% to $7.7m while revenue increased 442% to $739.9m on the consolidation of WBL Group’s revenue, which was about $504.2m. Recognition of Eight Riversuites also contributed to the increase. Gross margins declined to 10.7% (1Q13: 30.3%) mainly on gross losses of MFLEX. Generally, operating expenses were increased by the inclusion of WBL’s expenses. *Otto Marine: Shocking 1Q14 results, as net profit turned into red with loss of US$14.4m from profit of US$0.3m a year before, while revenue halved y/y to US$77.2m (-42.6%), caused by absence of a sale of vessel in 1Q13 ($34.5m), lower utilization resulting from vessel docking for survey and re-position and mobilization of vessels, partially offset by higher charter rates in the subsea segment. The bottom line was also plagued by loss on disposal (US$0.7m) and FX loss (US$4.2m). Gearing is high at 200%. Management sees a marginal increase in charter rates in the market, which are anticipated to improve in a tightening market, while cabotage rulings in the region have created attractive markets for both ship chartering and shipbuilding. NAV of US$0.07/share.