SG Market (23 May 14)

US Market: US stocks closed modestly higher led by snall caps and a biotech rally amid mixed economic data. The DJIA added 10 pts to 16,543 (+0.1%), while the S&P 500 advanced 4 pts to 1,892 (+0.2%), close to its all-time high of 1,897 and the tech-heavy Nasdaq jumped 23 pts to 4,154 (+0.6%). The Markit preliminary US manufacturing index rose to 56.2 in May from 55.4 a month earlier as output accelerated. Other data showed existing home sales rebounded 1.3% in Apr fror the first time in four months. But initial jobless claims jumped 28,000 to 326,000, reversing a big drop the previous week. Homebuilders rallied on the positive housing data with PulteGroup (+2.1%) and DR Horton (+2.4%) among the gainers, while earnings from retailers Best Buy (+3.4%) and Dollar Tree (+6.6%) topped estimates. Hewlett-Packard (-2.3%) slimped after its 2Q sales missed forecasts, prompting it to announce further job cuts. Market watchers note that while markets are edging higher, the disconnect between low bond yields and economic growth, and divergence between small and large caps are becoming a concern for investors. S’pore shares are likely to track higher following the Wall Street advance and slightly firmer opening in Tokyo (+0.8%) but the STI is expected to stay within a tight trading range between 3,285 and 3,255 with little catalyst to push it in either direction. Stocks to watch: *Global Logistics Properties: 4QFY14 results were at higher end of estimates, as core proforma net profit (adjusted for J-Reit and revaluation gains) jumped 31% y/y to US$54m taking FY14 core earnings to US$250m (+17%). Revenue for the quarter rose 20% to US$150.4m, driven by completion and lease-up of developments in China with increasing rents as well as continued growth in GLP’s fund management platform. The group also booked revaluation gains of US$92.4m (+30%) from its China and Japan properties, lifting NAV/share to US$1.84. Including revaluation gains, net profit for 4QFY14 and FY14 would have come in at US$160m (-29%) and US$685.2m (+0.1%) respectively. *OKP: Awarded $50.6m PUB contract to construct the Stamford Diversion Canal. Work will take 42 months commencing Jun. The new project will bring its order book to $240.2m, stretching till 2017. *KS Energy: 80% owned KS Drilling has secured contract extensions for three of its drilling rigs (KS Medstar-1, KS Discoverer 1 & 3) with total value of US$60m. *JES: Secured contracts for construction of six 64,000dwt Ultramax bulk carriers plus five options to build another 30 vessels for US$974m or US$27m each. The win takes total orders secured to US$1.54b ytd (US$436m in contracts and US$1.1b in options). Delivery of the six vessels is scheduled between Dec ‘15 and Jan '16 while vessels under options, if exercised, are expected to be delivered from late 2016 onwards. *Sarine: Secured first orders for Sarine Light in US and Taiwan, two large luxury consumer markets. Sarine Light accurately and consistently measures a diamond's light performance, which quantify the aesthetics of a diamond. *Hiap Tong: FY14 net profit fell 19.1% to $3.7m despite chalking up 18.7% rise in revenue to $45.7m. The strong topline performance was mainly due to the group's leasing income, led by an increase in its lifting and haulage equipment fleet but earnings were was weighed by gross margin compression to 29.1% from 35% due to higher staff, depreciation, rental and maintenance expenses.