SG Market (28 May 14)

US Market: US stocks advanced, with the S&P 500 notching a record high for the second straight session on some solid economic data and expections of a RCB rate cut. The DJIA gained 69 pts to 16,676 (+0.4%), while the S&P 500 added 11 pts to 1,912 (+0.6%) and the Nasdaq rallied 51 pts to 4,237 (+1.2%). Volume remained light with only about 5.4b shares exchanging hands, short of the 5.8b average for the month of May ’14. Sentiment received a boost from a surprising rise in durable goods orders (+0.8%) for a third consecutive month in Apr, resurgence of consumer confidence for May and higher home prices for Mar (+12.4%). In Europe, ECB President Mario Draghi signaled a readiness to act on low inflation. Investors appear to be returning to smaller companies and leading technology names, including Facebook (+3.5%), Priceline (+5.2%), Apple (+1.9%) and Tesla Motors (+2.1%). Among other gainers, BofA climbed 3.4% after resubmitting its capital plans to the Fed. Following the positive US market close, the STI is expected to inch up higher although the index needs to clear the immediate resistance at 3,285 before moving higher. Support remains at at 3,255. Stocks to watch: *Goodpack: Received $1.4b buyout offer from US private equity fund KKR at $2.50/share, 6.8% above last close but at bottom end of 2.50-2.80 expected range, via a scheme of arrangement. This requires sanction by the High Court and a majority of shareholders jointly owning at least 75% of the company to vote in favour of the all-or-nothing deal. It has already obtained the support of largest shareholder David Lam, who holds a 32% stake. If successful, Goodpack will be taken private and delisted. *CapitaMalls Asia: Parent CapitaLand has raised its stake in CMA to 85.2%, bringing it closer to the 90% mark that would enable it to delist its shopping mall arm. The takeover offer closes on 9 Jun. *Technics: Awarded $7.4m worth of contracts to supply booster compressor package for a wellhead platform in Vietnam and construction of a steel structure. *PACC Offshore: 1Q14 net profit jumped 76% y/y to $36.7m despite revenue dipping 6% to $52.9m on lower utilisation from transportation and installation, and offshore accommodation segments. Bottomline was boosted by a 138% rise in other operating income to $35.8m due mainly to recognition of gain on sale of five vessels to a JV. *CSC Holdings: 4QFY14 returned to the black with net profit of $1.8m vs a net loss of $5.5m a year earlier, taking FY14 net profit to $6.2m (FY13: $0.8m net loss). Revenue for the quarter slipped 13.4% to $111.2m, in tandem with the slowdown in the overall demand for construction services. The stark difference in bottomline was largely due to doubtful debt provisions of $8.6m in the previous year. *LottVision: FY14 net profit tumbled 86% to HK$1.4m despite revenue jumping 79% to HK$91.2m, mostly generated by its 55% interest in NutryFarm Chengdu Biomedicine (NFC). Bottomline was dragged by a 71% drop in other net income to HK$4.7m due to the lack of disposal gains and tax refunds, as well as sharp spikes a 138% spike in distribution (+138%) and admin expenses (+29%) due to comsolidation of NFC only from 2HFY13. *LionGold: Profit warning of a loss for FY14 due to maintenance costs of its operations in Bolivia and Ghana and substantial fair value losses on its financial assets, as well as significant impairment losses on goodwill and exploration expenditure. #Tiong Seng: JV with Dongah Geological Engineering was awarded a $316m contract for the construction of the Great World Station and tunnels for the Thomson Line by the Land Transport Authority. #Valuetronics: FY14 net profit surged 88% to HK$147.9m on revenue growth of 10% to HK$2.4b, as well as the absence of losses from its disposed licensing business. The strong top line was attributed to broad-based growth, particularly from higher demand in the industrial & commercial electronics segment (+24%). Consequently, gross margin expanded 1.2ppts to 13.4% on the change in mix. Group proposed final DPS of HK16¢ and special DPS of HK4¢. In addition, group pledged to pay out 30-50% of earnings going forward. #Falcon Energy: FY14 net profit turned around to US$60.8m from loss of US$3m, mainly due to income of US$128.4m from disposal of two jack-up rigs. Subsequently, revenue spiked 202% to US$350.8m, also from stronger performances from its core marine (+32%) and oilfield services segments (+210%), as more vessels were deployed and procurement contracts secured increased. Group declared final DPS of 1¢, bringing FY14 total to 1.5¢ (FY13: 0.5¢).