SG Market (02 Jun 14)

US Market: US shares edged up sending benchmark indices to fresh records as investors weighed mixed economic data showing an uneven recovery. The DJIA gained 18 pts to 16,717 (+0.1%), while the S&P 500 advanced 4 pts to 1,924 (+0.2%) but the Nasdaq dipped 5 pts to 4,243 (-0.1%). Consumer spending unexpectedly fell 0.1% in Apr after its biggest surge in five years as incomes slowed, while consumer confidence also declined more than forecast in May. But business activity in the Chicago area expanded in May at the strongest pace since Oct. The mixed signals forestalled any real significant directional shift. Markets will likely be in a holding pattern until there is confirmation that the economy is accelerating. Payrolls and ECB meeting will be the major catalysts this week. Low 10Y Treasury yields under 2.5% bolstered dividend stocks, including consumer staples and utility companies (+0.7%). Commodity stocks declined as oil and copper slipped. Among the major movers, Big Lots surged 12.4% after the value retailer posted results that exceeded estimates and raised its outlook. In contrast, Express (7.5%0 and Guess (-5.1%) slumped after forecasting disappointing profits amid sluggish consumer spending. S’pore shares are likely to open mixed with a slight positive bias following the uptick on Wall Street and ronust manufacturing data from China, which surged to a five-month high in May, suggesting that the economy has stablilised due to recent pro-growth policies. After breaking past the previous 3,285 top, the STI is likely to march towards next resistance at 3,320. Underlying supports lie at 3,285 and 3,263 (20-day moving average). Stocks to watch: *Yangzijiang: Claims that allegations of illegal activities made against Chairman Ren Yuanlin by Shenzhen-listed railway company Tianjin Guoheng are “mischievous and calculated to damage him and his corporate objectives”. *Tiger Airways: In reply to a SGX query over its recent unusual share price movements, the carrier disclosed that it is reviewing its investment in Tigerair Mandala as part of its turnaround plan and exploring various fund raising options. Group also claims that it has no knowledge in relation to rumours of a possible corporate action by parent SIA. *Swiber: Clinched US$80m EPIC contract in Latin America for subsea development work, raising total contract wins ytd to US$315m. The project will commence immediately and is expected to be completed in 2015. *United Envirotech: FY14 results below estimates as net profit slumped 32% to $20.1m, weighed by higher operation and maintenance costs of new treatment plants. Revenue improved 9% to $202.3m on strong growth in treatment segment (+54%) from increased capacity in current and newly acquired plants, partially offset by lower contribution from its engineering segment. First and final DPS of 0.3¢ declared (FY13: 0.5¢). NAV/share stood at $0.5372. *SingHaiyi: FY14 net profit surged 14-fold to $23.1m, mainly boosted by a $21.4m fair value gain on investment properties and $16.6m gain on bargain purchase of Tri-County Mall (TCM) in US. Revenue jumped more than 3-fold to $57m, on the back of higher property development income (+189%) of $46.8m, resulting from revenue recognition of Charlton Residences in S’pore and and sales of completed units in Vietnam Town, the project in US. In addition, rental income of $9.3m benefitted from maiden contribution from TCM. NAV/share lifted to $0.1454 from $0.1181. *LionGold: 4QFY14 net loss melted to $89.3m vs $2.7m profit a year ago. This takes FY14 net loss to a whopping $143.1m. Revenue for full year rose 20% to $144.2m on gold production of 40,000oz (1,136kg) and doubled its gross profit to $7.4m (+103%). But weaker gold prices, coupled with a compression of industry valuations, led to steep impairment of its assets, including $31.4m fair value losses for financial assets, $62.1m exploration writedown and $17.7m goodwill writeoff. Meanwhile, the group is setting off its US$1.8m interest due on its US$23m convertible bond against the issue of new shares at 8.109¢ each. *Renewable Energy: FY14 net profit of Rmb65.3m reversed from a a loss of Rmb56.6m in FY13 due to a disposal gains barring which, core net loss would have been at $7.2m vs $7.7m in previous year. Revenue leapt 4,532% to $13.6m due to solar energy generation from one of the group's units, which started only in late 2012 and hence, only two months of revenue was recognized in FY13 vs 12 months avhieved in FY14. *Giken Sakata: Acquiring 53.7% stake in Cepu Sakti Energy for $48m, to be satisfied in cash ($25.2m) and issue of 76m new shares at $0.30/share. Proforma FY13 EPS will drop from 0.34¢ to 0.04¢, while NTA will improve from 6.29¢ to 19.9¢. The proposed diversification into the O&G sector offers an opportunity for the group to expand its earnings base. *Sembcorp Marine: Entered new business venture with acquisition of a 12% stake in GraviFloat for US$4m, with a right to raise its stake up to 20%. GraviFloat designs, delivers and operates re-deployable, gravity-based, modularised LNG and LPG terminals for installation in shallow waters. *Declout: Proposed to acquire Netipay for $4.7m, a mobile cloud platform and proprietary payment processing service provider to mobile users in Indonesia. The group believes the acquisition will help to establish a foothold in the mobile platform and payments market in Indonesia, enhance its unified payment infrastructure business and improve its vertical domain cloud segment. Proforma FY13 NTA will drop from 6.35¢ to 5.23¢, while EPS will grow 36% to 0.53¢. *Elektromotive: FY14 net loss came in at $2.9m versus a net loss of $3.4m the previous year. on revenue of $7.1m (-3.6%). The decrease in revenue was due mainly to a drop in publishing revenue as a result of the cessation of a magazine title during the year under review. This was however partly offset by an increase in the electric vehicle charging solutions sales. Bottom-line was partially aided by a 42% drop in other operating expenses to $2.7m, due to lower legal fees. *Infinio Group: FY14 net loss was at $1.5m versus net loss of $1.6m in FY13. Revenue fell 31% to $0.05m, mainly due to the company ceasing the operations of its unprofitable IPTV, while the online gaming payments business which continues to operate albeit on a smaller scale, has its operations outsourced and remained profitable. Bottom-line was aided by a $0.2m (-46%) rise in other income, resulting from a waiver of director's fees to be written back.