SG Market (13 Jun 14)

US Market: US shares ended lower as growing geopolitical concerns amid escalating violence in Iraq sent oil prices to an nine-month high and economic data on retail sales and jobless claims disappointed. The DJIA shed 110 pts to 16,734 (-0.7%), while the S&P 500 dropped 14 pts to 1,930 (-0.7%) and the Nasdaq lost 34 pts to 4,298 (-0.8%). The VIX or Wall Street’s fear guage shot up 8.3% to 12.56, a three-week high. Market losses accelerated after President Obama announced that the US would not rule out military intervention in Iraq against Sunni Islamist militants who had seized major cities and are planning to establish their own Jihadist state. Fear of supply disruptions to Opec’s second largest oil producer sent US oil prices more than 2% higher to US$106.53 a barrel. A sustained rise in oil prices would bite into the economic recoveryand curtail consumer spending. In economic news, retail sales rose 0.3% in May, falling short of a 0.6% forecast, while US jobless claims rose to 317,000 versus estimates of 310,000. Transportation stocks were the biggest losers falling 2% as a group, as oil prices surged, weighing on Delta Air (-5.4%), United Continental (-5.9%) and Southwest Airlines (-4.5%). At the other end, energy related stocks rose, including Noble (+3.1%), Diamond Offshore (+3.3%) and Chevron Corp (+0.7%). S’pore shares are likely to track the decline on Wall Street, coupled with the start of the FIFA World Cup season, which has historically precipitated a weak spell for equity markets. The STI is expected to test the 20-day moving average support at 3285, with the next support at 3,270. Topside resistance is at 3,320. Stocks to watch: *Del Monte: Incurred net loss of US$42.8m for the transition period between Jan-Apr ’14, reversing from profit of US$6.6m, dut to.one-off acquisition-related fees and expenses ararising from the consolidation of US Del Monte Foods wef 18 Feb ’14. Revenue grew three-fold to US$379.2m, of which US$292m was contributed by DMF. Before non-recurring items, core earnings of US$3.8m was weaker because of lower volume and increased costs. *CapitaLand: 100% owned service residence unit The Ascott inks its first franchise deals in Vientiane and Bali. It awarded the Laotian franchise to LCD Global, which will rebrand the 116-unit Parkview Executive Suites as Somerset Vientiane in 4Q14 and the Indonesian contract to PT Menara Permata Propertindo for the 194-unit Citadines Kuta Beach Bali, which is scheduled to open in Aug ’14. *Low Keng Huat: 1QFY15 net profit slid 4% y/y to $14.6m although revenue jumped 36% to $24.2m. Construction revenue rose 170% to $11.9m from increased construction activity at Jurong Town Hall Road, while hotel and F&B sales fell 7% to $12.3m on lower occupancy rates. Gross margin normalized to 19.2% from 69.6% in 1QFY14 due to project cost write-backs following the completion of Hard Rock Café Sentosa and Nex. Share of JV contributions improved 51% to $14.5m thanks to the sale of development project at Jalan Conlay, KL. *LifeBrandz: 3QFY14 net loss widened by 166% y/y to $872,000 as revenue fell 10% to $5m on a slowdown in activities and increased competition from other clubs in the vicinity. *TA Corp: 51% owned subsidiary Que Holdings has been appointed distributor for Continental passenger and light truck tyres in Myanmar wef 1 Jun ’14. *Mirach Energy: Signed a non-binding term sheet with a technical service consultant to explore the possibilities of project management and financing for new drilling and exploration work within certain unexplored areas of its existing concessions in Indonesia. *Mermaid: Awarded a call off contract for subsea remotely operated vehicle (ROV) services in Thailand serving major upstream oil and gas operators. The contract has an estimated value of US$19m for an initial period of two years.