Monday, June 23, 2014
SG Market (23 June 14)
US Market: US shares rose on Fri, driving the Dow and S&P 500 to fresh records as intensified fighting in Iraq lifted oil prices and drugmakers rallied on merger activity. The DJIA gained 26 pts to 16,947 (+0.2%), while the S&P 500 added 3 pts to 1,963 (+0.2%) and the Nasdaq advanced 9 pts to 4,368 (+0.2%). Volume picked up largely due to quadruple witching when futures and options contracts on indices and stocks expire. 330 companies on the NYSE set new 52-week highs, while the VIX or fear gauge stayed near the lowest level since 2007, prompting concerns that the market may be getting too complacent with Energy stocks were the big winners as oil prices rallied to a new nine-month high of US$107.20 a barrel as the battle between Iraqi army and Sunni insurgents showed no signs of abating. Heathcare companies rose amid merger activity as European drugmaker Shire Pharmaceuticals rejected a US$46b takeover bid by Abbvie (-1.6%). This sent other drugmakers higher including Merck (+1.1%), Eli Lilly (+3.6%) and Amgen (+2.7%). Among stocks in focus, software company Oracle fell 5.3% after its 4Q results fell short of estimates, while used car firm CarMax surged 16.5% after its 1Q sales topped expectations. Other companies that saw gains included Caterpillar (+2%), Johnson & Johnson (+1.4%), Wells Fargo (+1.7%) and American Airlines (+3.5%). S’pore shares may attempt to climb back above its 50-day moving average at 3,265 following the record-breaking run on Wall Street and positive early trades in Tokyo (+0.4%) and Seoul (+0.4%) but upside is likely to be capped at the 3,285 resistance as short term indicators have yet to show any signs of improvement. Stocks to watch: *Wilmar: Signed a 50/50 JV agreement with Repi Soap and Detergent S. Co, to upgrade an existing manufacturing and build a new integrated manufacturing complex in Ethiopia, that will house an edible oil refinery and packing plant, production plants for specialty fats, soft oils, soaps and detergents, as well as a facility for sesame seed processing. *SIA: Newswires say the 51/49 Tata-SIA JV is expected to get the air operators’ permit next month, announce its brand name in early Aug, and start commercial operations in Sep. The venture will start with five aircraft in the first year of operations, and raise to 20 over the first four years. *MoneyMax: To invest RM15.6m for a 51% stake in a network of Malaysian pawnshops in its maiden overseas venture. The vendor is Mr Chong Mei Sang, a veteran who has 30 years of experience in the production and trading of jewellery. *Loyz Energy: Signed MOU for Enso Oil & Gas to invest in Loyz’ 52% owned subsidiary, Interlink Petroleum (IPL), and recommend suitable exploration and production (E&P) assets in the Irkutsk region of Russia to be acquired by IPL. HK-based Enso owns a 51% stake in a Russian company which holds a licence for gas E&P in Russia. *Serial System/ Achieva: Serial System proposed to acquire Achieva to expand its electronic and electrical components distribution business. The purchase price will be based on the sum of 60% of Achieva’s FYJun14 NTA and 40% FYJun15 NTA. Achieva's NTA as at 31 Mar was 6.42¢. Both companies intend to sign a definitive agreement by 31 Jul. *Yamada Green Resources: To acquire 19% of Zhangzhou Meisei Foods (ZMF) at Rmb36.4m (1x P/B), a manufacturer and supplier of agricultural processed food products and one of the leading processed bamboo shoots suppliers in Fujian, China. Yamada’s proforma FYJun13 NTA and EPS will remain at Rmb1.338 and Rmb0.157 post-acquisition. *HLH Group: 49% owned associate D’Lotus Development will acquire 13,541 sqm of freehold land in the city centre of Phnom Penh, Cambodia, with plans to develop an office tower, luxury condominiums, and F&B retail buildings, for consideration of US$14.9m. *UE E&C: Awarded a $38.8m subcontract by GS Engineering & Construction, the supply and installation of air-conditional and mechanical ventilation and utilities systems for the proposed additions and alterations for multi-user research buildings at Fusionopolis Way. *Biosensors: Says CITIC Private Equity Funds Management is still considering its options to enhance the value of its investment in the company (including the restructuring of its shareholding interests). *Innopac: Proposing a rights-cum-warrants issue, on the basis of 2 rights shares (issue price @ 1¢ each) that come with 1 free detachable warrant (exercise price @ 1.2¢ ), for every 1 Innopac share. The estimated net proceeds of $68.9m from the rights issue will be used for working capital, and to strengthen the group’s capital base to pursue potential growth and acquisition opportunities. *ISDN: Says it is expected to benefit from a recent upward revision of electricity tariff rates (from Rp656 to Rp1,075 per Kwh) to be paid to mini-hydropower developers (10MW capacity or less) by the Indonesian government. *IPCO: Profit warning. Expected to report a FYApr14 pretax loss due to unrealised fair value loss on financial assets, and allowance for impairment loss on available-for-sale financial assets. *LionGold: Has sought a three-month extension to hold its AGM for FYMar14 to 30 Oct. The company has had difficulty providing certain information to the auditors of its Bolivian gold mine subsidiary. *Nordic Group / PSL Holdings: Nordic has exercised its option to put its 30m shares in PSL (7.76% stake) to Sudirman Kurniawan for $9m. *RH Petrogas: Updates that there has been no further discussions or progress relating to the potential takeover proposal previously announced 20 May. *Poh Tiong Choon Logistics: Issued a “Trade with Caution” label by SGX, following a substantial 26.9% increase in share price over 19 and 20 Jun.