SG Market (30 Jun 14)

US shares ended Friday modestly higher, trimming its losses for the week. Technology shares took the lead, although a downbeat 2Q14 and FY14 earnings forecast by Dupont placed a cap on overall gains. The DJIA rose 6 pts to 16,852 (+0.0%), while the S&P 500 gained 4 pts to 1,961 (+0.2%) and the Nasdaq added 19 pts to 4,398 (+19 pts). Trading volume surged with ~8.9b shares exchanging hands, largely due to the final realignment of the Russell Investment Indexes, which affected more than US$5t in assets. Shares were boosted by positive economic data which showed that US consumer sentiment rose more than expected in Jun. Gains were however capped after Dupont (- 3.3%) cut its earnings forecast for FY14, citing slower sales from its performance chemical and agriculture units. S’pore shares may open with a slight upward bias following the late positive reversal in Wall Street’s performance last week. Some window dressing may be expected in the later part of the day, this being the last day of Jun. Near term STI support at 3,254, and resistance at 3,285/3,310. The short term momentum indicators supportive of an upward move. Stocks to watch: *OCBC: Both the HK and S’pore authorities have given their blessing for OCBC’s US$4.95b takeover of Wing Hang Bank in Hong Kong. The transaction has yet to be finalized, pending satisfaction of a number of conditions. OCBC management is confident that the deal will be completed by 3Q14. *Ying Li Int’l: Proposed to raise a total of $284m from China Everbright Group (165 HK), through the issue of – i) 381m new shares (14.9% of enlarged share base) @ $0.26 each, to raise $99m, and ii) $185m in aggregate principal amount of convertible perpetual securities (initial 8.75% coupon, $0.318 conversion price). Post deal, Everbright will become the second largest shareholder and a strategic partner of Ying Li. *Stamford Tyres: FY14 net profit slipped 13% y/y to $10m, weighed by a 8% decline in revenue to $290.6m, due to softening demand for Sumo Firenza tyres in Europe, and mining tyres in Indonesia and South Africa. Bottom line was further impacted by a $0.7m share of loss from JV, compared to profit of $13.2m in FY13, due to the absence of a one-off disposal gain from the sale of its China associate last year. Final DPS maintained at 1.5¢. *Vibrant (formerly Freight Links Express): FYApr14 net profit rose 11% to $42.7m, while revenue climbed 8% to $191.4m, mainly contributed by Freight and Logistics which grew 5.9% to $163m, on the completion of its new chemical hub in Jurong Island. Share of associates’ profits increased to 369% to $18.5m, due to a revaluation gain of investment property. *China New Town Dev: Secured a half-year Rmb1b unsecured loan (@ 10% interest p.a.) from its parent, China Dev Bank, to repay a current outstanding credit trust loan and refinance maturing bank loans, as well as to facilitate new and existing projects. *RH Petrogras: Commenced a 2D seismic survey in its 80% owned Block SK331 in onshore Sarawak, with expected completion in Nov ’14. *Stratech: To deploy another 30 or more of its iVACS intelligent Vehicle Access Control Systems in the Middle East. Current order book for iVACS stands at 59 units, which will contribute ~$2.44m of revenue in FY14. 25 of them are deliverable by end Jun ‘14. *Jackspeed: Plans to sell its leasehold factory at Loyang Drive for $6.5m to Tan Soon Huah Gas Supply, as part of on-going efforts to redeploy capital more efficiently. *ICP: To buy a 19.9% stake in Australian coal exploration firm Tiaro Coal for A$3.05m; ICP will also sell its 17.2% stake in Mount Adrah Gold for A$2m. *Otto Marine: Signed MOA to dispose three of its vessels to its 49% owned M’sian unit, Go Marine Services, for US$37.5m. Post transaction, Otto expects to realize an estimated net gain of ~US$1.0m. *FSL Trust: Inked a time charter agreement with Tesoro Corp to lease its 115,000 dwt crude oil tanker for ~US$5.7m over the next 12 months. *Olam: Sold its entire 100% stake in a Gabonese timber company for US$6.0m. *Jasper Investments: Gives notice for three consecutive years of losses.