SG Market (14 Jul 14)

US Market: US shares edged higher, rebounding in the afternoon session in thin volume amid a handful of mixed earnings, which overshadowed ongoing concerns of financial stress in Europe. The DJIA rose 29 pts to 16,944 (+0.2%), while the S&P 500 added 3 pts to 1,968 (+0.2%) and the Nasdaq Composite advanced 19 pts to 4,415 (+0.4%). The VIX or gauge of market volatility fell 4.1% to 12.08. Inventor sentiment took the lead from Europe, which rallied modestly, after Portugal's central bank took steps to alleviate concerns, claiming that the country's largest bank Banco Espirito Santos has sufficient finances to deal with its parent company's debt problem. Energy producers (-0.8%) were the biggest losers as crude oil prices declined for a third week, with Chevron Corp (-1.4%) taking a hit. Mortagage insurers, including Genworth Financial (-2.6%) slid in response to a new proposed capital requirement. Phone stocks climbed 0.8% with Verizon adding 1.4% to pace the gains. Separately, investors took a positive read-through on EBay (+2.3%) and Amazon (+5.6%) after sales exceeded expectations. US Steel gained 3.2% after the US government imposed duties on steel pipes from South Korea and eight other cities. Meanwhile, Wells Fargo dropped 0.6% after its 2Q earnings met forecasts, ending a 17-quarter streak of rising earnings. Tobacco giant Reynolds (-0.8%) confirmed that it is in talks with Lorillard (+4.6%) about a possible acquisition. This week’s calendar include reports from JPMorgan, Goldman Sachs, Yahoo, Intel and GE, while Fed chair Janet Yellen will give a congressional testimony on the outlook for the US economy and monetary policy. The S’pore market may get a slight lift this week as football-mad traders return to the markets after the FIFA World Cup finals and prepare for the start of the 2Q corporate reporting season. First upside objective for the STI is at 3,310 with underlying support at 3,270 as represented by the convergence of 20 and 50-day dmas. Stocks to watch: *SPH Reit: 3QFY14 DPU of 1.35¢ beat IPO forecast by 3.1%. Gross revenue of $50.4m was in line, while net property income of $37.7m beat estimates by 2.7% on proactive cost management. Occupancy was full for both Paragon and Clementi Mall. Aggregate leverage stood at 26.9%, with an average cost of debt of 2.33%, and no refinancing needs till 2016. Annualized 3QFY14 yield is 5.24% with NAV of $0.90. *Cheong Woh: 1QFY15 net profit surged to $2.3m from $0.2m a year ago as revenue jumped 36% to $19.1m, driven by 58% increase in HDD components, though offset by an 18% decline in sales of metal stamping components. Bottomline was boosted by increase in other operating income (+67%) and cut in finance costs (-25%). *Halcyon Agri: Acquiring Anson Company, which owns nine crumb rubber factories, from Lee Rubber Group for $450m (2.3x FY13 NAV). The deal will raise Halcyon’s annual export capacity for crumb rubber and natural rubber to 385,000 mt (+250%) and 740,000 mt (+120%), respectively. Post-acquisition proforma FY13 EPS is expected to increase to 3.8¢ (+31%) and NAV to 32.9¢ (+28%). The group will turn from net cash position to have net gearing of 280%. *Midas: Acquiring the remaining 45% stake in Jilin Midas Light Alloy for Rmb306m. The small premium of Rmb7.7m over valuation takes into account the future market potential of Jilin’s products and its strategic fit with the growth and direction of the group. *Jubilee Industries/WE Holdings: WEH’s 25.5% associate, Jubilee, is acquiring a 26% stake in EG Industries - Malaysia's largest electronics manufacturing services provider, for RM21m ($8.4m). In addition, Jubilee intends to fully acquire WE Components from WEH at a price above the FYMar14 NAV. Going forward, Jubilee will turn into a one-stop electronics solution provider, while WEH will focus on its fast-growing commodities businesses and Myanmar investments. *Frasers Hospitality Trust (FHT): Will make its trading debut today at 2pm. The IPO received “strong support” from retail and institutional investors, being 19x subscribed. The offer price of $0.88/unit implies 6.9% FY14 yield. *JK Tech: Plans to issue up to 150m placement shares at $0.40 each to raise net proceeds of $59m to fund its diversification into the oil and gas sector. *Anwell Technologies: In lieu of a Rmb94m trade payables owed, a trade creditor obtained a court order to seize the assets against Anwell’s subsidiary Henan Kerry Digital, and subsequently bought the seized assets for Rmb66.3m by way of a public auction. Anwell intends to lease back the assets from the creditor. *LCD Global: Offer by controlling shareholders, Raymond Lum and David Lum, has lapsed with valid acceptances of 36.0%, below the 50% level needed to turn the offer unconditional. *Tigerair: Chairman JY Pillay will retire and be succeeded by Hsieh Fu Hua. Hsieh, who has been an independent director on Tiger’s board since Nov '11. *Civmec: CFO resigns *UOB: Labeled “trade with caution” by SGX, after the bank said it was not aware of any reasons that could explain the trading in its shares. The counter closed up 3.6% on Friday, for the biggest gain since 2011. *Singapore Kitchen: Profit warning. Expects 1H14 net loss due to higher cost of sales, more open tender projects with thin profit margin, and an increase in operating expenses due to higher marketing and labor costs.