Monday, August 25, 2014

SG Market (25 Aug 14)

US Market: US stocks ended mostly lower on Fri following renewed tensions in Ukraine, and a cautious outlook on the US jobs market by Fed Chair Janet Yellen. The DJIA retreated 38 pts to 17,001 (-0.2%) and the S&P 500 shed 4 pts to 1,988 (-0.2%), while the Nasdaq Composite gained 6 pts to 4,359 (+0.1%). The CBOE Volatility Index slipped 2.5% to 11.47, the lowest level since mid-July. Geopolitical tensions sharpened after the US called on Russia to withdraw a convoy of vehicles from Ukraine or risk facing additional international sanctions. Russia claimed that the trucks were on a humanitarian mission, while Ukraine charged that Kiew did not authorize the border crossing, calling the intrusion an invasion. Meanwhile, Yellen told a gathering of central bankers at Jackson Hole that slack remains in the labour market despite improved economic data, leaving some market watchers disappointed by the lack of clarity about the timeline of the Fed’s interest rate normalization cycle. The Nasdaq was lifted by a rally of software companies, after cloud-computing company leapt 7.3% on strong earnings and a bullish FY15 sales forecast. Bargain clothing store Ross Stores jumped 7.4% after posting a 12.4% rise in 2Q earnings. Among other stocks in focus, Gap rose 5.2% after its 2Q earnings climbed nearly 10% and the apparel retailer announced plans to enter the Indian market via franchises, while Keurig Green Mountain surged 13.3% after a deal food giant Kraft to sell Kraft’s coffee brands in Keurig’s home brewing systems. About 4.3b shares were traded on the US exchanges, the slowest full day session this year. S’pore shares may inch higher after the STI nicked above the 20-day moving average at 3,320 but sentiment could be weighed by the pullback on Wall Street and geopolitical concerns. Downside support seen at 3,280. Stocks to watch: *FJ Benjamin: Adjusted for exceptional items, the group swung into a FY14 net loss of $20.8m from a net profit of $1.6m a year ago. Revenue dipped 1% y/y to $368.2m, due to a slowdown in luxury spending in North Asia, coupled with a sharp fall in tourist spending in Singapore, particularly by the Indonesia and China visitors. Gross margin fell 3.6ppt to 39.1%, pressured by higher Singapore operating costs, as well as competition in the form of deep discounting amongst the SE Asian retailers. *Singapura Finance: FY14 net profit rose 22% y/y to $6.7m. Net interest margin rose 15% to $19.1m, while non-interest income dropped 40% to $1.8m. Other operating income marginally increased due to recovery of bad debts previously written off. Management expects a moderate growth for the loan portfolio in view of the government cooling measures on property investment and car ownership. Unchanged first and final DPS of 5¢. BVPS at $2.15. *Singapore eDevelopment (SeD): Will hold non-deal roadshows with retail and institutional investors in Singapore this week, regarding its diversification in property development in the US and Australia, and plans for its info-comms technology business. Meanwhile, Dr Toh Soon Huat (founder of Novena Holdings) has emerged as a substantial shareholder after acquiring 30m SeD shares cum-rights. *Otto Marine: Appointed UOB Kay Hian to advise on a potential SGX-listing of its Subsea Services division, and/or other strategic options. *Jasper: Warns of potential breach of financial obligations under its five-year US$165m Jasper Explorer bonds, as soon as 31 Aug 2014, if certain waivers or relief are not met. The group is in the midst of broader restructuring discussions given that the Jasper Explorer vessel has not generated any revenue since coming off-hire at end Feb ’14. *Tritech: Terminated its proposed acquisition of a 49% equity interest in Jining Zhongshan Public Utility Water Co. *SGX: To delist five Global Depositary Receipts wef 28 Aug, for not having paid the annual listing fees. They are Accentia Technologies, Bombay Rayon Fashions, Confidence Petroleum India, Karuturi Global, Visesh Infotechnics. *Epicentre: Profit warning. Expects to report FY14 loss, mainly attributable to lower sale from certain Apple products, as well as gross margin erosion of retailing of third party accessories arising from price competition. *Trading halt: United Engineers, Halcyon Agri

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