SG Market (26 Aug 14)

US Market: US stocks ended broadly higher, bolstered by prospects for increased stimulus in Europe and a handful of M&A deals. The blue-chip DJIA gained 76 pts to 17,077 (+0.4%), while the broader-based S&P 500 advanced 10 pts to 1,998 (+0.5%), just shy of the psychological 2,000 level and the tech-heavy Nasdaq Composite added 19 pts to 4,557 (+0.4%), its highest level in 14 years. Stocks rallied as ECB President Mario Draghi and BoJ chief Haruhiko Kuroda raised the likelihood of quantitative easing measures to support growth during a meeting of central bankers. Markets were also helped by Fed chair Janet Yellen’s commitment to keep interest rates low despite warnings from a growing minority of inflation hawks. All main industry groups advanced with financial, energy and healthcare stocks rising at least 0.7%. Financial shares rose 0.8%, latching on expectations that Europe may see more aggressive monetrary stimulus with Morgan Stanley (+2.2%), JPMorgan (+1.5%) and Goldman Sachs (+1.4%) among the best performers. Fresh takeover news led to the biggest moves in the market. Burger King surged 19.5% on merger talks with Canadian coffee and doughout chain Tim Hortons (+19.3%) and plans to move its domicle to Canada to take advantage of lower corporate tax rate. Biotech stocks outperformed, continuing its recovery from its sharp drop earlier in the year, rising 2.4%. Pharmaceutical firm InterMune soared 35.4% following a US$8.3b buyout offer by after Swiss drug gaint Roche. Volume was light with 4.3b shares were traded on the US exchanges, 23% below the three-month average. S’pore shares are likely to edge higher following the Wall Street rally but upward momentum appears to be waning due to absence of positive catalysts. Topside resistance for STI is pegged at 3,380, while immediate support lies at 3,320. Stocks to watch: *United Engineers: 67.6% owned subsidiary WBL is selling its car distribution and retail businesses to StarChase Motorsports for $455m on a debt-free, cash-free basis. UE expects to realize a net disposable gain of $17.1m from the net proceeds of $292.1m. Based on FY13 numbers, proforma EPS would rise 20% to 29.3¢, and NTA would add 3¢ to $2.63. *Cordlife: FY14 net profit surged 125% y/y to $30.4m, on the back of strong revenue growth, healthy margins, and net fair value gains of $12.4m. Revenue jumped 42% to $49.1m, driven by increased client deliveries from the Philippines, India and Indonesia. Final DPS of 1¢ maintained. Meanwhile, group has acquired US$25m China Cord Blood Corp (CCBC) 7% senior convertible bonds for US$44m. Upon full conversion, Cordlife’s stake in CCBC will be increase from 10.0% to 17.8%. *HanKore: Disappointing 4QFY14 results with net loss of Rmb62.7m, reversing from a net profit of Rmb3.8m a year ago. Revenue slid 30% y/y to Rmb54.6m, and gross margin collapsed to 21.7% (4QFY13: 58.3%). For the full year, HanKore’s net loss widened to Rmb114.7m, from a net profit of Rmb72.4m in FY13. BVPS at Rmb2.83 ($0.575). *Otto Marine: Clinched A$57m worth of time charter contracts in Australia from two oil majors, for two of its large deep water AHTS vessels. *KrisEnergy: Drilling at Mancharee-1 reached a total depth at 12,205 feet measured depth, or 10,460 feet true vertical depth subsea. Gas shows were encountered at several levels but no significant pay zones were identified. *Civmec: Awarded subsea projects for the Shell Prelude Floating LNG project and the Wheatstone LNG project. *Ley Choon: Secured contracts for trenching works, and water and gas pipe works, worth a combined $14.5m. *Cambridge Industrial Trust: Acquiring a six-storey light industrial building at 12 Ang Mo Kio Street for $39.8m. The 16,762 sqm property has a remaining land tenure of 36 years anad is currently 85% leased. *SGX: To reduce the board lot size of securities to 100 units from 1,000 wef 19 Jan.