SG Market (27 Aug 14)

US Market: US shares pushed higher, sending the benchmark S&P 500 above the 2,000 psychological mark for the first time, helped by encouraging data on durable goods orders and consumer confidence. The blue-chip DJIA gained 30 pts to 17,107 (+0.2%), reaching an all-time intraday high, while the broader-based S&P 500 addded 2 pts to 2,000 (+0.1%), and the tech-heavy Nasdaq Composite advanced 13 pts to a fresh 14-year high of 4,571 (+0.3%). Markets trended higher as US durable goods orders jumped a record 22.6% in Jul, skewed by a surge in aircraft bookings, while consumer confidence rose more than expected in Aug to its higest level since Oct ’07. Energy shares outperformed (+0.5%), following a WTI oil price rebound from a seven-month low, with ExxonMobil (+0.9%) and Chevron (+0.3%) pacing the gains. Biotech stocks rallied 1.3% to new highs, staging a sharp recovery from a 21% decline from Feb to Apr, amid overvaluation concerns. Among other stocks in focus, Twitter rose 4.5% after expanding its ad sales across Europe, while Amazon climbed 2.3% after striking a deal to buy over videogame streaming network Twitch for US$970m. Burger King slid 4.3%, reversing its 19.5% gain yesterday after announcing a US$11.4b takeover of Canadian coffee and doughnut chain Tim Horton (+8.5%). Electronics retailer Best Buy lost 6.9% after reporting a steeper than expected drop in same-store sales and making a weak forecast. Volume was light with 4.5b shares traded on the US exchanges, 20% below the three-month average. Advancing stocks outnumbered declining ones by 2 to 1. S’pore shares may lose traction despite the record close on Wall Street as the daily technical indicators are to lose upward momentum with few catalysts in sight. The STI is also looking tired and may test the downside support at 3,320 before finding firmer grund at 3,280. Topside resistance is capped at 3,380. Stocks to watch: *Silverlake Axis: FY14 net profit jumped 27% to RM248.9m, keeping pace with the 26% increase in revenue to RM500.7m, with all segments (except software project services) delivering growth. Gross margin slipped 3ppt to 61%, but bottom line was boosted by substantial increases in other income and share of associate’s profits. Management is cautiously optimistic on outlook, with implementation projects being key in FY15. Final DPS of 1.2¢ and special DPS of 0.6¢ declared, bring FY14 payout to 4.5¢ (FY13: 3.1¢). *Hafary: FY14 net profit tumbled 64% to $8m, as last year’s bottom line was boosted by a $23.8m gain on disposal of development property. Revenue grew 11% to $92.7m, driven by higher sales in both the general segment (+6%) and project (+17%) segment, due to higher demand for surfacing materials. However, gross margin fell 3 ppt to 37.3% due to lower mix of revenue from the project segment and commencement of depreciation of its main warehouse at Changi. Final DPS of 0.3¢, bringing FY14 payout to 1.3¢ (FY13: 6.5¢). *Saizen REIT: 2HFY14 DPU dipped 1.6% y/y to 3.1¢, while distributable income was flat at $8.8m. For the quarter, 4QFY14 gross revenue edged up 3.4% y/y to $12.1m, while NPI rose 2.6% to $8.3m, as full year contribution from the seven properties acquired over the course of FY13 offset the divestment of one property in FY14. Average occupancy stood at 91%, and aggregate leverage at 37%. BVPS at $1.22. *China Yuanbang: FY14 net profit jumped 49% y/y to Rmb 143.7m, as revenue swelled 53% to Rmb 1.3b, mainly derived from the sale of three development projects. Although gross margin fell 3.6ppt to 30.0%, bottom line was boosted by fair value gains on investment properties (Rmb96.2m) and a doubling of rental income to Rmb21.1m. BVPS at Rmb1.16 ($0.235). *OCBC / Great Eastern: in exclusive discussions with the TCC Group, which is controlled by Thai tycoon Charoen Sirivadhanabhakdi, to sell their combined stakes in United Engineers (estimated 34% to 36% stake) and WBL, which could lead to a mandatory general offer for UE shares. *Halcyon: Sam Goi will emerge as a substantial shareholder with a 5.9% stake, after agreeing to subscribe for a total of 25m new shares at $0.738 apiece (9.4% discount to the last close). Gross proceeds of 18.5m will be used to further strengthen the capital base of the company and facilitate growth and expansion. *QT Vascular: Proprietary technology used in its Glider PTCA balloon catheter received key patent in Japan. *Sincap: In a response to SGX query, the group announced the potential acquisition of another piece of land in Australia. *Miyoshi Precision: Entered into a JV with Green Galaxy to develop, manufacture, assemble and sell light electric vehicles in China. Miyoshi will acquire 55% stake in the JVCo for an aggregate $3m, comprising i) $1m cash and ii) the issue of 32m new shares at 6.25¢ apiece. *SBI Offshore: In negotiations to build and manage up to five jack-up drilling rigs with a consortium of six Middle East-Chinese parties. *W-Corp: Hired Macquarie to issue 50m shares at $0.50 each, on a best efforts basis, to raise gross proceeds of not less than $25m. *OSIM: Issued $170m in principal amount of zero coupon convertible bonds due 2019, with an upsize option of $30m. *Digiland: Entered into a call option to acquire Goodwood Associates (GA), for consideration being the lower of $8.3m, or 4x FYJun15 P/E. GA is a wholesaler of petrochemical products, including LNG and the acquisition is in line with its strategy to expand into the oil and gas industry.