SG Market (28 Aug 14)

US Market: US shares ended little changed in a lethargic session with no hard news to spur any significant movements. The blue-chip DJIA edged up 15 pts to 17,122 (+0.1%), while the broader-based S&P 500 stayed flat at 2,000 and the tech-heavy Nasdaq dipped 1 pt to 4,570 (-0.02%). Volume was low with only about 4.2b shares changing hands. Impact from the ongoing geopolitical crisis in Ukraine, the Gaza Strip and Iraq appears muted in recent days, with investor sentiment buoyed by expectations that the Fed will continue to keep interest rates low and signals by the ECB to introduce an asset-buying plan. With no major economic reports on tap, traders focused the rebound by Best Buy, Aplle’s impending product launches and results from some retailers. Telecom and utility stocks saw the biggest gains, while energy, financial and technology sectors fell the most. UnitedHealth added 1.5% to pace the gainers on the Dow, while United Technologies topped the losers, sliding 0.5%. In the technology space, Apple gained 1.2% in anticipation of its upcoming launch of iPhone 6 and iWatch in Sep, but Facebook and Google shed 1.8% and 1.2% respectively. Tiffany (+1%) and apparel chain Express (+12.7%) rose on quarterly revenue that beat expectations and both raised their profit forecasts. But women clothing retailer Chico FAS slumped 4.6% on lower-than-estimated sales. Among other stocks in focus, electronics retailer Best Buy rebounded 6.3% from a 6.8% plunge on Tue after posting 2Q profit that topped estimates. Burger King declined 2.1% amid criticism that its US$11.4b takeover of Canada’s Time Hortons was in part motivated by the aim to cut its tax bill through the relocation of its headquarters to Canada. Volume was depressed ahead of the Labour day long holiday weekend in the US with only 4.2b shares traded on the US exchanges and advancing stocks outnumbering declining ones by 1.3 to 1. S’pore shares may drift sideways, tracking the lackluster close on Wall Street and mixed openings in Asian bourses. Topside resistance for the STI is capped at 3,380 with immediate support at 3,320. Stocks to watch: *STATS ChipPAC: Confirms yesterday’s Bloomberg report that Jiangsu Changjiang Electronics Technology and Tianshui Huatian Technology have contacted the company with regard to a possible acquisition. *Straco: Local news says Straco could make a bid to acquire the Singapore Flyer. The company behind the iconic observation wheel, which was built at a cost of $240, was placed under receivership last May. Straco shares were placed on halt since Wednesday after market. *Grand Banks Yachts: Posted FY14 net profit of $1m, reversing losses to post its first full-year profit in six years. The group achieved its highest full year revenue in five years of $40.3m (+15%), driven by recovery of the North American boat market and growth in Asia. Gross margin jumped to 19.4% from 13.6% a year ago, boosted by substantial operating cost cuts, higher productivity and utilisation rates. In Aug, Grand Banks completed its acquisition of Palm Beach Motor Yacht, and the enlarged group now boasts an aggregate net order book of $19.8m. The group will submit an application for its exit from the Watch-List, after the audit of the FY14 results. BVPS at $0.295. *ISO Team: Excluding the one-off disposal gains booked last year, FY14 core net profit surged 224% to $6.1m. Revenue jumped 45% to $69.9m, driven by a substantial increase in contribution from the Repairs and Redecoration (R&R) business segment (+83% to $48.3m), attributable to projects awarded by SKK, and the town councils of Moulmein-Kallang, Tanjong Pagar and Pasir Ris-Punggol. Gross margin improved to 19.3% from 17.0%. FPS maintained at 1¢. *Civmec: 4QFY14 net profit jumped 25% y/y to $11.6m (+26% q/q), while revenue spiked 110% to $166.7m (+42% q/q), mainly due to an increase in contracts. This helped buoy full year earnings to $35.1m (-3%) and revenue to $433.7m (+7%). FY14 gross margin slipped 2.6 ppt to 14.6% due to the re-classification of occupancy costs to cost of sales and an increase in the proportion of larger, higher-value projects (which are more stable but relatively lower margins). First and final DPS of 0.7¢ maintained. *Croesus Retail Trust: 4QFY14 distributable income and DPU both beat forecast by 2%, at ¥707m and 2¢ respectively. Gross revenue of ¥1,584m missed forecasts by 1%, mainly from the country-wide decline in overall consumer consumption due to the increase in consumption tax rate to 8% (from 5%), while NPI of ¥1,020m beat by 3%, from lower property management and repair expenses, partially offset by higher utility and promotional expenses. Portfolio occupancy at 99.4%. Leverage dropped 1.8ppt to 51.7%, on average interest cost of 2.13% and debt tenor of 3.7 years. BVPS grew 6% to $0.902. *Japfa: 2QFY14 net profit grew 21% y/y to US$39.1m, boosted by a US$9.6m disposal gain, as revenue climbed 9% to US$767.3m. This brought 1HFY14 earnings to US$61m (+6% y/y) and revenue to US$1,457.4m (+6%), attributable to better sales in dairy and animal protein segments, but partially offset by consumer food. Gross margin slipped 1.4 ppt to 17.6%, due to lower contribution from the higher margin animal protein and consumer food business in Indonesia, as well as delays in passing on raw material cost increases arising from the depreciation of the Rupiah against USD in 2013. *China Automation: 1H14 net profit rose 4.1% y/y to Rmb68.3m, buoyed by lower operating expenses and the absence of bad debt provisions booked last year. However, revenue declined 11.2% y/y to Rmb1.1b and gross profit fell 7.8% to Rmb387.9m on contraction in both petrochemical (-5.0% y/y, Rmb828.4m) and railway (-27.5% y/y, Rmb243.1m) segments. *Keong Hong: Awarded a $118m contract from MKH (Punggol) to construct six buildings for an executive condominium located at Edgedale Plains/ Punggol Central, with expected completion by Nov ‘16. *Polaris: 31.4%-owned PT Trikomsel Oke has been appointed as an authorised distributor for Xiaomi products in Indonesia. *Tat Hong: Terminated the proposed conditional sale and leaseback agreement with TransLinkQ regarding the divestment of five in Australia due to failure to reach a final agreement. *Wilmar: Acquiring Nexsol (Malaysia) for RM27m, and a 30 acre plot of land in Johor Bahru which houses Nexsol’s 100,000 MT pa biodiesel and glycerine refinery for RM23m. *Cosmosteel: CEO Ong Chin Sum and ED Ong Tong Yang were called in by the Corrupt Practices Investigation Bureau, in relation to illegal gratification to an agent. Both men are currently released on bail.