SG Market (01 Sept 14)

US Market: US stocks closed out a strong month on a quiet note with the S&P 500 posting a modest gain to another record as improving economic data offset overseas worries. The blue-chip DJIA gained 19 pts to 17,098 (+0.1%), while the broader-based S&P 500 added 7 pts to 2,003 (+0.3%), pushing back above the 2,000 milestone and the tech-heavy Nasdaq Composite tacked on 23 pts to 4,580 (+0.5%). Shares took cue from positive readings on US consumer confidence, which unexpectedly rose in Aug to a seven-year high, while a slight fall in consumer spending did not sent sentiment, coming after a strong Jun gain. Meanwhile, bsiness activity also rebounded in the Midwest, suggesting that the US economy recovery was gaining pace. But the personal consumption expenditure price index, the Fed’s preferred inflation measure, edged up 1.6%, well below the 2% target. Sluggish euro-zone data showed that inflation fell to a five-year low in Aug and unemployment remained at 11.5% in Jul, increasing pressure for the ECB to act on fresh stimulus. Trading was cautious amid new geopolitical concerns, with Ukraine seeking full membership in NATO to ward off Russia, and Britain raising its terrorism threat level to `severe’ in a warning that Islamic State jihadists are planning possible attacks on Europe. Technology, financial and energy shares were the top performers, with Home Depot (+1.1%) the best gainer and United Technologies (-1%) leading the losers. Gas pipeline company Kinder Morgan climbed 1.2%, while Goldman Sachs rose 1.2%. Among the tech stocks, Microsoft added 1.2% and Facebook 1.3%. Among other stocks in focus, communications and networking device supplier Avago Technologies surged 7.5% on 3Q results that topped estimates and an upbeat outlook for the current quarter. Cloud computing software firm Veeva Systems jumped 20.1% reporting 2Q earnings that beat expectations and boosting its full year forecasts. With the US headed into the Labour Day holiday weekend, volume has been among the lightest since 2008, falling below 5b shares for the past eight trading days. With US markets closed tonight, S’pore shares are likely to trade cautiously on tepid volume with topside resistance for the STI capped at 3,380 and immediate support at 3,320. Stocks to watch: *Dukang Distillers: FY14 net profit crashed 89% to Rmb84.8m, as revenue slumped 40% to Rmb1.45b, driven by lower sales at both Luoyang Dukang and Siwu operations, amid a backdrop of China’s on-going corruption drive and clampdown on luxury gifts and spending. Gross margin compressed 4.8 ppt from 40.9% to 36.1%. BVPS at Rmb2.50 ($0.51). *Longcheer: 4QFY14 net profit fell 20% y/y to Rmb16.7m, weighed by gross margin pressure and a spike in taxes. Revenue edged up 3% y/y to Rmb1.3b, as higher ASP helped offset lower shipment volume. However, gross profit fell 23% to Rmb67.1m due to severe competition in the 3G smartphone market. Admin costs stayed flat at Rmb54.6m, and the group benefited from the absence of FX loss in 4QFY13 (Rmb 8.2m), higher interest income of Rmb24.0m (+172%) driven by a doubling of cash deposits to Rmb 1.3b, and share of profit from associates of Rmb9.2m (4QFY13: Rmb2.0m loss). Bottom line was dragged by a 461% spike in income tax to Rmb19.7m. Jun ’14 BVPS at Rmb1.95 ($0.395). Note that a special dividend of $0.114 has since been paid. *Lum Chang: FY14 net profit rose 17% to $25.1m, boosted by associate contribution of $13m ($0.3 associate loss in FY13). However, revenue plunged 44% to $276.6m due to lower revenue recognized from four construction projects which were already substantially completed last year, as well as lower revenue from the Malaysian developments due to fewer phases being completed. Final DPS of 1.25¢ brings full year payout to 2¢ (unchanged). *Swee Hong: FY14 net loss widened to $19.9m from a $16.3m loss in the previous year. Although revenue rose 17% to $32.7m, boosted by higher civil engineering and tunnelling activity, the group registered a gross loss of $5.3m (from $6.3m in FY13), due to cost overruns from on-going projects. Admin expense also jumped 25% to $14.2m. *Spackman: Booked a 2Q14 net loss of US$0.5m, impacted by increased headcount, which more than offset lower impairment losses on goodwill. Revenue expanded 10-fold from a low base to US$4.8m, driven by the films - “For the Emperor”, “Confession” and “My Brilliant Life”. However, cost of sales swelled to US$4.3m, due to production, print and advertising costs. *Global Yellow Pages: Buying Wendy’s Supa Sundaes brand, inclusive of intellectual property rights, franchise systems and recipes for A$10m, in line with its strategy to diversify its F&B revenue streams. Assuming the deal was completed FYMar14, NTA/sh would have been 38% lower at 2.81¢, but EPS would have been 38% higher at 1.12¢. *OKH Global: Issuing $8m in principal amount of 11% redeemable convertible preference shares to Zana Capital to fund its previously announced acquisition of a 15% stake in Pan Asia Logistics Holdings Singapore. *KTL Global: In discussions to, i) form a 40% JV with Nantong Kaidele Ocean Engineering to carry out the business of trading in high-end slings, processing, storage display and other services within the Nantong Comprehensive Bonded Zone, and ii) acquire a 30% shareholding interest in FW Coastal Ventures, which provides training for personnel in the offshore O&G, commercial maritime and energy resources industries, from CEO Tan Kheng Yeow. *LionGold: Selling Acadian Mining Corporation for C$8.6m ($9.8m), to be satisfied by cash of C$4.3m ($4.9m) and shares of Atlantic Gold Corp valued at C$4.3m ($4.9m). Accordingly, LionGold will book a loss on disposal of $1.1m. *W Corp: Completed the reverse takeover of YuuZoo. The latter’s shareholders now own 89% of W Corp (post-compliance placement of 50m new shares at $0.50 each). Based on the new share base, FY13 EPS and NTA stands at US0.49¢ and US2.75¢, respectively. *Advanced Integrated Manufacturing: Awarded precision machined components project by Honeywell worth US$1m to commence 2015. *Jason Holdings: Extends the MOU to acquire Top Creation Investment (HK) till 30 Nov ‘14. Recall, the deal pertains to a $20m acquisition of a manufacturing company for wood-plastic composites, located in Huzhou City, Zhejiang Province, China. *China Hongxin: Says its PRC subsidiaries do not have the financial resources to meet the conditions for resumption of trading by 30 Sep. *Ezra: Subsidiary EOC has lodged its preliminary prospectus with the MAS.