SG Market (03 Sept 14)

US Market: US stocks lost steam, retreating from from records set in Aug ahead of closely-watched ECB meeting and US labour data later this week. The blue-chip DJIA dropped 31 pts to 17,068 (-0.2%), while the broad-based S&P 500 dipped 1 pt to 2,002 (-0.05%) but the tech-heavy Nasdaq Composite gained 18 pts to 4,598 (+0.4%). About 5.7b shares exchanged hands, snapping a poor streak of volume below 5b shares. Investors are looking ahead for additional montetary stimulus from Thu’s ECB meeting and Fri’s US jobs report, which is expected to show new payrolls of more than 200,000 in Aug for a 7th straight month. US manufacturing expanded at its fastest pace in Aug since Mar 2011, while construction spending rebounded strongly in Jul but the upbeat economic news was dampened by slower UK factory growth and contraction in Italy amid weakening demand and mounting geopolitical risks in Europe. Among the big movers, energy producers sank 1.3% as oil prices slumped 3%, sending the US benchmark WTI crude US$3.08 lower to US$92.28 a barrel, following weak manufacturing data from China and Europe and an oversupply situation. ExxonMobil (-1%), Apache (-1.6%) and Chevron (-1.5%) all slipped as oil slid to 15-month lows on the demand concerns. But Delta Airlines (+3.4%) and Southwest Airlines (+2.8%) rallied to lead carriers higher. Home Depot fell 2% after the home improvement chain disclosed that it is investigating a possible breach of its customer data, while office supply chain Staples soared 8.1% following a broker upgrade. Dollar General edged up 0.6% after it sweetened its bid for rival Family Dollar (+0.5%), which had earlier accepted a takeover offer from Dollar Tree (+1.6%). Norwegian Cruise Line surged 11.1% after announcing plans to acquire Prestige Cruise for US$3b from Apollo Gobal Management, which also owns a 20% stake in NCL. Telsla rose 5.4% to an all-time high on reports that the electric car maker is ramping up production. Trading picked up to 5.7b shares on US exchanges, snapping a poor streak of low volume below 5b shares. S’pore shares are likely to be range-bound with investors waiting for fresh direction from ECB meeting and US labour data. Topside resistance for the STI will be capped at 3,380 with downside support at 3,280. Stocks to watch: *Sing Post: Wef 1 Oct ’14, will increase local postage rates by 4-20¢, and international mail postage by 5-25¢. *Yoma: Acquiring, i) 43.3 acres of land bank at Pun Hlaing Golf Estate for future residential and commercial developments, and development of an international school, and ii) the rights to operate the PHGE Golf and Country Club which includes 219.2 acres of golf course, for total consideration of $95.9m. Also acquiring a 100% interest in Convenience Prosperity, an authorised dealer of New Holland tractors and farm equipment in Myanmar, for $14.8m. To fund the acquisitions, Yoma is undertaking a 1-for-3 renounceable rights issue at $0.38 each, to raise ~$164m. Meanwhile, the authorities have approved for redevelopment works to proceed at the Landmark development, and the group is confident that the site leases will be extended in due course. *Rex: Acquiring Rex Technologies (RT), which holds the exclusive licenses for the Rex suite of proprietary exploration technologies, at a nominal price of $1 and a loan repayment of US$8.5m. RT has signed contracts with an estimated annual value of US$10m. Rex expects to complete the deal by 1 Dec ’14, with RT to contribute positively toward group revenue in 4Q14. *Sunningdale Tech: Acquiring 100% of First Engineering (FEL) for an enterprise value of US$80m. This will create one of the largest precision plastics engineering companies with combined revenue of $636m. The transaction is expected to be EPS accretive, and highly complementary for its three major segments in Automotive, Consumer/IT and Healthcare. The proposed acquisition will be funded by existing cash and new borrowings. Deal closing is expected to take place in 4Q14. *Rotary: Won several contracts worth a total of $80m, including tankage works for LNG storage tanks in Thailand, jetty topside works in UAE and construction packages for an Alkoxylation plant on Jurong Island. *JB Foods: Acquiring an 80% stake in PT JeBe Koko for $23m (42% discount to valuation), for consideration of $11.6m cash and issue of 38m new shares at $0.30 each. The cocoa bean processing facility located in Gresik, Indonesia, has been part of JB Foods' operational supply chain and will raise group's annual production capacity by 71% to 145,000 mt of cocoa bean equivalent. 1-for-2 rights issue at $0.12 per share proposed to help fund the acquisition. *Manufacturing Integration Technology: Received an initial order for 11 new Smart Flex machines from an existing customer. This new generation of vision inspection equipment was launched at the Semicon Taiwan 2014 Show in Taipei yesterday. Separately, the group secured a total of $8.2m new order since its 1H14 results announcement, bringing total order book to $34.2m. *ValueMax: Acquiring moneylender licensee, VM Credit, for $1m. In conjunction, VM will divest its existing loans to Yeah Capital and provide transitional services of these loans. *Chasen: Won a Rmb40m contract to move technological equipment for a TFT LCD manufacturing plant from a repeat customer in Chong Qing, PRC. *Fuji Offset: Disposing its property in Senai Industrial Estate, Johor, for RM35m. Based on FY13 numbers, NTA per share will rise from $0.52 to $0.675. *LionGold: Disposing Ivy Bushes Holdings for $11m, representing 4.1% below valuation and 56% discount to NTA. Net proceeds of $6.8m will be applied towards working capital of Lion Gold’s gold mining operations. Post-disposal, NTA per share will be reduced from $0.104 to $0.09. *Ying Li: Shareholders gave the greenlight for HK-listed China Everbright (CEL) to proceed with its $284m investment in Ying Li through the subscription of new shares and perpetual convertible securities. Post share issue, CEL will become the second largest shareholder with a 14.9% stake. *GRP: Substantial stakeholder and executive director Kwan Chee Seng acquired 6.1m shares from the market at $0.107 apiece on 2 Sep, raising his stake from 28.3% to 29.4%. *The Hour Glass: Proposed 1-into-3 share split to improve liquidity. *Goodpack: Scheme of arrangement to privatise the company has been sanctioned by the court. 3 Sep (today) is the last day of trading of the shares.