SG Market (15 Sept 14)

US Market: US stocks ended lower on Fri, as new sanctions slapped on Russia by the West created a new wave of uncertainty to the ongoing Ukraine crisis, while traders speculated that the Fed could accelerate its timeline to raise interest rates the coming week. The blue-chip DJIA slid 61 pts to 16,988 (-0.4%), while the broad-based S&P 500 shed 12 pts to 1,986 (-0.6%) and the tech-heavy Nasdaq Composite lost 24 pts to 4,568 (-0.5%). The CBOE Volatility Index jumped 10% to 13.31 for its third week of gains. Sentiment was dampened after the US and European Union imposed a new set of sanctions targeting Russian banking and energy companies, sparking threats from Russia that it will retaliate accordingly. Separately, positive US retail sales and consumer confidence data saw traders speculate that the Fed could look to bring forward its interest rate hike ahead of the FOMC meeting this coming Wed. Oil companies were amongst the biggest losers, weighed by lower oil prices and on concerns that the new sanctions on Russia could hamper expansion plans of oil majors in the country. ExxonMobil dipped 1.3%, while Chevorn and Halliburton both slipped 0.9% and 1.8% respectively. Amongst other companies in focus, wireless carrier Sprint jumped 6.5% after a presentation by the group's new CEO drew rave reviews, while Darden Restaurants declined 1.5% after reporting a 1Q net loss of US$19.3m. About 6b shares were traded on US exchanges, 8% above the three-month average. S’pore shares are likely to stay subdued following the weakness on Wall Street, the gradual rebound in 10Y US bond yields and on lack of any solid catalyst. Expect to STI to trade within the 3,320-3,380 range with a downward bias. Stocks to watch: *Lippo Malls: Proposed to acquire Lippo Mall Kemang (LMK), a five-storey shopping centre located in South Jakarta, Indonesia, for $397m via cash of $340.7m and 111.1m new units at $0.405 each. To part-fulfill the cash portion, LMIR intends to issue up to 301.4m units, subject to unitholders' approval. LMK has a gfa of 150,932 sqm and net lettable area of 59,377 sqm, of which 92.8% are occupied as at Jun 2014. Proforma FY13 DPU post-acquisition is expected to improve to 3.34¢ (+2.8%), while NAV/unit will fall 0.9% to $0.4079. Aggregate leverage of the trust is expected to increase from 28.3% to 31.2%. *Sembcorp Industries: Investing $1.2b in to boost its power capacity in China from 987MW to 2607MW via acquisition of a 49%-stake in an existing 300MW coal-fired power plant in Chongqing, and the joint development of an adjacent 1,320MW coal-fired power plant, expected to be completed in 2017. *Artivision: Entered non-binding MOU to provide its video advertising technologies and platforms for video monetization to Chinese company, 合一, a subsidiary of NYSE-listed Youku Tudou, which is currently one of the biggest online video companies in China. *Popular: 1QFY15 net profit jumped 76.8% y/y to $9.4m while revenue increased 5.9% to $141.4m due to higher turnover achieved by the retail & distribution and publishing & e-learning divisions. Gross margins improved to 21.3% (+0.6ppt) on stricter cost measures. Bottom-line was also lifted by an absence of impairment losses recognized on two 18 Shelford units last year. *Vibrant: 1QFY15 net profit soared 89.9% y/y to $6.9m while revenue rose 8.2% to $50.5m, led by its financial services and logistics businesses. Gross margins widened 4 ppts to 32.4%. Improved bottom-line came from reduced fair value loss from quoted equity securities. This was offset by a 65.1% reduction of share of associates’ profits. *XMH Holdings: Net profit for 1Q4FY14 plunged 47.3% y/y to $1.4m on a surge in administrative and finance costs, even though gross profit improved 24.8% to $6.7m on higher revenue of $25.8m (+20.5%), mainly from the new projects business. Management is positive that Indonesia will gradually recover and customers will eventually take deliveries of diesel engine orders placed. *KOP: 1QFY15 revenue surged 67.4% y/y to $6.5m with increases recorded across all business segments but losses deepened to $3.0m from $1m a year ago, mostly the result of $2.4m one-off fees charged to immediate holding company, increase in administrative expenses and larger share of associates’ losses, due to the lack of sales in Ritz Carlton Residences by Royce Properties.