SG Market (21 Oct 14)

US Market: US stocks rallied for a third day on optimisim over corporate earnings although gains were capped by IBM’s disappointing results. The blue-chip DJIA added 19 pts to 16,400 (+0.1%), while the broad-based S&P 500 gained 17 pts to 1,904 (+0.9%) and the tech-heavy Nasdaq Composite advanced 58 pts to 4,316 (+1.4%). Small caps also rebounded with the Russell 2000 jumping 1.2%. The CBOE Volatility Index, a measure of market anxiety, eased 15.5% to 18.57. IBM was the biggest drag on the market, slumping 7.2% as its 3Q profit collapsed 97% after it took a US$4.7b charge for offloading its loss-making semiconductor business to GlobalFoundries, while revenue dropped for the 10th straight quarter. Apple rose 2.1% after rolling out its Apple Pay mobile transaction system and extended its gains by another 1.1% in after-hours trade after delivering record 4QFY14 results on its best new iPhone launch. Airlines stocks 5.2% as Ebola fears abated. Delta Air Lines rose 4.8%, American Airlines climbed 5.5%, while United Airlines soared 5.8%. Oil services giant Halliburton edged up 0.6% as net profit leapt more than 70% due to continuing strength in the North American market. Toymaker Hasbro jumped 4.9% as its 3Q earnings topped estimates. Refiner Tesoro surged 8.4% on news of its plans to acquire OEP Resources’ natural gas pipeline and processing unit for US$2.5b. In other news, Sears Holdings bolted 23% following a capital raising exercise, which offered shareholders US$625m notes plus warrants. Volume normalised to 6.4b shares traded on US exchanges, 5% above the three-month average. Advancing issues outnumbered declines ones by 2.8 to 1 on the BYSE and 2.2 to 1 on Nasdaq. Earnings season will ramp up significantly this week with about 130 S&P 500 companies scheduled to report results. Of the 87 companies that have released quarterly earnings, 63% came in ahead of expectations. S’pore shares may take a pause and consolidate before making the next move with the STI likely to trade within its 3,220-3,120 range. Stocks to watch: *Keppel Land: 3Q14 net profit came in below expectations, declining 10.6% y/y to $113m on substantially lower contribution from property trading and higher minority interests, partially offset by growth in property investment and fund management. Revenue plunged 60% to $168.7m, as project sales at new launches almost stalled along with the general slowdown in Singapore and China property market, but bottom-line was cushioned by a $92m gain on divestment of Equity Plaza. BVPS at $4.59. *Keppel Land: Divesting a 51% stake in a Saudi Arabia condo project for $185.1m, and realise a net disposal gain of $68.4m. *Frasers Commercial Trust: 4QFY14 DPU rose 6.3% y/y to 2.21¢ despite a 2.7% expansion in unit base, bringing total FY14 DPU to a historical high of 8.51¢ (6.3% yield). Gross revenue expanded 10.5% to $31.8m, and NPI grew 8.8% to $23.8m, as significantly higher NPI contribution from China Square Central and Alexandra Technopark more than offset marginally lower NPI from the other properties. Portfolio occupancy stood at 96.5% with WALE of 3.9 years and a well-spread lease expiry profile. BVPS at $1.61. *Mapletree Logistics Trust: 2QFY15 DPU rose 3% y/y to 1.88¢, while distributable income rose 4% to $46.3m. Revenue grew 6% to $81.5m, and NPI climbed 3% to $68.7m, driven by two acquisitions in Malaysia and Korea, and higher revenue from existing assets in Singapore and HK, though partly offset by lower occupancy in several newly converted multi-tenanted building in Singapore. Occupancy stood at 97.2%, with WALE of 4.6 years. Aggregate leverage of 33.3%, with 76% debt hedged or fixed rated. BVPS of $0.97. *Triyards: FY14 net profit of US$26.7m (-15%) and revenue of US$268.6m (-2%) came in below estimates. 4QFY14 net profit slumped 49% y/y to US$5.3m, on revenue of US$48.8m (-36%), due to timing differences on profit recognition. Bottom line was also dragged by higher personnel expenses and business development related expenses. BVPS at US$0.574. *Lum Chang: Awarded a $128m HDB tender for building works at Admiralty Integrated Development, involving the building of public housing, medical center, hawker center, communal facilities, etc. Target completion by 1H17. Orderbook raised to $577m. *TTJ: Secured $22m of contracts to supply structural steelworks for Changi Airport Terminals 1 and 2, Tampines Town Hub, as well as civil defence shelter doors. This will boost the group’s order book to $119m. *King Wan: Secured four mechanical and electrical projects between Jul and Oct’14, totaling $21m. Works include plumbing, sanitary, mechanical ventilation system installation for projects such as a 9,200-bed workers dormitory, the 124-room New Futura at Leonie Hill Road, and Assisi Hospice. *Atlantic Navigation: Completed the mobilization of 8 vessels to support a key client undertaking an infrastructure project in offshore Qatar. The group is reviewing the addition of 2 more vessels to support the project. The total contract value for the charters is ~US$8m for 10 vessels with an average charter period of 4.5 months per vessel. *Q&M Dental: Issued 19.1m new shares (3% of enlarged share capital) to International Finance Corporation in relation to its convertible loan. *Ramba: Placing 37.5m new shares (9.7% of enlarged share base) at $0.40 each to Zymmetry Investments, Lim Han Feng, Lim Suryanti, and five other placees. *Isetan: Profit warning. Expects loss for 3QFY14 due to challenging outlook at flagship Scotts store and start-up costs for the new store in Jurong East. *Willas-Array: Profit warning. Cautions that 1HFYMar15 net profit may decrease by more than 40% y/y due to lower gross margin and decrease in share of associate profit. *Darco Water: Seeking shareholders’ approval at upcoming EGM (6 Nov) for proposed employee performance share plan, and change of auditors from Baker Tilly to Crower Horwath, following the former’s resignation. *Sysma: Audited financials discovered $0.25m trade receivables to be doubtful of collection. The impairment recognized lifts Sysma’s pretax loss by 1.5% to $16.5m.