SG Market (24 Oct 14)

US Market: US stocks closed with solid gains, fuelled by upbeat eurozone data and strong earnings from two industrial heavyweights, which alleviated recent worries about slowing global growth, but came off session highs in late trading following a first reported case of Ebola in New York. The blue-chip DJIA bolted 217 pts to 16,678 (+1.3%), while the broad-based S&P 500 surged 24 pts to 1,951 (+1.2%), up 4.7% since mid-Oct, and the tech-heavy Nasdaq Composite added 70 pts to 4,453 (+1.6%). Reflecting the fluctuating risk appetite, the CBOE Volatility Index dropped 7.5% to 16.53. Investors welcomed stronger manufacturing data from the eurozone, as factories in Germany rebounded from a slump in Sep, while Spain showed some signs of recovery with 3Q unemployment dropping to the lowest level since 2011. In the US, weekly jobless claims rose by 17,000 to 283,000 but held below the 300,000 mark for the sixth straight week, suggesting that the labour market continues to improve. However, sentiment was a little jolted after news surfaced that a doctor who had returned from West Africa was rushed to a New York hospital with symptoms of the virus. Industrial (+2.2%) and energy (+1.8%) sectors led the advance as investors bought into cyclical stocks and dumped safe haven investments such as telcos (-1.2%) and bonds, sending the 10Y yields up 6bps to 2.28%. Caterpillar surged 5% after its 3Q profit blew away estimates on higher sales in North America and cost-cutting measures, prompting the construction equipment maker to raise its full year forecast. Industrial and consumer materials company 3M jumped 4.4% after its 3Q earnings came in above expectations on improved sales in all its businesses. American Airlines (+3.9%) and United Continental (+0.7) both climbed after their 3Q results beat estimates. Chinese e-commerce giant Alibaba rallied 3.1% to an all-time high of US$94.45, up 39% since its US$25b IPO last month. On the downside, Yelp plunged 18.6% after the online review company projected 4Q revenue of US$107-108m, below the US$111m consensus forecast. Wireless carrier AT&T slumped 2.4% after posting a drop in 3Q earnings that missed estimates that led to it cutting its 2014 sales forecast. General Motors dipped 1.2% as its 3Q net income fell 14.3% on weak performances in Europe and South Americal although the results were higher than projections. After the bell, Amazon sank 10.4% after its losses widened ten-fold to US$437m, missing after a series of product launches and the online retail giant gave a disappointing forecast for the holiday season, while Microsoft rose 3.8% after reporting revenue and profit that topped expectations. About 7.1b shares were traded on US exchanges, 13% above the three-month average. Declining issues outnumbered advancing ones by 3.4 to 1 on the NYSE and 2.7 to 1 on Nasdaq. S’pore shares may get a lift from the improving sentiment on Wall Street with the STI attempting to break past topside resistance at 3,230 towards the next objective at 3,280. Ddownside support now shifted to at 3,180. Stocks to watch: *Ezra: 4QFY14 net profit climbed 10% y/y to US$11m, as revenue grew 6% to US$446m, buoyed by its subsea services segment, though partially offset by a decrease in sale from the marine services and offshore support services segments. Gross margin declined 4 ppts to 14% mainly due to weakness in the AHT and PSV segments. Bottom line was further shored up by the absence of an impairment loss (US$2m) and disposal loss (US$1.2m), as well as lower admin expenses (-17%). The group boasts an order backlog of US$2.4b, with the bulk of contracts to be executed over the next 12-18 months. No dividends declared (FY13: 0.5¢/share). Separately, group has clinched contracts worth an aggregate US$70m from a variety of national oil companies, oil majors and contractors. Scope of work includes subsea installation of umbilicals, flowlines and jumpers, as well as provision of services to support rigs. Work has commenced for several projects, with the others slated for offshore execution from 4Q14 to 2Q15. *CCT: 3Q14 distributable income grew 4.8% to $61.6m, while DPU was up 2.9% y/y to 2.1¢, as the unit base expanded by 2.2% arising from the conversion of convertible bonds (2.3m units) and asset management fees (1.9m). Gross revenue and NPI improved 8.4% and 8.6% to $66.4m and $51.9m, respectively, buoyed by higher average office portfolio rent of $8.42 psfpm (+4.9%). Overall occupancy stood at 99.4% with WALE of 7.7 years. Leverage was 30.2% with an average cost of debt at 2.3%. BVPS at $1.69. *Ascendas REIT: 2QFY15 DPU edged up 1.7% y/y to 3.66¢, and distributable income rose 1.1% to $86m. Revenue expanded 8.6% to $164.8m, and NPI grew 7.0% to $114.7m, underpinned by recognition of income from Nexus@one-north, A-REIT City@Jinqiao, HIC, Aperia, as well as positive rental reversions (+6.3%). Portfolio occupancy stood at 87.2% with WALE of 4 years. Aggregate leverage was 32.6%, with average debt maturity of 4 years. BVPS at $2.07. *Cache Logistics Trust: 3Q14 DPU inched up 0.7% to 2.14¢, taking 9M14 DPU to 6.42¢ (-1.2%). Gross revenue improved 0.4% to $20.9m, however properly expenses rose, resulting in slightly lower NPI of $19.5m (-0.5%). Leverage stood at 28.8%. Cache offers 7.2% annualized yield. BVPS at $0.97. *Aztech: 3Q net profit fell 18% to $2.0m, despite a 19% growth in revenue to $79.3m. Top line was propelled by the Electronics segment (+9% to $46.9m), and higher revenue from the Materials Supply and Marine Logistics segment (+35% to $31.14m). Gross margin however, contracted to 11.0% (-2.6ppt) due to rising costs and increasing competition. *Midas: Awarded Rmb1.2b worth of contracts. Its 32.5% owned JV Nanjing SR Puzhen Rail Transport Co and Shanghai Alstom jointly secured a metro train contract for the Nanjing Metro Ninghe Intercity Line Phase 1 (Rmb897m). Separately, wholly-subsidiary Jilin Midas also secured orders for the supply of aluminum alloy extrusion profiles and fabricated parts to two major European train projects (Rmb256.8m), and three PRC metro train component parts contracts (Rmb 78.7m). *Isetan (Singapore): Signed an MOU with the Japan Association of Overseas Promotion for Food and Restaurants to negotiate and execute a tenancy agreement for the 4th floor of Isetan Orchard at Wisma Atria, with the intention to invite Japanese F&B companies to operate outlets and/or restaurants at the premises. *IEV: Entered into a 12-month MOU with PT Maxpower Indonesia to collaborate on LNG supply for the purpose of remote power generation in North Sumatera, beginning with a feasibility study. *Del Monte Pacific: Says its Philippine public offering which ended 22 Oct was oversubscribed and all the offer shares were sold at the disclosed offer price of P$17 each. Target date of listing of the offer shares on the PSE and SGX is 30 Oct. *Shangri-La Asia: Proposed a 1-for-7 rights issue at HK$11.10 apiece. Maximum net proceeds of HK$4.9b will be used to repay bank loans, for working capital and to fund capex for on-going hotels and development projects. *LionGold: Profit warning. Expects further pretax loss in its audited FYMar14 financials compared to that the unaudited results announced on 20 May, due to additional losses from impairment of available for sale financial assets and additional loss on exploration and evaluation expenditure. *Rotary Engineering: CFO Choo Peng Leong Phillip to resign wef 30 Nov