SG Market (27 Oct 14)

US Market: US stocks ended Fri on a positive note with the S&P 500 capping its best week since 2013, buoyed by strong corporate earnings as markets shrugged off fears of the possible spread of Ebola in New York. The blue-chip DJIA advanced 127 pts to 16,805 (+0.8%), while the broad-based S&P 500 gained 14 pts to 1,965 (+0.7%) and the tech-heavy Nasdaq Composite added 31 pts to 4,484 (+0.7%). Earnings season took centrestage, with about 70% of S&P 500 companies that have released results so far this quarter beating earnings estimates and 60% surpassing sales forecasts. Healthcare shares were the biggest gainers (+1.4%) after a New York City doctor was tested positive for the Ebola virus. Pharmaceutical firm Bristol-Myers Squibb gained 2.2% after reporting 3Q eanings above estimates. Pfizer added 1.8%after its board approved a new US$11b share buyback program. Microsoft rose 2.5% as quarterly revenue topped expectations on cloud computing growth. Procter & Gamble climbed 2.3% after announcing in-line earnings and plans to split its Duracell battery business into a separate company. On the downside, Amazon was pummelled 8.3% lower on a its 3Q loss puts it on track to record its largest annual loss in a decade, while Ford dropped 4.3% after its 3Q profit missed estimates on higher recall costs and lost production of its F-150 pick-up truck. Among other stocks in focus, SodaStream soared 15%, on reports that the home beverage carbonation system maker is planning to test PepsiCo-branded products, while Internet radio service provider Pandora Media plunged 13.5% on slower 3Q user growth. Volume shrank to 5.3b shares traded on US exchanges, 16% below the three-month average. Advancing issues outnumbered declining ones by 1.7 to 1 on the NYSE and 1.3 to 1 on Nasdaq. S’pore shares are likely to respond positively to the continued strength on Wall Street but gains will depend on US GDP data, key corporate earnings from Chevron, ExxonMobil, Dupont, Visa, Facebook, all due out this week and the critical FOMC meeting on 28-29 Oct, when the central bank is expected to end its monthly bond purchases after reducing it to US$15b last month. Investors will also keep an eye for a string of 3Q results from local index heavyweights OCBC, UOB (30 Oct) and DBS (31 Oct), several REITs (CDL Hospitality Trusts, Starhill Global, OUE Commercial), Hutchison Port, Indofood Agri, SMRT and others. A break of the 3,230 resistance could put the STI on the upward path towards immediate obejective at 3,260 before meeting the 50-dma at 3,280 with downside support at 3,180. Stocks to watch: *Raffles Medical: 3Q14 revenue and net profit both grew 11% y/y to $94.5m and $15.4m, respectively. Revenue from Healthcare Services jumped 16.4%, driven by higher patient load, an expanding clinic network and increased provision of healthcare insurance services. Hospital Services revenue climbed 7.3% with the addition of new specialist consultants to the group and higher inpatient admissions. The group’s net cash position remained healthy at $118.9m ($0.21/share), despite dropping from $130.6m in 2Q14, after making payments for capex ($10.4m) and interim dividend ($8.5m). #Mapletree Commercial Trust (MCT): 2QFY15 DPU rose 9.4% y/y to 1.97¢, as distributable income grew 11% to $41.4m. Revenue climbed 6.3% to $70m, and NPI advanced 8.8% to $52.1m, due to positive contributions from VivoCity, PSAB and Mapletree Anson. Occupancy stood at 98.5% with WALE of 2 years. Aggregate leverage was 38%, with all-in interest cost of 2.17%. BVPS at $1.16. *Mapletree Greater China Commercial Trust (MGCCT): 2QFY15 DPU advanced 10.4% y/y to 1.61¢, taking 1HFY15 DPU to 3.16¢ (+11.1%). Revenue grew 6.9% to $67.5m, and NPI increased 9% to $55.1m, led by strong rental reversions at Festival Walk (+21%) and Gateway Plaza (+32%). Property operating expenses dipped 1.6%, largely due to lower leasing commissions and marketing and promotions expenses. Management says Festival Walk experienced minimal impact from the on-going protests in Hong Kong, and expects steady performance for the property for the rest of the year. BVPS at $1.04. *CapitaRetail China Trust (CRCT): 3Q14 DPU grew 10.3% y/y to 2.35¢, and distributable income advanced 14.1% to $19.5m, but still fell short of the street’s expectations. Gross revenue and NPI both expanded ~30% to $51.4m and $32.3m, respectively, driven by new contribution from CapitaMall Grand Canyon, and positive rental reversion (+22.6%) from other multi-tenanted malls. However, portfolio occupancy slipped from 0.5ppt q/q to 97.6%, due to lower occupancy at the Chinese malls - Mingzhongleyuan, Qibao and Wuhu. Gearing remained healthy at 30.8%, with low weighted average cost of borrowing at 3.47% and a well-spread debt maturity profile. BVPS at $1.49. *GMG Global: Swung into a 3Q14 net loss of $4.9m from a net profit of $1.5m a year ago, taking 9M14 net loss to $19.6m (3Q13 net profit: $15.7m). For the quarter, revenue plunged 25% to $180.8m, due to a fall in the average selling price of rubber. Bottom-line was further impacted by associate losses at $0.8m, versus associate profits of $2.6m in 3Q13. *Ho Bee: Buying a freehold property known as 60 St Martin’s Lane in Covent Garden in London for £43.9m. The 36,350 sf building comprises six floors of Grade A office accommodation and a retail component, and is fully leased until 2026 with annual rental income of ~£1.67m (next rent review in 3Q16). *ISOTeam: Acquiring four local companies for ~$11.0m, as part of its plans to become a complete building and maintenance team. Funding will be via a combination of cash and issue of new ISOTeam shares priced at $0.50 each, or at 10% discount to the VWAP of the market day immediately preceding the date that the agreements are inked with the respective target companies. *Linair Technologies: Awarded a contract by Tanenake Corp to install the air con mechanical ventilation system for S’pore Changi Airport Terminal 4 worth an aggregate $24.4m. *Ezion: Extends long stop date for the $55m disposal of Ezion Offshore Logistics Hub and Teras Australia to AusGroup, till 31 Dec’14. *Global Yellow Pages: Completed the $38.5m acquisition of a 100% stake in Pakuranga Plaza. *Pavillon: Profit warning. Expects to incur loss for 1HFY15 on lower revenue in Singapore and China, increased personnel costs, and fixed asset written off upon closure of an outlet in Shanghai. *HTL Int’l: Profit warning. Expects to report 3Q14 net loss due to an increase in operating overheads resulting from a one-off expense incurred in connection with the cessation of an agency. Nevertheless, the group expected to be profitable for the full financial year. *Blumont: Profit warning. Expects to report 3Q14 losses arising from fair value readjustments of the group’s investments in transferable securities (financial assets). Results due on or before 14 Nov.