SG Market (29 Oct 14)

US Market: US stocks rallied on a broad front following a strong reading on consumer confidence and another round of corporate earnings ahead of the Fed’s policy decision this Wed. The blue-chip DJIA jumped 188 pts to 17,006 (+1.1%), while the broad-based S&P 500 climbed 23 pts to 1,985 (+1.2%), just 1.5% shy of its all-time high, and the tech-heavy Nasdaq Composite added 78 pts to 4,564 (+1.8%). The Russell 2000 index of small-caps surged 2.9% to 1,149, back above its 200-dma since Sep. Expectations are for policy makers to end the Fed’s bond-buying stimulus as planned but reiterate its dovish stance on interest rates. Market watchers highlighted that the majority of US companies that reported 3Q earnings so far has exceeded estimates, negating concerns about weak global demand. Adding to the positive mood, consumer confidence leapt to its highest level since Oct 2007, a good sign for the upcoming shopping season. This overshadowed separate data which showed that new orders for durable goods unexpectedly fell 1.3% in Sep, dragged by the volatile transportation sector. All 10 major industry groups advanced, led by energy stocks (+2.2%) as Brent crude rose above US$86 a barrel on a weaker USD. Chevron (+1.8%), ExxonMobil (+1.4%) and Transocean (+4.8%) all gained. Among key stocks in focus, biotech firm Amgen soared 6.1% it unveiled plans to cut jobs, enhance shareholder payouts and raised its full-year revenue and profit forecast. Pfizer inched up 0.2% as earnings came in slightly higher on stronger sales of its vaccines but offset by patent expiries in some drugs. Madison Square Garden soared 11% on reports that it is exploring the possibility of splitting into two separate companies to unlock value in its sports franchises. Wireless carrier T-Mobile rose 3.1% on optimism that it will add more customers this year. IBM gained 1.1% on news that the board has approved US$5b in additional funds for share buybacks. Yahoo added 2.6%, extending a nine-day winning streak to 21% following its 3Q results last week. Apple rose 1.6% after Alibaba (+1.9%) expressed interest in a mobile payment tie-up with the iPhone maker. On the losing end, Twitter slumped 9.8% after reporting a wider 3Q loss and slower user trends, prompting it to lower its 4Q revenue forecast. Department store chain Kohl’s lost 6.6% after projecting a sales drop in 3Q and full year earnings at low end of estimates. Freeport-McMoran declined 4.2% as 3Q earnings slid 33% on lower gold and copper prices. About 6.2b shares traded on US exchanges, on par with the three-month average. Advancing issues overwhelm declining ones by 5.2 to 1 on the NYSE and 4.1 to 1 on Nasdaq. S’pore shares are likely to get a lift from the broad rally on Wall Street and positive opening in Asian bourses with both Tokyo (+1%) and Seoul (+0.8%) trading higher. Firmer oil prices overnight could also put a temporary bottom on oil-related stocks such as Keppel Corp and Sembcorp Marine. Yoma may come into play following its sterling 2QFY15 results. The STI is currently struggling to keep above the 20-dma at 3,220. A sustained break of this resistance may put it on trek towards the next obejective at 3,260. Downside support remains at 3,180. Stocks to watch: *Yoma: 2QFY15 net profit more than tripled to $10.8m (+222% y/y). Revenue surged 53% y/y to $41.2m, driven by the solid performance of the real estate division, particularly the Star City project which accounted for ~80% of revenue. During the quarter, the group received booking deposits for an additional 106 units out of the 1,043 units available at Star City Zone B, bringing total sales to 856. Meanwhile, Yoma entered into an agreement with a third party investor to develop and manage the construction and sale of the 950 apartment units in Zone C, and has recorded an upfront revenue of $25.2m as consideration, with performance fees for managing project construction and share of profit from the sales of units to be recognised in the coming quarters. BVPS at $0.37. *OSIM: 3Q14 results came in below expectations. Net profit plunged 28% y/y to $16.4m, affected by start-up costs for TWG Tea expansion in Taiwan and China and legal costs involving two lawsuits in Singapore and HK. Meanwhile, revenue grew just 3.4% to $158.2m, mainly driven by sales in the South Asia region. In China, where the group has 256 OSIM outlets, OSIM has closed 25 non-performing outlets and opened 9 new ones, year-to-date. Interim dividend maintained at 1¢. *Sheng Siong: 3Q14 results largely in line. Net profit jumped 15.4% y/y to $12.2m, as gross margin improved 1 ppt to 24.2%. Revenue grew 4.8% to $186.4m, driven by a 3.4% increase in same store sales growth, thanks to stronger marketing activities, renovation of old stores and extension of store operating hours. To date, Sheng Siong has acquired 3 new stores, although its store count remains unchanged at 33 since end 2012. *Wing Tai: 1QFY15 revenue fell 28% to $160.1m, though net profit was flat y/y at $24.2m, despite a one-off gain on disposal of shares of a property subsidiary in Indonesia ($21.2m) and increase in contributions from JVs and associates (+69%). Top line was made up of progressive sales recognized from The Tembusu, additional units sold in Helios Residences in Singapore and The Lakeview in China. BVPS at $3.85. *STATS ChipPAC: Swung to a 3Q14 net loss of US$5.3m, reversing from a net profit of US$13.3m a year earlier, weighed by the absence of a one-off receipt of flood insurance settlement last year. Meanwhile, gross margin also declined 0.4ppt to 11.8%, on flat revenue of US$403.8m. Top line was affected by a delay in wafer supply at several key customers and demand shift from high-end smartphone to low-end smartphones, but offset by ramp up for advanced packaging programs and seasonal strength in the consumer segment. *Giken Sakata: 4QFY14 net profit surged 473% to $2.1m, despite a 46% drop in revenue to $69m. Gross margin expanded 9.5 ppt to 17%, attributable to a change in product mix in its precision engineering segment. Top line fell due to discontinuation of a large project in Mar ‘14. The acquisition of a 53.7% stake in Cepu Sakti Energy, an upstream O&G player in Indonesia, is expected to start contributions in 1QFY15. *GLP: Together with its 50% JV partner, will each inject additional US$138m of equity into the Japan Development Venture to raise its total size by 29% to US$2.2b (when fully leveraged and invested). This will boost the venture’s investment capacity to US$800m, and lift GLP’s total assets under management to US$13.2b. Separately, in 2QFY15, the group commenced development of GLP Soja II, a 78k sqm multi-tenant logistics facility in Okayama prefecture, Western Japan, with total development cost of ¥9.6b (US$88m). *The Hour Glass: Acquired Watches of Switzerland (WoS) for $13.3m cash. WoS is a 50-year old watch retail chain with five outlets in Singapore. *Trek 2000: Expanded the use of its FluCard technology to Ricoh Imaging's new camera line - PENTAX K-S1 Sweets Collection. The FluCard is a secure digital memory card with built-in Wi-Fi capabilities. *YuuZoo Corp: Launched its first mobile game, Honey Snatch, developed in partnership with Thailand-based Sandbox. In addition to iOS platform, the game is set to be published on Google Play Store later this year. *Global Palm Resources: Positive profit alert for 3Q14, primarily attributable to the increase in the sales volume and average selling price of crude palm oil and palm kernel. Results to be released on or before 14 Nov.