SG Market (03 Nov 14)

US Market: US stocks powered to fresh highs and gained back all its recent losses as the surprise stimulus by the Bank of Japan sparked a global rally. The blue-chip DJIA leapt 195 pts to a new record of 17,390 (+1.1%), for its best weekly gain since Jan 2013, while the broad-based S&P 500 surged 23 pts to an all-time high of 2,018 (+1.2%), up 8.4% from its Oct low and the tech-rich Nasdaq Composite jumped 65 pts to 4,631 (+1.4%), its highest since Mar 2000. US equities joined a global rally after the BoJ announced that it would expand its monetary base by up to ¥20t to ¥80t (US$724b) annually and triple its purchases of ETFs and REITs. The move dovetails plans by Japan’s Government Pension Investment Fund to double its holdings in local and foreign stocks. This comes just as the US Fed winds down the final US$15b of its US$85b monthly asset-buying scheme. Investors looked past softer-than-expected consumer spending in Sep, which fell for the first time in eight months, and higher employment costs, which rose for the second consecutive quarter to mark its biggest back-to-back gain since 2008. For more positive headlines, consumer sentiment rose in Oct to the highest level since Jul 2007, while Chicago PMI climbed to a one-year high. Market watchers noted that additional stimulus globally would aid the outlook for stocks, especially in a period where the US economy is showing signs of continued improvement. So far, better-than-forecast corporate earnings have helped the S&P 500 rebound from near correction territory with 76% of companies reporting results that exceeded expectations. All 10 major industry groups advanced, led by energy (+2%), materials (+1.9%) and technology (+1.8%) shares. Oil majors ExxonMobil and Chevron rose 2.4% and 2.3% respectively, after both companies reported quarterly profits which beat estimates, even as crude oil continued a selloff. Among other stocks in focus, Groupon soared 22% after the discount coupon firm reported sales and earnings wnich were ahead of estimates, while Linkedin vaulted 12.8% as mew business lines boosted 3Q revenue and profits. GoPro jumped 13% after posting better-than-expected 3Q results and gave an upbeat 4Q guidance. But Starbucks dropped 2.3% after its 4Q revenue missed forecasts. About 8.3b shares were traded on US exchanges, 27% above the three-month average. Advancing issues outnumbered declining ones by 3.3 to 1 on the NYSE and 2.4 to 1 on Nasdaq. S’pore shares are likely to take its cue from the record close on Walll Street to move higher. Having cleared the 3,260 resistance, the STI is set to test the next objective at 3,310 with downside support now placed at 3,230. Stocks to watch: *SMRT: 2QFY15 results beat street estimates. Net profit soared 76% y/y to $25.3m, driven by broad-based improvement across businesses, further aided by productivity gains. Top line grew 6% to $314m, with increases from all segments except LRT and Engineering services. Operating profit surged 67% to $33.3m, reversing sharply from the $6.8m operating loss from a year ago, boosted by better performance in the train and bus operations. Interim dividend boosted to 1.5¢ (1HFY14: 1¢). *NOL: Dismal 3Q14, posting a net loss of $23.1m (3Q14 profit: $20m), for a fourth consecutive quarter in the red. Revenue was flat at US$2.1b, as liner revenue (-2% to US$1.7b) was pressured by lower freight rates and volume, offsetting the growth in APL Logistics (+8% to US$399m). Efficiency gains helped NOL reduce its core EBIT loss by 31% to US$59m, but bottom line was weighed without the one-off disposal gain of NOL building recognized last year. BVPS at US$0.73. *UIC: 3Q14 net profit jumped 37% y/y to $59.7m, as revenue rose 17% to $178.4m, driven by higher trading property sales at V on Shenton, Alex Residences and Mon Jervois, and better performance from Pan Pacific Singapore hotel. Bottom line was boosted JV developments, Archipelago and Thomson Three. BVPS at $3.99. *OUE C-REIT: 3Q14 DPU of 1.4¢ came in 2.9% above IPO forecast, while distributable income of $12.2m beat by 3.2%. Gross revenue of $19.5m, and NPI of $14.5m outperformed forecast by 1.8% and 6.3%, respectively, on better occupancy and rental reversions, coupled with lower than expected utilities and maintenance costs. Occupancy stood at 97.2% with WALE of 3.7 years. Aggregate leverage was 39.5%, with average cost of debt of 2.59%. BVPS at $1.05. #Fragrance Group: 3Q14 net profit grew 6.7% y/y to $24.3m, aided by lower non-controlling interests. Pretax profit fell 9%, despite a revenue spike of 17.5% to $133.3m, dragged by lower selling prices of property development units and higher sales expenses, partially mitigated by lower finance costs from the capitalization of finance costs. Top line was driven by progressive recognition of income from property development projects of $128.7m (+21.2%), partially offset by lower investment income of $4.6m (-36.5%) due to the commencement of AEI works at investment property at Alexandra Road. BVPS at 13.4¢. *Global Premium Hotels: 3Q14 net profit edged up 3.3% y/y to $5.1m, taking 9M14 net profit to $12.9m (-9.1%). Revenue grew 9.3% to $17.2m, driven by full quarter contributions from Parc Sovereign Tyrwhitt (+$2.9m) and Fragrance Pearl (+$0.1m), though offset by lower same hotel revenue and closure of Fragrance Elegance. Bottom-line was dragged by an 18% jump in admin expenses to $6.6m, due to higher staff costs, depreciation and property tax. BVPS at $0.65. *Soilbuild Construction: 3Q14 net profit slumped 36% y/y to $4.0m, taking 9M14 net profit to $13.1m (-18%). Revenue sank 26% to $62.2m following completion of several major projects in 2014, and gross margin contracted to 10.6% (-0.6ppt), due to timing differences in the revenue recognition for projects with varying profit margins. The group has a current order book of $666m, with revenue visibility stretching over the next two years. BVPS at $0.115. *Mercator: 2QFY15 losses widened 16% y/y to $6.3m, as revenue slumped 33% to $14.3m, mainly due to a fall in spot rates, unscheduled repairs and lower rates for new contracts. *Sembcorp Marine: Secured a US$240m contract to build a new deepwater jack-up rig (Pacific Class 400 design) from BOT Lease, a leasing company of the Mitsubishi UFJ Financial Group. The contract value may be higher on additional specification requirements to be negotiated among the parties involved. Delivery is scheduled at end Oct ’16. This is SMM’s third jack up order year-to-date. *Keppel Corp: Secured a US$240m from BOT Lease, a leasing company of the Mitsubishi UFJ Financial Group, for a KFELS Super B Class jackup rig worth US$240m. Delivery is scheduled at end 2016. This is KEP’s 7th jack up order year-to-date. *DBS: May be interested in buying Coutts International, the non-UK private banking business of RBS, when it comes into the market around year end. Goldman Sachs has been appointed to handle the sale. *F&N / Thai Bev: A Singapore tribunal has ruled in favour of military-linked Myanma Economic Holdings, giving it the right to buy F&N’s 55% stake in Myanmar Brewery. *Cheung Woh Technologies: Acquiring a site in Senai, Johor, for RM8.3m ($3.2m), to expand its operations for secondary processes and electroless nickel plating of computer parts and components. *Oxley: Extended the MOU on its proposed acquisition of a freehold land in the city centre of Kuala Lumpur, Malaysia, from 4 Nov ‘14 to 5 Jan ‘15. * Hiap Seng Engineering: Profit warning. Expects net loss for 1HFY15 due to cost overruns for certain projects. *Grand Banks Yachts: Profit warning. Expects net loss for 1QFY15 due to longer-than-expected sale of inventory, one-off professional fees and amortization cost arising from the acquisition of Palm Beach Motor Yacht and restructuring expenses from streamlining of operation. Results to be released during the week of 10 Nov. *Dukang Distillers: Profit warning. Expects overall revenue 1QFY15 to be significant lower y/y, and a net loss for the quarter, due to the decrease in ASP and sales volumes of Luoyang Dukang and Siwu products as the Chinese government’s continued austerity measures affect wine and spirit sales across the nation. Results due on or before 14 Nov.