SG Market (10 Nov 14)

US Market: US stocks held at all-time highs on a mixed payroll report which showed the economy created fewer-than-expected jobs, while the unemployment rate dropped to a six-year low. The blue-chip DJIA advanced 19 pts to 17,574 (+0.1%), while the broad-based S&P 500 edged up 1 pt to 2,032 (+0.03%) but the tech-heavy Nasdaq Composite slid 6 pts to 4,633 (+0.1%). The CBOE VIX index slipped 4% to 13.12, the lowest since 19 Sep. The Oct jobs growth of 214,000 fell short of the 235,000 expected but exceeded 200,000 for the ninth straight month and came against a revised 256,000 increase the prior month. Notably, the unemployment rate ticked down to 5.8%, the lowest level since Jul 2008, suggesting that domestic demand was holding up in the face slower overeseas growth. Utilities shares were among the best gainers, rising 1%, while the energy sector climbed 0.9%, led by a rebound in oil prices from a three-year low. Diamond Offshore (+5.7%) and Newfield Exploration (+3.3%) rallied to pace the gains. Sears soared 31% on plans to divest 200-300 stores to a newly formed REIT. King Digital Entertainment rallied 4% after its 3Q sales beat estimates with more bookings from games other than Candy Crush. Healthcare companies suffered the biggest declines, down 0.9% on news that the Obamacare health bill was headed back to the US Supreme Court, which could cut back the availability of federal health subsidies for Americans. Health insurers and care operators, which had benefitted from the healthcare overhaul were hit, sending UnitedHealth Group (-2.7%), Tenet Healthcare (-6.5%) and Humana (-6.6%) tumbling. Among other stocks in focus, Walt Disney fell 2.2% after guiding that earnings fell at its biggest division, TV networks. Drug maker Salix Pharmaceuticals slumped 34% after its CFO resigned amid a SEC investigation into its inventory financial statements. First Sloar sank 10.8% after its 3Q profits slipped and the solar panel manufacturer decided not to spin off its power plants into a separate listed entity. About 6.5b shares were traded on US exchanges, slightly above the three-month average. Advancing issues outnumbered declining ones by 1.6 to 1 on the NYSE, while they were almost even on Nasdaq. S’pore shares are likely to remain listless following the muted close on Wall Street and a largely uninspiring local corporate results scene so far. Investors are likely to turn their attention to the Hong Kong market, which is kicking off the Shanghai-HK connect link on 17 Nov. Upside for the STI is capped at 3,310 with immediate support at 3,270. *Noble: 3Q14 results in line with Maybank-KE estimates but missed street expectations. Net profit grew by almost 6 times from last year’s low base to US$154m. Agri was the biggest growth driver, with operating profit surging by 464% y/y, driven by better soybean crushing and sugar business. The energy division disappointed, as operating income fell 16% y/y, hurt by a poor coal market. The metal division margin remained low mainly to due challenging iron ore operations. Special DPS of 3¢ declared post its Agri sale. BVPS at US$0.83 ($1.07). *CapitaLand: 3Q14 core net profit was broadly in line, rising 37% y/y to $130m, driven by higher contribution from the shopping mall business (CMA), development projects in China and Vietnam, and lower finance costs. Revenue dipped 4.3% to $919m, due to lower units handed over from development projects in China, partly mitigated by higher recognition from Singapore development projects, and higher contribution from the shopping mall and serviced residence businesses. BVPS at $3.72. *Venture: 3Q14 results broadly in line. Net profit rose 3% y/y to $36.1m (+8% q/q), for a seventh consecutive better quarter, with net margin at the top of its recent 5%-6% range. Pretax profit grew at a faster 15% clip, driven by improved business mix and efficiency, and would have been reflected in net profit, if not for a higher than expected tax rate last year. Revenue edged up 1.7% y/y to $598.7m, driven by growth in the Test & Measurement/Medical segment (+26%), but offset by declines in Computer Peripherals & Data Storage (-35%) and Printing & Imaging (-10%). Management maintained an optimistic outlook, flagging that customer sentiment is generally positive. BVPS at $6.525. *Innovalues: 3Q14 net profit of $4.2m (+68% y/y, +17% q/q) exceeded forecast, driven by expansion in gross margin to 25.6% (+7.0 ppt y/y, +2.1 ppt q/q), attributable to a favourable sales mix and enhanced operational efficiency. Revenue rose 4.3% y/y to $28.5m, mainly due to increased orders in Automotive segment, offset by orders decline in the Office Automation segment. BVPS at $0.20. *Wee Hur: 9M14 net profit soared nearly 8-fold y/y to $102.5m, as revenue surged 146% to $603m. Top and bottom line growth was mainly driven by recognition of Premier@Kaki Bukit, which obtained TOP in Aug’14. BVPS at $0.33. *Sarine Technologies: 3Q14 net profit spiked 85% y/y to $5.7m, as revenue jumped 17% to $20.4m, buoyed by improved business sentiment, higher Galaxy-related recurring revenue from a broader installed base and increased sales of other rough diamond planning and processing products. Gross margin declined slightly from 73% to 70% due to changes in product mix. *Longcheer: 1QFY15 net profit spiked 73% y/y to Rmb37.9m, mainly boosted by a Rmb36.3m gain from disposal of Mobell Technology. Revenue jumped 42% to Rmb3.1m, as a result of higher rental income from positive reversion upon lease renewal of an investment property in Xi’an. *Loyz Energy: 1QFY15 turned a net profit of US$0.5m, reversing from a loss of US$1.6m a year ago, as revenue spiked 243% y/y to US$6.9m. Top line was driven by the 78.9k bbl of oil attributable to its 20%-share from its Thailand concessions. The group expects to raise oil production from 4,700 bopd to 5,000 bopd in the next few months. BVPS at US$0.174. *Frencken: 3Q14 net profit plunged 67% y/y to $2.3m, weighed by gross margin compression (-2.2ppt to 14.1%) and sharply lower FX gains (-84.7% to $0.3m). Revenue was flat at $120.9m (+1.1%), as growth in the semiconductor, medical, analytical and automotive segments offset declines in the industrial automation, office automation, tooling, and consumer and industrial segments. *Mapletree Logistics Trust (MLT): Acquiring two industrial properties at 190A Pandan Loop and 134 Joo Seng Road for $34m and $13.5m, respectively. The 10,400 sm gfa Pandan Loop property (40 year remaining lease) has an under-utilised plot ratio with the potential to double gfa by way of redevelopment. Upon completion of both transactions, MLT's aggregate leverage ratio will rise to ~34.9%. *Keppel Land: Divesting its indirect 30%-interest in each of S25 and T25 to Keppel DC REIT for $262.8m and $162m, respectively, for an aggregate gain of $65.9m. *Keppel T&T: Proposing to spin-off Keppel DC REIT via a listing on SGX. The new vehicle is expected to hold eight data centre properties in Asia-Pacific and Europe. *TIH: Signed MOU with Comcraft Asia Pacific (CAP) to set up an India focused JV to invest in Indian companies with long term growth potential and special situation opportunities. CAP is part of the privately held Comcraft Group, a multi-billion dollar international business conglomerate founded by the Chandaria family. *Spackman Entertainment: Its Hollywood film, When I Live My Life Over Again, will be exhibited during the American Film Market held between 5-12 Nov. As a co-presenter, the group is a significant investor in the project, having contributed US$0.5m, or 32% of the movie’s production budget. *Lian Beng: Will not be pursuing the listing of its engineering and concrete business on Taiwan Stock Exchange. *Ezion / AusGroup: Ezion has completed the sale of its marine supply base business to AusGroup.