SG Market (12 Nov 14)

US Market: US stocks eke out marginal gains, extending all-time highs in thin volumes as investors found little impetus to take big positions in the absence of economic data, while the bond market was closed for Veteran’s Day. The blue-chip DJIA flat-lined at 17,615 (+0.01%), while the broad-based S&P 500 edged up a scant 1 pt to 2,040 (+0.07%), setting its 40th record close for the year, and the tech-heavy Nasdaq Composite added 9 pts to 4,661 (+0.2%). The CBOE Volatility Index rose 3% to 12.92 after plunging 51% from its two-year high in mid-Oct. Homebuilders rallied 2.4% for a fourth day of gains after DR Horton (+2.2%) reported 4Q earnings that missed estimates but revenue rose on stronger home prices and orders. Rival Lennar climbed 2.4% to extend a seven-year high. Healthcare-related stocks also outperformed, led by UnitedHealth Group and Merck, both up 1%. But financials were weak, weighed by JPMorgan (-0.9%) and American Express (-0.7%). Cable providers remained under pressure after President Obama called for stricter regulation to protect an open Internet, sending Time Warner Cable (-1.3%) and Cablevision (-2.7%) down for a second day. Juniper Networks tanked 5.7% after its CEO was fired for improper conduct towards a customer. Chinese e-commerce giant Alibaba slid 3.9% to US$114.54, selling on news after raking mind-blowing US$9.3b in online sales during its annual Singles Day promotion. Online deals provider Groupon jumped 4.9% after giving 2015 revenue guidance that is above estimates. Among other stocks in focus, social gaming company Zynga surged 10.9% after reporting solid 3Q earnings and strong growth in mobile bookings, while Ford advanced 2.6% following the launch of its new aluminum-bodied F-150 pickup truck. Volume was subdued with 5.5b shares were traded on US exchanges, the lowest in two months. Advancing issues led declining ones by 1.1 to 1 on the NYSE, while the reverse was seen on the Nasdaq. S’pore shares are likely to take a breather after failing to break above the downward resistance line at 3.310 on the STI. A move towards the downside support at 3,270 could be on the cards in the short term. In key earnings news, Wilmar beat expectations, while Genting S’pore missed. Stocks to watch: *Genting SP: 3Q14 results missed expectations, again due to an unlucky quarter. Net profit halved y/y to $97.4m, while adjusted EBITDA fell 27% to $277.2m (consensus estimate: $356m). Revenue declined 17% to $644.8m, as gaming revenue fell 21% to $477.3m. VIP volume contracted 12% y/y, and VIP win rate was at a low of ~2.0% (3Q13: ~3.05%), though the impact was moderated by an estimated 6% growth in mass market GGR and a 21% reduction in bad debts to $39.7m (or 11% of VIP GGR). Non-gaming revenue dipped 2% y/y to $167m, but grew 9% q/q, as average daily attractions visitations recovered. Hotel occupancy at 95% with RevPAR of $408. *Wilmar: 3Q14 results beat, with core net profit up 10% y/y, 148% q/q to US$430m. Despite a marginal decline (-2.7% y/y) in revenue due to lower ASP for its consumer sector, margin was well sustained. Key highlights: 1) oilseeds & grains was the biggest growth driver (pretax profit +88% y/y), as soybean crushing operations in China improved significantly, 2) sugar sector returned to profitability with the start of sugar crushing season, and 3) palm oil sector margin remained depressed due to CPO refining overcapacity. *Fortune REIT: Strong 3Q14 results, as DPU jumped 24% y/y to HK$0.103, and distributable income rose 26% to HK$193.1m. Robust revenue of HK$416.6m (+32%) and NPI of HK$286.6m (+33%), driven by additional contribution from Fortune Kingswood and strong rental reversions across the portfolio. Occupancy at 97.1%, with passing rent of HK$35.7. Aggregate leverage was 31.2%. BVPS at HK$10.99. *UOL: 3Q14 net profit rose 10% y/y to $124.3m, but failed to keep pace with the 66% jump in revenue to $433.5m, as gross margin contracted 6 ppt to 13.4%. Top line was underpinned by recognition of a $212m from the completion of The Esplanade, Tianjin, accompanied by modest growth from PARKROYAL hotels on Beach Road and Pickering Street, and Pan Pacific Serviced Suites Beach Road. BVPS at $9.29. *HanKore: Posted 1QFY15net profit of Rmb12.9m, reversing from a net loss of Rmb7.8m a year ago, though mainly boosted by one-offs - write-back of debt provisions (Rmb10m), FX gain on SGD denominated notes (Rmb6.9m), and absence of fair value losses (Rmb Rmb35.7m). Otherwise, revenue slipped 9% y/y to Rmb130.3m, and gross profit declined 13% due to a lower contribution from the higher margin EPC service. BVPS at Rmb2.88. *United Envirotech: 2QFY15 net profit soared 145% to $18.0m, taking 1HFY15 net profit to $40.8m (+203% y/y). Revenue doubled to $105.4m, led by the water treatment (+63%) and engineering (+105%) businesses, as well as addition of $5.4m of membrane sale to external customers arising from Memstar Tech (acquired Apr). *Boustead: 2QFY15 net profit almost doubled to $17.5m, while revenue grew 14% to $129.7m, driven by its Engineering Services, Energy Related Engineering and Real Estate Solutions segment (+16%) and Geo-Spatial Technology segment (+10%). Gross margin improved 4ppt to 38%. Interim DPS of 2¢ maintained. BVPS at $0.668. *Petrafoods: 3Q14 net profit dropped 29% to US$10.6m, taking 9M14 net profit to US$37.5m (-14%). Revenue declined 6.5% to US$118.2m, due to keener competition, higher cost inflation and weakness in regional currencies. Gross margin held steady at 31.7%, although bottom line was weighed by a 5% rise in selling and distribution costs to $17.1m and doubling of finance costs to $1.0m. *Ramba Energy: 3Q14 net loss narrowed to $2.2m from $4.3m previously, taking 9M14 net loss to $7.4m (9M13 net loss: $10.9m). Revenue slipped 2.4% to $17.6m, mainly due to lower sales from Indonesia as a result of weakening Rupiah and lower gas production. Bottom line was aided by a 14.0% decline in total cost and operating expenses to $20.6m, mainly due to FX differentials and lower service costs. BVPS at $0.157. *Swissco: Its JV with Union Offshore has secured a US$115m charter contract for up to a seven-year period to support an oil company in Asia Pacific, and will be acquiring an offshore service unit to support the contract. Deployment is expected in 1Q15 after its refurbishment and upgrading. Separately, Swissco also secured another 12 month charter contract valued at US$3.9m, for a multipurpose vessel in the Middle East. *Soilbuild Construction: Won a $61.2m contract to erect a 16-storey commercial development at Jalan Besar/Lavendar Street, bringing year-to-date contracts secured to eight and total order book to $727.2m. *GLP: Signed four new lease agreements totaling 81,000 sqm in Eastern and Northern China, three of which were signed with leading third-party logistics providers serving demand from the automotive and consumer goods industries. *Tigerair: Oct operating stats. Pax traffic rose 6.3% y/y, while capacity dipped 0.1% to 977m. Passenger load factor up 4.8ppt to 79.2% *TalkMed: 3Q14 net profit advanced 14% y/y to $9.6m, taking 9M14 net profit to $28.4m (+18%). Revenue grew 8.9% to $15.6m, driven by an increase in patient visits and increase in patients requiring higher intensity care. Bottom line was buoyed by a halving of other operating expenses to $0.8m, due to absence of IPO-related fees accrued in 3Q13, despite incurring higher tax expenses of $2.1m (+19%). *Eurosports: 1H14 swung to net loss of $3.1m (1H14 net profit: $1.9m), while revenue plunged 41% to $15.8m, as sales of its Lamborghini cars fell from 12 to 4, on the back of tighter regulations and financing restrictions. Bottom line was further weighed by sharply lower gross margin of 14.4% (-9.3ppt), and a 55% increase in admin expenses. BVPS at $0.102. *Pan-United: 3Q14 profits dropped 31% y/y to $8.4m on 6% higher revenue ($195.7m), flat gross profits ($44.5m) and general rise in expenses across the board due to acquisition of Changshu Changjiang International Port and increased stake in Changshu Xinghua Port. BVPS at 49.4 cents. *Rotary: 3Q14 profits rose 37% y/y to US$10.9m. Revenue dipped 7% to $172.0m but gross profits climbed 49.7% to $29.0m as GPM increased significantly to 17% from 11% as a result of productivity improvement efforts and smooth project execution. Management is focused on execution of current projects, order book stands at $303m. BVPS at 42.5 cents. *BBR: Profits plunged 82.9% y/y to $1.4m despite 42.7% y/y revenue increase to $171.6m, as gross profit was impacted by project losses recognized for general construction projects, lower contribution from higher-margin property development as well as cost overruns in some key construction materials. Gains on disposal of property and investment in associate contributed to the $5.0m increase in other operating income, while share of results from associates turned negative. BVPS at 43.92cents. *Memtech: profits for 3Q14 rose to US$12.4m from US$1.9m a year ago, but due to US$10.9m gain from exchange gain in liquidation of subsidiary, stripping which core net profit slipped 23.7% y/y to US$1.5m. Revenue climbed 7.7% y/y to US$36.15m on better sales in consumer electronics and automotive segments, but gross profit dipped 12.1% to US$5.6m on higher material costs, different product mix as well as reclassification of packaging costs from sales and marketing expenses to cost of sales. BVPS at US$0.155