SG Market (13 Nov 14)

US Market: US stocks called for time, halting a five-day rally, as investors weighed a series of global issues ranging from Europe’s economic woes, a landmark US-China climate accord, huge fines for six of the biggest global banks and continuing slump in oil prices. The blue-chip DJIA dipped 3 pts to 17,612 (-0.02%), while the broad-based S&P 500 shed 1 pt to 2,038 (-0.07%) but the tech-heavy Nasdaq Composite added 15 pts to 4,675 (+0.3%), reaching its best level since Mar 2000. The small-cap Russell 2000 climbed 0.6%, extending its six-day run. The matkets started the session in the red, echoing the action in Europe, where shares closed sharply lower after the Bank of England lowered its growth and inflation forecasts, attributing to European stagnation. Separately, ECB’s President Mario Draghi’s stimulus plans was met with stiff resistance by German Chancellor Angela Merkel, who instead called for greater fiscal discipline across the EU. Investors are also watching tense developments in eastern Ukraine, which could boil over into open conflict again. Utilities were the biggest losers, down 2% as a group, after the US and China reached a historic agreement on carbon emission cuts to fight climate change, with Exelon (-3.5%) and Public Service Enterprise (-3%) among the top decliners. Banks also lost ground, down 0.5% after US and European regulators slapped US$4.2b fines on six-major lenders for rigging FX benchmark rates. Shares of the three US banks on the list, JPMorgan (- 1.3%), Goldman Sachs (-0.9%) and Citigroup (-0.7%) all fell. Oil companies slid 0.9% as oil prices continued its slide with the US crude closed at a thre-year low of US$77.18 a barrel, while Brent dived % to settle barely above the US$80 psychological level at US$80.38 as traders doubt OPEC would cut output at this month’s meeting. ExxonMobil lost 1.1%, Chevron 0.7% and ConocoPhillips 0.8%. Pushing the Nasdaq higher were Apple (+1.5%), Yahoo (+3.2%) and Twitter (+7.5%), which indicated it was considering creating additional mobile apps. Retailers gained 1.1% amid strong corporate earnings results, with Macy’s jumping 5.1% after posting a 23% rise in 3Q earnings, while watchmaker Fossil Group surged 8.4% after the watchmaker reported 3Q profit that beat estimates and announced a US$1b share buyback program. After the bell, JC Penny (-1.3%) and Cisco Systems (-0.2%) fell after reporting results. Volume was realtively quiet with 5.9b shares were traded on US exchanges, 9% below the three-month average. Advancing issues led declining ones by 1.2 to 1 on the NYSE and 1.6 to 1 on the Nasdaq. S’pore shares are likely tostay sluggish on lack of liquidity flows and signidicant catalysts to take the market higher. Immediate resistance for the STI remains at 3.310 with downside support at 3,270. Stocks to watch: *SingTel: 2QFY15 net profit jumped 19.3% y/y to $1b, while revenue rose 3.5% to $4.3b, driven by: 1) Group Consumer (+2.2% to $2.6b) from stronger home services and equipment sales and 2) Group Enterprise (+3.3 to $1.6b) from strong ICT revenue growth across Singapore and Australia. EBITDA margin dipped 0.3ppt to 30.9%. Bottom line was aided by a 24.2% increase in JV and associates profits to $644m, and a $65m gain from the dilution of equity interest in SingPost. 1HFY14 interim DPS of 6.8¢ maintained. *City Dev: 3Q14 profit rose 4.7% y/y to $127.2m, while revenue surged 58% to $1.32b, boosted by completion of a 602-unit EC and contributions from two new hotels acquired in 1H14. Bottom line grew at slower pace due to absence of significant divestment gains from non-core investment properties last year. Management sees fragile prospects but is confident the group can weather the down-cycle. BVPS at $8.79. *China Sunsine: Blowout 3Q14 results. Revenue grew 32% y/y to Rmb582m, gross profit more than doubled to Rmb181m (+114%) and net profit tripled to Rmb83m. For the quarter, overall ASP jumped 16% to Rmb20,142 per ton, mainly due to industry supply shortage of the rubber accelerator products which Sunsine produces. The group’s sales volume continued to expand, rising 14% to 28,905 tons. BVPS at Rmb2.055 ($0.43). *Golden Agri: 3Q14 results disappointed, as net profit crashed 86% y/y to US$4.4m, impacted mainly by a deeper FX loss of US$29.3m (3Q13: US$6.2m loss). Revenue grew 17% to US$1.84b, boosted by an improved upstream business, bu gross margin contracted 2.3ppt to 15.3% due to a weaker CPO price environment. Interim DPS of 0.408¢ (3Q13: 0.585¢). BVPS at US$0.69. *Biosensors: 2QFY15 net profit more than halved to US$4.9m (-57% y/y), while revenue fell 10% to US$74.8m, as growth in critical care was offset by declines in interventional cardiology, cardiac diagnostic and licensing and royalties revenue. Bottom line impacted by the 3ppt contraction in gross margin to 70%, arising from weaker sales of Nobori stents in Japan, the cardiac diagnostic businesses, as well as price reductions in various geographical locations. BVPS at US$0.745. *Overseas Education: 3Q14 results disappointed, as earnings decreased 5.3% y/y to $5.3m, Revenue dipped 3.8% to $24.9m, dragged by lower student enrolments (estimated -10% to 3,225 students) after Dulwich and GEMS opened their first international schools in Singapore in Aug/Sep ’14. *SIIC Environment: 3Q14 results were strong and within expectation. Revenue rose 10% y/y to Rmb306.4m, and net profit soared 75% to Rmb67.0m. Water treatment was the biggest growth driver, with revenue up by 10%, due to higher water treatment volume and new acquisitions during the period. Overall gross margin dropped 6.5ppt to 26.2%, dragged by certain construction projects. Nevertheless, bottom line was shored up by a doubling of finance income to Rmb96.7m, net gain on disposal of subsidiaries and higher government subsidies (Rmb9.1m) and boost in share of JVs to Rmb 11.5m. BVPS at Rmb0.427. *Courts Asia: 2QFY15 net profit plunged 76% y/y to $1.7m, taking 1HFY15 net profit to $6.8m (-52%). For the quarter, revenue slid 20% to $178.6m, dragged by both the Singapore (-23%) and Malaysia (-13%) operations. Gross margin rose 4.2ppt to 32.7%, mainly due to Singapore’s sales mix shifting towards the higher margin electrical and furniture categories. But bottom-line was weighed by a 10% rise in admin expenses to $37.3m. BVPS at $0.544. *Yanlord: 3Q14 net profit collapsed to Rmb45.4m (-92% y/y), taking 9M14 net profit to Rmb461.9m (-43%). Revenue plunged 72% to Rmb977.2m, due to lower GFA delivered and ASP per sqm achieved for the period. Gross margin rose to 35.4% from 31.4%. Bottom line was impacted by a spike in admin expenses (+141% to Rmb102.2m) and rise in selling expenses (+27% to Rmb67.7m). BVPS at Rmb9.23. *Ying Li: Swung back into a net profit of Rmb11.0m, from a net loss of Rmb12.1m a year ago, taking 9M14 net profit to Rmb58.7m (9M13 net loss: Rmb21.6m). Revenue swelled more than nine-fold to Rmb260.7m, due to revenue recognition upon the handover of the remaining completed SOHO units in Blocks 2 and the office units in Block 1 of the Ying Li International Plaza during the quarter. BVPS at Rmb1.54. *ValueMax: 3Q14 net profit dropped 44% y/y to $1.7m, even though revenue rose 7.5% to $87.6m, as the increase in contribution from the retail and trading of pre-owned jewellery and gold business, helped offset a weaker pawnbroking business. Bottom line was dragged by lower gross margin (-1.5ppt to 7%) and increased admin expenses. BPVS at $0.28. *Yongnam: Secured several contracts worth $93.1m in total. These include structural steelworks for Changi Airport’s mixed-use Project Jewel complex, fabrication of steel components for jack-up structures in the offshore sector, and contracts for the supply of kingposts for the Thomson-East Coast MRT Line. *Japfa: Clarifies that there was no incident of bovine tuberculosis in its China dairy farms, following foreign media reports that alleged that several of the cows owned by HK-listed China Modern Dairy have been tested positive for the disease. *Starburst: 3Q14 slipped 6.4% y/y to $1.6m despite more than doubling of revenue to $7.6m and 5.3ppt improvement in GPM to 63.4%. Other operating income was reduced 89.6% y/y from a high base in 3Q13, which included a large sum of trade receivables write-back, other operating expenses increased $1.2m mainly due to IPO expenses. Going forward, management wants to grow recurrent income by clinching maintenance services contracts. BVPS at $0.1959 *Rex International: 3Q14 net loss widened to US$4.9m taking 9M14 net loss to US$11.1m. No revenue was recorded during the quarter, as the group was primarily involved in exploration and drilling activities. Bottom-line was pressued by a 28% rise in admin expenses to US$2.1m as well as FX losses of US$1.7m. The previous year bottom-line was also aided by a US$4.0m gain on dilution in the Group’s interest in HiRex, which was diluted from 49% to 41%. BVPS stands at US$0.19. *Swiber: 3Q14 crashed into US$27.5m losses. Revenue tumbled 60.9% to US$107.3m due to completion of projects and GPM contracted 13.4ppt to 0.8% due to high operating leverage. Recently awarded projects will commence in 4Q14. BVPS at US$0.919. *Swissco: 3Q14 profits climbed 87.8% y/y to $11.0m, the post RTO operations contributing $35.9m in revenue, mostly contributed by Maritime Services and OSV Chartering. Gross margin stands at 22.9%. Share of profits from JVs decreased 13.7% y/y to $5.2m due to lack of deferred tax provision in 3Q14 and loss of $0.5m from JV with Hadi Int’l. BVPS at $0.4096. Separately, a Swissco JV had secured a seven-year OSV charter contract valued at US$115m, to be deployed around 1Q15. *RH Petrogas: losses for 3Q14 rose 78% y/y to US$19.5m as gross profit shrank 56% to US$3.2m on lower average realized oil prices, lower oil and gas entitlement and higher cost of production and higher amortisation of O&G properties. US$20.5m impairment loss on goodwill was partially offset by absence of write-off from unsuccessful exploration and allowance for inventory obsolescence. BVPS at US$0.2179. *LionGold: losses for 1QFY15 snowballed to $21.2m from $0.7m profits a year ago. The business is unprofitable, with negative gross profit of $1.3m as cost of production at gold mines increased while mined quantity increased 39.8% y/y but grade of gold extracted fell from 8.3g/t to 5.5g/t and price of gold is weak. In addition, revenue and gross profit of its non-core PRC office equipment manufacturing operations are down $2.6m and $0.3m y/y. Outlook for both segments remain challenging. BVPS at 7.03 cents. *ABR: 3Q14 profits rose 35.2% to $2.0m on the back of 2.6% increase in revenue to $24.9m, mainly contributed by restaurant operations in Singapore, as gross margins improved 0.75ppt to 46.5% and operating costs were cut. BVPS $0.468 *Kingsmen Creatives: profit for 3Q14 rose 7.8% y/y to $3.5m on 35.6% increase in revenue to $86.2m, tampered by 32.4% jump in salaries and wages to $14.1m. BVPS at $0.4557 #ISDN: 3Q14 profits almost tripled to $2.7m on the back of 48.8% y/y increase in revenue to $59.3m, mainly contributed by 56.6% growth in China to $45.7m and 28.8% growth in Singapore $9.7m, partially offset by 17.3% contraction in its smallest market segment Malaysia. BVPS at $0.3339. *Informatics: 2QFY15 swung into a net loss of $0.9m from a net profit of $0.3m the previous year, taking 1HFY15 net loss to $3.1m (1HFY14 net profit at $1.0m). Revenue fell 33% to $4.7m, mainly due to lower students enrolled in the Singapore and UK operations. Bottom-line was weighed by a 16% rise in employee expenses to $2.9m. *Chasen Holdings: 2QFY15 net profit fell 45% to $0.2m taking 1HFY15 net profit to $0.4m (-47%). Revenue was down 6% to $24.5m, due to the decrease in Technical and Engineering Business Segment, partially offset by an increase in revenue from the Third Party Logistics Business Segment. Gross margin was relatively stable at 24%. Meanwhile bottom-line was non-controlling interest net profit jumping to $0.3m from $0.01m. *Falcon Energy: 2QFY15 net profit tumbled 49% y/y to US$19.7m, as revenue fell 71% to US$53.4m, weighed by oilfield services (-22%) from lower EPCC contracts, partially offset by the marine division (+31%) where more 3rd-party vessels were deployed. Gross margin fell substantially to 16.2% (-28.3 ppt), from the absence of revenue from the drilling division. Meanwhile, the bottom line was boosted by a disposal gain of a vessel (US$16.8m), mitigated by FX loss from the depreciating USD/SGD, as well as additional headcounts. BVPS of US$0.3217. Interim DPS maintained at 0.5¢. *Amara Holdings: 3Q14 slipped 6% y/y to $3.6m, dragged by higher staff costs (+16%) from additional headcount, as well as higher operational expenses (+16%). Revenue remained flat at $18.6m, with higher sales contributed from Hotel Investment and Management segment, partially offset by lower revenue from fewer units of development property sold in Property Investment and Development segment. BVPS of $0.543. *Sinarmas Land: 9M14 net profit fell 33% to $322.6m, while revenue fell 23.7% to $642.4m, due to an absence of land parcels sales in BSD City to JVs and associates. These were partially mitigated by higher sales in Kota Wisata and BSD City, and the consolidation of PDL and its mixed-use development project Kota Deltamas. Gross margin fell 1.2ppt to 71% and the absence of land parcels sales. Bottomline also weighed by an 81.5% decrease in exceptional items to $10.7m. BVPS of $0.49 *Advanced Integrated: has been awarded three projects totalling US$6.5m