SG Market (17 Nov 14)

US Market: US stocks were little changed on Fri as traders tracked the price of oil as retail sales rebounded along with a jump in consumer confidence. The blue-chip DJIA gave up 18 pts to 17,635 (-0.1%), while the broad-based S&P 500 crept up half of a point to a new record of 2,040 (+0.02%) and the tech-heavy Nasdaq Composite added 8 pts to 4,689 (+0.2%) for its 5th day of gains. Over in Europe, France and Germany narrowly avoided recession in the 3Q, while the broader 18-nation eurozone chalked up anemic 0.2% US economic data showed retail sales rose 0.3% in Oct after a 0.3% drop the previous month as households increased spending, benefitting from falling import prices, especially lower gasoline prices. Meanwhile, the preliminary reading on consumer sentiment in Nov rose to the highest level since Jul 2007. But market reaction to the upbeat news was muted, weighed by concerns of high stock valuations, with buyers and sellers not showing much conviction. Analysts opine that between now and end of the year, markets will probably fluctuate sideways with a slight upward bias. Energy producers rose 0.8% following a rebound in oil prices. The confirmation of merger talks between Baker Hughes (+1.9%) and Hallibutron (+2.4%) lit up the oil services sector, including Schlumberger (+0.5%). Newmont Mining surged 5% as gold climbed 2.3% to US$1,188/oz. Among tech shares, Amazon jumped 3.5% after the online retailer ended a e-book pricing dispute with publisher Hachette. Networking specialist Cisco Systems extended its gains by another 2.5% after guiding for a better-than-expected forecast. Apple rose 1.2% to a new record of US$114.18. Fashion retailer Nordstrom advanced 1.3% after reporting 3Q sales and earnings that topped estimates. Biotechs were the biggest drag, slumping 0.8%, led by Biogen (-3.9%) and Gilead Sciences (-2.1%). Car rental agency Hertz sank 4.6% after disclosing that it needs to restate its 2012 and 2013 financials amid a probe into the company’s accounting. Volume was light with 6b shares traded on US exchanges, 7% below the three-month average. Advancing issues outnumbered declining ones by 1.1 to 1 on the NYSE, while the reverse was on the Nasdaq. S’pore shares are likely to be listless after the quarterly results season ended on a whimper last Fri, with little catalysts to spur local interest. Attention will be focused on the debut of the Shanghai-HK trading link, which may draw liquidity and activity away from the Singapore bourse. Topsidee resistance for the STI is capped at 3,360 with support at 3,270. Stocks to watch: *PACC Offshore: 3Q14 results were below expectations, as net profit slumped 30% y/y to US$14.6m, due to a US$5m loss in its Mexican JV, GOSH, where seven vessels remained idle. Gross margins were weaker at 25.9% (2Q14: 30.1%, 3Q13: 41.1%), due to lower utilisation as some vessels underwent repair or were off-hired. Bottom line would have been worse, if not for a vessel sale gain of US$11.6m. Revenue edged up slightly to US$67m, boosted by the offshore supply vessels segment (+8.1%), but offset by weaker contribution from the transportation & installation (-10.5%) and offshore accommodation (-3.1%) segments. BVPS at US$0.67. *Cordlife: Swung into a 1QFY15 net loss of $3.5m, from a net profit of $8.7m a year ago. Adjusting for the group’s fair value changes on its investment in China Cord Blood Corp (1QFY15: -$4.9m, 1QFY14: $3.1m) and share of loss in associate (1QFY15: nil, 1QFY14: $2.1m), core net profit fell 9% y/y to $1.4m, and made up only 11% of full year forecast. Although revenue grew 17% to $13.3m, selling and marketing expenses expanded at a faster 36% clip to $4.4m. BVPS at $0.506. *Midas: 3Q14 net profit dissolved to Rmb1.5m (-91% y/y), as startup costs and interest costs led to a spike in admin expenses (Rmb36.5m, +42%) and finance costs (Rmb35.5m, +117%). Revenue rose 7.7% to Rmb324.2m, driven by the Aluminum Alloy Extruded Products division, and gross margins improved 6.2ppt to 27%. BVPS at Rmb2.42. *Sunvic: Chalked up a 3Q14 net loss of Rmb53.2m, from a net profit of Rmb85.5m a year ago. Revenue fell 32% y/y to Rmb 1.1b, due to lower contributions from acrylic acid (AA) and acrylate esters (AE), PMIDA and glyphosate. Gross margin contracted by 10ppt to 4.3%, affected by a decline in product ASPs. BVPS at Rmb4.20. *Sino Grandness: 3Q14 net profit jumped 30% y/y to Rmb218.3m, as revenue expanded 37% to Rmb1.02b, attributable to the increased sale from all its product segments. Notably, its beverage sales swelled 43% to RMb622.5m and sales of its domestic canned products more than doubled to Rmb140.3m (+128%). BVPS at Rmb3.07. *Oxley: 1QFY15 net profit evaporated to $10.1m (-96% y/y), as revenue plunged 82% to $120.3m on lower revenue recognition of its development projects. Bottom line was further weighed by surge in marketing and distribution costs (+259% to $3.2m), and FX adjustment losses (+789% to $11.5m), despite a decrease in provision for CEO incentive bonus of $15.8m. BVPS at $0.143. *Yongnam: 3Q14 net loss widened to $8.4m, from a $3.4m loss a year ago. Revenue halved to $47.3m, following completion of the Marina Coastal Expressway (at end FY13) and the Singapore Sports Hub (at end 1Q14). BVPS at $0.23. *Tat Hong: 2QFY15 net profit expanded 39% y/y to $11.5m, mainly boosted by a disposal gain of Hup Hin Transport, increased profits from associates and FX gain. However, revenue dropped 18% to $152.8m, weighed mainly by lower equipment and machinery sales in its distribution division (-35%), lower crane rental (-9%) and general equipment rental (-12%), partially offset by improved utilisation rates of its larger tower crane fleet in China. BVPS at $1.05. *United Engineers: 3Q14 net profit surged 47% y/y to $18.5m. Revenue grew 7% to $786.3m, attributed to progressive revenue recognition from Eight Riversuites, and gross margin improved to 16.2% (+3.4 ppts) as a result from positive contribution from 43%-owned Multi-Fineline Electronix. Meanwhile, revenue recognition from its property development JV with UE E&C helped offset other negative one-off items. Management updates that OCBC and Great Eastern remain in talks for its stakes in WBL Corp and UE, and the divestment of its subsidiary, UE E&C, remains in the works with an EGM scheduled on 28 Nov. BVPS at $2.83. *QT Vascular: 3Q14 net loss narrowed to US$3.7m, from a loss of US$12.4m a year ago. Revenue spiked 154% to US$3.4m, due to improved sales from its Chocolate Catheter product. The group turned a positive gross profit of US$0.7m from a gross loss of US$0.6m last year, thanks to increased scale and continued manufacturing operational improvements. BVPS at US$0.05. *Spackman Entertainment: Swung into a 3Q14 net loss of US$5.0m, from a net profit of US$4.3m a year ago. Revenue collapsed 66% y/y to US$3.6m, mainly due to the absence of production revenue and share of profit from the film production Cold Eyes. Cost of sales remained constant at US$5.3m, while bottom line was dragged by IPO expenses and an increase in employees. BVPS at US$0.047. Separately, the group proposed to acquire 51% or more of Novus Mediacorp, an ancillary distributor for Korean theatrical films. *Straco: 3Q14 net profit advanced 28% y/y to $19.5m, in tandem with the 26% growth in revenue to $38.6m, driven by higher visitor numbers to its Shanghai Ocean Aquarium and Underwater World Xiamen. BVPS at $0.21. *Super Group: Granted Four Leaves an option to buy its factory at 37 Chin Bee Crescent for $8m, representing an 11% premium to market valuation. *A-Sonic Aerospace: Proposed the following - 1) adopt a share buyback mandate, 2) bonus share issue, and 3) share consolidation. More details to be provided in due course. *Hong Fok: 3Q14 turned into red, with net loss of $0.6m from $9m profit in 3Q13, as revenue crashed 76% y/y to $14.8m, due to zero recognition of sales from Concourse Skyline and absence of investment income. BVPS of $2.34. *ECS Holdings: VST Holdings makes voluntary unconditional cash offer for all paid-up shares at $0.68 per share, a 11.5% premium over $0.61. Optionholders will be compensated on a “see-through” basis if not exercised. *Libra: awarded $5.35m air-con installation contract to be completed in July 2016 and a $4.15 electrical and air-con installation and building managmenet system to be completed in August 2015. *Pteris: turned profitable in 3Q14, with profits of $4.6m on the back of doubling of revenue to $51.7m to the completion of more passenger boarding bridges in China and internationally. BVPS at 60.5cents. *Wheelock: 3Q14 profits decreased 7.2% y/y to $11.0m as revenue slipped 17.4% to $22.8m due to lower revenue recognised from Ardmore Three based on the progress of constructions works over last year. BVPS at $2.66 *Artivision: losses for 2QFY15 narrowed to $0.7m as $2.0m revenue was recorded as newly acquired subsidiary Colibri Assembly (Thailand) contributed. BVPS at 1.07 cents. *Dukang: 1QFY15 deteriorated into losses of Rmb29.4m as revenue plunged 46.7% y/y to Rmb207.4m as a result of China’s austerity drive. GPM decreased 19.8ppt to 18.4%, but is partially alleviated by lower operating expenses. BVPS at Rmb246.72 cents or Sgd51.9cents. *Hotel Grand Central: 3Q14 swung into net loss of $0.4m, while total revenue increased 6% y/y to $36.3m, contributed by 300 Flinders Street and Palm Cove hotel purchased in 2013. Bottom line weighed by unrealized forex loss of $5.4m. BVPS of $1.38 *Straits Trading: 3Q14 turned into red with net loss of $18.5m (3Q13: $40.2m), mainly dragged by the absence of a $53.8m tax write-back, financing costs relating to the buy back of medium term notes, fair value loss on investment properties, partially offset by contributions from associate, ARA Asset Management. Revenue grew 34% y/y to $230.1m, attributed to its resources segment (+25%), on higher sales volume and higher average tin prices. BVPS of $3.17. *mDR: Wholly-owned subsidiary, Pixio, entered a 50/50 JV with UBP Printing to go into the advertisement business and the design of large format digital inkjet printing, placement of point-of-sale and out-of-home advertisements in Sabah, Sarawak, Kalimantan and Brunei. UBP is a subsidiary of United Borneo Press, a newspaper contract printer in East Malaysia. *mDR: 3Q14 turned into net loss of $3.1m from earnings of $1m in 3Q13, dragged by lower revenue of $73.6m (-11% y/y) and higher allowance for inventories due to a $3.1m provision for slow moving handsets and accessories. Top line was weighed by a slowdown in its distribution management solutions segment (-8.4%) in both retail and distribution segments, as well as its AMS business (-38.7%). BVPS of 0.53¢. *Grand Banks Yachts: 1QFY15 net loss widened to $1.3m (1QFY14: -$0.6m), dragged by a 31.5% decline in revenue to $6.5m, as a result of delays in the sale of inventory yachts. Gross profit declined 9.1 ppts to 9.5%, due to amortization of tooling and intangible assets, as well as restructuring expenses. Net order book stood at $17.5m, of which will be recognized through the remainder of FY15. BVPS of $0.2809. *Linc Energy: 1QFY15 turned into black, with net profit of A$106.1m from loss of A$40.9m in 1QFY14, mainly buoyed by the A$148.1m sale of the Carmichael Royalty Deed to the Adani Group, reduction in corporate expenses and outsourced services, reduction in site operating costs due to lower operations and staff at the Chinchilla demonstration facility, FX gain from the favourable USD/AUD rates and mitigation of port capacity for the coal division. Revenue fell 22.8% to A$29.6m, weighed by decreased US oil and gas net sales volumes and decrease in selling price per barrel, partially offset by higher sales from clean energy consulting. BVPS of A$0.6566.