SG Market (28 Nov 14)

US Market: Closed for Thanksgiving holiday. S’pore shares are likely to consolidate recent gains as US market was closed for Thanksgiving holiday, while European bourses extended a two-day rally as German jobless rate dropped to a record low and on renewed prospects of quantitative easing. Energy-related counters, particularly the upstream players and rigbuilders Keppel Corp and Sembcorp Marine, may be hit as OPEC kept production targets unchanged despite an oil supply glut, sending the US crude more than 6% lower to below US$70 per barrel. As expected, oil stocks Petrobras (-4.7%), Gazprom (-2.8%), Total (-4.1%) and Shell (-3.7%) tumbled. Beneficiaries of lower oil prices would include airlines, shippers and transport operators, SIA, NOL and ComfortDelgro as fuel takes up the large part of their cost component. Plantations could also face downward pressure as falling oil price reduces the economic viability of biodiesel, and therefore demand for palm oil as a feedstock. With technical indicators exhibiting few signs of directional change, the STI is unlikely to break out of its current trading range bounded by upper resistance at 3,360 and downside support at 3,310. Stocks to watch: *Keong Hong: FY14 net profit slipped 10% to $19.7m, even though revenue soared 86% to $272.8m on recognition of ongoing and new projects such as Alexandra Central, J Gateway and Skypark Residences. Gross margin contracted 9.6% due to higher project costs recognized during initial stages of construction. Bottom line was further weighed by other operational costs. Final DPS of 1.25¢, brings full year DPS to 2.25¢ (FY13: 2.5¢). BVPS at $0.34. *Casa Holdings: FY14 net profit slumped 62% to $3.7m, dragged by a goodwill impairment in Uno Casa ($1.3m), whereas FY13 bottom line was padded by other gains from write-backs on investment ($3.8m). Core net profit fell 17%, mostly attributable to higher operating expenses incurred on new property development in Iskandar, partially offset by higher contribution from associates. Revenue dipped slightly to $30.2m (-3%). BVPS at $0.347. *Compact Metal: Proposed to divesify into the cement business. The group will leverage on the expertise of new Executive Chairman - Ma Zhao Yang, who currently is a non-executive director of HK-listed West China Cement. *IPS Securex: Secured a US$1.6m contract to sell 50 sets of Hyperspike acoustic hailing devices and accessories. *Straco: Completed the $140m acquisition of the Singapore Flyer.