SG Market (08 Dec 14)

The US market surging yet again to break new record highs, and slight gains in the Asian futures point to a firmer open for the broader Singapore market. In the region, the Nikkei is trading 0.45% higher, while the Kospi is up 0.1% this morning. The oil plays however may continue to be side-lined by investors, with WTI crude extending its slide to fall below US$66 per barrel. Volatility may pick up when the China market opens. After a week of eye-popping gains, mainly boosted by the China financials sector (banks, insurers and brokers), the China Securities Regulatory Commission has noted that stock price manipulation and illegal activities are surfacing, and warned that it will “increase market supervision, resolutely crack down and earnestly safeguard the normal market order.” From a chart perspective, the Singapore market look set to continue trading within the 3,300 and 3,360 band in the near term. Stocks to watch: *Halcyon Agri: Swung to net loss of US$12.2m in 3Q14, from a net profit of US$2.5m a year ago, weighed by gross margin which contracted to 4.7% (-9ppt), and a one-off acquisition-related expense of US$13m. Revenue spiked 140% y/y to US$113.7m, on consolidation of Anson Co, which helped offset the lower revenue per ton (US$1,705, -30% y/y) due to lower rubber prices. *GLP: Entering into the US market with a 55/45 partnership with GIC, through the proposed acquisition of a US$8.1b industrial portfolio comprising 117m sf of total gfa across 36 major submarkets. GLP will fund the initial equity commitment of US$1.8b with cash and short-term debt, and plans to syndicate its ownership to other co-investors, which would reduce its stake from 55% to 10% by Aug ‘15. *DBS: The Business Times reported that DBS is awaiting regulatory approval to open a branch in Sydney, a move that will mark the Singapore bank’s landfall in Australia. The new branch is expected to focus on the corporate banking business. *Cambridge Industrial Trust: Acquiring its first business park asset at 16 International Business Park in Jurong East for consideration of $28m. The three-storey purpose-built building has a gfa of 69,258 sf and remaining land tenure of ~41.6 years. Post-acquisition by end Dec, the property will be leased back to M+W Singapore for 11.6 years, iwht options to renew for two consecutive five-year terms. The acquisition will be partially funded by proceeds from the MTN issued earlier this month and will have a positive DPU impact. *LCD Global: Proposing to carry out a renounceable rights issue of up to $105.4m in aggregate principal amount of five-year 2.5% convertible bonds (CB) due 2020, on the basis of 100 CBs for every 1,000 shares held. The CBs will have denomination of $1 each, and have a conversion price of $0.25. The majority of proceeds will be used to enhance its existing assets, particularly those in its hotels and resorts and serviced residences businesses and/or for business acquisitions as well as working capital. *Xpress: Entered into a 30-day non-binding MOU with Ma Wei Dong to issue 1.1b new shares at 0.7¢ each, attached with 2 free warrants with an exercise price of 0.7¢ each. The full exercise of warrants by Ma will raise his stake to 57.4% of the enlarged share capital of Xpress. The proposed subscription is intended to help the company augment its cash flow and improve working capital for expansion purposes. Ma is the chairman of the board of directors of Kunming LuChen Group. *ASL Marine: Announced the rescission of shipbuilding contracts for two offshore support vessels (OSVs). One of the vessels will be ready for operation by end-1Q15 and the other in 3Q15. Unless the vessels are sold, the revenues booked to date will have to be reversed. Management is of the view that demand for the vessels is high and has already commenced discussions with potential buyers and/or charterers for the vessels, and believes the rescission impact on FY6/15 financials is unlikely to be significant. *Mermaid Maritime: Received early termination of contract from an international client for the MTR‐2 tender drilling rig, due to client's inability to secure government permits. The initial term of the contract was set to end in May ’15, but demobilisation has been moved ahead to end-2014. *Vard: Its surveillance vessel “Marjata”, contracted in 2011 by the Norwegian Defence Logistics Organisation, has concluded its naming ceremony. This marks an important milestone in the process towards the vessel entering into operative service in 2016. *New IPO: UG Healthcare will make its trading debut at 9am today. The invitation was 11.5x subscribed. UG Healthcare is a Malaysian rubber latex and nitrile glove maker.