SG Market (13 Jan 15)

Singapore stocks are expected to open lower, as Wall Street extended its decline overnight, dragged by the continued sell-down in energy shares. Asian markets are mostly trading lower this morning, with Japan (-1.7%), Korean (-0.3%) and Sydney (-0.9%). From a chart perspective, the STI recently rebounded strongly from its 200-dma, with Stochastic indicators beginning to reverse upwards, although RSI appears neutral. Near-term support is tipped at its 20-dma at 3,318, while the recent high of 3,370 would be the key resistance level. Stocks to watch: *SPH REIT: 1QFY15 results in line. Distribution income came in at $33.5m (+2.9%) on revenue of $50.6m (+1.8%), with top-line led by higher rental income achieved by both Paragon and The Clementi Mall, which were fully leased with rental reversion of 12.5% and 2.3% respectively. NPI margin rose 2.2ppt to 74.8%, led by savings in utilities, lower marketing and maintenance cost. The REIT has an average lease expiry of 2.0 years by NLA. Aggregate leverage stood at 26%, with average debt term of 3.8 years and cost of 2.35%. NAV/unit of $0.93. *Lian Beng: 2QFY15 net profit rose 241.3% y/y to $23.5m, bringing 1HFY15 net profit to $35.5m (+105.2% y/y), largely due to the disposal of 122 Middle Investment (19%-owned hotel JV), and contributions from other JVs and associates, i.e. Newest, KAP Residences and The Midtown. Meanwhile, 1HFY15 revenue rose 26.1% to $367.6m due to increased revenue generated from the construction segment and workers' dormitory business, partially offset by decreases in the ready-mixed concrete segment. Gross margin fell 2.4ppt to 9.1%. Interim DPS of 1¢ announced. BVPS at $0.7791. *Universal Resource: Entered into conditional agreement to acquire 57.64% of Hong Kong New Wing Energy Development Company for US$50.0m. The latter holds an 85% interest in Challedon Service, which is entitled to carry out petroleum operations in certain oil blocks in Menduwai, Indonesia. The proposed acquisition will result in Universal Resource acquiring an ultimate effective equity interest of ~49% in Challedon. *Singapore eDevlopment: Acquiring a 197-acre land sub-division development in Maryland, its second US property project for US$15.7m, for which it has already secured pre-sales commitment for 89% of the project’s gross development value of ~US$67.1m. *DeClout: Proposed to spend $14.2m, via a 63m share issue, to acquire OSINet Communications, an ICT company specialising in internet broadband and network connectivity, managed services, hosting and data centre services in Singapore. The synergistic acquisition allows wholly-owned subsidiary, Acclivis, to scale its existing network capabilities, equipping it with its own its own ISP licence to provide end-to-end cloud and managed services to dedicated regional networks to companies across Asia Pacific. *ARA Asset Management: Establishes Australian platform and appoints David Blight as CEO. *KrisEnergy: Completed the 41.7% acquisition of working interest in the production sharing contract at Block A Aceh in Sumatra, Indonesia. *Technics Oil & Gas: Accepted a non-binding LOI for a $100m proposed sale-and-leaseback of an industrial leasehold property at 72 Loyang Way.