SG Market (02 Feb 15)

Singapore shares are likely to brace for another week of hits and misses following the weaker-than-expected US 4Q GDP growth, Eurozone inflation and China official PMI data, as well as the late selldown in STI index stocks last Fri. For this week, investors will be looking out for US manufacturing and jobs reports and some key local corporate earnings, including OSIM and SIA Engineering (Tue), SATS and Sing Post (Wed), GLP (Thu) and SIA (Fri) to set the tone for the market. Asian shares opened mixed this morning, with Tokyo (-1.1%), Seoul (+0.2%) and Sydney (+0.6%) not giving any clear direction. From a chart perspective, the STI is exhibiting a bearish harami set-up with support at 3,377 with overhead resistance at 3,465. Stocks to watch: *GP Hotels: 4Q14 net profit soared 61% y/y to $8.4m, mainly boosted by a reversion of overprovision of taxes in prior years ($3.4m). Excluding that, operating profit fell 17% y/y. Meanwhile, revenue climbed 7.2% to $16m from positive performance at Parc Sovereign Hotel and Fragrance Hotel Pearl, but partially offset by lower revenue from its remaining hotels and the closure of Fragrance Hotel Elegance. Operationally, average occupancy rate fell 6.9ppt to 81.4%, while RevPAR fell $5.5 to $86.8. First and final DPS of 0.5¢ declared (FY13: 0.26¢). BVPS of $0.6835. *MTQ: 4Q14 net profit fell 66% y/y to $2.2m, dragged by lower gross profit (-14%) from its oilfield engineering business and the inclusion of losses from recently-acquired subsidiary, Binder. Bottom line was also weighed by higher staff costs (+5%). Meanwhile, revenue remained flat at $74.9m, buoyed by contribution from Bahrain and Neptune. BVPS at $0.90. *Ezra: Subsea Services division, EMAS AMC, secured multiple contracts from various energy companies valued >US$65m (including options), taking year-to-date wins to US$355m. Scope of work includes project management, engineering, transportation and installation works for an FPSO in Africa. *United Engineers: Substantial shareholders, OCBC and Great Eastern, extended their exclusivity agreement with TCC from 30 Jan to 13 Feb, in relation to a possible sale of their combined stake. *Xyec Holdings: Voluntary conditional cash partial offer of 42.9% by Mamezou Holdings at $0.30/share. *Del Monte Pacific: To undertake a 493-for-1000 renounceable underwritten rights issue of up to 641.9m new shares at an issue price of $0.325 or 10.60 pesos apiece. Net proceeds of $202.5m intended to repay a bridging facility obtained to partially finance the acquisition of the consumer food business recently completed. *Roxy Pacific: To acquire a freehold land parcel at 609 Wellington Street, Perth, for A$17m. The acquisition is conditional upon approval to develop a hotel with at least 332 rooms. *PREH: To acquire 31.2% in AXA Tower for $1.17b ($1,735 psf). Management believes the under-utilised property provides a strong upside potential. *YuuZoo: Signed MOU with Activistic, an Australian company specializing in micro-donations and micro-payments. The partnership is intended to provide a platform across the YuuZoo networks to capture, manage and distribute micro-donations and micro-payments for charitable purposes. *Ramba Energy: Exclusive period with Risco Energy Investments to farm out a 25% working interest in the Lemang production sharing contract has lapsed. *Rex: Signed farm-in agreement with Rhein Petroleum (Tulip Oil’s 90% subsidiary) to acquire a participating interest in Altweide, with site area of 11 sq km, located in Upper Rhine Graben, Germany. *Japfa: Acquired remaining 15% stake in Japfa Comfeed Myanmar for US$5.7m. *IEV Holdings: Secured US$1.3m contract in India to supply its proprietary Marine Growth Preventer products to five new offshore platforms and one existing offshore platform for a major oil and gas company. *Shangri-La Asia: Positive operating profit guidance for FY14, due to improved performance from investment properties in China and lower pre-opening expenses of new projects. However, net profit is likely to be lower on smaller fair value gains from investment properties. Profit warnings: - Hai Leck (2QFY15) due to lower sales and decline in gross profit margin; - Blumont (4Q14 and FY14) due to fair value readjustments of financial assets; - Santak (1HFY15) from lower gross margin and significant expenses for its new precision machined component; - Hiap Seng (3QFY15) from cost overruns; - IFS Capital (4Q14 and FY14) net loss is expected to narrow y/y, although still dragged by impairment of loan losses; - Singapore eDevelopment (FY14) from losses and provision from claims incurred from its legacy construction business, as well as non-cash fair value adjustment of exchangeable notes.