SG Market (04 Feb 15)

Singapore shares are expected to open higher, taking cue from Wall Street which extended its gains overnight, led by the continued rebound in energy stocks and growing signs of a compromise in Greece’s debt issues. Asian markets are all trading higher this morning with Tokyo (+1.3%), Seoul (+0.9%) and Sydney (+1.4%). From a chart perspective, topside resistance for STI remains at 3,465 with underlying support at 3,377. Stocks to watch: *SIA Engineering: 3QFY15 results at the bottom end of estimates, with net profit down 23.5% y/y to $46.3m, as revenue slipped 6.5% to $265.3m, due to fewer heavy checks in its airframe and component overhaul segment, but mitigated by higher fleet management and line maintenance. Strong cost control led to a relatively stable operating profit (-3.6%), but bottom line was weighed by a 33.2% tumble in share of profits from associates and JVs at $25.3m, attributed to lower contributions from engine repair and overhaul centres. Management guided for business outlook to remain challenging, plagued by intense competition and increasing business costs, which may pressure margins. NAV/share at $1.128. *Osim: 4Q14 and FY14 net profit of $27.4m (-1% y/y) and $102.2m (+1%) met street expectations. 4Q revenue was flat at $177.7m with no change in geographical breakdown, while EBITDA margin was maintained at 21.9%. Company remains in net cash of $242m. DPS of 2¢ declared, taking FY14 total payout to 6¢. NAV/share at 56¢. *Eu Yan Sang: 2QFY15 net profit slumped 38% y/y to $2.0m, while revenue fell 8% to $84.7m, largely due to the impact of Occupy Central movement and slowdown in spending by mainland tourists in Hong Kong, and also the timing effect of Chinese New Year in core markets like Malaysia and Singapore. This was partly offset by higher revenue in Australia, which was in line with the increase in number of company operated outlets. Gross margin rose 2.1 ppt to 51.0%. Bottom line was dragged by a 5% rise in higher distribution and selling expenses at $31.0m. NAV/share at 34.7¢. *SGX: Jan securities daily trading value rose 12% y/y to $1.2b, while active clients grew 9%. Derivatives volume soared 67% to 1.5m contracts traded per day, driven by a 202% increase in China A50 Index futures. *Sim Lian: Proposed acquisition of freehold commercial property in Perth, Australia, for A$72.8m. The A Grade office commercial complex located at 59 Albany Highway, Victoria Park, has NLA of 12,813 sqm, of which 1,404 sqm comprises ground floor retail/office with the remaining spread across two separate towers. *Soil Build Construction: Awarded $26m contract by HDB for upgrading works at Paya Lebar Way/ Aljunied Road Blocks 120 to 124, 125 to 126, and Tampines Street 42 Blocks 444 to 460. The construction period is ~18 months. *Starburst: Awarded $11.8m contract for the Marina One project on the facade steelworks. Works expected to commence in Feb ‘15 and scheduled to complete in Aug ‘16. *Sino Construction: Entered into a 70:30 JV agreement with Primeforth Special Situation Fund to establish and operate Magnum Modular Power Generation. The new subsidiary will undertake the business of power generation, through proprietary Micro Power Plant (MPP) technologies, with additional focus on multiple fuels feed stocks namely, biofuel. *LCD Global: Offer by Aspial and Fragrance of $0.33/share has turned unconditional, after the group received valid acceptance from JTrust, LCD's second largest shareholder, bringing the offeror's valid acceptances to 59.6%. Offer will remain open for acceptance until 12 Mar. *Sarine Technologies: Substantial shareholder Fidelity Worldwide Investment has reduced its stake from 9.07% to 8.95%, via the sale of 424,000 shares in the open market at an average price of $2.62. *China Yuanbang Property: Profit warning for 2QFY15 due to an unexpected delay in certification procedures in China. *Bumitama: Obtained US$265m loan facilities for general purposes, subject to controlling major shareholder and management control conditions.