SG Market (05 Feb 15)

Singapore shares are expected to open with a downside bias, following the lacklustre close in Wall Street overnight, which saw crude-oil prices giving up part of the gains racked up over a four-day span.

Investors will also have to weigh the positive impact of China’s bank 50bps reserve requirement ratio cut against concerns of a potential Greek debt default in Europe.

Asian markets are mostly trading lower this morning, with Tokyo (-0.7%) and Seoul (-0.3%), although Sydney is trading flat.

From a chart perspective, topside resistance for STI is seen at 3,465 with underlying support at 3,377.

Stocks to watch:
*GLP: 3QFY15 results were in line. Proforma core net profit dropped 14.7% to US$65.9m, due mainly to lower share of results of jointly-controlled entities from lower fair value gains and higher staff and business expenses from expansion. Revenue remained flat at US$179m (+0.7%), as completion of development projects and higher rents in China was offset by the absence of deferred rental revenue, contribution from 11 properties sold to GLP J-REIT, as well as the weakening Yen against USD, which translated to a 10% drop in average rates. NAV/share at US$1.82.

*Singapore Post: 3QFY15 results were in line. Net profit rose 7.3% to $42.2m, in tandem with a 7.6% rise in revenue to $239.6m, as improved contributions from ecommerce and logistics businesses offset the decline in mail revenue. Subsidiaries, such as Quantium Solutions (logistics), Famous Holdings (freight forwarding), General Storage (self-storage) etc grew, which contributed positively to revenue. Total expenses rose 8.0% to $199.1m, due to the inclusion of the new subsidiaries. Separately, SingPost has appointed consultants to advise on the redevelopment of retail mall at Singapore Post Centre. Interim DPS of 1.25¢ unchanged.

*SATS: 3QFY15 results were above estimates. Net profit rose 25.2% to $53.7m, despite a 3.2% drop in revenue to $450.7m, with top-line dragged by poor results from subsidiary TFK and the divestment of Urangan Fisheries which impacted Food Solutions’ contribution. This was mitigated partially by an increase in Gateway Services revenue. Bottom line was however aided by a 2.3 ppt rise in operating margin to 11.3%, due to lower raw materials and “other” costs.

*CosmoSteel: 1QFY15 net profit fell 25.2% to $311,000, while revenue dropped 23.8% to 26.4m, weighed by a decrease in revenue from customers in the Energy Sector. Gross margin improved 6.5ppt to 17.5%, but bottom-line was dragged by a 26% rise in distribution costs to $3.4m and a 11.6% rise in admin expenses to $2.5m. NAV/share at 40.71¢

*Hwa Hong: 4Q14 profits dived 62.2% to $1.1m, taking FY14 net profit to $12.5m (+42%). Revenue for the quarter fell 4.2% to $6.6m, due to the absence of rental income from certain UK commercial and service office properties. Gross margin inched down 1 ppt to 39.7%. Bottom-line was dragged by a 90.5% decline in associate and JV contributions at $0.3m. DPS of 1.15¢ declared (3Q14: 1¢). NAV/share at $0.32.

*PEC: Won $132m refinery project in Middle East by an MNC. PEC will provide engineering, procurement and construction works for the development of a number of large crude and fuel oil tanks, with completion expected by Apr ’16.

*Technics Oil & Gas: 40.2% associate NOG secured GRE contracts worth $7.2m to supply, fabricate, test, install and commission for SW and Ballast systems for a Singapore customer.

*GuocoLand: launched commercial and retail space at Tanjong Pagar Centre, located just above the Tanjong Pagar MRT in CBD. Tanjong Pagar Centre consists of 100,000 sq ft of space and is connected to Guoco Tower (890,000 sq ft of premium Grade A office space), a 222-room five-star hotel, 181 luxurious homes and a 150,000 sq ft landscaped Urban Park.

*LCD Global: shareholders of the remaining 20% of CHC Pte Ltd exercised Put Option to sell their shares to the company for aggregate of $7.48m. LCD Global will satisfy the consideration fully by cash from existing revolving loan facility.

*SingTel: Terminating JV with Warner Bros and AXN.

*Junma Tyre Cord: Expecting net loss to deepen for 4Q14 due to margin erosion from unfavourable market conditions.