SG Market (06 Feb 15)

Expect Singapore shares to open higher, following the positive close in Wall Street overnight which was led by a rebound in energy stocks, and after Greece proposed a bridging program until end-May, to allow more time for debt negotiations.

Asian shares are mostly trading higher this morning, with Tokyo (+0.8%) and Sydney (+0.2%), although Seoul is down 0.2%.

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

Stocks to watch:
*FJ Benjamin: 2QFY15 net profit more than doubled to $1.2m, despite revenue falling 17% to $87.1m, weighed by challenging market conditions and decline in tourist footfall in stores. Gross margin expanded 2ppt to 40%, as a result of better inventory management and strategic tactical promotions to drive sales. Bottom line was aided by a 100% rise in other income to $6.0m due to the gain on partial sale of mandatory convertible bonds, and an 82% reduction in FX losses to $0.2m. NAV/share at $0.181.

*CSC: 3QFY15 swung to a net loss of $5.2m (3QFY14: $1.5m) on revenue of $116.6m (-1.4%). Top-line was led by increased business activity following the commencement of foundation engineering works for various new public sector residential and civil infrastructure projects. Gross margin expanded 1.5ppt to 6.7%. Bottom-line was however impacted by a lack of contribution of other income at $0.4m (-91.5%) and provisions of $3.8m made after a subsidiary received an unfavourable ruling in an arbitration case. NAV/share at $0.159.

*Multi-Chem: 4Q14 net profit soared 65% to $3.1m while revenue inched lower by 3% to $79.1m, from lower contributions from both the PCB and IT divisions. Bottom line was shored up by gross margin expansion (15.5%, +1.7ppt). Unchanged DPS of 0.55¢ declared. NAV/share at $0.241.

*CMT: Issued HK$1.104b notes fixed at 2.77% due 5 Feb 2027 under the S$2.5b multicurrency MTN programme. Simultaneously, it entered into swap transactions to swap the HK$ proceeds into S$192.8m fixed at 3.25%. Proceeds will be used to refinance existing debt, finance new investments and working capital, and to earn interest income.

*Memstar: In relation to the proposed RTO with Longmen, both parties have entered into a supplemental agreement to extend the date of following conditions from 31 Jan to 28 Feb, the conditions being: 1) Longmen’s raising of the second tranche of funds, and 2) Longmen entering into an off-take agreement with Petro China and/or CNPC for the purchase of the target’s coal bed methane.

*Sim Lian: Awarded land parcel with site area 17,450sqm and max gross floor area 52,350sqm at Anchorvale Crescent to be developed into Executive Condominium.
*Technics Oil and Gas: Secured contracts worth S$6m to supply process and rotating equipment to Malaysian customers.

*OEL: Extended its non-binding MOU for the proposed acquisition in Allied Resources for a five month period from 23 Jan.

*Europtronic: In response to SGX's trading query, company disclosed that it is in discussions with at least two parties for potential growth opportunities.

*CFM Holdings: Profit warning for 1HFY15 due to decrease in demand by some of the company’s key customers in the metal stamping segment and cessation of business with some customers after products reached its end of product life.