SG Market (11 Feb 15)

Despite solid gains in Wall Street overnight, Asian shares are off to a cautious start this morning, with Seoul up 0.5%, but Nikkei and Sydney both down 0.3%.
This suggests mixed sentiment ahead of meeting between EU finance ministers today and another meeting between EU leaders on Thursday, with some official downplaying any chances of a breakthrough.
From a chart perspective, topside resistance for STI is seen at 3,465 with underlying support at 3,377

Stocks to watch:
*OCBC: 4Q14 results fell short of estimates, with core net profit at $791m (+11% y/y, -6% q/q), taking FY14 core net profit to $2.7b (+23%). Net interest income was at $1.3b (+24% y/y, +2% q/q), led by loans growth of 24%, partially offset by muted net interest margin of 1.67% (-1bps). Non-interest income came in at $762m (+12% y/y, -5% q/q), driven by contributions from wealth management (+8%), credit card (+77%) and gain from investment securities (+2047%), offset partially by lower trading gains (-74%). Provisions soared 127% to $154m but NPL ratio was stable at 0.6%, with loan-loss coverage at 171%. Fully-loaded CET1 CAR was stable at 13.8% with Tier 1 CAR at 13.8%. DPS of 18¢ declared, taking FY14 total payout to 36¢ (FY13: 34¢). NAV/share at $7.46.

*Far East Hospitality Trust: 4Q14 distributable income dropped 8.8% y/y to $22.9m, while DPU declined 9.9% to 1.28¢, bringing FY14 DPU to 5.14¢ (-8.9%). Gross revenue and NPI was at $30.3m (-9.8%) and $27.7m (-9.2%) respectively, weighed by softer average daily rate (-4% to $186) and lower occupancy (-3.6ppt to 82.4%) in its hotel portfolio, resulting from weaker corporate business demand and an increase in hotel room supply. Meanwhile, its serviced residence portfolio saw average occupancy tumble 6.3ppt to 83.2% largely due to the completion of the renovation of the studio units at Regency House. Aggregate leverage remained at 31.4%, while debt-to-maturity lengthened from 2.8 years to 3.5 years, with debt cost remaining at 2.2%. NAV/unit at $0.9697.

*Croesus Retail Trust: 2QFY15 DPU grew 3% y/y to 2.08¢, partially weighed by the increase in unitbase from a private placement in Sep 14, while distributable income spiked 22.7% to ¥874.8m. In tandem, gross revenue and NPI surged 52% and 49% to ¥1,952.1m and ¥1,199.4m, respectively, due mainly to the acquisition of three malls (Luz Omori, Croesus Tachikawa and One’s Mall). In addition, better tenant sales at Mallage Shobu also bolstered the positive results. Occupancy stood at 100% with WALE of 8.8 years. Aggregate leverage lowered 0.8 ppt to 50.9%, with debt term of 3.3 years and average debt cost of 1.96%. NAV/unit at ¥74.36.

*Fragrance: 4Q14 net profit plunged 40.4% to $79.7m, taking FY14 net profit to $156.4m (-24.8%). Revenue was up 5.8% to $128.5m, driven by increased contribution in property development from the progressive recognition of Urban Vista, Novena Regency, Kensington Square etc, offset partially by lower property investments due to the commencement of AEI for the investment property at Alexandra Road. Gross margin for property development fell 3.2ppt to 31.7% from lower selling prices. Bottom line was largely weighed by a 47.2% decline in other operating income at $54.0m, due to the reduction of fair value gains on an investment property compared to the previous year. NAV/share at 14.6¢. Final DPS of 0.1¢.

*Stamford Land: 3QFY15 net profit fell 14.7% y/y to $12.8m, in tandem with a 18.8% drop in revenue to $67.8m. Top-line was weighed by a decline in property development segment (-72%) and trading segment (-44.3%). NAV/share at $0.54.

*Chasen: 3QFY15 net profit came in at $0.3m versus a net loss of $0.3m from the previous year, on revenue of $23.9m (-12%). Top-line was dragged by a decrease in revenue from the third party logistics business segment and technical and engineering business segment. Gross margin was relatively stable at 19%. Bottom-line was aided by a 53% drop in tax expenses to $0.2m, due to the utilization of group relief against taxable income of subsidiaries in Singapore.

*Technics O&G: 1QFY15 swung to a net loss of $0.6 (1QFY14 net profit: $0.3m), while revenue increased 18% to $18.6m from increased contributions from subsidiaries. Gross margins rose 9ppt to 41%. Bottom line was weighed by a 52% rise in admin expenses to $7.1m, from the consolidation of subsidiaries and startup costs, and increased finance costs.

*800 Super: 1HFY15 net profit doubled y/y to $4.6m on a 23.7% rise in revenue to $64.5m. Top-line was led by new contracts awarded and projects that were re-awarded with revised pricing, while bottom-line was weighed partially by a 30.4% rise in employee expenses to $31.7m. NAV/share at $0.248.

*Liongold: 3QFY15 net loss surged to $12.6m (vs $7.2m losses in 3QFY14). Revenue rose 28.3% y/y to $19.1m on higher gold sales, registering a gross profit of $5.0m (3QFY14 gross loss at $2.7m). Bottom line was however impacted by a 419.4% rise in other expenses to $16.7m, largely due to $10.5m disposal loss, $1.6m impairments and $2.3m FX translation losses. NAV/share at 4.6¢.

*Dukang: 2QFY15 net profit plunged 62.7% y/y to Rmb3.7m on revenue of Rmb231.6m (-42.5%). Topline was weighed by a significant decrease in revenue from both Luoyang Dukang and Siwu operations, as a result of China’s current austerity measures on luxury gifts and spending. Gross margin fell 6.7bps to 28.5%. Bottom-line was partially aided by a 60.2% drop in selling and distribution expenses of Rmb37.8m and a 26.8% decline in admin expenses to Rmb25.1m. NAV/share at Rmb2.471 (~$0.537)

*SGX: To introduce minimum trading price (MTP) of $0.20/share on 2 Mar for Mainboard companies, aimed at improving quality, liquidity and lowering transaction cost for investors. The MTP requirement will only be effective after a one-year transition period ending on 1 Mar ‘16. Non-complying companies will enter the SGX watch-list, which will subsequently be given a 36-month period to comply.

*China Fishery/ Pacific Andes: Proposed to undertake a 4-for-5 rights issue at $0.173 each, to help partially fund redemption of the US$250m ($337.5m) Copeinca Notes which are due in 2017. Pacific Andes Group (70.5% shareholding) has given its undertaking to suscribe for its entitlement.