SG Market (13 Feb 15)

Singapore shares are expected to open higher, taking lead from the positive close in Wall Street overnight, led by news of a ceasefire in Ukraine and strong earnings from Cisco which buoyed the tech sector.

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

*UOB: 4Q14 results ahead of estimates, with net profit at $773m (+1.7% y/y, -9.3% q/q), taking FY14 net profit to $3.2b (+8.0%). Net interest income was at $1.2b (+6.7% y/y, +1.1% q/q), led by loans growth of 9.5%, partially offset by a decline in interest margin of 1.69% (-2bps q/q). Non-interest income came in at $682m (+5.4% y/y, -16.4%), driven by increased contributions from credit card, wealth management, trade and loan-related activities, but partly offset by lower fund management, corporate finance fees and trading gains. Impairment charges rose 19.9% to $166m, due to a few isolated non-performing accounts in Thailand and Indonesia. NPL ratio was stable at 1.2%, with loan-loss coverage 145.9%. Fully-loaded CET1 CAR was 13.9% with Tier 1 CAR at 13.9%. DPS of 55¢ declared, taking FY14 total payout to 75¢ (unchanged). NAV/share at $17.09.

*Wilmar: 4Q14 results at the higher end of estimates, with core net profit improving at US$412.5m (+16.9%), taking FY14 core net profit to US$1.2b (-6.4%). Revenue slipped 7.3% to US$10.8b due to lower ASPs of consumer products and lower palm prices, partially offset by higher volumes. Bottom line was however aided by margin expansion from most divisions except the plantation and mills segment (due to lower CPO prices). Overall, PBT margin was at 5.0% versus 4.4% from the previous year. Final DPS of 5.5¢ maintained, bringing full year DPS to 7.5¢, (FY13: 8¢).

*Olam: 2QFY15 results below estimates, as net profit fell 12% y/y to $118.7m, despite a 8.3% rise in revenue to $4.9b, which was led by higher selling prices of almonds, hazelnuts, cocoa and coffee, which offset the drop in sales volume to 3.4m MT (-8.7%). Bottom line was impacted by severe FX devaluation across its major markets, primarily with the USD against Russia, Nigeria, Brazil and Australia, as well as a fair value loss on biological assets ($12m). EBITDA margin excluding FX effects, fell 0.6ppt to 6.4%. Free cash flow turned in positive, driven by lower working capital, reduced capex pace and lower net interest expense. Net gearing stood at 1.85x, in line with the group’s FY16 target of below 2.0x.

*Sembcorp Marine: 4Q14 results ahead of estimates, despite net profit being down 4.6% to $174.0m, bringing full year net profit to $560.1m (+0.8%). Top line dropped 14.6% to $1.4b, primarily due to lower revenue recognition for rig building projects. Operating margin improved to 16.1% (+5ppt). Bottom-line was partially weighed by a more than 3x rise in finance costs to $9.5m and associate and JV losses of $7.4m (4Q13: -$1.5m). Final DPS of 8¢ declared, bringing full year DPS to 13¢ (unchanged). NAV/share at $1.42.

*Amtek: 2QFY15 results missed estimates, despite net profit soaring 74% to US$11.3m, in tandem with a revenue surge of 60% to US$263m, with the surge in earnings largely led by the consolidation of Interplex. Gross margin expanded 2.3ppt to 17.6%, although bottom-line was weighed by a 71% rise in general and admin expenses at $27.8m, associated with the consolidation of Interplex, and a more than 3x rise in finance costs at $5.1m. Interim DPS of 1.3¢ maintained. NAV/share at US$0.32.

*Hi-P: 4Q14 results at the higher end of consensus estimates. Net profit turnaround to $15m (4Q13: -$14.5m), bringing FY14 earnings to $10.5m (+64%), mainly buoyed by improved gross margin (+5ppt to 9.4%) from a shift in product mix and absence of consolidation and relocation costs. Meanwhile, revenue declined 8.7% to $314.4m, due to a decline in orders from two key customers, partially offset by increased allocation from existing customers and customer base diversification. First and final DPS of 1¢ (FY14: 0.6¢). NAV/share at $0.7414.

*Biosensors: 3QFY15 results missed estimates, as net profit slumped 33% to US$7.4m. Revenue was flat at US$77.5m, as weak licensing revenue and unfavourable foreign exchange impact weighed on top-line. Gross margin fell 4ppt to 70%, weighed by the distribution activities of Nobori stents in Japan and price cuts in various geographies. There was also a US$2.5m one-off restructuring expense incurred in the quarter. NAV/share at US$0.753.

*Courts Asia: 3QFY15 results below estimates, with net profit down 35.8% to $4.0m, while sales fell 4.9% to $193.3m, on poor contributions in Singapore (-2.6%) and Malaysia (-15%). Gross margin was maintained at 32.1%, although bottom line was weighed by a 34.3% rise in finance costs to $7.1m.

*Boustead Singapore: 3QFY15 net profit fell 36% to $11.8m, while revenue grew 37% to $177.9m from increased contributions from real estate solutions and geo-spatial technology, partially offset by engineering services. Gross margin fell to 23.6% (-13.3ppt) due to an unusually low margin for a recently completed large real estate solutions project. Order book backlog stood at $342m. NAV/share at $0.71.

*Oxley: 2QFY15 net profit fell 11% to $22.2m on revenue of $235.5m (+16%), which was led by revenue recognition, based on completion method, from the group's 38-unit commercial and office development, Robinson Square. Gross margin inched down 1.2ppt to 23.6%. Bottom-line was weighed by the absence of credits contributions ($15.8m in 2QFY14) and a 34% reduction in associate and JV contributions at $4.1m. NAV/share at $0.149.

*ISOTeam: 1HFY15 results ahead of estimates, as net profit almost doubled to $4.1m on revenue of $$39.0m (+22.1%). Top-line was led by a 36.8% rise in the group’s repairs and redecoration (R&R) business, offset partially by a 20.9% decrease in revenue from the Addition and Alteration business at $8.2m. Gross margin was up 5.3ppt to 22.1%, due to better profit margin of R&R completed projects. NAV/share at $0.243.

*Yamada Green: 2QFY15 profits halved to Rmb22.1m, dragged by a 24.1% decline in revenue to Rmb176.7m. Noticeably, cultivation business is shifting from shiitake mushroom (Rmb98.9m, -40.6%) to moso bamboo (Rmb26.8m, +170%) as cultivation farmland for each is scaled by -1,792 mu and + 33,845 mu respectively. GPM declined to 21.5% from 23.0% due to higher labour costs. Ramp up in production of higher margin (~42%) moso bamboo business is favourable. Administrative expenses jumped Rmb9.2m largely on one-offs. NAV at Rmb1.506.

*Tiong Woon: 2QFY15 turned in $39.7m revenue (-11% y/y) and $3.8m profit (-57% y/y). Headwinds from lower oil prices impacted revenue across all business segments except Trading, and gross margin narrowed as cost of sales remained unchanged. NAV at 57.43¢

*OKH: 2QFY15 turned positive with profit of $49.2m (vs -$4.0m in 2QFY14) on $230.2m revenue (vs $3.3m in 2QFY14), mainly attributed to the completion of Woodlands Horizon ($219.3m). NAV at 17.48¢

*Avi-Tech: Turned profitable in 2QFY15 with $2.6m net profit (vs -$1.1m in 2QFY14) on $6.9m revenue (+45.9% y/y), with increase in sales in burn-in boards and board manufacturing (+56%), burn-in services (+25%) and engineering services (+50%) segments. Gross profit margin improved 7.7pp to 22.6% due to cost control measures and productivity enhancements across business segments. NAV at 12.33¢, interim dividend of 0.3¢ (vs nil in 2QFY14) declared.

*Pacific Century Regional: FY14 profits surged 68.5% y/y to $116.9m on the back of 79.7% jump in share of profit from associates to $117. PCCW, the associate, achieved revenue, core EBITDA and net profit increase of 24%, 29% and 76% respectively due to strong contribution from subsidiary HKT, continued growth of Solutions business, and substantial gain on disposal.

*Frasers Centrepoint: 1QFY15 net profit surged 55% y/y to $186.9m, boosted by fair value gains ($24.3m) and one-off items ($17m). Otherwise, earnings grew 22% to $146m. Revenue spiked 94% to $1.1b, attributed to contribution from recently-acquired Australand Property Group, which saw significant level of completions at the Clemson Park and Discovery Point residential projects. The listing of Frasers Hospitality Trust (FHT) in Jul '14 also resulted in a new stream of contribution from the six hotels acquired by FHT from the TCC Group. BVPS of $2.22.

*Informatics: 3QFY15 net loss widened to $1.8m from $0.4m, on revenue of $3.4m (-40%). The lower top-line was largely due to lower students enrolled in the Singapore and UK operations. NAV/share at 1.24c.

*GENS: Broke ground for Resorts World Jeju. RWJ is slated for opening in 2017.