SG Market (16 Feb 15)

Singapore shares are likely to be sluggish this week ahead of the Chinese New Year, with trading breaks in several Asian markets and US closed tonight for the Presidents’ Day holiday.

Sentiment will also be clouded by the uncertainty over Greece’s debt negotiations and Japan’s below forecast 4Q GDP growth of 2.2%, as well as disaapointment over failure of UE’s takeover talks.

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

Stocks to watch:
*City Development: 4Q results topped estimates, as net profit spiked 73% y/y to $384.9m, mainly boosted by the sale of the present and future cashflows of its Sentosa developments, associate contributions due to profit recognition in the Millennium Waterfront project, offset by lower JV earnings from an impairment loss for a residential project. Revenue improved 7.4% to $846.9m, contributed by higher management fee income (+36%), hotel operations (+12.5%) and rental income (+5%), offset by property development (-2.8%). Gross margin declined 16.8 ppt to 46.8%. This brought FY14 earnings to $769.6m (+12%) and revenue to $3.8b (+17%). Final and special DPS of 8¢ and 4¢ declared, maintaining FY14’s payout at 16¢. NAV/share at $9.25.

*OUE: 4Q14 above estimates. Swung to 4Q14 net profit of $127.5m (4Q13 net loss: $66.3m), bringing full year net profit to $1.1b (FY13 net loss: $7.0m). FY14 revenue fell 4.6% y/y to $416.4m, due to the absence of China hotels which were disposed in 2013, and lower property development revenue, slightly offset by higher revenue from property investments (+14.3%) Gross margin fell 8.6ppt to 43.1%. Associate contributions was up 5x to $87m, led by fair value gain on One Raffles Place and the recognition of share of results of OUEHT. Bottom line was propped up by a $1b disposal gain of Mandarin Orchard and Mandarin Gallery to OUEHT, versus $50.2m of other losses in FY13. DPS of 1¢ declared (4Q13: 2¢). NAV/share at $4.23.

*NOL: 4Q14 missed estimates. Net loss narrowed to US$85.1m from US$137.2m, while top line fell 4.5% y/y to US$2.23b, due to lower liner revenue at US$1.8b (-6.8%), as a result of lower freight rates (-2%) and volume (-8%), slightly offset by higher revenue growth in the logistics division (+5.5%). Gross margin improved 3pp to 8.4%, driven by operational efficiencies in the liner business. Liner utilization rate was above 90%. NAV/share at US$0.67.

*Ezion: 4Q14 results in line. Net profit spiked 107% y/y to US$83.7m, mainly boosted by one-time disposal gain (US$34.9m), partially offset by additional interest expense from a higher funding base. Revenue climbed 25% to US$104.6m, from contributions by additional liftboats and service rigs deployed for charter. Gross margin improved 1.9 ppt to 50.6%. First and final DPS maintained at 0.1¢. NAV/share at $0.832.

*Raffles Medical: 4Q14 results in line. Net profit surged 43% y/y to 22m, while revenue grew 5.8% to $100m, bringing FY14 earnings to $67.6m (-20.3%), on revenue of $374.6m (+9.9%), in line with street estimates. Top line for the full year was contributed by all divisions, driven by higher patient load from an expanding clinic network and the addition of more specialist consultants. Meanwhile, earnings got dragged by the absence of a one-time disposal gain in 2013 ($20.4m). Otherwise, profit before tax would have grown 10.3%. Final DPS of 4¢ declared, bringing FY14 DPS to 5.5¢ (FY13: 5¢). NAV/share at $0.955.

*Cordlife: 2QFY15 net loss was at $3.3m versus a net profit of $4.2m the previous year, despite a 17.5% y/y rise in revenue to $14.3m, weighed by $1.8m marked to value losses (vs $2.3m gain) on CCBC and $4.7m fair value losses on convertible bonds. Otherwise, gross profit rose 12.5% to $9.4m, in line with revenue, but operating profit halved to $1.1m due to increase in selling and marketing expenses in India. NAV at 48.35¢, interim dividend maintained at 1¢.

*Religare Health Trust: 3QFY15 DPU fell 15% y/y to 1.82¢ but was up 18% y/y excluding the Sponsor Waiver. Distributable income rose 18% to $14.4m on the back of 39% growth in revenue to $32.7m due to increase in base service fee, increase in average revenue per operating bed as well as new contributions from Gurgaon and newly acquired Mohali. INR FX losses were completely hedged by forward contracts. Gearing ratio remains low at 12.5% with debt tenor at 2.3 years. Portfolio occupancy was at 72% (3QFY14: 78%). NAV/ share at $0.859.

*Tat Hong: 3QFY14 net profit fell 63% y/y to $4.5m, while revenue dropped 7% to $154.9m, due to the disposal of Hup Hin Transport in Jul ’14, completion of projects, and slowdown in the construction industry, and reduced rental in overseas markets. Slump in bottom line was also attributable to a 78% reduction in other operating income to $3.3m, as a result of a $13m disposal gain of purchase rights for a plot of land in Iskandar the previous year. NAV/share at $1.05.

*Hafary: 2QFY15 net profit surged 73% y/y to $4.3m, boosted by revenue of $33.5m (+31.7%), buoyed by an increase in general (+30.9%) and project (+32.3%) segments of $16.5m and $$16.4m, respectively. Gross margin maintained at 37.5%. No dividend declared (2QFY14: 1¢). NAV/share at 9.3¢.

*United Engineers: Discussions between OCBC and Great Eastern with TCC Top Enterprise has lapsed, after not being able to reach an agreement on a possible transaction.

*Wilmar: Received approval from China's Anti-Monopoly Bureau for its proposed acquisition of Goodman Fielder.

*Artivision Technologies: Non-binding MOU with Youku Tudou, to provide its video advertising technologies and platforms for video monetisation for testing and evaluation.

*XMH: Extending the long-stop date regarding the proposed acquisition of Z-Power Automation from 15 Feb to 16 Mar.

*Tiong Seng: Profit warning for 4Q14; expects a loss due to an impairment loss for property development projects in China.

*China MinZhong: 2QFY15 net profit slumped 64.3% to Rmb72.0m on revenue of Rmb534.5m (-40.9%). The slump in revenue was due to a decrease in sales from the processed business segment (-45.6%), fresh vegetables (-46.2%), and beverage business (-41.5%). Gross margin decreased by 8.2ppt to 27.0%. Bottom-line was partially aided by a 19.6% rise in other income to Rmb55.1m and a 51.9% decline in other expenses to Rmb16.0m.

*Global Yellow Pages: 3QFY15 net profit fell 12.5% to $6.1m on revenue of $12.4m (-15.8%). The decrease in revenue was due mainly to decline in the search and direct sales solutions businesses partly offset by an increase in revenue from Singapore river tour & taxi services and royalty income from licensing of intellectual property rights of Wendy’s Supa Sundaes brand. Associate contributions fell 45.9% to $0.9m.

*UIC: 4Q14 net profit rose 26.3% to $123.1m, bringing FY14 net profit to $398m (+25.9%). Revenue increased 14% to $693.2m, due to higher trading property sales from the progressive sales recognition for V on Shenton, Alex Residences and Mon Jervois, partially offset by lower slaes of The Trizon (fully sold in 1Q14), and higher revenue from hotel operations, with higher room and occupancy rates and higher F&B revenue from Pan Pacific Singapore. Gross margins shaved 2.7ppt to 42.6%. Share of JV’s profits surged 91% to $37.2m from the progressive recognition from the Archipelago and Thomson Three. NAV/share at $4.09.

*Nam Lee: 1QFY15 profit rose 10.9% y/y to $1.3m on 26.5% lower revenue but higher gross profit margin (20.9% vs 13.7%) due to change in product mix. NAV at 50.2¢

*Zhongxin Fruit: recorded 1HFY15 profit of Rmb1.4m (+13% y/y) on 21% lower revenue of Rmb66.4m but 18% higher gross profit of Rmb18.8m, the result of lower sales volume but higher ASP and lower procurement costs. Inventory turnover is lower and accumulation risks increased. NAV at Rmb6.33 cents

*PCI: 2QFY15 profit down 19% y/y to US$2.1m, although revenue rose 2.5% to US$27.5m, due to lower profit margin (11.1% vs 12.5%). Lower operating expenses were mitigated by FX losses and valuation losses. NAV US 35.74 cents

*Chuan Hup: 2QFY15 profit spiralled 84% y/y to US$0.9m on the back of 8.4% lower revenue (US$49.0m) as property revenue was substantially reduced. Bottom line affected mainly by lower gross profit margin (15.9% vs 26.3%), compounded by losses in FX and fair value changes but mitigated by lower property development expenses and reduction in employee benefits. NAV at US 30.11 cents

*Pacific Healthcare: To divest 5.97% stake in Pacific Eldercare and Nursing for $185k. Post-disposal, proforma FY13 NTA is expected to be boosted to 0.12¢ from 0.08¢, with loss per share to narrow from 1.84¢ to 1.79¢.

*Huan Hsin: Conditional agreement with Phoenix Bridge International to sell its entire 51% stake in Indeed Holdings for US$15.2m, with proceeds used to increase working capital as part of its turnaround strategy. Indeed owns land use rights and plants previously used for its ceased notebook-casing manufacturing business. The underlying land has a total size of 62,634 sqm with a lease up to 2057. Huan Hsin is expected to book a disposal gain of $5.1m.