SG Market (17 Feb 15)

Singapore shares are likely to stay subdued with no leads coming from the US market, which is closed for a national holiday. Sentiment may be spooked by news that negotiations between Greece and its international creditors have broken down after the Greeks rejected a draft proposal put forward by EU finance minsters.

Meanwhile, the Singapore economy grew 2.1% y/y in 4Q14 against a previous estimate of 1.5% as a strengthening US recovery boosted demand from its third biggest export market in Dec. For 2014, GDP expanded a revised 2.9%, while non-oil domestic exports fell 0.7%. There was no change to the official growth forecast of 2-4% this year.

From a chart perspective, the STI is expected to consolidate within the 3,450-3,390 trading band.

Stocks to watch:
*CapitaLand: 4Q14 results above estimates, with core net profit up 54.3% to $283.6%, taking FY14 core net profit to $705.3m (+40.4%). Revenue for the quarter grew 67% to $1.5b, driven by the consolidation of CapitaMalls Asia, sales recognition of office strata units in Westgate Tower, as well as higher revenue from shopping mall and serviced residence businesses and development projects in Singapore, but partially offset by fewer handover of units from development projects in China. Bottom line was further boosted by better operating performance, higher fair value gains from investment properties (+6%) and absence of losses incurred on repurchase of convertible bonds in 4Q13, but dragged by higher provision ($91.8m) in light of the challenging market conditions in Singapore. First and final DPS of 9¢ declared (FY13: 8¢). NAV/share at $3.94.

*Cosco: FY14 results below estimates, with net profit slumping 32% to $20.9m, while revenue increased 21% to $4.3b, on growth in marine engineering and shipbuilding segments, offset by dry bulk shipping and other businesses. Gross margin narrowed 2.3ppt to 6.8% due to higher inventory write downs. A $91.4m one-off charge was also recognized on the discontinuation of the Octabuoy hull and topside module project announced in Jan ’15. The slump in bottom line was slightly mitigated by a $9m tax credit (FY13: $8.2m tax expense). First and final DPS of 0.5¢ declared (FY13: 1¢). NAV/share at $0.61.

*CWT: 4Q14 results below estimates, with net profit at $14.7m (-35.2%) taking FY14 net profit to $112.4m (+6%). FY14 revenue was up 67% to $15.2b, largely led by a 72.0% rise in commodity marketing revenue to $13.9b, and higher contributions from the logistics services (+14.0%), engineering services (+23.6%) and financial services segment (+213.0%). Bottom-line was weighed by a 1ppt drop in gross margin to 2.2%, due to margin squeeze in the commodity marketing segment, as a result of weaker demand, liquidity and less favourable trading conditions. Additionally, finance expenses rose 37% to $61.2m and tax expense more than doubled to $17.8m. First and final DPS of 4¢ declared. (FY13: 3.5¢). NAV/share at $1.28.

*ARA Asset Management: FY14 results in line. 4Q14 net profit fell 18% to $18.2m, bringing FY14 net profit to $87.5m (+18%). Revenue for the quarter fell 1% to $43.2m, supported by higher management fees (+9%), as a result of higher REIT base and performance fees and real estate management services fees, offset by a 57% slump in acquisition, divestment and performance fees to $5.1m. Bottom-line was weighed by a 224% rise in other expense to $6.2m. Final DPS of 2.7¢ declared, taking full year DPS to 5¢ (FY13: 5¢) NAV/share at $0.40.

*Straco Corporation: FY14 results in line. 4Q14 net profit fell 21.4% to $4.4m taking FY14 net profit to $37.7m (+10.5%). Revenue was up 32.8% to $19.4m mainly attributable to higher visitor numbers at Shanghai Ocean Aquarium (SOA) and revenue contributed by Straco Leisure from its newly acquired Singapore Flyer. Bottom-line was however weighed by a 61% rise in operating expenses to $7.5m and 119.2% rise in admin expenses to $5.8m, arising from the acquisition of the Singapore Flyer. First and final DPS of 2¢ declared (unchanged). NAV/share at $0.22.

*Halcyon: FY14 results below estimates. 4Q14 net profit was at US$1.8m (+34.6%), taking FY14 net loss to US$9.4m (FY13 net profit at $9.0m). Revenue for the quarter was up 437.4% to US$287.6m, due to sales contributed from Anson and NCE, partially offset by a decrease in the revenue per ton from US$2,299 to US$1,564. Gross margin fell to 4.8% from 8.0%, while bottom-line was dragged by a 96.4% rise in admin expenses to US$3.2m, and a 287.2% rise in finance costs to US$6.1m as a result of interests incurred on the acquisition term loan and on the MTN issued on 31 Jul ’14. NAV/share at $0.504.

*Rowsley: FY14 net profit was at $49.4m versus a net loss of $226.3m. Revenue was up 288% to $87.2m, primarily driven by full year contribution from RSP Architects Planners & Engineers and its subsidiaries (RSP), following the completion of the acquisition on Sep '13. Bottom-line was aided by other income at $78.3m (FY13: $5.6m), due to fair value adjustments from the re-measurement of consideration payable to RSP vendors and reimbursement of wage costs from RSP's customers. NAV/share at $0.118.

*Soilbuild Construction: 4Q14 net profit came in at $8.8m (-4.0% y/y), taking FY14 net profit to $20.9m (-13%). Revenue declined 39% to $68m due to the completion of four projects, but gross margin increased substantially to 14.8% (from 8.6%) due to more profitable projects under development. Bottom-line was weighed by a doubling of admin expenses to $2.4m. Order book of $837.3m at record high, extending revenue visibility over the next 24 months. DPS of 1.5¢ declared, taking FY14 payout to 2¢ (FY13: 1¢). NAV/share at $0.127.

*Ascendas REIT: JTC and Temasek will create an integrated urban solutions platform, merging 4 of their operating subsidiaries, Ascendas, Singbridge Group, Jurong Int’l and Surbana. Discussions of a merger began in Sept ’14, and the merged group will be jointly owned by JTC and Temasek through a 49:51% partnership. The merged group will have two independent operating arms – one to invest and hold assets (Ascendas and Singbridge), and the other to provide building & engineering specialist services (Surbana and JIH). The merged group’s aggregate value is ~ $5b based on underlying entities.

*Noble: Completely rejects allegations made within the short sell report by Iceberg Research.

*CapitaLand: Acquiring 60% stake in CapitaLand Township from Temasek for $240m, while selling 40% stake in Surbana International Consultants to Temasek. CapitaLand is expected to book a $60m loss through the sale of Surbana.

*GLP: Signed new lease agreements totaling 61,000 sqm with four customers, including three third-party logistics companies and one of the largest e-commerce companies in China.