SG Market (24 Feb 15)

Singapore shares are expected to open relatively flat, after US stocks hovered and closed near their all-time highs on Monday, weighed by a sharp drop in oil prices despite European shares advancing to a seven-year high.

Separately, Singapore's Budget 2015 offered no major surprises that will result in significant market moves, although it is overall marginally positive for SMEs, especially those in the construction sector, and REITs.

Asian stocks are trading mixed this morning, with Toyko (-0.1%) and Sydney (-0.2%) slightly in the red, while Seoul is up 0.3%.

From a chart perspective, the STI is expected to consolidate within the 3,450-3,390 trading band with a downward bias as momentum indicators are exhibiting signs of weakness.

Stocks to watch:
*SIIC Environment: 4Q14 results above estimates. Net profit surged 111% y/y to Rmb65.9m, bringing FY14 earnings to Rmb262.4m (+75%). Revenue for the quarter fell 35% to Rmb286.0m, dragged mainly by lower completion of construction projects (-78%), partially offset by higher water treatment and water supply revenue (+15%), as well as new contribution from waste incineration revenue (Rmb19.6m). Gross margin however improved 9.4ppts to 33.2% on lower contribution from the construction segment, while bottom-line was aided by a 24.6% decline in admin expenses, as well as a jump in associate and JV contributions to Rmb18.4m (+318%). NAV/share at Rmb0.385.

*Asian Pay TV Trust: 4Q14 DPU of 2.13¢ declared, bringing full year DPU to 8.25¢. Net profit slipped 22% y/y to $16.3m, dragged by other operating expenses (+31%) and FX loss of $0.3m (4Q13: +$2.3m). Revenue improved 4% to $81.8m, contributed by basic cable TV (+4.9%) and premium digital cable TV (+4.5%) segments, while broadband remained stable at $12.4m (-0.5%). Subsequently, EBITDA margin slipped 1.3ppt to 59.7%. NAV/unit at $0.89.

*Lee Metals: 4Q net profit tanked 61% y/y to $4.7m, taking FY14 net profit to $33.1m (+17.6%). Revenue for the quarter shrank 4.3% to $144.3m due to a 39.2% decrease in Steel Merchandising business to $34.8m, partially offset by 16.9% increase in Fabrication & Manufacturing business to $109.5m as a result of larger volume but weaker prices. Costs increased across the board due to ramp up on production capacity for F&M business. DPS of 2¢ declared, taking FY14 payout to 3¢ (FY13: 3.5¢) NAV/share at $0.374.

*Food Empire: 4Q14 net loss widened to US$12.1m from a net loss of US$0.2m the previous year, taking FY14 net loss to US$13.2m (FY13 net profit at US$11.7m). Revenue for the quarter fell 22.3% to US$57.6m, dragged by weaker performances from Russia (-36.2%) and Ukraine (-42.0%), as a result of the depreciation of the Russian Ruble and Ukrainian Hryvnia against the USD. Food Empire guided that the weak oil prices and political conflict between Russia and Ukraine will continue to weigh negatively on the group. NAV/share at US$0.259.


*Noble: Wholly-owned subsidiary Maylion has increased its shareholdings in Cockatoo Coal from 23.14% to 42.54%, via the acquisition of 18.8b shares for a consideration of A$37.5m. The consideration was wholly satisfied in cash and funded from internal resources.


*Starburst: Entered into conditional sale agreement with Pah Engineering to acquire 6 Tuas View Circuit for $22.4m. The property has a gfa of ~7,002 sqm, with remaining land tenure of ~43 years. The acquisition will increase Starburst's fabrication efficiency and capacity, and allows the group to consolidate all activities at the new location, thus enhancing efficiency.

*Rex: Indirect subsidiary West Indian Energy has completed the acquisition of the issued and outstanding shares of Parex Resources, whose main material asset is a 63.8% working interest in the Cory Moruga Block in Trinidad & Tobago. With the completion of the acquisition, its working interest in the Cory Moruga Block is now 83.8%

*Sarine Technologies: Gemological Science International, one of the largest independently owned gemological laboratories in the world, undertakes Sarine's new product, DiaMension Axiom, a high-end technology diamond scanner for measuring and modelling polished diamonds.