SG Market (25 Feb 15)

Singapore shares are expected to open higher, taking cue from Wall Street which hitt new record highs, after Fed Chair Janet Yellen signalled the Fed’s intent to remain patient before raising interest rates because of weak wage growth and low inflation.

Asian stocks are mostly trading higher this morning with Tokyo (+0.1%) and Seoul (+0.6%), although Sydney is down 0.1%. China resumes trading today, following a weak of closure for the Chinese New Year holiday.

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:
*Genting SP: 4Q14 results below estimates. Net profit fell 36% to $89.2m, while adjusted EBITDA decreased by 24% to $190.2m. Assuming theoretical normalized win rate, adjusted EBITDA would have been $280m. Revenue dropped 8% to $637.9m, weighed by a 9% drop in gaming revenue to $461.3m as growth in mass and premium mass was more than offset by significantly below average win percentage and rolling volume. Non-gaming revenue fell 4% to$176.1m. Hotel occupancy was at 93% with RevPAR of $422. First and final DPS of 1¢ maintained.

*Dyna-Mac: 4Q14 net profit slumped 56.6% to $4.0m, bringing full year net profit to $24.8m (-13.7%). FY14 revenue increased 18.3% to $318.6m due to higher volume of projects in Singapore and overseas yards. Gross margin fell 1.8ppt to 22.6% mainly due to higher operating costs and accelerated depreciation from the termination of lease of one of the yards. Bottom-line was dragged by a 27.4% rise in admin expenses to $38.0m. First and final DPS of 1.5¢ (FY13: 2¢). NAV/share at $0.196.

*Vallianz: 4Q14 net profit improved 27% y/y to US$3.6m, on revenue of US$48.2m (+700%), bringing FY14 earnings to US$18.5m (+147%) and revenue to US$153.7m (+669%). The stellar performance was led by the acquisition of Rawabi Swiber Offshore Services at end-2013, which significantly boosted charter and brokerage revenue for the group, comprising 78% of overall sales (FY13: 44%). Net gearing lowered 37 ppts q/q to 2.16x, with order book at US$540m. Proposed first and final DPS of US0.05¢ (FY13: US0.04¢). NAV/share at US$0.0668.

*Chip Eng Seng: 4Q14 net profit soared 383.9% to $167.6m, taking FY14 net profit to $280.7m (+282.6%). Revenue surged 112.9% to $368.6m, driven by the property development segment, from the recognition 100 Pasir Panjang, Belvia and Alexandra Central), all of which obtained TOP in 2014. On-going mixed developments in Yishun, Nine Residences & Junction Nine also boosted top line. Gross margin rose 9.3ppt to 30%. First and final DPS of 4¢ and special DPS of 2¢ announced, bringing full year DPS to 6¢ (FY13: 4¢). NAV/share at $1.172.

*Healthway Medical Corp: 4Q14 net loss narrowed to $2.8m from $4.1m from the previous year, taking FY14 net profit to $9.8m (-67.8%). Revenue for the year was up 6.3% to $85.7m, mainly due the increase in revenue from the specialist & wellness healthcare segment pursuant to increase in patient volume, partially offset by a decrease in revenue from the primary healthcare segment. Bottom-line was weighed by a 59% drop in other operating income to $20.8m, due to a decrease in disposal gains of available-for-sale of financial assets, offset by a 34.4% decline in other operating expenses. NAV/share at $0.083.

*Wheelock Properties: 4Q14 net loss widened to $103.1m from $91.3m the previous year, taking FY14 net profit to $43.1m (+7.7%). Revenue for the quarter fell 7.2% to $26.9m, as the revenue recognised from Ardmore Three based on the progress of construction works was lower versus last year, and the group also received lower dividend income from its investments following the disposal of its investment in Hotel Properties to its associated company in 2Q14. Bottom-line was further weighed by an allowance for diminution in value of $75m made on The Fuyang project in China, and fair value losses of $50.7m due to the revaluation of Scotts Square Retail. NAV/share at $2.62.

*Overseas Education: FY14 net profit fell 2.8% to $22.0 on revenue of $102.1m (-0.9%). The slight decrease was mainly attributable to lower revenue from tuition fees (-0.8%), school bookshop sales (-14.8%) and enrichment programme (-16.5%). Total operating expenses remained flattish at $75.7m. Maintained first and final DPS of 2.75¢. NAV/share at $0.379.
*IFS Capital: 4Q14 net loss widened to $8.5m (+104% y/y), as total income declined 6.3% to $8.6m, dragged by lower factoring volume and decreased average loan assets, absence of gain on partial redemption of convertible loan, partially mitigated by a write back in gross provision for unexpired risks compared to a charge in 4Q13, as well as income received from intellectual property. Bottom line was weighed by higher net claims from full provision made for claims reserve for a client and and higher staff costs (+21%). Proposed first and final DPS of 1.5¢ (FY13: 2¢). NAV/share at $0.802.

*Heeton: 4Q14 net profit tumbled 69% y/y to $1.9m, despite a 125% surge in revenue to $6.8m, bringing FY14 earnings to $9.5m (-49%) and revenue to $36.3m (+141%). For the year, top line was mainly boosted by contribution of $24.1m from two residential projects, Onze@Tanjong Pagar and the Earlington in London. However, cost of properties sold spiked ahead of sales at 521%, which dragged bottom line on top of increased net finance expenses, higher sales and marketing costs (+43%) and a $5m provision for foreseeable losses, partially offset by higher share of profits of associates (+36.2%) attributed to progressive profit recognition for various residential projects. Proposed final DPS of 0.6¢, bringing FY14 DPS to 1.1¢ (FY13: 1.3¢). NAV/share at $1.216.

*SGX: CEO Magnus Bocker will be leaving the stock exchange after his current contract expires on 30th Jun ’15. SGX board is moving forward with its CEO succession plan and is assessing both internal and external candidates.

*QT Vascular: 4Q14 net loss widened y/y to US$7.8m (4Q13: -US$6.6m), despite a 51% pop in revenue to US$3.7m, bringing FY14 total losses to US$34.2m (FY13: -US$34.5m) and revenue to $13.2m (+141%). Top line was driven by increased sales volumes (+194%) of the Chocolate PTA Balloon Catheter and Glider PTCA Balloon Catheter with distributors and direct coronary sales in US. BVPS of US$0.04.