SG Market (27 Feb 15)

Expect a lackluster opening from Singapore shares, following the mixed performance in Wall Street overnight, which saw tech counters rallying and energy stocks languished, dragged by continued weakness in oil prices.

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

Stocks to watch:
*Noble: 4Q14 results in line. 4Q14 swung to a net loss of US$240m, dragging FY14 net profit to US$132m (-44%). Stripping out exceptions, FY14 core net profit would have been US$515m (+40% y/y). For the year, revenue rose 4% to US$85.8b, driven by increases in the energy business, offset by declines in metals, minerals and ores business. On a pro-forma basis, full year tonnage was at a record 278m tons (+19%). Overall operating margin fell to 1.74% from 1.92%. Bottom line was affected by US$200m of Yancoal impairment and US$179m of other impairments, offset by US$178m of negative goodwill and US$140 of remeasurement gains. DPS of US0.7¢ declared, taking FY14 DPS to US3.7¢ (FY13: US0.91¢). NAV/share at US$0.75.

*ST Engineering: FY14 results below estimates, with net profit at $532m (-8%), as revenue slipped 1% to $6.5b, weighed by most business segments- Aerospace (-1%), Electronics (-4%), Land Systems (-5%), Marine (+8%) and Others (-18%). The Marine segment was boosted by higher shipbuilding and engineering works, but partially offset by lower shiprepairs. Order book stood at $12.5b, of which about $3.8b is expected to be delivered in 2015. Final DPS of 11¢, comprising 4¢ ordinary and 7¢ special, bringing FY14 total to 15¢ (FY13: 15¢). NAV/share at $0.4891.

*Yangzijiang: FY14 results ahead of estimates. 4Q14 net profit fell 15% y/y to Rmb636.6m, taking FY14 net profit to Rmb3.5b (+12.5%). Revenue for the quarter rose 12% to Rmb3.8b, boosted mainly by delivery of nine vessels (4Q13: 6). Gross margin almost halved (-19.8 ppts) to 22.4%, after the construction of more lucrative orders made prior to the financial crisis had completed. In addition, progressive construction of its first jack-up project had started, which has significantly lower margin vs other commercial vessels. Bottom line was further weighed by additional provision made for HTM investment (Rmb315m), higher R&D expenses for new product development, partially mitigated by government subsidy and a turnaround from associates and JVs. First and final DPS of 5.5¢ (FY13: 5¢). NAV/share at Rmb5.343 ($1.16).

*China Everbright: FY14 net profit was up 10% to HK$292.8m on revenue of HK$1.1b (-19%). The fall in revenue was attributable due to a decrease in construction revenue from service concession arrangement, as a few of the group’s construction projects were completed and began operation in FY13, offset by an increase in operation service revenue, finance income and construction contract (EPC) revenue. Gross margin improved 15.8ppt to 56.8%, due to a change in revenue mix with operation service income. Bottom-line was partially weighed by a surge in other operating expenses at HK$9.1m, consisting largely of net exchange loss and post-acquisition expenses due to the consolidation of HanKore, and a 17% rise in finance costs to HK$92.2m. NAV/share at HK$2.63.

*Golden Agri: 4Q14 results below estimates. The quarter saw a net loss of US$21.9m, after taking a US$133.8m (vs US$36.9m gain in 4Q13) loss on fair value of biological assets, partially offset by US$34.0m FX gains (vs US$17.5m losses in 4Q13), resulting in core net profit shrinking 59.4% to US$46.1m. FY14 revenue was up 15.7% to US$7.6b, lifted by Plantation and Palm Oil as well as Palm and Laurics, but hit by top line losses in Oilseeds due to negative refining margins, as a result of China’s challenging environment. Final DPS of 0.177¢ proposed, taking FY14 payout to 0.585¢ (FY13: 1.1¢).

*Indo-Agri: 4Q14 results below estimates. Net profit slipped 0.9% y/y to Rp225.45b, bringing FY14 to Rp758.7b (+45.0%). Revenue for the quarter improved 11.8% y/y to Rp 4.2t as plantation sales jumped 30.9% to Rp1.9t on higher volume offset by lower ASP, but Edible Oils & Fats was flat (-0.7%) at Rp 2.2t. Operating costs surged 21.8% due to marketing and promotion, higher wages and increased employee benefits. Associate losses widened to Rp45.1b versus Rp23.9b. Final dividend to be determined. NAV/share at Rp10,322.

*Vard: 4Q14 results above estimates. Net profit improved 36.3% y/y to NOK154m, taking FY14 net profit to NOK349m (-2.2%). Revenue surged 45.5% to NOK4.5b, driven by delivery of two vessels and a newbuild contract. EBITDA margin of 1.9% (-1.8 ppt) was dragged by materials and subcontract costs (+63%) and higher staff expenses (+19.7%). Order book of NOK17.7b stretches revenue visibility into 2017. NAV/share at $0.62.

*UOL: FY14 results in line. Net profit for the year fell 13% to $686.0m, while revenue increased 29% to $1.36b mainly from the recognition of sale at Jalan Conlay and the completion of The Esplanade, Tianjin in 2014, slightly offset by lower property development revenue from Waterbank at Dakota and Spottiswoode Residences completed in 2013. Gross margin fell 6.7ppt to 42.7%, due to higher contributions from the property development which has higher costs. Associate contributions rose 24% to $119.8m from increased contribution from Pan Pacific Singapore and the Archipelago and Thomson Three development projects. First and final DPS of 15¢ (FY13: 20¢). NAV/share at $9.71.

*Innovalues: 4Q14 results above estimates. Net profit surged 469.7% to $5.4m, taking FY14 net profit to $15.8m (+82.2%). Revenue jumped 19% to $27.9m, mainly driven by the auto segment, slightly offset by the office automation segment. Bottom line was buoyed by higher gross margin which surged 13.6ppt to 30.4% due to favourable sales mix and improved operational efficiency. Final DPS of 0.6¢ and special DPS of 0.8¢ declared, bringing full year DPS to 2¢ (FY13: 1.2¢)

*Hock Lian Seng: FY14 net profit soared 3x to $72.6m, in tandem with a 3x rise in revenue to $261.6m (+201.8%). Topline was led by $193.5m contributions from the property development segment, which saw the recognition of revenue from the industrial development property project, Ark@Gambas, which obtained TOP in Nov ‘14. Gross margin fell 5.2ppt to 37.3%. Proposed first and final dividend of 4¢ (FY13: 1.8¢). NAV/share at $0.403.

*China Sunsine: 4Q14 results in line. Net profit spiked 210% y/y to Rmb54.2m, taking FY14 net profit to Rmb220.2m (+187%). Revenue for the quarter was up 18% to Rmb523.1m, buoyed by higher sales volumes (+2.1%) and average selling prices (+15%), due to the shortage of accelerator products in the market. Subsequently, gross margin surged 12ppt to 31.9%, boosted by a drop in average unit cost of aniline (-20%) attributed to lower crude oil prices. Bottom line was partially weighed by higher selling and distribution expenses (+21%), increased staff costs and additional allowance for impairment on receivables. First and final DPS of 1¢ and special DPS of 0.5¢ declared, taking FY14