SG Market (02 Mar 15)

Singapore shares are expected to open mixed, tracking the weak close in Wall Street last Fri but the firmer Asian bourses this morning and China’s move to cut interest rates over the weekend could provide some tailwinds for the local market.

From a chart perspective, the STI is still trapped within the 3,390-3,450 trading band.

Stocks to watch:
*Venture: FY14 results in line. 4Q14 net profit rose 3.5% to $39.3m, taking FY14 net profit to $139.8m (+6.6%). Revenue for the quarter climbed 8.3% to $674.7m, driven by test & measurement, medical & life sciences, and others segments, offset by decreases in computer peripherals and data storage. Overall expenses increased in tandem with top line, except R&D which grew 83.3% to $10.6m. Final DPS of 50¢ maintained.

*Midas: FY14 results above estimates. Net profit advanced 18.1% to Rmb56.3m on revenue of Rmb1.32b (+14.8%). Topline was led by the Aluminium Alloy Extruded Products segment which rose 17.9% to Rmb1.29b mainly due to an increase in business volume. Overall gross margin improved 2.1ppt to 26.6%, although bottom-line was weighed by a rise in admin expenses (+26.6%) and finance costs (+68.5%), partially offset by a doubling in associate contributions to Rmb29.0m, led by an increase in train cars deliveries from associate company Nanjing Puzhen Rail Transport. Proposed final DPS at SG 0.25¢, taking FY14 payout to an unchanged SG 0.5¢.

*Hyflux: FY14 net profit increased 31% to $57.5m, despite a 40% drop in revenue to $321.4m. Municipal revenue shrank 46% to $269.9m while Industrial rose 62.2% to $46.4m. Geographically, turnover in home country Singapore shrank the most, by 47.8% to $232.5m. Bottom-line was propped by one-off gains on divestment of JV and tax credit. Order book in excess of $2.9b. Proposed final DPS of 1.6¢, taking FY14 payout to an unchanged 2.3¢.

*Sino Grandness: 4Q14 results below estimate. 4Q14 net loss was at Rmb64m versus net profit of Rmb32.5m in 4Q13, taking FY14 net profit to Rmb233.4m (-19.0%). Revenue for the quarter fell 8.3% to Rmb503.6m, dragged by decrease in sales of overseas canned products at Rmb70.4m (-48.2%). Gross margin grew 2.9ppt 43.6%, led by higher margin from the beverage segment. Bottom line was weighed by a rise in distribution and selling expenses (+51.2%), admin expenses (+20.3%), finances costs (+94.2%), and fair value loss from options derivatives at Rmb34.9m (+947.6%).

*China Merchant Holdings (Pacific): FY14 results in line. FY14 net profit increased 20% to HK$739.4m, while revenue climbed 7% to HK$2b, largely due to revenue growth of Yongtaiwen Expressway, the consolidation of Jiurui Expressway and the increase in bank interest income. Gross margin was maintained at 55.1%. Bottom line buoyed by a more than double in other operating income to Rmb113.4m, rise in admin expenses (+8%) and rise in JV contributions (+6%). Proposed final DPS of 3.5¢, taking FY14 payout to an unchanged 7¢.

*Swiber: FY14 results below estimates. 4Q14 registered net loss of US$9m (4Q13: US$30.2m), as revenue slipped 6% to US$200.3m, bringing FY14 earnings to US$31.2m (-66%) and revenue to US$726.5m (-30%). For the year, top line was dragged by the absence of significant contribution from projects, mainly from South Asia (-53%) and South East Asia (-37%). Gross margin crashed 14ppt to 2.4% due to absorption of fixed costs. Bottom line boosted by disposal gain ($101.8m), lower admin expenses, associate profits (+40.7%) and lower NCI (-85%), offset by higher fair value loss on share options (US$22.6m) and increased finance expenses (+40%). Order book stood at US1.4b. Net gearing spiked from 1.24x to 1.75x. NAV/share at US$0.924.

*Q&M: FY14 results above estimates. Net profit rose 33% to $8.6m, while revenue jumped 40.9% to $100.3m from higher revenue from existing dental outlets, contributions from outlets in Singapore and Malaysia, as well as acquisition of Aoxin in Jul ’14. PBT margin inched up 0.7ppt to 10.5%. Proposed final DPS of 0.32¢, taking FY14 payout to 0.73¢ (FY13: 1.3¢).

*Ho Bee: FY14 core results below estimates. 4Q14 net profit slumped 43.6% to $285.2m taking FY14 net profit to $315.0m (-46.8%). Revenue fell 48.6 to $28.9m on the back of nil property development sales, slightly mitigated by a 110% surge in rental income, mainly from The Metropolis, Rose Court and 1 St Martin’s Le Grand. Other operating income slumped 42.8% to $282.3 due to smaller fair value changes of investment properties. First and final DPS of 5¢ (FY13: 8¢). NAV/share at $3.90

*Ying Li: FY14 results above estimates, although 4Q14 net profit slumped 30% y/y to Rmb195.3m, on revenue of Rmb243.8m (-42%), bringing FY14 earnings to Rmb254m (+24%). For the quarter, top line was dragged by a decline in sale of properties (-49%), as most of the completed units at Ying Li International Plaza were sold, partially offset by increased rental income (+52%). Gross margin spiked to 73% (+43 ppts) due to the change in mix. Bottom line was weighed mainly by FX losses (+102%) due to the appreciation of USD/SGD and absence of fair value gain (-56%), partially mitigated by a government grant (Rmb5m) and lower finance costs. NAV/share at Rmb1.96.

*Yongnam: Poor FY14 results in line with street forecasts, as group turned in a net loss of $8.5m from earnings of $5.5m in FY13, dragged by lower revenue of $212.1m (-41%), due to the tailing down of projects and slow starts in new projects such as Changi Terminal 4 and Marine One. Gross loss came in at $32.6m versus a gross profit of $38.1m, from the group’s inability to absorb its high fixed production and overhead costs. Bottom line aided by a one-off $34.4m disposal gain on property, partially offset by higher finance costs (+54%). No dividends declared (FY13: 0.6¢).

*Kim Heng: 4Q14 turned into loss of $1m (4Q13 net profit at $6m), bringing FY14 earnings to $5.6m (-67%), starkly lower than street estimates of $18.5m. Revenue for the quarter fell 21% y/y to $20.5m, resulting from lower demand for rig maintenance on the back of the oil price fall. Gross margin plunged 14 ppts to 30% from lower contribution of marine offshore support services and chartering and towage services. In addition, bottom line was dragged by a $3.3m provision for doubtful debts and an absence of sale of inventory made in 4Q13, partially mitigated by disposal ($0.7m) and FX ($0.5m) gains. First and final DPS of 0.5¢ maintained.

*Rex International: 4Q14 net loss widened y/y to US$51.6m (4Q13: -US$4.8m), mainly due to a US$41.1m impairment of available for sale investments, fair value loss of US$4.4m attributed to jointly-controlled Caribbean Rex and FX loss (US$4.4m) from the weaker SGD/USD. Meanwhile, revenue grew to US$0.3m (from nil), which arose from technical services rendered to clients by Rex Technology Management. This brought FY14 loss to US$62.7m (FY13: -US$8.5m).

*Haw Par: FY14 net profit improved 10% to $118.8m, while revenue gained 9% to $154.2m, attributed to a 18% growth in healthcare segment contributed by higher sales in Asian markets, partially mitigated by leisure (-24%) and property (-5%) segments. Gross margin climbed 1.9 ppt to 58.5%, while bottom line was boosted by higher dividend income and disposal gain ($10m) and higher share of results from associates, but partially offset by higher promotion and advertising costs, as well as lower fair value gains. Final DPS of 14¢ proposed, maintaining FY14 total at 20¢. NAV/share at $12.82.

*KS Energy: FY14 net profit surged to $30.1m from $23.0k the previous year, on revenue of $227.3m (+40.5%). The surge in revenue was mainly generated by the commencement of charter contracts in Indonesia and Vietnam during the year, with revenue contribution from the division making up about 92.2% of the group’s total revenue. Gross margin improved 7.3ppt to 28.6%, mainly led by higher revenue from the drilling segment. Bottom-line was further aided by other income contributions of $56.6m (FY13: $3.1m), due to disposal gains of PPE, offset partially by a 33.6% rise in admin expenses and 141.8% rise in impairment charges. NAV/share at $0.723.

*RH Petrogas: FY14 net loss was at US$28.3m versus US$65.9m from a year ago. Revenue fell 13% to US$75.2m, mainly due to the decrease in average realised oil prices and lower cost recovery for FY14 under the terms of the production sharing contracts (PSC) of the Basin and Island PSCs. Gross margin fell 14.7ppt to 17.3%, mainly due to the increase in depletion and amortisation of oil and gas properties in Basin PSC and Island PSC. Bottom-line was aided by a 55% drop in other expenses to US$37.4m, mainly due to lower impairment loss on goodwill and lower write-off for unsuccessful exploration and evaluation expenditures and the absence of FX losses. NAV/share at US$0.204.

*Libra Group: FY14 net profit surged more than 10x TO $5.3m on revenue of $63.7m (+102%). Topline was led by higher revenue from the mechanical and electrical engineering segment (+161.8%) and higher revenue from the manufacturing segment (+16.2%). Gross margin rose 5.7ppt to 23.1%, led by improved project execution and productivity and increased sales to external customers. Bottom-line was weighed by a 49.9% increase in admin expenses to $9.5m. Final DPS of 0.5c declared, taking FY14 payout to 1.2c (FY13: 0.3c). NAV/share at $0.052.

*JB Foods: 4Q14 net narrowed to RM15.9m versus RM23.1m from the previous year, taking FY14 net loss to RM45.0m (FY13 net loss at RM53.2m). Revenue for the quarter was up 22.5% to RM195.7m, mainly due to the increase in average selling prices of cocoa ingredient products by 34%. However, average cocoa bean prices rose by a higher quantum of 31% in the quarter, resulting in a gross loss of RM0.07m. NAV/share at RM0.292.