SG Market (08 Apr 15)

Singapore Shares:

Expect a lacklustre opening from Singapore shares, taking cue from the late reversal into negative territory in the US overnight, indicating some wariness ahead of the upcoming first-quarter earnings season.

Regional bourses are trading higher this morning in Tokyo (+0.5%), Seoul (+0.4%) and Sydney (+0.8%).

From a chart perspective, the STI is likely to be bounded by upper resistance at 3,388 and downside support at around 3,355.

Stocks to watch:
*Ezra: 2QFY15 results below estimates, as net profit decimated 99% y/y to US$0.1m, despite a 1% growth in revenue to US$302m, mainly from new contribution from recently-acquired Strategic Marine Entities, but partially offset by weakness in both the shallow water AHTS and shallow water PSV segments, as well as absence of revenue contribution from one leased-in vessel in 2HFY14. Gross margin dipped 2.2ppt lower to 13.6%, on the dry docking of Lewek Express, negative utilization impact from Lewek Champion due to an unexpected gangway malfunction, unplanned repair and maintenance costs for Lewek Champion, as well as lower amount of variation orders billed from lower project close outs. Bottom line was dragged by a 69% plunge in associate profits, on consolidation of EOL Group, while joint venture companies turned into losses after it incurred an impairment loss. Order backlog stands at US$2.3b. NAV/share at US$1.3348.

*SingTel: To acquire 98%-stake in Trustwave, the largest independently-managed security services provider in US, with presence in Europe and Asia Pacific, for US$810m excluding net debt. Trustwave’s services include protection of IT infrastructure, applications and networks and cyber threats response. The deal is expected to be loss-making in 1st year, EBITDA positive in 2nd year and EPS accretive in 3rd year.

*RH Petrogas: Group will not seek an extension to the initial six year exploration period of the West Belida Block production sharing contract on expiration on 4 May, as past exploration findings in the block were not encouraging.

*MFS Technology: Previously-owned subsidiary, MFS Technology, commenced proceedings against the CEO and Executive Director of the group, which involve the transfer of certain information prior to the disposal.

*Ntegrator: Awarded a $25.6m contract to supply Next Gen NBN services. The three-year contract brings year-to-date contract wins to $50.8m.

*Dairy Farm: Completed the 19.99%-stake investment in China's Yonghui Superstores for Rmb5.69b.

*Health Management International: Seeking buyers for 49%-owned Mahkota Medical Centre in Malacca for about US$250m (RM900m).

*CWT: Appointed the official provider of logistics and operations support for the 28th SEA Games, comprising full supply chain management and supporting logistical services, inclusive of manpower and transportation.

*Sino Construction: Proposed agreements to acquire both 51%-stake in Signet and 52%-stake in JEMS have lapsed, after precedent conditions were not fulfilled.

*Sinotel Technologies: Mandatory cash offer of $0.098/share has been declared unconditional, after offeror Advance Technology obtained 52.1% of total issued shares. Offer will remain open until 24 Apr.