SG Market (17 Apr 15)

Singapore shares are expected to open lower, taking cue from the negative close in Wall Street overnight, following mixed earnings and a weaker than expected economic data.

Regional bourses are trading lower this morning in Tokyo (-0.5%), Seoul (-0.2%) and Sydney (-0.4%).

From a chart perspective, the STI recently breached past the psychological resistance level of 3,500 yesterday to close at a seven-year high at 3,540. We caution however that technical indicators are looking overbought, as indicated by both the RSI and Stochastics. Topside resistance is at 3,620, while support lies at 3,465.

Stocks to watch:
*Keppel Corp: 1Q15 results came in below estimates. Net profit rose 6.4% to $360.2m, reflecting a bigger share of Keppel Land’s earnings and sale of some equity investments. O&M revenue was flat at $1.9b, mainly from higher recognition from on-going projects, while property division ($$327m, -1%) and infrastructure division ($509m, -31%) weighed on top line. O&M’s operating margins narrowed 2.2ppt to 12%, as a result of higher staff costs (+26.1%). $500m of new orders were won in 1Q15, bringing order book to $11.3b. Five jack-up rigs were delivered in the quarter. NAV/share at $5.97.

*SATS: Set up JV with the world’s seventh largest food company, Brazilian meat producer BRF group, to provide meat processing and manufacturing of branded food products for distribution to retailers, restaurants, wholesalers, distributors and ship chandlers. The 51/49 JV will have an issued and paid up capital of $48m, and intends to grow its portfolio of branded food products for the Singapore market and expand into other Southeast Asian markets over time.

*Courts: Partners international brands Ace Hardware and JYSK (Danish-brand selling home-living necessities). Products from these brands will be available at Courts stores in Singapore, and the first two shop-in-shop concepts,which is expected be operational in FY4/16.

*Vallianz: Clarifies that BT article quoting Vallianz to be in talks for more deals at “more than US$100m each” is speculative as no deal is firmed up and no value of contracts has been disclosed in any discussion. Trading halt has been lifted.

*ISOTeam: Awarded nine contracts worth ~$31.1m in aggregate, with works ranging from improvement works at multi-storey car parks to painting works and repairs and redecoration works.

*United Envirotech: Unconditional offer of $1.65/share by CITIC Environment has closed, with the valid acceptances of 85.8% of total issued share capital.

*Polaris: 44.9%-owned associate, PT Trikomsel, has partnered PT Transindo Digital Retail (TDR) to sell telco products in Indonesia. TDR is a retail store player which distributes various brand of mobile phones, tablets and accessories such as Advan, Apple, Asus, Hewlett Packard, Huawei, Lenovo, Microsoft, Oppo Samsung, Smartfren, Xiaomi and several other leading brands, at its Trans Hello retail outlets. TDR currently has about 50 outlets and targets to expand another 100 outlets by end Apr 2015.

*Alliance Mineral Assets: Granted an operating licence for its on-site processing plant at its Bald Hill Project by the Western Australia authorities. Simultaneously, group has completed the refurbishment of its primary processing treatment plant and mining contractors had been fully mobilised to commence work with the goal of restarting tantalite production at the Boreline pit.

*Keong Hong: JV Pristine Islands Investment appointed Accor to manage its first two hotels in Maldives. Acoor will provide the full spectrum of hotel management services, including consultancy on the design and construction of the two new-build hotels.

*Sysma: Disclosed that two directors of its JV company are currently assisting CPIB in investigations. Group cited that investigations appear to relate to events that occurred prior to the employment of these directors before the JV company was incorporated.