SG Market (05 May 15)

Singapore stocks are expected to open higher, taking cue from Wall Street, buoyed by positive data from US factory orders which showed its first rise in eight months.

Regional bourses are trading higher this morning in Seoul (+0.2%) and Sydney (+1.1%), with Tokyo closed.

From a chart perspective, technical support for the STI is seen at 3,445 (50-dma) with immediate resistance at 3,520.

Stocks to watch:
*Economy: Both prime ministers from Singapore and Malaysia are holding a 2 day meeting, which is expected to see updates on the proposed S’pore-KL high-speed rail, as well as planned rapid transit system project connecting Malaysia's Johor Bahru and S’pore Woodlands.

*Tiger Airways: 4QFY15 net loss narrowed sharply to $18.8m from $95.5m a year earlier as revenue climbed 5% y/y to $172.2m, driven by stronger yield (+12%), higher load factor (+3.9ppt) and lower fuel cost (-20%). Operating loss contracted to $2.3m (4QFY14: -$24.2m) despite a change in fleet depreciation policy and maintenance provisions, which led to a one-time charge of $10.8m. Otherwise, EBITDA would have registered a $4m profit (4QFY14: -$37m). The results brought FY15 net loss to $264.2m (FY14: -$223m) on revenue of $677.4m (FY14: 746.5m). NAV/share of $0.0863.

*Hi-P: 1Q15 net loss widened to $13.8m from $12.3m, despite revenue soaring 56.4% y/y to $279.8m. Top-line growth was contributed by the group’s ODM product, other high component content assembly products as well as orders from new customers. Gross margin compressed to 1.6% (-0.3ppt), due to higher material costs and start-up costs in Nantong plant. Bottom line was weighed by the absence of insurance claim this year, increased SG&A expenses, and fair value losses from derivatives, partially offset by FX gains. NAV/share of $0.7456

*Marco Polo Marine: 2QFY15 net profit increased 26% y/y to $3.8m, while revenue fell 9% to $29.7m, from weakness in the ship chartering business (-65.6% to $5.4m), due to the deconsolidation of BBR post-disposal, lower utilization rates, and transitional deployment of one of the OSVs. These were partially offset by increase in shipbuilding and repair operations (+44.6% to $24.3m). Gross margin fell 4.2ppt to 22.9%, from lower ship chartering contributions. Bottom-line was aided by FX gains, lower operating expenses and lower finance costs. Meanwhile, JV losses of $0.4m were booked versus profits of $0.2m last year. NAV/share of $0.529.

*Riverstone: 1Q15 net profit jumped 68.6% y/y to RM27.0m, while revenue increased 44.8% to RM127.2m, due to higher gloves demand. Gross margin improved 0.9ppt to 31.6%. Bottom line was also aided by an FX gain of RM1.7m, versus FX loss of RM0.9m a year earlier. NAV/share of RM1.09.

*Ellipsiz: 3QFY15 net profit more than doubled to $1.2m, while revenue fell 22% to $25.6m from lower contribution from distribution & services, due to divestment of facilities, slightly offset by increase in probe card solutions (PCS) revenue. Bottom line was aided by a 10ppt expansion in gross margin to 37% from stronger PCS contributions, and FX gains, but slightly mitigated by increased R&D expenses (+26%). NAV/share of $0.219.

*IPC: 1Q15 turned into net profit of $0.2m compared to loss of $1.6m in 1Q14, boosted by unrealised FX gains of $1.2m (1Q14: -$1m) from stronger USD/SGD, as well as lower distribution and marketing expenses (-63% y/y). Meanwhile, revenue slipped 7.1% to $6.9m due to the absence of sales from a fully sold project, as well as fewer unsold units available for sale in Japan, further dragged by absence of rental income from two hotels which were sold at end-FY14. NAV/share of $0.249.

*QT Vascular: Company assures investors on on-going patent infringement suit by AngioScore Inc for its Chocolate PTA balloon catheter. Highlights probability that AngioScore could obtain a permanent injunction is minimum as AngioScore does not practise the '119 Patent. The worst case liability would involve payment of a reasonable royalty on such products made, used or sold in US, which is not expected to have a material effect on its financial position and profitability.

*Lereno Bio-Chem: Non-binding term sheet to acquire 51%-stake in HTwo Education Holdings, a group which specialises in infant and childcare services, student care, tuition, enrichment businesses and the operations of a private institution. The $20.4m consideration is expected to be paid via cash, funded through rights issue and private placement, and new shares of Lereno.

*Soilbuild Business Space REIT: Issued 111.8m new units at $0.805 each via a private placement, enlarging unit base by 13.7%. Net proceeds of $88.4m is intended to partially fund the acquisition of the property located at 72 Loyang Way.

*Sing Holdings: Expects 1Q15 loss, weighed by higher sales and marketing expenses incurred for the group‘s development properties.

*Kencana Agri: Expects to report a consolidated net loss for 1Q15 mainly due to FX losses resulting from the depreciation of the Rupiah against the USD and lower average selling prices of CPO.