SG Market (11 May 15)

Singapore shares could open higher, after China cuts its interest rates for the third time in six months, while Wall Street also ended higher last Fri, led by a rebound US jobs growth.

Regional bourses are trading higher this morning in Tokyo (+1.5%), Seoul (+0.0%) and Sydney (+0.6%).

From a chart perspective, support level is seen at 3,360, with topside resistance at 3,520.

Stocks to watch:
*Transport: LTA has awarded the contract for the first Bulim bus package under the new bus contracting model to a UK bus operator, Tower Transit Group based on quality and price. Tower's annual $125.6m bid is the third lowest out of eight shortlisted tenders, above SMRT's $93.7m and ComfortDelgro's $125.2m. The 5-year contract comes with a potential 2 year extension (excluding adjustment for inflation, changes in wage level and fuel costs, service variation and incentive payment).

*China Everbright Water: 1Q15 results in line. Net profit advanced 44% to HK$104.6m on revenue of HK$436.3m (+80%), as the quarter saw the first full quarter contribution from HanKore. Top-line was led by construction revenue contribution from the undergoing upgrading and expansion work of Binzhou Boxing and Suzhou Wuzhong waste water treatment project, as well as increase in operating and finance income. Gross margin decreased to 50% (1Q14: 55%), mainly due to a larger portion of construction revenue recognized in the mix of the revenue. Bottom-line was aided by a 234% rise in other income, due to the increase in government grant received, offset by a 129% rise in admin expenses due to the inclusion of HanKore, and a 142% rise in finance costs. NAV/share of HK$2.68.

*OUE: 1Q15 result in line, as net profit fell 91.8% to $77.2m, largely due to the absence of the $986 deconsolidation gain of OUE Hospitality Trust from the previous year, but offset partially by the one-off gain from the disposal of Crowne Plaza Changi Airport ($57.8m) and non-core fair value gains on its mutual fund and equity securities ($14.7m). Revenue inched up 1% to $108m, with a full quarter’s contribution from Lippo Plaza and higher contribution from OUE Twin Peaks which obtained TOP in February, offset by lower occupancy rates from hotel properties, and deconsolidation from OUEHT into an associate from Mar ‘14. NAV/share of $4.35.

*Centurion: 1Q15 results in line with estimates, as net profit slumped 58% to $9.4m, while revenue rose 44% to $7.7m, mainly attributed to new contributions from student accommodation assets in Australia and UK, as well as higher occupancy rates of its workers accommodation assets and expanded bed capacity at Westlite Toh Guan. Gross margin improved from 63% to 68%, led by higher rental rates and increased capacity. Meanwhile, the bottom line was weighed mainly by absence of associate profit, as well as higher finance costs (+125%) due to addition interests incurred for the financing of its student accommodation portfolio in UK. NAV/share of $0.523.

*Straco: 1Q15 results in line. Net profit soared 60.5% to $8.7m, while revenue surged 71.5% to $25.2m, from the first full quarter contribution of the Singapore Flyer acquired in Nov ’14, as well as increased revenue from Shanghai Ocean Aquarium from increased visitor arrivals. Bottom line growth was slightly weighed by an overall increase in expenses, largely from the operation of the Singapore Flyer. NAV/share of $0.238.

*Ascendas Hospitality Trust: 4QFY15 DPU came in at 1.25¢ (+3.3%) taking FY15 DPU to 5.06¢ (-8.3%). Gross revenue for the quarter inched up 1.6% to $54.5m while NPI was up 2.2% to $22.6m, mainly due to the contribution from Osaka Namba Washington Hotel Plaza, partially offset by continued weakening of the AUD and JPY against the SGD. Leverage ratio stood at 37.2%, with average debt cost of 3.2% and WALE of 2.5 years. NAV/unit of $0.74.

*Fortune REIT: 1Q15 DPU rose 12% to HK11.63¢, while distributable income increased 12.8% to HK$218.7m. Gross revenue climbed 13.6% to HK$458.8m, while NPI rose 12.4% to HK$325.m, led by the contribution of Laguna Plaza acquired in Jan ’15 and strong rental reversions of 18.4%. Occupancy stood at 98.1%. Aggregate leverage stood at 33.2% with effective interest cost of 2.02%. NAV/unit of HK$11.87.

*Far East Orchard: 1Q15 net profit fell 75.3% to $3.5m on revenue of $103.8m (+36.5%). Topline was led by the increase from the property business, due to the sale of the group's 30% interest in 7 and 11 Bassein Road to Transurban Properties for $38.1m. Meanwhile revenue from the hospitality business remained comparable to that of the previous year. Gross margin fell to 19.6% from 26.6%. Bottom-line was weighed by other losses of $6.3m versus net gains of $4.9m, largely due to FX losses. NAV/share of $2.93.

*Vallianz: 1Q15 net profit climbed 5% to US$5m, despite a 119% surge in revenue to US$60.7m, driven by higher charter and brokerage revenue, as well as higher revenue derived from ship management services, shipyard services and investments, attributed to its three new acquisitions (Jetlee Group, OER Group and Newcruz Group). Gross margin fell 10.9ppt to 26.4% on a change in revenue mix. However, bottom line was weighed by a spike in finance costs (+197%) from an issuance of notes, partially mitigated by contributions from its Indonesian associates (US$1m). NAV/share of US$0.064.

*UMS: 1Q15 net profit fell 12% to $7.5m, on revenue of $27.5m (-20%), mainly due to change in major customer orders in the current quarter, where business activities are now expected to pick up in 2H than 1H traditionally. Bottom line drop was partially mitigated by a 4ppt expansion in gross margin to 57% from the stronger USD, and $0.8m of FX gains. NAV/share of $0.461.

*Technics: 2Q15 swung to $1.1m net profit from a net loss of $0.2m the previous year. Revenue increased 41% to $19.9m due to increased contributions from subsidiaries. Bottom line also benefitted from a 10ppt expansion in gross margin to 43%. Other gains of $2m, mainly from FX gains partially cushioned the increases of expenses. NAV/share of $0.287.

*Wee Hur: 1Q15 net profit soared 91% to $13.6m, while revenue surged 51% $117.3m , led by higher contribution from the progressive revenue recognition of 65% owned Parc Centros. Bottom line was also boosted by a 6.4ppt expansion in gross margins to 26.7% from the same project. Construction segment order book stood at $302.5m providing revenue visibility to FY17. NAV/share of $0.35.

*Trek 2000: 1Q15 net profit jumped 18% to US$0.5m, while revenue surged 80% to US$26.8m mainly from increased sales of Flucard and WiFi memory modules. Management remains focused on targeting growth in three key areas- Consumer Wearable, Medical and Cloud Technologies. NAV/share of US$17.87.

*Asia-Pacific Strategic: To acquire Century 21 Hong Kong, a vehicle which holds the exclusive right to sublicense "Century 21" marks, to grant Century 21 franchises to licensed real estate brokers and to use the Century 21 system to establish, develop and operate brokerages office in Hong Kong and Macau.

*Otto Marine: Expect 1Q15 net loss, due to decrease in vessels utilization and lower charter rates, as well as a provision and impairment.