SG Market (13 May 15)

Singapore shares are likely to open with a slight positive bias after Wall Street reversed course and closed modestly lower amid continued volatility in the European bond markets.

But a poor stream of corporate results from Golden Agri, SIA Engineering, Wing Tai and UOL could cap the gains

From a chart perspective, the STI may continue to struggle around the 50-dma at 3,450 with resistance seen at 3,520 and downside support at 3,360.

Stocks to watch:
*Golden Agri: 1Q15 results below estimates, with core net profit down 48.3% to US$52m, while revenue fell 18.9%, dragged by the Palm and laurics division on lower CPO prices despite higher volumes sold. Plantation and palm oil mills segment saw weakness from lower CPO prices and lower production output from dry weather, while oilseeds segment was weighed by lower ASPs and crushing volume. EBITDA margin fell 2.3ppt to 8.1%, from lower ASPs. NAV/share of US$0.68.

*SingPost: 4QFY15 results in line, with core net profit at $41.1m (+14.9%), taking FY15 core net profit to $157.2m (+5.2%). Revenue for the quarter rose 28.7% to $248.7m, led by growth in the logistics (+72.5%) and retail & eCommerce (+9.1%) segments. Excluding the impact of M&As, revenue grew 1.6%. Total expenses rose 33.9% to $35.7m. Bottom-line saw minimal far value gains of $5.2m versus $44.5m from the previous year. Unchanged first and final DPS of 2.5¢. NAV/share of $0.684.

*ST Engineering: 1Q15 results missed estimates, with net profit down 5% to $130m on revenue of $1.5b (-3%), dragged by the difficulties faced by its US shipbuilding operations, with revenue for the marine sector down 13%. Meanwhile, both the Aerospace and electronics segment achieved comparable quarterly revenue of $71.4m and $356m respectively, while revenue for the land systems segment rose 6%. PBT margin inched down 0.8ppt to 10%.

*SIA Engineering: 4Q15 results below estimates, with net profit down 36.5% to $41.4m, taking FY14 net profit to $183.3m (-31%). Revenue for the quarter fell 11.3% to $276m due to lower airframe and component overhaul revenue. Bottom line slump accelerated by a 41% drop in share of associate’s profit to $21.3m, from weaker contributions from the engine repair and overhaul centres. Final DPS of 8.5¢ proposed, taking full year payout to 14.5¢ (FY14: 25¢). NAV share of $1.18.

*Vard: 1Q15 results below estimates, registering a net loss of NOK92m versus a net profit of NOK92m from the previous year. Revenue was up 14.6% to NOK3.1b, although EBITDA margin weakened to 2.1% from 6.4%, weighed by additional cost overruns in Brazil. Bottom-line was hit by net FX losses of NOK207m, stemming from a 15-year yard construction loan in Brazil denominated in USD. No new orders secured in 1Q15, outstanding orderbook dipped by 28% q/q to NOK15.6b. NAV/share of $.60.

*Ezion: 1Q15 results at the lower end of estimates, with net profit of US$41m (-9.2%) on revenue of US$90.1m (-4.6%). The dip in revenue was due to the absence of contribution from the Marine & Offshore logistics support services divisions as the projects in Australia did not go into additional trains as planned. Gross margin dipped 4ppt to 46.1%. Contributions from more liftboat units are mostly expected to start from 2Q15 onwards, so quarterly profits should progressively improve through the remaining quarters. NAV/share of $0.852.

*UOL: 1Q15 results below estimates. Net profit fell 39% to $74.2m, while revenue fell 42% to $238.3m, from the absence of one-off property development revenue from the sale of land at Jalan Conlay, KL. Meanwhile, property development revenue (-69%) saw the recognition of Katong Regency, Seventy Saint Patrick’s and Riverbank@Fernvale, while investment income (+9%) was from OneKM mall which opened in 4Q14. Hotel revenue fell 4% due to lower revenue from Pan Pacific Perth and PARKROYAL Yangon which are undergoing renovation. Gross profit fell 5ppt to 44%. Bottom line slump partially cushioned by increased other income and share of associate UIC’s profit. NAV/share of $9.87

*Wing Tai: 3QFY15 results below estimates. Net profit fell 93% to $2.9m, taking 9MFY15 net profit to $34.4m (-69%). 9MFY15 revenue fell 26% to $460.8m, with revenue supported by contributions from the progressive sales from The Tembusu, additional units sold in Foresque Residences, Helios Residences and The Lakeview in China. Gross margin fell 5ppt to 38.8%, while negative operating leverage resulted in the bottom line slump. NAV/share of $3.96.

*Super Group: 1Q15 results largely in line, due to seasonality patterns. Net profit tumbled 24% to $13.6m, as revenue slipped 2% to $121.7m. Top line deteriorated from lower branded consumer segment (-5%), weighed by sales in Philippines, Malaysia and Eastern Europe, although partially offset by its food ingredients (+4%) from higher sales in ASEAN. Gross margin fell 2ppt to 36% from higher mix of food ingredients sales which has lower gross profit. Bottom line was also weighed by higher tax expense (+75%). NAV/share of $0.474.

*Q&M: 1Q15 results in line, with net profit almost doubling to $2.9m, on revenue of $29.0m (+48%). The jump in topline was led by higher revenue from dental and medical clinics (+24%) and dental equipment & supplies distribution (+50%) segment, as well as maiden contributions of $4.4m from dental supplies manufacturing. Seperately, the group announced the proposed acquisition of 8 dental clinics in S’pore, which will contribute at least $1.6-1.8m for FY15-17, based on profit guarantee. NAV/share of $0.103.

*Sino Grandness: 1Q15 net profit surged to Rmb108.2m from Rmb17.7m a year earlier, while revenue increased 21.9% to Rmb582.2m from strong domestic sales of canned and beverage products as its distribution network widened, while weakness in overseas canned products market. Gross margin improved 1.6ppt to 40.8%. Bottom line surged from a Rmb67.6m fair value gain from option derivatives in relation to convertible bonds, against a Rmb26m loss last year. NAv/share of Rmb2.528

*GuocoLeisure: 3QFY15 swung to net profit of US$4.4m (3QFY14 loss: 0.3m), bringing 9MY15 net profit to US$35.8m (+19.7%). 9MFY15 revenue fell 8.9% y/y to US$278m, due to weakness from gaming and property development segments. Bass Strait royalty fell7% to US$29.2m. Bottom line was improved by an overall decrease in expenses. NAv/share of US$0.83.

*Sinarmas Land: 1Q15 net profit surged 70.4% y/y to $79.8m, boosted by an unrealised FX gain of $23.9m (1Q14: -$18.1m) from the stronger USD/IDR, absence of a $7m loss in associate in 1Q14, partially offset by higher finance costs (+131%) on increased borrowings. Meanwhile, revenue climbed 19% to $285.4m mainly on increased land sales in Indonesia, particularly BSD City in West Java and Karawang International Industrial City in Karawang, but mitigated by lower sales on completed commercial units in Kota Wisata after the hand-over in 2014. Gross profit margin improved 2.1ppts to 71.8% due to higher profits derived from sales of land. NAV/share of $0.59.

*Kingsmen Creative: 1QFY16 net profit fell 14.5% to $0.8m on revenue of $51.9m (-3.9%). Topline was weighed by the retail & corporate interiors (-22.3%) and alternative marketing (-60.6%) segments, offset by the exhibitions & museums (+23.2%) and R&D (+48.5%) segments. Gross margin was relatively unchanged at 27.4%. Bottom-line was weighed by higher employee expenses (+11.9%) and higher taxes (+92.1%). NAV/share of $0.506.

*Starburst: 1Q15 net loss fell 108.5% to $0.5m on revenue of $2.9m (-78.8%). The drop in revenue was largely due to the different work phases that the group's projects are in, as revenue is recognized based on the percentage-of completion method. NAV/share of $0.204.

*Rotary Engineering: 1Q15 net profit fell 51.5% to $7.0m on revenue of $89.4m (-55%). The fall in topline was due to the group reaching completion of some of its major projects. Gross margin improved to 18.3% from 16.9% due to productivity improvement efforts. Bottom-line was aided by other income of $4.4m due largely to disposal gains and FX gains of $2.4m. NAV/share of $0.471.

*PEC: 3Q15 net loss came in at $3.1m versus a net profit of $1.3m from the previous year. Revenue fell 8% to $98.2m, mainly attributable to a delay in commencement of new project works secured as existing projects were substantially completed in earlier quarters. Gross margin fell 7ppt to 15%, mainly attributable to higher costs arising from the delayed commencement of projects and difficulties in the recovery of variation claims from existing and completed projects. Improvement to admin expenses (-22%) and other operating expenses (-9%) were not enough to prevent the group dipping into a net loss. NAV/share of $0.831.

*HMI: 3Q14 net profit surged 195% to RM7.7m, while revenue increased 20% to RM82.9m, from higher patient load and average bill sizes in two of its hospitals. Gross profit margin improved 0.5ppt to 29.4%. Bottom line surge came from increased equity interest in the Group (i.e. lower non-controlling interests) following the restoration of ownership of certain hospital assets (previously equity accounted)