SG Market (25 May 15)

Singapore shares are likely to again stumble at the open, following the late sell-off on Wall Street last Fri on profit-taking ahead of the long weekend, as well as Fed Chair Janet Yellen’s remarks that the central bank will stick to its plans to hike the fed funds rate this year.

Regional bourses are trading higher in Tokyo (+0.3%) and Sydney (+0.1%), while Seoul and Hong Kong are closed today in celebration of Buddha’s Birthday.

In the week ahead, Singapore will release its industrial production and final 1Q GDP growth on Tue.

From a chart perspective, the STI is still stuggling below its 20 and 50-day moving averages, with next support at the recent low of 3,425 and immediate resistance at 3,466. Looking at technical indicators, the RSI is neutral and MACD has yet to trigger a bullish crossover.

Stocks to watch:
*Mercartor: FY15 net loss deepened to US$125.4m from US$22.8m, on lower revenue of US$56.3m (-25%) that was largely due to a fall in spot/contract rates and unscheduled repairs. Other expenses surged more than 10-fold to US$8.8m, mainly because of allowances for bad debt. Earnings were also hit by massive impairments of US$63.5m from property and equipment and US$18.9m provision for an onerous contract..NAV/share at US$0.13.

*Thai Beverage: CEO plans to ramp up marketing and promotion efforts in its non-alcoholic beverage business and will await for the right time to look at its substantial but non-core 29% stake in Frasers Centrepoint. The group wants to be focused purely on F&B and aims to derive more than half of its revenue from non-alcoholic beverage and from outside Thailand by 2020.

*Hiap Seng: Awarded contract worth ~$43m for the provision of mechanical works for the Mogas-Cogen Project on Jurong Island. The works have commenced and are scheduled for completion by Sep '16.

*Edition: Proposed renounceable non-underwritten rights issue of up to 4.7b new shares at an issue price of $0.01, on the basis of eight rights shares for every one held, to raise net proceeds of between $18.2m (minimum subscription scenario) to $46.8m (maximum subscription scenario). Proceeds raised have been earmarked to further develop the property development business, fund general corporate activities of the company and general working capital.

*Mapletree Logistics Trust: Announced two proposed acquisitions: 1) One warehouse in Vietnam (MLPBN1) and 2) One warehouse in South Korea (DLC), for a total consideration of $42.2m. The acquisitions are expected to generate initial NPI yields of 10% for MLPBN1 and 8% for DLC, and will be accretive at the distribution level. The transactions will be fully funded by debt. Upon completion, MLT's aggregate leverage will be ~34.9%.

*SGX: MOU with Zhengzhou Commodity Exchange to collaborate on efforts to jointly develop and expand the commodities markets in China and Singapore.