SG Market (26 May 15)

With Wall Street closed for Memorial Day holiday on Mon, Singapore will shares are likely to take direction from China and Hong Kong markets, as well as the upwardly revised 1Q GDP growth of 2.6%.

Regional bourses opened mixed this morning in Tokyo (+0.1%), Seoul (-0.4%) and Sydney (+0.3%).

From a chart perspective, the STI is again testing reistance at around 3,460 where the 20 and 50-day moving averages are converging. A clear breakout from this point could take the index back to the recent peak at 3550. Otherwise, immediate support lies at 3,425. Looking at technical indicators, the RSI is neutral, while MACD has yet to trigger a bullish crossover.

Stocks to watch:
*Economy: Singapore’s GDP gew 2.6% in 1Q15, faster than the 2.1% expansion in 4Q14, despite the continued contraction in the manufacturing sector. With global conditions expected to improve for the rest of the year, driven by a pick up in US and Europe, the government is maintaining its 2015 growth forecast of 2-4%. NODX posted a faster expansion of 4.8% in 1Q15 compared to 4Q14’s gain of 0.5%.

*Property: CBRE expects total leasing volume to decline by 5-10% for the rest of the year, with overall rents softening by 5-7%, on back of an estimated 19,018 completions in the pipeline which will bring the number of new homes to ~22,000, 10.4% higher than the 19,921 new homes completed in 2014.

*Valuetronics: FY15 results beat estimates, as net profit inched up 0.9% to HK$149.2m, boosted by higher interest income but partially offset by higher staff costs in China (+11.2%). Revenue slipped marginally to HK$2,429.3m (-0.2%), attributed to a slowdown in demand from its consumer electronics segment (-10.9%), mitigated by higher sales from industrial and commercial electronics (+22.6%). Gross margin improved 0.2ppt to 13.6% from a change in product mix. Net cash position grew HK$27.9m to HK$505.8m. NAV/share at HK$2.158.

*Stamford Land: 4QFY15 net profit almost doubled to $5.4m, taking FY15 net profit to $29.7m (+9.7%). Revenue for the quarter was up 80% to $112m, driven by revenue from the property development segment of $61.7m (+792.5%), due to the disposal of DH site. Contributions from the other three main revenue segments were lower, with hotel owning & management (-9.3%), property investment (-2.5%) and trading (-22.1%). Bottom-line was dragged by an almost 6-fold surge in expenses for properties sold to $37.3m, as well as a 17-fold jump in other losses to $9.8m which was largely due to fair value losses on investment properties. NAV/share at $0.53.

*Jason Marine: FY15 net profit climbed 39.8% y/y to $3.9m, as revenue improved 12.4% to $56.4m, mainly from the sale of goods due to more project deliveries, but partially mitigated by lower revenue from rendering of services (-6.7%). Subsequently, gross margin dropped 1ppt to 26.1% from a change in product mix. The bottom line was partly weighed by higher staff costs and bonuses (+7.4%), as well as higher taxes (+130%). NAV/share at $0.28.

*GLP: Second largest shareholder, Greenwich-based hedge fund Lone Pine Capital has sold its entire 7.27% stake to Chinese investment fund Hillhouse Capital Management on 21 May at $2.74/share.