SG Market (10 Jul 15)

Singapore shares are expected to inch higher at the open, taking cue from the positive close on Wall Street overnight, in a session which saw the health of China’s financial markets and ongoing uncertainty in Greece continuing to weigh on investor sentiment.

Regional bourses are trading higher this morning in Seoul (+0.4%) and Sydney (+0.5%), while Tokyo is down 0.4%.

From a chart perspective, the STI hit a new year low at 3,250 yesterday, with next level support seen at 3,200 (Dec ’14 low). Overhead resistance is at the 3,360 triple-top.

Stocks to watch:
*Macro: In its quarterly update to the World Economic Outlook, the IMF is projecting global growth to come in at 3.3% for 2015, led by a gradual pickup in advanced economies, but partially weighed by emerging economies. Growth is expected to strength to 3.8% in 2016.

*Airline: The IATA remains positive on the outlook of the airline industry, while citing risks in the form of a potential Grexit and a slowdown in China. Global airlines are expected to register a record US$29.3b (+80% y/y) in earnings this year, aided by lower fuel costs and robust load factor.

*Property: The HDB resale market saw some recovery in Jun, as the number of HDB resale volume jumped to a 2½ year high, with 1,709 units sold (+30% y/y, +8.5% m/m). Resale prices inched up 0.1% from the previous month, although overall prices for the year fell 4.4%. Some analysts cautioned that if 2Q15 really marks the start of the recovery of the HDB resale market, the S’pore government could then deem it as being unnecessary to relax current property cooling measures.

*SPH: 3QFY15 ahead of estimates. Net profit increased 9.6% y/y to $98.2m, while revenue dipped 0.9% to $306.8m, with a 5.6% drop in print media being offset by a 16.5% increase in property segment and 21.6% rise in others segment. Contribution from the property segment came from Seletar Mall which commenced business last November. Bottom line was aided by increase in other operating income, decrease in overall expenses and a narrowing of share of losses of associates. NAV/share at $2.21.

*Ezra: 3QFY15 crashed into net loss of US$3.0m (3QFY14: US$8.3m), with non-controlling interests spiking up 76% to US$3.4m. Revenue slipped 3% y/y to US$390.7m from weakness in its two core segments- subsea services and offshore support and production services. This was partially mitigated by higher sales from Triyards, its marine services segment, which saw maiden contributions from Strategic Marine (SM Group), a shipbuilder and fabricator acquired in Oct '14. Due to the change in business mix, gross margin dropped 4.6ppt to 11.7%, which led to a massive wipeoff in profit after tax to US$0.4m (-96%).

*ST Engineering: Aerospace arm secured new contracts worth $920m in 2QFY15. The latest series of contracts consists of airframe, component and engine maintenance, as well as engine wash and pilot training. The contract wins takes the group’s order book to ~$13.1b.

*Nera Telecommunications: Secured $10.6m contract to supply and deliver card payment terminals and software for a financial institution in South East Asia.

*Oxley Holdings: To acquire freehold residential property in UK for £35m ($73.5m). The 22,830 sqm site is located at Deanston Wharf, Canning Town in London, and is intended to be redeveloped.

*Tuan Sing: Ruled not to proceed with its conditional collective purchase of Gilstead Court by the Court of Appeal. Subsequently, group will make a claim for the $1m refund on deposit and $4.5m refund of stamp duty from the government.