Wednesday, July 22, 2015

SG Market (22 Jul 15)

Singapore shares may open lower today, taking cue from the downturn on Wall Street following the poor results showing by the major tech names.

Regional bourses are all in the red this morning in Tokyo (-0.9%), Seoul (-0.6%) and Sydney (-0.9%).

From a chart perspective, the STI may be due for a short term pullback and consolidation as technical indicators are at overbought levels. The index is just above its key 200-dma resistance-turn-support at 3,360 with the next support at 3,320, while resistance is at 3,400.

Stock to watch:
*Mapletree Industrial Trust: 1QFY16 in line, as DPU increased 8.8% to 2.37¢, while distributable income rose 12.8% to $48.2m. Revenue climbed 4.1% to $81.6m, while NPI expanded 6.2% to $60.2m, from higher occupancies across all property segments except stack-up/ramp-up buildings, higher rental rates, and contributions from Equinix Singapore. Occupancy stood at 93.5% (3.3ppt q/q) with WALE of 3.2 years. Aggregate leverage stood at 30% with weighted average all-in funding cost of 2.3%. NAV/unit at $1.32

*CapitaLand Mall Trust: 2Q14 in line, with both distributable income and DPU up 0.7% y/y to $94m and 2.71¢, respectively, boosted by lower finance costs (-16.5%) due to the refinancing of its Euro-Medium Term Note in Apr '15 at a lower rate. However, gross revenue slipped 2.9% to $159.6m, while NPI dropped 4% to $109.5m, due to ongoing asset enhancement works in IMM Building and Bukit Panjang Plaza, and lower occupancy at JCube and Clarke Quay. Subsequently, overall occupancy slipped 0.8ppt q/q to 96.4%. Meanwhile, aggregate leverage held at 33.7% (-0.1ppt q/q) with average debt cost of 3.3%, debt tenor lengthened from 5.1 years to 6.1 years. NAV/unit at $1.84.

*Keppel T&T: 2Q14 net profit jumped 11.2% y/y to $15.9m, despite a 4.2% drop in revenue to $49.1m, due mainly to absence of revenue from the two data centre properties disposed in Dec '14 to Keppel DC REIT, partly offset by higher revenue from logistics segment. Subsequently, EBIT margin dropped 8.6ppt to 9.4, while bottom line was boosted by higher associate income (+34%). NAV/share of $1.17.

*Vard: 2Q15 results sharply below estimates as net profit fell 58.6% y/y to NOK58m, on a 15.4% drop in revenue, due to lower activity levels at its European and Brazilian yards. EBITDA margin compressed 4.6ppts to 1.8%, hurt by weaker performance at some of the yards, which led to an operating loss of NOK21m, down from operating profit of NOK140m in 2Q14. The Brazil tax claim is still pending decision in the second out of three levels of appeals and no provision has been made. Order book at NOK13.92b, down from NOK15.63b at end-1Q. NAV/share at 0.61.

*Tigerair: 1QFY16 net loss narrowed 97.4% y/y to $1.6m, while revenue declined 3% to $168.3m, on the back of a 7.2% capacity decrease. At the operating level, group turned in profit of $0.6m compared to loss of $16.4m in 1QFY15, as expenses fell 10.8% from lower fuel costs (-36%), FX gain of $0.3m (1QFY15: -$3.3m) due to the stronger USD/SGD, partially offset by a $4.1m increase in depreciation costs following a change in policy last quarter. NAV/share of 9.08¢.

*UOB: Teaming up with Temasek on a 50:50 JV, to provide up to US$500m in venture debt financing to start-ups in China, India and South-east Asia operating across sectors including tech, consumer, healthcare and clean technology.

*Keppel Corp: Secured US$684m conversion contract with Golar LNG to convert a moss type LNG carrier into a Golar Floating Liquefaction facility. The contract marks the exercise of the second of two options. The notice to commence the 31-month conversion contract is expected to be issued in 2016.

*First Resources: Jun production of CPO was at a 3 mth high of 54.4k tonnes (+12.9% y/y) aided by a 13.8% y/y gain in FFB harvest.

*Stratech: Secured its first commercial US contract alongside US-based partner, Organizational Strategies, to deploy its iFerret airfield/runway surveillance and foreign object & debris detection system at Miami International Airport. The contract term is up to 14 years, comprising an initial 5-year term and options to renew for 3 additional 3-year periods.

*iX Biopharma: Trading debut at 9am for specialty pharmaceutical firm. The invitation for 65.5m new shares (64.5m placement shares and 1m public offer) at $0.46 apiece was 1.4x subscribed. Substantial applicants allotted over 5% of invitation shares include private investor Yeo Chung San (6.6m), prominent investor Alan Wang’s Asdew Acquisitions (4m) and Orthopedist Ang Kian Chuan (3.9m).

*Lion Asiapac: Profit warning for 4QFY15 and FY15 due to allowances for impairment of investments, manufacturing plant and equipment, and property development. Results expected in late-Aug.

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