SG Market (30 Jul 15)

Singapore shares are expected to trade in positive territory today following the overnight boost in Wall Street, after the FOMC sprung no surprises and left its options open for a rate hike later in the year.

Regional bourses opened firmer in early trading in Tokyo (+1.1%), Seoul (-0.1%) and Sydney (+0.6%).

From a chart perspective, the STI look to consolidate between the 3,270 and 3,360 levels as technical indicators suggest a lack of direction.

Stocks to watch:
*SIA: 1QFY16 results missed, despite a 162.1% soar in net profit to $91.2m, which includes a compensation of $110m from Airbus to release orders placed previously by SIA. Revenue inched 1.4% to $3.73b, boosted by the consolidation of Tigerair. Excluding which, revenue would have fallen 3.2% to $3.57b, dragged by lower traffic (-4.4%) as passenger yields were eroded by significant capacity injection and aggressive fares from competitors, particularly on Americas and Europe routes. This was further exarcebated by weakness from cargo (-7.2%) and engineering services. Operating profit was 182% higher at $111.4m, with the bulk from lower fuel costs (-8.7%). Bottom line benefitted from smaller share of associate losses of $7.1m (1QFY15: -$18.9m) on Tigerair's turnaround and consolidation, but offset by losses at JV of $0.7m (1QFY15: $16.3m) on weak performances by NokScoot and SIA Engineering’s JVs. NAV/share climbed 2.5% to $10.93.

*Sembcorp Marine: 2Q15 results below expectations as earnings slumped 17% y/y to $109.2m, on a 9.9% drag in revenue to $1.21b, as well as share of associate and JV losses of $2.6m (2Q14: $9m). The decline in revenue was mainly due to a fall in rig building projects (-28.7% to $622.6m), pared by gains in offshore and conversion (+36% to $401.8m) and repair (+10.6% to $165.7m) segments. This resulted in 1H earnings of $215.1m, 42.6% of street’s full-year estimates. Order book stood at $10.9b (1Q15: $10.6b), with YTD order wins of $1.4b ($0.4b in 2Q). Interim DPS was cut to $0.04 (2Q14: $0.05).

*SGX: 4QFY15 results in line as revenue and profit saw growth of 24.9% y/y and 24.3% to $215.6m and $96.2m, bringing FY15 revenue and profit to $778.9m (+13.4%) and $348.6m (+8.8%). For the quarter, top line was boosted across all segments, particularly in derivatives (+57.7%), underpinned by securities (+7.2%) and other operations (+13.3%). In FY15 revenue was boosted by derivatives which saw exponential growth to $295.7m (+41.7%), driven by the 220% increase in volume for China A50 index futures and commodities benchmarks, but partially mitigated by lower contribution from securities (-7.7%) on lower daily average traded value and total traded value. Maintained final DPS of $0.16, bringing FY15 total to $0.28, implying a 3.4% yield.

*Frasers Hospitality Trust: 3QFY15 DPU marginally higher-than-forecast at 1.56¢ (+0.6%), while distributable income of $18.8m came in line. Gross revenue of $23.7m and NPI of $19.2m came 3% and 1.2% lower mainly due to lacklustre performance in Malaysia, further dragged by the softening of longer-stay rental market in Singapore, partially offset by Japan, Australia and UK properties which all outperformed from greater demand, with strong occupancies and growth in RevPAR, despite unfavourable FX movements. Aggregate leverage at 38.8% with average debt cost at 2.2% and tenor of 3.7 years. NAV/unit of $0.843.

*Starhill Global REIT: 6QFY15 in line with DPU of 1.29¢ (+3.2% y/y), on distributable income of $29.5m (+4.3%). Revenue rose 6.9% to $51.8m, while NPI climbed 5.5% to $41.3m, boosted by new contribution from Myer Centre Adelaide acquired in May, as well as positive rental reversions and high occupancies at Singapore properties. Occupancy stood at 98.2% (-0.9ppt q/q) with WALE of 6.8 years, while aggregate leverage surged 6.9ppt q/q to 35.5%, with debt cost of 3.19%. NAV/unit at $0.90.

*TEE International: 4QFY15 results above forecasts as net profit turned around to $8.2m (4QFY14: -$16.4m), mainly from the absence of a one-off project cost overrun of $19m recognised in 4QFY14. This brought FY15 earnings and revenue to $11.1m (FY14: -13.3m) and $217.9m (+7.4%), underpinned by higher recognition from on-going engineering and real estate projects. Gross margin improved 5.9ppt to 16.5% after project normalized operations. A final and special DPS of 0.4¢ and 0.15¢ declared, bringing FY15 DPS to 0.73¢ (FY14: 0.95¢).

*TEE Land: In spite of a 3.5x y/y jump in 4QFY15 revenue to $30.2m (4QFY14: $8.6m), net profit slipped 19.5% to $4.9m. This brought FY15 revenue and net profit to $60.2m (+49.3%) and $11.1m (-5.3%). For the year, a confluence of factors including sharp jumps in selling and distribution costs (+85% to $2.3m), administrative expenses (+74.2% to $9.5m), finance costs (+599.8% to $3.6m) and other operating expenses (+288.9% to $6.2m), which included a massive write-down due to a failed Malaysian land purchase as well as FX losses. Final DPS was cut to 0.61¢ from 0.75¢, bringing FY15 DPS to 1.05¢ (FY14: 1.25¢).

*China Everbright Water: Received 10-year term loan of US$140m from International Finance Corporation for development and expansion of wastewater treatment and environment protection business.

*Ho Bee: Acquiring freehold Grade A office in London for £144m. The 10-storey building totalling 98,000 sf is fully-leased to The House of Commons up to 2029 at an annual rental of £6m, on a five yearly upward rental review.

*Profit warnings:
- Blumont
- Global Palm Resources