SG Market (04 Aug 15)

Singapore shares are likely to stay muted after Wall Street closed the session in the red but off the worst levels of the day, as oil prices continued its downward slide.

Regional bourses are trading mixed this morning in Tokyo (-0.4%), Seoul (+0.3%) and Sydney (+0.2%).

From a chart perspective, the STI is struggling to find its footing in a steep downtrend although technical indicators are deeply in oversold territory. Below 3,180, the next support lies at 3,150, while upside resistance is at 3,250.

Stocks to watch:
*CWT: 2Q15 results missed estimates. Net profit fell 14% to $26.2m, while revenue plunged 45% to $2.0b on lower naphtha volume, and a drop in commodity prices. Gross profit fell 16%, largely attributed to the fall in commodity logistics volume, slowdown in trade services and start-up cost of new logistics hub. CWT also highlighted that parent C&P Holdings is considering a strategic review which may or may not lead to a transaction involving the group. Interim DPS of 3¢ declared. NAV/share at $1.323

*Asian Pay TV: 2Q15 results in line. DPU of 2¢ declared and management reaffirmed its distribution guidance of at least 8.25¢ for FY15, representing an annualized yield of 9.9%. Revenue rose to $82.7m (+4.4% y/y, +0.5% q/q) on positive contribution from all three segments- Basic cable TV (+3.4% to $65.8m), Premium digital cable TV (+11.6% to $3.8m) and Broadband (+7.5% to $13.1m), boosted by positive FX gains and increased broadband and premium digital cable TV subscribers. EBITDA margin slipped to 61% (-1.2ppt y/y, +1.9ppt q/q), on higher operating expenses (+7.7% y/y) from increased staff costs (+14.4%) and legal and professional fees relating to the refinancing of TBC's borrowing facilities (+19%). Aggregate leverage grew 2ppt q/q to 46%. NAV/unit at $0.89.

*Biosensors: 1QFY16 results missed estimates, as net profit slipped 4.1% to US$9.5m. Revenue tumbled 16.4% to $67.0m, primarily attributable to a 14.1% slide to US$60.5m from its product revenue segment, although the group was able to cut its operating cost to bolster operating margin by 8.5ppt to 27.3%. Bottom-line was partially weighed by FX losses of US$1m (1QFY15: -US$249k) as well as a tax charge of US$1m (1QFY15: tax credit of US$1.3m). NAV/share at US$0.61.

*Viking Offshore & Marine: 2Q15 earnings nearly doubled from $89k to $173k on back of a 32.4% increase in revenue to $21.6m. The jump in revenue was due to contributions from the heating, ventilation, air-conditioning and refrigeration systems segments as well as maiden contribution from the asset chartering business. Gross margin slipped 3.1ppt to 28.4%, due to the change in business mix. Finance costs (+1,479.2% to $758k) weighed heavily on bottom line, as Viking’s debts increased more than 4-fold to $33.1m as the company sought funds for its asset chartering business. NAV/share at $0.12.

*UMS Holdings: 2Q15 results ahead of estimates, with net profit up 14% to $8.3m and revenue climbing 8% to $31m, as business activity from its major customer picked up earlier than expected. Gross margin held steady at 57%. Notably, employee benefits expense increased 20%, but this was due to a bonus provision that was written back last year. Interim DPS of 1¢ maintained. NAV/share at $0.45.

*Ramba: 2Q15 loss worsened by 9.9% to $3.2m, while revenue slumped 21.7% to $16.5m due to the absence of an ad-hoc marine project which was completed last year, the cessation of chemical business at end last year, and lower gas production. Impact from bottom line was slowed by lower serviced costs, as well as the absence of related costs of the marine project and the ceased logistics business. NAV/share at $0.18.

*Sarine: Management guides that the group’s quarterly results for 2Q15 will clearly show a substantial improvement in comparison to 1Q15. The quarterly results will also include a detailed commentary on the significant trends affecting the diamond industry, including the recent minimal DeBeers sight.

*Rex International: JV Co signed agreement to acquire 50% stake in EnQuest Norge’s licences in the Norwegian Sea. The exploration potential in the fields is considerable and supported by an initial seismic survey. A drill-or-drop decision is expected to be made in Feb ’16, following which drilling could take place in 2016/17.

*Keong Hong: Awarded contract worth $107.5m by Raffles Hospital to construct a 20-storey medical building. Construction is expected to be completed by Aug’17.

*SGX: Derivatives market suspended from 1956 to 2145 hours yesterday, after being hit by a technical issue.

*Ascendas REIT: Issued $100m unsecured Medium Term Notes due in 2020 with fixed interest of 2.95% p.a., payable semi-annually. The proceeds will be used for acquisitions, AEIs, working capital and refinancing of existing borrowings. The notes were rated A3 by Moody’s.

*Profit warnings:
- Teho International
- San Teh