SG Market (12 Aug 15)

Singapore shares are poised for a weak opening after Wall Street dropped sharply overnight on China’s latest move to devalue its currency.

Regional bourses are trading lower this morning in Tokyo (-0.3%) and Sydney (-0.4%) but flat in Seoul.

From a chart perspective, technical indicators are deeply oversold. Topside resistance is seen at 3,250 (top of a breakdown gap) with iunderlying support at 3,150, followed by 3,090.

Stocks to watch:
*Haw Par: 2Q15 net profit jumped 87.8% y/y to $115.9m, largely lifted gains from partial disposal and reclassification of Hua Han shares which amounted to $55.8m. Top line grew 12.5% to $51.2m on strong healthcare revenue (+19.3%), but partially offset by leisure (-18.4%) and property (-17.7%) segments. Gross margin improved 1.5ppt to 61.2%. Interim DPS of 6¢ maintained. NAV/share at $12.93.

*Super Group: 2Q15 results missed estimates, as net profit tumbled 30.2% y/y to $10.5m, with revenue slipping 4.7% to $125.5m on lower branded consumer sales of $80m (-4.3%) and food ingredient sales of $45.5m (-5.2%). Gross margin remained constant at 36%. Bottom line weighed by higher tax expenses of $4.3m (+107.9%) as well as FX losses of $1.1m. Interim dividend of 1¢ maintained. NAV/share at $0.45.

*China Sunsine: 2Q15 results in line, despite net profit being down 21.8% y/y to Rmb47.1m on revenue of Rmb497.3m (-8.7%). Top line was weighed by a 13% decrease in overall average selling price of chemicals to Rmb16,019 per ton. Gross margin slipped 1ppt to 24.3%. Bottom line was further pressured by a 39.2% increase in selling and distribution expenses, due to higher freight costs as well as sales incentives. NAV/share at RMB2.31.

*Centurion: 2Q15 results in line. Net profit rose 28% y/y to $9.8m, while revenue expanded 33% to $26.4m, from student accommodations in UK, and increased occupancies at 1) Westlite Toh Guan dorm since Jan ’14 capacity expansion and 2) Weslite Tampoi (TOP: Jan ’15). Gross margin was maintained at 65.3%. Finance expenses surged 59% to fund expansions, offset by a 41% increase in associate contributions from improved occupancy at Weslite Mandai. Interim DPS of 0.5¢ (2Q15: nil). NAV/share at $0.53.

*Vallianz: 2Q15 net profit fell 29.1% y/y to US$3.8m, while revenue surged 68.6% to US$65m, driven by higher charter and brokerage revenue, ship management services contributions, and investments. Gross margin fell 8.7ppt to 27.3% due to change in revenue mix and expansion of owned fleet. NAV/share at US6.88¢

*Swissco: 2Q15 net profit rose more than three-fold y/y to US$13.2m (2Q14: US$3.6m) on revenue of US$18.4m (2Q14: nil), contributed by charter income from two fully-owned drilling rigs (US$10.7m), offshore support vessel (US$7.3m) and ship repair revenue (US$0.4m). Bottom line boosted by a 2.6x rise in associate and JV contributions (US$12.4m), following charters of two drilling rigs in 3Q14 and two accommodation rigs in 1H15 and vessel divestment gain (US$41m), but partially offset by FX (US$2.8m) and impairment loss (US$0.8m). NAV/share at US$0.36.

*Boustead Projects: 1QFY16 net profit fell 19% y/y to $4.8m on flat revenue of $56.6m, with the design and build segment still forming the bulk of revenue contribution at 88%. Gross margin stable at 21.8%. Bottom-line weighed by a rise in selling and distribution expenses (+10%) and finance costs (+411%), offset partially by lower income tax (-32%). Orderbook stood at $214m. NAV/share at $0.56.

*Charisma Energy: 2Q15 net profit plunged 59% y/y to US$2.7m, while revenue tumbled 96% to US$6.1m due to a one-off rig sale last year. Bottom line was aided by higher gross margin of 64% versus 4.4% due to the sale of rig in the previous year as mentioned above. NAV/share at US0.61¢

*Healthway Medical: 2Q15 net profit rose almost 4x y/y to $2.0m on revenue of $24.1m (+15.5%). Top-line was led by an increase in revenue from the Primary Healthcare segment and from the Specialist & Wellness Healthcare segment, mainly due to an increase in patient load. Bottom-line was aided by slower growth in staff costs (+10%) and lower tax expenses (-20.7%). NAV/share at 8.47¢.

*Zico Holdings: 2Q15 net profit came in at RM2.5m (-60.4% y/y) on revenue of RM13.9m (+20%). Top line was led by higher revenue from the advisory and transaction services segment (+74.1%), weighed by weaker performances from the management and support services business (-27.9%) and licensing services (-22.2%). Bottom-line weighed by a spike in employee expenses (+124.4%), retainer fees and consultation fees (+146.6%) and other expenses (+210.7%). NAV/share at RM29.12sen.

*SunningdaleTech: 2Q15 net profit surged 35.2% y/y to $6m as revenue soared 44.5% to $165.4m on contribution from First Engineering (FEL) which was acquired in Nov’14. Gross margin slid 0.6ppt to 12.9% due to new setup in Thailand and Brazil plus lower utilization of South China plant. Bottom line lifted by FX gains ($0.7m, 2Q14: $-1.2m) but partially offset by higher financing cost ($1m, 2Q14: 0.3m) to acquire FEL. NAV/share at $0.34.

*Keppel Corp.: Secured a FPSO conversion contract from Armada Madura EPC (target completion: 3Q16) and was also awarded major repair, upgrade and modification contracts by Totem Ocean, Dolphin Drilling and Saipen Offshore respectively. All four contracts total up to $125m.

*Tigerair: Jul operating statistics in Singapore recorded a 3.3% y/y increase in passenger traffic to 825.8m RPK, while capacity lifted by 0.1% to 968m ASK. Passenger load factor increased 2.7ppt to 85.3% and no. of passengers carried up 7.2% to 448,000.

*Genting HK: Selling 10m Norwegian Cruise Lines, or 4.36% of total outstanding shares, for a net consideration of US$590m. A gain of ~US$44.6m is expected from the disposal.

*Darco Water: Agreed to acquire 60% of Wuhan Kaidi Water Services from three vendors for $10.9m, to be funded by new share issuance at 2.85¢, with consideration shares to represent ~36.6% of enlarged capital. Wuhai Kaidi currently has 22 ongoing projects across China amounting Rmb487.5m, and 7 ongoing projects outside China worth Rmb65.4m.

*Koh Brothers: Awarded a $86.3m contract by PUB for upgrading Kallang River, scheduled to complete by 4Q18. Scope of project includes reconstruction of drains and culverts as well as developing a park to beautify a 1.8km section of the river, between Bishan and Braddell Road.

*KOP: Signed agreement to acquire and develop Winterland Shanghai. Winterland Shanghai is located in Lingang City, with a gross floor area of approximately 213,000 sqm.

*Courts: Failed to acquire to Courts Mauritius after the Mauritian government rejected its bid.

*Profit guidance:
- China Sports International
- Li Heng Chemical Fibre Technologies
- Gaylin Holdings