SG Market (13 Aug 15)

Singapore shares could rebound from yesterday’s knee-jerk sell-off, taking cue from the afternoon rally on Wall Street and positive openings on regional bourses this morning in Tokyo (+0.3%), Seoul (+0.1%) and Sydney (+0.4%).

From a chart perspective, technical indicators are deeply oversold. Topside resistance is seen at 3,250 (top of a breakdown gap) with underlying support at 3,090, followed by 2,950 (Feb ’14 low).

Stocks to watch:
*SingTel: 1Q16 results in line. Net profit grew 12.8% y/y to $941.6m on divestment gains of $47m. Excluding those gains, underlying net profit would have grown 1.6% to $895m. A weaker AUD and IDR weighed on bottom line with FX losses of about $450.1m. Operating revenue was up 1.5% to $4.2b due largely to growth in mobile data services, higher ARPU in Australia as well as increased revenue from digital services. EBITDA margins eased slightly to 29.5% (-0.7ppt). NAV/share at $1.59.

*City Developments: 1H15 net profit flattish at $257m, making up just 41% of consensus FY15 estimates. 1H15 revenue rose 2.8% to $1.64b, largely backed by revenue from new Millennium & Copthorne hotels acquired in 2014, and improved performance from M&C’s refurbished hotels, but offset by lower contribution from the property development segment. Gross margin dipped 1ppt to 47.5%. 4¢ interim DPS maintained. NAV/share at $9.36.

*Golden Agri: 1H15 results slightly missed, with core net profit down 26.7% to US$109.5m. 1H15 revenue fell 14.4% to US$3.38b, as Plantation and palm oil mills revenue (-26.4%) was dragged by lower CPO prices and FFB. Palm and laurics revenue also fell 10.1% from weaker ASPs, partially offset by higher volume. EBITDA margin relatively stable at 8.1%. Bottom line weighed partially by US$53.5m of FX losses mainly from weaker IDR. NAV/ Share at US$0.69.

*First Resources: 2Q15 net profit grew 9.8% to $28.6m on revenue of US$118.8m (+5.9%), with top line led by higher sales volume of palm based products. However, on a 6 month basis, 1H15 results still came in short of FY15 estimates. Gross margin fell 3.8ppt to 50.5%. The group reported broad based growth across its FFB harvest (+20.4%), CPO (+17.9%) as well as palm kernel (+22%). Interim DPS of 1.25¢ maintained. NAV/share at US$0.67.

*Bumitama Agri: 2Q15 results missed as net profit sank 26% to Rp217.1b, weighed by lower average selling price of CPO and palm kernel (PK). Revenue rose 8% to Rp1,581b on higher sales volume of both CPO and PK as well as the commencement of Glycerin sales. Gross margin tumbled 18.7ppt to 25.5% on higher purchases of external FFB (+69.9%) as well as an earlier application of fertiliser. NAV/share at Rp4,073.

*UOL: 2Q15 results ahead. Net profit tumbled 27.9% y/y to $152.5m, largely due to a 56% drop in fair value gains on investment properties. Top line spiked 60% to $342.2m on strong property development (+343%) and property investment revenue (+15.3%), but partially offset by weaker sales from hotel ownership (-5.6%). Gross margin tumbled 15.3ppt to 40.3%. Bottom line dragged by higher marketing expenses (77%), but partially offset by FX gains. NAV/share at $9.87.

*Yanlord: 2Q15 net profit jumped more than 11x to Rmb171.1m on revenue of Rmb2.3b (+55%). Higher topline was due to greater GFA delivery and improved ASP. Gross margin improved to 34.9% from 25.0%, due to a change in product mix for higher-margin projects. Bottom-line was aided by a decline in admin expenses (-44%) and finance cost (-7%), as well as JV contributions of Rmb34.8m versus losses of Rmb1.9m previously. NAV/share at Rmb9.90.

*SIIC: 2Q15 results in line. Net profit rose 26% y/y to Rmb83.1m on higher fair value gains and reversal of accrual expenses. Top line dipped 4.7% to Rmb416.7m, undermined by lower construction (-34.3%) and service income (-24.3%), but partially supported by revenue from service concession arrangements. Gross margin improved 6.8ppt to 43.4% on better cost efficiency, but bottom line was partially weighed by FX losses (Rmb-5.3m, 2Q14: nil) and higher finance expenses (+13.3%). NAV/share at Rmb0.483.

*OUE C-REIT: 2Q15 results in line. DPU rose 2.1% y/y to 1.46¢, yielding 8.7% annualised yield. Gross revenue climbed 5.4% to $19.7m on higher rental income from Lippo Plaza and other property related income. Lippo Plaza (+12.9%) and OUE Bayfront (+14.6%) also experienced positive rental reversion. Portfolio occupancy fell 3.3ppt q/q to 95.3% while WALE stood at 2.7 years. Aggregate leverage down 0.7ppt to 37.9% with average cost of debt at 2.74%. NAV/unit at $1.10.

*Nam Cheong: 2Q15 results missed. Net profit tumbled 83% to RM10.7m, while revenue slumped 49% to RM192.7m, as shipbuilding revenue (-50%) saw lower progressive recognition from the sale of PSVs, while chartering revenue fell 42% from lower utilization. Gross margin declined 1.8ppt to 15.9%. Bottom line dragged by higher selling and admin expenses, as well as increased finance costs from additional MTNs issued. NAV/share at RM0.589

*Pacific Radiance: 2Q15 missed. Net profit tumbled 88% to US$3.8m, while revenue fell 29% to US$34.8m, from lower utilization of subsea vessels. Gross margin tumbled 18ppt to 25%. Notably, bottom line saw the absence of the gain on vessel sales (US$18.1m) from the previous year. NAV/share at US$0.576.

*Q&M: 2Q15 results in line. Net profit shot up 212% to $3.7m, while total revenue jumped 50.7% to $30.5m, led by higher revenue from Singapore dental outlets, the acquisition of Aoxin, the equipment distribution, as well as the supplies manufacturing businesses from the acquisition of Aidite. Bottom line further boosted by a $1.8m gain from disposal of property at Block 130 Jurong Gateway. Interim DPS of 0.42¢ (1H15: 0.41¢). NAV/ share at 10.4¢.

*QT Vascular: 2Q15 net loss tumbled 52.8% y/y to US$6.4b despite revenue inching up 2.7% to US$3.3m on stronger sales in Asia (+577%) and Europe (+13.4%). Gross margin improved 7.4ppt to 13%. Bottom line was weighed by higher sales personnel cost (+26.5%) and FX loss of US$0.6m (2Q14: US$0.3m). NAV/share at US3¢.

*Sino Grandness: 2Q15 net profit grew 16.1% to Rmb126.1m, while revenue climbed 14.5% to Rmb924.8m, led by higher sales of beverage and canned products in China, but partially offset by weaker sales of canned products in overseas market. Gross margin increased 3.5ppt to 41.9%. Bottom-line weighed by a spike in distribution costs (+180.2%) and financing costs (+225.5%), but cushioned by fair value gains from convertible bonds of Rmb40m (2Q14 loss: Rmb27.3m). NAV/ share at Rmb2.72sen.

*Sinarmas: 2Q15 below expectations. Net profit plunged 51.1% y/y to $24.4m due to FX losses and absence of exceptional gains. Revenue grew 20.2% to $233m on higher land and property sales but partially offset by lower contribution from its China and UK divisions. Gross margin slid 4.2ppt to 65.8% due to higher development cost. Management is not sanguine about its Indonesia’s portfolio amid the nation’s tepid macro outlook. NAV/share at $0.56.

*Starburst: Swung into a net loss of $1.4m versus a net profit of $3.0m, on revenue of $4.1m (-48%). Despite securing contracts and LOTs for projects and maintenance work totalling ~$37.5m in 1H15, negligible revenue was recognised in the quarter, with fabrication works for some of these projects only expected to commence in 3Q15. Bottom-line was further weighed by a rise in project and production costs (+22.5%), depreciation expenses (+93.5%) and other operating expenses (+213.7%). NAV/share at $0.19.

*Rickmers Maritime: 2Q15 earnings fell deep into the red with net losses of US$15.7m on one time impairment charges (US$19.6m) to vessels and goodwill as well as the absence of a US$11.4m gain on loan settlement booked in 2Q14. Revenue slid 9.7% to US$28.5m due to reduced charter rates contracted on four vessels. Vessel utilisation rate edged higher to 99.8%. Bottom line was further weighed by a $1.1m FX loss. Interim dividend of US0.6¢ maintained. NAV/share of US$0.56.

*Informatics: 1QFY16 net loss widened to $2.7m from $2.2m on revenue of $2.5m (-34%). The weaker topline was due to lower students enrollment in the S'pore and UK operations. NAV/share at $0.01.

*Vard: Secured a contract for the construction of one stern trawler for a new Canadian client valued at NOK350m. Delivery is scheduled in 4Q16.

*Olam: Secured a US$800m revolving credit facility for its US subsidiaries. Proceeds will be used to refinance debt as well as for working capital needs.

*Tat Hong: Intends to spin-off its Tower Crane Rental business via a listing of shares in Tat Hong Equipment Service (THES), on the Taiwan Stock Exchange (TSE) and has submitted an application for the proposed listing.