SG Market (14 Aug 15)

Singapore shares are likely to mark time following the mixed close on Wall Street, as investors take stock of a pair of ugly results from investor favourities Genting S’pore and Ezion.

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:
*Genting S’pore: 2Q15 missed, amid a plunge to net loss of $16.9m (2Q14 net profit: $102.3m), dragged by fair value losses on derivative financial instruments of $95m, and unrealised FX losses of $84m. Revenue fell 23% y/y to $578.1m, on back of a 56% plunge in VIP GGR to $240m, due to a 36% fall in VIP volumes and a weak 2.1% win rate. Mass GGR climbed 2% to $428m. Market share were 47% and 43% for VIP and mass respectively. Adjusted EBITDA was $296.4 (-6%). NAV/share at $0.60

*Olam: 2Q15 results in line, with core net profit jumping nearly 2x y/y to $95.2m, on revenue of $4.8b (-16.4%). Topline was weighed by a 17% decline in sales volume to 2.9m MT, as the group discontinued its grains, wood products as well as cashew processing operations which carried lower margins, resulting in a 1.2ppt rise in EBITDA margin to 5.9%. Unrealized FX losses and other expenses fell 42.6% to $199.2m. Interim DPS of 2.5¢. NAV/share at $1.66.

*ST Engineering: 2Q15 slightly missed. Net profit fell 6.1% y/y to $125m, while revenue was shaved 2.6% to $1.5b, as lower marine revenue was offset by higher revenue from electronics and land systems sectors. Operating margin climbed 0.4ppt to 9.7%. Bottom line was dragged by higher finance costs but partly offset by better performance from associates. Interim DPS of 5¢ (2Q14: 4¢). NAV/share at $0.64.

*ComfortDelgro: 2Q15 results in line. Net profit rose 6.9% y/y to $80.9m on revenue of $1.04b (+2.1%), driven by most segments in particular the bus (+4.1%), Taxi (+3.3%) and Rail (+6.8%), but partially weighed by automotive engineering business (-12.1%) and a FX loss of $14.2m from the weaker AUD and GBP. Operating margin was flat at 11.7%. Interim DPS of 4¢ (2Q14: 3.75¢). NAV/share at $1.06.

*Ezion: 1H15 earnings sorely missed estimates, attaining just 35% of full year forecasts as 2Q net profit sank 36.2% y/y to US$29m. Revenue slipped 2.8% to US$90.1m due to delays in its projects in Australia. Gross margin fell 16.2ppt to 34.9%, due to the deployment of additional multi-purpose self-propelled jack-up rigs and Jack-up Rigs. Bottom-line weighed by a 4.1% fall in other income and a 12.9% jump in admin expenses. NAV/share at $0.86.

*Wing Tai: FY15 results beat estimates. 4QFY15 net profit fell 18.9% y/y to $115.9m, taking FY15 net profit to $150.3m (-41%) or 1.7x of consensus estimate. FY15 revenue slid 15.7% to $676.7m, with contributions underpinned by progressive sales from The Tembusu, additional units sold in Le Nouvel Ardmore, Foresque Residences, Helios Residences and The Lakeview in China. Gross margin narrowed 5.7ppt to 38.3%. Bottom-line eroded by higher admin (+16%) and financing (+19%) expenses plus lower associate contributions (-23%). Final DPS of 3¢ maintained. NAV/share at $4.07.

*OUE Hospitality Trust: 2Q15 results slightly missed. DPU decreased 7.3% y/y to 1.52¢ although gross revenue grew 4.6% to $29.6m on higher contributions from the hospitality segment (+8.3%) but weighed partially by the retail segment (-3.1%). NPI margin dipped slightly to 87.0% from 89.2%. Distributable income fell 6.6% to $20.2m, due to lower master lease income from Mandarin Orchard as a result of weaker operating performance. NAV/unit at $0.90.

*Courts Asia: 1QFY16 results ahead of estimates, with net profit advancing 19% to $6.0m on revenue of $19.2m (+2.1%). Topline was led by higher sales from Malaysia (+5.4%) and maiden contributions from the Indonesian operations, offset partially by weaker Singapore sales (-2.4%). Gross margin increased to 34.5% from 32.7% due to higher service charge income in Malaysia. Bottom-line aided partially by lower distribution and marketing costs (-7%). NAV/share at $0.55.

*Valuetronics: 1QFY15 net profit was shaved 1.1% to HK$33.5m, while revenue fell 12.2% to $550m, driven by a 27% decrease in consumer sector from slowdown in demand from LED customer. This was offset by a 11.2% increase in industrial and commercial electronics contributions from some existing customers. Gross margin improved 1.5ppt to 14.3% on improved mix. Bottom line fell at slower rate also in part due to other operating gains of HK$1.5m. NAV/ share at HK$2.25

*Singhaiyi Group: 1QFY16 earnings soared more than 22x to $21.9m on revenue growth of over 40x to $237.7m. The explosion in performance was down chiefly to revenue recognition of the group’s 93%-sold Design, Build & Sell Scheme project, Pasir Ris One. However, the project had lower profit margins, thus causing overall gross margin to fall 42 ppt to 12.9%. A special dividend of 0.2¢ was proposed. NAV/share of $0.16.

*JB Foods: 2Q15 net loss narrowed to US$0.4m from US$3.1m on revenue of US$42.2m (-23.6%). THe weaker revenue was mainly due to lower product shipment volume. Gross margin profit came in at US$1.9m versus a gross loss of US$1.6m, on the back of lower carrying costs of inventory and the absence of inventory written down in the quarter. NAV/share at US$0.09.

*Falcon Energy: 1QFY16 net profit jumped 4.6x to US$44.8m on revenue of US$60.7m (-34.5%). The weaker topline was weighed by weaker contributions from the marine division and oilfield services division. Gross margin expanded 17.4% from 13.8%. Bottom-line was largely fuelled by other operating income of US$54.3m, due to the one-off settlement in relation to the CHO's claim relating to outstanding charter hire. NAV/share at US$0.37.

*Fu Yu: 2Q15 net profit fell 17% to $1.4m on revenue of $58.4m (-7.1%). The fall in topline was due to decrease in orders from customers in some China subsidiaries. Gross margin inched up 0.6ppt to 14.2%. Tax expenses more than doubled to $1.1m, as no deferred tax asset was recognized for loss-making subsidiaries and reversal of deferred tax asset no longer required by a subsidiary. NAV/share at $0.24.

*Metro: 1QFY16 net profit shot up 269.9% to $37.5m on a one-time gain on disposal of EC Mall ($53.7m) as well as unrealised fair value gains on investment properties ($8.8m). Higher turnover of $42.7m (+36.7%) was driven by Metro Centrepoint and Sengkang. However, FX losses of $4.7m as well as a 24.7% decline in other income pushed the company into operating losses of $8.7m (1QFY15 operating profit of $4.8m). NAV/share of $1.68.

*CEFC: SGX cautions that 40% of volume between 10 Jul and 6 Aug had been concentrated in a few offshore accounts.