Friday, August 21, 2015

SG Market (21 Aug 15)

Singapore shares are expected to open lower, with Wall Street sinking to levels not seen since Mar, weighed by concerns on China growth slowdown.

Regional bourses are all trading lower this morning in Tokyo (-1.8%), Seoul (-1.8%) and Sydney (-1.0%).

From a chart perspective, the bearish downtrend has yet to see any respite, although technical indicators are currently oversold. Immediate support is tipped at 2,950 (Feb ’14 low), while overhead resistance is pegged at 3,150.

Stocks to watch:
*IPS Securex: FY15 net profit doubled to $2.3m, while revenue surged 25.9% to $15.7m, driven by sale of security products and maintenance and leasing business. Gross margin narrowed by 7ppt to 41.2% from lower margins in the security solutions business. Bottom line surged at a faster clip largely due to FX gains, reversal of allowance of inventory obsolescence and other operating income, offset by increased finance costs. Final DPS of 0.75¢ (FY14: nil). NAV at $0.073.

*UG Healthcare: FY15 net profit fell 35.4% to $3.2m, dragged by IPO costs of $0.8m. Revenue climbed 13.7% to $55.7m, due to increased volumes from a new production line constructed, and higher exports overseas. Gross margin fell 0.1ppt to 20.7%. Aside IPO costs, bottomline was weighed by increased marketing and admin expenses for preparation on the next phase of growth. NAV/ share at $0.197.

*Civmec: 4Q15 net profit plunged 43.5% y/y to $6.5m on lower revenue of $114.7m (-31.2%) and a one-off bad debt of $2.9m. On full year basis, earnings fell 13.6% to $30.3m while topline grew 15.1% to $499.2m on new contracts secured by the group. Gross margin for the full year narrowed 2.3ppt to 12.4%, mainly due to the increase in number of large scale projects which command lower margins. Final DPS of 0.7¢ maintained. NAV/share stood at $0.30.

*Citic Envirotech: Secured 3 wastewater treatment and water supply projects with total contract value of Rmb263m ($58m) in China. The first investment is the acquisition of a 82.5% stake in Changan, which will be building and operating a 40,000m3/day industrial wastewater treatment plant, a 30,000m3/day industrial water supply plant, and a 10,000m3/day wastewater recycling plant. The remaining investments are for the extension (+30,000 m3/day to 80,000m3/day) of a wastewater treatment plant as well as a 50,000 m3/day water supply project.

*Noble: Fitch stated that Noble has a stable financial profile based on its 2Q15 results and noted an increase in debt due to working capital expansion, of which is expected to help turnaround 2Q negative operating cash flow in 2H15. Additionally, the rating agency deems that the reduction in Noble’s credit facilities is align to its asset light model transition, but cautioned that any weakened support from the group’s banking partners may result in negative rating action.

*Perennial Real Estate (PREH): To acquire a 55% stake in a JV with Shangri-La Asia to develop a 49,874 sqm site in Ghana into an integrated development. The total development cost for the project comprising hotel (20% of gfa), residential (22%), office (34%), retail (13%) and serviced apartments (11%), is estimated to be ~US$250m.

*Pacific Andes Resources/ China Fishery: Both companies under investigation by MAS and CAD for an offence under the Securities and Futures Act. The group has received notices from the authorities to provide information and documents relating to dealings with certain third parties from Oct '11 till now.

*Hiap Seng Engineering: 49:51 JV company has been awarded with a US$57m ($80m) contract for the engineering, procurement, construction, and commissioning of field erected tanks in Malaysia. Work has already commenced and is scheduled to be completed by Jul ’17.

*Otto Marine: Taken delivery of a 238-men work maintenance vessel to fulfill a long-term bareboat charter contract worth US$27m that was secured in Jun’15. The second unit is currently under construction in a Chinese shipyard and will be completed by the end of 2015.

*OSIM: Clarified that the company is not in talks to sell its GNC franchise, as opposed to a report published by Mergermarket on 19 Aug.

*TMC Education: Proposed auction sale of two strata lots at Peninsular Plaza comprising 2,971 sf of commercial space. Reserve price for the lots at market value (Jun '15) of $5.6m.

*OKH Global: JV company with Pan Asia Logistics Group has secured 10-year lease agreement for a build-to-suit logistics property with BMW Asia. The agreement is expected to commence after completion of the property by Nov '16, and provides up to 761,000 sf of logistics space over two phases.

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