SG Market (28 Sept 15)

Singapore shares are likely to remain tepid this week, following the volatile session in Wall Street on Fri, with no clear signals on the global economy.

Jittery investors may take a risk-off stance after Singapore’s manufacturing output plunged 7% in Aug, raising fears of a technical recession in the 3Q and regional economies are faring no better with China’s manufacturing PMI hitting the lowest level in over six years and Japan’s core inflation dropping for the first time in two years.

It is a short trading week in Hong Kong with the market closed today and Thursday. Hence, catalysts may be limited until the later part of the week when several key economic indicators will be released in China and US on Thurs and Fri.

Regional bourses are generally mixed this morning in Tokyo (-1.5%), Seoul (-0.2%) and Sydney (+0.4%), with Hng Kong closed today and on Thu. Foucs will be on the US spending bill which lawmakers have to pass before 1 Oct and several key economic indicators to be released in China and US in the later part of the week.

From a chart perspective, the STI may re-test the Aug low of 2,808, with near-term resistance at 2,850.

Stocks to watch:
*Property: Signature at Yishun, the first EC project launched since the qualifying income ceiling was raised from $12k to $14k, sold about 20% of its 525 units at ~$750 psf, below the average ~$800 psf for other ECs.

*Vard: Secured new contracts worth over US$100m from new customer, Topaz Energy and Marine, to design and construct two offshore subsea construction vessels. Delivery is scheduled for 3Q17 and 4Q17.

*CMC Infocomm: Awarded two contracts worth $4m from the Singapore telco companies to carry out in-building coverage projects and network migration. This brings its outstanding order book to $21m.

*Oxley: 49%-owned JV Oxley Worldbridge officially launched its second development project in Phnom Penh known as The Peak, a mixed development comprising two residential towers, one commercial tower and a retail podium. More than 30% of the 507 units in one of the residential towers have been sold. Construction for the project is expected to start in early 2016, with completion scheduled by 2020.

*HLH: Launched proprietary real estate brand, CAMHOMES, to build the first Singapore style public housing homes in Cambodia. In conjunction, group unveiled its first housing project D'Seaview, a mixed-development project similar to an executive condominium model, in the port city of Sihanoukville. The freehold seafront development will have 735 residential units with prices starting from US$33,000 per unit and a commercial space for retail services, targeted for completion in 2018.

*Tung Lok: Received a counterclaim from China National Decoration (CND) for RMB9m (~$2m) in late payments, in relation to an initial RMB1.6m claim against CND for failure to attain proper fire safety documents for a restaurant in China.

*Sunright: FY15 earnings jumped more than 23x y/y to $3.1m, partly due to a low base effect as well as a 2.9 ppt increase in operating margins to 5.6%. Revenue was flat at $137m, from moderate growth in global demand for semiconductors, but mitigated by lower sales from distribution. Bottom line was boosted by an exchange gain of $1.2m arising from the appreciation of its USD denominated receivables as well as gains on disposal of $1.3m and lower production costs of $1.6m. NAV/share stood at $0.59.

*Declout: To acquire remaining 49%-stake in JV Epecsoft Asia for $21m, to strengthen group's position in the games and toys distribution in the APAC region. Post-completion, FY14 proforma NTA/share is expected to drop to 6.56¢ (-45%), EPS to increase to 0.55¢ (+1.9%), and gearing to rise to 99% (+60ppt).