SG Market (05 Oct 15)

The Singapore market may see a positive uplift following the rally on Wall Street last Fri, as a dismal jobs report are likely to put off a Fed interest rate hike this year and even push it into 2016.

The plantation sector may come into play in the near term, supported by increasing positive broker reports, which highlighted the shortfall in CPO stocks, arising from El Nino and haze in Indonesia.

Regional bourses opened higher in Tokyo (+1.4%), Seoul (+1.2%) and Sydney (+1.9%).

From a chart perspective, the STI may attempt to test its topside resistance at 2,855 (20-dma) in the near term, although the gains are unlikely to be sustained without any strong catalyst. Downside support remains at 2,670.

Stocks to watch:
*Frasers Centrepoint: Launched new retail business unit under Frasers Property Australia and intends to grow its portfolio from A$300m to A$1b in the next 3-5 years. In addition, group may sell assets developed in Australia to one of its REITs for capital recycling purposes.

*Global Premium Hotels: To acquire prime freehold property in Perth CBD, Australia, for A$23.9m. The 2,600 sqm site can be redeveloped for various purposes including hospitality, and the group has not yet ascertained the specific type of development it wishes to pursue.

*Q & M: Non-binding MOU to acquire a 60% stake in dental supplies distribution company Shenyang Lan Hai Tong Mao Medical Equipment for Rmb7.6m to boost its operational distribution capabilities in China. In FY14, the distributor has revenue of approximately Rmb1m, and the deal will come with a 12-year full time service agreement and profit guarantee of at least Rmb16.8m over a 12-year period. In addition, the group has been promised dividends of not less than Rmb10.1m within the 12-year period.

*Q & M: Non-binding master agreements to purchase 60% stake in four separate operational dental clinics in Liaoning Province, China, for an aggregate Rmb21.1m. The deals come with a profit guarantee of at least 180% on purchase price over a 12-year period.

*NauticAWT: Proposed acquisition of project engineering services company Marine Engineering Services for $0.9m, or 1.3x P/B. The acquisition is expected to be paid via cash of $0.5m and the remaining via an issue of new shares.

*Ramba: KKR-backed Mandala Energy will farm in 35% participating interest in the Lemang PSC from Ramba, subject to government approval. Mandala will invest up to US$179.6m in Ramba, consisting an upfront cash payment of US$26.3m, sliding-scalefuture contingent payments based on certification of oil and gas reserves, partial carry for Ramba’s share of 3 exploration wells, and a cash payment upon declaration of the first new exploration discovery. In a concurrent agreement, Ramba will acquire 15% of Lemang PSC from Eastwin. The resulting participating interest in Lemang PSC will be 35/31/34 between Mandala, Ramba and Eastwin.

*Cedar Strategic: Acquiring 60% of property developer Huizhou Daya Bay Mei Tai Cheng Property Development for Rmb48m. The company has almost completed the development for 1,099 apartment suites, of which the handover of ~700 units is expected to commence from 4Q15, while the remaining will be kept for rental income.

*SGX Launched a new index business unit, SGX Index Edge, to offer comprehensive services aimed at addressing the rising demand for index-linked investment in Asia. Plans are also in the works to offer Asia-based index solutions for product issuers region-wide, including thematic and strategy-based equity indices for the Singapore market.

*SinoCloud: Terminated its proposed acquisition for an additional 46% stake in China Satellite Mobile Communications Group, after the long stop date of the agreement has lapsed. SinoCloud currently holds a 45% stake in the mobile satellite products distributor.

*Spackman Entertainment: Will release "The Priests", starring the reunion of Gang Dong-won and Kim Yun-seok, on 5 Nov '15. The trailer in late Sep has attracted strong interest from netizens, and was ranked #1 amongst movie searches on Korean search portal Naver.

*k1 Ventures: Proposed capital reduction exercise of $0.015/share and 5-into-1 share consolidation.

*Global Yellow Pages: Will buy Supatreats Asia from Asia Good Retail. While the purchase price has not been determined, the initial consideration could be A$1.9m plus a deferred sum of A$3m. Supatreats handles the supply chain for the Wendy’s brand of ice cream in Australia and New Zealand.

*Annaik: Terminated its proposed rights issue due to the recent weak and uncertain market conditions.

*Aztech: Issued profit warning that 3Q15 (3Q14: $2m) may swing into the red despite being operationally profitable as bottom line was weigh by unrealised loss from currency hedging and impairment charges on carrying value of vessels and inventory. The group also expects to divest some excess assets to strengthen its liquidity position.