SG Market (12 Oct 15)

Singapore are likely to consolidate their gains this week, with momentum indicators entering overgbought territory and local investors hold their bets ahead of advance 3Q GDP estimate and MAS semi-annual policy decision on Wed, as well as trade data on Fri.

Regional bourses are trading higher this morning in Tokyo (+1.6%) and Seoul (+0.1%) but are weaker in Sydney (-0.6%).

From a chart perspective, the STI may cross the the 3,000 psychological resistance today, with the next hurdle at 3,050 and underlying support tipped at the 50-dma (2,965) and 20-dma (2,865).

Stocks to watch:
*Strategy: Asset management firm PIMCO believes that the worst of the commodity crunch is over, with oil prices expected to gain over the next 12 months, although a major rebound is unlikely. The asset manager is forecasting oil prices to average US$60 per barrel in a year’s time.

*Economy: MAS will be releasing its semi-annual monetary policy decision on Wed. Majority of the street project a policy easing in response to a probable technical recession in 3Q15 amid an absence of inflationary pressures.

*Noble: The Business Times reported that a potential overhaul of Noble’s metals unit may help the beaten-down stock regain a little of its former lustre, drawing reference to media reports that the group is intending to cut down on its zinc and copper trading to focus on aluminium and alumina.

*Tee International: 1QFY16 net profit surged 77.9% y/y to $2.5m, while revenue climbed 44.2% to $61.1m, led by on-going engineering projects. Gross margin expanded 1.8ppt to 10.3% from hotel operations and rental income from TEE Land. Outstanding order book now stands at $377m. NAV/share at $0.19.

*Tee Land: 1QFY16 net profit dived 69.2% y/y to $0.9m as revenue halved to $3.4m (-47.9%), mainly undermined by limited progressive bookings from development projects, but partially offset by higher contributions from hotel operations and investment properties, which boosted gross margin by 26.1ppt to 54.1%. Bottom line was weighed by higher depreciation, FX losses from a weak ringgit, and an increase in finance cost due to borrowings for acquisition of Australian hotels in FY15. NAV/share stood at $0.35.

*Tee Land: Entered into two separate option-to-purchase agreements to acquire two plots of freehold land at Harvey Avenue, Singapore to develop new houses. Each plot of land is 513 sqm with a purchase consideration of $4.2m.

*Perennial Real Estate: Offering $150m in aggregate principal account of 3-year 4.65% bonds due 2018, subject to increase in offer size in the event of oversubscription, the re-allocation from public to private placement to non-US investors, and the right to cancel the offer if less than $25m is subscribed.

*Cache Logistic Trust: Acquiring a A$27m freehold single-storey warehouse with two levels of corporate office, spanning across a 22,440 sqm land area with gfa of 13,363 sqm, in Queensland, Australia from Wacol Industrial Property Trust. The property, which will be funded by bank borrowings, has a WALE of 7.9 years and a lease agreement that allows fixed annual rental escalation of 4% until Aug 2023.

*OKP: Awarded a $12.7m contract from JTC for road extension, drain and sewage works for a project located in Woodlands Ave 4. The project will take place over two phases and is expected to be completed by Jun '16.