SG Market (13 Oct 15)

Singapore shares are likely to struggle, taking cue from the flattish close on Wall Street amid a selloff in crude oil and energy stocks.

Regional bourses are trading lower this morning in Tokyo (-0.4%), Seoul (-0.1%) and Sydney (-0.4%).

From a chart perspective, the market appears a little overstretched with Stochastics indicators in overbought position and a pullback may be imminent. Topside resistance for the STI is at 3,050 with underlying support at 2,955 (50-dma) and 2,880 (20-dma).

Stocks to watch:
*Palm oil: Malaysian Palm Oil Board’s (MPOB) Sep ‘15 inventory rose 5% m/m to hit an all-time high of 2.63m MT (+26% y/y). The higher inventory was achieved despite lower m/m production (1.96m MT, -4% m/m, +3% y/y) and higher exports (1.68m MT, +4% m/m, +3% y/y). Domestic consumption in Sept fell 20% m/m to 0.22m MT, likely due to post-Raya celebration effect.

*SPH REIT: 4QFY15 results in line, with DPU flat at 1.39¢ taking FY15 DPU to 5.7¢ (+11.8%). Gross revenue for the quarter inched lower by 0.6% to $50.8m, as higher rental income from positive reversions were offset by the fitting-out period at Paragon, while NPI inched up 0.4% to $38.2m, due to lower operating expenses as a result of saving in utilities and lower maintenance cost. Committed occupancy stood at 100%, with WALE of 2.3 years. Gearing stood at 25.7%, with average cost of debt of 2.55%. NAV/share at $0.95.

*Cheung Woh: 2QFY16 net profit dipped 8.5% y/y to $2.9m on revenue of $21.7m (+2.6%). Top line was led by an 8.4% jump in revenue from the HDD components segment on back of a stronger USD, although this was pared by a 21.5% slump in revenue from the precision metal stamping components segment due to lower customer demand as well as a weaker RM. Gross margin improved to 23.2% from 17.7%. Bottom-line was pressured by a 96.8% plummet in contributions from its Chinese associate (TP Group) due to lower customer demand. Interim dividend of 0.5¢ maintained. NAV/share of $0.36.

*ST Engineering: Aerospace arm secured new contracts worth $410m (3Q14: $450m) in 3Q15. The latest series of contracts consists of airframe, component and engine maintenance, as well as pilot training across the US, and East Asia.

*Cogent: Signed a letter of intent issued by the Singapore Economic Development Board regarding its potential appointment as the developer of the Jurong Island Chemical Logistics Facility. The 6 ha facility will have a total built up area of ~150,000 sqm.

*Rotary: Established a presence in Slovenia to manufacture and sell electrical distribution and control apparatus, lighting, equipment, machinery, and industrial equipment.

*HG Metal: Entered into 40:60 JV with Mottama Holdings to establish and operate a steel structure fabrication plant in Myanmar.

*Ley Choon: Won a $2.5m contract by the PUB for the supply and laying of watermains in the east side of Singapore from 2015-2017.