SG Market (14 Oct 15)

Singapore shares are expected to open lower, taking lead from a lower close on Wall Street amid renewed fears of slowing growth in China and little clarity on the Fed policy path.

But investors may find a little comfort that MAS eased monetary policy by adjusting the currency band as the economy narrowly avoided a technical recession.

Regional bourses are opened weaker in Tokyo (-1.2%), Seoul (-0.4%) and Sydney (-0.6%).

From a chart perspective, the market is due for a near term correction from its overbought position. Topside resistance for the STI is seen at 3,050 with underlying support at 2,950 (50-dma) and 2,880 (20-dma).

Stocks to watch:
*Economy: Singapore's GDP grew 1.4% y/y and 0.1% q/q, beating analysts’ expectations of a 0.1% contraction, and narrowly averting a technical recession. Separately, the MAS announced that it would ease monetary policy slightly by slowing the SGD appreciation.

*Banks: Singapore and China has agreed on new initiatives to boost the use of Rmb, which will see banks in Singapore being able to lend Rmb to corporates across Tianjin and Suzhou and vice versa. The latest move will provide more financing options to Tianjin and Suzhou corporates, while providing Singapore investors and financial institutions new channels to deploy their growing Rmb liquidity.

*SPH: FY8/15 results came in above estimates despite net profit being down 20.4% y/y to $321.7m, largely due to lower fair value gains versus the previous year. Revenue ceded 3.1% to $1.2b, weighed by weaker media (-6.3%) and other (-6.4%) segments, partially cushioned by stronger contributions from the property segment (+12.6%). Operating margin inched up 1.7ppt to 30%, due to lower materials, production & distribution and depreciation expenses. Bottom line was weighed by lower fair value gains from SPH REITs' retail assets and the absence of a gain on partial divestment of a JV last year. Final DPS of 8¢ maintained but special DPS lowered by 1¢ to 5¢. NAV/share at $2.24.

*First REIT: 3QFY15 in line, DPU climbed 3% to 2.08¢, while distributable income rose 6.2% to $15.6m. Revenue expanded 6.1% to $25.3m, while NPI increased 6.8% to $25m, driven by contributions from Siloam Sriwijaya, which was acquired in Dec, as well as higher contributions from Indonesia and Singapore properties. NAV/unit at $1.02.

*Liang Beng: 1QFY16 results above estimates, with net profit soaring more than 2.6x y/y to $32.3m led by substantial gains from developments projects spearheaded by associates (+1219.2% to $15.4m) and JVs (+238.2% to $13.2m). Revenue was down 19.1% to $135.6m, mainly due to a decrease in revenue generated from the construction segment and ready-mixed concrete segment. Gross margin improved 1.3ppt to 11.2%. NAV/share at $0.96.

*OCBC: Business Times highlighted that OCBC's wealth management business has been registering strong performance, with wealth management income and AUM growing at double-digit percentage over the last five years. Wealth management income is expected to hit a record $2.6b this year and contribute to 30% of the group’s income in 2015 versus 23% in 2011.

*SIA: To restart non-stop Singapore-US (Los Angeles and New York) flights with a new Airbus A350 variant. Delivery of the ultra-long range aircraft will take place in 2018. Non-stop flights between Singapore and additional cities in the US are currently under consideration.

*GLP: Leased 114,000 sqm in Greater Tokyo, Japan. With the new leases, two development properties in Japan are now 100% leased ahead of its completion.

*IPCO: 78.8% owned China natural gas distribution network subsidiary, Hubei Zhong Lian Huan Investment Management, has been granted approval-in-principle by the National Equities Exchange and Quotations for its proposed listing on the China New Third Board, and is currently pending further approval by SGX.

*CEFC: Positive profit alert for 3QFY15 due to a new source of revenue. Results expected to be announced on 15 Oct.