SG Market (15 Oct 15)

Singapore shares could open lower following a weak close on Wall Street as investors were spooked by a downcast profit forecast at Wal-Mart cutting its growth forecasts and muted PPI data, which raised concerns about growth and earnings.

Regional bourses are trading lower this morning in Tokyo (-0.2%), but higher in Seoul (+0.8%) and Sydney (+0.8%).

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:
*UG Healthcare: Maybank-KE initiates coverage with Buy call and TP of $0.41 on the rubber glove maker, highlighting that major capacity expansion of 27%/32% in FY16/17 is expected to meet strong demand and lift EPS by 38%/45%. Valuations are undemanding with the under-researched group trading at 55% discount to peers, despite a comparable growth profile.

*Soilbuild Business Space REIT: 3Q15 results beat expectations as DPU climbed 5.1% y/y to 1.625¢ on a 20.8% jump in distributable income to $13.1m. This was underpinned by gross revenue of $20.7m (+22.4%) and NPI of $17.8m (+25.3%), as new contributions from three properties acquired after 3Q14 helped to boost overall performance. Portfolio occupancy dipped 1.2ppt to 98.7%, with weighted average lease to expiry of 4.8 years. Aggregate leverage improved 0.2ppt q/q to 36.1%, with aggregate interest cost of 3.2%. NAV/unit at $0.80.

*Noble: CEO, Yusuf Alireza acknowledged at a forum that the group could have been more transparent earlier on, but stood firm on its valuation methods, highlighting that the complexity of some parts of its business meant that “there is no level of transparency that will make the group’s business simple".

*GLP: Leased a total of 25,000sqm to two new customers in Brazil. 20,000sqm will be leased to Lojas Lebes, one of the largest retailers in South Brazil, while 5,000sqm will be leased to Rio Quality, a food distributor in Rio de Janeiro.

*Biosensors: Favourable report received for its BioFreedom product, which demonstrated superior safety and efficacy compared with a bare-metal stent. The results from a clinical trial showed a 50% reduction in the need for repeat revascularization, and patients also had a 29% reduction in risk of cardiac death, myocardial infarction or stent thrombosis.

*Ascott REIT: Issued 2.4m units at $1.2202/unit to its manager, Ascott Residence Trust Management as payment for acquisition fees of interest in three Citadines serviced residence properties in Australia and Japan, and four S-Residence rental housing properties in Japan. Following the issuance, the manager will hold a 6.5% stake in the REIT.

*Starland: Cash offer by GRP Chongqing Land of $0.236 per share which represents a 38.8% and 36.8% premium over the last traded price of $0.17 and its 1H15 NAV/share of $0.173. The cash offer comes after GRP signed an agreement to purchase an 82.9% stake at the same price from several Starland shareholders.

*ISOTeam: Adopted a dividend policy whereby it will distribute up to 20% of its net profit excluding exceptional items. If the policy was applied to the group’s JunFY15 results, it would have paid out a slightly lower dividend of 1.14¢ instead of 1.15¢.

*SunMoon Food: Requested for voluntary suspension, as substantial shareholder First Alverstone Capital is still in the midst of responding to queries to Securities Industry Council on several notifications of change in interest in shareholders, which may create market speculations and uncertainties.

*Vard: Profit warning for 3Q15 and FY15. Results will be negatively affected by continued operational challenges in its Brazil shipyards as well as negative trends in the Brazilian economic and political environment. Vards 3Q results will be released on 11 Nov ‘15.

*TPV: Profit warning. Expects 9M15 net loss to average around US$80-100m due to weakening euro, Brazilian real, and Russian ruble against the USD, and the weakness in TV demand in some overseas markets, especially in Europe.