SG Market (16 Oct 15)

Singapore shares are expected to open higher, taking cue from the overnight rally in global markets, with Fed Futures showing that chances of a Fed rate hike this year are diminishing.

Regional bourses are trading higher this morning in Tokyo (+1.0%) and Sydney (+0.9%) but flat in Seoul.

From a chart perspective, topside resistance for the index is seen at 3,050 with underlying support at 2,950 (50-dma) and 2,880 (20-dma).

Stocks to watch:
*Office: Knight Frank cautions that prime office rents in Singapore could decline by 3% over the next three years, weighed by 7.6m sf of new supply in GFA which is expected to come on stream.

*Keppel DC REIT: 3Q15 results beat expectations with DPU of 1.64¢ and distributable income of $14.5m topping management’s forecast by 2.5% and 2.2% respectively, attributable to hedging gains and lower interest expenses. Gross revenue beat forecasts by 1.8% at $25.7m while NPI was marginally lower than expected at $21.4m (-0.3%) due to higher property operating expenses (+25%) of $4.4m. Portfolio occupancy rose 1.1ppt q/q to 95.1%, with WALE of 8.9 years. Aggregate leverage stood at 30.1% (+3.7ppt), with average cost of debt at 2.5% and tenor of 3.4 years. NAV/unit at $0.86.

*Sabana REIT: 3Q15 DPU slid 2.2% y/y to 1.77¢, weigh by a larger unit base, while distributable income rose 2.2% to $13.0m. Both gross revenue and NPI edged up slightly at $25.5m (+1.5%) and $18.3m (+1.4%), respectively, mainly lifted by contribution from 10 Changi South Street 2 that was acquired in Dec '14, but partially offset by the exhaustion of vendor's rental support for 9 Tai Seng Drive in 2Q15, and higher property expenses from 2 Toh Tuck Link which was converted into a multi-tenanted property in 4Q14. Occupancy improved by 0.8ppt q/q to 91.7%, while WALE shortened to 1.7 years (-0.3 years). Aggregate leverage stood at 38.0%, with average cost of debt at 4.2% and tenor of 2.3 years. NAV/unit at $1.06.

*SIA: Sep’s passenger traffic improved 0.4% y/y against a 0.1% increase in capacity. Consequently, passenger load factor (PLF) improved marginally by 0.2ppt to 80.2%. Management continues to point out the challenging operating environment and that the growth in passenger carriage was mainly due to promotional activities. Amongst its subsidiaries, only Scoot managed to improve its PLF (+4.8ppt to 83.5%), with SilkAir (-0.8ppt to 66.7%) and Tigerair (-0.1ppt to 81.7%) reporting marginal declines in PLFs. Cargo load factor was up d 0.7ppt to 62.9% as cargo traffic improved 4.4% on a 3.3% increase in capacity.

*Singapore Post: Acquiring TradeGlobal from private equity firm, Bregal Sagemount for US$168.6m ($236m). TradeGlobal is a leading US end-to-end eCommerce provider that offers best-in-class services to the world’s premier fashion, beauty and lifestyle brands. The combination of the two companies will enhance their capabilities to build a powerful global eCommerce platform and enable customers to expand internationally.

*Capitaland Mall Trust: Divesting the three-storey Rivervale Mall, located in Sengkang New Town for $190.5m to PE fund manager, AEW Asia, which will see CMT realise a net gain of $72m. Impact from the sale is expected to be minimal, as the property only makes up 1% of CMT's total deposited property value.

*First Resources: Operating statistics for Sep ’15 - CPO production jumped 12.9% y/y to 75,804 tons, while extraction rate remained steady at 23.1%. Palm kernel production also grew 12.1% to 17,027 tons, with extraction rate at 5.2% (unchg). For 9M15, CPO production was 514,499 tons (+11.6%), while that for palm kernel was 119,158 tons (+11.3%).

*Cordlife: In relation to Cordlife's 13.4% stake disposal in China Cord Blood Corp to HK-listed Golden Meditech, the latter has obtained shareholders' approval for the purchase and all conditions for the disposal have now been met. Maybank-KE last estimated that Cordlife may pay up to $0.14/share in special dividends upon completion of the disposal.

*STATS ChipPAC: Jiangsu Changjiang Electronics Technology has completed the compulsory acquisition of STATS ChipPAC at $0.46577/share. The transfer of all shares of all dissenting shareholders has been effected and payment has been despatched. Following the completion of the acquisition, STATS ChipPAC will be delisted from SGX on 19 Oct.

*Perennial Real Estate: Entered into an anchor lease agreement with IHH Healthcare and its Chinese partner, which will see IHH and its partner leasing a space of 48,000sqm at Perennial International Health and Medical Hub in Chengdu, China, and operate a 350-bed hospital. The hospital is expected to open in 2H17.

*GLP: Leased 143,000 sqm of space to five industry leaders in Greater Tokyo, Japan.

*ST Engineering: Electronics arm secured $370m worth of contracts, a 27.9% drop from 3Q14.

*Green Build Technology: Awarded underground utility tunnel project in Harbin for a total investment cost of Rmb947m by the municipal government, to be completed by end 2016. Green Build will co-invest Rmb437m, while the municipal government will invest the balance amount.

*TTJ: Secured structural steelworks contracts for a series of local pro