SG Market (19 Oct 15)

Despite the positive close on Wall Street last Fri, sentiment on the Singapore market is likely to remain taut before the release of China's 3Q GDP growth at 10am which consensus estimates at 6.8%, the slowest growth rate since the global financial crisis

Regional bourses are trading flat this morning in Seoul and Sydney, while Tokyo is down 0.3%.

From a chart perspective, Technical indicators suggest the STI is close to overbought levels, with topside resistance at 3,050 and near-term support at 2,980.

Stocks to watch:
*Property: National Development Minister Lawrence Wong is guiding for the supply of new HDB flats to go up next year, in a bid to meet higher demand arising from policy changes e.g. recent raised income ceiling for new flats from $10,000 to $12,000, and a new two-room flexi scheme. Wong however highlighted that cooling measures in the property market will be staying put for now.

*Banks: DBS is now Asia’s eighth largest private bank in terms of AUM, which grew by 35% y/y to US$73b in 2014, attributable to its acquisition of Societe Generale’s Asian private banking business, while other contributing factors include innovation, growing focus on digital banking and strong customer retention. OCBC’s Bank of Singapore ranks at 11th spot with US$51b AUM and UOB Private Bank was at 17th spot with US$19.5b AUM.

*Auto: The super luxury car sector has been hard hit by the uncertain economic outlook and stock market turmoil, with some dealers unable to even sell a single car in a month.

*Guocoleisure: 1QFY16 net profit jumped 89.2% y/y to US$31.4m mainly due to a US$13.1m one-off compensation received. Revenue inched down 2% to US$115.1m, on lower Bass Strait oil and gas royalty income, although hotel revenue was stable as a result of improved RevPAR. Gross margin dipped slightly to 59.8% (-0.4ppt). Bottom-line was boosted by a 61.4% decline in finance costs. NAV/share at US$0.88.

*GuocoLand: 1QFY16 net profit spiked to $550.5m (1QFY15: $27m) mainly boosted by a $480m disposal gain from the sale of Beijing's Dongzhimen project in Aug '15. Revenue and gross profit gained 97% and 115% y/y to $439.8m and $143.8m, respectively, due to higher sales from Leedon Residence in Singapore and profit recognition of an office block in Shanghai Guoson Centre. NAV/share at $3.03.

*United Engineers: Disposed its stakes in PT United Engineers Indonesia for $7.2m, and is expected to record a net gain from the sale of about $13.2m after taking into consideration FX reserve realisation and transaction costs.

*Technics Oil & Gas: Entered into agreement to provide technology know-how as well as technical support to Indonesia’s PT Elnusa Fabrikasi Konstruksi (Elnusa). Elnusa is the only Indonesian national company that has capabilities in oil & gas services, seismic, drilling and oilfield.

*AusGroup: Notified by Australian authorities that its Port Melville property would not require assessment under the Environmental Assessment Act. This helps ensure that the property is in full compliance with regulations.

*Bumitama Agri: 3Q15 CPO production hit an all-time high of 181,975 MT (+20.8%), while Palm Kernel production was up 14.4% to 31,814 MT, fuelled by a 22.5% jump in FFB harvest. CPO extraction rate was maintained at 23.2%, while palm kernel extraction rate dipped 0.3ppt to 4%.

*Green Build Tech: Proposed disposal of low-margin packaging business for Rmb39m ($8.4m), or 1x P/B. Upon completion, group will focus primarily on its green technology business segment. Pro forma FY14 EPS is expected to fall 20% to Rmb0.0783, while gearing will decrease significantly from 90% to 2%. Notably, sale assets comprise 95.7% of group's NAV of Rmb0.1815 ($0.04).

*SinoCloud: Proposed private placement of 1,377m new shares (14.4% existing share capital) at 0.35¢ apiece to four individual placees. Net proceeds of HK$26.7m raised will be intended for funding of investments (30%) and working capital (70%).

*YuuZoo: Acquired 5% stake in major Chinese Film production company RS Media & Entertainment Group, which has US$600m of movies in negotiation or production.

*China Merchants Pacific: Completed the acquisition of the Guixing and Guiyang expressways on 15 Oct.

*Avic International Maritime: Terminated the proposed $45m acquisition of logistics facilities provider Shanghai Catic Industrial, after preconditions were not met.