SG Market (22 Oct 15)

Singapore shares could open lower, taking lead from the negative close on Wall Street, in a session which saw the “biotech bloodbath” continuing.

Regional bourses are trading lower this morning in Tokyo (-0.1%) and Seoul (-0.2%), but flat in Sydney.

From a chart perspective, technical upside for the STI is capped at 3,050 with near-term support at 2,980.

Stocks to watch:
*Strategy: Maybank-KE opines that Singapore-listed glovemakers Riverstone and UG Healthcare are laggards in the glovemakers rally, possibly due to slower newsflow and investors being too preoccupied with the penny stocks rally. Both stocks are trading at deep discounts to peers (20% for Riverstone and 50% for UG in FY16).

*SGX: 1QFY16 results beat expectations, as net profit jumped 28% y/y to $99.3m on revenue of $219.6m (+30.1%), with derivatives business (+69% to $90.8m) being the biggest driver as volume surged 82% primarily drive by China A50 Index futures (+164%). Securities revenue was up 14% to $55.9m, as average daily trading value increased 27% to $1.23b. Operating margin expanded 1.9ppt to 53.4% on better cost efficiencies. A higher interim DPS of 5¢ (1QFY15: 4¢) was proposed. NAV/share at $0.794.

*CapitaLand Mall Trust: 3QFY15 core results largely in line, with DPU up 9.6% y/y to 2.98¢ on distributable income of $103.2m (+10.2%). The strong bottom-line was largely aided by the release of $8.0m of taxable income retained in 1Q15. Gross revenue and NPI fell 1.8% and 0.7% respectively, due to on-going asset enhancement works in IMM Building, and lower occupancy at JCube and Clarke Quay, but mitigated by lower property operating expenses. Portfolio occupancy was at 96.8% with WALE of 2.8 years. Aggregate leverage stable at 33.8%, with average debt cost of 3.3% and tenor of 5.8 years. NAV/unit at $1.85.

*Mapletree Commercial Trust: 2QFY16 results in line as DPU climbed 2.5% y/y to 2.02¢. Gross revenue inched up 1.9% to $71.3m, largely lifted by higher rental from VivoCity, but partially offset by lower occupancy at Mapletree Anson. NPI was further boosted to $54.8m (+5.1%), led by a reduction in electricity consumption and tariff rates. Occupancy increased 0.9ppt q/q to 96.6% with WALE of 2.3 years, while aggregate leverage and average debt cost held still at 36.4% and 2.42% respectively. NAV/unit at $1.24.

*Cambridge Industrial Trust: 3Q15 DPU of 1.204¢ (-3.7% y/y) came below forecast, weighed by a 22.1% rise in borrowing costs used to fund acquisitions. Gross revenue and NPI was at $28.5m (+13.8%) and $21.7m (+10.5%), led by contributions from four recently-acquired properties and the completion of AEI projects. Occupancy held steady at 95.4% with WALE of 3.9 years, while aggregate leverage was at 37.2% with average debt cost of 3.7%.

*Frasers Centrepoint Trust: 4QFY15 results in line, with DPU of 2.859¢ (+2.7% y/y) taking FY15 DPU to 11.608¢ (+3.8%). Gross revenue and NPI for the quarter was up 1.7% and 1.2% to $47.5m and $31.7m respectively, driven by steady rental income growth from the portfolio properties and contributions from Changi City Point which was acquired in Jun ’14. Occupancy was at 96% with WALE of 1.5 years (3QFY15: 1.6 years). Aggregate leverage stable at 28.2% with average debt cost of 2.4%. NAV/unit at $1.91

*Cache Logistics Trust: 3Q15 results in line on flat DPU of 2.14¢ while distributable income inched up 0.6% y/y to $16.8m on a $1.5m distribution of proceeds from the Kim Heng Warehouse divestment. Gross revenue surged 11.3% to $23.1m on contributions from its three Australian acquisitions, but NPI slipped 3.6% to $18.8m from higher property expenses at newly multi-tenanted buildings. Occupancy stood at 95.2% (-3.1ppt q/q) with WALE of 4.3 years. Aggregate leverage stood at 38.3% with average debt cost of 3.4% and tenor of 3.3 years. NAV/unit at $0.97.

*Stratech: Clinched a contract to upgrade its iFerret intelligent airfield/runway surveillance and foreign object & debris (FOD) detection system at Singapore Changi Airport.

*TriTech: Signed a 5:95 JV with two Chinese partners to provide technical expertise, know-how, and support for a build-operate-transfer project of a wastewater treatment plant in Anhui, China.

*Tee Land: Formed a 55/10/35 JV co., TCK Commercial, with Peter & Jan Clark and Kenmooreland to acquire seven commercial units and three car park lots in Sydney, Australia, for a total consideration of A$6.26m ($6.32m). The acquisition will be funded via a mix of internal funds and bank borrowings, and is expected to complete by Jan '16.

*MMP Resources: Issued profit warning for 3Q15