Singapore shares may enjoy positive spillover from the tech rally on Wall Street last Fri following bumper earnings by US technology giants and surprise monetary easing by China.
But sentiment is expected to be remain fragile ahead of BoJ and Fed meetings this week and the release of 3Q results from the local banks, starting off with OCBC (28 Oct), followed by UOB (30 Oct) and DBS (2 Nov).
Regional bourses are trading higher this morning in Tokyo (+1.3%), Seoul (+0.3%) and Sydney (+0.3%).
From a chart perspective, the STI has broken out of its tight trading range and is likely to head towards the next upside objective of 3,120 with downside support at 2,980.
Stocks to watch:
*Property: Private home prices continue to slide in 3Q, with the URA index down 1.3% q/q, the steepest in eight consecutive quarters of declines. On the other hand, public housing appears to have stabilised, with the HDB resale price index dipping 0.3%, the smallest q/q fall in nine straight quarters.
*China Water: Consultative draft policies from China ’s 5th Plenum is scheduled to be released this week, with favourable policies and increased government spending in the water treatment sector anticipated. This may spark positive sentiment for counters such as China Everbright Water, SIIC Environment and Citic Envirotech.
*Hutchinson Port: 3Q15 results beat expectations as net profit rose 7.2% y/y to HK$525.9m on a slightly higher revenue of HK$3.5b (+2.3%), supported by firmer revenue per TEU in Hong Kong and China following tariff hikes. Operating margin expanded 1.8ppt to 37.9% on lower costs, primarily due to lower throughput handled and lower fuel price. Management guided tepid container volume outlook for 4Q15, and will continue to focus on tariff and cost improvements to achieve FY15 DPU target of HK$0.33-0.36. NAV/unit at HK$4.84.
*CapitaLand Retail China Trust: 3Q15 DPU of 2.35¢ (+12.3% y/y) was in line, on higher distributable income of $19.5m (+14.2%), boosted by stronger yuan. In Rmb terms, gross revenue slipped 0.7% to Rmb251.8m, impacted by CapitaMall Minzhongleyuan (road closure for construction of a new subway line) and CapitaMall Wuhu (tenant repositioning). Portfolio occupancy slipped to 94.8% (-0.2ppt q/q) with WALE of 8.5 years, while aggregate leverage climbed to 28.5% (+0.8ppt) with an average debt cost of 2.98% and tenor of 2.42 years. NAV/unit at $1.70.
*Raffles Medical Group: 3Q15 results missed estimates, with net profit inching up 1.2% to $15.6m on revenue of $101.5m (+7.4%). Top-line was led by hospital services (+11.7%), which commanded better margins but earnings were dragged by higher depreciation (+28.5%) and operating lease expenses (+32.3%) largely as a result of the new and expanded operations at RafflesHospital and the newly opened RafflesMedicalCentre Orchard. NAV/share at $1.02.
*SIA: Maybank-KE downgrades to Hold from Buy and shaves TP to $11.80 from $11.85, in light of the persistent soft yield environment and management’s plans to taper down future growth capacity plans. Fair value is based on an unchanged 1.0x FY17 P/B, in line with its 10-year mean.
*PSL: Issued profit warning for 3Q15.
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