SG Market (28 Oct 15)

Singapore shares could open lower, taking cue from Wall Street, as investors are likely to remain cautious ahead of the Fed policy statement. Nevertheless, the better-than-expected earnings from OCBC may provide a slight boost to investor sentiment.

Regional bourses are trading lower this morning in Seoul (-0.2%) and Sydney (-0.3%), but higher in Tokyo (+0.5%).

From a chart perspective, the STI is due for a technical pullback. Resistance for the index is capped at 3,120 with downside support at 2,980.

Stocks to watch:
*Economy: MAS highlights that a weakening SGD is not on its policy agenda, calling economists’ expectations of more aggressive easing "clearly unwarranted”, as the S’pore economy is neither experiencing an outright retraction in economic activity or widespread price declines.

*OCBC: 3Q15 results better-than-expected, with core net profit of $902m (+7% y/y, -14% q/q), driven by net interest income of $1.32b (+6% y/y, +3% q/q) from 4% loans growth, although NIM narrowed to 1.66% (2Q15: 1.67%). Non-interest income came in 3% lower due to weaker life insurance performance, partially offset by treasury-related flows. Total provisions soared to $150m (3Q14: $97m, 2Q15: $80m), while NPL ratio climbed to 0.9% (3Q14: 0.7%, 2Q15: 0.7%). Tier 1 CAR of 16.0 (3Q14: 17.4%, 2Q15: 14.1%). NAV/share at $7.78.


*SMRT: 2QFY16 results in line, with net profit of $25.7m (+1.9% y/y) on revenue of $328.8m (+4.7%). Top line was led by improvements across rail (+2.7%), bus (+4.1%) and non-fare operations (+9%), although operating profit eased to $32.5m (-2.4%) as rail incurred a $4m loss, weighed by renewal and maintenance costs. Meanwhile, bus division recorded a $2.6m profit instead of a $1.4m loss previously, led by stronger revenue and diesel cost savings, while the non-fare division contributed a $33.1m (+21.7%) profit, led by contributions from the taxis, rentals and advertisements segments. Interim DPS of 1.5¢ maintained. NAV/share at $0.5747.

*Osim: 3Q15 net profit of $6.2m (-62.4% y/y) was a far cry from expectations, taking 9M15 net profit to $42.1m (-43.6%) or 49% of FY15 consensus estimate. Revenue for the quarter tumbled 10.5% to $141.6m, as sales in North Asia (-7.5%), South Asia (-10.4%) and other regions (-27.3%) were eroded. Bottom-line was further hit by higher trading goods purchased, depreciation, interest expense, as well as TWG startup and legal costs. Interim DPS of 1¢ maintained. NAV/share at $0.53.

*CapitaCommercial Trust: 3Q15 DPU of 2.14¢ (+2.4% y/y) came in line with estimates. Gross revenue and NPI grew to $68.3m (+2.9%) and $52.7m (+1.5% y), from higher rents, but partially offset by increased property tax. Overall portfolio occupancy slipped to 96.4% (-3.3ppt q/q), with WALE of 7.7 years. Aggregate leverage climbed to 30.1% (+0.6ppt q/q) with average cost maintained at 2.4%. NAV/unit at $1.74.

*Starhill Global REIT: 1QFY16 results in line, with DPU up 3.1% y/y to 1.31¢, while distributable income rose 5.2% to $30m. Gross revenue was up 16.8% to $56.8m, while NPI rose 10.2% to $43.6m, from full quarter contribution from Myer Centre Adelaide, as well as stronger performance of Singapore properties. Portfolio occupancy inched up 0.1ppt q/q to 98.3% with WALE of 6.6 years. Aggregate leverage stood at 35.7% with average debt cost of 3.13% and tenor of 3.8 years. NAV/unit at $0.90

*Mapletree Greater China Commercial Trust: 2QFY16 results in line with bullish estimates, with DPU expanding 12.6% y/y to 1.808¢, while distributable income grew 14% to $49.5m. Gross revenue increased 25.4% to $84.6m, while NPI rose 26% to $69.5m, led by strong rental reversions from Festival Walk and Gateway Plaza, as well as full quarter contribution from Sandhill Plaza. Occupancy dipped 0.6ppt q/q to 98.4% with WALE at 2.3 years. Aggregate leverage stood at 41%, with average debt cost of 2.64% and tenor of 2.45 years. NAV/unit at $1.192

*Tee Land: Group's associate, Chewathai is acquiring a 6,544sqm freehold land in bangkok, Thailand for THB316.3m ($12.4m) to develop a high-rise condominium. The proposed acquisition will be financed via a mix of internal funds and bank borrowings, and expected to completed by Jul '16.

*Technics O&G: 51% owned subsidiary clinched two EPC contracts worth $4.6m, to fabricate and install steel structures, bringing YTD order wins to $15m.

*Engro Corp.: Issued profit warning for 3Q15 and 9M15.