SG Market (11 Nov 15)

Simgapore shares are likely to drift down amid soft China inflation and muted Wall Street close as fears over US rate hike surface back into the fore.

Sentiment will be contingent on the Chinese retail sales and industrial production data to be released at 1.30pm and final flurry of corporate results this week, including those from SingTel, Wilmar, Genting S’pore, City Dev and Noble.

Regional bourses are trading mixed this morning, with Seoul down 0.2%, Sydney up 0.4% and Tokyo flat.

From a chart perspective, downside support for the STI is at 2,950, with resistance capped at 3,050.

Stocks to watch:
*Vard: Dismal 3Q15 results. Net loss widened to NOK486m (3Q14: -NOK37m), weighed mainly by finance expenses and restructuring cost. Revenue dropped further to NOK2.27b (-19.2%), from reduced activity at its European shipyards. EBITDA was negative at NOK467m (3Q14 –NOK51m), largely due to loss provisions related to projects at the Brazilian yards. The Brazilian tax claim is still pending an appeal decision and no provision has been made. NAV/share at $0.56.

*Courts Asia: 2QFY16 results topped estimates, with net profit of $6m (+253% y/y) on revenue of $186.1m (+4.2%). Topline was led by higher sales from Malaysia (+27%) and maiden contributions from the Indonesian operations (+5.8% q/q), offset partially by weaker Singapore sales (-2.6%). Gross margin widened 2.6ppt to 35.3% due to higher service charge income in Malaysia. Bottom line was further supported by lower distribution & marketing (-1.6%) and admin (-1.4%) costs. NAV/share at $0.52.

*BreadTalk: 3Q15 net profit fell 60% to $1.6m, bringing 9M15 net profit to $6.5m (-22.7%), missing estimates. 9M15 revenue climbed 7.9% to $469.1m, driven by growth in all segments, from stronger same store sales growth. For the Bakery division growth also came from new outlets (9M15: 835, 9M14: 772). Gross margin improved 1.5ppt to 53.9%. Bottom line was however weighed by higher depreciation expense from newly opened stores, and higher operating costs in China and Singapore. NAV/share at $0.44.

*Croesus Retail trust: 1QFY16 DPU came in flat at 2.08¢ due to FX hedging losses, while distributable income grew 16.1% y/y to ¥918m. Revenue rose 17.2% to ¥2.01b, led by the acquisition of One’s Mall on Oct '14 and positive rental reversion from Mallage Shobu. NPI grew slower to ¥1.23b (+10.7%) due to ballooning expenses from building management (+57.3%), repair (+73.2%), and sales & promotion (+41%). Portfolio occupancy dipped 0.7ppt q/q to 98.6% with WALE at 8.6 years. Aggregate leverage stood at 47.6%, with average debt cost and tenor of 1.98% and 2.6 years respectively. NAV/share at ¥80.54.

*UMS: 3Q15 net profit soared 56% y/y to $8.5m on a $2.4m FX gain (+359%). Revenue grew 24% to $30.3m, largely led by strong sales from semiconductor equipment. Bottom line was pressured by increases in raw material purchases and subcontractor charges (+16%), and staff (+23%) costs. Interim DPS was maintained at 1¢. NAV/share at $0.45.

*QT Vascular: 3Q15 net loss widened nearly 10 times y/y to US$33.3m on a 2.8x rise in R&D expenses to US$2.2m as well as US$20.4m in legal expenses. Revenue slid 26.7% to US$2.5m as the group sold 39.3% fewer catheter units as it was re-negotiating a distribution agreement with Cordis. Gross margin improved 23.6ppt to 43.4% on production efficiency gains. Bottom line was further hit by jumps in its sales & marketing (+27.2%) and admin (+52.8%) expenses as well as finance costs of $5.1m. NAV/share at -US$0.02.

*Best World: 3Q15 net profit spiked 259.3% y/y to $4m, as revenue rose 36.2% to $26.2m, attributed by strong export sales to China, as well as higher direct selling in Taiwan and Indonesia through effective marketing campaigns and product launches. NAV/share at $0.28.

*CNMC: 3Q15 net profit slumped 46% y/y to US$1.8m, as revenue slipped 1% to US$9.9m, due to an 8.6% fall in average realised gold price, partially mitigated by an increase in the production and sales volume (+8.3%) of fine gold in 3Q 2015. NAV/share at $0.11.

*Swissco: 3Q15 net profit rose 38.7% to US$11.2m on revenue of US$10.4m (-63%). The weak topline was largely due to lower average day and utilisation rates for the OSV segment. Gross margin more than doubled to 67.1%, largely due to lower maintenance, crew and fuel costs. Bottom-line aided by a more than 5x jump in associate and JV contributions to US$10.7m, due to the commencement of charters for two drilling rigs and two accommodation rig over the past year. NAV/share at US$0.38.

*Viking Offshore: 3Q15 net profit jumped 1.7x to $193k from $116k a year ago on back of a $1.6m FX gain. Revenue slipped 3.4% to $19.4m due to project delays and lower new order intake, reflecting the depressed oil market. The change in sales mix as well as pricing pressures eroded gross margin by 3.1ppt to 24.1%. The near absence of interest income coupled with a 8.6 time jump in finance costs crimped bottom line performance. NAV/share at $0.12.

*Otto Marine: Registered 3Q15 net loss of US$5.5m (3Q14: US$2m), dragged by a 55.4% rise in finance costs. Revenue tumbled 35% y/y to US$63m on reduced fleet size and lower charter rates. NAV/share at US$1.12.

*Global Investment: 3Q15 net profit jumped to $12.7m (3Q14: $0.8m), mainly on a $10m impairment loss reversal from a residential mortgage-backed security. Revenue was flat at $3.9m as an increase in interest income from new bonds was offset by higher fair value loss on financial assets. Expenses fell to $1.1m (3Q14: $6.2m) due to a steep drop in FX losses. NAV/share at $0.20.

*Sarine Technologies: Opening its first Allegro service center in Jaipur, India to provide automated gemstone planning and shaping service based on 3D laser mapping technology.