SG Market (13 Nov 15)

SG Market: Singapore shares are likely to be weighed down by the overnight rout on commodities and increased likelihood of an interest rate hike next month, with disappointing 3Q results from several bellwether stocks City Dev, Genting S’pore, Noble and Olam adding to the market gloom.

Regional bourses are trading lower this morning in Tokyo (-1.2%), Seoul (-0.6%) and Sydney (-1.8%).

From a chart perspective, the STI is likely to breach the 2,950 support and head towards the next downside at 2,920.

Stocks to watch:
*Genting SP: 3Q15 results missed, with adjusted EBITDA down 18% y/y to $209.2m. Net profit plunged 62% to $37.2m on revenue of $636.1m (-1%), with top-line weighed by a 5% fall in gaming revenue to $451.8m. Gaming weakness was offset by a 10% increase in non-gaming revenue, from a 17% increase in visitations to attractions. EBITDA margin fell 6.5ppt to 32.9%. Bottom line aided by FX gains of $113m, but offset by fair value losses of investments of $71.7m, and bad debt charges of $92.5. NAV/share at $0.60.

*Noble: 3Q15 results missed, as core net profit tumbled 43.2% y/y to US$92.0m on revenue of US$18.7b (-20%). Operating income rose 3% to US$272.3m, led by the Energy segment (+245%), but partially offset by the Gas & Power segment (-12%) and the Mining and Metals segment which fell into an operating loss of US$44m (3Q14: +US$65m). Overall operating margin rose 0.34ppt to 1.51%. Bottom-line further weighed by supply chain asset losses of US$24.4m versus gains of US$74.7m, while associate and JV losses widened to US$66m from US$20m, largely attributable to Noble Agri. NAV/share at US$0.78.

*Olam: 3Q15 results missed estimates on core net profit of $34.2m (+6.2% y/y) and revenue of $4.47b (+4%), driven by elevated prices of almonds and cashews, but partially mitigated by lower contribution from volumes in industrial raw materials (fertiliser trading, cotton, wood). EBITDA margin fell to 4.4% (-0.7ppt), while headline net profit fell to $31m (-30%) on an absence of net exception gain of $12.1m. NAV/share at $1.85

*City Dev: 3Q15 results missed. Net profit fell 16.4% y/y to $106.4m, while revenue plunged 38.8% to $809.3m, as property ($228m, - 70%) slumped from the absence of recognition from Blossom Residences EC (TOP Sep ’14), partially offset by contribution from Coco Palms, Jewel@Buangkok, and D’Nest. Hotel revenue fell 1.5% to $437.8m, as contribution from new hotels were offset by oversupply and weak tourism in Singapore. Bottom line also impacted by absence of $10.9m gain recognized last year. Interim DPS of 4¢ maintained. NAV at $9.53.

*Golden Agri: 3Q15 core results above estimates, with core net profit up 137.5% y/y to US$61.0m even as revenue slipped 14.6% to US$1.6b on broad based decline across its segments. Top-line was weighed by lower sales from the plantation and palm oil mills (-20.4%), palm & laurics and oilseeds (-39%) segments. Overall EBITDA margin improved 3.2ppt to 4.9%, largely led by improved downstream margins in the palm and lauric segment. Bottom line was shaved by FX losses (+54.9%) as well as fair value losses, mitigated by a tax credit of US$12.8m (3Q14: tax charge of US$5.9m). NAV/share of US$0.69.

*China Everbright water: 3Q15 results below bullish estimates, despite net profit up 25.3% y/y to HK$88.8m on robust revenue of HK$410.1m (+62.7%), underpinned by higher construction revenue from expansion and upgrades of several waste water treatment plants. Gross margin narrowed 5ppt to 47% due to higher contribution from construction which yield lower margins. Bottom line further hit by a spike in admin expenses (+148%) arising from the consolidation of HanKore Group post RTO, and higher deferred tax. NAV/share at HK$2.73.

*OUE Hospitality Trust: 3Q15 results in line, with DPU up 4.9% y/y to 1.72¢, as revenue and NPI rose to $32.7m (+14.6%) and $28.8m (+13.5%) respectively, mainly driven by contribution from Crowne Plaza Changi Airport Hotel (CPCA), which was acquired in Jan ’15. Distributable income grew slower to $23m (+5.8%), dragged by higher finance expenses. Retail portfolio occupancy inched 0.1ppt q/q to 98% with WALE of 2.9 years. Aggregate leverage stood at 42.1%, with average debt cost and tenor of 2.5% and 2.7 years. NAV/unit at $0.90.

*Cosco: Sank into the red with 3Q15 net loss of $82.1m vs $7.1m net profit y/y as revenue slipped 18.1% to $949.6m on lower shipyard (-17.8%) and shipping (-34.9%) revenue. Losses from both segments resulted in a $10.7m gross loss (3Q14: +$56.7m). Bottom line was further eroded by a provision charge of $75.9m on doubtful debts, lower scrap sales (-56.5%), and interest income (-40%), partially mitigated by a $16.5m tax credit. NAV/share at $0.60.

*Super: 3Q15 results missed estimates as net profit slumped 25.6% y/y to $7.4m, with revenue slipping 6.6% to $121m on lower branded consumer sales (-3.8%) and food ingredient sales (-11.5%). Gross margin was flat at 32.6% (+0.6ppt). Bottom line weighed by higher operating (+3.3%) and finance expenses (+197.5%), partially mitigated by government grants of $1.2m. NAV/share at $0.46.

*Yoma: 2QFY16 results missed, as net profit plummeted 97.2% to $0.3m on a 51.7% tumble in revenue to $19.9m, weighed by lower sales of residences and land development rights (-79.1%) and real estate services (-34.6%). The group fell into an operating loss of $0.5m on higher operating expenses (+70.6%) and absence of an $8.1m fair value gain recognised in 2QFY14. Bottom line further weighed by $0.2m in tax expenses (2QFY15 credit of $0.4m). NAV/share at $0.37.

*Silverlake: 1QFY15 results in line, as net profit climbed 15% to RM68.6m, while revenue grew 13% to RM131m, driven by increases in maintenance and enhancement services (+23%) and software project services (+109%), offset by a slump in software licensing sales (-42). The appreciation of SGD and USD against the RM had a +7% effect on revenue. Gross margin fell 5ppt to 60%. Bottom line boosted by RM13.5m unrealized FX gains. Interim DPS of 0.6¢ announced (1QFY16: 0.8¢). NAV/share at RM0.27.

*Valuetronics: 2QFY16 results in line, with net profit down 11.3% y/y to HK$32.2m on revenue of HK$526.5m (-16.1%), weighed by consumer electronics (-40.6%) weakness due to the slowdown in the LED business, although this was partially offset by a 27.7% increase in industrial revenue. Gross margin improved 1.5ppt to 14.6%. NAV/ share at HK$2.12.