SG Market (16 Nov 15)

Singapore shares are set for a soft opening as the deadly Paris attacks are likely to deal another blow to weak sentiment already undermined by the weak US retail sales data, China’s margin tightening and poor 3Q corporate results in Singapore.

Investors will also look out for Singapore’s Oct NODX tomorrow and 3Q GDP reports out on Wed.

Regional bourses are seeing some bloodshed this morning in Tokyo (-1.3%), Seoul (-1.1%) and Sydney (-0.6%).

From a chart perspective, the STI is likely to breach the 2,920 support, with the next downside risk at 2,850.

Stocks to watch:
*ComfortDelGro: 3Q15 results slightly beat expectations as net profit grew 5.4% y/y to $85.2m on revenue of $1.04b (+1%) driven by most segments, in particular, bus (+3.4%), taxi (+2.4%), and rail (+7.3%), but weighed by automotive engineering business (-15.1%). Operating margin edged higher to 12.3% (+0.5ppt) on FX gains of $1.9m as well as lower fuel and electricity (-8.1%) costs, partially offset by higher staff (+3.1%) costs and depreciation (+9.7%) . NAV/share at $1.05.

*SIIC Envirotech: 3Q15 results in line with bullish estimates, as net profit advanced 33.4% y/y to Rmb89.3m on revenue of Rmb502.1m (+38%), with all five key segments registering growth, namely construction (+85.4%), operating and maintenance income (+10.9%), financial income from concessions (+33.5%), service income (+34.2%) and others (+118%). Gross margin remained constant at 37.9%. Bottom-line led by an almost 2x rise in associate and JV contributions. NAV/share at Rmb2.41.

*OUE: 3Q15 results in line, with net profit down 8.9% y/y to $15m, on a softer revenue of $98.9m (-6.9%), undermined by absence of property development income from OUE Twin Peaks and a marginally weaker hospitality division (-1.5%), but partially cushioned by greater contribution from property investment division (+15%). Gross margin shrank by 3.1ppt to 37.7%. Bottom line was further hit by higher finance expenses and fair value losses, but partially negated by newly acquired equity-accounted investees. NAV/share at $4.35.

*Q&M Dental: 3Q15 results in line, with net profit advancing 16.7% y/y to $2.7m on revenue of $30.6m (+7.6%), backed by dental clinic (+6%) acquisitions and dental supplies manufacturing (+83%), but partially offset by dental supplies distribution (-35%) due to absence of an one-off equipment supply to the Malaysian government in 3Q14. Bottom line aided by non-operating gains from PIC cash payout and enhanced special employment credit. NAV/share at $0.102.

*Cordlife: 1QFY16 results in line, turning around to net profit of $7.6m (1QFY15: -$3.6m) on firmer revenue of $14.5m (+9.7% y/y), boosted by higher number of client deliveries. Operating margin narrowed 0.6ppt to 12.2%, mainly pressured by an increase in staff cost due to a larger workforce. Bottom line was buttressed by a stronger USD, but partially weighed by net fair value losses from financial assets and derivatives. Special interim DPS of $0.13 declared. NAV/share at $0.65.

*Midas: 3Q15 results in line, with net profit soaring more than 9x to RMB13.9m on a 27.2% jump in revenue to RMB412.2m with its aluminium alloy extruded products division contributing to its entire top line growth. However, gross margin was crimped 1.1ppt to 25.9% due to the change in product mix. Bottom line was further buttressed by other operating income (+78.6%) and contributions from associate NPRT (+650.3%). NAV/share at Rmb2.50.

*Ying Li: Missed expectations as 3Q15 net profit dived 73.6% to RMB2.9m on revenue of RMB111.9m (-57.1%) due to lower property sales (-73.7%) but partially mitigated by stronger rental income (+11.6%). Gross margin expanded 16ppt to 55.2% on stronger rental margins. Bottom-line was further pressured by a jump in selling (+60.5%) expenses, but mitigated by a jump in interest income (+623.4%). NAV/share at Rmb1.93.

*Wheelock: 3Q15 results missed expectations as net profit edged 2.4% higher to $11.3m on revenue of $83.9m (+268.6%) mainly due to property sales partially offset by lower rental income. Gross margin collapsed 51.1ppt to 23% on a change in revenue mix. Bottom line was weighed by other operating (+303.9%) and tax (+401.6%) expenses, partially mitigated by a $22.1m gain on disposal of its financial assets. NAV/share at $2.53.

*Swiber: 3Q15 swung into a net profit of US$3.2m (3Q14: -US$27.5m), with revenue more than doubling to US$215.7m due to a significant recognition of revenue for a Latin American project and execution of new projects in South Asia, which translated into higher gross margin of 11.1% (+10.3ppt). Net gearing grew to 153% (+8ppt). Order book stood at US$1.5b. NAV/share at US$1.09.

*Mermaid Maritime: 3Q15 net profit climbed 19.1% to US$16.5m, while revenue was up 10.1% to US$96.6m, largely led by the subseas division, which saw higher contract value of cable lay projects and higher utilization rate of vessels, offset by zero drilling revenue from the drilling segment, following management’s decision to cold stack its rigs. NAV/share at US$0.40.

*KS Energy: 3Q15 net loss widened to $38.1m from $0.6m a year earlier, while revenue slumped 60.3% to $23.2m, largely driven by a slump in drilling business due to reduced deployment of rigs in the quarter. Gross margin fell 2ppt to 27.2%. Bottom line was dragged by a more than 26x surge in other operating expenses and JV losses of $16.0m. NAV/share at $0.63.

*Dukang Distillers: 1QFY16 net loss narrowed to Rmb0.8m (1QFY15: -Rmb29.4m), although revenue dropped 21% y/y to Rmb164m, as the group continue to be affected by China’s austerity measures on luxury gifts and spending. Gross margin expanded to 32.5% (+ 14.1ppt) on a change in sales mix, while bottom line was boosted by lower selling and distribution expenses (-31.4%) on reduced television commercials. NAV/share at Rmb1.80.

*Spackman: 3Q15 net loss narrowed to US$1.0m (3Q14: -US$5.0m), while revenue fell 21% y/y to US$2.9m, as there were no films under production. The group registered a gross margin of 28.4% as compared to a gross loss the previous year, due to two newly acquired subsidiaries Novus Mediacorp and UAA Korea.