SG Market (04 Jan 16)

Singapore Market: Singapore shares will likely be weighed by the downdraft in Wall Street that ended 2015 with a whimper, as well as continued dismal manufacturing data from China, its fifth consecutive contraction in Dec.

For the week, the US jobs report on Fri will be the most keenly watched indicator for the health of the domestic economy, while the US central bank will be publishing the minutes of its Dec meeting, where it voted to raise interest rates, on Wed.

Regional bourses opened mixed on the first trading day of 2016, with Japan (+0.3%), Korea (-0.3%) and Australia (+0.6%).

From a chart perspective, the STI is trading within a tight range between its immediate support at 2,860 (20-dma) and resistance at 2,920 (50-dma).

Stocks to watch
*Economy: 4Q15 GDP grew 5.7% q/q, beating estimates of a 1% expansion as services (+6.5%) and construction (+7%) sectors help offset a decline in manufacturing (-3.1%). On a y/y basis, GDP grew 2%, ahead of street expectations for a 1.2% increase.

*Banks: Nov total loans grew 1.4% y/y, its slowest since Feb 2010, dragged by weak business loans across most sectors, while consumer loans continued to be weighed by weakness in the property sector and car loans. MKE maintains UW on the sector, with top pick being UOB (Hold, TP $21.00).

*Genting Hong Kong: Exercised a call option to purchase the remaining shares in Petram LIV and Petram LWB, a property lessor and shipyard operator, respectively, for €16.5m (HK$140.9m).

*Second Chance: 1QFY16 net profit surged 48.4% y/y to $2.5m, mainly from fair value gains of $0.7m (1QFY15: -$1.5m). Revenue slipped 7.1% to $8.2m, dragged by apparel (-22.7%) and securities (-15.1%) businesses, but mitigated by its gold business (+8.7%) . Gross margin slid 4.9 ppt to 57.6% from the change in sales mix. NAV/share stood at $0.37.

*Centurion: Scaling down its Penang worker dormitory project to a maximum of 6,102 beds from 12,000 beds. The group entered into a supplemental agreement with the Penang Development Corp to nearly half the project’s land size to 6.6 acres (prev: 10.6 acres), with a revised purchased price of RM10.9m (prev: RM20.8m).

*YuuZoo: Entered into settlement agreements with Infocomm Asia (IAH) in which YuuZoo will now acquire 30% of IAH for US$2.1m. IAH will also repay loans of $6.5m, while YuuZoo will gain access to IAH’s 32m registered users in seven Southeast Asian markets. Separately, Chief Revenue Officer Rio Inaba has stepped down from his role one year following his appointment, to pursue other opportunities.

*Tuan Sing: 44.5% owned Gul Technologies Singapore acquired the remaining 38.6% stake in printed circuit boards manufacturer Gultech (Suzhou) Electronics, for Rmb194m ($42.1m), at 1.24x P/B.

*China New Town: In relation to the development of Yangzhou Airport New Town Project, China New Town will contribute an investment of Rmb100m, which will have a fixed return of 13% per annum over a three year period. Subsequently, the group will be guaranteed an exit through equity interest purchase by the district authorities and is backed by the municipal government.

*Sin Heng Heavy Machinery: Awarded the distributorship from Manitowoc's Grove range of all-terrain cranes for Indonesia. It will also provide after-sales service and parts in the country.

*Linc Energy: Credit Suisse AG disposed 6.5m shares at 12.54¢ apiece via the market on 29 Dec 2015, reducing its shareholding from 9.25% to 8.2%.

*Raffles United: To sell its 50% stake in Kian Ho Guangzhou for a part inventory, part cash deal worth ~$1m.

*Advanced Integrated Manufacturing: To purchase a minimart in Redhill for $0.2m.

*Design Studio: Exclusive distribution agreement with SieMatic Möbelwerke for its range of kitchen products has been terminated, after falling revenue contributions in FY13-14.