SG Market (14 Jan 16)

Downward pressure is expected to persist in the Singapore market after the bloodbath on Wall Street as investors await the 4Q15 results season, which kicks off today.

Regional bourses opened deep in the red in Tokyo (-3.7%), Seoul (-1.5%) and Sydney (-1.3%).

From a chart perspective, STI is likely to test the key fibonacci support at 2,680. If that is breached, the next line of defense is at 2,600.

Stocks to watch
*Banks/ Economy: 3-month Sibor and SOR jumped to 7-year highs of 1.252% and 1.21826%, amid volatility in the SGD and worries about further depreciation of the yuan. The SGD has lost 1.8% year-to-date to 1.4349 against USD, and is expected to continue to weaken.

*Property: SRX overall rental index for non-landed private homes fell 5.4% in 2015 (2014: -5.2%, 2013: -2.5%). Market watchers expect rents to fall 5-8% for non-landed private homes in 2016, on high supply and tight immigration policies.

*Cambridge Industrial Trust: 4Q15 distributable income and DPU fell 7.2% and 9% y/y, to $14.8m and 1.139¢, respectively, due to the absence of capital distribution and payment of management fees in cash, instead of units in 4Q14. This brought FY15 DPU to 4.793¢ (-4.2%), above estimates. For the quarter, gross revenue and NPI rose to $28.5m (+10.7%) and $21.6m (+8.7%), respectively, mainly from contribution of two newly-acquired properties and completion of three AEI projects. Occupancy dropped to 94.3% (-1.1 ppt) with WALE of 3.8 years, while aggregate leverage decreased to 36.9% (-0.3 ppts q/q) with average debt cost of 3.67%. NAV/unit at $0.673.

*Ezra: 1QFY16 swung into net loss of US$55.3m (1QFY15: +US$54.4m), mainly from absence of negative goodwill (US$106m) and derivatives losses (US$13.9m). Revenue climbed 19% y/y to US$152.3m on higher contributions from a larger fleet in its marine services segment, but partially offset by weakness in the offshore support industry. Gross margin plummeted to 10% (-12 ppt). NAV/share at US$0.454.

*Lian Beng: 2QFY16 net profit dipped 2.8% y/y to $22.9m, as revenue slid 35% to $130m amid deterioration in the construction and ready-mixed concrete business. Gross margin grew to 11.7% (+3.2 ppt), and bottom line was further boosted by a surge in associate and JV contribution from profit recognition in property development projects. Maintained interim DPS of 1¢.

*CapitaLand Commercial Trust. Proposed sale of 50% stake in One George Street office tower drew bids of between $536.9m and $581.6m, based on the guide price of $2400-2600/psf.

*ST Engineering: Electronic arm secured $435m worth of contracts in 4Q15, which include rail electronics & intelligent transportation ($91m), satellite & broadband communications ($107m), and advanced electronics & ICT solutions ($237m). The contracts will be completed progressively till 2025. This brings 2015 contract wins to $1.61b.

*Viva Industrial Trust: Declined right of first refusal for an industrial property worth $255m at 7000 Ang Mo Kio Avenue 5, with a gfa of 1.07m sf.

*GRP/ Starland: GRP launched a mandatory unconditional offer of $0.236/share for Starland, after the former acquired a 82.9% stake purchase from various shareholders at the same price.

*Eindec: Completed its IPO placement of 35.8m shares to raise net proceeds to $4.6m which will primarily fund its new business of environmental and technological solution products in China. Trading in Eindec will commence at 9am on 15 Jan.

*Suntec REIT: Secured a $120m facility agreement with DBS to refinance an outstanding loan agreement.

*Advance Integrated Manufacturing: Acquiring a minimart at Blk 895B Woodlands Drive 50 for $0.24m.

*Yoma Strategic: Incorporated a new subsidiary Yoma German Motors, in Myanmar with US$50,000 capital to sell and service Volkswagen passenger cars in Myanmar.