SG Market (19 Jan 16)

Singapore: Singapore shares may stabilise after dropping to grossly oversold levels but sentiment will continue to be weighed by worries of a deeper oil supply glut and underwhelming 4Q15 results season.

Regional bourses were generally positive in opening trades in Tokyo (+0.2%), Seoul (flat) and Sydney (+0.4%).

From a chart perspective, STI has broken below its 2011 low at 2,600, with the next support at 2,520.

Stocks to watch
*Banks: Media flags investor concerns over the local banks' exposure to O&G and China. With oil price plunging below US$28 and supply glut likely to worsen with Iranian exports, analysts warn of more bad loans from the O&G sector, with bank shares currently pricing in 10% default rate. The slowdown in China slowdown is also impacting demand for trade finance loans.

*M1: 4Q15 net profit of $43.6m (-2.1% y/y) slightly missed estimates, as revenue fell to $307.9m (-11.1%) due to decreased handset sales (-26.9%). Operationally, ARPU for postpaid (-5.3%), prepaid (-17.2%), and data (-9.3%) all fell while data usage grew to 3.3GB/month (+0.3GB). EBITDA margin rose to 42.2% (+0.6 ppt) on lower handset subsidies. Final DPS cut to 8.3¢, bringing FY15 payout to 15.3¢ (FY14: 18.9¢). NAV/share at $0.441.

*Keppel REIT: 4Q15 results met expectations as DPU climbed 11.3% y/y to 1.68¢, on a 17.8% jump in distributable income to $54m, thanks to higher contributions from associates MBFC3, Chifley Square (Sydney) and OTB office tower (Perth) and $5m divestment gain from Prudential Tower. Revenue and NPI edged up 1.1% and 1.5% to $42.8m and $34.8m, respectively, on higher income from Ocean Financial Centre and Bugis Junction Towers. Portfolio occupancy stood at 99.3% (+0.8ppt q/q) with WALE of 6 years, while aggregate leverage was reduced to 39.3% (-3.3 ppt) with average cost of debt of 2.5%. NAV/unit at $1.44.

*Keppel Infra Trust: 3QFY16 DPU rose 13.4% to $0.0093, while net profit attributable to unit holders was $8.7m (3QFY15 loss: $10.7m). Revenue rose 33.8% to $160.5m, as improvement from concession’s contributions were offset by weakness from CityGas, KMC and Basslink. Gearing fell to 34% (FY3/15: 52%) as a result of the consolidation of Crystal assets and KMC. NAV/share at $0.353

*SingPost: Launched SP Commerce, an integration between its ecommerce division with US firms TradeGlobal and Jagged Peak, an e-commerce provider and logistics firm.

*ST Engineering: Aerospace arm injected US$3m ($4.2m) into its US MRO business, VT Volant Aerospace. The unit has developed in-house engineering capabilities to offer turnkey cabin retrofit services.

*Hyflux: Awarded a contract by Italian EPC contractor Saipem worth US$50.4m, to design, manufacture and supply a seawater reverse osmosis and sulphate removal facilities package in Khurais, Saudi Arabia. The contract is to be fulfilled over one year.

*GLP: Incorporated two subsidiaries, Jinan Linkong Supply Chain Management (Rmb84m capital) and Yunnan Mingyong Logicstic Facilities (Rmb200m) in China for provision of distribution facilities/services. Group also set up an 85%-owned subsidiary Tibet Punuo Investment Management (Rmb25m) for investment and asset management.

*Sunpower Group: Secured a centralised steam Build-Operate-Transfer project in Lianshui Economic Development Zone at Jiangsu, China, worth Rmb95m ($20.8m). Sunpower will hold a 95% stake in the JV project, which has a concession period of not more than 30 yrs and is expected to begin operations in 2H16.

*Trendlines: In negotiations with a MNC to set up an Agritech Fund. If executed, the MNC will invest US$10m to be managed by Trendlines for early-stage companies.

*Sembcorp Marine: Delivered an accommodation semi-submersible vessel to its customer Prosafe.

*HLH Group: Broke ground for D’Seaview project, its first freehold mixed-development in Cambodia. Since the sales launch in Oct ’15, 80% of the 300 units in Phase 1 have been subscribed at prices between US$675 and US$1,943 psm.

*Advanced Integrated Manufacturing: Acquired a minimart in Jurong West for $0.06m.

*Cosmosteel: To record a 1QFY16 loss due to lower revenue.