SG Market (27 Jan 16)

Singapore market is likely to remain range-bound amid the ongoing lacklustre earnings season. Index heavyweights Keppel Corp and Sembcorp Industries may face selling pressure after reports that key shareholder Temasek Holdings is reviewing options for them, including asset sales and rights issue, suggesting all is not well.

Regional bourses opened positive in Tokyo (+2.2%) and Seoul (+1.4%), while Sydney (-0.4%) is slightly down.

From a chart perspective, downside risk for the STI at a 5-year low of 2,520, while topside resistance remains pegged at 2,670.

Stocks to watch:
*Mapletree Industrial Trust: 3QFY16 in line, DPU rose to 2.82¢ (+5.6% y/y), while distributable income climbed to $50.3m (+9.5%). Revenue and NPI grew to $83.3m (+6.6%) and $61.9m (+6.7%), led by the build-to-suit project for Equinix, higher rental rates and occupancies (+0.9ppt q/q to 94.7%). Aggregate leverage stood at 29.3% (-0.4ppt q/q), with weighted all-in funding cost of 2.4% (+10bps q/q). NAV/unit at $1.33.

*Suntec REIT: 4Q15 in line on distributable income and DPU of $69.5m (+7.7%) and 2.75¢ (+6.7% y/y), lifted by capital distributions from the CHIJMES disposal. Gross revenue and NPI grew to $87.5m (+14%) and $62.5m (+18%), underpinned by the completion of Phase 3 AEI works at Suntec City and stronger performance at Suntec Singapore. Both office (+0.4ppt q/q to 99.3%) and retail (+1.4ppt to 97.9%) occupancy edged up. Aggregate leverage crept to 37.1% (+0.4ppt) and average debt cost increased to 2.86% (+0.12ppt). NAV/unit at $2.154.

*Starhill Global: 2QFY16 results in line. DPU climbed to 1.32¢ (+2.3% y/y), while distributable income rose 3.5% to $30.1m. Gross revenue and NPI jumped to $55.6m (+13.8%) and $43.7m (+10.4%), respectively, driven by contribution from Myer Centre Adelaide acquired in May ’15, as well as better performances of Singapore properties. Portfolio occupancy dipped to 98% (-0.3ppt q/q) with WALE of 6.4 years, while aggregate leverage held steady at 35.7% with average debt cost of 3.15% and tenor of 3.6 years. NAV/unit at $0.90.

*Parkway Life REIT: 4Q15 results in line. with both distributable income and DPU up 16.1% y/y to $20.4m and 3.37¢, respectively, boosted by partial distribution of divestment gains from the sale of seven Japan properties in Dec ’14. Gross revenue and NPI both grew 4.8% to $26.3m and $24.6m, from higher rent revision (+1.1%) and contribution from properties acquired in 4Q14 and 1Q15. Portfolio occupancy remained at 100% with WALE of 9.12 years. Aggregate leverage dipped marginally to 35.3% (-0.5ppt q/q) with average debt cost of 1.6% (+0.1ppt q/q) and tenor of 3.5 years. NAV/unit at $1.69.

*OUE Commercial Trust: 4Q15 results missed street estimates. Against IPO forecasts, distributable income and DPU came above by 21.1% and 20.4% to $17.6m and 1.36¢, respectively. Revenue of $40.3m (+4.2%) and NPI of $29.7m (+6.6%) due to better performance at all three properties and lower-than-expected utilities cost at OUE Bayfront and One Raffles Place. Occupancy slipped to 94.3% (-2.8ppt q/q), with WALE of 2.7 years. Aggregate leverage surged to 40.1% (+6.2ppt q/q), with debt cost rising to 3.45% (+0.29ppt). NAV/share at $0.96.

*Sembcorp Marine: Substantial shareholder Templeton Asset Management pared 3.8m shares at an average $1.54/share on 25 Jan, reducing its stake from 5.15% to 4.97%.

*Ezra: CFO Eugene Cheng stepped down with immediate effect due to family reasons, and Chan Eng Yew, CEO of subsidiary Triyards, is appointed as interim CFO starting from 27 Jan.

*M1: In response to a SGX trading query following a sudden surge in share price and volumes yesterday, M1 disclosed that a Bloomberg article citing Temasek is weighing the possibility of Keppel Corp selling its 19.1% stake in M1.

*Soilbuild Construction: Awarded a design and build contract worth US$9.4m for the addition and alteration works of St John Shopping Center in Yangon Myanmar. Completion is expected within 8.5 months from commencement in 1Q16.