SG Market (29 Jan 16)

Regional bourses all opened in negative territory in Tokyo (-0.2%), Seoul (-0.8%) and Sydney (-0.3%).

From a chart perspective, the STI appears trapped in a consolidation range bounded between its five-year low of 2,520 and topside resistance at 2,670.

Stocks to watch
*SGX: Looking into sweeping review of the equity market structure aimed at lifting retail interest and liquidity. This includes the scrapping auto penalties for buy-in, reviewing minimum trading price calculation, as well as studying the need for quarterly reporting.

*OSIM: 4Q15 net profit crashed to $9.3m (-66% y/y), dragged by one-offs and legal costs ($9m). Otherwise, full year core earnings of $67.5m (-34%) came ahead of estimates. For the quarter, revenue slipped to $168.7m (-5%), from lower sales in regional markets amid the tepid environment, but partially mitigated by increased sales in North Asia. Gross margin improved to 72.2% (4Q14: 69.5%). Final DPS unchanged at 2¢.

*Frasers Hospitality Trust: 1QFY16 results slightly ahead on distributable income of $23.7m (+23.2% y/y), while DPU rose at a slower pace to 1.72¢ (+7.5%) on an enlarged unit base (+14%) from a private placement in Jul '15. Revenue and NPI surged to $31.4m (+16.2%) and $26.3m (+16.9%), led by the contribution from Sofitel Sydney Wentworth, partially offset by decreased contribution from Intercontinental Singapore due to renovation works. Aggregate leverage stood at 38.8% (-0.1ppt q/q) with effective borrowing costs of 2.6%. NAV/unit at $0.86.

*Ascendas Hospitality Trust: 3QFY16 DPU spiked to 1.45¢ (+11.5% y/y), boosted by the absence of unwinding costs for FX swap. However, gross revenue and NPI fell to $54.9m (-9.5%) and $23.4m (-9.3%), from the loss of income in Pullman Cairns International following its sale in Jun '15, lower contribution from Pullman and Mercure Brisbane King George Square hotel in Brisbane, and compounded by the weaker AUD. Aggregate leverage increased to 38.2% (+0.7ppt q/q) with debt term of 2.3 years. NAV/unit at $0.70.

*Tuan Sing: Achieved 4Q15 net profit and revenue of $14.4m (-41% y/y) and $143.4m (+28%), bringing FY15 earnings and revenue to $68.8m (+13%) and $677.1m (+91%), respectively. The positive set of results was attributable to increased takings from the property segment, as well as the consolidation of Grand Hotel Group. Gross margin expanded to 21% (+1.6ppt), while bottom line grew at a slower clip mainly due to an absence of negative goodwill ($26.9m). First and final DPS of 0.6¢ (FY14: 0.5¢). NAV/share at 74.4¢.

*Oxley Holdings: 2QFY16 net profit of $46m (+107% y/y) was boosted by fair value gains arising from FX swaps ($12.9m) and a jump in JV and associate contribution of $26.5m (2QFY15: $4.1m). Revenue tumbled to $177.8m (-25%), due to lower recognition of property development projects, partially offset by higher rental income. Gross margin jumped to 37.7% (+14.1ppt) on a shift in sales mix. Interim DPS of 0.75¢ was declared (2QFY15: nil). NAV/share at $0.1799.

*Creative Technology: 2QFY15 net profit turned around to US$12m (2QFY14: -US$9.2m), boosted by the settlement of a patent lawsuit (US$21m) and gain on disposal of investments (US$2.7m). Revenue slipped 15% y/y to US$26.5m, dragged by difficult market conditions, while gross margin slipped to 26.7% (-2.9ppt) on the change in sales mix.

*Jaya: 2QFY16 NAV stood at $0.4432/share. Jaya updated the settlement deed with MMA Offshore Asia on arbitration proceedings is not expected to have a material financial impact on the company. Jaya remains as a cash shell and has up to 3 Jun ’16 to meet the new listing requirements.

*Yanlord Land: Acquired 75% stake in China-based property development firm Shenzhen Hengming Commercial, which owns a residential development site in Shenzhen, for Rmb1.59b.

*Q&M Dental: Acquiring Lee & Lee (Dental Surgeons), which has three outlets across Singapore, for $10m in a cash and share deal.

*Yanzijiang Shipbuilding: Acquired 95% interest in China-based equity venture capital investment fund that focuses on the new economy space for Rmb190m.

*SATS/ Neo Group: SATS proposed the sale of its property at 22 Senoko Way to a 55% owned subsidiary of Neo Group, Thong Siek Food Industry, for $15m. As at end-Sep ’15, the property accounted for $5.8m in net book value for SATS. The property has a land area of 14,807.2 sqm and is intended for Thong Siek’s expansion, as a nearby plant has reached maximum utilisation.

*Interplex: Consent solicitation exercise with note holders in relation to the $200m 6.9% notes due 2019 has been passed. It is one of the pre-conditions on the voluntary takeover offer by Slater at $0.82/share.