SG Market (04 Feb 16)

Singapore shares will likely see a slight respite from the recent selldown following the overnight jump in oil prices on fresh talk of an OPEC meeting, which overshadowed concerns of the unexpected surge in crude inventories.

Regional bourses opened mixed in Tokyo (-0.8%), Seoul (+0.6%) and Sydney (+1.3%).

From a chart perspective, STI may close gap at 2,580, after establishing a double bottom at 2,530.

Stocks to watch:
*Noble: May be deleted from MSCI Singapore index at the upcoming MSCI quarterly index review on 11 Feb.

*Frasers Centrepoint: 1QFY16 core net profit plunged to $90.3m (-38%), on revenue of $671.6m (-37.3%), dragged by lower property development works in Singapore, China and Australia, but was partially offset by contribution from the newly acquired Malmaison Hotel du Vin in UK. NAV/share at $2.28.

*F&N: 1QFY16 net profit tumbled to $25.7m (-27% y/y) on absence of divestment gains from Myanmar Brewery. Otherwise, earnings would have leapt 33.5%. Revenue slipped to $488.7m (-11%), dragged by a weaker MYR, while operating margin widened to 10.8% (+3.9ppt) on better cost efficiencies. NAV/share at $1.74.

*GLP: 3QFY16 net profit (ex. revaluation) rose to US$82.9m (+25.8%), bringing 9M15 earnings to 70% of street's full year forecast. Development starts of USD826m met 55% of FY16 target. For the quarter, revenue climbed to US$198.9m (+11.1%), mainly attributable to the completion and stabilisation of development projects in China with increasing rents, and the inclusion of management fee income from GLP US Income Partners I, but was partially offset by the syndication of 60% of GLP Brazil Income Partners II portfolio and sale of Japan properties, as well as the weakening of the Japanese Yen and Chinese Renminbi against the U.S. Dollar. NAV/share at US$1.73.

*Religare Health Trust: 3QFY16 DPU grew to 1.91¢ (+5.3%), along with distributable income of $15.3m (+5.7%). Revenue rose to $35.9m (+5%) from rising base and variable fees from clinical establishments and increased hospital income on higher occupancy. Portfolio occupancy dropped to 75% (-5ppt q/q), while aggregate leverage inched to 15% (+0.3ppt q/q), with debt tenor of 1.9 years. NAV/unit at $0.905.

*CapitaLand Retail China Trust: 4Q15 DPU of 2.59¢ (+4.4% y/y) was in line. In Rmb terms, gross revenue inched 0.4% to Rmb253.3m, from rental growth at two malls, while NPI slipped to Rmb158.9m (-1%) on a compensation payment to a tenant impacted by AEI works. Portfolio occupancy improved to 95.1% (+0.3ppt q/q) with WALE of 8.2 years, while aggregate leverage narrowed to 27.7% (-0.8ppt q/q) with average debt cost maintained at 2.99% and tenor of 2.18 years. NAV/unit at $1.77.

*UG Healthcare: 1HFY16 net profit jumped 34% y/y to $3.2m on stronger revenue of $30.1m (+20%), driven by planned capacity expansion, but partially offset by lower average selling price. Gross profit margin expanded 3.7ppt to $23.9% on cheaper raw material costs. Bottom line was supported by FX gains from a weaker MYR, while partially doused by higher admin expenses, as well as currency losses from UK and China operations. NAV/share at $0.2023.

*Parkson Retail Asia: 2QFY16 net profit fell 71.6% to $2.9m, while revenue fell 12% to $103.4m. Weakness was on the back of weak same store sales in Malaysia and Vietnam. Bottom line also dragged by absence of FX gains from foreign currency deposits and the gain of disposal of shares in an associate. NAV/share at $0.27.

*IPS Securex: 1HFY16 net profit climbed to $1m (+10%), while revenue rose 21% to $7m, led by increased sales in security products and higher fees from maintenance and leasing. Gross margin slipped to 48.2% (-1.4ppt) on the shift in sales mix, while bottom line was pared by the absence of reversal of allowance for inventories obsolescence (-34%) and higher finance costs (+61%). No interim DPS declared (1HFY15: 0.75¢).

*Tiong Woon: Swung to 2QFY16 net loss of $67,000 (2QFY15 net profit: $3.8m) while revenue fell 11% to $35.4m, mainly dragged by weaker performances in heavy lift and haulage, marine transportation, and trading segments. NAV/share at $0.5677.

*OLS Enterprise: Entered power purchase agreement with Sarawak Energy to purchase electricity for its Malaysian integrated phosphate plant. The plant is located in the growth node in the Sarawak Corridor of Renewable Energy and will be South-East Asia’s largest integrated phosphate complex.

*MM2 Asia: Non-binding term sheet for the proposed acquisition of five target companies, engaged in event and concert production. The potential $26m deal will be funded with a mix of cash and new shares over three payment tranches, with the last payment after 2018 results.

*Rotary Engineering: Acquiring a 1999 Korean-built double hull oil tanker with a cargo capacity of 123,000 m3 for US$15.6m, mainly funded by internal funds.