SG Market (16 Feb 16)

SG: The short term relief rally could be ruffled by the disastrous 4Q15 results from Sembcorp Marine and Cosco Corp, although UOB's resilient earnings would give some comfort for banks.

Regional bourses opened mixed in Tokyo (+0.3%), Seoul (+0.8%) and Sydney (-0.5%).

From a chart perspective, immediate resistance for STI seen at 2,640 with 2,530 triple bottom providing base support.

Stocks to watch:
*UOB: 4Q15 net profit of $788 (+0.3% y/y, -8.2% q/q) matched street estimates. Net interest income grew 9.3% y/y to $1.28b on loan growth of 3.9%, led mainly by building and construction (+16.9%), and wider NIM of 1.79% (+10bps y/y, +2bps q/q). Fee income of $480m (+6.7% y/y) saw broad-based growth across most businesses, while other income jumped 39.4% to $323m, bolstered by stronger treasury contributions and gains on sale of securities. Higher one-off expenses for UOB80 events and brand campaign lifted CIR to 46.3% (4Q14: 43.5%). Provisions climbed 14.6% to $190m, while NPL ratio ticked up to 1.4% (4Q14: 1.2%), jacked up by new NPLs in S'pore, Indonesia and Greater China. Tier-1 CAR slipped to 13.0% (-0.9ppt). Final DPS of $0.35 took total FY15 payout to $0.90 (FY14: $0.75). Book NAV/share at $17.84 (+4.4%).

*Sembcorp Marine: Disastrous 4Q15 results as group sank into net loss of $536.9m (4Q14: +$176m) from hefty loss provisions ($278m), impairment of receivables ($151.8m), inventory write downs ($85.5m) and associate/JV losses ($150.3m). Revenue tumbled 8.2% to $1.33b including a sale reversal for a rig due to contract termination with Marco Polo, as well as reduced recognition for rig building projects from order deferments. Subsequently, gross loss amounted to $328m, bringing FY15 gross profit to $130.9m (-84.5%) and margin to 2.6% (FY14: 14.5%). Order book diminished to $10.4b (-10.3% q/q) despite managing to secure $1.6b in new orders in 4Q15. Final DPS slashed to 2¢, bringing FY15 DPS to 6¢ (FY14: 13¢). NAV/share at $1.20.

*Cosco Corp: 4Q15 languished in a red tide with net loss of $483.8m (4Q14: -$13.1m), as revenue slumped 20.8% to $725.5m from lower shipyard (-20.6%) and shipping (-31.6%) contributions. Gross loss amounted to $336.1m (4Q14: +$46.7m) from heavy inventory write downs ($289.1m) and depressed charter rates, while bottom line was further eroded by a provision charge on doubtful debts from certain Brazilian clients ($304.6m). First and final DPS scrapped (FY14: 0.5¢). NAV/share at $0.37.

*SIA: Jan passenger load factor rose 3.6ppts y/y to 80.1%, on higher passenger traffic of 6.8%, against a 2% expansion in capacity. Load factors for all regions supported by stronger returning traffic from year-end holidays with a shift to outbound travel during the Chinese New Year holidays. Meanwhile, its subsidiaries also had improved load factors, SilkAir (+3.2ppt to 69.7%), Scoot (+1.4ppt to 84.8%) and Tigerair (+2.9ppt to 81.5%). Overall cargo load factor rose 0.5ppt to 60.5% as cargo traffic growth (+7.2%) outpaced capacity growth (+6.3%).

*SingPost: Further investment into China logistics company Shenzhen 4PX Information Technology from 18% to 35.9% for an aggregate Rmb163.2m ($36m).

*Frasers Centrepoint: Formed a 40:40:20 JVCo with Sekisui House and KH Capital to acquire and develop a residential property project in Singapore.

*Aspial/ Fragrance: Still in the midst of SGX approval, 50/50 Fragrance-Aspial JV has extended the long-stop date of the proposed acquisition of shares in LCD Global from Aspial owner Koh Wee Seng in an interested party transaction to 15 Mar ’16.

*SIA Engineering: Investing up to $50m over the next few years on innovation initiatives and technology adoption projects in aerospace MRO, with the support of the EDB. Separately, SIAEC is appointed by Rolls Royce as an approved on-wing services provider within its Trent service network.

*Wing Tai: Setting new fund management business alongside institutional investors, to invest in Asia Pac through core and core-plus/value-add strategies.

*Silverlake Axis: Collaborates with United Bank Limited in Pakistan for joint digital banking product development and enhancement.

*Stratech: Awarded a favourable judgement in a South Korean case, where defendant II Jin Hi-Tech Corp was ordered to pay Stratech US$1.3m for monies owed for work done and services rendered on a project.

*Chip Eng Seng: Decided not to proceed with the proposed spin-off of its construction business on SGX Main Board due to unfavourable market conditions.

*Tat Hong: Accepted offer from JTC for the surrender of a 25-year lease of its property at 11 Gul Crescent for $21m. The disposal is expected to net a gain of $9.5m, bringing proforma FY15 EPS from 0.77¢ to 2.05¢.

*Miyoshi: Intends to transfer its listing from the main board to the Catalist board.

*Profit warning: Regal International, Mermaid Maritime