SG Market (17 Feb 16)

Regional bourses opened relatively tepid in Tokyo (+0.4%), Seoul (+0.3%) and Sydney (flat).

From a chart perspective, the STI may attempt to close the gap at 2,670. Immediate support at 2,580 (20-dma).

Stocks to watch:
*OCBC: 4Q15 net profit of $960m (+21% y/y, +6% q/q) exceeded street estimate of $845m, on the back of higher interest margin (+7bps to 1.74%), insurance contributions as well as improved trading and investment income. Provisions jumped 25% mainly from NPLs in S'pore, Greater China, rest of world and equity investments, NPL ratio ticked up to 0.9% (4Q14: 0.6%). CIR 42.3% (-2.9ppt). Tier-1 CAR rose to 14.8% (4Q14: 13.8%). Maintained final DPS of $0.18, taking FY15 payout to $0.36. NAV/share at $8.03.

*CapitaLand: 4Q15 results above street estimates with core net profit of $249.2m (-12.1% y/y), mainly due to the absence of sale proceeds of Westgate Tower. Otherwise, operating earnings jumped 55.7%, on higher revenue of $1.74b (+14.6%) from increased contributions from China development projects and serviced residence business, partially offset by weaker sales in Singapore and Vietnam. First and final DPS of 9¢ maintained. NAV/share at $4.21.

*Starhub: 4Q15 met expectations despite net profit sliding to $80.8m (-14.3%), as revenue slipped 2.1% to $633.8m on declines across its mobile (-2.3%), pay TV (-0.1%), fixed network services (-2.9%), and equipment sales (-9.6%), partially mitigated by broadband (+9.2%). Mobile post-paid customer base (+3.8%) and ARPU (+2.4%) outperformed that of the shrinking prepaid segment. EBITDA margin slumped to 27.9% (-5.9 ppt) due to a surge in cost of services (+33%) and traffic expenses (+37%). Final DPS of 5¢ was maintained.

*Overseas Education: FY15 net profit slumped 32% y/y to $14.9m, as revenue slipped 5% to $97.1m from softening of student enrolment numbers. Bottom line was dragged by higher depreciation expenses at the new campus and finance costs of $4.2m (FY14: nil). First and final DPS of 1.375¢, bringing FY15 total to 2.75¢ (FY14: 2.75¢).

*LCD Global: 18M15 (18 months to Dec ’15) turned into net profit of $4.7m (18M14: -$7.7m), mainly boosted by the absence of a write off (18M14: $9.8m). Revenue slipped 1% y/y to $81.2m, as increased hotel and serviced residence income (+1%) from higher F&B sales and a stronger Sterling Pound was offset by lower sales in leisure and others (-31%) from closure of four amusement games outlets across Singapore. Final DPS of 1¢, bringing 18M15 DPS to 3.5¢ (18M14: 0.65¢). NAV/share of $0.27.

*Sembcorp Marine: Substantial shareholder Franklin Resources pared its stake from 5.02% to 4.97%, selling 949,900 shares over the market at $1.454 apiece on 15 Feb.

*GLP: Leased 48,000 sqm (520,000 sf) at GLP Park Lingang in Shanghai to a client which caters to domestic consumption.

*GLP: 50:50 JV with Canada Pension Plan Investment Board with equity commitments of ¥100b. The JV’s investment strategy allows it to sell assets to GLP J-REIT, and construction of new developments will commence in 2016.

*SIA Engineering: 65:35 JV with Airbus to provide airframe maintenance, cabin upgrade and modification for A380, A350, and A350 aircraft in Asia Pacific.

*ST Engineering: To divest 50% stake in aircraft lessor, Keystone, to Sojitz for US$19.7m ($15.3m). Upon completion, both shareholders plan to build up a portfolio of mid-life and end-of-life single aisle aircraft assets.

*Zagro Asia: Exit offer of $0.30/share declared unconditional after offeror Rumakita Investments obtained valid acceptances of 93.5%. Closing date of the offer will be on 18 Feb and the offeror intends to exercise its right of compulsory acquisition.

*Soo Kee: Non-binding MOU to acquire 70% in precious metals distributor DK Bullion for up to $0.8m, or 14.4x P/E and 0.22x P/NTA, as part of the group’s business expansion and product diversification plan.

*Profit warning: Blumont, Kencana Agri, Hong Leong Asia