SG Market (19 Feb 16)

Singapore shares are likely to see some profit taking following the recent run-up on short covering amid the spate of uninspiring 4Q earnings from the embattled O&M names and banking counters.

Regional bourses opened mixed in Tokyo (-1.4%), Seoul (flat) and Sydney (-1.4%).

From a chart perspective, the STI faces stiff resistance at 2,670 but if that is breached, it is unlikely to go past the short term objective of 2,750.

Stocks to watch:
*Wilmar: 4Q15 met expectations on core net profit of US$350.4m (-15%), as revenue declined to US$9.4b (-12.5%) due mainly to lower CPO prices and sales volume, partially mitigated by a jump in sugar prices. EBITDA margin held steady at 6.5%, while bottom line was dragged by increased selling and distribution expenses (+14.3%). Final DPS of 5.5¢ maintained, bringing FY15 total to 8¢ (FY14: 7.5¢).

*Genting SP: Shock 4Q15 net loss of $7.8m (4Q14: +$89.2m) and weak revenue of $547.4m (-14%) miss expectations by a mark, hurt by slump in VIP volumes (-40%), poor win rate (2.1%), divestment and FX losses. Mass GGR fell 10%. Adjusted EBITDA fell at a slower pace to $181.3m (-5%) due to efficiency enhancements. Notably, bad debt provision fell 45% y/y to $45.3m. First and final DPS raised to 1.5¢ (FY14: 1¢).

*Hyflux: FY15 net profit tumbled 28% to $41.3m, mainly attributed to lower disposal gains, while revenue jumped 39% to $445.2m due to higher contribution from the Qurayyat Independent Water Project in Oman and augmentation of the Yanbu Desalination Plant in Saudi Arabia. Bottom line was further eroded by higher raw materials and subcontractor costs, finance expenses, as well as losses from associates and JVs. A lower final DPS of 1¢ brought FY15 payout to 1.7¢ (FY14: 2.6¢). NAV/share at $0.542.

*Innovalues: 4Q15 results met expectations despite net profit tumbled 11% y/y to $4.8m on a softer revenue of $26.9m (-3.7%), drag by the Automotive segment (-6.5% to $21.7m), but partially offset by a strong Office Automation business (+14.4% to $5.2m). Gross margin increased 3.3ppt to 33.7% on improved efficiency. Bottom line was hit by higher staff expenses, absence of gains from sale of submerged machines, lower FX gains, and higher tax provision. A higher final plus special DPS of 2.6¢ brought FY15 payout to 3.8¢ (FY14: 2¢) was declared. NAV/share at $0.2534.

*Fragrance: 4Q15 tumbled 89.1% y/y to $8.7m, while revenue fell 68% to $41.1m, largely dragged by lower contributions in the property business. Gross margin fell to 17% (4Q14: 31.7%) due to higher variation of order costs for Urban Vista. Bottom line also dragged by decreased fair value gains from investment properties and reduced interest income. NAV/share at 15.4¢.

*Aspial: FY15 net profit plunged 40% to $8.8m, while revenue fell 9% to $464.1m, as increases in the financial service business were offset by weaker contributions from the real estate and the jewellery businesses. Bottom line fall was also dragged by lower fair value gains from investment properties. First and final DPS of 1¢ (FY14: 2.6¢). NAV/share at 17.31¢.

*Sembcorp Industries: Thermal Powertech Corporation India clinched a contract to sell 570 megawatts of power to Telangana Power Distribution Companies for eight years, thereby raising long-term demand commitment to 85% of its 1,320 megawatts generating capacity.

*SIA Engineering: Renewed its fleet management programme agreement with Tigerair Taiwan for five years. It currently services 12 airlines globally.

*AusGroup: Appointed Macquarie Capital as financial advisor to solicit and consider offers for its scaffolding and access business after receiving several expressions of interest.

*Rotary Engineering: Secured $65m worth of new contracts between Nov ’15 and Feb ’16, which includes a $19m civil engineering project for a jetty and its topside in Jurong Island, as well as two contracts worth $33m for piping, mechanical, civil and E&I work in Jurong Island.

*Sunpower: Secured a third centralised steam build-operate-transfer project in Anhui, China worth RMB54m. The project has a concession period of 30 years and is expected to be completed by 3Q16.

*Vallianz: Successfully refinanced its Saudi Arabian offshore subsidiary through the issuance of a five-year Sukuk worth SAR1b (US$266.7m).

*Linc Energy: Entered into agreements with PT Sugico Graha to license its technology in Indonesia to develop two commercial Underground Coal Gasification projects of which it is expected to receive US$17.5m in licence fees as well as royalties of US$0.3125/MMBTU.

*Profit warning:
- Ziwo
- Dyna-Mac
- Chantian Plastic & Chem
- China Yongsheng