SG Market (22 Feb 16)

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:
Singapore shares may be held back, taking cue from the fresh slide in oil prices as STI nears the immediate resistance at 2,670.

O&M heavyweights Keppel Corp and Sembcorp Marine could see downside risks on reports that major client Sete Brazil could file for bankruptcy protection in a week’s time if state-controlled Petrobras failed to sign a long term lease contract for its rigs on order.

Regional bourses opened relatively unchanged in Tokyo (flat), Seoul (-0.2%) and Sydney (+0.4%).

From a chart perspective, stiff resistance for STI is seen at 2,670, with downside support at 2,530.

Stocks to watch:
*DBS: 4Q15 net profit of $1b (+20% y/y, -6% q/q) was a tad above estimates on net interest income of $1.85b (+11% y/y, +2% q/q), driven by its best NIM in five years at 1.84% (+13bps y/y, +6bps q/q), while underlying loans was flat in constant-currency terms. Non-interest income climbed to $795m (+19% y/y, -12% q/q), led by higher treasury income and interest income from funding swaps. Provisions rose to $247m (+17% y/y, +39% q/q) from higher specific allowance, while NPL ratio stayed flat of 0.9%. Tier 1 CAR at 13.5% (4Q14: 13.1%, 3Q15: 12.9%). Final DPS of 30¢, bringing FY15 payout to 60¢ (FY14: 58¢). NAV/share at $15.82.

*China Everbright: FY15 results missed with net profit of HK$406.2m (+39% y/y). While revenue spiked to HK$1.82b (+73%) from a significant increase in construction revenue of HK$599m (FY14: HK$116m) due to the expansion and upgrading of several BOT projects, gross margin narrowed to 45.4% (-11.4ppt) on the shift in mix towards lower margin sales. Bottom line was boosted by tax refund (HK$60.3m) and government grant (HK$31.9m), partially offset by higher admin expenses (+162%). First and final DPS of 0.35¢ proposed (FY14: nil). NAV/share at HK$2.71.

*OUE: FY15 in line as net profit plummeted 86% y/y to $156.4m on absence of gains from divestment of Mandarin Orchard Singapore and Mandarin Gallery, while revenue edged up to $431.5m (+3.6%) from consolidation of One Raffles Place after increasing stake in OUB Centre. Gross margin narrowed 8ppt to 35%. Bottom line was further weighed by consolidation of OUBC’s expenses, but partially supported by negative goodwill from Gemdale shares acquisition. A final DPS of 1¢ took FY15 payout to 5¢ (FY14: 2¢). Net gearing increased to 0.58x (FY14: 0.44x). NAV/share at $4.35.

*Raffles Medical: FY15 results met estimates as net profit inched 1.6% y/y to $69m, as revenue grew 9.6% to $410.5m, on maiden contribution from clinic operator International SOS in Oct '15, increased sales from more specialist consultants, higher patient load and greater patient acuity. Final DPS of 4.5¢ declared, bringing FY15 total DPS to 6¢ (FY14: 5.5¢).

*PACC Offshore: 4Q15 net loss crashed to US$149.7m (4Q14 -US$9.9m) due to impairment of goodwill (US$127m) and fixed assets (US$21.4m). Revenue climbed 29% y/y to US$71.8m, mainly from chartering of new vessels in offshore accommodation segment, albeit lower charter rates. Gross margin widened 12ppt to 24%. Net gearing crept up to 0.51x (FY14: 0.45x), with total borrowings of US$559.7m due in less than a year. A lower first and final DPS of 0.5¢ (FY14: 1.5¢) was declared. NAV/share at US$0.5853.

*IHH Healthcare. Temasek Holdings is set to acquire a 72% stake in Hyderabad-based CARE Hospitals for US$278m. CARE runs a network of 17 hospitals with 2,400 beds across 9 locations in India. The transaction values CARE at US$160,000 per bed, 35% higher than the US$118,000/bed IHH paid for Continental Hospitals, also based in Hyderabad, in Mar ’15.

*SIA/ Tigerair: Extended the long stop date for its offer for Tigerair to 26 Feb.

*Sing Post: Extended the long-stop date for its conditional JV agreement with Alibaba to further develop their business collaboration, involving Sing Post’s wholly-owned Quantum Solutions to be the platform for collaboration, from 7 Apr 2016 to 31 May 2016.

*Vard: Secured a NOK325m contract to design and construct a stern trawler for HAVFISK ASA. Delivery of the vessel is scheduled in 1Q18.

*Nordic Group: Secured three new orders totaling $2.5m, which includes a maintenance contract from a repeat customer for an extension of scaffolding services at a new gas facility, the supply of insulation materials for a new customer and an order from a repeat customer to provide labour and materials to perform acoustic piping insulation work for the Catcher Development Project. Works expected by 2Q16.

*Yanlord: Acquired property developer Shenzhen Huarong Innovation Investment for Rmb45m.

*Lian Beng/ KSH/ Heeton/ Ryobi Kiso: Consortium led Heeton (55%-ownership, latter three parties own 15% each) is adding two more ibis hotels in London.

*Allied Technologies: Applied for a 12-month extension to meet requirements to be removed from the SGX Watch-List.

*Profit warning
- A-Sonic Aerospace
- China Environmental Resources Group
- Mercurius Capital Investment
- Hi-P