SG Market (25 Feb 16)

Investors are bracing for some market volatility following the overnight swing in crude prices.

Regional bourses opened mixed today in Tokyo (+0.8%), Seoul (+0.8%) and Sydney (-0.2%).

From a chart perspective, technicals are overbought with STI facing topside resistance at 2,670 and downside support at 2,600.

Stocks to watch:
*City Dev: 4Q15 net profit of $410.5m (+6.6% y/y) brought FY15 earnings to $773.4m (+0.5%), 38% above street estimates, primarily attributable to a $314m gain from the sale of leasehold interest in three commercial buildings. However, core property development (-54%) and hotel operations (-93%) remained weak operationally following the sale of cashflow of Cityview Place and significant impairment losses to certain hotels and RevPAR declines. Final and special DPS of 8¢ and 4¢, respectively, maintaining full-year total DPS of 16¢.

*Riverstone: 4Q15 results topped estimates with net profit of RM37.2m (+66.4% y/y) from higher revenue of RM153.5m (+37%) due to increased gloves demand and wider gross margin of 31.3% (+4.9 ppt) on lower input prices. Bottom line gains were, however, partially mitigated by a FX loss, higher depreciation charges due to its facility expansion, but offset by fair value derivative gains. Final DPS of 5.25sen brought FY15 DPS to 7.65sen (FY14: 6.9sen).

*Ho Bee Land: 4Q15 net profit slipped to $193.7m (-32.1% y/y) due to lower fair value gains from investment properties and impairment losses. Overall revenue dropped to $222.6m (-28.5%) on lower fair value changes of investment properties (-34%), offset by increased rental contributions (+23.9%). FY15 DPS of 7¢ declared, which included a first and final as well as special dividend (FY14: 5¢). NAV/share at $4.023.

*First Res: FY15 results missed, as 4Q15 net profit crumbled 66.5% y/y to US$19.8m, as sales dropped 25.9% to US$130.9m on lower ASPs of palm based products, partially offset by higher volumes from the refinery and processing segment. Gross margin fell 9.8ppt to 47.9%, while bottom line was weighed by increased distribution and finance expenses. NAV/share at US$0.63. Final DPS of 1.25¢, bringing FY15 DPS to 2.5¢ (FY14: 3.55¢).

*SIIC Environment: 4Q15 net profit jumped to Rmb119.7m (+27% y/y), bringing FY15 earnings to Rmb360.4m (+24%), in line with street estimates. For the quarter, revenue spiked 51.5% to Rmb511.1m on increased construction activities, higher sales volume of water treatment and supply and greater contribution from newly acquired water treatment companies. Gross margin slipped to 37.1% (-6.3ppt) on a shift in sales mix, while operating profit was bolstered by FX gain (+15.6%).

*BreadTalk: FY15 missed estimates, after 4Q15 net profit crashed to $1.1m (-91.7%) on an absence of a $10m fair value gain, while associates swung into losses. Revenues remained flat at $155.1m, as the increased contribution in the restaurant segment (+5.4%) was offset by lower bakery sales (-2.2%). Final DPS of 1¢ brought FY15 DPS to 1.5¢ (unchanged). NAV/share at 52¢.

*Straco: 4Q15 net profit surged 41.5% y/y to $6.3m on solid revenue of $23.8m (+22.7%), boosted mainly by the Singapore Flyer which was acquired in Nov '14, but partially offset by lower sales at Chinese attractions. Operating margin expanded 5.1ppt to 45.2% as expenses rose at a slower pace. Net cash position soared to $62.6m (FY14: $19.1m), representing net cash/share of 7.3¢. First & final DPS of 2¢ and a special DPS of 0.5¢ was proposed (FY14: 2¢). NAV/share at $0.2595.

*HTL: Supplemental agreement with Guangdong Yihua Timber Industry on the conditional takeover of HTL via a scheme of arrangement, finalising the acquisition price at $1.00/share. Pre-conditions include government sanctions on the proposed acquisition before 31 Jul 2016.

*Hock Lian Seng: FY15 net profit dived 49.5% to $36.7m, as revenue of $174.8m (-33.2%) was eroded by property development business, given revenue contribution from Ark@KB project, completed in FY15, was significantly smaller than Ark@Gambas in FY14. Gross margin, which shrank 15.2ppt to 22.1%, was further dragged by lower margins in civil engineering segment. A first and final DPS of 2.5¢ (FY14: 4¢) was proposed. Net cash at $0.27/share (FY14: $0.31), translating into an ex-cash trailing P/E of 1.8x. NAV/share at $0.435.

*Singapore Post: S&P cut long-term corporate rating to A- from A due to increased earnings volatility but maintains its stable outlook.

*IPS Seurex: Agreed to acquire all of Yatai Security & Communications and Avac Systems (up from 40% stakes in previous MOU) for $1.87m in aggregate.

*Yongnam: Awarded four contracts worth $69.8m for projects in Singapore and the Middle East.

*PACC Offshore: Secured five-year charters for five vessels to the Middle East worth US$85m.