SG Market (26 Feb 16)

Singapore shares are expected to see more volatility as the market reacts to oil price gyrations and possible G-20 news.

Regional bourses opened mixed in Tokyo (+1.6%), Seoul (+0.2%) and Sydney (-0.2%).

From a chart perspective, STI faces stiff resistance at 2,670 with downside support at 2,600; technicals reversing from overbought levels.

Stocks to watch:
*Noble: First annual loss in almost 20 years of US$1.67b (2014: US$132m profit), which included US$1.2b of impairments and US$724m loss from agri unit sale. Core net profit of US$244m (-58%) on revenue of US$66.7b (-22%) fell short of estimates. Tonnage handled climbed 26% to 271m MT, giving 1.76% operating margin (19bps) FV of long term commodity contracts dropped to US$3.2b from US$4.5b at end Sep. Generated positive cash flow of US$651m in 2H15 with cash on hand at US$1.95b against total debt of US$5.9b. Jury still out on further writedown of commodity contracts and refinancing of US$1.6b debt due May. NAV/share at $0.72.

*ST Engineering: 4Q15 net profit on target at $140.8m (flat), while revenue dipped 3.8% to $1.78b mainly on reduced shipbuilding contracts. Management guided flat earnings for 2016. First and final DPS of $0.10 brought FY15 DPS to $0.15 (maintained).

*Venture: 4Q15 net profit rose 14% to SGD44.8m, bringing FY15 earnings to SGD154.1m (+10%), in line with estimates. 4Q revenue showed steady 8% growth, while pretax margin improved on cost control and FX gains. Final DPS of 50¢ maintained.

*Best World: 4Q15 net profit spiked 81% y/y to $3.7m, bringing FY15 earnings to a 7-year record high of $10.1m (+149%). For the quarter, revenue surged 64% to $40.9m on sustained growth momentum due to increased product acceptance. Net cash per share grew to 21.5¢ (3Q15: 18.1¢/share). Application for China direct selling license is proceeding on schedule. Final DPS of 1.5¢, bringing FY15 DPS to 2¢ (FY14: 0.8¢).

*China Merchants Pacific: FY15 results missed; net profit slid to HK$597.2m (-19.2%) on absence of a negative goodwill (FY14: HK$22.8m) and FX losses of HK$30.4m (FY14: HK$31.1m gain) due to the weaker RMB. Revenue grew to HK$2.21b (+9.3%), on new contributions from three recently acquired expressways and increased traffic at Yongtaiwen Expressway. Final DPS of 3.5¢ brought FY15 DPS to 7¢ (maintained). NAV/share at HK$5.32.

*Haw Par: FY15 net profit surged to $193.7m (+52.5% y/y) from stronger dividend income of $89.5m (+43%). Revenue rose to $178.8m (+16%) on rise in healthcare (+24.8%) but partially offset by leisure (-18.4%) and property (-17.4%) segments. Bottom line was further shored up by a $55.6m gain on partial disposal of interest in Hua Han. Final and special DPS of $0.29 declared bringing FY15 DPS to $0.35 (FY15: $0.20). Notably, group took a fair value loss on its balance sheet, which reduced NAV/share to $11.57 (-9.8%).

*IHH: 4Q15 results came in line despite core net profit declining to RM214.6m (-11.1% y/y) on higher financing costs (+60.6%) stemming from new acquisitions. Revenue grew to RM2.29b (+18.5%) from healthy growth across all segments. EBITDA margin narrowed to 26.8% (-3.3 ppt), weighed by tighter margin at Parkway Pantai, Acibadem, and PLife REIT. NAV/share at RM2.72.

*SingTel: Together with Mitsubishi Heavy Industries EngineSystems Asia have been awarded LTA’s $556m next-gen ERP project, which is to be progressively implement from 2020 onwards.

*Asiatravel.com: Launched a platform and organised a first virtual travel fair in Singapore.

*SBI Offshore: Received request for termination of a US$24m design and engineering contract from a consortium of six Middle East-Chinese parties due to low oil prices.

*Lian Beng: Acquiring Broadway Plaza, a leasehold 5 storey commercial property in Ang Mo Kio Central for $51.5m. The property has GFA of 55,351sf, and 61 years remaining in lease duration.

*Dutech: Swung to 4Q15 net profit of Rmb22m from Rmb4.3m losseslast year, driven FX gain and the absence of bargain purchase gains recorded last year. Revenue increased 22.6% to Rmb330.2m, from strong sales of the new model safe, and revenue contribution from Deutsche Mechatronics GmbH. Gross margin expanded to 25.3% (+6.3ppt). NAV/share at Rmb1.946.

*Rotary Engineering: FY15 net profit fell 15% to $42.8m, as revenue tumbled 52% to $329.3m amid a slump in both its project services, and maintenance & trading segments. Gross margin widened 7ppt to 24% on closure of several projects, and productivity improvements. Bottom line was buttressed by reversal of impairment losses, disposal gains, FX gains from stronger USD, and interest income from an investment loan. A first and final DPS of 1.5¢ was proposed (FY14: 2.5¢).NAV/share at $0.509.